Prasa defending its clean sweep
‘BID TO SHUT US UP ABOUT CORRUPTION’ Shortly before the appointment of its new, free-spending CEO and its abrupt dismissal, the Prasa board says it had uncovered massive corruption.
The Passenger Rail Agency of South Africa (Prasa) board is fighting its summary dismissal earlier this month, arguing it’s arbitrary, irrational and against the agency’s best interests.
It is seeking an interim court order to reinstate the board and to interdict new board members from taking office. Peters steps in Transport minister Dipuo Peters dissolved the Prasa board (led by former chairperson Popo Molefe) on March 8, after temporary CEO Collins Letsoalo claimed a grossly inflated salary while he was seconded to the agency. The board opposed the increase.
The board claims it had lined up a number of candidates to replace Lucky Montana (previous group CEO), and Letsoalo’s appointment was accepted reluctantly at the suggestion and insistence of the minister.
This decision turned out to have disastrous consequences. To have his massive salary increase approved (from R1.3m to over R5m) – and despite a letter from the minister stating he would retain the same rank and salary as his previous position – Letsoalo fired the acting group executive for Human Capital, Bhekani Khumalo, who had declined his request, and replaced him with a woman who approved his increase.
“In short, Mr Letsoalo demonstrated a reckless disregard for the board and failed to adhere to even the most basic tenets of good corporate governance,” the board says in its papers.
The board believes it has been dissolved to frustrate the investigations it undertook shortly after its appointment in August 2014, when it uncovered many irregularities and misconduct.
The board claims the minister made “vague and unsubstantiated” allegations of misconduct in her affidavit.
“It appears, with respect, that these additional reasons have been deployed after the fact, in an attempt by the minister to shore up the basis for her removal decision,” the board argues.
Prior to being shown the door, the board claims to have instituted investigations into wasteful expenditure, which had led to legal actions to have money recovered and contracts cancelled.
This was substantiated by the Auditor-General, who found in July 2015 that there was approximately R550 million in irregular expenditure during the 2014/15 financial year and approximately R14 billion for the 2015/16 financial year.
In response, the board appointed Werksmans Attorneys to investigate the irregular expenditure. It found that Prasa’s wasteful, irregular, fruitless or unlawful expenditure ranged from R13 billion to R24 billion.
The board under Molefe then instituted two applications to review and set aside unlawful contracts amounting to some R7 billion.
He demonstrated a reckless disregard for board
Clean sweep In addition, the board has also instituted proceedings to recoup monies lost as a result of corruption or other unlawful behaviour in 60 entities.
The board argues it is crucial that it remains in place to ensure these processes are successfully pursued to completion, something that would be in the best interests of Prasa.