SIU tells Parliament that Prasa plans to use Swifambo’s ‘too tall’ trains

The Special Investigating Unit (SIU) says the Passenger Rail Agency of South Africa (Prasa) still intends to use the trains that were previously reported to be “too tall” for the country’s railway network.

President Cyril Ramaphosa issued a proclamation earlier this year authorising the SIU to probe Prasa and recover any financial losses incurred by the state, with the investigation spanning back to 2010.

SIU’s Prasa investigation

The investigation is looking into the awarding of tenders, including the highly controversial R3.5 billion Swifambo Rail locomotives contract, which the courts set aside in 2017 due to irregularities in the procurement process.

The probe also covers allegations of severe maladministration, fraudulent liability claims, the hiring of ghost employees, and unlawful actions by Prasa officials.

Any evidence of criminal conduct uncovered by the SIU will be handed over to the National Prosecuting Authority (NPA).

An investigation into the state-owned enterprise (SOE) was also launched under a 2019 proclamation.

Prasa-Swifambo tender

Appearing before Parliament’s Standing Committee on Public Accounts (Scopa) on Wednesday, SIU chief national investigating officer Zodwa Xesibe revealed that despite the cancellation of the Swifambo five-year tender, the unit has identified 28 entities that received payments from the company.

“We are now investigating these entities to identify if there were any services that they rendered to Swifambo for them to be entitled to such payments,” she said.

Xesibe stated that although Swifambo received R2.6 billion from Prasa, it delivered only 13 of the 88 locomotives it was contracted to provide.

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The SIU official informed MPs that Prasa is negotiating with Swifambo’s liquidators to acquire six AFRO4000 locomotives already in South Africa and 17 locomotives located in Spain as part of the settlement.

“During its engagement with Prasa, the SIU was then advised recently that Prasa is in discussions with the liquidators of Swifambo with a view of obtaining locomotives which are already in South Africa as part of payment in distribution and then the 17 locomotives which are still in Spain.

“Those negotiations are still taking place and we understand that they have been paid already by Swifambo as a dividend.”

Sars payment

Prasa reportedly filed a court application seeking permission to access locomotives that had not been delivered yet, aiming to bring them into operation.

The railway agency argued that its existing fleet is inadequate to meet the operational demands of the business.

Swifambo paid R1.8 billion of the funds received from Prasa to Spanish company, Vossloh.

READ MORE: 33 Prasa employees suspended over R3.5bn irregular tender awarded to Swifambo Rail

The remaining R776 million was distributed among 28 unnamed entities.

“One payment of R246 million was made to Sars [South African Revenue Service].

“The team is engaging with Sars to determine if the amounts due and payable to Sars, in terms of the tax laws, have been made and received by Sars,” Xesibe said.

She also disclosed that the SIU is investigating the connection between an unnamed former Prasa CEO and the director of one of the entities, which received the largest share of payments from Swifambo.

Siyangena Technologies tender

The R5.6 billion Siyangena Technologies tender is also under investigation.

The company was contracted to supply and maintain an integrated security access management system at various train stations.

Although the service provider received R3.3 billion from Prasa, the contract was subsequently nullified by the court.

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 “As part of the court judgment, the parties were required to evaluate the work that was done by Siyangena to at least get to understand the value for money and that process is still ongoing. We are still awaiting a final report that process,” Xesibe continued.

The SIU investigator pointed out that Siyangena had been contracted by Prasa since 2010.

The unit identified 10 entities that received payments from Siyangena.

Lucky Montana properties?

Additionally, the SIU discovered two properties owned by an unnamed former Prasa CEO, which were acquired “during the period in question”.

Former Prasa CEO Lucky Montana previously made headlines for his R11 million mansion in Johannesburg.

This followed former Prasa chairperson Popo Molefe alleging in court papers that the contract awarded to Siyangena Technologies was unlawful and that Montana benefited improperly from it.

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Xesibe revealed that the R11 million property was financed by a subsidiary of Siyangena, with funds passing through several other entities before the house was purchased.

The second property, acquired for R6.5 million by one of the entities linked to Siyangena, was originally valued at R1.8 million and later appraised at R3 million.

Fraudulent liability claims

Regarding fraudulent liability claims processed and paid by Prasa’s group insurance department, Xesibe reported that over 3 800 claims, totaling R1.4 billion, were identified.

“There is a potential saving of R57 million and potential recovery of R1 million that emanate from the cases identified.

“NPA and Legal Practice Council [LPC] referrals of fraud and misconduct will be made as soon as possible once the pending reconciliation of evidence is complete,” she told Parliament.

She added that the SIU anticipates to completed investigations in March 2025.

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