Prasa contract holder charged with fraud

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IOL BR Alstom 0843 Bloomberg A Citadis tram, manufactured by Alstom. Photo: Bloomberg.

Johannesburg - Neither the National Treasury nor the Passenger Rail Service of SA (Prasa) would comment on how an international company was awarded a rail contract worth a record R51 billion even though it has been under investigation for corruption in the past five years.

Alstom, the French maker of trains and power equipment that was awarded a R51bn contract to build trains for Prasa, was charged with corruption by UK prosecutors on Thursday.

The news came a day after Alstom announced it had taken record orders thanks to a huge rail contract in South Africa.

The contract is between Prasa, and Alstom South Africa and its empowerment partner, Gibela, to build 600 commuter trains.

Moffet Mofokeng, a spokesman for Prasa, said: “Prasa has run a competitive, transparent and fair procurement process with regards to our rolling stock fleet renewal programme. There is no corruption regarding our contract with Alstom.”

He added: “There is no link between Prasa and what you allege Alstom has done in the UK. Therefore, we are not in a position to comment about Alstom’s operations throughout the world.”

Mofokeng failed consistently to answer the question of whether Prasa knew Alstom was under investigation by the UK authorities when the Prasa contract was awarded.

A simple questionnaire by Prasa to bidders could easily have established this.

The funds have been allocated to Prasa by the Treasury, which referred all questions about Alstom to Prasa.

The National Treasury had not responded to inquiries by Business Report at the close of business yesterday.

The World Bank has a policy of blacklisting any corporation that is found guilty of corruption in any project it is funding.

In November 2006, the international lender declared Lahmeyer International, a German multinational, ineligible to be awarded contracts financed by the World Bank for a period of seven years because of corrupt activities in connection with the Lesotho Highlands Water Project.

The Serious Fraud Office (SFO) announced six charges against the company’s UK subsidiary Alstom Network over offences that allegedly occurred in relation to large transport projects in India, Poland and Tunisia, according to a statement from the agency.

Alstom is in the process of selling its power generation turbine business to General Electric, with which it is also to tie up energy ventures as a result of controversial negotiations last month.

In its announcement on Tuesday, Alstom said orders taken by its energy and rail divisions doubled from the equivalent figure last year to e8.2bn (R116bn), with a strong performance by the rail division.

It is this division that Alstom, a builder of high-speed trains, now intends to make into the world leader – and its main business.

Alstom said: “This record performance derives essentially from a contract with Prasa booked in transport for around e4bn and a good flow of orders in renewable power and grid.”

The UK Bribery Act, which was passed in April 2010, is aimed at organisations operating on a global basis and has an extra-territorial application.

The SFO began investigating Alstom in 2009 and arrested three members of the company’s board in the UK in 2010.

While the London agency dropped that case, it might charge other individuals in relation to the probe shortly after deciding on whether to pursue the company, three people with knowledge of the matter said last month.

The alleged offences are said to have taken place between June 2000 and November 2006, according to the SFO statement.

The first hearing is scheduled for September 9, at Westminster Magistrates’ Court in London.

Christine Rahard, a spokeswoman for Alstom, said: “The SFO has indicated that it has initiated proceedings against two UK subsidiaries of Alstom. The companies are in ongoing communications with the SFO about its investigation and will continue to work with the SFO to seek a fair and appropriate resolution.”



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