The Western Cape High Court on Wednesday urged transport minister Fikile Mbalula and civil society organisation Unite Behind to reach a settlement on the controversial appointment of Passenger Rail Agency of SA (Prasa) administrator Bongisizwe Mpondo.
Prasa is one of SA’s many state-owned enterprises that has been hollowed out by years of mismanagement and corruption due to state capture costing SA an estimated R500bn.
The rail agency announced in May that it was facing a “debilitating cash-flow crunch” after failing to pay R23m to employees’ retirement fund benefits in the past two months. The entity said it was considering job cuts through voluntary severance packages to ease its financial woes. The operator has lost R199m since the start of the Covid-19 lockdown in March. The revenue loss now projected for 2020 is R757m.
Prasa has had five turnaround strategies since its inception. It received a disclaimer from the auditor-general in 2019, prompting Mbalula to fire the board and place Prasa under administrator Bongisizwe Mpondo in December last year.
However, Mpondo’s appointment was shrouded in controversy. Business Day has reported that Mbalula ignored the law and due processes when appointing him as there was no approval from parliament and the National Treasury.
On Tuesday, Unite Behind, a coalition of more than 20 civil society organisations, approached the court to review and set aside Mbalula’s decision to appoint Mpondo as acting CEO and accounting authority for the state-owned rail and bus operator.
Judge Nathan Erasmus encouraged Mbalula and Unite Behind to settle out of court and undertook to withhold judgment until the parties had reverted to him with a settlement on June 2.
“We can’t pre-empt the agreement, but if we fail to agree then each party will submit what they think should be the way forward, and the judge will then deliver his judgment,” said Unite Behind co-ordinator Mmeli Dube.
“Many attempts to meet the minister in the course of 2019 were also fruitless. We hope that the minister will now come to the table, and will finalise the appointment of a permanent board at Prasa as he undertook to do last year,” said Dube.
Unite Behind said in court that there was no law empowering Mbalula to appoint an administrator at Prasa or to “vest accounting authority powers in any person”.
“For Prasa to be placed under administration requires an act of parliament. Only [the] National Treasury can authorise a functionary other than the Prasa board to serve as the accounting authority in exceptional circumstances,” the civil society organisation said.
Dube said they want an order directing Mbalula to appoint a permanent board of control within three months, and an order directing the National Treasury, in the interim, “to appoint another functionary of a public entity as the accounting authority of Prasa”.
Mbalula’s spokesperson, Ayanda Allie-Paine, did not immediately respond to a request for comment.
Last week, Unite Behind called on Mbalula to extend the two-week period for nomination of candidates to serve on the new Prasa board to allow more people to participate in the process.
This was after Mbalula, who has described Prasa as a broken organisation, announced recently that nominations for the board were open and the deadline set for June 1.
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