SCORPIO

Gravy Trains: Prasa paid R4m in ‘ghost’ invoices to clear Lucky Montana’s debt – three years after he’d left the place

By Pieter-Louis Myburgh 17 November 2019
Caption
Former Passenger Rail Agency of SA (Prasa) CEO Lucky Montana appears before the parliamentary inquiry into state capture on January 30, 2018 in Cape Town, South Africa. Montana gave an explosive account of the machinations of state capture when he testified at the inquiry into state owned enterprises. (Photo by Gallo Images / Sowetan / Esa Alexander)

In late 2018, the Passenger Rail Agency of South Africa paid a contractor for allegedly bogus invoices in order to settle an outstanding loan the former CEO had obtained from a businesswoman. The Prasa official who helped process the dubious payment asked for a cut of the money. These dealings suggest state-owned enterprises are preyed upon by former bosses, even years after they have left the scene.

A brief legal battle in the South Gauteng High Court last year laid bare financial dealings that Prasa CEO Lucky Montana had with a contractor in the period after he was sacked as the state-owned rail operator’s chief in late 2015.

Nandisa Gschwari, the owner of Prasa contractor Nandisa Milisa Consulting Services (NMC), sued Montana for just under R1-million. The court filings, including bank statements and correspondence between Gischwari and Montana, revealed that the businesswoman had loaned Montana about R800,000 in early 2016. This was after Montana had been sacked as Prasa CEO.

The money was paid in separate tranches between February and June 2016. These “loans” were suspicious, seeing as NMC had clinched a R50-million contract for ad-hoc repair work on Prasa’s ageing fleet of train carriages while Montana still headed up the SOE.

Gschwari has denied that her payments to Montana were related to NMC’s contracts from Prasa.

After several unsuccessful attempts to retrieve her money from Montana over a period of more than a year, Gschwari started legal action in July 2018. She wanted just under R1-million from Montana, a figure that included interest on the money she claimed Montana owed her.

The case received some attention after Sunday World newspaper reported on it. However, it is developments that unfolded after Gschwari launched her legal bid that should raise concern over influence the likes of Montana apparently still have over Prasa officials, especially those with financial responsibilities. This seems to justify fears that alleged corruption at Prasa is deeply entrenched and ongoing, despite lofty promises from top government leaders that SOEs will be cleaned up.

Scorpio has learnt that Gschwari withdrew her case against Montana in about October 2018, after her company had been paid a little more than R4-million from Prasa’s coffers. We obtained financial records confirming Prasa’s Metrorail division made the payment to NMC on 2 October last year.

Correspondence between Gschwari and Francis Theoane, the Prasa official who effected the payment, should raise eyebrows about the true motivation behind the transaction. Theoane works at Prasa Rail, the division that oversaw the ad-hoc repair and maintenance contracts the SOE had awarded to companies like NMC during Montana’s time in charge.

Sources familiar with the matter claimed that Theoane, along with other officials still employed by Prasa, were close to the SOE’s former boss. “Francis [Theoane] still works with Lucky,” alleged one source.

The correspondence seen by Scorpio makes it difficult to come to a different conclusion.

In a message sent by Theoane to Gschwari shortly before NMC received the R4-million, the Prasa official instructed the businesswoman to withdraw her case against Montana.

Scorpio does not have any evidence that Montana told Theoane to pay NMC, or that he was the hidden hand directing Theoane when the latter asked Gschwari to abandon her legal bid. But the sequence of events during that timeframe strongly suggests this was what happened. After NMC received the R4-million from Prasa, Gschwari withdrew her case against Montana – just as Theoane had told her to do.

What’s more, Prasa allegedly paid NMC on the back of fraudulent invoices.

One source explained that NMC submitted “ghost” invoices to Prasa, a term that describes invoices for non-existent goods or services. The source claimed that NMC had “stolen” the R4-million from Prasa.

Scorpio asked the SOE for details or any supporting documentation to help explain the payment to NMC, but it declined to do so pending ongoing investigations.

There are two ongoing investigations on this company, the first being an internal investigation as well as the Special Investigating Unit (SIU),” said Prasa.

Due to the ongoing investigations, we cannot comment further with regards to your questions. We can however confirm that they [NMC] were contracted to undertake ad-hoc rail work, however, the nature and the detail of the contract is subject to investigation,” added the rail operator.

Gschwari did not respond to queries.

Montana was angry when contacted for comment.

Voetsek Myburg. It’s your story, not mine,” Prasa’s former CEO wrote in a WhatsApp message.

Meanwhile, Prasa and the SIU may also have to look into the conduct of the official who allegedly processed the payment.

Theoane, who would go on to win an excellence award at a Prasa ceremony a few weeks later, had another request for Gschwari – apart from that regarding her case against Montana. He also asked her to pay R2.5-million to a company called Molathewa Trading.

Company records show that this entity’s sole director is one Leroma David Theoane. It is not clear how the two Theoanes are connected to one another, but documents obtained by Scorpio show that both men once listed the same address in Boipatong, near Vanderbijlpark, as their residential address. In other words, Theoane asked a Prasa contractor to channel money to an entity that appears to be connected to him.

Scorpio could not verify whether the R2.5-million requested by Prasa’s Theoane was indeed paid to Molathewa Trading after NMC’s October 2018 payment from Prasa, but other financial records show that Gschwari did make at least one substantial payment to this company earlier that year. This raises suspicions that Theoane, who still works at Prasa, might be extracting alleged kickbacks from contractors for his own benefit.

Neither Francis or Leroma Theoane responded to requests for comment.

Complaints of alleged corruption involving Montana, other Prasa officials and private contractors were submitted to the Hawks, the SIU and the National Prosecuting Authority (NPA) from as early as 2015. To date, not a single person has been brought to book. DM

Gallery

Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or if you are already an Insider.

BUSINESS MAVERICK

The WEF and the confidence conundrum

By Tim Cohen