TAKE BACK YOUR TRAINS
STUNG PRASA SEEKS REFUND
RAIL parastatal Prasa launched a dramatic court action this week to recover from one of South Africa’s biggest ever tender debacles involving billions of rands.
The Passenger Rail Agency of South Africa wants the Spanish company that provided the controversial Afro 4000 trains — found to be unsuitable for the local rail network — to take back its stock and refund the R2.65-billion already paid to it.
The deal attracted international headlines when it was discovered earlier this year that the trains were too tall for South Africa’s railways.
It has also emerged that Prasa executives involved in the deal could face criminal charges for their part in the scandal.
Court papers filed this week detail allegations of blatant collusion in the tender process, designed to favour certain individuals from the start.
On Friday, Prasa chairman Popo Molefe approached the High Court in Johannesburg to ask it to have the R4.8-billion locomotive deal scrapped. He wants the matter to be heard in open court.
Prasa has also begun legal proceedings to recover R20-million in “remuneration, bonuses and travel expenses” paid to its bogus former chief engineer Daniel Mtimkulu, whose engineering qualifications proved to be false. Mtimkulu was central to the deal.
The Hawks are also continuing with the criminal investigation into Mtimkulu and Prasa’s former group CEO, Lucky Montana, for corruption relating to the alleged rigging of the tender process.
In an affidavit, Molefe lays out details of how the tender was allegedly rigged from the very beginning and specifically designed to favour Swifambo Rail Leasing and its “joint venture” partner, Spanish locomotive manufacturer Vossloh España. He chronicles the relationship between Swifambo, a company owned by former senior government official Auswell Mashaba, and Vossloh España, which built the locomotives.
Molefe says Swifambo — which, he argues, was formed specifically for the multibillion-rand deal — was assessed on the experience and technical capabilities of Vossloh España, even though the two had no joint venture or any legal agreement in place during the bid process.
The process, says Molefe, showed “the appearance of a fronting relationship between Swifambo and Vossloh España . . . although Vossloh is a significant supplier to the European rail industry, it does not have a broad-based black economic empowerment certificate . . . no documents were provided in Swifambo’s bid to confirm that it had entered into a joint venture with Vossloh Southern Africa.
“This was essential considering the bid indicated that Swifambo would rely solely on the experience and technical capabilities of Vossloh to fulfil its obligations,” says Molefe.
Vossloh España’s Southern African subsidiary was formed only after the initial bid was submitted by Swifambo.
Molefe further reveals that Swifambo:
[Do not] permit any of the disputes to be heard in private arbitration
Was not disqualified despite submitting a tax clearance certificate that had no VAT number, and no tax clearance certificate at all for Vossloh “as part of a joint venture or subcontractor” agreement;
Was a new company and had not traded before. Molefe said Standard Bank “indicated that Swifambo had no financial history which the bank could use to evaluate its financial viability”;
Failed to produce “previous experience of supply and leasing of locomotives, including attaching letters of referral from at least three clients for [which it] had done work”;
Could not have had any experience in rail because it had been formally established on March 1 2012, just four months before the awarding of the contract; and
Changed its name to Swifambo, from Mafori Finance Vryheid (Pty)
Ltd — a company that provided small and micro housing loans for rural communities.
Prasa’s board is hoping that revelations about the irregularities will assist it in getting out of the deal.
A source with intimate knowledge of the court action said the application was the first step in that process.
“The legal view is that the contract is dead because there are all those irregularities in the tender. For example, Swifambo has no trading history, it was a shelf company, had no experience in the rail industry and although they listed Vossloh as their partner their agreement was signed after the awarding of the tender. So all this court action says is that the money must be paid back and those trains returned,” said the source, who asked not be named as he did not want to jeopardise the process.
Prasa was meant to receive 88 trains by 2016 and has already paid R2.65-billion. Only 13 trains have been delivered so far.
Swifambo’s bid was judged on the specifications of a Euro 3000 locomotive, which was the correct height for South Africa’s rail network. Instead, the taller Afro 4000 was delivered, and found to encroach too close to overhead powerlines along South African tracks.
Says Molefe: “The specification for the tender was authored by Mtimkulu . . . the specifications used to assess the bid proposals during the technical evaluations was irrational in that it included specifications that had no purpose other than to provide an advantage to Swifambo.”
He says there were some specifications that were a precise match to those of Vossloh locomotives.
Molefe further alleges that there was no evidence that either the National Treasury or the Department of Transport were given any submissions in order to give the deal the goahead.
The two departments did not respond to questions sent by the Sunday Times. Swifambo’s owner, Mashaba, failed to respond to detailed questions.
Montana said he had not seen the court documents and would not comment.
Vossloh Southern Africa’s project manager, who identified himself only as Adri, also refused to comment.
In a statement, Molefe said Prasa wanted the court “not to permit any of the disputes to be heard in private arbitration, but rather in open court so that the public can be assured that the deplorable conduct identified in [Prasa’s] application is aired in the courts and the appropriate sanctions are meted out to those who have sought to exploit taxpayers’ money”.