Transport Minister Fikile Mbalula said the crisis at Prasa could not be solved by replacing the current board with a new one. Picture: Bongani Shilulbane/African News Agency (ANA)

Johannesburg - The embattled Passenger Rail Agency of SA (Prasa) had been placed under administration by Transport Minister Fikile Mbalula, who dissolved the entity’s interim board.

Addressing the media on the decision, Mbalula said the crisis at the rail agency could not be solved by replacing the current board with a new one.

He said the continued decline of the quality of service provided by Prasa to the commuting public required urgent intervention.

Last week, Mbalula had indicated the process of making changes to the leadership of Prasa was at an advanced stage.

On Monday, he said the entity had been riddled with mismanagement and governance challenges over the past decade of its existence.

“This period was also characterised by dissonance at the highest level of the organisation, characterised by tensions between the board and management. The Public Protector also released a report on Prasa tittle 'Derailed' which highlighted serious lapses of corporate governance. As a consequence, the National Treasury instituted a forensic investigation on the issues flagged,” Mbalula said.

He said in the 2017/18, Prasa was so unstable that it had four boards in a single financial year, which he said perpetuated the instability within the entity.

“Over this period, Prasa lost 1 246 employees, 27% of them due to natural attrition and 18% resigned,” he said.

He said the organisation had performed badly over the financial year.

“Irregular expenditure stood at R23.4-billion. And increase from R19.6-billion the previous year. Similarly, fruitless and wasteful expenditure escalated to R1-billion, up from R988-million the previous year. Once again the Auditor General sharply raised the concern about the instability at Prasa,” Mbalula said.

The dissolved interim board was appointed in 2018 by former Transport minister Blade Nzimande for a 12-month term which was extended twice this year until April 2020.

“Over the last few weeks, we have conducted a review on the performance of the board and of the entity as a whole. This assessment followed the Government Technical Advisory Centre (GTAC) assessment report which was compiled after engagement with a number of managers. Based on this report and other considerations, we arrived at a conclusion that Prasa has deep rooted challenges that require decisive interventions.

“Merely replacing an interim board with a permanent board will not address the deep rooted fault lines at Prasa. The GTAC report highlights the dysfunction of Prasa and records noncompliance with financial prescripts that warrant immediate action and intervention,” he said.

Businessman Bongisizwe Mpondo has been announced as the administrator for the next 12 months, after which a new board will be appointed.

Political Bureau