Former Passenger Rail Agency of South Africa boss Lucky Montana, along with his alleged corruptors and their enablers, could be facing charges for their alleged crimes. Daily Maverick’s investigative journalist for Scorpio Pieter-Louis Myburgh explains.
Reporting by: Pieter-Louis Myburgh
Filmed by: Joel Seboa
Edited by: Malibongwe Tyilo
Produced by: Emilie Gambade
Sub-edited by: Kevin Flynn
Support journalism that protects democracy. Become a Maverick Insider.
***
The Special Investigating Unit recently announced that it would provisionally freeze two properties owned by Lucky Montana, a former CEO of the state-owned Passenger Rail Agency of South Africa, or Prasa.
Much of the media coverage only broadly dealt with the SIU’s announcement, but there is a compelling backstory to Montana’s properties, one that unlocks several important themes. The saga highlights the value of enterprising investigative journalism. It exposes the tactic of funneling alleged kickbacks through convoluted property transactions. Finally, it once more underpins the tremendous cost of corruption at our foremost State Owned Entities.
I’ve been tracking the story of Montana’s suspicious property schemes for more than a decade, and today I’ll take you through Prasa’s R5.6-billion Siyangena corruption scandal.
The saga takes us back to 2010, the year in which South Africa hosted the Fifa World Cup.
With Montana at the helm of Prasa, the SOE decided it urgently needed to upgrade several commuter train stations ahead of the tournament. But this motivation is now widely viewed as a ruse. The tournament was only months away. Prasa and its contractor would’ve had little chance, if any, to complete such a large undertaking in time.
However, Prasa pressed ahead and awarded a R90-million contract to Siyengena Technologies, a company that formed part of businessman Mario Ferreira’s TMM Holdings.
Siyangena was appointed to install CCTV cameras, access gates and related equipment at a handful of Prasa stations.
The dealings between Prasa and Siyangena were shady from the outset. There was no lawful procurement process, no budget for the program, while internal Prasa documents were manipulated to conceal the unlawful nature of Siyangena’s appointment. We know this because of high court and Supreme Court of Appeal judgments that were later handed down.
All available evidence points to Lucky Montana as the main motivator for appointing Siyangena. Records from the court proceedings revealed that Montana had been having private meetings with Siyangena’s bosses, raising questions over the nature of his relationship with the Prasa contractor.
But Siyangena’s R90-million contract was only the start of the company’s lucrative relationship with Montana’s state-owned entity.
In 2011, Prasa commenced with the ISAMS program, short for an integrated station access management system. Siyangena ended up raking in billions of rands through this project.
First, the company’s original R90-million contract unlawfully ballooned to a R1.9-billion deal. Siyengana was appointed to install security equipment at 62 Prasa train stations.
Siyengena, by all appearances, viewed the larger Prasa contract as an opportunity to milk the SOE. Under the pilot project, the cost for the security installations came to R2.5-million per train station. Under the extended roll-out, the cost per station first ballooned to R12-million per station, and then to R31-million.
Because the value of Siyangena’s new contract exceeded R1-billion, it qualified as a mega deal, as defined by the National Treasury’s guidelines for public procurement. This meant the national department of transport had to plan for it in its medium-term expenditure framework. The contract also required the transport minister’s approval. But Montana and Prasa somehow sidestepped these key requirements.
In 2014, Siyangena clinched yet another Prasa mega contract, this time worth a massive R2.5-billion.
With the earlier contracts, Prasa didn’t even bother to put out an open and competitive tender for the job. This time, however, there was a tender process, but this would later be exposed as a total sham. For instance, it was discovered that Prasa had laced the bid specifications with security equipment that only Siyangena was licensed to sell in South Africa. None of Siyangena’s rival bidders ever stood a chance to win the contract.
The R2.5-billion contract, together with the earlier deals and related contract extensions, meant that Siyangena’s total earnings from Prasa would climb to R5.6-billion.
The question, then, was why Prasa was so eager to dish out multi billion rand contracts to Siyangena, this while the underlying procurement processes could, at best, be described as dubious.
In 2015, while working at Rapport newspaper, I exposed Prasa’s infamous “tall trains” procurement scandal, but Prasa’s dealings with Siyangena were also on my radar. There were rumours among some Prasa employees that Siyengena was allegedly bribing Montana.
This was a serious accusation, so I set out to establish if there was any truth to the allegations.
I didn’t have access to Montana’s bank records to look for suspicious transactions, but I knew there were other methods for laundering alleged kickbacks to politically exposed persons.
One such method involves complex property transactions that are designed to disguise illicit cash flows.
I began digging into Montana’s property records and soon found something that looked odd.
In 2008, Montana had bought a house in the Johannesburg suburb of Parkwood, for an amount of R1.85-million.
In 2014, he sold the property for R6.8-million. In just six years, Montana had managed to achieve a return on investment of nearly 270%. Based on average appreciation figures for that suburb, the property’s value should only have increased by about 30% over that period.
It appeared as if someone had hugely overpaid for the Prasa boss’s property. I spoke to a few real estate agents in the area, and they too were stunned that the house had been sold for such a high price.
The deeds office records revealed that the buyer was a shelf company called Precise Trade and Invest 02. Its sole director was one Riaan van der Walt, and when I started digging into Van der Walt’s background, the alarm bells truly went off.
I managed to establish that Van Der Walt, a lawyer from Pretoria, was closely linked to Siyangena Technologies.
He had shared directorships in other entities with Mario Ferreira, Siyangena’s founder.
What’s more, Van der Walt had represented Siyangena in legal matters, and he had once acted as a spokesperson for TMM Holdings, the holding company for Siyangena Technologies and other Ferreira ventures.
My hypothesis was that Siyangena had channeled an alleged kickback to Montana by means of a property sale at a highly inflated price.
All of the parties denied any impropriety, but the Parkwood transaction was only the start of my investigations into Montana’s property portfolio.
It quickly became evident that Montana had been amassing several high-value properties, and that he had frequently paid cash for these assets. The total value for his property portfolio exceeded R45-million, raising questions about the source of these funds.
In 2018, while working for News24, I made a significant breakthrough. I laid my hands on documents that cast further doubt over Montana’s property dealings and his relationship with Siyangena’s lawyer and other individuals associated with Mario Ferreira, Siyangena’s founder.
My reporting revealed the following: In 2015, Montana became the owner of a R13.5-million property in Hurlingham, Johannesburg. And he didn’t pay a cent of his own money towards the transfer. As it turned out, Van Der Walt’s shelf company, Precise Trade and Invest, had paid a R2-million deposit to the transfer attorneys.
The rest of the money, R11.5-million, had come from an entity called Midtownbrace.
I scoured South African company records, but couldn’t find any entity registered with that name. Finally, after checking neighbouring countries’ company records, I found a company called Midtownbrace, which was incorporated in Botswana. Its directors, however, were South African, namely businessman Andre Wagner and his father, Johan.
My investigation showed that Andre Wagner was linked to Siyangena’s lawyer, Van Der Walt, and to Mario Ferreira’s son. The trio had at various points in time all been directors in an entity called Wetlands Country Retreat.
What was even more curious was Wagner’s explanation for why his company, Midtownbrance, had contributed R11.5-million towards Montana’s property.
Wagner claimed the money was for a townhouse complex that he and Montana were going to develop on the 6000m 2 Hurlingham plot. The development, however, would never materialise.
Wagner at the time showed me a memorandum of agreement that supposedly verified his story, but the document left me with more questions than answers. For instance, the agreement stipulated that the development would be pursued through a joint venture structure. It did not make any provision for the erf to be registered in Montana’s name. Why on earth would Wagner’s company pour that much money into a property, only for it to be registered in the Prasa’s boss’s name?
The source of funds for Midtownbrace’s R11.5-million contribution was especially interesting.
Wagner explained that he once owned shares in Wetlands Country Retreat, the entity that linked him to Siyangena’s lawyer, Van Der Walt.
He then sold his shares in Wetlands Country Retreat and “re-invested” the money in Montana’s supposed townhouse development.
But who bought Wagner’s share in Wetlands Country Retreat, I asked him. Where did the R11.5m actually come from?
Wagner indicated that money had come from TMM Holdings, Siyangena Technologies’ holding company.
This was an astonishing admission, considering the timing of this flow of funds.
Siyangena was sitting with Prasa contracts worth billions of rands. Its holding company, TMM Holdings, then transferred R11.5m to Midtownbrace, supposedly as compensation for Wagner’s stake in Wetlands Country Retreat. Midtownbrace then “re-invested” the R11.5m in a property that would be registered in Montana’s name.
The optics looked terrible. It had all the makings of a crafty scheme to channel alleged kickbacks to Montana in exchange for Siyangena’s massive Prasa contracts.
Wagner, Ferreira and Montana all rejected the hypothesis and strongly denied any impropriety.
But then came the Zondo Commission, which put a magnifying glass to alleged State Capture schemes, including Prasa’s most contentious contracts.
One forensic report presented to the commission detailed how Siyangena’s holding company had transferred millions of rands to Riaan Van Der Walt’s shelf company, Precise Trade and Invest, which then utilised those funds to help Montana buy several properties.
The SIU’s recently released evidence looks even more damning. It effectively closes the loop concerning the flow of funds from Siyangena’s Prasa contracts to Lucky Montana’s properties, with Wagner and Van Der Walt’s entities acting as conduits for the allegedly illicit cash flows.
The SIU is adamant that there is an “uninterrupted money trail” linking Montana’s properties to Siyangena’s massive Prasa contracts.
The Hurlingham property serves as a good example of what the SIU describes as an “uninterrupted money trail” that links Montana’s properties to Siyangena’s massive Prasa contracts
In December 2014, Prasa transferred R339-million to Siyangena. Next, Siyangena moved R12.5-million to its call account. In April 2015, Siyangena transferred R13-million to its holding entity, TMM.
On the same day, TMM transferred R12-million to Midtownbrace, the company Wagner had incorporated in Botswana. Finally, in May 2015, Midtownbrace paid R11.5-million to the transfer attorneys that handled Montana’s Hurlingham purchase.
The SIU also uncovered a similar flow of funds that links one of Montana’s properties in Waterkloof, Pretoria, to a R94m payment Siyangena had received from Prasa in March 2014.
The big question now is whether the Hawks and the National Prosecuting Authority (NPA) will institute criminal proceedings against those implicated in the Siyangena scandal.
The two organisations have been investigating the matter for several years, while the SIU said in its recent statement that it would refer any evidence of alleged criminal conduct to the NPA.
The NPA told Daily Maverick that the Hawks’ investigation is ongoing and that a formal prosecutorial decision will be made as soon as the probe is wrapped up.
Be sure to keep following Daily Maverick for impactful investigations and coverage of corruption scandals that ultimately affect each and every South African. DM
RIGHT OF REPLY
Wagner strongly denied any impropriety. He remained adamant that Midtownbrace had made a legitimate investment in Montana’s townhouse development: “I deny any insinuation and/or allegation that Midtownbrace is part of alleged corruption and money laundering or that any TMM dealings was done via Midtownbrace,” stated Wagner.
Siyangena Technologies said it noted from the SIU’s court papers that no relief is being sought against the company. “As the matter is sub judice it would be inappropriate for us to comment any further,” the company stated.
Montana did not respond to requests for comment.
Van der Walt reportedly moved to Texas in the United States around the time of the Zondo Commission and could not be reached for comment.
Comments
Scroll down to load comments...