Prasa corruption ‘witch hunt’ investigations get pushback from MK Party MPs

19 Sep 2024

The Special Investigating Unit presented its findings to Parliament on Wednesday.

Umkhonto Wesizwe (MK) MPs pushed back against investigations into Passenger Rail Agency of South Africa (Prasa) contracts worth billions of rand red-flagged by the Zondo Commission when the Special Investigating Unit briefed Parliament on its “deep dive” into the rail agency on Wednesday.

A briefing took place before the Standing Committee on Public Accounts with regard to the Special Investigating Unit investigation into corruption in Prasa’s contract with Siyangena. MK’s David Mandla Skosana said that an independent engineer’s report ordered by the North Gauteng Division of the High Court showed Prasa got a good deal.

“Why do you continue with the witch hunt if it’s true?” asked Skosana. He then added, “Because some people view this investigation as a witch hunt. I’m not saying it’s a witch hunt.”

Special Investigating Unit head Andy Mothibi and lead investigator Zodwa Xesibe told the committee that following Siyangena winning the R5.6-billion contract from Prasa in 2012, R27-million was moved through subsidiaries and front companies to “disguise gratification to the former employees of Prasa”.

Additionally, the largest portion, R557-million, was paid to a company owned by “a politically exposed person”.

The Special Investigating Unit investigators said they did not want to name the people they had in their sights as the investigations were still under way and they had not been charged.

Follow the evidence

The SIU’s investigations have been proclaimed by President Cyril Ramaphosa in order to follow the evidence that was placed before the Judicial Commission of Inquiry into Allegations of State Capture during former president Jacob Zuma’s presidency, known as the Zondo Commission.

Featuring prominently in the Zondo Commission report are Lucky Montana (Prasa CEO from 2010 to 2015), Sfiso Buthelezi (Prasa board chairperson from 2009 to 2014) and the two largest Prasa contracts under investigation, to companies Siyangena and Swifambo.

The Special Investigating Unit told the Standing Committee on Public Accounts that for the 2010 soccer World Cup, Prasa contracted Siyangena to upgrade seven train stations with high-speed access gates. This was extended to a further 69 stations. These access gates were not installed in time for the World Cup, and still do not work as designed.

Then in 2013, Siyangena was contracted to install an Integrated Access Management System at a further 30 stations. In all, it had a R5.6-billion contract with Prasa – awarded irregularly – of which it received R3.3-billion.

Xesibe told the Standing Committee on Public Accounts that a Siyangena subsidiary then paid R11-million to “company E”, which paid “company F”, which bought a property for this amount in the name of the former Prasa group CEO.

Xesibe said a second property worth R1.8-million was bought by “the former GCEO”, revalued at R3-million, and then sold for R6.8-million to “company G” which was “linked to Siyangena and its group of companies”.

Montana is known to have at one point owned six upmarket properties.

The second-largest Prasa contract covered in the Zondo Commission report was R3.5-billion to Swifambo for the acquisition of 88 locomotives over five years.

Xesibe told the standing committee that Swifambo (which did nothing but channel funds) was paid R2.65-billion and delivered only 13 of 88 locomotives that were supposed to be bought from the Spanish arm of German company Vossloh, which received R1.87-billion in total.

‘Unknown shelf company’

Ferial Haffajee and Ivor Chipkin in their book Days of Zondo describe Swifambo as “an unknown shelf company owned by unknown businessman Auswell Mashaba… and Angolan businesswoman Maria da Cruz Gomes”, who was later reported to be a friend of Zuma and who channelled R79-million from the contract to the ANC.

Xesibe said the Special Investigating Unit had found a payment of R110-million to a company that had a director who had been a chairperson of the Prasa board.

She said a payment of R1.5-million had also been paid to a company that shared a director with Swifambo at the time of payment.

The Special Investigating Unit was also investigating the relationship between “the former GCEO of Prasa”, the director of a company that received “most of the monies” from Swifambo, and the Swifambo director.

Insurance fraud

Standing Committee on Public Accounts members seemed taken aback when Xesibe told them Prasa was paying a R30-million per month insurance premium, but the underwriter only covered claims above R100-million, and the majority of claims fell below this value.

She said the Special Investigating Unit was also looking into fraudulent liability claims, with Prasa having paid R1.5-billion for 299 insurance liability claims between 2012 and 2024.

The unit is investigating 226 files from Prasa’s insurance division, with 76 matters undergoing legal review before being submitted to the Civil Litigation Unit to recover money due to: the incidents never having occurred; injuries not matching up to the claims; claimants unaware summons were issued in their names; and claims where there are no records of hospital admission.

Also, referrals to the National Prosecuting Authority and the Legal Practice Counsel for fraud and misconduct will be made.

The Special Investigating Unit is also investigating and verifying 1,277 ghost employees to whom Prasa was paying R20-million a month; maladministration and governance issues; the contracting of services such as security, maintenance, early detection cable theft solutions, supplier development, travel services, and forensic services such as Werksmans Attorneys contracted to investigate contracts worth R10-million or more as ordered by former public protector Thuli Madonsela in her 2015 “Derailed” report on Prasa.

MK MPs push back

Xesibe reported the completed findings related to Werksmans Attorneys, which was one of 13 auditing and legal firms contracted to investigate corruption in Prasa in 2016.

She said Werksmans, who were paid R170-million, were irregularly appointed by the Prasa board, but “value for money was realised”.

This appeared irksome to MK MPs Skosana and Thalente Kubheka.

Skosana said former board chairperson Popo Molefe (who testified before the Zondo Commission on how his efforts to clean up Prasa were thwarted by political intervention) was responsible for the irregular appointment of Werksmans.

He said Werksmans were paid “a whopping R400-million for the unlawful and irregular contract, but there’s no consequences”.

“Some people could believe there’s a double standard,” he said.

“When are you going to the (Special) Tribunal (which hears applications for asset forfeiture by the Special Investigating Unit) to recover this R400-million?” he asked.

He also said the locomotives ordered by Swifambo, which had been reported to have limited use on South Africa’s rail network as they had the wrong specifications, could be used.

Sensationalised

He said it was “sensationalised by the media that they were too big to be used”.

Kubheka said there was “a perception” that the Special Investigating Unit was focusing on “certain people” in their investigations. He said that just because the unit found Prasa got value for money from Werksmans, “does that stop the irregular part of it”?

Other MPs, such as the ANC’s Helen Neale-May, pushed for further investigations, including into all executives’ qualifications, asked questions on the ghost employees, and how the Special Investigating Unit was dealing with the issue of destroyed, missing or stolen records, and employees having left the rail agency. DM

First published by GroundUp.

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Follow the evidence

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MK MPs push back

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