South Africa


Prasa pays R3m to Mbalula’s administrator — just before court culls him

Prasa pays R3m to Mbalula’s administrator — just before court culls him
Prasa administrator Bongisizwe Mpondo. (Photo: Suné Payne) / Transport Minister Fikile Mbalula. (Photo: Gallo Images/Sydney Seshibedi)

On the eve of a court ruling that the transport minister had appointed Prasa’s administrator unlawfully, the rail agency rushed through payment for his nine-month tenure.

See accompanying sidebar What’s left of Prasa’s rail infrastructure? here.

The day before the high court set aside Bongisizwe Mpondo’s secondment as the administrator of the Passenger Rail Agency of South Africa (Prasa), he was hastily made a permanent employee and back-paid R3.17-million.

The amount, which is apparent from leaked payroll records and pay stubs, was his salary plus an “acting allowance” for the nine months since Transport Minister Fikile Mbalula had sent him to Prasa.

AmaBhungane has been told the rail agency has launched a witch-hunt to find the source of the leak.  

Mpondo was added to Prasa’s payroll system on August 24, the day before the Cape Town High Court judgment, with a monthly salary of R454,212 plus a monthly allowance of R196,508 for his role as Prasa’s acting accounting authority.

Together, this makes for a whopping R650,720 a month. The R3.17-million he got as back-pay that day was after tax and deductions.

 But Prasa should never have paid Mpondo at all, given the court ruling the next day that Mbalula had appointed him unlawfully something the rail agency’s two group legal executives had warned about as early as January.

Civil society coalition #UniteBehind, which launched the court challenge to Mpondo’s appointment, raised red flags even earlier, writing to Mbalula on 10 December 2019 asking him to explain the legality of the move. 

Neither Mbalula nor the Department of Transport would answer questions about who authorised Mpondo’s payment or whether the minister or the department would now refund Prasa.

#UniteBehind told amaBhungane, “The department should cover Prasa’s costs of Mr Mpondo, given that the high court has held that his appointment and purported secondment was unlawful and invalid.”

Mpondo’s generous package is particularly galling because for the past two years there has been a salary freeze for all other Prasa employees – and because of Mpondo’s failure to restore security services cancelled by the interim board last year, leading to extensive vandalism and theft. 

Prasa referred amaBhungane’s questions to the department. Mpondo said he had sacrificed to leave his transport consulting business and “respond to the call to serve my country”. He worked “month on month without earning a salary during a time when the Covid-19 pandemic was wreaking havoc in the economy”. 

The department’s director-general, Alec Moemi, said Prasa had paid Mpondo a lump sum for the previous nine months because of “prolonged negotiations”. 

“Mr Mpondo’s situation was unprecedented,” Moemi said. “Where secondment happens between a department and an entity, it is not so straightforward, as the salary bands on the Persal system and those of [state-owned] entities are way apart from each other. 

“In any secondment arrangements, the parties do make some form of payment arrangements. The minister did send a letter of appointment of Mr Mpondo as Prasa’s acting group chief executive to the acting company secretary, Ms Mapule Thabethe. This letter in turn allowed Prasa to be able to appoint him on their own systems.”

But Moemi is ignoring Judge Nathan Erasmus’s ruling that Mpondo was initially contracted as a special adviser to the minister, a role that precluded him from being seconded elsewhere. 

Erasmus also ruled that an attempt to have him resign and immediately sign a new contract with Mbalula as a “project manager” did not allow for his lawful secondment as acting chief executive of Prasa either. 

Although the purported appointment was made by the minister, the department expected Prasa to pay Mpondo’s salary but this did not happen for nine months, perhaps because of the mysterious “prolonged negotiations”.

Suddenly an administrator

Mbalula, who took charge of the transport department in May 2019, stated several times that he planned to fast-track the appointment of a permanent Prasa board.

As Erasmus set out in his judgment, Mbalula made several promises that he was on the point of finalising the appointment of a new board to succeed the interim board.   

But on 15 November, Mbalula appointed Mpondo as a special adviser to his office. One week later, in a letter to Finance Minister Tito Mboweni and President Cyril Ramaphosa, Mbalula explained his intention to dissolve the current interim board and either fast-track the permanent board appointments or place Prasa under administration.

“I’m leaning more on option two, considering the situation of the entity and wish to consult with yourself on invoking the provisions of section 49(3) of the PFMA in me appointing an administrator, which should be a turnaround expert to assist in addressing the operational deficiencies of the entity,” Mbalula wrote. 

Two weeks later, on 5 December, Mpondo’s position as special adviser was terminated and Mbalula offered him a contract as a project manager in the department, to be seconded as the acting group chief executive for Prasa. 

On the same day, Mbalula dissolved the interim board and later purported to appoint Mpondo as “administrator” with the power to direct Prasa without a board of control.

The judge would later find Mpondo was “not an existing employee capable of secondment” and that the laws governing Prasa did not allow for it to operate without a board.  

Almost immediately after Mpondo’s secondment, both #UniteBehind and Prasa’s internal legal team questioned the legality of appointing an administrator at the rail agency. Despite these warnings, Mpondo was tasked by the minister to get what Mpondo called “a broken business” back on track. 

Mpondo’s work included expediting the agency’s modernisation programme, implementing security, developing capacity to manage Prasa’s capital programme and competitive procurement, “ensure effective consequence manage content”, and review Prasa’s business model.

But instead, he and Mbalula appear to have destabilised the rail agency still further.

Mpondo appointed a six-person task team, replacing some newly appointed permanent staff, such as the chief financial officer. He would also try to remove Prasa’s chief procurement officer, and over the next nine months would make new chief executive appointments to subsidiaries Prasa Rail, Prasa Tech and Autopax, as well as appoint Prasa’s chief information officer and company secretary.

Now the department has conceded that Mpondo’s appointments may be overturned.

“The newly appointed accounting authority or the new board of control, as the case may be, will make such decisions as he/it may be advised to lawfully take with regard to appointments and decisions made by Mr Mpondo,” Moemi told amaBhungane.

Meanwhile, Mpondo compounded the security vacuum opened by the interim board when he cancelled most of the irregular though necessary security contracts in April this year in favour of a deal with the South African Police Service.

The police were supposed to help guard the railway network according to a 2019 memorandum of agreement

Despite this partnership, railway lines and trains remained vulnerable to vandalism and theft as the police were seemingly focused on arresting petty offenders during the Covid-19 lockdown. 

Prasa had been expected to announce its own security plan earlier this year, but this was delayed until 16 September where Prasa expanded on its plan to insource its security using 3,100 new protection officers. By this time, the damage to the railway network had derailed the network modernisation programme, with only South Africa’s mainline routes remaining operational.

The rail agency had an unspent capital budget to modernise infrastructure, but this has since been redirected to pay off Eskom and municipality debts. In a March media briefing, Mpondo reportedly explained that Prasa’s liabilities amounted to R9.7-billion, in part because of payment arrears to Eskom and municipalities.

According to a source close to the matter, Prasa managed to convert R1.8-billion of its capital expenditure budget into operational expenditure, with R1.4-billion earmarked for spending on the rail business and R400-million for spending on managing Covid-19.

According to the 2019 Budget review, the Treasury allocated Prasa R41.5-billion in capital transfers for the three-year medium term to buy new coaches, refurbish old ones and upgrade other infrastructure.

Following Judge Erasmus’s ruling, the Treasury appointed Airports Company South Africa group executive Badisa Matshego as the accounting authority for Prasa.

Matshego told the media during the 16 September launch of Prasa’s new integrated security plan that the rail agency had sustained R4-billion in damage to infrastructure in recent years. 

The theft and vandalism of core infrastructure had caused a “very serious reduction in capacity to provide the requisite service in rail transport for commuters, causing major disruptions, sales and drastically diminishing the ability of plants to generate revenue,” Matshego said.

#UniteBehind and experts from the Treasury have all said that Prasa needed stability, with a permanent board to implement modernisation and refurbishment programmes.

Mpondo told amaBhungane: “I took the sacrifice to leave my business and respond to the call to serve my country. This has come at great opportunity cost to me for the almost nine months I was away from my business. (I have been running my transportation consulting business for 14 years now).

“I dedicated my time fully to the Prasa task wherein earning a salary was not foremost on my mind. I sought to bring stability and order to Prasa whilst ensuring that trains are running. 

“I therefore worked month on month without earning a salary during a time when the Covid-19 pandemic was wreaking havoc in the economy. I must indicate that whilst this has been very difficult for me personally, I am however proud of the effort I put in to bring Prasa back on track.

“There have been notable positive changes in the organisation against some determined headwinds from within and outside of Prasa. Lastly, there are very competent skills that I have recruited which should continue to build on the solid foundation that I sought to put in place.” DM

 The amaBhungane Centre for Investigative Journalism, an independent non-profit, produced this story. Like it? Be an amaB Supporter to help us do more. Sign up for our newsletter to get more.


Comments - Please in order to comment.

  • Coen Gous says:

    Apart from basic incompetence, the fraudulent action of Mbalula and his cronies at the ANC and now PRASA is an example how to run down the state as quickly as possible, whilst enriching themselves. The ANC delegation by air force jet to Zanu-FP was purely to learn from them how to do it faster, more efficient, and with better self-enrichment results

  • Johan Buys says:

    Back-paying 650k a month a day before the court says appointment was illegal amounts to a middle finger to thenlaw, the judge, taxpayers and decency. As Mbalula and PRASA have done nothing good for years, Pres Ramaphosa should clear the decks.

  • Dennis Bailey says:

    The more state medaling the less functionality of SOEs in SA.

  • Rob Glenister says:

    The worst part of this disgusting story is that our esteemed lame duck president will do nothing about it.

  • Hermann Funk says:

    When is the President making true his promise that all those implicated will step aside?

  • Joe Irwin says:

    Methinks that it’s time to close the business and become an ANC cadre. With a 3 million+ after tax bottom line for next to no effort there is little reason to continue the sleepless nights trying to work out how to meet my salary and wage commitments.

  • MIKE WEBB says:

    This Mbalula piece of …. comes from the cANCer Youff League. Same as Gigaba and Julius. What a reputation to have built for itself. Remember Youff goes up to 34 years +364 days. What a joke! Also remember Peter Mokaba and Collen Maine (Oros). Where did they find this barrel to scrape?

  • L Dennis says:

    Thieving makes me sick to my core

  • Jon Quirk says:

    The contempt for the law and due process from both Prasa and Mbulula is beyond contempt and utterly sickening.

    The most fundamental duty of a Director is proper maintenance of the assets – contrast this with the R4 billion destruction of rail infrastructure.

    The Directors should all be held personally liable; the concept of limited liability totally falls away when gross negligence and criminality is involved, and ignorance is no excuse – it is a basic responsibility of all Directors, executive and non-executive to satisfy themselves that they have sufficient information they can rely on in order that they may exercise their judgement.

  • Ludovici DIVES says:

    How does Ramaphosa keep these guys on his cabinet, doesn’t he have performance assessment’s done on these clowns.

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