E-toll contractors accused of corrupt payments
Electronic Toll Collections and its Austrian owner Kapsch TrafficCom are accused of alleged corruption and bribery in two contracts. OUTA has passed on information on this to the NPA. Meanwhile, motorists still wait for the long-promised Government announcement on the future of e-tolls.
E-toll contractors accused of corrupt payments
The South African public has yet to see the e-toll impasse solution promised by Government for nearly two years. Over the last few days the Minister of Transport, Fikile Mbalula, gave another undertaking that an announcement on the future of the controversial scheme will be made before the end of this financial year, which is 31 March 2021. This has been promised since Cabinet set up a committee in July 2019 to find a solution. (For more on this promise, see the section “The future of e-tolls: Government’s decision promised in July 2019 still awaited” on OUTA's e-tolls webpage.
Whilst we await this long-overdue announcement by the Minister, OUTA announces that it has received information of alleged corruption and bribery by the e-toll collection company and its majority owner, and how the owner initially ignored calls for an investigation.
In the first matter, the South African e-toll operator Electronic Toll Collection (Pty) Ltd (ETC) allegedly paid a South African company called ProAsh an inexplicable amount of R10m over a three-year period, starting three months after winning the e-toll collection contract and with no apparent return for these payments.
In the second matter, the Austrian business Kapsch TrafficCom, which owns ETC, allegedly laundered a US$5.5m bribe to Zambian officials through its South African bank account.
ETC is majority owned by Kapsch TrafficCom AG, which is based in Austria, and its subsidiaries Kapsch TrafficCom AB (based in Sweden), and TMT Services and Supplies (Pty) Ltd. In September 2009, ETC was granted the contract to build, operate and maintain the Gauteng Freeway Improvement Project open-road tolling system, commonly referred to as Gauteng’s e-toll system. The operations part of the contract was switched on in December 2013 when the e-tolls went live, and is still running following various extensions to the five-year contract.
We believe these allegations of corruption, bribery and maladministration were reported to the ETC board and executive management of Kapsch TrafficCom in both South Africa and Austria in mid-2019, but were apparently initially ignored. In addition, these allegations were also reported to the SAPS, the US Department of Justice and the Vienna Stock Exchange (where Kapsch is listed), with no feedback from the authorities.
In September 2020 OUTA was approached by the whistleblower who had reported these matters to the authorities and was concerned about the lack of action, to ensure these matters do not get swept under the carpet. OUTA investigated, then assisting in the compiling of an affidavit with all the available information and evidence. This was then submitted by hand to the National Prosecuting Authority (NPA) in terms of Section 27 of the National Prosecuting Act (this section allows the reporting of information on specified offences directly to the NPA investigating director through an affidavit).
In November 2020, OUTA submitted this report to ETC, which then appointed ENS Africa’s forensics department to investigate the allegations. OUTA has since met twice with the investigation team of ENS and requested follow up correspondence on these issues from ETC. However, ETC has made it clear that although OUTA reported the matter to it and provided evidence and input to the investigators, ETC is not obliged to share the investigation findings with OUTA or the public.
To date OUTA has not been informed of any findings in this serious matter.
OUTA believes that the questionable payments by ETC to ProAsh and the indications that Kapsch paid a significant bribe to secure the Zambian contract raise questions about the awarding of the e-tolls build-operate-maintain contract which SANRAL awarded to ETC in 2009.
With the ongoing and mounting controversies related to the e-toll fiasco, OUTA eagerly awaits the announcement of Minister Mbalula on the future of e-tolls. Furthermore, OUTA believes that these latest revelations, along with others that OUTA has raised regarding the ETC tender and contract values as well as the inflated GFIP construction costs, warrant the introduction of an independent inquiry on the e-toll matter.
A summary of the allegations is provided below.
The payments by ETC to ProAsh
• In September 2009, ETC won the Gauteng e-toll contract. Three months later, in December 2009, ETC started making monthly payments to the value of R279 999.96 for the next 36 months to ProAsh Property Investments (Pty) Ltd (trading as ProAsh Business Services). The total of these payments amounted to just over R10m. ProAsh was supposedly meant to assist ETC in managing their Qualifying Small Enterprise (QSE) and Exempt Micro Enterprise (EME) subcontractors, to achieve a contract participation goal established by SANRAL. However, there is no evidence that any such management services were delivered by ProAsh to ETC.
• OUTA is in possession of bank records for some of these transactions.
• These allegations were raised with the ETC board and Kapsch TrafficCom AG. There was no action taken.
Kapsch and the Zambian payments
• In August 2017, Intelligent Mobility Solutions (IMS), a company 50% owned by Kapsch TrafficCom AG, won a concession from the Zambian government to design, install and operate systems for traffic surveillance, vehicle speed enforcement, road safety education and intelligent traffic solutions. The other 50% of IMS was owned by a Zambian business Lamise Trading Ltd, headed by Walid El Nahas.
• Kapsch auditors in South Africa became suspicious about payments made by the South African Kapsch operation, for seemingly fraudulent invoices submitted by Lamise. Information provided shows that Kapsch paid El Nahas US$3.5m as a “pre sales cost” into his personal account. Kapsch later paid El Nahas another US$1.1m to buy 1% of his shares, which in turn gave Kapsch a 51% shareholding in the Zambian operations. Later another US$1.9m was paid to El Nahas for unknown reasons. These payments were transferred from Europe to Kapsch’s South African bank account and from there these funds were transferred to Zambia.
• The Zambian government refused to pay on the IMS contract, due to contractual problems.
• In April 2019, El Nahas allegedly told ETC and Kapsch officials that the payments were used to pay bribes to the Zambian authorities and to pay security officials to arrest a minister he had clashed with. He also told the group that the signatures on contracts between his company Lamise and Kapsch were forged. El Nahas was subsequently arrested in February 2019 in Zambia and charged with corruption-related offences, as was a Zambian Minister.
A soundclip with comment by OUTA CEO Wayne Duvenage is here.