Prasa eyes iced company for its billions

The 70 new locomotives were meant to pull carriages full of people and goods around South Africa. The billions of rands spent on them were part of a plan by the Passenger Rail Agency of South Africa (Prasa) to modernise its fleet. But after they had been shipped to South Africa from as far away as Spain, operators realised that they didn’t fit local railway lines. Now the Afro4000 locomotives are sitting at depots around the country, waiting to be auctioned off to fill a huge hole in Prasa’s budget.

The agency is pinning its hopes on recovering the more than R2-billion owed to it by a now-liquidated company, which scored billions from the the 70 locomotives contract.

In a 2017 ruling, the high court in Johannesburg said Prasa, a state-owned entity, had awarded a tender to the company — Swifambo Rail — in a “corrupt tender process”.

As a result, the court set aside the R3.5-billion contract for the 70 locomotives. It also said that Swifambo Rail was a front for Vossloh España, a Spanish company that was subsequently bought by Stadler Rail, a Swiss company. An appeal by Swifambo Rail to the Constitutional Court was dismissed with costs in May.

But Prasa maintains that Vossloh España (now owned by Stadler) was a subcontractor so there is no need to recover money from it. This means it has to wait with other creditors and hope that there is some money left over from the liquidation process.

In Prasa’s court papers — which were deposed in 2015 by its then board chairman Popo Molefe — there were no documents to confirm that it had entered into a joint venture with Vossloh España. This venture would be essential, considering that its bid to supply the locomotives indicated that Swifambo would rely solely on the experience and technical capabilities of Vossloh to fulfil its obligations.

Swifambo was not disqualified in that bid, despite submitting a tax clearance certificate that had no value-added tax number and not submitting a tax clearance certificate for Vossloh.

Prasa now hopes it can recover about R2.6-billion from Swifambo, even though it has been liquidated. The utility’s spokesperson, Nana Zenani, said: “Vossloh was a subcontractor of Swifambo and not a joint venture partner. Therefore, there is no contract between Prasa and Vossloh,” which would allow the rail utility to chase the European company for the money for the useless locomotives.

Zenani added: “It is up to the liquidators to decide on the future of the relationship between Prasa and Vossloh as part of their duty to realise the assets of Swifambo.”

But recovering any money from Swifambo could prove tricky because liquidators have to chase after the money trail in the bank records of Swifambo and also try to sell 70 locomotives in an auction.

According to one of the liquidators, Hannes Muller, the 13 locomotives that Swifambo supplied have already been put up for auction and on July 24 they will meet Prasa for the state agency to prove its claim as a creditor.

“We are trying to sell the trains. We had a meeting with Stadler [Rail] and they told us that there are [more] trains in Valencia [in Spain], which have been paid for [by Prasa]. We are trying to establish if there is a market in the world for these trains. We have a marketing campaign worldwide,” said Muller.

According to a source who was involved in the initial investigation of the deal, Prasa is not likely to recover much from Swifambo unless it also pursues Vossloh. “There is nothing in Swifambo; monies were misused there and given to a number of individuals. Prasa has to go after Vossloh too because it took the money and provided locomotives that could not be used,” said the source.

A briefing note, seen by the Mail & Guardian, to the new transport minister, Fikile Mbalula, has advised that Vossloh should also be pursued. “The matter is currently with the liquidator and liquidator is empowered to take action against Vossloh as well.”

The minister, as the head of the department that owns the state-owned enterprise, is its shareholder and so is heavily involved in what happens next.

The note said: “[The] minister is advised that now that the contract, the bid process and even Vossloh itself were found wanting, it follows that the funds transfer from Prasa over this contract was unlawful and we must recover the money.”

Previous investigations by the M&G showed that Auswell Mashaba, who owned Swifambo, may have used some of the proceeds of the train deal to purchase properties worth about R50-million, some of which were bought for cash.

About R80-million from the company also made its way to Angolan businesswoman Maria da Cruz Gomes, a friend of former president Jacob Zuma.

Vossloh and Stadler had not commented by the time of going to print.

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. But it comes at a cost. Advertisers are cancelling campaigns, and our live events have come to an abrupt halt. Our income has been slashed.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years. We’ve survived thanks to the support of our readers, we will need you to help us get through this.

To help us ensure another 35 future years of fiercely independent journalism, please subscribe.

Thanduxolo Jika
Thanduxolo Jika

Thanduxolo Jika is an investigative Journalist and Co-Author of We are going to kill each other today:The Marikana Story. The Messiah of Abantu.

Sabelo Skiti

Sabelo Skiti is an investigative journalist.


‘Tenderpreneurs’ block the delivery of protective equipment to schools

Protests by local suppliers have delayed PPE delivery, which according to the DBE, is one of the reasons the reopening of schools has been pushed back until June 8

‘Soon he’ll be seen as threatening, not cute’: What it’s...

There is no separating George Floyd’s killing from the struggles black people have faced ever since the first slave ships landed on these shores

How schools could work during Covid

Ahead of their opening, the basic education department has given schools three models to consider to ensure physical distancing

Press Releases

Mining company uses rich seam of technology to gear up for Covid-19

Itec Direct technology provides instant temperature screening of staff returniing to the workplace with no human contact

Covid-19 and Back to School Webinar

If our educators can take care of themselves, they can take care of the children they teach

5G technology is the future

Besides a healthcare problem Covid-19 is also a data issue and 5G technology, with its lightning speed, can help to curb its spread

JTI off to court for tobacco ban: Government not listening to industry or consumers

The tobacco ban places 109 000 jobs and 179 000 wholesalers and retailers at risk — including the livelihood of emerging farmers

Holistic Financial Planning for Professionals Webinar

Our lives are constantly in flux, so it makes sense that your financial planning must be reviewed frequently — preferably on an annual basis

Undeterred by Covid-19 pandemic, China and Africa hold hands, building a community of a shared future for mankind

It is clear that building a community with a shared future for all mankind has become a more pressing task than ever before

Wills, Estate Administration and Succession Planning Webinar

Capital Legacy has had no slowdown in lockdown regarding turnaround with clients, in storing or retrieving wills and in answering their questions

Call for Expression of Interest: Training supply and needs assessment to support the energy transition in South Africa

GIZ invites eligible and professional companies with local presence in South Africa to participate in this tender to support the energy transition

The best local and international journalism

handpicked and in your inbox every weekday