Leaked report reveals 'questionable' bids, lack of consequences at Prasa

A leaked report has revealed tender irregularities at the Passenger Rail Agency of South Africa (Prasa) which were previously sampled and analysed by the Auditor General. 

At a briefing in Parliament on Tuesday, DA MPs Manny de Freitas and Zakhele Mbhele unpacked the findings from the AG’s draft report for the state-owned rail entity’s 2016/17 financial year. The group's annual report has still not been released.

The DA made the 118-page draft report available to the media following the briefing.

After the briefing Prasa spokesperson Nana Zenani told Fin24 the company would not respond to queries about the leaked report, as it did not come from Prasa.

Zenani also said that Prasa would be releasing its 2016/17 annual report, but could not give a date as yet.

Tender processes

According to the DA, the 36 tenders sampled by the AG had irregularities in the selection of a service provider and followed a "questionable" bidding process. The AG also noted a lack of consequences for those implicated. 

The DA said on Tuesday it intends to lay charges against the Prasa board; both its new board and the previous interim board. "From the beginning, the interim board was not doing what it should have been, it was continuing with the cover-ups. It’ll be both boards because it was over that period," said De Freitas.

In addition, the DA will write to Transport Minister Blade Nzimande requesting the release of the annual report to the public.

The DA also called for the release of Treasury’s reports, which were finalised in December 2016. The Public Protector had outlined areas of further investigation by Treasury following the release of the 'Derailed' report in 2015.

The party also wants an action plan from the transport minister and Prasa executives for those implicated to face consequences.

De Freitas also called for Parliament’s portfolio committee on Transport to begin its inquiry into the transport sector. The committee previously agreed to it, but the process has not yet begun.

The draft report outlines Prasa’s losses for the period. As of March 31, 2017 - the end of the previous financial year -  the entity had incurred a loss of R1.7bn. Its accumulated loss amounted to R4.4bn, according to the report. 

The entity’s cash balance for the period was R12.3bn, but approximately R10.8bn is a capital subsidy ringfenced for capital expenditure.

The AG noted that excluding the capital amount, the group is in a net liability position. Having analysed Prasa’s financial position, the AG said that there was a "risk" that Prasa may have "difficulty meeting its short-term financial commitments to sustain operations".

Earlier, at a separate briefing between Treasury and the Standing Committee of Appropriations, Treasury’s deputy director general on public finance, Dr Mampho Modise, spoke on Prasa’s financial position for the 2017/18 financial year.

Prasa appears to be underspending on capital expenditure, Modise warned, and Treasury may reduce amounts allocated to Prasa if the entity does not pick up its spending on projects. 

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Yes. We need the money.
11% - 1368 votes
It depends on how the funds are used.
73% - 8867 votes
No. We should have gotten the loan elsewhere.
16% - 1959 votes