Lucky Montana withheld contracts from Prasa board, inquiry told

Popo Molefe described how when he was appointed board chairperson of the Passenger Rail Agency of South Africa (Prasa), group CEO Lucky Montana hugged him and spoke of his admiration of Molefe’s activism during the apartheid days. Little did Molefe know, as board chair, he would be left out of many crucial decisions, not even getting glimpses of important contracts. 

Molefe was speaking at the Zondo Commission of Inquiry into State Capture, on Thursday 12 March. This was his second day of testimony of his experience as board chairperson of Prasa between 2014 until 2017. 

Testimony related to the rail agency has been heard by the commission since Wednesday 11 March, with Molefe being the third person to testify on the matter. Tiro Holele, CEO of Autopax, which is a subsidiary of Prasa, and Jacob Rakgoathe, general manager of group compliance at Prasa, testified on Wednesday. 

Molefe said Montana told him that he would leave Prasa, but Molefe and the rest of his board wanted him to “stay on and provide leadership” during a major modernisation project.

What was clear throughout Molefe’s testimony was that the Board of Control was to provide oversight to the entity, but operations were largely the responsibility of the management team at Prasa. 

And oversight would be key for the modernisation project, which would see the procurement of trains, the installation of a resignalling programme and the upgrading of Prasa stations, which Molefe said would cost the entity R172-million over 40 years.

Evidence leader advocate Vas Soni asked whether the board had dealt with contracts for this modernisation programme.

Molefe said, “Most, if not all, the contracts had been concluded, with various original equipment manufacturers as well as other service providers. I’ve indicated those that were rolling out signalling systems – those contracts had already been concluded. 

“And to be more specific with regard to the locomotives, a contract had been concluded with a company called Swifambo, which was a South African company which later was to partner with Vossloh. I say ‘later’ advisedly because at the time when this contract was awarded, Swifambo, which had no experience in rail, either leasing or operating, did not have a subcontract with Vossloh, which had the capacity to manufacture the locomotives.”

Swifambo Rail Leasing, a front company for German company Vossloh, was a company that was supposed to provide 70 new locomotives to Prasa. When the locomotives arrived in South Africa they were too tall for the tracks. Besides this anomaly, the deal was filled with corruption. Funds went into the pockets of a number of people including Makhensa Mabunda and Auswell Mashaba. 

https://www.dailymaverick.co.za/article/2020-03-03-gravy-trains-r500m-from-failed-prasa-locomotives-deal-fraudulently-funnelled-to-trust-private-accounts-and-properties/

“As a new board chairperson, in order for us to exercise our proper oversight, we felt duty-bound to ask for detailed presentations on the contracts by the group CEO [Montana] and his executive team but we also then requested the actual contract so we could see precisely what the company was committing itself to, its obligations the company had in relation to that contract,” said Molefe. 

The former board chair told the commission that the contracts were not given, despite asking management for these contracts. 

“Meeting after meeting, the GCEO was reminded the board needed the contracts – they were not forthcoming,” said Molefe. “[Montana] didn’t say no, but wasn’t providing.”

Molefe stated that he did not know Montana was implicated in former Public Protector Thuli Madonsela’s interim Derailed investigation until this was revealed in the media. 

“We raised the issue with having to hear from the media that Prasa had been given an interim report which included a number of questions that the company had to respond to, and it came from the public protector, which the board was not presented with, and there’s now the situation around much when we were still asking for that report.”

Molefe said that after this, “Increasingly, the board was getting a sense the group CEO for that time period did not consider himself fully accountable to the board, he was actually beginning to question the validity and integrity of the board.”

Montana was implicated in the first volume of the Derailed investigation, but he resigned before any disciplinary action could be taken against him.

Montana has previously indicated he made a submission to the inquiry and was ready to spill the beans on what went on at the entity. There has been no official confirmation by the inquiry on whether Montana will testify.

Molefe is due to continue his testimony on Friday, 13 March, along with Martha Ngoye who is Prasa’s head of legal, risk and compliance. DM