Hearing on the Passenger Rail Agency of South Africa’s (PRASA) Annual Report and financial statements for 2021/22, with Minister

Public Accounts (SCOPA)

29 November 2022
Chairperson: Mr M Hlengwa (IFP)
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Meeting Summary

Passenger Rail Agency of SA (PRASA)

The Committee met with the Passenger Rail Agency of South Africa (Prasa) for a hearing on the material irregularities and irregular, fruitless and wasteful expenditure at the SOE. The Minister of Transport was in attendance.

The Minister of Transport said that in March 2022, he appeared with Prasa before Parliament. The improvement against predetermined objectives of 11%, from 18% to 29% remained unacceptably low. Prasa had to do far better on its outcomes and ensure that it improved how it handled public funds by eradicating fruitless and wasteful expenditure. That could not be done without employing people with the right skills in critical positions.

“I have been quite emphatic on the issue of vacancies with the board”. Some of the positions were vacant and some were going through disciplinary processes. Those processes could not go on forever, they had to be completed, including the filling of the group CEO position. It had to be filled, and there was nothing visible standing before the Board, preventing it from going ahead to employ someone into the position of the group CEO even though there were challenges; but the law did not stop the Board from appointing a CEO. “I was informed that the board was finalising the process of recruitment for the position of CEO. Interviews were held and the headhunting process has also kickstarted”.

Prasa remarked that when the Board arrived in October 2020, it inherited about R28 billion in irregular expenditure cumulative from the previous years. The Board had undertaken to deal with that amount through condonation and following National Treasury’s procedures. By the end of March 2021, the Board submitted to National Treasury, about R12 billion that had been checked in line with Treasury guidelines for condonation. That was not a completed matter until the National Treasury had approved it. Prasa was still working with the audit teams to complete the work on reducing that R28 billion.

The Committee commented that procurement was not in line with Prasa’s supply chain management policies and thus contributed R941 million towards irregular expenditure. For goods and services, R88 million was incurred. Due to Competitive bid methods not followed for appointment of suppliers contravening SCM policies, R65 million was incurred. For overspending on contracts, prior to obtaining approval for delegated officials, was R34 million and for non-compliance, with Prasa’s remuneration policies it was R17 million. Those were the current Board and management’s creations. The AG said insufficient and inappropriate evidence was provided to indicate that all those instances were investigated in the 2020/21 financial year.

The Committee asked why those instances had not been investigated. The Committee was told that irregular expenditure was dealt with in a concerted effort yet more irregular expenditure was created. Why was there close to R1 billion in irregular expenditure in one financial year? Why did Prasa have a line item of salaries when there were no people responsible? The fact that the CFO was going through a DC was welcomed, but was the CFO the only person who failed to produce the financial statements and ensure that every other item that money had been spent on was accounted for? The person who was spending that money and caused the irregular expenditure – who was it? If that person was not being dealt with, Prasa would have another disclaimer. How long would the DC process of the CFO take and how long had the acting CFO been a part of the finance division? Should the CFO be dismissed as an outcome of the DC process, how long would it take the Board to refill the position?  

Meeting report

Mr Fikile Mbalula, Minister of Transport, made his opening remarks stating that in March 2022, he appeared with Prasa before Parliament. The improvement against predetermined objectives of 11%, from 18% to 29%, remained unacceptably low. Prasa had to do far better on its outcomes and ensure that it improved how it handled public funds by eradicating fruitless and wasteful expenditures. That could not be done without employing people with the right skills in critical positions.

“I have been quite emphatic on the issue of vacancies with the board”. Some of the positions were vacant and some were going through disciplinary processes. Those processes could not go on forever. They had to be completed, including filling the group CEO position. It had to be filled, and there was nothing visible standing before the Board, preventing it from going ahead to employ someone into the position of the group CEO even though there were challenges; but the law did not stop the Board from appointing a CEO. “I was informed that the board was finalising the process of recruitment for the position of CEO. Interviews were held and the headhunting process has also kickstarted”.

The focus for the financial year was to recover certain corridors, particularly the Mabopane corridor in Pretoria and Cape Town Central line corridors. The Mabopane corridor was fully recovered, infrastructure was secured and the security measures in place seemed to be working. However, the Cape Town central line had several challenges, including relocating encroachers and finding alternative housing. “I have been hands-on with the matter – I have engaged with the encroachers, the Cape Town municipality, and the national and provincial governments”. Those people were supposed to be relocated or moved by 1 November 2022 to a particular area that was allocated. Agreements were signed and the land was inspected but there were obstacles concerning implementation. There was an argument about who paid between the metro and the national government regarding the responsibility to install ablution facilities and design the area to move the people. “I have seen the land, but the issue is about the payment.

Prasa would account in terms of the central line and would soon open other parts. It had witnessed the severe destruction, theft and vandalism of rail infrastructure in most corridors and as the process of regaining those corridors ensued, thugs had been threatening Prasa contractors. Working together with Ministers in the economic cluster, measures taken by government on the sale of scrap metals would be announced the following day as well as the work concerning the scrapping of metal led by the Department of Trade and Industry. Further revelations would be made on that the following morning.

Working with Prasa security and the South African Police Service (SAPS), scrap metal dealers were visited in Gauteng and identified their negative impact on the theft and vandalism of public infrastructure. Recently, the courts sentenced criminals arrested in one of the joint operations by the SAPS and Prasa. Prasa was overseeing critical public infrastructure that served the interest of the majority, the poor of the poorest of the country. “We need crime intelligence and communities to join Prasa in that war”. It would be impossible for Prasa to fight that war by itself. The possibility of bringing in the South African National Defence Force (SANDF) in some of the corridors was a matter that had been explored. The core mandate of Prasa was to provide safe, reliable and efficient rail passenger services – its mandate was not security, and it could not spend much of its budget on security.

Similarly, “we need to review the laws to ensure that encroachers’ interests do not outweigh those of thousands of rail passengers who rely on rail to access schools, clinics, workplaces and commerce as is the case in Cape Town. We are unable to operate because a few people have encroached on the railways and are refusing to move because the law favours them. They are inconveniencing the 20 000 people who use this to go to work and so on. Our laws must protect critical infrastructure and the interest of rail passengers against those who contravene the laws”.

Whilst navigating through those challenges, the following achievements were also realised against the planned targets for the year such as the reintroduction of services in Mabopane, Pretoria. There were also new trains on the Cape Town to Simonstown route, Cape Town to Retreat via Athlone and Cape Town to Belleville via Goodwood routes. As for yesterday, the Soweto residents were excited to witness Stimela Sabantu navigating to several places.

While we celebrate that good news, it was important for the Board to root out mafias and improve internal controls. Findings by various forensic reports showed that corruption was almost endemic, and its stains were as stubborn as resistance. Whilst that did not reflect the entire Prasa personnel, there were far more good apples than rotten ones. The Department of Transport would leave no stone unturned on all those who abuse the systems for their self-enrichment. Prasa was in a dire financial situation as it was not generating sufficient revenue to cover its operating costs. The group posted a loss of R1.9 billion for the year under review. As part of performance agreements, the ministry and the Board committed to the President to dramatically reduce Prasa’s irregular expenditure in all entities. They committed to 100% elimination of fruitless and wasteful expenditures by 2024. The Special Investigations Unit (SIU) was investigating all irregular expenditures and once the findings were made, the ministry would not hesitate to recover the funds from the culprits. On concluded forensic reports, Prasa was initiating consequence management on personnel involvement.

In conclusion, the ministry was making all the necessary efforts to ensure that Prasa functioned optimally and rooted out corruption. “We call on all South Africans to report the crimes and we rely on communities to blow the whistle on crimes and ensure that Prasa is safeguarded from the outside within”.

The Acting Chairperson indicated that the Committee had received the report, but that was a hearing and several questions on salient areas would arise.

Board Chairperson Remarks
Mr Leornard Ramatlakane, Chairperson of the Board, Prasa, said that when the Prasa board arrived in October 2020, it inherited about R28 billion of irregular expenditure cumulative from the previous years. The Board had undertaken to deal with that amount through condonation and following the National Treasury’s procedures. By the end of March 2021, the Board submitted to National Treasury, about R12 billion that had been checked in line with Treasury guidelines for condonation. That was not a completed matter until the National Treasury had approved it. Prasa was still working with the audit teams to complete the work on reducing that R28 billion. The work continued and the Board was committed to ensuring that Prasa operated like any other entity that adheres to the rules.

Secondly, the Board had reported that it appointed a group CEO, but things did not go as planned and Prasa parted ways with that group CEO even though he had gone to court to dispute certain things. The process of advertising commenced, and interviews took place, but the Board did not find a suitable candidate. The Board started headhunting and interviews would be ensuing soon; by the end of that year, a suitable GCEO would be recommended. It was a panel of the Board that was busy with the process of recruitment – a five-personnel panel.

Mr Hishaam Emeran, Acting group CEO, Prasa, said there had been a concerted effort to reduce irregular expenditure, sitting at just over R30 billion. There was a further R12 billion which was currently undergoing the determination test at National Treasury. Prasa was waiting for feedback on that amount. Of the R30 billion figure, there was approximately R18 billion that was actively in the process of being dealt with. Those matters were closely monitored.

It may not be highlighted definitively in the presentation, but some of the key measures implemented going forward to achieve a different outcome, particularly the audit action plan, had been implemented with immediate effect. The audit action plan was developed with a high-level team to drive as management learnt from the previous years. It was also engaging the Auditor-General South Africa (AGSA) to take input at an early stage. One of the key things to drive this year was to ensure that this was not left as a year-end cycle. Management wanted to bring, within, Prasa a monthly reporting cycle in the financial space. There would be regular reporting and tracking.

Hearing proceedings
Ms V Mente (EFF) commenced with a reminder to the Minister who, at some point,   was leading the most progressive generation to bring change and address the imbalances, particularly the inequalities. Unfortunately, he was now leading one of those most important institutions of government that were the central nerve in addressing those imbalances. Prasa’s mandate was understood - two weeks ago, with the Hawks, there was a question about the state of Prasa and how it was that at Prasa, it was very easy for people to steal everything and collapse the entire infrastructure, but there was no knowledge of who was behind it, yet there was law enforcement. Currently, there were no guarantees that the current infrastructure being installed at Prasa was going to be there tomorrow and that was indeed true, Prasa might as well close shop.

The AGSA had put Prasa in its entirety under a disclaimer, which meant that the state and the people did not know what the money Prasa was given did. The money could not be accounted for. Thus, a disclaimer meant the financial statements were not prepared in accordance and the AG could not audit anything. In March, the Minister came and pleaded for some time to be given for the Board and the team to deal with everything. That was agreed to, but Prasa still received a disclaimer, so why did Prasa get a disclaimer again after having afforded everyone an opportunity to deal with matters, but the annual financial statements were not up to scratch?

Mr Emeran replied that the disclaimer that Prasa received was the fourth consecutive one and there was a clear requirement of how Prasa could improve from that. The team looked at the shortcomings of the process and one of the key things identified was that in terms of the audit action plan, the time left to address many of those challenges was insufficient. Management had learnt from that process to ensure that the audit task team was immediately activated at the appropriate level included in the performance management systems and obtain the specific actions identified with clear time frames to be included in those performance management compacts of the executives. One of the things that will assist in addressing the findings on material irregularities, the root causes that must be addressed, had been imposed with specific action plans. Management had started now with the process. The key thing to ensure not repeat that disclaimer was to ensure that the action plan was driven. “We had learnt the lessons from the previous cycle”. Many of the root causes that led to the disclaimer in the 2020/21 financial year still prevailed. The plan was available, and it could be unpacked to address the concerns of the Members.

Mr Ramatlakane said the Board was asked to go to various places where the disclaimer emanated. That process had to do with the history of the entity where asset management had been a problem. That was not captured or followed – those deals with the rail, and everything that had to do with the rail. When the division occurred before, Prasa did not ensure that it paid monies for the SAPS to manage the asset on an ongoing basis. The Board was dealing with a historical challenge and a model was put in place for dealing with the system and asset management. It took time for the AG to approve that model because it had to be authenticated by a body outside of Prasa to be accepted. That process caught up with the Board, but it was hoped that things would turn out differently this financial year since that matter had been finalised.

Ms Thinavhuyo Mpye, Chairperson of the Audit and Risk Committee (ARC), Prasa, added that one of the things the AG had pointed out was that Prasa did not have a comprehensive turnaround strategic plan, but Prasa had various strategic documents to turn around the entity and those had since been consolidated and they would be presented to the Board as a comprehensive plan by management. The second issue that the AG pointed out was capacity, and now capacity in the finance department had since been beefed up. New personnel had been appointed to enhance the capacity.

The other issue was the capacity in the internal audit department, but “we have now finalised the appointment of a partner” – Prasa entered a three-year contract with SNG to assist with the internal control rebuilding and capacitating the internal audit department. Some of the financials were not reviewed by the internal audit department before they went out to the external audit process, which had been sorted.

Some material irregularities and qualifications were pointed out in the past, but three qualification matters had been finalised and closed. The AG was pleased with the existence and completeness of the assets, which was the drive that the Board started from the previous cycle. Prasa had never done that in the past ten years. This year when the team embarked on verification, the office of the AG reported that it was pleased with the existence and completeness of the assets, but the remaining issue was the valuation of the assets and the determination of the residual values. Unfortunately, Prasa received a disclaimer because the AGSA would not sign off on a qualification until Prasa had dealt with all those matters. The remaining matters would be sorted out in the next financial year.

Ms Mente indicated that she had heard the claim that the entity was trying to solve the problem, but this was the second year. Those matters predated the Board – Prasa had a disclaimer already but did not expect to see the same status in the second year. The answer became what the plans were, but it was leaving out the very critical part of it – there were people in those offices. The Board had staff, and people were being paid but still failed to produce the required standards of financials. “The issue is that we have a recurring outcome that is not satisfactory while people are being paid”. This all meant that people in those offices did nothing. That state of disclaimer meant that there was absolutely nothing that could have been done. The AG said, “I was unable to obtain sufficient and appropriate audit evidence to provide a basis for an audit opinion on these consolidated and separate financial statements.” This was the second year of the Board, and the Board knows what must happen. What happened to the people who were supposed to at least do something?

Mr Ramatlakane replied that it was indeed the second year of the Board dealing with that matter. In the previous year, the Board indicated that the issue of asset management was an albatross, and that was the plan for how it was dealing with it. There were staff in the finance department, but it was under-capacitated, hence, the Board went out to source the required skills and expertise. The root cause of the problem, which was asset management, was that the Board was confident that going forward the situation would change.

The acting Chairperson said that Ms Mente’s question was direct – when the Board arrived at Prasa, there were people occupying offices and the causal factor did not emanate from space. Irregularity pointed to certain actions, and she asked about the consequence management applied in terms of what the Board found. There was a CEO who just left and there was also a first acting CEO, but now there was a second acting CEO, but the results were the same.

Mr Ramatlakane confirmed that there were people, but they were under-capacitated. The Board had instituted an investigation – the CFO of Prasa was going through a DC for underperformance and other matters. Previously, there was no capacity available at Prasa to compile and prepare financial statements. Hence, the Board started the process of ridding off people who could not do the work and it also brought in some people with financial capacity on a fixed-term contract. “Going forward, we will not sit and talk the same language in the next financial year, given the current plan and additional capacity that has been put in place”.

Ms Mpye added that some of the matters mentioned in the audit report included contract management and supply chain management – the fact that the depot modernisation programme did not have enough depots to house the new trains. The Board then undertook contract management via EPCM and engaged the DPSA to accelerate some of the capacity issues identified under the supply chain.

There was an issue with the Gibela Project where the AGSA indicated that some of the conditions set out on the MSA contract with Prasa and Gibela were not paid attention to, and it was agreed that there would be a project team that would deal with that Gibela Project. The reason why the Board went to DPSA was that the Board wanted to accelerate the plans to finalise the modernisation of depots.

Ms Mente welcomed the citing of the CFO, who was going through the DC process, but said the issue was that funds were appropriated to be utilised in Prasa. She wondered under which conditions the funds were appropriated if the key performance areas were not satisfactory to the Portfolio Committee at the time. If Prasa was getting funds, Prasa was expected to show accountability for it. That would mean that the shortfall in Prasa was not stated during the time of appropriation because money could not be given whilst it could not be accounted for. It was hard to understand under which conditions the money was appropriated, which could not be accounted for today. If there was short staff and under-capacity meant that the office was dysfunctional and we should not have a line item of salaries, or procurement of services because at the end of the day, if ever we bought anything, no one was going to keep the invoice, capture it and produce that line item in the financial statements.

Financial statements were not complicated if there was information available. The citing of assets was heard, but that was a separate issue and item. The main item was that once you got money from the purse of the state, it meant someone was going to use it to buy something. If that was not the case, it meant the money was spent recklessly and would not be accounted for because there was no capacity. Why did Prasa have a line item of salaries when no people were responsible? The fact that the CFO was going through DC was welcomed, but was the CFO the only person who failed to produce the financial statements and ensure that every other item that money had been spent on was accounted for? The person who was spending that money and caused the irregular expenditure – who was it? If that person was not being dealt with, would Prasa have another disclaimer? That would become a cycle even under a new CFO. It was difficult to understand why salaries were being paid, yet only one person was being held liable for everyone else who could not produce a single piece of evidence of how the money got spent.

The acting Chairperson clarified the question by asking who was taking responsibility for that failure and what actions had been taken to ensure that consequences were observed.

Mr Ramatlakane said the reason why the Board decided to conduct a forensic investigation in the finance department was because the Board was not happy with the responses on that matter. Some of the consequences were in place and people were going through the disciplinary process. When the Board reviewed the issue of finance, it identified the dysfunctionality and resolved to do something different.

Mr Emeran said the biggest challenge was around the capacity constraints in putting the AFS together, but what had been clear from the Board was conducting a forensic investigation, not only within finance but in functions like SCM and legal, to get to the bottom of the weaknesses within the system. That was one of the things currently being instituted.

Ms Mente said the two responses bordered on both the salary and the skill. The salary item of Prasa and the dysfunctionality confirmed an imbalance of the skill and the salary. A person was getting a salary they were not skilled for. If there was a feeling that information got withheld was either because they did not know how to obtain what was required or it was done deliberately. “That reminds me of the National Skills Fund, where a disclaimer is issued but a plan is said to be in place, but nothing changes, and no one wants to account yet people have been receiving salaries. Are we paying people who are skilled to do the work or people who occupy the desks and go home? The money was spent but that could not be proved”.

What was the outcome of the skills audit? It did not seem like there were managers at Prasa. If people could not do their jobs, they had to leave. “We are a state that is trying to give our people what is due to them, but they are still not benefitting. And we find an institution that is given money but cannot account for it – this cannot be accepted”.

She welcomed the forensic investigation, and that the SIU was also in the space of Prasa with some of the contracts. The Board had considered bringing in the SIU this financial year. What the AG was saying about the asset register was very scary and there was no way there could be no knowledge of how much the assets were worth, where they were and who was holding them and renting them by how much. If that persisted, the entity would not be doing what it was supposed to be doing. The SIU had to be invited because that could not be accepted. There was a new group CEO and tomorrow, there was going to be another appointed CEO. The managers were getting salaries, but they were not attributed to the failure at Prasa.

Adv Smanga Sethene, Chairperson of the Legal Committee, Prasa, said Minister Mbalula had recently visited Prasa offices where he spoke at length about Operation Ziveze. That was a board project which was premised based on what Ms Mente was articulating. On 8 and 9 November 2022, the Board had a workshop where the Board received presentations from the SIU on matters that had to be included in the new proclamation.

Regarding Operation Ziveze, its basis was borne out of a realisation by the Board of the lack of skilled personnel and that Prasa was bloated as an organisation. The Board did not have an accurate number of Prasa’s workforce. Operation Ziveze found that, indeed Prasa’s HR and finance systems were not at best, in the sense that there were ghost workers; some of them could not be accounted for and some had exited life. Hence, the next phase of Operation Ziveze was to include the SIU to assist the Board. The head of SIU had already been in discussion with the Board and on Friday, the Board would be meeting officials to iron out certain matters that had to go into that issue. The Committee could be assured that the Board had been conscious of the fact that there was a need for a skills audit to be conducted. As a result, a service provider was in the process of appointment. For example, it was important that at Prasa, there had to be an army of engineers, particularly on the technical side, but the absence of that created serious problems. In due course, the Board would be back to the Committee to inform the Committee at great length of the outcomes of the skills audit. There was no doubt that the SIU would make its report public.

A Prasa official added that the Board also found that there had to be a way for Prasa executives and senior management to have their salaries speak to their performance. It was proposed that it should be 75/25 per cent monthly, but that was an organisation where even individual objectives were not in place. The Board would do that and ensure that the contracts were converted within the law. Once the guidelines had come forth to say that was doable, it would be done. 75% will be the salary and the 25% would speak to their performance. The skills audit provider had been appointed and management confirmed the skills audit was going to be commencing. That would be reported monthly, and the Board would monitor it closely.

Ms Mente suggested that the skills audit had to extend to the lifestyle audit of those employees. “We saw the Minister on the train at Mabopane, that was appreciated but we were very late. With everything going on at Prasa, at a central point, we must be responding to the needs of the people. It does not look like we are meeting these needs”. Prasa ordered 600 trains from Gibela, but it had produced 104 and out of those 104; how many were functional? When were they coming?

Additionally, the Minister alluded to the issue of land to relocate the people who occupied the railway tracks in Cape Town. Earlier during informal discussions, she was informed that there was a motion in the City of Cape Town around the issue of land and that motion was rejected to avail the land. Not very long ago in Parliament, “we debated the issue of the availability of land, and we were made aware that the Constitution allows it”. It was difficult to understand what the Minister meant about who had to pay. “Do we not have land as a State that we must pay for it? We cannot be held backwards by the fact that there is no land to relocate people”.

Mr Ramatlakane said that there was already an agreement to include the issue of skills audit and monies would be part of the SIU proclamation. The report on the process would be provided to the Committee.

Mr Emeran responded to the question about the trains and said 111 trains had been accepted. The reality was that Prasa was not utilising all of them yet due to the recovery of the corridors, which were currently being rolled out. Prasa was still recovering many of the corridors and of the 40 corridors that Prasa normally reported on, it was now on 17 corridors. Having recovered those corridors, Prasa was not running at the frequency it ran before it suffered theft and vandalism. The main issue related to the signalling programme. The service was quite limited and once the signalling was recovered, Prasa would be able to run trains at the 5/10 minutes frequency they had run at before. More trains had to be brought back and interim solutions were being implemented. The challenge in the Naledi corridor was accelerating the signalling programme to run higher frequencies and the depot modernisation programme, which was already more than five years behind schedule – to modernise the depots, hence the DPSA engagement for accelerating. Of the 111 trains, Prasa used about 30 to 40, split among Gauteng, Western Cape and Durban, where new trains had already been deployed. The demand was forcing Prasa to increase the frequency. The financial troubles experienced also stemmed from the fact that Prasa was not transporting the same passengers it did before when it transported 500 – 600 million passengers per annum, which had dropped to 20 million. The revenue streams were a key focus area in terms of recovery as well. The priority was to launch those corridors with the new trains.

There was a detailed plan for the corridors; some had advanced more than others, and the trouble was opening the Pretoria/Joburg link, including the Tembisa link. Management met with Eskom yesterday, Prasa had progressed on some of the corridors quite far, but the challenge was also the readiness of the points of distribution facilities from Eskom that were also hit by theft and vandalism. The meeting with them was to ascertain how it could accelerate fixing those distribution points. The corridors may be ready before Eskom could fix those points, but the challenge would be energising the line.

This week blue trains were launched on the Cape Town to Bellville route. The rest of the corridors, other than the central line, were operating with the blue trains.

In KwaZulu-Natal, “we have recovered sections of the corridors though they were hit badly by the floods. Prasa recovered the corridor through to Umlazi and extended the service to KwaMnyandu”. Prasa was running a diesel from KwaMashu and Tongaat to Durban while recovering the section. Once those were fully recovered, a trial test of the blue trains would be tested. Critical for the sustainability and maintenance of the blue train was to ensure the depot modernisation programme did not lag.

The Acting Chairperson asked what the role of Mr Emeran was before he was appointed to act.

Mr Emeran said his position at Prasa was the CEO of the Technical Division.

The Acting Chairperson said that was where the problems of Prasa came from.

Mr B Hadebe (ANC) presented his notebook for all Prasa and Eskom engagements to make the point that all that had been raised to the Committee was documented. What was being said today was what the Committee was told two years ago. That was a worrying factor. When the Committee first interacted with Prasa, the chairman of the Board stated categorically that Prasa was a broken business, which suggested that he understood the magnitude of the challenges the Board was fronted with; thus, he knew what needed to be done to fix that broken business.

He directed to the Minister and suggested that the Committee needed to get an understanding of where the challenge was and the bottlenecks. As a former provincial secretary of SANCO in the Western Cape, he understood what the challenges were. He proposed that the Committee convene a meeting with the City of Cape Town and the Provincial Government because the AGSA had highlighted the Western Cape target numbers, which was 16 but only five were achieved. The reason was that illegal settlements were not relocated, and the contract had to be cancelled for not finding accommodation for those people. The second aspect highlighted by the AG, which contributed to the underperformance, was the number of metro rail passengers – the initial target was 65 million but only 16.5 million was achieved due to delays in the recovery of lines and corridors and the central line was also a contributing factor. “We cannot simply just understand the challenges but not go where the problem is”.

For four consecutive years now, Prasa has been given a disclaimer opinion on expenditure management. He welcomed the point and commitment to deal with irregular expenditure decisively, but said actions spoke louder than words. While management was busy dealing with the historic irregular expenditure, it created its own history and contributed to irregular expenditure. He said he would have understood if they were dealing with an instance where management did not contribute to the existing irregular expenditure. “A person who takes over will have to deal with your history”. There were multimillion rands of irregular expenditure incurred in the financial year and there was no evidence to suggest that anything was done to investigate it. That was what the AGSA had said.

For that financial year, procurement was not in line with Prasa’s supply chain management policies and thus contributed R941 million towards irregular expenditure. For goods and services, R88 million was incurred. Due to Competitive bid methods not followed for appointment of suppliers contravening SCM policies, R65 million was incurred. For overspending on contracts, prior to obtaining approval for delegated officials, was R34 million; for non-compliance, with Prasa’s remuneration policies, it was R17 million. Those were the current Board and management’s creations. The AG said no sufficient and appropriate evidence was provided to indicate that all those instances were investigated in the 2020/21 financial year. Why were those instances not being investigated? We were told that irregular expenditure was dealt with in a concerted effort yet irregular expenditure was created. Why was there close to R1 billion in irregular expenditure in one financial year?

Ms Mpye said that the irregular expenditure incurred stemmed from historic contracts. It was not anything that came from the creation in the new financial year. Those amounts were from the contracts that were placed as irregular expenditures in the previous year so all payments to those contracts automatically triggered irregular expenditure. As mentioned earlier, Prasa was engaging the National Treasury for condonation to the tune of R11.6 billion. R13.4 billion was still going through determination tests to assess if there were no losses incurred from those contracts. Once the internal audit did that process, it would be brought before the ARC to be considered for recommendation by the Board for condonation. That would leave about R5.8 billion that was yet to go through a determination test. Last week the ARC sat and considered three contracts worth about R44 million. That has gone through the determination test, and it would be presented to the Board, which after deliberation by the Board, would be submitted to the National Treasury for condonation.
Mr Hadebe sought clarity if overspending on a contract before obtaining approval from a delegated official is something of the past; if so, why would the AG say there was no appropriate evidence that suggests this matter was being investigated?

Ms Mpye said if it did not go through the condonation process and until National Treasury had approved the condonation application, it remained on the list of irregular expenditure. Even the R11.6 billion was still listed as part of the R30 billion even though it had gone to National Treasury to go through that process.

Mr Hadebe said once a determination was made to condone, certain things ought to have been undertaken before and there had to be a demonstration that there was value for money. There was a need to summon those responsible and there had to be an outcome for that and an arrive at a decision to condone. The AGSA had said there was no sufficient and appropriate evidence that the investigation was conducted. If Prasa already went to the National Treasury for condonement, that evidence ought to have been provided to the AG so that the AG could not come and say there was no evidence, yet National Treasury had already been approached for condonation. Once a determination was made to condone, Prasa ought to have satisfied all the prescripts regarding the framework of irregular expenditure to decide condonation. But when the AGSA said there was no sufficient evidence that Prasa had been investigated, Prasa could not say that those amounts fell within the category that was waiting for approval for condonation; otherwise, that statement would not have arisen because the evidence would have been produced, showing the list of officials that were involved, the DC process and the outcome of those processes and the only thing left would be for National Treasury to condone.

National Treasury could not be used as an excuse because Prasa was supposed to go to National Treasury, having concluded the investigations relating to the irregular expenditure and satisfying itself that there was value for money, then approached National Treasury. When the AG said there was no evidence, it meant nothing was done.

Ms Mpye replied that the process outlined by Mr Hadebe was done. The SIU was the one that investigated the GO contract and there was a report that showed that Prasa suffered no loss, hence, the recommendation to the Board and the submission to National Treasury. The recommended amounts had gone through the satisfaction test.

If Prasa submitted to National Treasury and the AG, it would have been privy to such information and would not have arrived at the conclusion that it could not see evidence, hence it listed all the amounts where there was no demonstration of investigation and identifying culprits. The AG would not arrive at the current conclusion it made against Prasa. The AG said that Prasa was unable to detect, prevent and disclose – if all that had been done, why would the AG say the internal controls were so weak that Prasa was unable to disclose everything and, as such, it could not express an opinion, hence the disclaimer. Why was Prasa disclaimed if it had done everything as required?

A Prasa official said that the AG was correct to say that Prasa had no proper internal control systems to determine the completeness of irregular expenditure. That was not unique to Prasa but from an internal control perspective, the AG was correct. Prasa had not had the capacity and the internal control department was very small, hence the appointment of a new partner to beef up the capacity of the internal control systems. The Board had also approved a new SCM policy, which would enable Prasa to avoid incurring irregular expenditures and broaden the scope of the policy.

Mr Hadebe said that the AGSA acknowledged the historic issue relating to consequence management and the Committee also applauded Prasa for reducing four areas of disqualification but there were still issues that pertained to irregular, fruitless and wasteful expenditures, which had nothing to do with areas awaiting condonation. Was Prasa saying that it was not true that it was not able to detect, prevent and disclose irregular expenditures? Were those areas also picked up by the internal audit of Prasa?

“Should we leave here under the impression that the leadership has measures in place to disclose all irregular expenditures?” The AGSA said that Prasa had not revisited the issue of 2016/17, hence the recommendation to draw a list of those to move out of this situation because Prasa had not registered everything. Previously, there was incompleteness in terms of irregular expenditure and that had not been revisited to ensure that everything that was highlighted in the past had been unearthed and disclosed accordingly because of the lack of the capacity to disclose everything.

The Prasa official said that was still under process and steps were being taken to correctly detect and report irregular expenditures. Currently, capacity was being put in place and it would be fully applied by the end of the year.

The Chairperson joined the meeting. He asked when the submissions to National Treasury for the condonation were made because the turnaround time became important to note how long National Treasury was taking. Though Prasa may well say that it had submitted for condonation, the flip side of the coin was that National Treasury may not condone it. When the Committee last interacted with Prasa, the issue of capacity building, turnaround times and revamping had always been on the agenda. It was becoming a rephrase but Members wanted to know what changes had been made in the spaces that had been cited. Operation Ziveze was noted by the Committee, as well as the revelations of the ghost workers and so on, but the question was how far Prasa was in making strides that it committed to building capacity and strengthening internal controls.

Mr Hadebe read what the AGSA said “notwithstanding the positive developments on critical matters, Prasa continued to fail to investigate everyday occurrences of irregular, fruitless and wasteful expenditure resulting in non-compliance with the PFMA. Furthermore, we have been unable to obtain a consolidated list of all investigations that have started and were in progress.” Two years after the Board had taken over, Mr Emeran could be forgiven because he was only two months on the job. Mr Hadebe asked the Board to respond to the current continuation of failure to investigate the everyday occurrence of irregular, fruitless and wasteful expenditures and the lack of a consolidated list of all investigations that had been instituted and the ones that were in progress.

Mr Ramatlakane replied that the matter raised by Mr Hadebe was an issue that had to be corrected and in fixing that, the Board had to ensure that every detail was ongoing daily and weekly was made to ensure that Prasa complied. He made that commitment to the Committee. The submission for the condonation regarding the R11.6 billion to National Treasury was made on 31 March 2021. The rest was waiting in the queue to be verified in the process going forward, the R13 billion mentioned earlier. He admitted that there was a gap between what was submitted and the daily operations regarding disclosure in ensuring that the AGSA had the same information as Prasa.

Mr Emeran said that management had filled some critical positions in the SCM function. Starting in January, Prasa would have two key SCM practitioners, over and above the positions that had been filled or were in the process of being filled. Further, Prasa was seeking assistance from the DPSA around the depot modernisation programme, which was close to eight years behind schedule to assist with unblocking the challenges in the SCM. That was to assist Prasa with the evaluation and adjudication process on an accelerated process. Additionally, on the technical side, management was considering capacitating the corridor recovery structure – the technical officials on the ground. The key one was to get the EPCM appointment going and the DPSA to unlock some immediate critical projects that needed to move.

Mr Dinkwanyane Mohuba, board member, Prasa, said that in the last sitting of the Audit and Risk Committee, it was decided that in the next meeting, the current issues persisting at Prasa, as alluded to by Members, had to be presented to the Board so that the Board could deal with them to avoid having those matters dealt with by the next Board and the people responsible would have already left. Some of the submissions that had been received were historic and the people responsible had already left. Therefore, from next month “we are going to submit the current irregular, fruitless and wasteful expenditures and the progress made in terms of what has been done to avoid investigating these matters later when the people have already left”.

The Members reached a consensus that all along, the Board and the management had been dealing with historic matters instead of the current issues that the AGSA had highlighted.

Mr Hadebe asked if Prasa had developed an action plan and how it was monitoring it. The AGSA had indicated that the audit action plan was implemented very late. How are things currently?

Mr Emeran confirmed that an audit action plan had been developed and an audit task team had also been established, which would be driven within the CEO’s office, not at a lower level. A team had been appointed and it had already convened. Very clear deliverables and timeframes had been set.

The team had assessed the root causes of those matters and the issue of capacity had come up several times but discipline in the organisation had lagged. The monitoring and evaluation were weak to ensure that those processes and policy imperatives were implemented. In the diagnostic and analysis, the team had identified the root causes and had tried to resolve matters that spoke to the audit outcome. The biggest challenges were more around the business imperatives of Prasa, and the audit issues would be dealt with as a by-product. The asset register was brought within the SAP environment in the current financial year. The second core issue that had been dealt with was around the SCM compliance space.

Mr Hadebe said it was concerning when the AG said Prasa relied on audit processes to produce credible financial statements. Currently, the financial statements had material misstatements that were only picked and rectified during the audit. Who was responsible for that function?

The official said Prasa had a moratorium appointment and people left. There was no capacity to develop and manage internal controls, even controls around the financial statements as well. There had not been capacity or time yet, but the processes had started, and some capacity had been added. The real headache of the business stemmed from a legacy of bad asset management processes since 2010 and massive vandalisation in the network on an industrial scale. That meant that the asset base had changed so substantially that producing a feasible set of assets was difficult. Two asset verification processes had been done, but they did not deliver all that was desired but delivered something to work with and needed. The previous disclaimer for the existence of assets was resolved and the AGSA was happy with it. If the Members could investigate the asset management processes, the condition assessment of assets and the impairment value of assets – for example, “we run yellow trains, which sit at zero value in the assets, but they are running every day”. The AGSA suggested that Prasa revalue those items, but a specialist was needed in that area. A specialist had been appointed in that area to assist with the understanding of whether the entity’s assets were impaired or not and to look at the conditional assessment process, which was consistent across the business but did not deliver a different value for different provinces.

Financial statements were an accumulation of everything that happened in the business; if business practices were not applied accordingly across the business, then what you saw on the financial statements would not correctly reflect the business. Undoubtedly, efforts have been put in place to address some of those issues. The audit action plan had objectives to address those misstatements. Some of those misstatements were financial but “we have disagreed with the AG and that is also fine”. One of the most important issues from the prior year which had been addressed was the matter of capital grants. Management approached National Treasury and the AG to come up with a mechanism to ensure that people realised what Prasa’s operations were and the capital subsidy when recognised as income. Prasa had a large capital subsidy sitting at R9.7 billion, which gave Prasa R5 billion profit, which is not possible at Prasa right now. That was a major issue that had been addressed. Unfortunately, not all of those major issues would be addressed quickly, but three of the major findings had been addressed. However, where there were factual findings where there was consensus, management conceded and adjusted as proposed by the AGSA.

Mr Hadebe said that as someone that relied on the accounting authority and based on the general responsibilities as outlined in the PFMA, of ensuring that there were proper systems in place, effective and efficient, in terms of financial and risk management. Two years down the line, how long should one wait to have a Prasa board that would produce credible financial statements without material misstatements? How long should that abnormal situation be accepted? Two years ago, the AGSA said the same thing. Should we give you another two years?

The official responded that Prasa expected to move from the disclaimer to a qualified position. The audit action plan was realistic, and it was not that Prasa could fix everything today. Prasa had 460 000 assets and to count all of that was a massive undertaking, Prasa was rebuilding everything from scratch and two years was a reasonable space to assess an improved outcome.

Mr Hadebe was wary of normalising that situation because now, with Eskom, loadshedding had been normalised. Even a student coming from high school was given four years to graduate but experts wanted more than five years to produce credible financial statements. “We are not talking about an audit opinion, but there must be something that the AG can work with”. The AG should not be the one telling Prasa how bad its books were.

The official clarified that by two years, he meant March 2023. Prasa could have moved from a disclaimer to a qualification. He did not want to make unrealistic commitments about what Prasa could achieve.

Mr Hadebe welcomed the job well done on the reduction of material irregularities. He said Prasa had demonstrated zero tolerance regarding failure to adhere to the law. However, regarding the unfair procurement process that was followed in the appointment of the signalling contract, he asked if that matter had been reported to the SAPS. And all the culprits – were they still doing business with the state or with Prasa? Could those companies be identified and what was the current status of those companies who were on the wrong side?

Mr Emeran requested to get back to the Committee on that matter. He had not been able to confirm yet but would revert to the Committee, either before the meeting ended or in writing.

Ms B Swarts (ANC) asked how long the DC process of the CFO would take and how long the acting CFO had been a part of the finance division. Should the CFO be dismissed as an outcome of the DC process, how long would it take the Board to refill the position?

Prasa had underspent its capital budget, which directly dealt with services and a good plan had been presented for getting engineers and expediting the spending on the capital budget. How long had the acting CFO been at Prasa and what were his qualifications? Running a big organisation like Prasa and not having chartered accountants was problematic because it did not assist the Committee. There was a clear plan on how Prasa was going to execute its capital projects, but the AG said Prasa had underspent on the capital projects, which bordered on service delivery. There were so many acting people in positions at Prasa, but “we must reach a stage with Prasa where we can see through the skills audit that these acting people are replaced with permanent people”. Even through the Zivese Operation, so many ghost employees had been uncovered and people were now being requested to reveal themselves, but they were not coming forth. When it came to senior management, how long was it going to take to have permanent senior managers that would need to execute the plan that had been presented to the Committee? Those people had to possess the right expertise and qualifications for the jobs they were employed in.

As much as Prasa was going to implement the plan, a report was needed on who were the people that would be responsible for executing or implementing the plan as well as their experience and expertise. “We need to assess whether the people are up to the task”.

Mr Ramatlakane replied that there was a DC process ongoing currently and the outcome of that process would be quick. There was an independent chairperson that had been appointed for legal implications on the issue of findings on the CFO. He said he could not confirm the date when the DC process would be, but updated information could be provided to the Committee as the process unfolded. Once an outcome was reached, the process of advertising would be expedited. The Board’s view was to finalise that matter in this financial year. The intention was that by the end of this financial year, Prasa had to have a permanent CFO.

The acting CFO has been with Prasa for some time since 2011 in finance. He was a chartered accountant by profession. He started acting in February, after the suspension of the CFO.

The positions directly reporting to the Board were Mr Emeran & Company Secretary.

Mr Somyo emphasised that the essence of the question was expediting the filling of those critical positions and most importantly, ensuring that the appointed people possessed the required skills, expertise and qualifications.  

Mr A Lees (DA) asked about the details of the uncovering of the ghost employees at Prasa, who they were and if they had been dismissed or not.

Mr Emeran replied that the last update was that the 3 000 ghost workers had been unverified when it was initially announced, however, management noticed an immediate and high rate of resignations of 1 159. That raised suspicions but that brought the number down to 1 300 that were being investigated. Additional work was done to identify exceptions that came up, but it was important through the investigation that Prasa picked up the issue around fraudulent qualifications and criminal records. It was not just picking up the ghost employee number but other important issues. That led to key steps being taken around stopping the salaries and the re-verification of the information that needed to come through.

Mr Lees interjected to ask if anything had been done to hold anyone accountable. Prasa could not come there, meeting after meeting to tell the Committee the same thing. The Committee had not been told what had happened – who was responsible for appointing those ghost employees, had they been fired and had monies been recovered yet?

Mr Emeran said that Prasa had not fired anyone, but that matter went much broader and deeper than expected. Prasa indicated that it needed to appoint a forensic company and was working on that through National Treasury to be expedited.

Mr Lees said that there had been no substantial progress from March to now. The Zondo Commission recommended a commission of inquiry into Prasa as a whole, did the Minister know if anything had happened regarding that? 13 locomotives were taken up and seven were sold. Where were the six and where were the seven operating?

Mr Emeran said the seven were auctioned to a private company outside South Africa. The six remaining ones were spread out across the provinces but were not operational yet.

Mr Lees said that a statement was made that the locomotives were running but now the Committee was told that those were not running. That was strange; which was which?

Mr Ramatlakane said the statement was clear in that those locos had never been determined to be suitable for South African conditions and they had run before pulling coaches to Cape Town.

Mr Lees asked why the Board was delaying the sign-off on the 30 locos as instructed by the court for the transaction to proceed.

Mr Ramatlakane said the delay was not within Prasa because the agreement was tripartite but for it to be lawful, it had to be an order of the court. The deputy judge president had to make a concession and agree to a date. The delay had been to the final determination of a date for when that matter would have come before the high court. Everyone else had signed that agreement.

Mr Emeran added that there was also litigation on that matter, but the previous supplier had since withdrawn that litigation. That had added to the delays. There was a requirement for the Board to provide a resolution that it could decide on going for the consignment and that the SCM policy had been amended.

Mr Lees asked where the resolution was.

Mr Emeran said it had been provided and developed as part of that process. The information that the decision had been taken had been provided.

Mr Ramatlakane said that the agreement had been signed but the lawyers of the supplier wanted to get a resolution that the Board had taken that decision. That resolution was provided, and nothing was outstanding now.

Mr Lees asked for the date the resolution was handed over to the attorneys. In terms of the statement that there were 44 Prasa officials involved in that deal who were suspended; what was the progress in terms of disciplinary process? 11 were reported to have resigned but since July, what progress had been made?

Mr Emeran said there were 14 resignations, eight suspensions, two dismissals and five final written warnings issued. 13 were found not guilty through that DC process and there was no action taken on two, but one took early retirement. Only six still needed to be closed out of that original list in terms of the DC process.

Mr Lees said he was uncertain what that meant but wanted to know if any monies were recovered from those who were found guilty. That could be submitted in writing.

Regarding Gibela, the factory was visited. It was quite an impressive operation but yesterday, the first run in the Soweto line, there was loadshedding and the passengers jumped off the train. Recall those self-contained units, that did not have a loco in the front and had their own traction mode? Had Prasa been running diesel on those, how was Prasa running those blue trains? What had been the issue?

Mr Emeran said the compact units he saw coming out of the factory were six coach modules; typically, two modules were put together, giving you a 12-coach configuration. The incident that had happened yesterday had not been due to loadshedding. There was a trip in one of the substations but unfortunately, the contingency plan to address the trip took longer than it should have. It took 33 minutes to get it back and it normally got resolved within a minute or two. “We had ensured that we do not have the same communication challenge going forward.

Mr Lees asked where the tractions had been stolen, was Prasa pulling the blue trains with diesel yet?

Mr Emeran said the blue trains were running on electric power and the corridors had been rebuilt to install new electric infrastructure. Where you saw them running, they were running on electricity.

Mr Lees asked if the corridors in KwaZulu-Natal were running on diesel or electricity.

Mr Emeran said two were running on diesel, which was KwaMashu to Durban and Tongaat to Durban because the recovery of the electricity infrastructure was underway. The corridor from Durban to eMlazi, up to kwaManyandu, was electrical.

Mr Lees jokingly said that the reason Eskom ran out of diesel so much was that Prasa was using it. There was a comment about the Siyangena contract, which went back to 2012 for an integrated security system ranging from R517 million to R4.5 billion. After all the devastation, was anything left of it?

Mr Emeran said that part of the finding from the court was that Prasa needed to appoint an independent engineer to transform the work that was done. The work that was rolled was not completed. In many cases, the hardware was problematic, but the key thing now was to assess what was provided during that period.

Mr Lees asked what the actual spend on that project was.

Mr Emeran requested to submit the information in writing.

Mr Lees said Prasa had sent a lot of lovely photographs in terms of the good work it was trying to do. Sadly, it was a waste of money, “if we had clean and honest people, we would not need military kind of fencing and walls. It was an indictment on our society that we must take money meant for services to put these measures in place”. How much of the new work done to safeguard the assets had already been breached and stolen, if any? Had any of it been breached?

Mr Emeran said so far, there had been no breaches but as part of the wall fencing technology, Prasa got to the point of identifying concrete walling solutions coupled with military-grade steel fencing as seen in the past, the previous ones were easily breached. Those walls were coupled with technology, top to bottom signals to proactively give alert signals, besides the CCTV cameras.

Mr Lees said that depended on what caused the devastation that took place from 2020 onwards – people had to be arrested. Prasa seemed to have abandoned its infrastructure in terms of security. What security measures were then in place?

Mr Emeran said the integrated security strategy included the physical deployment as the first phase and significant numbers were rolled out and deployed at a corridor and site level. The exact numbers could be provided in writing.

The Head of Security at Prasa added that in the past year, from June 2021 to the present, there were approximately 600 to 660 incidents of theft and vandalism monthly. That had been reduced to less than 50 incidents a month. The added advantage was that the reaction time was quicker and when there was a breach, they were often cut, not removed. Recently, Prasa had a lot of people receiving between 8- and 15-year sentences for those crimes.

Mr Lees asked the Minister to respond to the Zondo Commission’s recommendation for an inquiry at Prasa.

The Minister said government’s response to the Zondo Commission had come in the form of submission to Parliament. Part of it included a response to the recommendation of the Commission of Inquiry for Prasa. “We believe that we need integrated law enforcement at Prasa to deal with corruption. We need officials to help law enforcement agencies”.

Ms N Tolashe (ANC) was not pleased with the fact that the disciplinary hearing was taking so long. She said the process commenced in February. It was now November and nine months had passed. There was nothing that Prasa could put on the table. Was that going to be an open-ended kind of exercise?

Regarding the process followed on ghost workers, it would perhaps be profitable if the Committee received a monthly report on the progress that Prasa was making. That was an extremely serious matter and could potentially collapse the entire Prasa. The answer was not clear on whether people had been held accountable. Members were told about resignations, which left one worried about how far that was going to go.

Mr Somyo said that it was reported on the news that there were people who had pretended as if some work had been done and collected IDs of various individuals out there and that money went to someone working at Prasa and the manager would collect the money from an ATM. Millions of rands had gone through those processes in Gauteng and KwaZulu-Natal. Ghost employees, suppliers and others were just collecting money from Prasa through that ghost exercise.

Mr Ramatlakane said there had been an investigation in the finance department before the DC took place. It was first a precautionary suspension of the CFO and an independent investigation to determine the magnitude of the problems. The suspension was applied to allow the process of the DC to proceed. The Board would provide a report on that matter and keep the Committee updated.

The Chairperson said that it was reported that 1 159 resignations had happened in one month but how did a ghost resign? Who had processed that? “Prasa must not leave the meeting with those ambiguities”. Every time that matter arose, Prasa was paying into bank accounts, and it should know to whom it was paying money. It was a grade 1 forensic investigation. Surely, there was a resignation process and to have so many people resigning in one month should be extremely concerning. In all material facets, what was the value of the resignation of those 1 159? Further, was Prasa then paying pension, and severance packages to those people, because if it was a resignation, it was a legitimate process that was triggered by the ghost employee? Something was missing on that matter, perhaps an investigation was going to assist Prasa. Those 1 159 resignations had to be unpacked.

Mr Ramatlakane said that was a board initiative and the Board had appointed an external body to investigate. The Board had suspected that it was unlikely that some managers in Prasa had not managed that process of getting to those ghost employees. The Board could not be provided with resignation letters from the 1 159 resignations. The SIU had started the investigation and it would follow the money. “We suspect somebody must have been able to aid that process”. Since that investigation process commenced, the finance department reported that Prasa saved about R200 million monthly.

Ms Mpye added that an investigation had since been launched across all the functions of the entity. That was a huge anomaly and could not be resolved within a short time because all of that happened within the organisation in the presence of managers and employees that were there, “we cannot entrust the same people with the same responsibilities”. Last week, it was reported to the ARC that we were using our causal partner to conduct the investigation but because it was expanded, the Board engaged National Treasury to piggyback on some of the contracts it had with forensic investigators to aid the SIU during the investigation process.

The Chairperson said on 29 March, the Committee met with Prasa, and it was indicated that Prasa had over 3 000 ghost employees. The Committee was informed that Prasa had embarked on a process to verify the 3000 ghost employees on the payroll but could not be verified. That was in March, but nine months later, Prasa was still unable to unpack the 1 159 yet nine months ago, it was verifying. Basically, Ms Tolashe’s request for a monthly report on that matter was nine months late because that was the statement that Prasa made – it said it was verifying the 3 000. It sounded nice to say something was happening but when you review it nothing was happening. “We cannot be speaking about this like it is a new reality”.

On 29 March, the Board said it would have appointed a CEO in 90 days, but that had not happened. “When you come back here for the next hearing, we must find ourselves pretending as if these are new things and no commitments have been made”. The issue around capacity had been raised.

At this point, what was expected would have been a progress report on Operation Ziveze on the verification but now it was by chance that there were resignations. There must be a heightened level of seriousness that Prasa applied to how it dealt with SCOPA and committed to its commitments. That was not inspiring confidence, and it was unacceptable. Information that was asked for in March still had not reached the Committee. He took very little comfort out of what he read today. That situation was unacceptable.

A Prasa official,   clarifying on Operation Ziveze, said it had commenced in September 2021 when people had to show themselves. By January 2021, there were resignations of about 750 people, and it was assessed that there were 3 000 unverified people. A window was opened to allow people to come forth to be verified. By March 2022, an additional 400 people resigned, bringing the number to 1 159 people. From that process, “we initiated a parallel process to investigate who loaded those people on the system and who resigned those people from the system”. Due processes and investigations were currently happening and a list of suspects was being questioned.

The Chairperson interjected and asked to have that information in writing because the timelines were now confused. It had to be in writing because there was a commitment to that effect anyway.

Mr Somyo said Prasa’s performance was not pleasing in some respects. The AG had commented on zero performance in one of the critical projects where it identified about 33 train station modification projects, but it had been three years, and nothing had happened, yet the underspending was close to R7 billion. That had formed part of the set of responses that would be provided to the Committee.

The Minister said when coming to SCOPA Prasa had to be ready to give substantive responses to the issues raised by the AG. Most of the time, it looked like the team came there and was surprised by the line of questioning of the Members. Some members of the Board were more articulate than others. All the information that SCOPA could need had to be presented to it and it was disappointing that it looked like the Board was not prepared.

Last week the issues of the vacancies, disciplinary matters, Operation Ziveze, the capital expenditure matter and attracting people with skills at Prasa, were raised. Instruction was given to the Board to get people with the right skills and expertise. Up to some point, that decision would have to be taken and “I do not want to shake the tree, as I will be accused of being an anarchist, but we cannot be changing people every week”. He said he arrived at Prasa and changed people and took drastic steps. He brought people and he was dealt with by the courts. He appointed that Board but if he dismissed it tomorrow, it would seem like he did not think.

However, that Board had covered a lot of work and was doing a lot of work, but needed to get organised. “We need to show our people that we are a board at work”. He said he had been putting so much pressure on the Board on vacancies, but the CEO delays were impacted by the litigation issues. There was nothing legal that said the Board could not employ a CEO and the chair had given assurance that that process was complete. He was told there was a new structure, but he was not informed of that as a Minister. There was no reason why critical positions were not being filled. Human resources were the biggest issue that Prasa was experiencing.

In the Human Resources department, Thandeka passed away and there was no human resources person. A lot of corruption was happening there and even in procurement, the lady had resigned a long time ago, but the position was still not filled. He instructed that those vacancies are filled but the biggest problem of Prasa was SCM and employing capable, experienced and qualified people. If those people were not put in the right positions, Prasa would keep coming there. “We are going to clean out Prasa”. He wanted to see stability at Prasa and see the capital projects moving.

He went to National Treasury and the Minister of Finance confirmed to assist Prasa but insisted that Prasa had to demonstrate that it had capacity. The Board had to come to SCOPA to demonstrate that it was addressing the issues highlighted by the AGSA. The work taking place now in the corridors had to have been done been long ago and that matter spoke to management. It was not because of vandalism that trains stopped operating, it was because of Covid-19 at level five. When they were stopped, they had been running day and night in Soweto and other places, and the little that was remaining was vandalised. There was no contingency plan to guard the corridors when the trains had stopped, but we were unable to bring them back because the little that we had was stolen. The modernisation programme was not moving but it had to be pushed to move.

Mr Somyo thanked the Minister for his comments and appreciated his honesty and commitment to changing the situation at Prasa. He said there was a difference between the current Board and the previous one. The current Board makes mistakes, but it learns. However, they must not manage the Committee on the dissemination of information, the information that the Committee requested had to be provided in its entirety.

The monthly reports would be expected to come in as committed by management and the Board.

The meeting was adjourned.

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