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OUTA Lays Charges Against PRASA’S Former Board

The Organisation Undoing Tax Abuse (OUTA) has laid criminal charges of corruption and fraud against the former board of the Passenger Rail Agency (PRASA) over the disastrous locomotive contract.

The charges were laid on 25 October at the Randburg police station and are supported by an affidavit by OUTA COO Ben Theron.

PRASA awarded the contract to local company Swifambo on 25 March 2013, for the purchase of 20 Euro 4000 locomotives and 50 EuroDual locomotives for about R3.5 billion.

In 2015, Popo Molefe was appointed as PRASA board chairman and successfully challenged the deal in the high court based on the Public Protector’s report and subsequently issued demand to Swifambo for the return of the R2.65 billion already paid. Swifambo is appealing the court judgment.

“PRASA was supposed to be replacing the trains for inter-city services. They’ve paid Swifambo R2.65 billion but received locomotives unfit for purpose. This negatively affects poor citizens and commuters directly. It’s about time those responsible for this mess were held accountable and funds returned,” says Theron.

At the time of the deal, PRASA was run by then Group CEO Lucky Montana, who was also a board member, and the board was chaired by Sfiso Buthelezi, who is now Deputy Minister of Finance.

“It is a terrifying prospect that a board chair with this track record was appointed as Deputy Minister of Finance and the chair of the Public Investment Corporation. If he cannot manage a locomotive deal, how can he manage the PIC or the national Budget?” says Theron.

The other board members at the time were: Zanele Gaza, Xolile George (CEO of the South African Local Government Association), Namhla Mxenge, Mawetu Vilana, Marissa Moore, Thulani Gcabashe, Kuben Pillay and Mfenyana Salanje (now deceased) and the company secretary was Lindikaya Zide.

OUTA asked the police to investigate the charges against all the surviving members of that board.

The irregularities and illegalities in the deal had been highlighted in 2015 investigations and were not disputed in the high court case which was finalised in July 2017. The locomotives delivered were unsuitable for South African railways, Swifambo didn’t have a valid tax clearance, didn’t have any relevant work experience or financial backing and was effectively fronting for Spanish company Vossloh. PRASA had intended to lease the 70 locomotives but ended up buying them.

The PRASA board of control (BOC) was legally responsible for approving such deals and knew that procurement procedures had not been followed.

“The delivery of the defective locomotives could have been averted had the BOC not approved the bid. The agreement, in turn, resulted in financial loss to PRASA as defective locomotives had been delivered,” says Theron in the affidavit.

The then board made matters worse by failing to report the known procurement irregularities to law enforcement authorities, he said.

In July 2017, OUTA filed papers in the Pretoria High Court to join Molefe’s application to compel the Hawks to investigate the corruption at PRASA and the National Prosecuting Authority to guide the investigations. Molefe’s term on the board ended on 31 July and OUTA’s case is set to be heard on 6 November.

OUTA is a proudly South African non-profit civil action organisation, comprising of and supported by people who are passionate about holding government accountable and improving the prosperity of South Africa.

Additional information and media:

Soundclips with comment on this are available here:

Ben Theron, soundclip in English

Ben Theron, soundclip in Afrikaans

Dominique Msibi, OUTA Portfolio Director for Special Projects, soundclip in isiZulu

Agnes Mbaye, OUTA intern, soundclip in Sepedi

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