The Organisation Undoing Tax Abuse (Outa) has laid criminal charges of corruption and fraud against former board members of the Passenger Rail Agency of South Africa (PRASA) over its “too tall” locomotive contract.
PRASA awarded a contract to local company Swifambo in March 2013 for the purchase of 20 Euro 4000 locomotives and 50 EuroDual locomotives for about R3.5-billion.
“PRASA was supposed to be replacing the trains for inter-city services. They’ve paid Swifambo R2.65-billion but received locomotives [that are] 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,” Outa COO Ben Theron said in a statement.
At the time of the deal, PRASA was run by then group CEO Lucky Montana, who was also a board member, while Sfiso Buthelezi, who is now Deputy Finance Minister, was PRASA’s chairperson.
“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,” said Theron.
He added that the PRASA board had been 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 board not approved the bid. The agreement, in turn, resulted in a financial loss to PRASA,” Theron noted.
The irregularities surrounding the deal had been highlighted in 2015 investigations and were not disputed in a case that was heard in the High Court and finalised in July.
Popo Molefe, who was appointed PRASA chairperson in 2015, successfully challenged the deal in the high court, based on a report published by the then Public Protector Thuli Madonsela. Following the court judgment, PRASA demanded that Swifambo return the R2.65-billion already paid.
Swifambo is appealing the court judgment.
In July, Outa filed papers in the Pretoria High Court to join Molefe’s application to compel the Hawks to investigate the alleged corruption at PRASA and for the National Prosecuting Authority to guide the investigations.
Molefe’s term on the board ended in July and Outa’s case is set to be heard on November 6.