R45-million victory for Prasa in SA Fence and Gate saga

First published by GroundUp.

Advocate Lindi Nkosi-Thomas ruled on Wednesday that SA Fence and Gate should pay R45.1-million back to the Passenger Rail Agency of South Africa (Prasa) after it failed to supply and install lighting for that amount. Nkosi-Thomas was acting as an arbitrator in a long-standing dispute between the two companies.

The most interesting aspect about this dispute is that a deponent for Prasa was Martha Ngoye, who initiated these proceedings as the agency’s legal boss. Yet she was dismissed at the end of January and the agency is attempting to hold her responsible for the SA Fence and Gate lighting contract going wrong.

In response to her dismissal, Ngoye has taken urgent court action against Prasa. The case is expected to be heard in the Labour Court in Johannesburg on Friday.

In 2013, Prasa entered into a contract worth R209-million with SA Fence and Gate for the installation of fences and other security measures at train depots across the country.

After work on the initial contract began, Prasa and SA Fence and Gate began negotiating an extension to the contract to include, among other things, the provision of lights at the depots. This extension was improperly approved by Palello Lebaka, a Prasa executive who was subsequently fired after disciplinary hearings.

Since Prasa required the lights for the depot, Ngoye, as acting group CEO, approved the extension of the SA Fence and Gate contract to include lighting, on the recommendation of then-chief procurement officer Josephat Phungula, and Prasa’s Bid Advisory Committee.

But, after a dispute between SA Fence and Gate and lighting subcontractor Top 6, only R1.9-million worth of lights were installed after Prasa had paid R47-million to SA Fence and Gate.

SA Fence and Gate contended that the lighting extension was not authorised by Prasa’s board and was therefore void. Interestingly this is the same argument put forward by the chair of Prasa’s Board Leonard Ramatlakane in his 30 January announcement in which he announced Ngoye’s dismissal.

Yet this contention was not supported by the arbitrator, who found that the approval of the lighting was an administrative decision, not a Board one, supported both on 20 January 2015 by Ngoye as acting GCEO, and then ratified in December 2015 by the steering committee of the board.

Nkosi-Thomas’s ruling undermines Ramatlakane’s case against Ngoye and another dismissed executive, Nkosinathi Khena, by indicating that Ngoye was duly authorised to approve the lighting condonement.

Ramatlakane’s suggestion that Ngoye and Khena had cost Prasa money in this matter is also implausible since Ngoye coordinated Prasa’s legal team in winning this arbitration.

Nkosi-Thomas also rejected a claim by SA Fence and Gate against Prasa. DM