Mbalula dissolves Prasa interim board, places it under administration

Transport Minister Fikile Mbalula has dissolved the interim board of Prasa and placed the struggling state-owned entity under administration with immediate effect.

Bongisizwe Mpondo has been appointed as its administrator. Mbalula on Monday described Mpondo as an "entrepreneur who has an extensive record in corporate governance and working with public institutions to improve operational efficiencies". He has served on the boards of the East London Industrial Development Zone, South African Express and South African Airways.

Mbalula also announced that the secondment of the acting group CEO, Dr Nkosinathi Sishi, has been withdrawn with immediate effect.

Mbalula on Monday said the the appointment of the administrator, which was supported by Cabine, would provide a "quick turn-around times in decision-making with a view".

The passenger rail agency has been rocked by allegations of administrative inefficiencies and corruption involving top executives, with former transport minister Blade Nzimande once suggesting that it had for a long time been used as as an ATM.

An attempt to turn around the company has led to suspensions of numerous senior managers implicated in allegations of improper, irregular, corrupt, fruitless and wasteful expenditure.

In October, the Auditor General of South Africa, Kimi Makwetu, gave Prasa a disclaimed audit opinion for the 2018/19 financial year, citing the regression on instability of executive management, and a lack of accountability by senior officials to address findings made by the AG over the years.

The rail agency has also come under scrutiny for not spending its budget allocation for required capital projects. 

Mbalula on Monday said that most of the irregular financial conduct disclosed in the group's financial statements was caused by non-compliance with supply chain management prescripts and payments "where the value derived could not be justified".

Prasa's financial shortcomings became pronounced in the 2015/16 financial year. In the the 2017/18 financial year the entity changed boards four times, which perpetuated instability, said the minister. 

Irregular expenditure in the 2017/18 financial year stood at R23.4bn, an increase from R19.6bn the previous year.  The appointment of the an interim board in April 2018, which was meant to help steer the company in the right direction, has not yielded positive results. 

"Merely replacing an interim board with a permanent Board will not address the deep-rooted fault lines at Prasa," Mbalula said.

"Since the interim Board’s appointment, the affairs of the entity have not improved but have regressed instead as evidenced by the disclaimer, following two financial years of stagnant audit outcomes position of 'qualified with findings'."

Early this month, Mbalula told members of Parliament that a permanent chief executive officer and other critical executives would soon be appointed, following months of leadership instability. Interim CEO Sibusiso Sithole quit in February, after eight months on the job. 

He stressed that he still had faith in the work of a "war room" he established in August to improve the efficiency of the state. The war room, which is run by a technical task team, is tasked with assessing the day-to-day service performance of the company and coming up with recommendations on how to resolve challenges. 

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