Prasa will have a new board soon, says Fikile Mbalula
Board positions for the embattled Passenger Rail Agency of SA (Prasa) will be advertised in the next few weeks and a new board will be put in place soon, transport minister Fikile Mbalula said on Monday.
Late in 2019, Mbalula fired board members of the transport utility and placed the agency under administrator Bongisizwe Mpondo.
“Time is of the essence — we are not going to delay the appointment of the board. We will advertise positions soon,” Mbalula said without providing timelines.
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.
Mbalula said the previous board was largely to blame for the mess at Prasa and therefore the appointment process of new directors needed to be thorough.
“Most of the things at Prasa were messed up by previous boards. All boards I think were faced with different challenges. They were either in conflict with the management or political principles … now the place is broken, and needs stability.”
Parliament has previously stated its intention to have former board members banned from holding directorships. Previous board members include former chair Khanyisile Kweyama; Sango Ntsaluba, founder of audit and advisory firm SizweNtsalubaGobodo; and Nazir Alli, former CEO of the SA National Roads Agency Limited.
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.
Mbalula said the appointment of Mpondo, who has served on the boards of other state-owned enterprises such as SAA and SA Express, as administrator would help stabilise Prasa.
“Mpondo is there to clean out and put systems in place, then bring stability,” he said.
Meanwhile, Mpondo told MPs on Monday that Prasa has lost R199m since the enforcement of the national lockdown to curb the spread of the coronavirus. He said projected revenue loss for the year, at this stage, is R757m.
Prasa was forced to stop all services during levels 5 and 4 of the lockdown, in line with the Disaster Management Act regulations. The agency is also looking at offering voluntary severance packages to about 2,000 of its employees who are nearing retirement age, to address its financial crisis.