ANC man’s R1bn Prasa contract bonanza

A politically connected security group has extracted more than R1bn from the Passenger Rail Agency of South Africa (Prasa) through an unlawful backdoor procurement arrangement that the National Treasury says violated regulations.

The Sunday Times can today reveal that Reshebile Aviation & Protection Services (RAPS) and Reshebile Aviation Solutions (Ras) — both led by ANC veteran and former Robben Island prisoner Paul Langa — pocketed more than R1bn from Prasa following a “piggybacking” arrangement involving the Airports Co of South Africa (Acsa).

Documents seen by the Sunday Times show that in July 2021, Acsa approved Prasa’s request to piggyback on its panel of security companies, giving the rail agency access to contractors already appointed through Acsa’s procurement process. RAPS, which has since been liquidated, was on the panel.

But the Treasury, the custodian of all public procurement, has confirmed that the regulation commonly relied on to permit one state institution to piggyback on another’s contracts did not apply to Acsa or Prasa, raising serious questions about the legality of the arrangement.

The Treasury referred the Sunday Times to a KwaZulu-Natal High Court judgment six years ago that declared a similar arrangement involving Acsa and RAPS to be unlawful.

In that case, the court in Pietermaritzburg set aside the apppointment by uMngeni Water of RAPS through a piggybacking arrangement based on the company’s contract with Acsa. The court found that neither Acsa nor uMngeni Water were entitled to use the arrangement and criticised the departure from the constitutional requirement for competitive procurement.

In a judgment that highlighted a central condition of such piggybacking arrangements, the court found that uMngeni Water had failed to satisfy itself that Acsa had appointed RAPS through a lawful and regular procurement process in the first place.

Yet barely a year later, Acsa approved Prasa’s request to participate in its security panel, triggering a chain of events that resulted in Langa’s companies pocketing more than R1bn from the rail agency.

Langa’s ties to the governing party run deep. He spent years as head of security at Luthuli House and oversaw security arrangements for some of the party’s largest gatherings.

Treasury regulations permit government departments and certain state-owned entities (SOEs) to bypass procurement processes and piggyback on contracts awarded by other departments or parastatals and appoint service providers without going through a fresh tender process. Strict conditions apply, which include:

• The goods or services being procured must be identical in nature;
• The pricing must be the same as in the original contract;
• The terms and conditions of the original contract must remain applicable;
• The institution holding the contract must provide written approval for participation; and 
• The original contract must have been awarded through a lawful and competitive procurement process.

A senior Treasury official said the procurement arrangement between Prasa, Acsa and Langa’s companies could be subjected to new scrutiny, including by the auditor-general, thanks to the Sunday Times reporting.

The procurement arrangement between Prasa, Acsa and Langa’s companies could be subjected to new scrutiny, including by the auditor-general, thanks to the Sunday Times reporting

Invoices obtained by the newspaper show RAPS pocketed between R16m and R18m a month from Prasa. By the time it was liquidated and lost its Acsa contract in March 2024, Prasa had paid it well over R550m.

The documents do not reveal how many security personnel were deployed under the arrangement, making it difficult to assess the basis for the multimillion-rand monthly charges.

Sources said that following the liquidation, Prasa did not go to market for a replacement service provider but shifted the work to Ras — without a procurement process, service-level agreement or contract.

Ras, which was registered in 2020, is not on Acsa’s security panel but nevertheless remains Prasa’s security provider. Financial records reviewed by the Sunday Times show the company receives about R18m a month from the rail agency. That brings its earnings from Prasa since 2024 to around R522m. Added to the more than R550m Prasa paid to RAPS between 2021 and 2024, the total comes to more than R1bn.

The Treasury said that in the normal course of a proper piggybacking arrangement, after RAPS was liquidated, Prasa ought to have appointed a replacement by launching a fresh procurement process; by cession, which is the transfer of rights to another company; or by novation, which is the scrapping of a contract and creation of a new one.

However Prasa this week denied any wrongdoing. Spokesperson Andiswa Makanda said: “Prasa relied on formal written confirmation from Acsa that the originally contracted entity, Reshebile Aviation & Protection Services, had undergone a change of name and registration number to Reshebile Aviation Solutions. That confirmation was supported by a board resolution and verified through Acsa’s internal processes.”

But under company law, entities may change their names but do not acquire new registration numbers in the process. A registration number is the legal fingerprint of a juristic person and remains unchanged throughout its corporate life.

Company registration records reviewed by the Sunday Times show that RAPS and Ras are separate companies with different registration numbers. Ras was incorporated in 2020 and RAPS was liquidated in 2004, so it appears impossible that one could simply have become the other.

Makanda said Prasa switched from RAPS to Ras in mid-2022. But documents seen by the Sunday Times show that Prasa only requested the particulars of Ras — VAT number, letterhead and BEE accreditation certificates — from the company’s officials more than two years later in September 2024.

Prasa accordingly updated and approved its SCM [supply chain management] policy and procedures to provide for participation in contracts competitively awarded by other organs of state

—  Andiswa Makanda, Prasa spokesperson

Makanda admitted that the Treasury rules providing for piggybacking do not apply to Prasa. However, she insisted the rail agency was entitled to do what it did because the Treasury had advised it that the principles of piggybacking could be imported into Prasa’s own supply chain framework and used as the basis for participation in contracts awarded by other organs of state.

“Prasa accordingly updated and approved its SCM [supply chain management] policy and procedures to provide for participation in contracts competitively awarded by other organs of state,” she said.

She said Prasa had not appointed RAPS directly from Acsa’s panel. Instead, the rail agency had invited all seven companies on the panel to participate in a Prasa-specific process, with six responding. However, Prasa declined to provide the evaluation reports, scorecards, recommendations and approval memoranda underpinning that process.

Makanda dismissed criticism that Prasa effectively piggybacked on a procurement process designed for airport security despite requiring security services for an entirely different environment, arguing that the underlying security functions were sufficiently comparable.

Langa did not respond to questions sent via WhatsApp. Repeated attempts to obtain comment through his secretary, Tanya Bezuidenhout, were unsuccessful.

Acsa acknowledged that it had allowed Prasa to piggyback on its panel of security service providers. The entity’s chief procurement officer, Macdonald Maluleke, said he did not inform Prasa of RAPS’s liquidation because it was information that was publicly accessible and available.

The airports company did not address questions about why it approved Prasa’s participation in its security arrangements despite the Pietermaritzburg high court judgment on the piggybacking issue. The company also did not respond to questions about how much it paid RAPS.