Prasa chair embroiled in fallout from unlawful R4.5bn contract

The board chair of the hobbled Passenger Rail Agency of SA (Prasa) has been accused of working to settle a dodgy R4.5bn contract that was ruled unlawful and invalid by a full bench of the high court in Pretoria more than a year ago. 

Documents seen by the Sunday Times indicate that Leonard Ramatlakane agreed to, and arranged, a meeting between Prasa executives and Mario Ferreira, the owner of Siyangena Technologies, to discuss a proposed settlement of the contract.

The contract between Siyangena Technologies and Prasa, which the high court set aside with costs in October 2020, is now under investigation by the Hawks.

The court also found that the work Siyangena performed for Prasa was not fit for purpose and exceeded the budget.

The contract was the subject of a 2015 report, “Derailed”, by former public protector Thuli Madonsela, who found maladministration and improper conduct in the deal.

The court ordered that a process to calculate just and equitable compensation to either Siyangena or Prasa should ensue. Despite this, Ramatlakane responded in September last year to a letter Ferreira wrote asking for a meeting about their “ongoing litigation”, to “explore an amicable solution that is beneficial to both” Siyangena and Prasa.

Ramatlakane wrote: “You have also stated that the legal solution could be in line with the judgment ... Prasa confirms its willingness to meet with you on a without-prejudice basis to have an engagement as per your proposal ... The engagements will allow Prasa to understand your viewpoint and also what you will be putting on the table as proposal to resolve the litigation.”

An insider in the ANC’s national executive committee told the Sunday Times that Ferreira has been trying to lobby several people at Luthuli House to get Prasa to settle with his company. Ferreira did not respond to this allegation.

The insider said: “Prasa doesn’t have to pay Ferreira a cent, he can appeal as many times as he wants. That contract was dodgy and courts have ruled in Prasa’s favour and it should defend that."

Eyebrows have been raised about the conduct of Ramatlakane who, as a nonexecutive board chair, should not have been engaged in operational matters; these should instead have been referred to then CEO Zolani Matthews.

“This thing was run as an operation purely by the chair, no-one else ... He had no business talking to the Siyangena CEO,” said a source close to Prasa.

In addition, the meeting Ramatlakane facilitated with Ferreira but did not attend, took place at a time when Prasa’s lawyers, Werksmans Attorneys, were preparing to fight an appeal Siyangena had brought before the Supreme Court of Appeal (SCA) challenging the high court judgment. 

Another insider told the Sunday Times this week: “There is absolutely no reasonable prospect of success for Siyangena to win that case. It doesn’t make sense why Ramatlakane would even entertain any discussions about a possible settlement because that contract was ruled by a full bench of judges to be invalid and unlawful.”

On November 3, Matthews and Prasa's acting group legal executive, Thato Tsautse, met Ferreira and two other Siyangena representatives. According to the minutes of that meeting, which the Sunday Times has obtained, its purpose was to discuss outstanding payments Ferreira claims are due to Siyangena.

In the meeting, Ferreira told Prasa executives that the rail agency owed Siyangena R3.8bn but a R2.6bn settlement was acceptable. At the meeting “it was proposed that a joint team of Prasa and Siyangena Technology should prepare a draft agreement that would be made an order of the court”, the minutes say.

Ramatlakane denied ever meeting Ferreira and said he only wrote to him to communicate a board decision that the meeting with Siyangena could go ahead. He did not respond to why he became involved in an operational matter.    

“There was nothing sinister or illegal about the meeting in issue... The letter communicated the decision of the board that the meeting could go ahead," Ramatlakane said.

"The board's response to any matter is within an assessment of the benefit towards Prasa and the wellbeing of the commuters."

The contract between Siyangena and Prasa concerns the installation of security equipment for Prasa’s infrastructure ahead of the 2010 Soccer World Cup. Siyangena was to supply and install speed gates, access control and surveillance systems. There were subsequent extensions to the contract that Madonsela found were improperly awarded.

Siyangena is ready to argue its matter before court and will do so when the matter is enrolled

—  Mario Ferreira, owner of Siyangena Technologies

Despite Siyangena’s contract being investigated by the Hawks, and Prasa having won its civil case against the company, Ramatlakane sought a legal opinion in July last year to guide Prasa on a “roundtable discussion with Siyangena” and whether there would be any benefit in negotiating a settlement.

In response to our questions, Ramatlakane said he and Matthews received an e-mail from Ferreira to meet to discuss a proposal to resolve the dispute and, after that, the board sought the legal opinion.

Advocate Kgomosoane Mathipa’s opinion was that Prasa could consider this only if Siyangena withdrew its appeal and the parties implemented the judgment of the Pretoria high court.

“In light of the fact that it is Prasa that brought the review application to court and had a constitutional duty to do so, and the judgment is in its favour, it is undesirable that Prasa takes steps to settle the matter other [than] agreeing that Siyangena withdraws its appeal, if that is what it so decides to do,” he wrote. 

Mathipa also told Prasa it was highly unlikely that the SCA would find Siyangena to be an innocent party because it participated in the irregular and unlawful procurement of its services.

"As this matter is now in the hands of Prasa's legal representatives, ideally, any settlement negotiations must take place between Siyangena's legal representatives and those of Prasa, on instruction of Prasa of course," said Mathipa in his opinion. But Prasa did not inform or get its lawyers at Werksmans involved in the discussions with Ferreira.

Prasa appears to have no appetite to fight the appeal. It failed to meet a bill of more than R1m from Werksmans, which led to the firm withdrawing as Prasa's attorneys.

Prasa has now appointed new attorneys who will have to start afresh in a case with more than 10,000 pages of court documents, which Werksmans will hand over once it is paid. 

The Siyangena contract was also investigated by the state capture commission. Former Prasa CEO Lucky Montana disputed allegations by commission investigator Clinton Ollerman, who testified that Montana had obtained properties worth R36m after inappropriately awarding contracts to Siyangena.

Approached for comment, Ferreira did not comment on whether he had met with Ramatlakane and what the discussions were.

“Siyangena was contacted telephonically by your journalist on Saturday morning. When requested to send the questions in writing he did but refused us an opportunity to consider or obtain advice regarding the matter which is now [being litigated]."

He said the company was waiting for the SCA to set a date for the appeal.

"Siyangena is ready to argue its matter before court and will do so when the matter is enrolled. If you have regard to the judgment of the high court you will note that engagement between Siyangena and Prasa is in any event inevitable. Siyangena will partake in any bona fide attempts to resolve the matter and we record that we have made our views clear to the current and previous board of Prasa.

“All efforts to resolve the dispute have been open and in line with the principles of dispute resolution. Siyangena will not be drawn into political and factional grandstanding.

Unbalanced and bias journalism [sic] intended to sensationalise the matter is nothing new to Siyangena. The matter must take its course and the media is welcome to report on [it]."

Hawks spokesperson Col Katlego Mogale said their investigation, "which deals with allegations of fraud, corruption and money laundering in relation to the awarding and irregular extension of a tender to Siyangena Technologies", was ongoing.

Apology:

TimesLIVE apologises to Leonard Ramatlakane, chair of the Passenger Rail Agency of SA (Prasa) for omitting a material fact in the article, "Prasa chair embroiled in fallout from unlawful R4.5bn contract" (February 27).

The article detailed how Ramatlakane was accused of trying to settle a dispute with Siyangena Technologies despite the high court finding the contract between Prasa and Siyangena was unlawful and invalid. 

Ombud Herman Scholtz found it was incorrect to state that the court ruled Siyangena should get no more money from Prasa. The High Court ordered that a process to calculate just and equitable compensation to either Siyangena or Prasa should ensue, which was a material fact to be stated.  

Scholtz dismissed complaints that we suggested Ramatlakane acted in his own interests without board approval or that he, rather than Prasa, had sought a legal opinion.

For the full ruling, go to www.presscouncil.org.za

Editor's note: The story has been updated to reflect that the high court ordered a process to calculate just and equitable compensation to either Siyangena or Prasa.