EFF’s sinister sudden interest in PRASA

14 August 2019

Floyd Shivambu submitted a letter on 5 August to Minister of Transport Fikile Mbalula and the Acting CEO of PRASA, Dr Nkosinathi Sishi, with eight questions about the appointment of Werksmans Attorneys by PRASA.

The timing and nature of the questions are sinister. The EFF has never campaigned to improve commuter train services.

The Werksmans issue is thorny. According to reports by the Sunday Independent, PRASA has now paid roughly R300 million to Werksmans Attorneys for legal and forensic services.

This is an exorbitant figure. But these services have an aim: to investigate possibly corrupt tenderers and, where evidence of corruption exists, to litigate against companies to end their relationships with PRASA and recoup money from them.

Many of the questions asked by Shivambu have already been put to the Minister and PRASA, often under parliamentary privilege. Werksmans’s costs are not new information, but this is a new angle of attack-as-defence for those implicated in state capture and corruption at PRASA.

Werksmans has been attacked several times for its work on PRASA. It’s interesting to see where the attacks have come from.

The first was in July 2016, when Fose Segodi, writing in the Mail & Guardian (M&G), under the stewardship of Political Editor Matuma Letsoalo (who would later leave the newspaper for failing to disclose that his and his wife’s company was being paid by PRASA).

In August 2016, Minister Dipuo Peters clashed with PRASA Chair Popo Molefe about these investigations, and ordered them brought to a close. Dipuo Peters lost this battle after Molefe asserted that completing the investigations was required by law. Peters was forced to concede this in her response to a parliamentary question in September that year. At that stage, irregular tenders worth over R14 billion were under investigation.

In December 2017 Judge T.A.N. Makhubele, then Chair of the Interim Board of PRASA, decided through a board resolution to centralise and indefinitely suspend the Werksmans investigations (urgent court action by #UniteBehind and the Equal Education Law Centreprevented this action from proceeding).

Then, in 2018, Lucky Montana’s testimony in Parliament for the Eskom Inquiry produced reports in Noseweek questioning Werksmans.

Now, following the 4 August publication of an article by the trio of writers, Piet Rampedi, Karabo Ngoepe and Mzilikazi wa Afrika in the Sunday Independent, the EFF has launched a series of questions about the Werksmans investigations.

On all occasions those implicated in benefiting from or protecting state capture have been trying to undermine the Werksmans investigations.

Here are the EFF’s questions - and responses to them

The EFF’s questions are as follows, corrected for grammar and spelling, with the answers provided by this author, where the information exists.

1. When did PRASA appoint Werksmans Attorneys?

Werksmans was appointed on 6 August 2015 by then Acting GCEO Nkosinathi Khena in terms of a letter of engagement to investigate instances of irregular, fruitless, and wasteful expenditure by PRASA, and all irregular and unlawful activity that was outlined in but not limited to the 31 March 2015 draft report of the Auditor-General.

2. Why was Werksmans Attorneys appointed?

Werksmans was appointed as part of PRASA’s compliance with then Public Protector Thuli Madonsela’s remedial action, following the release of her 2015 report titled Derailed. This report described corruption and state capture at PRASA.

3. What procurement process was followed to appoint Werksmans Attorneys?

Werksmans was appointed from PRASA’s legal panel, a collection of law firms that had been approved to do legal and forensic work on PRASA’s behalf. The term of the legal panel expired but the task of investigating this corruption was urgent and PRASA’s legal department lacked the resources to accomplish the tasks alone. Those responsible for failing to renew the legal panel were the Board under Sfiso Buthelezi, and the executive leadership of Lucky Montana.

4. What role did the Chairperson of the Board Dr Popo Molefe play in the appointment of Werksmans?

Molefe was obliged to investigate corruption at PRASA as part of his fiduciary duty as Chair of PRASA. Former Transport Minister Dipuo Peters (who would later improperly remove Molefe and his board), admitted as much in her September 2016 replies to Parliament’s questions.

5. Did the Auditor-General (AG) make a finding that the appointment of Werksmans Attorneys and payments were irregular? If yes, why did the AG make the finding?

The appointment of Werksmans was irregular. But all appointments from the expired panel were irregular because of Montana and Buthelezi’s misconduct. The task for which Werksmans was appointed was essential as it implemented some of the Public Protector’s remedial actions.

6. What did PRASA do to address the findings of the AG?

The most important thing that PRASA has done is to reconstitute the broken supply chain management (SCM) process. With this SCM process fixed, PRASA can reappoint a legal panel. What Shivambu should ask is what PRASA has done to address the AG’s findings about PRASA.

The AG’s 2016 report, which did not fully address PRASA as its financials had to be resubmitted, stated: “PRASA incurred irregular expenditure of R13.97 billion in the year under review as a result of significant non-compliance with its own SCM policy and legislation. Included in this amount is R9.8 billion relating to irregular expenditure identified in the year under review, which related to previous years.”

What did PRASA do about these findings? It appointed Werksmans Attorneys to force criminals to pay back the money.

7. How much has Werksmans Attorneys been paid by PRASA and for what? (Details by each payment)

While the Werksmans reports may have cost R300 million, the company led the successful court proceedings against Swifambo, which led to the cancellation of the too-tall trains tender, saving the public purse some R2.5 billion. Werksmans is also engaged in similar litigation against Siyangena, whose R4.5 billion acquisition of PRASA funds has been a major reason commuters do not have safe trains. Werksmans produced comprehensive, court-ready forensic investigations that reveal the web of corruption and deceit at Lucky Montana’s PRASA.

8. How and by when is PRASA going to recover the money paid to Werksmans Attorneys unlawfully and irregularly?

This leading question is directed at compelling the Minister of Transport to seek legal redress against Werksmans. But Werksmans’s successful litigation against contractors, such as in the Swifambo case will hopefully recoup billions of rands. Already, PRASA has removed itself from the R2.5 billion Swifambo tender. This victory alone represents a return of investment of over 800%. When other likely legal victories against Siyangena and others are factored in, this return on investment will increase massively.

PRASA has suffered from wasteful expenditure. Werksmans investigations were very expensive, perhaps too expensive, but they exposed wasteful expenditure and prevented further waste from contracts initiated by Montana.

PRASA’s supply chain management disaster has directly led to the collapse of commuter rail. Incompetent and unregistered security companies were extended year-on-year by Montana, and train and rail maintenance collapsed following Montana’s for-friends-only outsourcing programme.

What is the EFF’s track record on PRASA?

The EFF’s public record to hold PRASA to account is easy to summarise:

On 4 July 2017 the EFF tweeted once in celebration following the setting aside of the Swifambo contract by the Gauteng High Court.

On 9 July this year, the EFF’s Nontando Nolutshungu is quoted in the budget vote discussion: “Let’s retain and expand the state ownership of central transport and logistics modes such as Transnet, PRASA and establish shipping manufacturing company.”

On 31 January 2018, EFF Secretary General Godrich Gardee and EFF Treasurer General laid charges against Zweli Mkhize for allegedly soliciting bribes at PRASA. This followed Lucky Montana’s testimony at Parliament.

The EFF’s election manifesto contains six lines on rail infrastructure, none of which addresses the corruption that occurred under Montana.

Apart from this, nothing. The statement on Swifambo on the EFF website returns a 404 page. There are no other mentions of PRASA on its official channels.

EFF Chair Adv. Dali Mpofu, no stranger to exorbitant fees and payouts, has intimate knowledge of at least one major site of corruption at PRASA. Mpofu was lead counsel in Swifambo’s unsuccessful appeal of the setting aside of its tender in the Supreme Court of Appeal, and in its unsuccessful appeal to the Constitutional Court.

This case was prosecuted by Werksmans on PRASA’s behalf, and followed the forensic investigations into the Swifambo tender.

So why is the EFF going after Werksmans?

In Advocate Terry Motau’s October 2018 investigation into VBS, The Great Bank Heist, VBS Bank is recorded as attempting to secure R1 billion from PRASA in early 2018. This report was written with the assistance of Werksmans. The R1 billion “investment” was driven by PRASA’s then-Acting GCEO Cromet Molepo and then-Chair of the Interim Board Judge Makhubele. This deposit was prevented by PRASA’s Acting CFO Yvonne Page, whose signature was required to endorse this transaction. Page instead left PRASA’s offices taking indefinite sick leave.

A couple of months later VBS collapsed. Among those implicated in the scandal are Floyd Shivambu and his brother Brian.

Join the dots.

James Stent is a member of commuter activist group #UniteBehind. Views expressed are his own.

This article first appeared on GroundUp