SOE boards may be liable for losses
BOARD members of state-owned enterprises could soon be held liable for the losses incurred by the entities under their watch.
Deputy Chief Justice Raymond Zondo yesterday asked the Commission of Inquiry into state capture he chairs to go after former Passenger Rail Agency of SA (Prasa) non-executive directors who oversaw the awarding of a R3.5 billion contract to buy 88 locomotives from businessman Auswell Mashaba’s Swifambo Rail Leasing, despite the company not qualifying for such a deal.
Crowe Forensics SA director Ryan Sacks, a chartered accountant appointed by the Hawks to investigate payments made by Prasa to Swifambo, testified that while the company – later unmasked as a front for Vossloh, the Spanish firm building the locomotives – was initially expected to deliver 88 locomotives, the number was reduced to 70 after the rand weakened.
Ultimately, only 13 locomotives were delivered.
Justice Zondo noted: “The way this contract was handled, it does appear that the interests of Prasa were subsidiary to something else; it’s very worrying.”
He asked evidence leader advocate Vas Soni how much of the R2.68bn Prasa paid to Swifambo Rail Leasing and its parent company, Swifambo Rail Holdings, had ever been paid back.
Soni said the amount was only R63 million, according to the companies’ liquidators.
Justice Zondo said Prasa should “investigate the possibility of suing everyone who made decisions that resulted in these losses in circumstances where these individuals cannot give proper explanations for their decisions”.
He continued: “They should explain to Prasa; if their explanations are not satisfactory, then Prasa should consider suing them because this is a lot of taxpayers’ money”.
Soni said the details of the looting at Prasa had given him sleepless months.
The commission heard that former Prasa non-executive director Dr Bridgette Gasa expressed her concerns about Swifambo Rail Leasing’s capacity in emails to the board chaired by now ANC MP and former deputy Finance minister Sfiso Buthelezi.
Justice Zondo requested the commission’s legal team to explore the possibility of asking Gasa to prepare an affidavit and explain the concerns she had about Swifambo, the discussions of the board and its response.
Justice Zondo said ex-Prasa chief executive Lucky Montana should be coming to give evidence before the commission in due course.
“Was it a matter of incompetence, or could it be that the board or some members of the board were party to some agenda which was against the interests of the entity?” he asked.
Justice Zondo said he could consider that subject to issues of prescription and others, state-owned enterprises should sue board members to recover whatever they could of taxpayers’ money.