Fikile Mbalula axes CEO Nkosinathi Sishi and entire Prasa board
Companies / 10 December 2019, 08:30am / Siphelele Dludla
JOHANNESBURG – Transport Minister Fikile Mbalula on Monday wielded the axe at the Passenger Rail Agency of South Africa (Prasa), firing acting chief executive Nkosinathi Sishi with immediate effect to dissolve the troubled parastatal’s interim board and place the entity under administration for 12 months.
Mbalula said the government had conducted a review of the performance of the board and of the entity as a whole over the past few weeks.
He said the review concluded that Prasa had deep-rooted challenges that required decisive interventions at leadership and management levels.
“Merely replacing an interim board with a permanent board will not address the deep-rooted fault lines at Prasa,” Mbalula said.
“The Government Technical Advisory Centre report highlights the dysfunctionality of Prasa and records non-compliance with financial prescripts that warrant immediate action and intervention, in addition to the initial intervention of the War Room.”
The board, led by businessperson Khanyisile Kweyama, was appointed for 12 months by former transport minister Blade Nzimande in April last year.
When its term expired in March this year, it was extended to April 2020, or until a new board was appointed.
During its tenure, the interim board held 22 meetings, but could not present a single sheet of minutes when asked to do so.
Mbalula detailed how Prasa’s many challenges became more pronounced in the 2015/16 financial year due to serious governance breaches, particularly in supply chain management.
He said billions of rands had been recorded as irregular expenditure, alongside fruitless and wasteful expenditure over five years.
In the 2016/17 financial year, Prasa incurred R19.6 billion in irregular expenditure from 14.8bn in 2015/16, while fruitless and wasteful expenditure escalated to R181m.
Prasa had four boards during the financial year and lost more than 1 000 employees, 18 percent of whom resigned.
Irregular expenditure stood at R23.4bn that year from R19.6bn the prior year, while fruitless and wasteful expenditure escalated to R1bn from R988m.
In its management report for the 2018/19 financial year, the Auditor-General raised critical issues pertaining to governance, which included a finding that Prasa did not take effective and appropriate steps to prevent irregular, fruitless and wasteful expenditure, as required by law.
The rail agency also had to deal with instability due to the appointment of interim boards.
Auditor-General Kimi Makwetu gave Prasa a disclaimed audit opinion for the 2018/19 financial year, which was a regression from prior years.
Mbalula withdrew Sishi’s secondment with immediate effect.
Mbalula said the role of the new group chief executive would be integrated into the role of the administrator as an integral part of the intervention.
He announced Bongisizwe Mpondo as the new administrator of Prasa with immediate effect.
“I have no doubt that Mr Mpondo has the right credentials to tackle the challenge of turning around Prasa, address its operational deficiencies and tackle intractable challenges confronting its divisions and subsidiaries,” Mbalula said.
The United National Transport Union (Untu) welcomed Mpondo’s appointment, saying Mbalula had no alternative but to implement drastic measures.
Untu’s general secretary, Steve Harris, said they will support and contribute to the efforts made to ensure that the 14 000 jobs provided by Prasa were not affected.