Johannesburg - Dozens of Passenger Rail Agency of SA (Prasa) officials, including senior executives and general managers, have been busted for failing to disclose that their business partners scored contracts worth R87million from the embattled state-owned entity. No action has been taken against the officials - nearly four months after retired former acting chief executive Cromet Molepo tried to discipline the employees for misconduct for failing to declare that their business partners received lucrative contracts from Prasa.
The dodgy transactions were discovered during Auditor-General Kimi Makwetu’s audit of Prasa’s finances in the 2016/17 financial year.
Correspondence seen by Independent Media shows that in March, Molepo told then interim board chairperson Xolile George that the audit had identified 42 transactions totalling R87m in six Prasa divisions.
The officials include executives and general managers in Prasa Corporate, Rail, Technical, Corporate Real Estate Solutions, its investment company Intersite and intercity bus service Autopax.
However, Prasa claimed it had no knowledge of letters of suspension that were issued by Molepo to “any staff member and/or executives”.
“Prasa’s policy on any issue regarding conflict of interest requires workers to declare their interests. We encourage anyone with information to come forward in this regard,” the agency said.
The response followed Prasa chief executive Sibusiso Sithole referring Independent Media’s questions to the agency’s communications team this week despite some of its senior officials being among those issued with the suspension letters.
National Transport Movement (NTM) general secretary Ephraim Mphahlele said the union was aware of the letters sent to staff suspending them.
He said this was for executives and general managers awarding tenders to their relatives.
According to Mphahlele, the NTM was told that investigations were continuing.
In his letters to the interim Prasa board that was replaced a few days after it was constituted, Molepo said: “I have implemented consequence management as required by legislation to suspend the officials implicated, and a disciplinary team must be established to deal with these matters accordingly.”
Molepo said he would have failed in his duties by not exercising his responsibilities, “especially considering that Prasa has been plagued by allegations of maladministration, fraud and corruption...”
His letters stated: “Failure to declare business interests is a serious offence for a state entity. Furthermore, it was also identified that your business associates failed to declare their interests with you in the standard bidding document forms. It is therefore my prerogative to suspend you until the investigation is concluded.”
He also instructed the officials not to obstruct or interfere with investigations by contacting any Prasa employee or tamper with the agency’s witnesses. He demanded official laptops and barred them from accessing work emails.
According to Molepo’s letters, it was the board’s fiduciary duty to provide the National Treasury with the companies that failed to disclose their business associates.
The suspension letters state that Prasa’s financial misconduct, poor performance and abuse of supply chain management had reached “paralysis” state.
Molepo blamed the dishonesty of officials who acted mischievously by failing to declare their business interests.
“During the audit process by the Auditor-General for the 2016/17 financial year it was identified that you failed to declare your business interests conducted by your business associates doing business with Prasa,” Molepo told each official.
George said it was not the board’s role to suspend staff.
Molepo could not be reached for comment this week.
The temporary board headed by George was replaced by Transport Minister Blade Nzimande in April.
Prasa has also failed to present its 2016/17 annual reports with financial statements to Parliament since the September 30 deadline last year, as the rules require.
Releasing the outcomes of his audits of national and provincial government departments and entities in November, Makwetu said the R45.6bn incurred in 2016/17 had increased by more than half from R29.4bn but could be even higher as they did not include Prasa, which incurred about R14bn in 2015/16.
Repeated attempts by Makwetu’s staff for information needed for the audit were not met by Prasa staff.
“Should any information that is requested not be received within the agreed timeline, and should we not be able to obtain sufficient appropriate audit evidence by alternative procedures, this omission will be considered to be a misstatement of the financial statements/reported performance against predetermined objectives as a result of the limitation on the scope of the audit,” warned a manager in Makwetu’s office over a year ago.
Dikeledi Magadzi, the chairperson of the National Assembly’s portfolio committee on transport, said that by last week, Prasa was still not ready to present its 2016/17 annual report.
She said they expected the outstanding report to be presented before the end of next month.
Prasa said Makwetu was still finalising its 2016/17 audit.
“As soon as that process is completed, we will submit the financial statements to the shareholder (Nzimande),” the entity said.