Prasa denies VBS Bank investments deal reports

Prasa's headquarters in Pretoria.

Prasa's headquarters in Pretoria.

The Sunday Times reported that Prasa’s former acting CEO Lindikhaya Zide confirmed the rail agency’s commitment to a R1 bn investment with a return of 8.25% per annum.

The Passenger Rail Agency of South Africa (Prasa) has denied that it is set to invest R1 billion in the little known bank that granted President Jacob Zuma a loan to repay about R7.8 million for non-security upgrades to his private homestead at Nkandla in KwaZulu-Natal.

Prasa “would like to set the record straight on the allegations of an imminent payment to VBS [Bank] by Prasa as unfounded”, the embattled state-owned enterprise (SoE) said in a statement on Sunday.

“Prasa has call account Investments with all the major banks in South Africa. The proposal by VBS or any other banks is within common practice. Prasa is governed by the Prasa investment policy which is a guide on transactions of a similar nature,” it said.

The money used in the current investments by Prasa with all five the major banks in South Africa “comes from surplus monies that may be available for short periods of time due to delays or postponement of some capital projects”.

“This money is then invested in call accounts for short periods of time as a measure to ensure Prasa’s ongoing liquidity and can be accessed to fund any unforeseen capital shortfalls that may occur at any given time. In the final consideration of any investment, Prasa must be guaranteed capital preservation of public funds and the immediate availability of funds should they be needed.”

As an SoE, Prasa had to ensure that all investments complied with the National Treasury regulations and the Public Finance Management Act (PFMA). In this regard, all intergovernmental prescripts and practices had to be adhered to in considering any business proposal made to Prasa before any formal deals were struck. This included the VBS proposal.

“Currently, Prasa is in the process of analysing the VBS proposal in order to approach the National Treasury officially to ensure compliance by VBS.

“It is important therefore for Prasa to emphasise that no payment instruction has been made either by the board of Prasa or the acting group CEO in this regard. In addition, there is no set deadline to which Prasa must adhere to in regards to the yet to be approved VBS proposal. Most importantly, the authorisation of such payments does not reside with either the chairperson of the board nor the acting group CEO.

“It is therefore disingenuous to suggest that there has been any pressure placed on the acting chief financial officer to approve the VBS proposal or any other proposal without following due process, the explicit guaranteed return on investment, and the protection of public funds.

“The Interim Prasa board and the acting group CEO are on record as not having approved nor signed off on the VBS proposal and have not placed Prasa in a binding commitment to the VBS proposal,” the statement said.
– African News Agency (ANA)


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