Prasa pays R3m to Mbaks’s administrator — just before court culls him

On the eve of a court ruling that the transport minister had appointed Prasa’s administrator unlawfully, the rail agency rushed through payment for his nine-month tenure.

The day before the high court set aside Bongisizwe Mpondo’s secondment as the administrator of the Passenger Rail Agency of South Africa (Prasa), he was hastily made a permanent employee and back-paid R3.17-million.

The amount, which is apparent from leaked payroll records and paystubs, was his salary plus an “acting allowance” for the nine months since Transport Minister Fikile Mbalula had sent him to Prasa.

AmaBhungane has been told the rail agency has launched a witch-hunt to find the source of the leak.

Bongisizwe Mpondo wage type.

Mpondo was added to Prasa’s payroll system on August 24, the day before the Cape Town high court judgment, with a monthly salary of R454 212 plus a monthly allowance of R196 508 for his role as Prasa’s acting accounting authority.

Together, this makes for a whopping R650 720 a month. The R3.17-million he got as back-pay that day was after tax and deductions.

But Prasa should never have paid Mpondo at all, given the court ruling the next day that Mbalula had appointed him unlawfully something the rail agency’s two group legal executives had warned about as early as January 2020.

Civil society coalition #UniteBehind, which launched the court challenge to Mpondo’s appointment, raised red flags even earlier, writing to Mbalula on 10 December last year asking him to explain the legality of the move.

Bongisizwe Mpondo payslips.

Neither Mbalula nor the department of transport would answer questions about who authorized Mpondo’s payment or whether the minister or the department would now refund Prasa.

#UniteBehind told amaBhungane, “The department should cover Prasa’s costs of Mr Mpondo, given that the high court has held that his appointment and purported secondment was unlawful and invalid.”

Mpondo’s generous package is particularly galling because for the last two years there has been a salary freeze for all other Prasa employees – and because of Mpondo’s failure to restore security services cancelled by the interim board last year, leading to extensive vandalism and theft.

Prasa referred amaBhungane’s questions to the department. Mpondo said he had sacrificed to leave his transport consulting business and “respond to the call to serve my country”. He worked “month on month without earning a salary during a time when the Covid-19 pandemic was wreaking havoc in the economy”.

The department’s director-general, Alec Moemi, said Prasa had paid Mpondo a lump sum for the previous nine months because of “prolonged negotiations”.

“Mr Mpondo’s situation was unprecedented,” Moemi said. “Where secondment happens between a department and an entity, it is not so straight forward as the salary bands on the Persal system and those of [state owned] entities are way apart from each other.

“In any secondment arrangements, the parties do make some form of payment arrangements. The Minister did send a letter of appointment of Mr Mpondo as Prasa’s acting group chief executive to the acting company secretary, Ms Mapule Thabethe. This letter in turn allowed Prasa to be able to appoint him on their own systems.”

But Moemi is ignoring Judge Nathan Erasmus’s ruling that Mpondo was initially contracted as a special advisor to the minister, a role that precluded him from being seconded elsewhere.

Erasmus also ruled that an attempt to have him resign and immediately sign a new contract with Mbalula as a “project manager” did not allow for his lawful secondment as acting chief executive of Prasa either.

Although the purported appointment was made by the minister, the department expected Prasa to pay Mpondo’s salary but this did not happen for nine months, perhaps because of the mysterious “prolonged negotiations”.

Suddenly an administrator

Mbalula, who took charge of the transport department in May 2019, stated several times that he planned to fast track the appointment of a permanent Prasa board.

As Erasmus set out in his judgement, Mbalula made several promises that he was on the point of finalising the appointment of a new board to succeed the interim board.   

But on 15 November, Mbalula appointed Mpondo as a special adviser to his office. One week later, in a letter to Finance Minister Tito Mboweni and President Cyril Ramaphosa, Mbalula explained his intention to dissolve the current interim board and either fast-track the permanent board appointments or place Prasa under administration.

“I’m leaning more on option two considering the situation of the entity and wish to consult with yourself on invoking the provisions of section 49(3) of the PFMA in me appointing an administrator, which should be a turnaround expert to assist in addressing the operational deficiencies of the entity,” Mbalula wrote.

Former Prasa administrator Bongisizwe Mpondo during a press briefing on 2 September 2020.

Two weeks later, on 5 December, Mpondo’s position as special adviser was terminated and Mbalula offered him a contract as a project manager in the department, to be seconded as the acting group chief executive for Prasa.

On the same day Mbalula dissolved the interim board and later purported to appoint Mpondo as “administrator” with the power to direct Prasa without a board of control.

The judge would later find Mpondo was “not an existing employee capable of secondment” and that the laws governing Prasa did not allow for it to operate without a board.

Almost immediately after Mpondo’s secondment, both #UniteBehind and Prasa’s internal legal team questioned the legality of appointing an administrator at the rail agency.

Despite these warnings, Mpondo was tasked by the minister to get what Mpondo called “a broken business” back on track.

Mpondo’s work included expediting the agency’s modernisation programme, implementing security, developing capacity to manage Prasa’s capital programme and competitive procurement, “ensure effective consequence manage content”, and review Prasa’s business model.

But instead, he and Mbalula appear to have destabilised the rail agency still further.

Mpondo appointed a six-person task team, replacing some newly appointed permanent staff, such as the chief financial officer. He would also try to remove Prasa’s chief procurement officer, and over the next nine months would make new chief executive appointments to subsidiaries Prasa Rail, Prasa Tech and Autopax, as well as appoint Prasa’s chief information officer and company secretary.

Now the department has conceded that Mpondo’s appointments may be overturned.

“The newly appointed accounting authority or the new board of control, as the case may be, will make such decision’s as he/it may be advised to lawfully take with regard to appointments and decisions made by Mr Mpondo,” Moemi told amaBhungane.

Meanwhile Mpondo compounded the security vacuum opened by the interim board when he cancelled most of the irregular though necessary security contracts in April this year in favour of a deal with the South African Police Service.

The police were supposed to help guard the railway network as per a 2019 memorandum of agreement.

Despite this partnership, railway lines and trains remained vulnerable to vandalism and theft as the police were seemingly focused on arresting petty offenders during the Covid-19 lockdown.

*Read What’s left of Prasa’s rail infrastructure? below.

Prasa had been expected to announce its own security plan earlier this year, but this was delayed until 16 September where Prasa expanded on its plan to insource its security using 3 100 new protection officers. By this time, the damage to the railway network had derailed the network modernisation programme, with only South Africa’s mainline routes remaining operational.

The rail agency had an unspent capital budget to modernise infrastructure, but this has since been redirected to pay off Eskom and municipality debts. In a March media briefing, Mpondo reportedly explained that Prasa’s liabilities amounted to R9.7-billion in part because of payment arrears to Eskom and municipalities.

16 September 2020, Prasa security launch raid on illegal scrap dealer (photo: Gemma Ritchie).

According to a source close to the matter, Prasa managed to convert R1.8-billion of its capital expenditure budget into operational expenditure with R1.4-billion earmarked for spending on the rail business and R400-million for spending on managing Covid-19.

According to the 2019 budget review, the treasury allocated Prasa R41.5-billion in capital transfers for the three-year medium term to buy new coaches, refurbish old ones and upgrade other infrastructure.

Following Judge Erasmus’s ruling, the treasury appointed Airports Company South Africa group executive Badisa Matshego as the accounting authority for Prasa.

Matshego told media during the 16 September launch of Prasa’s new integrated security plan that the rail agency had sustained R4-billion in damage to infrastructure in recent years.

The theft and vandalism of core infrastructure had caused a “very serious reduction in capacity to provide the requisite service in rail transport for commuters, causing major disruptions, sales and drastically diminishing the ability of plants to generate revenue,” Matshego said.

#UniteBehind and experts from the treasury have all said that Prasa needed stability with a permanent board to implement modernisation and refurbishment programmes.

Mpondo told amaBhungane: “I took the sacrifice to leave my business and respond to the call to serve my country. This has come at great opportunity cost to me for the almost nine months I was away from my business. (I have been running my transportation consulting business for 14 years now).

“I dedicated my time fully to the Prasa task wherein earning a salary was not foremost on my mind. I sought to bring stability and order to Prasa whilst ensuring that trains are running.

“I therefore worked month on month without earning a salary during a time when the Covid-19 pandemic was wreaking havoc in the economy. I must indicate that whilst this has been very difficult for me personally, I am however proud of the effort I put in to bring PRASA back on track.

“There have been notable positive changes in the organisation against some determined headwinds from within and outside of Prasa. Lastly, there are very competent skills that I have recruited which should continue to build on the solid foundation that I sought to put in place.”


What’s left of Prasa’s rail infrastructure?

Over months of lockdown with little or no security at depots and train stations because of contract cancellation, is there anything left at Prasa to fix?

The Passenger Rail Agency of South Africa (Prasa) was in a crisis long before the national lockdown in March this year.

Vandalism and arson had cost Prasa almost a billion rand in damaged infrastructure between 2017 and 2019 – during a time when Prasa had contracted out its security services.

“Even when there was security, there was still vandalism,” Transport Minister Fikile Mbalula told journalists at a press briefing  last month.

But this rationalisation cannot hide the wanton destruction the termination of security services by Prasa in April 2020 facilitated during the lockdown.

Now overhead cables hang loose or abandoned in the veld, temporary houses cluster the railway line in Langa, Cape Town, and desperate people have pilfered the bricks from depots and train stations left unsecured.

*Click on the train icons in the map below to see some of the damage perpetrated before and during the lockdown.

After the rail authority failed to award three prior security contracts, it announced last month that it would insource its security, adding 3 100 protection officers for a total force of 5 600 to protect passengers and existing Prasa infrastructure, including 2 280 km of rail.

Mbalula explained that Prasa had decided against contracting out security in favour of employing people “accountable to Prasa”.

Prasa had the same security contractors since its launch in 2009.

It failed to appoint new security contractors in April last year after it abandoned an advertised security tender. The rail agency then cancelled the security contracts anyway in November, resulting in court cases where security contractors accused the rail authority of leaving the railway lines vulnerable.

George Goch train station in Jeppestown, Johannesburg. Picture posted on the Facebook Group “How can we help the Prasa administrator?” (Photo taken 14 August 2020.)

In the Western Cape, Judge John Hlophe ruled in favour of the contractors and ordered Prasa to continue to use their services on the original contracted terms, pending the completion and implementation of a security tender or adequate contingency plan.

The court expected Prasa to implement the plan by February this year, but this was delayed to September.

Mbalula has since tried to rope in the South African Police Service, the Hawks, the National Prosecuting Authority, Metro Police, and the Railway Safety Regulator to help deliver on Prasa’s “beefed-up” security plan.

In Gauteng, security companies also challenged the November 2019 contract terminations, but according to Prasa’s acting security head, retired Brigadier General Tebogo Rakau, the judge in that case granted permission for the termination of the contracts on one month’s notice.

Accordingly, contracts in Gauteng were terminated in March this year and ran out at the end of April.

The conflict between the judgments has added to the confusion.    

United National Transport Union media liaison Sonja Carstens told amaBhungane that Prasa had not reinstated security as ordered by the Western Cape court.

“From the end of October [2019] up until today, no private security contractors have worked at Prasa,” she alleged.

The private security companies provided an estimated 3 400 protection officers nationwide to bolster Prasa’s security, according to Carstens.

Western Cape security companies have taken the rail agency to court twice (in April and June) over Prasa’s alleged contempt of Judge Hlophe’s order.

On 22 June, the security companies approached the court to interdict Prasa’s national R600-million emergency security tender.

A report in the Cape Times quoted Adiel de Bruyns, managing director of one of the companies, as saying, “No explanation was given as to what has come of the 2019 tender… The entire procurement process is being conducted in under two weeks… This process is flawed.”

The court ruled in favour of the security companies on 7 August and said Judge Hlope’s order was applicable nationally. “Prasa could not go out to tender until it had satisfied the conditions of Judge Hlope’s order,” Rakau said.

Prasa spokesperson Makhosini Mgitywa explained: “[Security] contracts were extended to 30 April where a [memorandum of understanding was agreed] with the police to look after the railway network while Prasa worked on a contingency plan. However, SAPS was reprioritised during lockdown, leaving Prasa vulnerable.”

Prasa had also struggled to pay its existing security contractors because of its budget deficit, he said.

Rakau said Prasa was in the process of meeting its deadline for a full security complement by the end of October.

Meanwhile, overhead cable theft in Gauteng has led Metrorail to operate diesel trains – creating a public safety problem, with passengers sitting in dark coaches with electric doors that cannot close.

Other railway lines remain closed because of infrastructure damage.

Prasa was meant to transform the way South Africans travel.

Instead, commuters using its Metrorail service have dwindled from 543-million paying passengers a year in 2013 to a mere 147-million passengers in 2019.

The lack of security at Prasa and the wanton destruction of its infrastructure have forced millions of commuters to dig into their purses to pay for taxi trips 500% more expensive.

“There is no political will to make good on the promises at Prasa,” said Carsten. “Each new broom sweeps clean and presents a new plan, but the plans never reach implementation.”- Gemma Ritchie