Prasa lost billions to inexperienced contractors, Zondo hears

Former Passenger Rail Agency of South Africa chair Popo Molefe made his third appearance at the Zondo commission of inquiry into State Capture on Friday, testifying about contracts worth billions that were awarded to contractors without the relevant skills or experience.

Judge Raymond Zondo, presiding over proceedings, heard that former CEO Lucky Montana was awarded lucrative locomotive procurement contracts to companies without the requisite qualifications in processes that were "fraudulent" and "corrupt", according to Molefe.

One contract worth R3.5 billion was awarded to Swifambo Rail Leasing, while another company, Siyaya Consulting Engineers, received some R900 million from Prasa between 2010 and 2011.

Other contracts, worth over R4 billion, were awarded to Siyangena Technologies. News24 previously reported that a R13.5m property owned by Montana was partly funded with money that could be traced back to a beneficiary of the Siyangena contracts.

News24 also previously reported that less than a week after Prasa made its first payment of nearly R500 million to Swifambo, the latter's managing director paid R14.3 million into the account of a lawyer who had introduced himself as an ANC fundraiser. The total would come to nearly R80 million.

According to Molefe, Swifambo was initially meant to carry out the leasing of locomotives to be used for passenger services and for routes in various metro areas. The board later found that the company did not meet Prasa's requirements and that its procurement was questionable.

"The investigation that we conducted demonstrated conclusively that that procurement process was fraudulent, corrupted, and that Swifambo itself, notwithstanding the fact that it did not meet the requirements set out in the RFP - they needed to demonstrate that they had skills necessary to carry out a program of the size and prominence that it was.

"Suddenly, Swifambo was allowed to offer a proposal on the manufacturing of locomotives, which was not part of the RFP right at the beginning. There were specifications around what would be needed by Prasa… what was to be leased or procured. [They] needed to comply with the rail safety regulators but they also needed to comply with the rail network of Transnet," said Molefe. 

'In all matters, they did not qualify'

Molefe told the commission that the company also needed to have qualified people to carry out the job, but this was not the case with the Swifambo contract.

"They needed to have sufficient qualified people to carry out the programme. It was a requirement that a bond deposit of 10% the value of the contract be paid up front. They needed to demonstrate that they would be able to implement the local content required… in respect of all of these matters, Sifwambo did not qualify," said the former chairperson.

Hidden subcontractor

In addition to finding that Swifambo was not qualified to carry out the project, the board also discovered that the contract was concluded and signed without disclosing the subcontractor.

According to Molefe, when Swifambo revealed its subcontractor, "the evidence that emerged shows that in fact the company that became the subcontractor of Swifambo… had nothing in its capacity to provide locomotives," said Molefe.

Going to the top illegally

Molefe also told the commission that certain key employees received top positions without being qualified – some claiming they had qualifications that did not exist. Molefe made particular reference to former executive Daniel Mthimkhulu, who was ordered to pay back Prasa over R5 million after lying about his qualifications in a bid to increase his salary.

Molefe added that both Montana and Mthimkhulu contributed to corruption that brought Prasa to its knees by providing false information.

"In order for Mr Mthimkhulu to get where he got, he lied at different times, where at one point he lied to the board and Mr Montana that a company… in Germany had offered him a job and he was going to leave the country.

"Mr Montana believed that Mr Mthimkhulu is an asset to Prasa and said 'Don’t go. We will pay you whatever that company was going to pay you'," said Molefe. The commission heard that the company did not know Mthimkhulu at the time, and had not offered him a job.

Molefe said Montana, too, had done the same, claiming that a company named Gypsum Fertilizer had offered him a job, adding that he would need a salary increase from Prasa in order to stay.

Martha Ngoye, head of legal, risk and compliance at Prasa, is expected to take the witness stand.

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