As Dries van der Walt pulls out of Prasa’s rail unit, SOE execs keep the revolving exit door spinning ever faster

Dries van der Walt’s departure as acting chief executive of the Passenger Rail Agency of South Africa’s (Prasa) rail unit brings to 10 the number of senior executives who have left struggling state-owned enterprises since February 2019. He resigned and left at the end of July, after 29 years with the rail operator, Prasa announced in a note to staff on Wednesday morning.

But the revolving executive door has been swinging fastest at head office Prasa House. Prasa has been the worst affected by the executive exodus of all SOEs. It has lost five executives in 2019 to both resignations and dismissals, while five others remain either on suspension or special leave. In the past four years, Prasa has appointed seven group interim chief executives, including the incumbent, Nkosinathi Sishi.

All but three members of the Prasa executive committee are interim appointments. The utility is yet to fill the key operational vacancies of chief financial officer, human capital management, group chief procurement officer and chief security officer. In addition to these, at least four other executives have either been placed on suspension or special leave.

Chris Mbatha, the chief information officer, is undergoing a disciplinary hearing on charges that have not been publicly specified. He was placed on special leave in March, then suspended before being charged. Former corporate real estate solutions chief Tara Ngubane resigned in the middle of her disciplinary hearing, after being placed on suspension in March.

Legal head and risk and compliance officer Martha Ngoye remains on special leave after almost three months, as does Tiro Holele, a strategy executive in the office of the CEO. They are yet to be charged with any offence or to be told why they have been removed from work.

Lindikaya Zide, another former acting chief executive and former company secretary, was fired in July, having been found guilty of “maladministration and contravention of company policy”.

While Prasa acknowledged receipt of 15 Daily Maverick questions seeking comment on Wednesday, it did not provide answers to any of them.

Among the questions, we wanted to know why so many executives were being fired or kicked out of office.

Earlier in August, Prasa also failed to answer a list of 16 questions on a proposed R5-billion infrastructure investment project that is said to flout all good corporate governance processes.

Some insiders at the utility, however, have strong views on the cost of the instability.

“What this board has done is to ensure that the place has all these critical executive positions vacant, which allows them (board members) to exert control over the institution,” said a senior employee who was granted anonymity by Daily Maverick for fear of reprisals.

The planned R5-billion outsourcing of infrastructure investments to the Development Bank of Southern Africa is what other Prasa employees point to as an example of a board gone rogue and lining up connected individuals to benefit from fees extracted from the railway operator.

If the executive instability was not enough, the whole board of non-executive directors is an interim one. Prasa last had a permanent board of directors at the expiry of its three-year term in 2017, when Popo Molefe was chairman. Bizarrely, former transport minister Blade Nzimande opted for an interim board in April 2018, which avoids any form of scrutiny as there are neither interviews nor any vetting of interim board members. Khanyisile Kweyama was appointed interim chairman in 2018, for an initial period of 12 months, which was extended earlier in 2019.

The exits at the executive suites of the wider family of state-owned entities have been equally busy.

On 1 August Mark Barnes resigned as chief executive officer of the South African Post Office with immediate effect, after almost three years with the postal and financial services utility. He resigned after disagreements over the strategy and the future of Postbank with the Post Office’s shareholder, the government.

Barnes, banker and chairman of the JSE-listed Purple Group, had been hired to turn around the fortunes of the Post Office, which had been crippled by a series of labour strikes and financial losses that had rendered the utility unable to fulfil its basic mandate of delivering mail. Announcing his departure, the board said Barnes had joined it when it was “on its knees financially and operationally”.

The Post Office had run out of funds to pay both wages and suppliers in 2016 and had outstanding debt of almost R4-billion. He left behind R1.8-billion cash in the bank, and all debt had been settled, with the help of a R3.5-billion government bailout. His single biggest achievement was to win the contract for the Post Office to pay out social grants to millions of recipients, which brought in much-needed revenue and saved the government billions in distribution fees. The Post Office said under Barnes’ stewardship, it was on track to break even by 2021.

Barnes’ resignation followed shortly after the departure of Vuyani Jarana from South African Airways (SAA).

In his resignation letter, Jarana slammed the stifling red tape and slow decision-making SAA had to navigate in a fiercely competitive industry. As an entity of the state, SAA’s reporting lines straddle two government departments, the National Treasury, which is the custodian of the Public Finance Management Act (PFMA) that governs all state-owned entities, and the Department of Public Enterprises, the shareholder ministry.

SAA has long run out of funds to meet all its obligations, including the payment of wages and suppliers. It has for many years been running on loan extensions, debt guarantees and cash bailouts from the government.

Jarana, who had joined SAA in November 2017 from Vodacom Group, quit only two weeks after Eskom announced the resignation of its chief executive Phakamani Hadebe. He quit for health reasons and to focus on his family, Eskom said of Hadebe.

Like both SAA and the Post Office, Eskom is also struggling under the weight of a crippling debt pile, more than R400-billion, a bloated and militant workforce, corruption and declining sales.

The departure of Prasa’s Van der Walt makes him the fifth senior executive to leave the stricken passenger rail operator this year. Sibusiso Sithole resigned in February, only nine months after his appointment as acting chief executive. Sithole had been appointed in June 2018 to act in the position for a period of 12 months, but quit ahead of schedule when he and the board “agreed on mutual separation”, said Prasa on 28 February. Sithole had replaced another acting chief executive, Lindikaya Zide.

Van der Walt confirmed he had quit. In a terse message to Daily Maverick, Van der Walt said: “I can confirm I have (applied) for early retirement. I am however not prepared to discuss or initiate discussions around my retirement.”

While Prasa has been in no mood to discuss its executive exodus, its passengers have been feeling the effect of the massive instability. Last month transport minister Fikile Mbalula lambasted the board for poor performance.

He lamented the fact that the utility had achieved only 31% of its own performance targets. When Prasa reports its financial results for the year ended March, it will show its performance has deteriorated to the lowest level yet, show internal management reports seen by Daily Maverick. Whereas last year on-time train performance fell to 68% of scheduled train movements, this year it has dropped even further. The 41% on-time performance would be a new low for Prasa.

Passengers have deserted the utility in droves. In the first quarter of the 2020 new financial year, the three months to June, Metrorail conducted only 40.7 million paying passenger trips. The target for the quarter was 59.9 million. DM