MPs aim to have former Prasa board members declared delinquent
Former board members of the embattled Passenger Rail Agency of SA (Prasa) could soon be banned from holding directorships, should parliament’s finance watchdog committee have its way.
During a meeting of the standing committee on public accounts (Scopa) on Wednesday to discuss the crisis at the rail agency, ANC MP Mervyn Dirks said previous boards and the interim board led by Khanyisile Kweyama should be declared delinquent, a suggestion backed by committee chair Mkhuleko Hlengwa.
Other notable directors who could be declared delinquent if the committee has its way include Sango Ntsaluba, founder of audit and advisory firm SizweNtsalubaGobodo; Louis Wessie; Jenny Schreiner; Nazir Alli, former CEO of the SA National Roads Agency Limited; Doris Tshepe and Mashila Matlala.
Under the Companies Act, directors can be declared delinquent if they grossly abuse their position or act in a manner that amounts to gross negligence, wilful misconduct or breach of trust regarding the performance of their functions and duties as a director. Delinquent directors are automatically disqualified from company directorships.
Hlengwa said a report to that effect will be prepared and tabled in the National Assembly after an inquiry.
Disclaimer from auditor-general
Prasa, which is responsible for delivering rail services, a vital ingredient to boost productivity and stimulate economic growth, has over the years been engulfed in allegations of corruption and mismanagement. This is while the country’s rail services continue to flounder, with Cape Town rail lines being the hardest hit.
In Prasa’s delayed 2018-2019 annual report, tabled in parliament late in 2019, the auditor-general slapped the state-owned company with a disclaimer — the worst possible audit outcome. It received a qualified audit opinion the year before.
In the report, auditor-general Kimi Makwetu detailed the extent of the rot at Prasa, finding that the troubled state-owned company had incurred R26bn in irregular expenditure.
The situation was so dire that minutes of board meetings were not adequately recorded, in contravention of the Companies Act. Minutes provide evidence that directors have met their statutory and regulatory obligations.
Doubts also remain about Prasa’s ability to continue as a going concern.
In the annual report, Makwetu said Prasa did not maintain complete governance records, including minutes of meetings of the board, its subcommittees and executive committee. This, he said, has had a negative effect across the audit as resolutions and other decisions taken could not be confirmed.
“The lack of governance records … is a matter of significant concern and requires urgent intervention,” Makwetu said.
Late in 2019, transport minister Fikile Mbalula placed the agency under administration for a year. Mbalula announced the appointment of Bongisizwe Mpondo, who has served on the boards of other state-owned enterprises such as SAA and SA Express, as administrator. A permanent board would be put in place six months into the administrator’s term to “allow for a seamless transition”.
Commuter activist group #UniteBehind has lodged a court application that aims to overturn Mbalula’s decision to appoint Mpondo as the administrator of Prasa, news agency GroundUp reported on Wednesday.
In the affidavit submitted to court, Zackie Achmat, secretariat member of #UniteBehind, said the decision to appoint Mpondo as sole administrator will “allow Prasa to operate without any lawful and effective oversight”.
Achmat also said Mbalula lacks the power to appoint an administrator in place of a board.
Briefing Scopa on Wednesday, Mpondo described Prasa as a broken business with “very little order, if any, in the business”.
He said a turnaround strategy has been developed and the intention is to stabilise the organisation by March. Prasa has appointed a panel of technical advisers to assist in getting the company back on its feet.
“Prasa’s promise to the customer has deteriorated to unacceptable levels, leaving some passengers with no transport options in certain communities, resulting in a drop in passenger train trips over the years,” Mpondo said.
His team is made up of qualified professionals and experts in finance, supply chain management, communications, legal and governance, engineering and rail operations.
Mbalula said Prasa is “rotten to the core” and had been poorly led by previous management.
He described the #UniteBehind court challenge as unfortunate and said he is confident his actions will withstand legal scrutiny.