Former Prasa CEO misled and withheld information from the board, says Popo Molefe

Former chairperson of the Passenger Rail Agency of South Africa (Prasa) Popo Molefe on Thursday told the commission of inquiry into state capture that the agency’s former CEO, Lucky Montana, misled the board and withheld critical information from it, which was a concern.

Molefe said soon after his appointment on 1 August 2014, the newly appointed board felt duty-bound to ask Montana and his executive team to give a detailed presentation on the modernisation programme at the agency and for the actual contracts – most of which had been concluded and signed – to see what Prasa was committing to.

The modernisation programme would cost R172 billion for 40 years, with R51 billion estimated to be spent in the first 10 years of the programme, Molefe said.

Though Montana and his team of executives gave a presentation to the board, the former CEO failed to furnish it with the contracts it had requested.

“Meeting after meeting the group CEO was reminded that the board needed those contracts [but] they were not forthcoming,” Molefe said, which prompted the board to approach the legal firm, Webber Wentzel, which had assisted Prasa with one of the contracts, which was of particular interest to the board.

Montana was “very angry” that the board had approached the law firm directly, Molefe said, adding that at the time the board also intended to approach the company Prasa had entered into that contract with, Molefe said.

He said what was particularly “strange” for him was that Montana did not seem to have an understanding of the power relations between himself as CEO and the board as the accounting authority.

“Where we could not understand failures on his part was when we now wanted to see the actual contracts,” said Molefe.

Molefe said another concerning development at the time was that the board learned through the media that the public protector had sent questions to Prasa and had issued an interim report on the agency, which gave the board the indication that Montana did not consider himself accountable to it.

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He said the former CEO had on numerous occasions questioned the integrity and validity of the board and had taken issue with the fact that he had not been consulted on its appointment.

On 27 November 2014, the board held its first extensive meeting where “urgent decisions” had to be made with regards to the modernisation programme, Molefe said.

Prasa management had at the time said who their preferred bidders were and the board approved the relevant tenders subject to Montana keeping to his promise to provide it with a probity report which would give it the assurance that proper processes had been followed, Molefe said.

He said on 23 December 2014, he called a meeting with the directors where he learned that there never was a probity report, contrary to Montana’s assertion at the November meeting that it was there, because the position of a probity officer had been vacant for 12 months.

This prompted for a request to be made to an audit firm, which provided internal auditing services for Prasa, to conduct an ad hoc assessment of the tenders so the board could get the assurance it needed before approving these contracts, Molefe said.

The findings by the auditing firm were in the “negative” and in February 2015 the board decided that the contracts should be cancelled and new requests for proposals should be issued urgently, Molefe said.

The board came to the conclusion that Montana “deliberately misled the board” because he wanted it to approve tenders that were “seriously flawed”, Molefe said.

Molefe said when Montana was interrogated on this, his “excuse” was that he, too, had been misled.

On assessment, the board concluded that the office of the CEO – held by Montana at the time, who had indicated that his contract should not be renewed at its end on March 2015 – “was too powerful” and so the board implemented certain measures to curtail this.

The commission continues, watch live courtesy of eNCA:

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