Prasa rejects R2.2bn bill for illegal contract

The Passenger Rail Agency of South Africa (Prasa) is digging in its heels, refusing to pay a further R2.2bn for an unlawful contract it signed with Siyangena Technologies for a project in which costs skyrocketed from R1.9bn to R5.1bn.

The contract, awarded in 2010, was for security equipment such as speed gates and access control and surveillance systems at train stations. Much of the equipment is no longer operational as it was vandalised after Prasa cancelled security contracts in 2020, leaving infrastructure vulnerable to criminals.

Now, after evaluating the work done by Siyangena, an independent engineer has said Prasa owes the company more than R5.1bn for the work done.

But Prasa appears unwilling to pay. The Sunday Times understands that its internal legal team terminated law firm Ngeno & Mteto, which was at loggerheads with the agency's lead counsel, Quentin Leech SC, on challenging the findings of the engineer.

“Bowmans Law has since taken over the matter and has appointed engineers to challenge the findings of the [engineer's] report,” said Prasa’s legal adviser to group CEO Hishaam Emeran.   

“Prasa has 90 days to challenge the engineer's report and if we must bring a court application to get the documents this will hurt our prospects of success and timeliness.”

Before the 2010 Soccer World Cup, Prasa had embarked on an ambitious project to modernise its stations with a pilot phase that began with a budget of R317m. But by 2015 the contract with Siyangena was the subject of a 2015 report, “Derailed”, by former public protector Thuli Madonsela, who found maladministration and improper conduct in the deal.

By that time Prasa had already paid R3bn to Siyangena.

There were subsequent extensions to the contract that Madonsela found were improperly awarded, as no open tender process had been followed and there had been no requests for proposals.

The contract was set aside by the Pretoria high court with costs in October 2020. The court ordered that an independent engineer be appointed to calculate just and equitable compensation to either Siyangena or Prasa.

Siyangena appealed the ruling but lost in the Supreme Court of Appeal (SCA) in November 2022.

In that case, Prasa argued that the equipment was not fit for purpose because it did not meet the need or provide the latest technology and was, in various respects, implemented in a manner that was inadequate and incomplete.

“All of this points to the need for an independent, qualified third party to assess and determine the financial value of the works,” the SCA found. “This approach will ensure that Siyangena would not be benefited unduly and that Prasa would not be paying for services not rendered. Fairness is achieved and justice is ensured for both parties.”

In August, independent engineer Errol Braithwaite, appointed by both Prasa and Siyangena, told Prasa that it owed Siyangena R5.1bn, excluding VAT, the value of stock in storage and the costs of delayed payments from the date of the unpaid invoices, which in 2019 stood at R2.8bn.

“The independent engineer is of the overall opinion that the project was installed to high standards of technical professionalism by a responsible and competent contractor, using equipment conforming to both the employer’s specifications and to international good practice, at market-related prices,” Braithwaite said in a report.

“Further, the contemporaneous project records were found to be highly detailed and reliable, and also internally consistent under multiple cross-checks.”

Braithwaite was given a sample of 13 railway stations to inspect and evaluate the work performed by Siyangena from April 2011 to June 2019 in the Integrated Station Access Management Solutions (Isams) project. 

Photographic evidence showed stations with modern equipment destroyed.

“The project was undeniably well executed and for this the technical teams from both Prasa and Siyangena should be strongly commended. It is evident that, notwithstanding the legal issues ongoing between the parties at the time, at a working level the work progressed in a competent and professional manner ... [However] the extent of damage and destruction of Isams assets (among others), as witnessed by the independent engineer and attested to by both Prasa and Siyangena is truly stunning,” said Braithwaite.

“Regrettably, apart from some notable exceptions, the independent engineer witnessed a pervasive culture of poor maintenance and disregard of basic housekeeping requirements, leading to declining functionality and system safety.

“The issue is much deeper and broader than Isams and will require a deep and committed intervention by management,” he said.

Contacted for comment, Siyangena’s project manager, Rui Ferreira, said they could not comment on the matter.

“The applicable court order obliges us to engage with Prasa using the independent report as a basis to reach agreement. We are proceeding in that manner,” Ferreira said.

Siyangena has argued throughout the court cases that it was an innocent contracting party with no knowledge of the internal workings of Prasa and was thus not complicit in any malfeasance.

Prasa did not respond to questions.