Peters asks AG to probe Prasa

Johannesburg - Transport Minister Dipuo Peters has asked the Auditor General (AG) to probe alleged financial mismanagement at the Passenger Rail Agency of SA (Prasa).

"The minister has commissioned the AG's office to look into alleged violations of the Public Finance Management Act and other related statutes regarding contracts, engagement of service providers and payments to service providers including but not limited to issues that have received wide media coverage recently," spokesperson Tiyani Rikhotso said in a statement on Sunday.

Peters said given recent revelations and the outcomes of other processes linked to corporate governance, she believed an independent institution, such as the AG, was better placed to look into Prasa’s financial affairs.

"I have been in consultation with the board and senior management of Prasa in the past weeks. I have asked several questions, the responses of which largely inform my decision," Peters said.

"It is worth noting that the AG's office has previously produced reports regarding financial management at Prasa. I have thus requested the AG's office to look into those past reports and immediately attend to identified areas of concern."

Rikhotso said the Prasa board, management, staff and other parties were expected to co-operate with the AG’s investigation.

On Thursday, former Prasa group CEO Lucky Montana laid fraud charges against a number of Prasa executives.

One of the charges relates to a R209m tender to fence Prasa’s depots.

He opened a fraud, blackmail, and corruption cases against Prasa chair Popo Molefe, and two other Prasa executives.

Montana was fired from Prasa with immediate effect on July 16. He regards his dismissal as illegal.

His removal came amid reports that Prasa had paid R600m for 13 Afro4000 locomotives imported from Spain, which were apparently too high for local conditions and could damage overhead power cables.

Millions gone

On Friday, Netwerk24 reported more than R17m had disappeared from Prasa's coffers. It had apparently been spent on renting land that had been provided to the parastatal for free.

This was among the findings contained in a provisional report by the AG on Prasa's finances for the 2014-15 financial year.

The AG identified accounting errors in Prasa's books amounting to R4 billion, of which around R790m was irregular expenditure.

The R17m spent on rent relates to an operating lease for Prasa’s Gibela factory site, near Nigel in Gauteng. The Alstom-led Gibela consortium intends to build a manufacturing facility for Prasa's R51bn passenger coach tender on the site.

Ekurhuleni metro spokesperson Themba Gadebe told Beeld newspaper that a lease agreement between Prasa and the metro, concluded in November last year, stipulated that Prasa was exempted from paying rent for the first two years of the lease period. This was in exchange for the considerable economic benefits the new facility would bring to the metro.

Public Protector Thuli Madonsela is busy finalising a report into Prasa. She said on Friday that she has delayed the release of the report to consider further inputs her office received.

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