Roy Moodley: Mr Prasa?

For more than a decade, the Passenger Rail Agency of South Africa’s (Prasa) infrastructure and service has deteriorated rapidly, forcing commuters to other more expensive forms of public transport. Central to this degradation is almost a decade of corruption and maladministration, with Prasa’s procurement process captured by a group of businessmen assisted by some of Prasa’s senior executives and board members. 

In March last year, Advocate Vas Soni — evidence leader of the Prasa stream at the Zondo Commission — introduced two names alleged to be the principal “capturers” of Prasa’s procurement process: Chockalingam “Roy” Moodley and Makhensa Mabunda. In Unaccountable#26, we detailed how Mabunda’s network of companies scored billions worth of dodgy contracts with the SOE and was one of the masterminds behind the Swifambo “tall-trains” contract alongside German railway giant Vossloh. 

Moodley and his companies have been implicated in corruption allegations at SOEs dating back to 2001 when his security company was named in a tender scandal at Telkom. This week, evidence showing the KZN businessman’s alleged capture of Prasa’s “modernisation mission” takes centre stage: A series of forensic reports into Prasa’s major contracts by law firm Werksmans, alongside evidence presented to the Zondo Commission, reveals the level of influence that Moodley and his companies wielded over Prasa and how he used this influence to receive lucrative contracts and crush dissent within the parastatal.

Prasa: the new piggy bank

Prasa was formed in 2009, integrating branches of rail and coach transport previously separated, and aiming to modernise South Africa’s long-distance and urban railway and coach services. The government identified the importance of rail services as an affordable and accessible form of urban public transport for South Africans sidelined to the peripheries of metropolitan areas.

This modernisation mission came with a substantial increase in budget from the state. Yet, this was quickly captured by predatory interests that viewed Prasa’s coffers as their personal piggy bank. The extent of the rot was first revealed in then-Public Protector Thuli Madonsela’s 2015 Derailed report, which documented systemic corruption and maladministration at Prasa. National Treasury and Prasa subsequently commissioned extensive forensic reports into all major contracts worth over R10-million from 2010-2015.

These damning forensic reports were withheld from the public until they were leaked to UniteBehind, which then shared them with news organisation GroundUp in 2016 and 2017. This was the first time Moodley’s business interests in Prasa were revealed. However, it was not the first time that one of his companies was implicated in corruption allegations. 

Royal Security: two decades of dubious dealings 

The first reported corruption allegation was in 2001, when one of Moodley’s companies — Royal Security — was involved in a scandal at Telkom. The security company was hired to protect the parastatal’s copper network. The Mail and Guardian reported that an internal Telkom investigation revealed that Bheki Langa — a top Telkom executive — was involved in irregularly favouring Moodley’s security company and authorising irregular payments for work that they did not do. Langa and Moodley were close friends from their time together in the African National Congress (ANC). 

Langa resigned, while Telkom allegedly laid fraud charges against Royal Security and cancelled its contract following the corruption probe. However nine years later, in 2010, another internal probe reported on by the Mail and Guardian accused three Telkom officials of “colluding with security companies who are hired to protect and monitor Telkom’s copper cable network”. Royal Security was again one of the implicated companies.

What was not known during the Telkom scandal was that Royal Security had South Africa’s president on its payroll.

Jacob Zuma: Employee of Royal Security?

Moodley is often mentioned due to his close association with Jacob Zuma. According to evidence presented to the Zondo Commission by Prasa evidence leader Advocate Soni, Moodley paid a monthly salary of R64,000 to Zuma through Royal Security from 2007 to 2009, stopping a few months into his presidency. The payments totalled R1.5-million according to the Commission’s investigators, and one year later Royal Security started receiving contracts from Prasa. So far, it has been paid more than R471-million by the state-owned railway company.

Royal Security’s involvement at Prasa was first mentioned in then-Public Protector Thuli Mandonsela’s 2015 Derailed report. Considering complaints related to then-Prasa CEO Lucky Montana improperly awarding tenders, Madonsela declared the “appointment of Royal Security was irregular, as its original contract [from 2006] was terminated by Prasa due to its underperformance”. Just like the Telkom case, Royal Security managed to find a way to benefit from Prasa’s procurement process after having a contract terminated. 

A 2017, Werksmans investigation into Prasa’s security contracts found major irregularities in the appointment and extension of security companies’ contracts from 2010-2016. The investigation revealed that Prasa spent hundreds of millions on irregular security contracts without a proper procurement process. The security companies investigated included Royal Security.

The report documented Prasa’s “practice of continuous contract extensions and/or ad-hoc appointments over several years applied to ensure that the security companies continued to supply services to Prasa”. These contracts were extended for seven years without following any Supply Chain Management (SCM) process or assessment of the technical ability of the security providers, such as Royal Security. Werksmans concluded this was “highly irregular” and “may constitute contraventions of the Public Finance Management Act (PFMA).”

The report also found that Prasa had attempted to terminate the Royal Security contract for “economic reasons”, but the company “continued to deploy security and protect the assets on the back of a verbal request by the GCEO”. Ultimately, Lucky Montana instructed Prasa’s head of Security, Jama Matakata, to “continue with the engagement in the view of security challenges”, despite attempts to cancel the contract.

Werksmans concluded that Royal Security was the preferred security adviser to Prasa because they continually benefited from “extensions and deviations”. The continuous extensions of these security contracts and failure to assess the capability of service providers left “the security at Prasa’s business units and subsidiaries in disarray” and unable to cope with Prasa’s daily security issues.

The most expensive customer-service training in the world?

Royal Security is not the only company connected to Moodley that received lucrative contracts from Prasa. Another 2017 Wersksmans report found that at least five companies associated with Moodley received contracts from Prasa. These are companies where Moodley’s sons Mageshrepren and Selvan, along with other close associates, are at the helm (and where Roy Moodley is not listed as an active director).  

Testimony to the Zondo Commission by Fani Dingiswayo, Prasa’s former General Manager of Legal Services, and Tiro Holele, a Prasa executive, revealed that Moodley’s contracts were viewed as almost untouchable by Prasa employees. Holele and Dingiswayo detailed a longstanding dispute concerning Prasa contracts with a Moodley-linked company called Prodigy Business Services. The Companies and Intellectual Property Commission’s (CIPC) records show that Moodley was a director of the company, but resigned in 2012.

Digiswayo testified that in early 2015 he received a contract between Prasa and Prodigy from Prasa’s Supply Chain Management (SCM) team. The contract, originating in 2010, was for “customer service” training for Prasa employees, as part of Prasa’s “My Station Programme”. The contract had lapsed, but Prodigy had not trained the set number of employees and was requesting Dingiswayo to finalise the extended scope of the work, which was needed before payment could be made. Prodigy said they had been continuing with the training despite the contract having lapsed and wanted to be paid.

Dingiswayo requested the contract’s SCM file, which would have the original supporting documents for the contract. When he started digging, he became suspicious. The foundation of the contract was a letter from one of the directors of Prodigy, Nerishni Shunmugam, addressed to CEO Lucky Montana, which stated that Prodigy had a grant from the training Sector Education and Training Authority (SETA). Shunmugam said that if Prasa paid Prodigy for the training, they could claim back from the SETA grant, making it a zero-sum game.

Montana then submitted to Prasa’s SCM that Prasa should prepare the necessary documents and engage Prodigy on confinement — a closed tender process — because they were the “only people who are accredited” to do this type of customer training, according to Dingiswayo’s testimony.

The first contract was signed at a cost of R10.8-million for the training of 300 learners through learnerships, which Dingiswayo said was Prodigy’s way of “getting its foot in the door”. The Prodigy contract, like the Royal Security contract, used the tried-and-tested modus operandi for bypassing the procurement process at Prasa — especially when Montana was CEO. It established an initial contract or partnership — often on confinement — which was then used as a basis for continuous contract extensions and mysterious “addendums” or annexures, dramatically increasing the cost and bypassing any competitive procurement process.

The extensions of the Prodigy contract — also done on confinement — entailed a five-day customer service training programme that would train 3,000 employees, according to Dingiswayo. It would run from September 2011 to 31 March 2014 at a cost of R82-million. The training — which was pitched at a high school level qualification and ran for five days — cost R24,000 per learner. 

“I think that is the most expensive customer service training in the world,” Dingiswayo told the Commission.

Dingiswayo raised his concerns with SCM that the confinement application was unwarranted and that it was far too expensive. He refused to be involved. Montana emailed Dingiswayo in 2015 saying that “there is nothing wrong with the appointment of Prodigy nor the extension of their contracts” and accused Dingiswayo of being part of “a much bigger agenda targeting certain contracts”. 

A week later, Dingiswayo was called to Montana’s office and summarily fired for “working against the interest of Prasa” by trying to cancel the tender. The next day, Dingiswayo’s boss in the legal department, Martha Ngoye, visited Montana to understand the motivation behind Dingiswayo’s dismissal. She too was immediately fired for challenging Montana’s authority. After Montana left Prasa, Ngoye and Dingiswayo returned.

Ngoye told the Zondo Commission that Montana used dismissals and suspensions to sideline employees who questioned contracts that Montana favoured. She said that “internally you knew whoever touches Prodigy will not receive a favourable response from Mr Montana.” 

At the Zondo Commission this year, Montana denied he had an improper relationship with Moodley, saying that the testimony and accusations from Molefe, Dingiswayo and Ngoye had “nothing to do with facts” but rather had to do “with pursuing an agenda that was the basis for targeting certain contracts”. He said that their focus on Moodley was part of this “narrative” that targets contracts. He also said that Prodigy was “properly appointed” and that the company was not still connected to Moodley.

Testimony from Dingiswayo, Ngoye, Molefe and Holele at the Zondo Commission helped reveal the extent of Moodley’s influence over Prasa’s procurement process.

One of the top 15 decision-makers in the country?

Popo Molefe took over Prasa’s board in late 2014 and started a major overhaul of Prasa’s contract and procurement process. This included taking two mega contracts to court to have them set aside (Siyangena and Swifambo) and launching extensive investigations into corruption and maladministration at Prasa. While Montana left Prasa in 2015 after clashing with Molefe when the first serious cases of corruption were revealed to the public, Moodley’s influence at Prasa was far from over.

Tiro Holele, General Manager of Strategy at Prasa, told the Zondo Commission that Prodigy director Shunmugam had called him into a meeting in 2017, two years after Montana had left. At the time, there was an ongoing dispute about the validity of the contract based on the issues raised by Dingiswayo, and Prodigy was still trying to secure payment despite the contractual irregularities and ongoing court action. 

Holele testified that he arrived at the meeting expecting to see Shunmugam, but was greeted by Moodley instead. Holele said that Moodley immediately demanded that Prasa pay Prodigy R24-million. However, as the contract was before the courts at the time, Prasa could not make any payment — which Holele told Moodley.

According to Holele, Moodley then boasted that he was “one of the top 15 decision-makers in this country”, that “big changes were coming”, and that Holele “should be on the right side of those changes”. Moodley also allegedly stated that when those changes happen “the young man will come back” — which Holele assumed was former CEO Lucky Montana. Holele presumed that the “big changes” might refer to the Transport Minister or other Cabinet positions.

A month later Popo Molefe and his board were sacked by then-Minister of Transport Dipuo Peters, who was herself sacked by Zuma and replaced by Joe Maswanganyi. In 2017, Maswanganyi and the parliamentary portfolio committee on transport — led by Dikeledi Magadzi —  tried to start a “white-washing process that would target those wanting to expose the corruption or release the findings of the Treasury investigations”, according to a UniteBehind report. The targets included Molefe, Ngoye and Dingiswayo.

At the Zondo Commission last year, Molefe testified that Moodley tried to “capture” him six times when he was Prasa board chairperson between late 2014 to 2017. The first time allegedly occurred in 2015, when Molefe was invited to a railway exhibition in Berlin by then CEO Montana, soon after Molefe became Prasa chairperson. At this event, Molefe noticed how close Moodley appeared to be to certain executives within Prasa, especially the CEO Montana.

After this encounter, Molefe asked employees at Prasa about Moodley’s involvement at the SOE. He said he was told that “Prasa is [Moodley’s] farm… you know a farm, when it is harvesting time you come to harvest”, that he is referred to as “Mr Prasa” and that the politically connected businessman “owns Prasa”. 

Molefe testified that despite warning Moodley to not get too close to management, Moodley continued with his efforts to influence the Prasa chairperson on numerous occasions. This included offering to pay for Molefe’s entire family trip to the US Golf Masters, offering him a seat at the State of the Nation Address, and inviting him to his golf event in Durban.

Prasa’s very own tenderpreneur?

In Unaccountable#26 on the Swifambo “tall-trains” case study, we revealed how businessman Makhensa Mabunda acted as a tender middleman for the massive locomotive contract at Prasa, as well as receiving contracts directly from the SOE.  It seems Moodley could have played a similar role to Mabunda, and exercised some influence on Prasa’s procurement process, including for the massive Siyangena contract.

While Moodley was allegedly trying to influence Molefe, Werksmans was undertaking major investigations into major contracts at the SOE on instruction by Molefe’s board. Two of these investigations were being used for Prasa’s litigation to get the Swifambo Rail Leasing and Siyangena Technologies mega-contracts — worth over R8-billion combined — set aside in court. 

Siyangena Technologies was awarded a contract in 2011 to install an integrated security system at select Prasa stations, at an initial cost of R517-million. However, like the Prodigy contract, the Siyangena contract was irregularly extended in 2013 and 2014, with the total cost ballooning to over R4.5-billion. Prasa asked the court to set aside the contract, claiming that it had no fixed budget, bypassed the procurement process and did not obtain board approval. The High Court in Pretoria set aside the contract in a damning 2020 judgment, finding that Montana pushed a “not fit for purpose” contract past Prasa’s internal controls meant to prevent corruption.

Molefe testified at the Zondo Commission that during the Werksmans investigations into the Siyangena contract, investigators discovered that Siyangena paid Moodley a whopping R500-million after being awarded the contract. The money was paid to Hail Way Trading, a company of which Moodley is the sole director. Molefe testified that this money was deposited with Hail Way Trading despite it not doing any work relating to the contract or being a shareholder of Siyangena. Siyangena is co-owned by soccer boss Mario Ferreira. A News24 article alleges that Ferreira and Moodley are associates, and co-owned two racing horses.

Similarly, in 2017, a News24 investigation revealed that Prodigy, the same firm that benefited from the dubious customer service training contract, transferred R4.5-million to Hail Way Trading in 2015. Hail Way Trading shares the same registered address as Royal Security, according to CIPC records.

A 2017 Werksmans investigation alleged that Hail Way Trading purchased and was trading as Goldex Engineering and Maintenance in 2013. Goldex had a contract to repair Prasa’s degraded and vandalised rolling stock, but the investigation found irregularities and deviations in the contract and recommended that Prasa consider laying charges of racketeering. The same investigation found that Hail Way Trading, independently of Goldex, was also a supplier to Prasa; contracted vaguely as “modernisation specialists” to assist Prasa to “rebuild the technology hub with international partners”. The company has invoiced the SOE R7.7-million to date, according to the report.

Moodley and his companies thus seem to have scored over a billion rand through irregular contracts with Prasa and mysterious middleman payments from other suppliers, like Siyangena. Yet despite being implicated in numerous investigations, Moodley remains a free man with no sign of facing justice any time soon. 

Justice derailed

Prasa’s infrastructure and service are in a shambles. The number of people who regularly use trains has dropped by 80% since 2013, while the average time of a trip on a train has increased by 45% over the past eight years to 107 minutes.

While Moodley’s security companies earned millions, Prasa’s failure to provide adequate security for its passengers and infrastructure saw a major rise in vandalism, theft, personal robbery and other security-related incidents, from 4,123 in 2012/2013 to 6,379 in 2016/17, according to the 2016/17 Railway Safety Report. The lack of security resulted in “increasing theft of overhead cables” which resulted in train delays and the heightened risk of train collisions or derailments. 

It has been 10 years since many of these contracts were irregularly awarded, and although Prasa laid numerous criminal charges against implicated parties in 2015/2016, there has not been a single criminal prosecution relating to the looting of Prasa, despite extensive evidence. 

Moodley and his associates have faced little scrutiny by law enforcement despite leaving two decades of corruption allegations in their wake. He, like many others implicated in corruption at Prasa, has not appeared before the Zondo Commission, choosing to rather send his attorney to deny all allegations levelled against him. 

This serious lack of accountability creates an environment of unfettered impunity in which businesspeople like Moodley and Mabunda thrive. If the Hawks and NPA are serious about dealing with State Capture, then Prasa would be a good place to start. DM