Mending Prasa will probably be a protracted haul


The problems referring to monetary mismanagement and tender irregularities on the Passenger Rail Company of South Africa (Prasa) have been within the public eye for quite a lot of years.

In 2015, then-Public Protector Thuli Madonsela launched her report on the investigation into the assorted allegations regarding Prasa. These irregularities have been additional probed by the Judicial Fee of Inquiry into Allegations of State Seize.

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The minister of transport dissolved the Prasa board of management in December 2019, and a brand new board was appointed on October 21, 2020 for a interval of three years.

This new board members now need to report on the monetary yr ended March 31, 2020 – which ended six months earlier than their appointment.

In his assertion accompanying the monetary report, chair Leonard Ramatlakane referred to the unprecedented ranges of theft and vandalism suffered by Prasa’s rail and infrastructure community.

Prasa will now concentrate on attaining stability in key administration and expert positions, strengthening good governance, making certain the security and safety of operations and passengers, making certain reliability and availability of rail transport, putting in sturdy regional operations as centres of excellence, and consequence administration.

This text summarises the primary points arising out of the monetary report.

Investigations into irregularities

Quite a few investigations are nonetheless in progress, together with:

  • These arising from the 2015 Public Protector report;
  • These being carried out by The Hawks (the Directorate for Precedence Crime Investigation), which started in 2016 when it comes to the Prevention and Combating of Corrupt Actions Act;
  • These referring to the contravention of the Competitors Act; and
  • These relating to produce chain administration irregularities recognized and reported through the 2018/2019 audit.

An settlement was signed on September 11 final yr, when it comes to which the Particular Investigating Unit (SIU) would second assets to Prasa for six months to help with the finalisation of the investigation into the fabric irregularity.

The SIU is presently investigating 27 issues. The Hawks are engaged on 23 issues, a few of which have been referred to the Nationwide Prosecuting Authority’s Specialised Business Crimes Unit.

Inside investigations and disciplinary hearings are underneath means and three authorized corporations have been appointed to handle the following disciplinary hearings.

Report of the Auditor-Common (AG)

  • In a nutshell, the AG issued a disclaimer of opinion, supported by quite a few causes together with inadequate applicable audit proof, not having the ability to confirm property, plant and tools (PPE), not having the ability to confirm whether or not money flows from investing had been correct and full, insufficient impairment evaluation carried out for PPE, issues with the accounting for unspent conditional grants, incorrect accounting for prior interval errors and changes, and a scarcity of governance data.
  • The monetary statements submitted for auditing weren’t ready in accordance with the prescribed monetary reporting framework or supported by full and correct data.
  • Irregular expenditure, which amounted to R28.6 billion (2019: R27.three billion), resulted primarily from non-compliance with provide chain administration.
  • Additional findings embrace the shortage of consequence administration, the fixed menace of pillaging and destruction of the rail infrastructure, main capital initiatives stay not on time, and irregularities with provide chain administration.
  • Complete capital commitments in regard to “contracted however expenditure not but offered for” amounted to R76.three billion (2019: R71.1 billion). Complete operational commitments in regard to providers “contracted however expenditure not but offered for” amounted to R16.6 billion (2019: R20.four billion). The AG discovered that there was a scarcity of supporting audit proof to substantiate R15.eight billion of the R16.6 billion.

Different vital numbers

  • Prasa has name deposits of R24 billion (2019: R18 billion). The monetary statements don’t point out with whom these name deposits reside. Nevertheless, they earn curiosity at a mean charge of 5.9% (2019: 6.35%) every year, and amounted to R1.5 billion for the yr (2019: R1 billion).
  • Prasa entered into an settlement with the Gibela Rail Transport Consortium in 2013 for the design, provide and manufacture of 600 new trains. Prepayments for 2020 quantity to R8.three billion (2019: R8.four billion). Funds had been made up entrance to Gibela for the development of the property. As soon as development is full and delivered, the quantity is transferred to property, plant and tools.
  • The carrying worth of property, plant and tools that’s taking “considerably longer to finish” is R3.9 billion (2019: R9.9 billion).
  • The carrying worth of property, plant and tools the place development or improvement has been halted quantities to R2.1 billion (2019: R0.eight billion); R2 billion pertains to a authorized dispute.
  • Unspent conditional grants for 2020 had been R48.9 billion (2019: R45 billion). The AG couldn’t verify the accuracy of this quantity.
  • Contingent liabilities of R2.eight billion (2019: R3.2 billion) embrace the Siyangena contracts of R2.1 billion. In a judgment handed down on October eight, 2020 the North Gauteng Excessive Courtroom put aside all agreements between Prasa and Siyangena Applied sciences. Siyangena has appealed the Gauteng Excessive Courtroom resolution.
  • The receivable referring to Swifambo Rail Leasing (SRL) of R438.5 million (2019: R459.eight million) was “impaired to the present estimated potential recoverable worth within the earlier monetary yr”. This quantity is more likely to change. Prasa entered right into a contractual settlement with SRL in 2013. 13 locomotives had been delivered to Prasa through the 2014/15 and 2015/16 monetary years. No locomotives had been delivered subsequently. A forensic investigation revealed irregularities. The excessive court docket put aside the contract, and this resolution was upheld by the Supreme Courtroom of Attraction. The Constitutional Courtroom dismissed Swifambo’s utility for go away to attraction in 2019. There are various authorized challenges forward.

Ramatlakane is assured that Prasa is “too vital to fail”.

Sadly, that is the chorus from the entire state-owned entities which have been battered by corruption and state seize.