South Africa

DAYS OF ZONDO

Legal team at Prasa had no control over certain contracts, commission hears

Legal team at Prasa had no control over certain contracts, commission hears
Deputy Chief Justice Raymond Zondo. (Photo: EPA-EFE / Kim Ludbrook)

The Zondo commission has heard how the legal team at Prasa did not have access to contracts – including the infamous Swifambo contract.

“When we raised those issues as far as Swifambo were concerned, we were found to be in people’s bad books,” said Martha Ngoye, head of Legal Risk and Compliance at the Passenger Rail Agency of South Africa (Prasa).

She was speaking on Monday 16 March at the Zondo Commission of Inquiry into State Capture about Prasa’s legal woes and her role as the head of the legal department, which she claimed often did not have access to documents and was not involved in the drafting of certain contracts. 

Ngoye, who has been head of the department since 2014, was the fourth official from the rail agency to testify about Prasa as it faces a multitude of court cases and allegations of maladministration, corruption and State Capture. 

Testimony related to the agency has been ongoing from last Wednesday with Tiro Holele, Jacob Ragkoathe and Popo Molefe having already testified. 

On Monday, Ngoye took the stand and revealed how the legal team at Prasa – who were supposed to be advising the entity to ensure it worked strictly within the confines of the law – were sometimes kept out of the loop and not welcomed by officials. 

Ngoye described Prasa as being “sued on a daily basis”. 

Addressing Deputy Justice Raymond Zondo, she stated, “Chair, it’s important to know that whilst some people find the assistance of the legal department is crucial and they welcome it, others regard us as a nuisance in the process.” 

One such example of being kept out of the loop, Ngoye explained, was the Swifambo deal – where Swifambo was a front company for a German company called Vossloh, that was supposed to bring 70 new locomotives to the rail network. The deal was riddled with corruption. Swifambo was not qualified to run the deal as it had no rail leasing or manufacturing experience. On Friday, the former chairperson of the Prasa Board of Control, Popo Molefe, revealed that specs for the proposal were tailored to suit Vossloh. 

Read in Daily Maverick: Testimony this week puts focus on governance issues at Prasa

Ngoye said the legal team was not involved at all with the Swifambo contract, which was valued at R3.5-billion, until “what transpired was that there was a point where there was an intention to increase the value of the contract to R5-billion – this is where the legal department was approached”. 

The lawyer and her team were concerned because “we found a number of provisions which necessarily did not comply with, for instance, compliance with National Treasury requirements… some of the conditions precedent were not followed or met. 

“When we raised those issues as far as Swifambo were concerned, we were found to be in people’s bad books. And what we said as the legal function as far as that is concerned, we will not participate in a contract that we believe is untoward, and also where we suggested changes to be made, those changes were not welcomed. 

“So we made it very clear: rather do not involve the legal team because it  was a late stage already for our involvement – and that’s how it was.”

Ngoye, who sat calm and composed during her testimony, told the commission, “I came to the legal department in 2014, so these contracts had already been concluded and even in my understanding, legal participation was very minimal. 

“We get pulled in when there are problems with the contract, but in terms of drafting and advising the organisation… we’ve been excluded.” 

Ngoye, who spoke of her troubles with Prasa officials said, “Chairperson, the more things change, the more they stay the same… Mr [Lucky] Montana left in 2015 and what we found is that from that period onwards, things have not necessarily changed to what we would have wanted them to be. It’s very clear that issues around maladministration within Prasa continue.” 

Before Ngoye joined Prasa’s legal team, she was the CEO at Intersite, a subsidiary of Prasa between 2011 and 2014. When she joined the Prasa legal team, the CEO at the time, Lucky Montana told her, “‘Martha we have a need for a strong legal department, so therefore because of your background, I would suggest we move you – it’s still a group executive position – from the CEO of Intersite to go and build the legal function at corporate’, which I didn’t see anything wrong with.” 

Despite a previous fallout, Montana and Ngoye were on professional terms, she stated, including time between December 2014 and January 2015 when Montana took a break from the company. Ngoye was asked by Montana to step in as acting group CEO. 

One of the things that stood out was the issue with the increase in the value of the Swifambo contract. This discussion was taking place within Prasa and Ngoye said, “I understood this instruction came from Mr Lucky Montana and obviously he would need to take that instruction back to the board.”

Ngoye told the commission the legal team thought, at that stage, this was the direction Prasa was going in and all required approvals just needed to be received in order for the value to be increased. This would mean that the contract would be increased from R3.5-billion to R5-billion. Ngoye said her team was “uncomfortable” with this increase.

“We just did not see this contract being beneficial to Prasa and when we raised our concerns, it was not received favourably.” 

Ngoye will continue with her testimony on Tuesday 17 March. DM

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