Corrupt Prasa locomotives deal set aside

Slamming corruption in SA as a cancer ‘eating at the fabric of our society’, Gauteng High Court (Johannesburg) Judge Ellem Jacob Francis yesterday set aside Prasa’s controversial R3.5bn contract with Swifambo Rail Leasing for new locomotives too tall for SA's rail network, notes Legalbrief. In a judgment that reflects badly on Deputy Finance Minister Sfiso Buthelezi (see report below), Francis cited concerns over the apparently corrupt manner in which the contract was awarded. ‘Corruption will triumph if this court does not set aside the tender,’ the judge said. The contract value later ballooned to more than R5bn, of which nearly R4bn has been paid by Prasa to Swifambo. According to a News24 report, Prasa board chairperson Popo Molefe says the ruling vindicated the board’s earlier concerns over the apparently corrupt manner in which Prasa, under the leadership of former CEO Lucky Montana, awarded the contract to Swifambo. The company at the time had no footprint in the rail industry and subsequently sub-contracted Spanish manufacturer Vossloh Espana to supply the 70 locomotives required by Prasa. ‘We expect Vossloh to take the locomotives back to Europe. As far as we’re concerned the contract is unlawful and never really existed,’ added Molefe. The board chairperson also stressed the importance of seeing through Prasa’s separate court bid to compel the Hawks to properly investigate the more than 40 criminal charges the board has laid against individuals and companies involved in allegedly corrupt Prasa contracts.

The tender process was ‘peppered’ with irregularities. Francis found that Swifambo, the novice BEE company contracted to provide the locomotives, was nothing more than a willing and criminal front for the international rail company Vossloh España, notes a Daily Maverick report. The judge found there was sufficient evidence that proved Swifambo was merely a ‘token participant that received monetary compensation in exchange for the use of its B-BBEE rating. Vossloh could not bid on its own. Instead it concluded an agreement with Swifambo in which its B-BBEE points were exchanged for money.’ Explaining his reasoning, Francis said he was aware that Swifambo will probably be dumped in financial difficulty, but concluded that ‘they simply brought this upon themselves when they had no right to have been awarded the tender in the first place’. He had harsh words for the scheme, notes the DM report: ‘Any prejudice to Swifambo must be viewed in the context of several key facts: Swifambo is a start-up, it has virtually no employees, business, customers and suppliers, and is a wholly-owned subsidiary of Swifambo Rail Holdings. Any prejudice to Swifambo, and particularly to Swifambo Rail Holdings who devised the scheme, is immaterial in comparison to the prejudice to the public interest.’ He added: ‘The relationship that exists between Swifambo and Vossloh amounts to exploitation of the intended beneficiaries, being black people as defined in the B-BBEE Act … it is a criminal offence under the B-BBEE Act.’ The contract was awarded in 2013 during the tenure of then Prasa board chair Sfiso Buthelezi, who was appointed Deputy Minister of Finance in March. Buthelezi’s board signed off on the contract without gaining the prior approval of the Minister of Transport or the Minister responsible for the Treasury as prescribed by the Public Finance Management Act. ‘The irregularities raised in this case have unearthed manifestation of corruption, collusion or fraud in this tender process. There is simply no explanation why Swifambo was preferred to other bidders,’ Francis said. Auswell Mashaba, chair of Swifambo, said the company would be appealing.

The DA laid charges against Buthelezi yesterday, alleging he derived a benefit from the corrupt deal, a Beeld report notes. It notes, too, that it has been reported previously in Rapport that Mashaba paid R80m to Angolan businesswoman Maria Gomes and attorney George Sabelo – both of whom are allegedly closely linked to President Jacob Zuma. Molefe alleges that it emerged in the Prasa boardroom that Gomes claimed she represented the ANC and was entitled to 10% of the value of the contract, but the ANC has denied this.