Picture: THE TIMES
Picture: THE TIMES

The Treasury has said it will meet the deadline set by the high court in the Western Cape to appoint someone to head-up the Passenger Rail Agency of SA (Prasa) before the end of the week.

This follows judge Nathan Erasmus’s ruling that transport minister Fikile Mbalula’s failure to appoint a board for Prasa and his decision to appoint Bongisizwe Mpondo as the administrator was unlawful. So, too, was the minister’s appointment of Mpondo as Prasa’s acting group CEO and accounting authority.

Last Tuesday, Erasmus ordered that Mbalula appoint a board within 60 days, while the Treasury, which approved Mpondo’s appointment, was directed to instruct or approve, within seven days, “another functionary of a public entity to be the accounting authority for Prasa”.

According to the Public Finance Management Act, if a public entity has a board, that board is the accounting authority. If it does not have a board, the CEO or person in charge is the accounting authority for that entity.

The judgment was viewed as having the potential to frustrate Mbalula’s plans of cleaning out the rot at the rail operator, which has been implicated in numerous allegations of widespread corruption related to state capture.

Former Prasa chair Popo Molefe told the state-capture commission of inquiry in July that the ANC leadership was aware of alleged corruption at the rail operator. He told the commission that 69 cases relating to alleged corruption in multi-billion-rand locomotives contracts were reported to the Hawks but “there was no movement” from the law enforcement agencies.

Prasa, which has had five turnaround strategies since its creation in 2009, registered irregular expenditure of R27.2bn in 2018/2019. It received a disclaimer from the auditor-general in 2019.

In May, Prasa announced that it was facing a “debilitating cash-flow crunch” after failing to pay R23m to employees’ retirement fund benefits for the previous two months. The state-owned enterprise said it was considering job cuts through voluntary severance packages to ease its financial woes.

Prasa has lost R199m since the start of the Covid-19 lockdown in March. The revenue loss now projected for 2020 is R757m.

In response to a query from Business Day on Tuesday, the Treasury said: “The National Treasury is committed to meeting the deadline set by the court.”

Mbalula’s spokesperson Ayanda Allie-Paine said: “Minister Mbalula will be addressing the matter at a media briefing [on Wednesday]. I cannot comment before then.”

Last week, Mbalula said he would apply his mind to the judgment and “make a pronouncement”.

The judgment came after UniteBehind — a coalition of more than 20 civil society organisations — approached the court in May to review and set aside Mbalula’s decision to appoint Mpondo as acting CEO and accounting authority for the agency, arguing that “due processes” had been flouted.

Mbalula has previously defended his decision to appoint Mpondo, saying the rot runs deep at the rail operator and that Mpondo has the expertise and skill set to turn it around.

mkentanel@businesslive.co.za

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