Transport minister Sindisiwe Chikunga has been accused of interfering with operations at the Passenger Rail Agency of SA (Prasa) but insists there is a political conspiracy to undermine her work to turn around the entity.
She said this was because she had been singled out for exceptional performance by ANC President Cyril Ramaphosa during an NEC meeting.
In an interview this week with the Sunday Times, Chikunga said there were attempts to undermine her efforts to clean up the ailing agency — plagued by corruption and underperformance in the past few years.
Chikunga said she asked the board about procurement issues in response to allegations which reached her office.
“As the minister of transport, I have received complaints from citizens who interact with Prasa. The last being a whistle-blowing email that levelled serious allegations against employees of the agency.
“As a responsible minister I acted on the Special Investigating Unit’s (SIU) whistle-blowing report I received. I requested the board to provide information which will empower the minister as the executive authority and the shareholder to exercise the legal oversight role with circumspect [and] with avoidance of overreach,” she said.
Among the allegations received was about a R186m contract awarded to KD Baula Projects (based in Roodepoort) for the reconstruction of 3KV DC Traction and AC distribution substations between Unified and Luipaardsvlei train stations in Roodepoort and Mogale City (Krugersdorp), west of Johannesburg.
According to the whistle-blower, KD Baula had no experience and had supplied Prasa with fraudulent guarantees to receive advance payments from the state-owned entity (SOE). A preliminary internal Prasa investigation, conducted at the behest of Chikunga, concluded there was credence to the claims which therefore warranted further investigation.
“It is however interesting to note that KD Baula was on 11 August 2023 issued with a non-performance certificate [due to] delays in compiling the safety file and poor co-ordination of activities [and] changing of subcontractors by KD Baula... it would appear that the whistle-blower has provided enough information to warrant further investigation into the procurement process followed in the appointment of KD Baula,” said the report.
The investigation also uncovered that the company which issued KD Baula with the guarantees, Malvern Guarantees, a registered credit provider under the NCR, was owned by the same director Khuphulile Dube, a Brahman cattle breeder who owns a farm in Limpopo. A company search confirmed that both companies are owned by Dube.
These things will come back and haunt us. What Sindi is doing is too blatant. She is asking about contracts and appointments as if there are other people she has lined up ... Other ministers are campaigning for the ANC but she is calling boards to discuss tenders
— ANC insider
Dube’s company Malvern Guarantees was fined R25m in 2020 by the Financial Conduct Authority for issuing guarantees to a number of companies even though it was not a licensed short-term insurer or a bank. The ruling was upheld by the Financial Services Tribunal on appeal and the case revealed that Dube had scored R35m in the transactions.
“We have also noticed that the MD for Malvern Guarantees and KD Baula is the same person ... We are unable to make a finding as to whether this is permissible in law,” said Prasa’s internal investigation.
According to the National Treasury’s general conditions of procurement contracts, guarantees should be issued by a reputable bank. This is to safeguard procuring entities against unqualified bidders — the financial guarantee or tender bond acts as security against the risk of the bidder failing to execute the terms of the contract awarded to them.
Sources close to the SOE and inside the ANC have made claims that the minister had ulterior motives when she called the Prasa board to a meeting in April and asked them to give her a list of companies “that do not meet project timelines” but have been continuously reappointed.
The minister’s leaked April 2 meeting agenda with the board at Prasa’s Durban office show that Chikunga asked for a list of companies not meeting their project timelines, updates on lifestyle audits, investigations into a whistle-blowers' claims of corruption at Prasa, progress on payment of security companies, recovery of rail corridors and the signal programme, among other matters.
Chikunga’s detractors say she is attempting to capture Prasa as she had also told the entity in November last year to rescind pending executive appointments because of allegations of irregularity during the interview processes.
“Things can’t be done so blatantly, it will harm the ANC. These things will come back and haunt us. What Sindi is doing is too blatant. She is asking about contracts and appointments as if there are other people she has lined up ... Other ministers are campaigning for the ANC but she is calling boards to discuss tenders, when we have less than 30 days to elections and five hours meeting with the board on short notice. This is the time that should be dedicated to the ANC,” said one ANC insider.
A Prasa insider said the minister should not be invested in procurement and appointments of senior officials as a shareholder. “The minister should be asking if Prasa is meeting its performance targets. She shouldn’t be asking about procurement and employee positions because this now is becoming an overreach,” said one Prasa insider.
But Chikunga said she is promoting accountability and transparency by attending to allegations levelled against the entity or its board of directors.
“Inherent in the minister’s responsibilities is to ensure accountability, transparency and avoid acting when more damage has already been cause — thus acting proactively always mitigates and avoids any undesired consequences.
“By virtue of the position I occupy as the minister of transport and as a deployee of the ANC, I am ... accountable to the people of SA.
“It’s unfortunate that exercising due diligence in our oversight mandate is misconstrued as meddling. Regardless of naysayers we will continue to diligently serve the people. Rail services and rail infrastructure will be fully restored to drive the socioeconomic development of the country,” said Chikunga.
In November last year, Chikunga and her protectors were accosted by three armed men, believed to be part of a gang that has been terrorising motorists on the N3. Last month three suspects believed to be part of the gang were shot and killed by police during a high-speed chase. One suspect escaped.
Prasa's management and board confirmed that KD Baula was appointed in June last year and that its contract had been extended by two months with no cost implications and would end in July. The entity said the investigation was not complete and any action on the issue of Malvern's guarantees would be determined by the final investigation.
Dube did not respond to detailed questions at the time of publishing.
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