Metrorail has been defrauded of R8-million in a sophisticated operation by an employee
syndicate that probably worked with outsiders, a forensic audit by Deloitte and Touche has revealed.
A report by the auditors also states that the Passenger Rail Agency of South Africa (Prasa) initiated the investigation but called it off before it was completed.
Despite the alleged fraud, which took place in 2008, the staff members responsible appear still to be employed by Metrorail.
A total of R3.5-million of the money illicitly transferred from the parastatal’s bank account was recovered but R4.7-million was lost, according to the report.
Metrorail is a division of Prasa, which has been paring back rail services because of government funding cuts.
The Deloitte report, dated February last year, details two incidents of the fraudulent electronic transfer of funds that took place over a few days in the Durban and Pretoria regions in June and July 2008 respectively.
After the Standard Bank business online facility was hacked into in separate online raids, amounts total- ling R4.7-million and R3.5-million were transferred into private accounts.
The report states that the fraudulent transactions were perpetrated through 369 beneficiary bank accounts, with the electronic transactions being described as “salary” or “wage”.
“The nature of the fraud perpetrated in the Durban and Tshwane regions was on a sophisticated and complex level,” it says.
“The possible involvement of more than one crime syndicate and collusion between Prasa staff and external parties is likely.”
Prasa instructed Deloitte to investigate the alleged fraud several months after it took place, but the document states that the agency gave instructions for the probe to be terminated before it was finalised.
The report says polygraph tests on six employees indicated “deceptiveness”, and two Metrorail employees were arrested.
Two Metrorail employees were arrested this week but later released in Durban, as the Tshwane case had not been opened at the time.
It adds that after the fraud some employees began acquiring material goods “that were not commensurate with their annual salaries”.
A credit clerk in the Durban region, who is named in the report, bought several luxury vehicles within months of the alleged offence, while an IT administrator acquired a VW Microbus.
According to the report syndicate members approached the staff member in question to obtain business online credentials for the Tshwane region for an initial sum of R150 000.
The Mail & Guardian emailed questions on Wednesday morning to Prasa’s chief executive, Lucky Montana, and the agency’s chief financial officer, Sindi Mabaso Koyana, asking why the forensic investigation had been suspended and why the alleged thieves who were named in the report had not been brought to book.
Prasa responded by denying that it terminated the investigation, saying it was properly conducted and the matter was currently with the SAPS.
Prasa also said the personnel implicated in the fraud had been moved out of the finance department.
Manny de Freitas, the Democratic Alliance spokesperson on transport, said he would call for a debate on the matter in Parliament.
Back-to-rail plan stuck at the station
Heavy road haulage is inefficient and costly, yet state cannot get its trains back on track.
Three years ago the transport department planned to move heavy freight haulage off roads and onto rail to ease congestion and pollution. But the “back-to- rail” plan for passengers and freight hasn’t been carried out.
In fact, some trains have halted operations because of cutbacks in government funding to rail. Most infrastructure has not been upgraded since the 1970s.
Yet the drivers of light motor vehicles subsidise their heavy counterparts, according to the RailRoad Association’s Allen Jorgenson.
In a discussion paper, “Transport costs and the relevance of externalities”, Jorgenson notes that road tolls are skewed towards heavy vehicles.
Transport systems that depend on motor vehicles, he says, are costly in terms of provision and the maintenance of road infrastructure, parking facilities, congestion, accidents, land costs, energy security and pollution.
Yet these costs are not directly borne by the users. Jorgenson argues that rail has a higher capacity to move traffic than road, with a single rail track able to handle four or five times the traffic volume that a two-lane, bidirectional road can carry.
Meanwhile, heavy vehicles are responsible “for 46% of the total external costs imposed on society: 74.5% of air pollution, 13% of global warming trends, 71.1% of noise, 14% of congestion and 13% of energy security”.
In the Eastern Cape the “back to rail” strategy was earmarked as part of a job-creation programme.
However, Kei Rail, launched two years ago, stopped operating in November last year after the transport department failed to pay Transnet Rail Engineering (TRE) R84-million owed in terms of a contract for the maintenance and supply of coaches, said rail expert John Batwell.
“Kei Rail was one of many projects affected when the departments of roads and transport were split. The transport department did not pay what it owed TRE after being left just 31% of the budget,” he said.
Provincial departmental spokesperson Ncedo Kumbaca confirmed this, saying the department was talking to rail industry players to get Kei Rail back on track.
Eastern Cape transport minister Thandiswa Marawu said last month: “We cannot have a 10-year rail plan and fail to implement it. I won’t allow the award-winning Kei Rail project to collapse.”
She said the aim was to revitalis rail services to revive small rural towns and link them to the economic hubs of the province and the country.
The immediate focus would be to provide a rail link between Coega and City Deep in Gauteng, between Nqura port and the Sishen iron mine, and between East London and Gauteng.
Kei Rail carried about 12 000 passengers a day and the medium-term aim was to use it for goods haulage as well.
Around 30 000 jobs were targeted for creation through activities such as the production of railway sleepers, retail and coffee shops, catering, cleaning and tourism.
But, Batwell said, “grass has grown along the rail track and animals are roam- ing the station”.
University of Johannesburg lecturer Vaughan Mostert argued that it would have made more sense to use the R39-billion spent on the Gautrain to upgrade the existing rail network.
“We’ve got to invest money in the move from road to rail. Rail needs government’s intervention and protection,” he said.
Democratic Alliance transport spokesperson Manny de Freitas said government did not have the means to fix the problem, underscoring the need for public-private partnerships.
In addition, too many state and parastatal entities had fingers in the pie. “Everything should be under one department: transport. But we also have provincial departments, Transnet, Transnet Rail Engineering and Passenger Rail Agency of South Africa (Prasa). The buck goes round as to who is responsible for funding what.”
Rail services that have collapsed, or virtually collapsed, include long-distance service train Shosholoza Meyl, which has 16 out of a total of 130 locomotives in operation due to government’s underfunding of Prasa.
Transnet allegedly refused to certify Prasa trains that were not maintained by its engineering arm after the former shifted maintenance to private contractors.
In addition, the tourist-oriented rail service, Apple Express, operating on the Port Elizabeth to Avontuur gauge, ceased functioning at the end of last year because of government underfunding of operational and refurbishment costs.
This article was produced by amaBhungane, investigators of the M&G Centre for Investigative Journalism, a nonprofit initiative to enhance capacity for investigative journalism in the public interest. www.amabhungane.co.za.