https://www.engineeringnews.co.za

Things not 'hunky-dory' at Prasa, admits acting CEO

1st December 2016

By: African News Agency

  

Font size: - +

The scope of a forensic audit into the embattled Passenger Rail Agency of South Africa (Prasa) has been widened and now includes probes into R24-billion in contracts, the rail company’s acting chief executive Collins Letsoalo told MPs on Wednesday.

Letsoalo, Prasa board chairman Popo Molefe, and other members of the state-owned company’s executive were called to Parliament’s standing committee on public accounts to answer questions on R13.9-billion in irregular expenditure identified by the Auditor-General and another R255-million in fruitless and wasteful expenditure.

Letsoalo and Molefe could do no more than admit to collapsing systems, specifically with regard to procurement practices, placing most of the blame on former board and executive members.

There were many suspect deals involving more than just the R13.9-billion identified by the AG being probed by Werksmans Attorneys which has been contracted to conduct the probe for Prasa.

“We have problem in Prasa. We’re sorting it out. It’s not an overnight thing. I’ve been in Prasa for five months, it’s difficult…when systems collapse, they really collapse,” said Letsoalo.

“The R24-billion is contracts under investigation, not the ones found to have something.”

In at least four cases “elements of criminality” were identified, said Letsoalo, adding they’ve been handed over to the Hawks.

MPs pushed hard for answers on why Prasa had weak internal controls, with ANC MP Nthabiseng Khunou calling Prasa “a sinking ship”. Letsoalo had no choice but to admit that risk mitigation strategies were either absent or very weak.

“It’s something we’re working on. We believe there’s not been a lot of work in doing that functions…and it has been compromising various areas,” he said.

Letsoalo said the irregularities were as a result of a combination of factors, conceding everything was not “hunky-dory” at the state-owned rail agency.

“Policy was there and it was not adhered to in most instances.”

He said in some instances they were also plugging policy gaps.

“In areas where internal controls have collapsed….the effectiveness of internal audit becomes compromised, and yes it was compromised. I don’t want to create impression everything is going well.”

Lesoalo said most of the irregular expenditure incurred this past financial year was as a result of contracts signed as far back as 2012 while former chief executive officer Lucky Montana was still CEO.

Montana was fired last year after it was revealed that a massive contract with Swifambo Rail to provide 70 new locomotives to Prasa was irregular as the trains were not suitable for South Africa’s rail network. Prasa has lodged a lawsuit claiming back R2.6 million already paid to the company.

Molefe told MPs that there were attempts to destroy documents to prevent investigators from finding a paper trail.

“In our detailed investigations we will show there was in the past an attempt to destroy documents. They were actually destroyed, some of them hidden before…,” said Molefe.

“I must hasten to say we identified a serious weakness and or information management within the organisation and it is one of the challenges as we deal with internal controls and internal systems we are dealing with.”

Economic Freedom Fighters MP Ntombovuyo Mente said Prasa was being used as “a vehicle for corruption”.

“It’s corruption. Either people are ballooning prices or giving tenders to their friends…who signs the cheque out? Is there value for money?”

Letsoalo said while they were trying to regularise irregular expenditure, it would not be an overnight process. He said the sluggish response to irregular, wasteful and fruitless expenditure by the previous executive had led to people getting away with signing contract not in line with the law or treasury regulations.

“There was a slow response from management in terms of consequences and in terms of implementing the PFMA [Public Finance Management Act].”

Letsoalo said they’ve instructed Werksmans to complete the forensic audit within the next six months.

Edited by African News Agency

Comments

Showroom

Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...

VISIT SHOWROOM 
Alco-Safe
Alco-Safe

An unmanned breathalyser that is made to be tough and simple to use. Can be used in any environment for operator-free breathalyser testing.

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.088 0.137s - 174pq - 2rq
Subscribe Now