THE auditor-general, Kimi Makwetu, has taken the Passenger Rail Agency of South Africa (Prasa) to task for irregular spending and awarding contracts to bidders based on preference points inconsistent with the requirements of the Preferential Procurement Policy Framework Act.
Prasa’s financial 2015-16 statements include R4.1bn in irregular expenditure, prepayments for new locomotive of R1.9bn and new rolling stock for the agency’s fleet renewal programme worth R8bn.
Prasa is the subject of 39 Hawks investigations in terms of the Prevention and Combating of Corrupt Activities Act. The agency has commissioned law firm Werkmans Attorneys to probe financial mismanagement and tender irregularities under former group CEO Lucky Montana.
This comes amid revelations that Montana earned R4.39m in 2015-16 of which R3.9m was basic salary. Executive directors took home altogether R11.4m in that period.
The auditor-general drew attention to significant gaps in Prasa’s annual report, saying it had not provided its draft annual report and he could not determine if there were any material inconsistencies.
Makwetu pointed out that contracts were awarded to bidders based on preference points at odds with the requirements of the Preferential Procurement Policy Framework Act.
"Construction contracts were awarded to contractors that did not qualify for the contract in accordance with Construction Industry Development Board regulations. Effective steps were not taken to prevent irregular, fruitless and wasteful expenditure," he wrote.
"Credit cards, not used for permitted purposes as set out in treasury regulations, were obtained in contravention of treasury regulation 31.2.5 (no public entity listed in schedule 2 or 3 to the act may obtain a credit or debit card, whether in the name of the public entity or any officer bearer or any official of the institution)," Makwetu wrote.
He said the outcome of investigations at Prasa could affect its subsidiaries.
DA MP Manny de Freitas said billions wasted at Prasa came as no surprise as the agency also paid Montana his salary for the rest of his contract.
"On top of this, Mr Montana received other remuneration to the tune of R458,000 for three-and-a-half months of work. This inexplicably overshadows acting CEO Mr Khena’s salary of R1.6m from July 2015 to March 2016," said De Freitas.
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