Former Passenger Rail Agency of South Africa (Prasa) CEO Lucky Montana appeared at the Zondo Commission of Inquiry into allegations of state capture on Friday (April 16).
He began by telling the commission that so many things had been
Montana’s 98-page statement was interspersed with allegations. He accused the commission and its chair Deputy Chief Justice Raymond Zondo of being biased.
He also found fault with former Prasa chair Popo Molefe and Werksmans Attorneys.
Advocate Vas Soni SC was accused of being conflicted.
Even the commission’s numbering system did not escape attack.
Montana answered Soni’s questions mainly by making allegations against Molefe and Werksmans.
On Molefe he said: “Molefe was never the hero of the struggle. He did wrong things and that is why he created enemies.”
He illustrated the divide by describing a scene of himself and Molefe standing on opposite sides of the river “and even if a bridge were to be built we would never connect”.
Molefe had told the commission that Montana had not cooperated in giving the new board all the necessary information.
Montana said this was not correct, that the board had been given an induction plus two files of documents, adding “we were not involved in any criminality”. And: “It is false that I refused to cooperate.”
Montana alleged that Werksmans were “irregularly appointed” and that they “receive a fee of 10% of Prasa’s irregular expenditure”.
Soni struggled to get Montana to confine himself to answering his direct questions, many of which required a simple yes or no. The hearing went on for some 10 hours, and will continue on Tuesday (April 20).
Seven hours into the testimony Soni began questioning Molefe on the Swifambo Rail Leasing (SRL) matter.
Background to the SRL matter:
- On March 25, 2013, Prasa entered into a contractual agreement valued at R3.5 billion with SRL to construct 88 new locomotives for Mainline Passenger Services. The contract included its technical partners Vossloh Spain and Vossloh Germany.
- The ‘engineer’ in charge of the Swifambo project was Prasa’s then executive manager: engineering services, Daniel Mthimkhulu, who had been appointed by Montana. Mthimkhulu was in fact a play-play engineer, not being in possession of any formal qualifications. The locomotives were entirely unsuitable for South African rail roads, akin to purchasing a cruise liner to sail on the Vaal River.
Montana said he understood that he wasn’t being asked to review this matter, “but the courts got it wrong”.
At this juncture, it may be more interesting to take a look at the high court and Supreme Court of Appeal (SCA) judgments.
High court judgment
In July 2017 Prasa applied to the High Court Gauteng Local Division to have the contract with Swifambo set aside.
In the matter between Prasa and Swifambo Rail Agency the court found that the Swifambo bid did not comply with set requirements in a number of material respects:
- It did not have a tax clearance certificate.
- Swifambo had not demonstrated that it had previous experience in the supply of locomotives.
- The procurement policy required that “specifications should have been designed” by the cross-functional sourcing committee (CFSC): ” Instead the specifications were prepared by Mtimkhulu, who was masquerading as an engineer with a doctorate.” And further, the specifications had been changed to align with the features of the Vossloh locomotives.
- The “methodology adopted in the scoring process was irrational and or unreasonable”.
- The process failed to comply with the provisions of the Public Finance Management Act (PFMA) and Prasa did not obtain the approvals required under the PFMA prior to awarding the contract.
- The contract materially deviated from the approved bid, rendering the provision of the locomotives unlawful.
In the judgment, Judge J Francis opined: “Corruption is a cancer that is slowing eating at the fabric of our society. If it is left unchecked it will devour our entire society. Chemotherapy is needed to curb it. The chemotherapy in this instance is an effective remedy that will nip the cancer in its bud. The remedy that the respondent is proposing will be making a mockery against the fight against unlawful tenders. It will send out a message that it pays to be involved in unlawful tenders and crime does pay.
“This is not the society that we fought for and should live in,” said Judge Francis.
“There is simply no reason why the respondent should benefit from an unlawful award that was peppered with so many irregularities.”
It was held that:
- “This case raises issues of fundamental public importance. This case concerns corruption by a public body concerning a tender that will affect the public for decades to come.”
- And that the contract was concluded as a result of a corrupt tender process.
Judge Francis had to consider an appropriate, effective remedy in terms of the Promotion of Administrative Justice Act, which would be just and equitable.
“The issue of what an appropriate remedy is [is] one of the most difficult decision[s] that a court must make in review applications that are tainted with material irregularities and corruption like in the present matter. It is akin to sentencing in criminal proceedings.”
Judge Francis held that the facts of the case demonstrated that Swifambo was not an innocent tenderer, and that the contract be set aside.
Supreme Court of Appeal
Swifambo appealed the high court decision.
In considering the high court judgment, the Supreme Court of Appeal (SCA) noted that a shelf company, Mafori Finance, had been acquired by Swifambo Holdings (Pty) Ltd 20 days before the bid was made, and that the name was only changed to Swifambo after the bid had been submitted. Vossloh was not eligible to bid as it didn’t have any B-BBEE rating. The contract between Swifambo and Vossloh was concluded more than a year after the bid had been submitted. The SCA agreed with the high court’s finding that: “Swifambo was a party to a fronting practice, and was not an innocent tenderer.”
The high court had condoned the nearly three-year delay in bringing the application to court on the basis that, although unreasonable, it was in the public interest that state-owned entities are not corrupt.
The SCA cited case law, endorsed by the Constitutional Court, which emphasised that the overriding consideration in condoning delay is the “interests of justice”.
In considering whether there was any reason to interfere with the high court’s decision to set the contract aside, the SCA noted that:
- There had been no confirmation by Vossloh that it was in a position to “deliver locomotives that are fit for purpose”.
- The locomotives that had already been delivered were not fit for purpose – they had been tested on railway lines in the country and were found to be unsafe.
- The SCA did not accept Swifambo’s contention that the “locomotives supplied complied with the specifications of the contract”, as Mthimkhulu had drawn up the specifications “to match those of the Vossloh locomotives”.
The SCA accordingly dismissed the appeal with the costs of two counsel.
This begs the question, did the courts “get it wrong” as alleged by Montana?