OUTA welcomes Scopa's 'delinquent directors' move on Prasa
OUTA applauds the Standing Committee on Public Accounts (Scopa) for its decision to ask Parliament to have the former directors of the Passenger Rail Agency of SA (Prasa) declared delinquent directors.
If successful, this will effectively block those individuals from holding positions as directors.
OUTA welcomes moves to implement consequence management at our collapsing state-owned entities (SOEs). We call on Scopa to also watch over the recovery of funds corruptly spent at Prasa, to ensure this happens.
On Wednesday (5 February 2020), Scopa committed to tabling a resolution in the National Assembly asking for Parliament to start the process of having the members of the former boards of Prasa declared as delinquent directors. Scopa also plans a full parliamentary inquiry into Prasa and the culpability of the various boards. This followed a Scopa meeting at which the Prasa administrator outlined the state of the entity, including the dismal lack of governance records which the board was responsible for maintaining and the financial mess – including irregular expenditure of more than R20bn in the last four years. Prasa received a disclaimer audit opinion from the AG, the worst audit outcome possible.
Scopa chair Mkhuleko Hlengwa stated that failure to present something as straightforward as board minutes to the AG was a serious indictment on the board and welcomed Minister Mbalula’s decision to dissolve the board in late 2019. Hlengwa was quoted as saying: “Accountability cannot end with a dismissal. It needs to have far-reaching consequences to remind you that you can't be in an entity and it collapses in your hands.”
“Scopa has been fulfilling its role as government watchdog since Mkhuleko Hlengwa took up the role of chairperson,” said Wayne Duvenage, OUTA CEO. “Holding Prasa’s boards personally accountable for the state of the rail agency sends a strong message to the boards and executives of other state-owned entities."
OUTA welcomes the use of the delinquent director strategy, to block such individuals from powerful positions and send a clear public message that they cannot be trusted. We also encourage SCOPA to follow suit with other boards of SOEs where there is evidence of extremely poor govenance and unlawful conduct by executives and directors.
OUTA is currently involved in legal action asking the Pretoria High Court to declare Dudu Myeni to be a delinquent director in terms of the Companies Act, arising from her activities while she chaired the board of SAA. This action against a director of an SOE is a precedent-setting case against an SOE director.
“The problem is that these cases are extremely costly for civil society to take up, especially when it is work that should actually be the responsibility of Parliament and the current board members of these SOEs,” adds Duvenage.
We also ask that Scopa expands its call to look at Ministers who deliberately and without rationale removed board members like the Prasa chair Popo Molefe, who were doing a good job of tackling corruption and questioning the conduct of executives within the SOE.
The former interim Prasa board was appointed in April 2018 and dissolved in December 2019 and Prasa was placed under administration. This board was: Khanyisile Kweyama (chair), Sango Ntsaluba, Jenny Schreiner, Mashilila Matlala, Xolile George, Nazir Alli, Doris Tshepe, P Tarafara, Louis Wessie, Sibusiso Sithole (GCEO until February 2019), Dr Nkosinathi Sishi (acting GCEO from March 2019).
The previous board was: advocate Nana Makhubele (chair), G Maluleke, Xolile George, Dr Natalie Skeepers, Magdalene Reddy and Prof John Maluleke.
OUTA actions against Prasa corruption
In July 2017, OUTA filed an intervention application in the Pretoria High Court, aimed at compelling the Hawks to investigate the corruption at Prasa and the NPA to guide the investigations. This arose because Molefe, then still Prasa chair, had gone to court to overturn corrupt contracts but was about to end his term of office, leaving a risk that his board’s anti-corruption moves would fall away.
In October 2017, OUTA filed charges against the Prasa board which oversaw the R3.5bn locomotives contract with Swifambo. This deal was found to have been corrupt by the high court in 2015 and overturned. That board was chaired by Sfiso Buthelezi (who later served as deputy minister of finance) and included then GCEO Lucky Montana, Xolile George (who was on the most recent boards), Zanele Gasa, Mfenyana Salanje, Namhla Mxenge, Mawetu Vilana, Marissa Moore, Thulani Gcabashe and Lindikaya Zide.
In October 2018, OUTA made a submission to the State Capture Commission on Prasa’s dubious locomotive contracts with Swifambo and Siyangena.