Prasa wastes billions in irregular spending

Cape Town – The Passenger Rail Agency of South Africa (Prasa) was fingered for irregular expenditure of over R14bn during the current and previous financial years, the entity’s annual report for 2015/16 shows. 

In the 2015/16 financial year, Prasa incurred irregular expenditure of R4.1bn, but an additional R9bn was identified in the same report that related to previous years. 

The irregular expenditure was attributed to a number of incidents, including: 

- The undisclosed conflict of interest by a member of Prasa’s bid evaluation committee; 

- Failure to do a feasibility study and testing of the market before considering a supplier contract; 

- Failure to follow a competitive bidding method when appointing a supplier;

 - Unfair advantage granted to a winning bidder;

- Contract extensions granted more than once without a competitive bidding process; and

- Payments made to a supplier without a contract. 

Prasa said in its annual report it was investigating all instances of irregular expenditure, which has still not been completed. National Treasury is currently investigating 100 cases, as well as an undisclosed number by Werksmans Attorneys, while the Hawks are probing an additional 39 cases. 

READ: Public Protector office clarifies Prasa probe order

Prasa also incurred "fruitless and wasteful expenditure" to the value of R255.3m in the year under review for among other things a lack of planning and failure to follow the correct process when former chief executive Lucky Montana was dismissed, which resulted in a salary payment in excess of R3m. 

According to the report Montana, who was dismissed in July 2015, received a salary package of R3.9m plus a further R458 000 in the latest financial year. 

DA spokesperson on transport, Manny de Freitas said in a statement, with individuals such as former Montana being paid out a salary of R3.9m for the rest of his contract after being fired in July 2015, it is "no surprise that Prasa has wasted billions unnecessarily".

Prasa has been mired in controversy for close to two years, following allegations of mismanagement, dodgy tenders, fraud and corruption.

In the Public Protector’s report, titled Derailed, people and entities linked to Montana were singled out for impropriety at the state-owned entity. 

READ: Montana widely implicated in Prasa report

Prasa has also recently admitted that it had a cash flow problem which resulted in late payments to suppliers. It attributed its financial situation to  the tough economic climate, operational challenges such as many coaches being out of service, train burnings, major service disruptions, fare evasion and vandalism of infrastructure. 

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
16.62
+0.9%
Rand - Pound
20.07
+0.9%
Rand - Euro
16.94
+0.8%
Rand - Aus dollar
11.61
-0.1%
Rand - Yen
0.12
+0.9%
Gold
1,787.63
+0.7%
Silver
20.62
+3.7%
Palladium
2,246.50
+5.4%
Platinum
944.04
+0.7%
Brent-ruolie
94.92
+0.8%
Top 40
63,771
+1.0%
All Share
70,266
+1.1%
Resource 10
65,045
+1.5%
Industrial 25
85,829
+1.1%
Financial 15
15,741
+0.4%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders