- Prasa told Parliament that it would prioritise consequence management against employees that allowed needless deviations in spending.
- Prasa chair Leonard Ramatlakane said all critical vacancies would be filled by people with the required skills.
- Former executives won their court bid to have the termination of their contracts declared unlawful.
The Passenger Rail Agency of South Africa told Parliament on Tuesday that previous leadership at the entity were behind a cascade of public spending deviations, which the current leadership was now tasked with cleaning up as they work to get the rail agency back in shape.
Prasa has undergone a number of changes in leadership over the past few weeks, including the appointment of former Member of Parliament for the African National Congress Leonard Ramatlakane as the entity's chair.
The entity is also embroiled in a battle with former executives whose termination of contract Prasa announced in January and February.
However, former chief operating officer Nkosinathi Khena, former executive for risk and legal compliance Onica Ngoye and former Autopax CEO Tiro Holele succeeded in appealing their contract terminations at the Labour Court on Tuesday.
Prasa said in a statement released on Tuesday afternoon that they would appeal the ruling and file papers on Wednesday. This battle could throw a spanner in the works of current leadership as they hope to fill vacancies at Prasa.
Briefing Parliament's Standing Committee on Public Accounts, Ramatlakane said he had studied the findings of Special Investigating Unit reports into the agency's applications to deviate from public spending guidelines when procuring goods and services.
"The deadline for the special investigation is the end of February 28, but they need until March 15 to consolidate the issues. After the SIU presentation to SCOPA, there was an omission that Prasa will recover R26 million," said Ramatlakane.
Ramatlakane said the permanent appointment of Prasa CEO Zolani Matthews would go a long way in giving the agency the capacity to function at optimum levels as leadership looked to get to the bottom of past truant spending.
"We are hard at work to look for a group CEO. That has happened and Cabinet finalised that appointment and the announcement was made on Saturday. Now we are formalising the difficult tasks that must be done so the CEO can start running," Ramatlakane said.
Why Prasa deviates
Prasa group chief procurement officer Willie Mathebula said for a number of programs, many of the bidding processes did not go out because of the pandemic. He said Prasa was planning for a number of tenders to get bidders for the modernisation and rehabilitation programs.
"There was an appointment of the Development Bank of Southern Africa as an implementing agent for capital programme, with a contract value of R5.4 billion. This was for the rehabilitation of the rail network and modernisation. We were urged to go through a competitive bidding process," said Mathebula.
Mathebula told SCOPA that in the majority of the applications for deviations where National Treasury did not approve the deviations, Prasa did not move ahead with that deviation or its spending.
"Prasa sought a deviation for surplus rolling stock commodities with a single source supplied by Transnet for a contract value of R280 million. The deviation was approved initially but after Treasury later requested further information R40 million has been spent. It was ultimately not supported by National Treasury but for some reason Prasa went ahead.
"Prasa implemented this project prior to applying for deviation from National Treasury. Consequence management is in progress," said Mathebula.
Mathebula said another tender, which was given to Premifield, saw services rendered but the deviation was pursued to maintain the program until the project is fully realised.
"In the leasing of locomotives for Main Line Passenger Services and for a period of six months for a contract value of R66 million, Prasa needed to finalise the tender process and got conditional support by National Treasury provided that the tender was fast tracked," he said.
He said in the station modernisation programme in Isipingo, Molemo Consultants, Nkambule & Associates, Iliso Consultants and Development Engineering Consultants were appointed. Expenditure had already been incurred when application for deviation was made to National Treasury. Five officials have been suspended pending SIU investigation, Mathebula said.
"A panel was appointed for R275 million. After the expenditure was incurred, they approached National Treasury seeking deviation. Treasury pointed out that the spending was already incurred and instructed Prasa to request a condonation and the process involves an investigation to find out who is responsible and that is what the SIU has been working on," he said.
Prasa also had a project for sinkholes to be fixed for R24 million, along with the upgrading the drainage and sinkhole mitigation works at and near Centurion station. Mathebula said a deviation was sought because it would take Tiro Civils less days to complete outstanding work.
Prasa did not proceed with the project as Treasury did not approve and an open tender process is being implemented.
SCOPA chair and MP for the Inkatha Freedom Party Mkhuleko Hlengwa took issue with a lack of clarity on some of the deviation applications that Prasa made to National Treasury.
"The application for a deviation to National Treasury being declined and Prasa complying does not mean the application was not done. We want to get an understanding as to why Prasa applied for the deviation in the first place when the law is clear," said Hlengwa.
Hlengwa also pointed out to Mathebula that he was at the National Treasury Office of the Chief Procurement Officer, which meant he was familiar with much of the spending deviations he was trying to explain to Parliament, likening the situation to "trying to catch a javelin that you threw".
"There is a potential conflict of interest that arises when you present to us about these deviations and Prasa engagements with National Treasury, given that you were seconded to join Prasa from Treasury at the Office of the Chief Procurement Officer. This is not necessarily personal," Hlengwa said.
SCOPA member and African National Congress MP Bheki Hadebe asked Ramatlakane if all the key positions flagged by the office of the Auditor General in Prasa's annual report had been filled at a board level.
Ramatlakane said: "We hope by the new year we complete our structural review and fill the posts. We also want relevant skills in the position and not just warm bodies. We would like to finalise the appointment of the CEO before the end of next week".
SCOPA member and Democratic Alliance MP Alf Lees said the failure to update Parliament or act upon on already concluded investigations into financial management smacked of a lack of urgency.
Lees asked what action had been taken against officials and employees that failed to prevent deviations and inappropriate spending.
Ramatlakane said some officials responsible for this left the employ of the agency, but that the board would ensure accountability for those still working at Prasa.
Loco for locomotive
On the ongoing curious case of locomotive procurement at Prasa, board member Matodzi Mukhuba said the agency procured 13 locomotive from Stadler.
Mukhuba said some of the locomotive are still in Spain so that they can be checked if they still need modification before they can be delivered to South Africa.
Board member Fana Ramutla said there were originally 17 locomotive procured and the R2.6bn paid went to Swifambo. Liquidators put the locomotive on auction.
"The proposed commercial agreement is R1.1 billion which is the 23 locomotive manufactured and 13 were delivered to South Africa, complete with two years maintenance, training in Spain and SA by Stadler and further maintenance for another two years," said Ramutla.
Labour court fight
Meanwhile the Labour Court in Johannesburg handed judgement on Tuesday declaring the termination of employment of Khena, Ngoye and Holele. Prasa released a statement on Tuesday afternoon saying it would appeal the ruling.