PRASA was to make a second attempt at briefing the Committee on the status of Metrorail which had been scheduled for August 2016. However, the PRASA Board was asked to brief the Committee on the newspaper report about Acting Group Chief Executive Officer (GCEO), Collins Letsoalo, giving himself a 350% salary increase and his firing by the Board.
The PRASA Board explained that the decision to fire Mr Letsoalo had been taken before the Sunday Times article appeared. The events leading to the July 2016 secondment of the Acting GCEO to PRASA by the Minister were outlined. Further communication was supposed to come from the Minister and everyone was waiting for this. In the meantime, time was ticking by and Mr Letsoalo had to work. There was supposed to be engagement about his salary, ultimately the issue went to the Board due to the threatening email Mr Letsoalo sent to the PRASA HR manager.
Mr Collins Letsoalo, who had now returned to his position of Department of Transport CFO, was called on to give his side of the story. He read out letters and emails to support his contention that he was expected to receive this salary. He spoke about the disagreement he had with the board about the Werksmans Attorneys forensic audit recommendations and his refusal to pay an invoice of Werksmans Attorneys.
The Department of Transport Acting Director General explained how a secondment works and spoke about the secondment allowance.
The Committee requested the secondment agreement and other documentation. After telling Mr Letsoalo not to threaten people, Members accused the PRASA Board of corruption and of having too many PRASA senior executive staff in acting positions and it was told to focus on its mandate rather than enter into disputes. The Board was accused of incompetenc, stealing millions of rands in supplementary board fees and that the Committee would write to the Minister stating that the Board should be dismissed.
The PRASA Board members were shocked by the accusations. PRASA was complicated as everything had not been done properly before. The time and effort they put into PRASA was immense. From the start, they could not work with Mr Letsoalo as they could not have an Acting GCEO who did not listen to them. They tried to get the Minister to assist but they never got that intervention.
The Chairperson stated that “it had not been raining, but pouring at PRASA", and the Committee had received queries about PRASA since PRASA had been in the media the previous week. She requested the PRASA delegation leader introduce his team and explain to the Committee exactly what was happening at PRASA regarding the media reports about the 350% salary increase of the former Acting CEO. She asked why the Board had allowed such a salary increase to happen under its watchful eye as it had been presenting itself as having a fiduciary duty, and the reason for abdicating this duty.
Mr L Ramatlakane (ANC) made a special request to the PRASA Board in terms of the Parliamentary Rule 167, that the information they present to the Committee be the truth, and that every person who provided the truth was protected from incrimination.
PRASA Board briefing
Mr William Steenkamp, PRASA Board member, introduced the PRASA delegation which consisted of executives in an acting capacity.
The Chairperson noted with concern that most of the members of the delegation were holding office in an acting capacity. She likened them to ‘Hollywood Actors’.
Mr Steenkamp replied that the Board will not give a ‘sugar quoted’ version to the leadership of Parliament, but will speak the truth even if it sounded unfavorable. He said that a synopsis of what transpired and how they found themselves in the position they were regarding the media saga surrounding PRASA would be presented.
Mr Tefetso Phitsane, PRASA Board member, gave a brief account of the events leading to the firing of the Acting Group Chief Executive Officer (GCEO), Mr Collins Letsoalo. He said it all started when the Minister of Transport decided to second one of her staff to PRASA to assist in turning PRASA around and ensure it delivers on its primary and secondary mandate. That took place on the 1 July 2016. After the secondment, there was a grey area as the conditions to the secondment after the announcement were not presented to PRASA. Hence PRASA invoked its policy and wrote a letter to the newly appointed Acting Group Chief Executive Officer, Mr Letsoalo, setting out the conditions.
The following is an extract of the letter;
“In your position as group acting Group Chief Executive Officer (GCEO), you will report to the Board of control. The acting GCEO position is a full time position. It headquarters at PRASA house in Pretoria. While you render your services as an acting GCEO, you will not engage in any employment or any other business activities, whether full time or part time that would create a conflict of interest with PRASA provided that you may continue to serve on any Boards of directors or Committees which you serve at the effective date. By signing the agreement, you confirm to PRASA that you have no contractual commitments or other legal obligations that will prohibit you from performing your duties for PRASA.
From the effective date, your position as acting GCEO may continue until further notice at the latest, or until a permanent GCEO successor is hired and commences employment with PRASA.
Notwithstanding the foregoing, your employment may be terminated by you or PRASA at any time with or without consent. recourse, with or without advanced notice.
Compensation and benefits. During your term of office, PRASA will pay your salary at the annual rate applicable to this position and in accordance with the applicable remuneration policy, payable at such at the company’s normal pay roll being the 27th day of every month. You will be eligible to receive all the benefits applicable to this position and to the PRASA senior officers. The details related to your compensation and benefits will be discussed and shared with you by the group executive responsible for human capital portfolio.
Expenses. PRASA will reimburse you for all reasonable and necessary expenses incurred by you in connection with your performance of services as acting GCEO on behalf of PRASA in accordance with applicable company policies and guidelines.
Entire agreement. The terms of this agreement and the resolution of any dispute as to the meaning, effect, performance or validity of this agreement or arising out of, or related to this agreement, you submit to the exclusive jurisdiction of the South African courts.
The Board wishes you all the best.
The letter was signed by Mr Molefe and accepted by Mr Letsoalo’’.
Mr Phitsane said that subsequent to the letter, negotiations were supposed to take place on the salary and they took place. There were some disputes about the salary, and the matter was reported to the shareholder. PRASA did not ignore the matter, but it came to the attention of the Board four weeks ago and investigations followed. Legal advice was obtained on how to proceed with the matter. The salary came to the attention of the Board which mandated Human Resources (HR) and Manco to look into the matter and make recommendations. A decision was made to part ways with the former acting GCEO. This information was conveyed to the advisors of the Minister and the acting Director General. When the matter came to the newspapers in the manner it was reported, PRASA had already taken action but only needed to inform the Minister. Unfortunately, the information got to the media before they could finalise it. They however wrote and delivered letters to both parties who were affected. Everyone was aware of the media briefings taking place. A letter ending the secondment was sent to the former Acting GCEO Mr Letsoalo.
Mr Phitsane said the Minister requested the Board to furnish her with a detailed report on what had transpired. A full report on the events from the beginning of the secondment until its termination was compiled and presented to the Minister. Mr Phitsane remarked that the Board categorically did not approve the salary increase.
Mr Steenkamp noted that the PRASA chairperson, Mr Popo Molefe, had written to Mr Letsoalo on 7 July 2016, and the Board discovered that the Minister had written a letter dated 7 July 2016 approving the secondment; hence both happened on the same day. However, the Board was not aware of this. The Minister to Mr Letsoalo stated very clearly and in unambiguous terms that Mr Letsoalo would be seconded from the Department to PRASA to serve as acting GCEO at the same grade that he was earning in the department. It was not an increase and that there would be no benefits added to secondment and neither would there be an increase in salary. Mr Letsoalo in turn signed the letter, acknowledging the letter from the Minister and that he understood very well the contents of the letter and therefore that he had no problem with accepting the secondment.
The Chairperson remarked that there are always two sides of the story and requested Mr Letsoalo's side of the story.
Former Acting Group CEO briefing
Mr Letsoalo stated that there had been no truth in what had been said and he was going to show that the Board was at all material times aware of what was going on about his remuneration. He had never ever calculated his salary nor ever asked for an increase. It was sad that when he walked around now, he was called “Mr 350%”.
Mr Letsoalo said that it was important to go to the letter he got when he went to PRASA. He was sad to note that since he has been at PRASA, he had been dismissed so many times by the Board. He cited 16 August 2016, as one of the times he was dismissed by the Board and again in December 2016. He explained the calculation of his salary by quoting several emails between himself and PRASA executive and board. One such email was one he wrote to Mr Bongani Nkomo, general manager of remuneration and benefits, and copied to group executive for human capital, Mr Bhekani Khumalo, the man he “purportedly fired ‘for refusing to give him the salary increase he was looking for. The email read as follows.
“Dear Bongani, for the record of general manager in charge of employee benefits, I request the following from you; a total remunerative package for GCEO of PRASA group as approved by the Board of control. I enquire about the car and driver which I am informed is for the use of the GCEO, how is it accounted for in the package. Can you calculate the salary on the basis of only yearly inflationary increases excluding the BOC approved increases based on the counter offer to the previous GCEO. I need this soonest. Kind regards, Collins”.
Mr Letsoalo highlighted that at the time of the email, there was the issue of Mr Lucky Montana, the former GCEO of PRASA, who had supposedly increased his salary through a counter offer.
Mr Nkomo responded to the email as follows:
“Dear Collins, the current costal total package for the GCEO as approved by the Board of control is now R5 903 999.04 per annum see attached payslip and letter. If the original package was to be increased by the yearly inflationary increase, the GCEO salary would be sitting at R5 986 170.07…the remuneration package can be structured into the following benefits, medical aid, joint provident fund, car allowance,24-hour death cover, company cellular phone on an unlimited package…... HCM does not make a call on the chauffeur driven car, should you wish to make use of this benefit, it will be subject to fringe benefit tax”.
Mr Lestsoalo indicated that in the email, Mr Nkomo showed how he arrived at the final figure. From the email, it was clear that he had not done what they accused him of doing. He agreed to pay fringe benefit tax after it had been explained to him. He noted that Mr Phitsane was copied in all the correspondence.
Following the above email, Mr Khumalo responded as follows;
Your telephone call of recent, 4th August 2016. You indicated to me that Collins had asked you what remuneration package he was entitled to? You said that that he said that he was merely sent a copy of a payslip and what he wanted was something written down detailing what he was entitled to in line with his position as acting GCEO of PRASA…………I trust that you will find the earlier communication sent to the acting GCEO helpful in you articulating what he is entitled to in his position he occupies at PRASA…...”
The following email extract was attached in the same email. Mr Phitsane was copied. It was written by Mr Khumalo and addressed to Mr Letsoalo;
Find attached the simulated payslip of former acting GCEO Lucky Montana as of end of June 2015, as per your instruction….in fact, I don’t even think the remuneration requires the Board’s approval as the employment letter signed by the Board instructs you on how to arrive at the acting GCEOs remuneration. ( LK please advice)’’….
Mr Letsoalo indicated that PRASA compensates at a total cost to company pay, each and every executive structures it as it suits their personal circumstances and as per attached payslip in the last email, Lucky Montana was on a total cost package of R 5 903 999.04. Mr Phitsane stated that he knew nothing about this amount, and he found that interesting and Mr Molefe remarked that he had just heard about it.
On 2nd August 2016, after it was discussed that the remuneration issue does not require the Board’s approval. In the following email, Mr Lindikhaye Zide the company secretary was copied while Mr Letsoalo was not, hence showing that Mr Letsoalo was only briefed.
“Please note that I have consulted with Phitsane on the matter, he indicated that he has tried to call you in order to discuss with you the outstanding issues that need to be clarified prior effecting the said payment among other things that need to be concluded;
The finalisation of the acting GCEO's contract including its duration.
The exact amount that is due by PRASA (being the difference that is paid by dept and the rate of the current position at PRASA given that it is a secondment.
You will note that we have Mr Mbulelo Ngikana in our midst as a secondment, when he was brought on board, there was a memorandum of understanding (MOU) that was signed with Civil Aviation Authority (CAA). CAA continues to pay Mr Ngikana his salary and they invoiced PRASA for the additional monthly amounts that are owed as a result of having being seconded to us. This and other matters has not been discussed and finalised by the Board at DOT. I have advised that a similar approach be adopted with the acting GCEO where we become responsible for the difference of his salary paid by Department of Transport and the going rate still to be discussed and agreed by the Board at DOT on this and other issues. Without the clarity on this and other issues, it is difficult to expedite the payments as advised by your email of yesterday. We will have to appraise the acting GCEO and apologise for the delay while I engage the chairperson of HR and Ramco who will in turn facilitate this matter with the chairperson of the Board of PRASA…...”
Mr Letsoalo requested a final confirmation in writing which he got on a PRASA letter head which read:
“26 October 2016
To Whom It May Concern
Re: Confirmation of Remuneration package of Group Chief Executive Officer of PRASA.
This letter serves as confirmation that the current annual remuneration package of PRASA GroupChief Executive Officer is R 5 986 140.07. Should you require any additional information, please do not hesitate to contact the undersigned.
General Manager, Remuneration and Benefits…”
Mr Letsoalo remarked that the Board had always been aware. His unchanged salary package of R1 300 000 and the difference was paid to him as secondment allowance by DOT. It is interesting to note that one of the board members was once seconded to a company called Roads Agency Limpopo. He was paid the difference between his salary and the salary of a CEO.
Mr Letsoalo said that he could raise a lot of matters. One of the matters he raised was about Werksmans Attorneys because he refused to pay the Werksmans invoice.
Mr Phitsane was the first to respond to Mr Letsoalo's presentation. He said that what Mr Letsoalo had presented was not the truth and that Mr Phitsane was going to present the truth.
Mr Phitsane stated that the salary of any CEO was supposed to be discussed at Board level and it was the Board that was supposed to determine the “rands and cents” of any CEO. He said that in the letter written to Mr Letsoalo, he was clearly instructed to go to HR in order to be furnished with information regarding his salary and that was exactly what he did. However, in the process of doing that the HR contacted Mr Phitsane and told him that Mr Letsoalo sent an email threatening the Group Executive HR that he gives Mr Letsoalo what he gave Lucky Montana, failing which he would deal with him. He asked him whether he was reporting to the Board, and if he continued doing that, he would take it as insubordination because he was refusing to take a lawful job instruction. The email read: “You give me what he was earning, failing which I will actually deal with you. If you continue doing this, I will take this as insubordination, because you are refusing to take a lawful job instruction.” The email continued with Mr Letsoalo looking for what Lucky Montana was earning.
On 4 August 2016, Mr Phitsane wrote the following email to HR,
“…..notwithstanding the correspondence between you and the affected parties, I am writing this to Bhekani Khumalo. Please note that the current acting GCEO has to be remunerated at the proper notch as evaluated by the credible HR system, not the one that was fraudulently and inappropriately utilised by the previous GCEO……please note that there is no indefinite secondment, you need to source the actual compensation from DOT to enable you to calculate the difference, once the Board has made a determination. Please note that as an HR practitioner, you need to do the right thing and not be cohered into committing wrong things. Currently, as the matter stands until the shareholder says otherwise, the Board is in control of all personnel irrespective of how they were brought into the institution. We will therefore determine how much an incumbent is supposed to earn. Until such a decision on his salary is properly determined, I advise you not to proceed with any payment. In any case, the incumbent is seconded and still paid by the department, therefore it is not to his disadvantage. I have interacted with the chair of the Board to bring him up to speed with the current events unfolding in PRASA”
Mr Phitsane stated that there were issues surrounding Lucky Montana's salary which was being investigated, hence they could not base their remuneration notch on that. He contacted the GCFO who in turn requested Bhekani to ‘pay what the man wants’. At this stage Mr Phitsane was not aware of the letter that the Minister had written to Mr Letsoalo which provided that his salary, rank and seniority stay the same. They were dealing with this matter as a secondment. They were not aware that such correspondence between Mr Letsoalo and the Minister had taken place. Mr Phitsane stated that he had all the emails regarding the interactions on the matter, which he took to the Board on 16 August 2016. He did this in order to sort out the salary package of the acting GCEO who had told everyone that he must been given the salary package that Lucky Montana earned, a man who was permanently employed. Mr Phitsane asked where have you seen the officials themselves calculating even the inflation. Where have you seen an accounting officer and the officials themselves calculating a salary, including the inflation of that particular position? That itself says a lot. Mr Phitsane brought this to the attention of the Minister and requested that the secondment be terminated as Mr Letsoalo did not listen to the Board and insisted that he was going to get what Lucky Montana earned.
Department of Transport (DOT) Acting Director General input
Mr Matabatha Mokonyama, DOT Acting Director General, mainly confined himself to the secondment and not to the internal issues. He said that matters at PRASA had been deteriorating. Prior to July 2016 there was an acting GCEO at PRASA. However, the Minister as the shareholder approached the PRASA Board and stated that she was not happy with the state of affairs and as a result requested the Board to agree with her in appointing Mr Letsoalo as acting GCEO. The Board discussed the matter and agreed to this appointment. At the DOT when they second an official, it is done in terms of Section15 of the Public Service Act. It happens when a need arises and it is public knowledge that secondments happen. He was one of the officials seconded.
Mr Mokonyama clarified the letter from the Minister. When the Ministers refers to a salary that does not change, it means at the point of origin in the department. It means that if your original salary is higher than or equal to the position that you are seconded to, you get nothing. If your salary is lower than the position that you are seconded to, you get a secondment allowance. The secondment allowance is the difference between your original salary and that of the position you are occupying. The letter concerning "a status that does not change" does not mean that a person will not get a secondment allowance. This allowance is not an incentive. He said that he gave this explanation to ensure that there was no ambiguity concerning the letter that the Minister wrote to Mr Letsoalo.
Mr Mokonyama explained that there were issues between the Board and Mr Letsoalo resulting in an attempt to send him back to the Department in August. In December 2016, a letter was written to Mr Letsoalo stating that he should go back to the department. The Minister intervened and stated that the appointment of a permanent GCEO should be fast tracked and done before the end of April 2017. In December 2017, the Board received a letter from HR stipulating how much Mr Letsoalo would earn while on the other hand, issues were still being processed. While they were still busy, they were approached by the Sunday Times Newspaper who asked questions about a seconded person increasing his salary. Mr Mokonyama said that he did not personally speak to any journalist.
The Minister wrote a letter to the Board stating that she was alarmed by what she saw in the newspaper and requested a report. She made this request on a Monday and the request was to be met by Friday. During this period, Mr Letsoalo's secondment was terminated. Mr Mokonyama said he was not informed of the Board’s decision but learnt this from the media. The Minister wrote back to the Board stating that she had requested a report which she had not received and yet the Board had acted by terminating the secondment. On Friday, the requested report was received by the Minister from both the Board and the Mr Letsoalo. Mr Letsoalo's report took the form of an affidavit. Mr Mokonyama stated that that was the position he wanted to put forth.
The Chairperson noted that the documents referred to by the various presenters were not furnished to the Committee and said that they should be compiled and furnished to the Committee.
Mr Steenkamp replied that they would furnish the documents.
Mr C Hunsinger (DA) remarked that the situation at hand was very disappointing and embarrassing as it was evidence of a parastatal not realising what was important to the country, which was to provide a service to commuters, to contribute to the South African economy and to develop the rail assets. It was a demonstration of a mis-focus by a parastatal, PRASA. Arguing about salaries and emails was not its mandate. He was disappointed that the Minister was not present in the Committee as she was the one who had put the deal together and it was important to get the Minister's input. The subject of argument was dealt with under the Public Service Act and the two parties (Mr Letsoalo and the Minister) were supposed to reach an agreement if there was a secondment. Mr Letsoalo was supposed to agree to go and PRASA was supposed to accept. This was supposed to be followed by an agreement. His question was “is there such an agreement?’ He wanted to see such an agreement and its contents. He referred Mr Phitsane stating that “the conditions presented to PRASA were not clear” and asked which conditions Mr Phitsane was referring to. He asked that, if all the allegations raised did happen, what was the reason for the breakdown of relations and confidence which ended Mr Letsoalo's appointment from Mr Phitsane's side.
Mr Hunsinger asked Mr Letsoalo if his email enquiring about the salary was done in a general manner or if it was for his sake. He asked how this incident would affect his continued supposed role as DOT chief financial officer, given the bad flavour between him and PRASA?
He asked if there was no wrongdoing, why Minister Peters ended the secondment on 1 March 2017.
Mr M De Freitas (DA) remarked that he had served on this Portfolio Committee for a long time and he found the situation was embarrassing, both parties had erred badly. When a secondment happens, an MOU is drawn up and the conditions are very clear. He wanted to find out if this was done, if there was a clear letter from the Minister that outlined what the salary was, what the period was as per the Public Service Act. He noted the Board stated that on 7 July 2016, there was a letter from the Minister which they say they did not know about. He asked how that was possible. This meant that either the Board was very incompetent or someone was lying; but it was very odd. It was shocking that they had an official who was proudly saying how he was negotiating his own salary. It was beyond arrogance, you do not negotiate salaries, it is supposed to be done in advance.
He commented that almost all executive members who were introduced to the Committee were in an acting position and thus they could be removed at any time. This was the reason PRASA was in such a mess as this was unstable for any organisation since you do not get a maximum output from members in an acting capacity. He requested documentation from all the speakers who had presented.
Mr T Mulaudzi (EFF) raised a concern about the PRASA Board chairperson not being present. He said that the senior executive members of PRASA were in an acting capacity and this meant that they were not doing anything. He referred to the 350% salary increase and said that he was surprised to learn that the PRASA Board chairperson had stated that they were not aware of this. At the start of the Committee meeting, Mr Ramatlakane made clear a request for the Board not to mislead the Committee and therefore he felt abused by the Board members because they were aware of the increment of the former Acting GCEO's salary. The Acting DG cleared up the issue of secondment, salary and allowances very well.
He wanted to know if the Board was expecting the incumbent not to get anything yet the Board instructed him to go to HR to enquire about the salary, while on the other hand they stated that they would stick to the letter written by the Minister which allowed him to make an enquiry with HR. He engaged with them but the Board was accusing him of interacting with HR. That was an inconsistency. The Board accused Mr Letsoalo for dismissing Mr Bhekani Khumalo for refusing to increase his salary while Mr Letsoalo stated that Mr Khumalo was still working there. He asked which version was the truth. He asked the Board that if they knew from last year that Mr Letsoalo was not the right man for the job, why did they not terminate his contract because they only did so only after the newspaper article appeared. Previously, there was a bad report about PRASA from the Public Protector and the former GCEO Lucky Montana was blamed for all the predicaments. Now that Mr Letsoalo was with PRASA, he was blamed for the predicaments. He asked the Board if they would blame every new person that came on Board. It meant the problem was not the GCEOs but the Board which shifts the blame to people accounting to them. He wrote to the Minister to query the decision to remove the Acting GCEO as this was the person who was supposed to be overseeing the Board. He got the impression that the Board was above the shareholder. He accused the Minister of messing up the Board and that the Board had been paying back the money which they "steal" from PRASA but they were not being suspended.
The Chairperson cautioned Mr Mulaudzi to withdraw the word steal, for which he did.
Mr Mulaudzi stated that the Board misused and mishandled the money. The Board has a fiduciary responsibility to ensure that PRASA is managed very well. He called for the suspension of the Board and a comprehensive enquiry into PRASA. Consequent management must be done and the Board must pay back the money.
Mr M Sibande (ANC) said that he was disturbed about the status quo of PRASA which was deteriorating. He had hoped that the current position would be much better but in turn seemed to go from better to worse although he was subject to correction by the Board. He was worried that the term of the Board was coming to an end and yet there were Board members who were holding office in an acting capacity. He wondered how they were going to evaluate themselves when their term came to an end and that they were responsible for appointing a CEO. He asked if the Committee was dealing with the Board or journalists because every now and then they went to the media. He asked if their responsibility was journalism or managing the Board. He asked how many times Mr Letsoalo was dismissed and why, as he had alleged that he was dismissed many times before. He asked about the allegation Mr Letsoalo made earlier that he was dismissed because he refused to pay Werksman Attorneys. On secondment, there was a lot of legislation addressing secondment. Lots of things happened but the Board never informed the Minister. The Minister herself had to request an intervention. This seemed as if their systems did not talk to each other in terms of line functions.“You have a stipulated number of meetings per year in terms of legislation, but you have more meetings than necessary”. He asked what they were discussing and yet so many things were going wrong under their nose. He asked if those meetings were there for them to collect money or there to guide the entity itself. He referred to Mr Ramtlakane's earlier statement that Board members must speak the truth. Board members were pointing fingers at Mr Letsoalo and in turn Mr Letsoalo was pointing fingers at Board members, this meant that there was no truth. He asked what the Board was waiting for in order to appoint full time, permanent executive members. He requested information about Werksmans Attorneys as there were some people who kept on getting money from government and when questions are asked, the person who asked the questions would be penalised. He requested former Acting GCEO Mr Letsoalo to withdraw the threats if there were any, as earlier alleged, as he himself does not believe in threats. Lastly he requested the PRASA Board to give a deadline to the Committee as to when they were going to fill the vacancies.
Mr M Maswanganyi (ANC) said that government operates in terms of the law. It was the Public Service Act that regulates secondments and transfers in Chapter 4 and that any secondment or transfer should be done in the interest of the public. That subsequent to a secondment, the Public Service Regulations Act under regulation 62 provides as follows
“A Secondment in terms of section 15(2) or (3) of the Act may only take place if – (b) the period of secondment does not exceed 12 months unless due to operational reasons determined otherwise by the Minister and; (c) an agreement has been concluded between the receiving and the sending department, organ of state, other government or any other body agree otherwise.
(2) The recipient department, organ of state, other government or any other body in terms of section 15(2) or (3) of the Act shall bear the inclusive costs of secondment, unless the seconding department, organ of state, other government or any other body agree otherwise”.
He wanted to check, as other members had alluded to the agreement between the receiving and sending department, where the agreement was as a letter does not constitute an agreement. He requested the agreement. It meant PRASA was supposed to bear the costs of Mr Letsoalo. He asked when the Committee was going to hear the Minister as she was the relevant authority who could give the reasons for the secondment. The DOT was not consistent in how it administered parastatals. He gave an example of ACSA which let go four of its Board members and this showed consistency. He asked why there were inconsistencies when dealing with department agencies.
Mr Ramatlakane said that there had been announcements about the acting positions. He requested that curriculum vitaes (CVS) be submitted so that the Committee would review them for requisite skills. If a parastatal needs to be rescued, they would need to rescue the people that lead it. He referred to Mr Letsoalo's statement that he asked for a legal opinion from the company secretary Mr Zide. Mr Ramatlakane asked what the response was from the company secretary on the matter as this would provide clarity. Paragraph three in the letter dated 7 July 2016 referred to ‘applicable benefits’ for Mr Letsoalo. The Board during its presentation did not explain what this meant, but in turn referred Mr Letsoalo to HR. He asked the Board what they meant in the appointment letter to Mr Letsoalo by 'applicable benefits'.
Mr Ramatlakane said that he had not seen Mr Letsoalo's “firing letter’’. He asked what the charge was for firing Mr Letsoalo. He asked if Mr Letsoalo was charged for negotiating his own salary. He asked the Board if the worst charge they put to Mr Letsoalo was not the same charge they should have put to themselves. He said he was referring to the scheme which they had worked out for themselves in the previous year where the Board members benefited by paying themselves lump sums. They paid themselves without the Minister consenting to it. This was only disclosed after the Committee asked the Board if they paid themselves that money and they reluctantly agreed. Some of the money received stretched to R2 million and was money outside the scope of normal board meetings. They paid themselves and yet they were still on the PRASA Board. That money was irregular and illegal and they were supposed to pay it back. He asked why the Board was still there and if they were still fit for office. The issue of Mr Letsoalo paying himself was a scapegoat. Mr Letsoalo had refused to pay Werksmans Attorneys and the Sunday Times article about Mr Letsoalo paying himself might have been a sponsored article without doubt. He asked if the Werksmans invoice had been paid and if it had, what budget had been used. He asked Mr Phitsane how much the package for an Acting GCEO was. He asked if the Board was still fit for office, and answered the question himself in the negative.
Mr G Radebe (ANC) commented that he did not see the difference between what happened in the SABC Board with the PRASA Board. The PRASA Board “is corrupt” and should be dissolved, an enquiry should follow and people should be arrested. Since the Board's appointment in 2014 to date, what had they done? When they were first appointed, they came up with a strategy to fire the CEO in 2015, appointed an Acting GCEO who did not want to comply with their interests and got booted. Then the Minister tried to assist with the secondment of Mr Letsoalo who was fired within six weeks in August 2016. He addressed Mr Letsoalo and told him that “you don’t make threats” and hopefully he would find time and apologise to all those he threatened. The Board should not appoint anyone as their term was coming to an end. Doing so would mean that they want to rule from the grave. He said that Mr Letsolao was fired because he “closed the tap”.
Ms S Xego (ANC) agreed with the previous speakers. She stated that there was a communiqué between the Minister and the Board about the secondment. She asked if Mr Letsoalo's remuneration and what he was getting at DOT before was discussed. She asked if the Board advised the Minister about the salary irregularities before they terminated the secondment. She requested an update on the mandate for the recruitment and appointment of a permanent GCEO. She said that the PRASA Board liked accounting to the public, a responsibility which belonged to the Committee.
The Chairperson remarked that PRASA had a mandate to ensure that they upped the stakes of the economy, and ensured that people were able to get from point A to point B. She was disappointed that since the Boards appointment in 2014, the PRASA mandate had never been attained but instead the Committee received problems that blurred the PRASA mandate. The PRASA Board had put aside governance and instead had to appear before the Committee while faced with many problems. Mr Letsoalo joined the Board but was shown the door within six weeks and she wondered what exactly Mr Letsoalo had done wrong. The conduct of the Board before the Committee left much to be desired. The Committee would write a letter to the Minister and the President would be copied, explaining that the Board had shown dispute after dispute. Mr Letsoalo was the fourth GCEO since the Board's inception in 2014. Mr Letsoalo had requested the terms of reference of his remuneration and there was Werksmans. In the Western Cape, trains were always late and this applied to trains in Pretoria as well. There was little monitoring and evaluation of the problems in PRASA and the main focus had been on disputes and dispute resolution.
Mr De Freitas suggested the response by the Board must not be rushed but be put in writing.
The Chairperson replied that the last time a written reply had been requested, the request did not materialise.
Mr Steenkamp responded that they would provide the written documentation requested by Friday. He started by clarifying the perception that the PRASA Board had been disrespectful of the Committee. He said that it was not the Board's intention to disrespect the Committee. He responded to the issue of the supplementary board fees and stated that he was surprised to hear the allegation that board members made millions in this transaction. He would provide the Committee with a detailed written response that would clear the false perception held by the Committee. He would indicate how many board meetings the Board had taken part without getting paid and that the Board had taken the decision to only take 25% of the money that was due to the Board for that financial year. Any other version was not the truth. He did not see the reason for his repaying the fees that were due to him as he was in actual fact short changed. It was painful to hear the accusation that the PRASA Board was "corrupt" and this was an insult.
He explained that Lucky Montana’s contract was supposed to terminate on 31 March 2016. Mr Montana had himself requested the Board in March 2015 to release him earlier by November 2015. He had been engaging with the Board chairperson, Mr Molefe, about this request when the Board had arrived in 2014. He gave the Board a letter in March 2015 and the Board accepted it. Hence the Board did not strategically dismiss him.
He replied that they did not have a written MOU concerning the secondment as it was a very difficult process to manage. When the Minister approached the Board on 30 June 2016 requesting the Board to accept her request to second Mr Letsoalo to PRASA, the Board deliberated on the process. They requested to convene with the Minister on 7 July 2016 but the Minister could not make it. Instead, she sent a letter approving the secondment of Mr Letsoalo. On 26 September 2016, a meeting was held and the Minister decided that Mr Letsoalo's secondment would last for a period of six months effective from 1 July 2016 to 31 December 2016. They agreed that the term of the secondment would be extended for one further month, hence it would end on 31 January 2017.
Mr Steenkamp stated that it was disappointing to note the Board being accused of staging Mr Letsoalo's exit and engaged in the buying of the media. Two weeks prior to the media article about the 350% salary increase, the Board was contacted by the media and they had no idea what the media was talking about. The Board's final decision was taken prior to the media article.
Mr Steenkamp replied that Mr Letsoalo called for a media conference against the Board's instruction and outside of PRASA's premises.
Mr Phitsane next responded to questions asked but first expressed disappointment in the manner in which they were being addressed by the public representatives. He did not appoint himself to be a PRASA board member and was not getting any benefits. He said that if he disclosed how much he was losing by being with PRASA to try and assist it, everyone was going to be disappointed. He was not aware that there were “taps” in PRASA that needed to be closed. He felt abused being a PRASA board member and was not sure what they meant by the alleged millions of rands that the Board had secured themselves. PRASA was complicated as everything had not been done properly.
Mr Phitsane replied that at PRASA “we don’t have contact numbers of the media, issues of PRASA are always in the paper”, some of this could be because of court matters as some documents became public documents and were then publicised.
Mr Phitsane said that when Mr Letsoalo went to PRASA, further communication was supposed to come from the Minister and everyone was waiting for this. In the meantime, time was ticking by and Mr Letsoalo had to work. There were supposed to be engagement about his salary, ultimately the issue went to the Board. From the start, they could not work with Mr Letsoalo as they could not have an Acting GCEO who did not listen to them. They tried to get the Minister to assist but they never got that intervention.
Mr Phitsane said the Committee had raised that the Board should be dismissed was within its rights to state. The acting positions came as a result of their starting the recruitment process for a permanent GCEO because they felt they had to first appoint the accounting officer before they fill other positions, and the process went through the recruitment agency. The recruitment process for a permanent GCEO finally got to Cabinet, but they never got a response and were later told to re-start the process. He said the structure of PRASA was very problematic and PRASA had subsidiaries which had their own boards and at times there were grey area in terms of what the main PRASA board and the subsidiary board was supposed to do, hence an alignment was needed. He indicated that the Board had no interest in derailing PRASA. They were speaking the truth and had no reason to lie to the Members. He addressed the issue that Mr Letsoalo had raised that he had been copied in some emails. He said that he was a non-executive member and hence was not operational.
Mr Phitsane spoke about being called thief. When you are nominated to be a board member, it is because there is a certain confidence in you. Hence this accusation was not right in terms of his discharging his duties.
The Chairperson indicated that the word thief had been withdrawn by the Member who raised it and she apologised on behalf of everyone.
Mr Lindikhaya Zide, Acting CEO: PRASA, replied to Mr Ramatlakane about the CVs and stated that he had already sent in his. He explained the protocol of an email when a person is copied in, you do not expect the person copied to respond as that person is not the subject of the email. If they wanted his response, they were supposed to write to him and ask him to respond. After emails have been exchanged and finalised, the matter will then be escalated to the Board.
Mr Ramatlakane said the question whether Werksmans Attorneys had been paid, was not answered.
Mr Zide replied that the Board had met with Werksmans Attorneys to clarify many issues.
Mr Letsoalo gave his final response. He said that, yes, Werksmans Attorneys had been paid. When he was in office, he refused that Werksmans should to do criminal prosecution work. He accused Werksmans of telling the Hawks what to do and that Werksmans wanted to hire private prosecutors, a decision which he did not agree with.
Mr Mokonyama said that when they received the letter about the payment of the secondment allowance, they requested a legal opinion which stated that Mr Letsoalo had already signed a consent form for his secondment. On the matter of Board members paying back the money, he said that some Board members had said they were not going to pay and that they could take them to court.
The meeting was adjourned.
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