In a judgment that could frustrate transport minister Fikile Mbalula’s efforts to get rid of the rot at the Passenger Rail Agency of SA (Prasa), the high court in the Western Cape has declared Bongisizwe Mpondo’s appointment as the agency’s sole administrator unlawful and set it aside.
Prasa is one of SA’s many state-owned entities (SOEs) that has been hollowed out by years of mismanagement and corruption due to state capture, which has cost the country an estimated R500bn.
Prasa announced in May 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 SOE 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, which Mbalula has described as a broken organisation, has had five turnaround strategies since its inception. It received a disclaimer from the auditor-general in 2019, prompting Mbalula to fire the entire board and appoint Mpondo as administrator in December 2019.
But in May, UniteBehind, 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 agency, arguing that “due processes” had been flouted.
Judge Nathan Erasmus ruled on Tuesday that Mbalula’s failure to appoint a board for Prasa and his decision to appoint Mpondo as the administrator instead of a board was unlawful, and set it aside. So, too, was the minister’s appointment of Mpondo as Prasa’s acting group CEO and accounting authority.
Erasmus ordered that Mbalula appoint a board within 60 days, while the National 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”.
Mbalula said: “I note the … order by the Western Cape High Court. I await a full, written judgment and will peruse same, apply my mind and make a pronouncement.”
Mbalula has previously defended his decision to appoint Mpondo, saying the rot runs deep at Prasa and that Mpondo has the expertise and skill set to turn it around.
UniteBehind described the judgment as a victory for commuters, saying: “It paves way for the immediate appointment of a permanent and competent board of control to stabilise Prasa and begin the process of fixing our trains.”
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