SABC – 30 January 2018
Former PRASA CEO Lucky Montana says there is no truth in former ANC Secretary-General Gwede Mantashe’s statements that the ANC was not receiving any money from companies.
Lucky Montana said that former ANC Treasurer General Zweli Mkhize wanted the ANC to get a kickback for a tender that was awarded to a company that provided locomotives to PRASA.
He also says there is also no truth that the ANC does not know Angolan businesswoman Maria Gomes.
Montana was giving damning evidence in the Eskom parliamentary inquiry into allegations of State Capture.
Montana has been giving damning evidence in the Eskom parliamentary inquiry into allegations of State Capture.
“I’ve seen the statements written or issued by the former Secretary-General. He is saying we have never received any money from any company. I met with the former Treasurer General and you know where we met? We didn’t only meet at some hotel or only at Luthuli House. We were meeting at the House of Mariah Gomez were the Treasurer General of the party, myself were meeting to discuss ANC finances and other things, because as a member for the ANC, that’s part of what I was doing.”
He said earlier that former ANC Treasurer General Zweli Mkhize wanted the governing party to be given 10-percent of a multi-million rand tender that was awarded to a company that provided locomotives to PRASA.
Montana claims that he met with Mkhize at a hotel in Sandton and turned down his demand.
Public Enterprises Minister Lynne Brown says she is still waiting for the President to sign the proclamation that will authourise the Special Investigating Unit (SIU) to investigate corruption and state capture allegations at Eskom.
She told the Public Enterprises Committee on Tuesday that she’d been waiting three months for the SIU proclamation.
Brown wants an investigation into procurement and contract management into both Eskom and Transnet.
The Minister was taking part in an interaction between the committee and the leadership of several State Owned Enterprises (SOEs).
“I have written to the President because we are now waiting a sign off on the SIU. It’s gone, three months ago we were first told it was at Justice and then we were told it’s at the Presidency and now we are told it’s at the Presidency waiting for sign off from the President,” says Brown.
STATEMENT BY TSHEPO LUCKY MONTANA, FORMER PRASA CEO, PARLIAMENTARY INQUIRY INTO CORPORATE GOVERNANCE AT ESKOM – CAPE TOWN, 30 JANUARY 2018
I am fully aware that the Terms of Reference of this Parliamentary Inquiry by the Portfolio Committee on Public Enterprises does not include the affairs of the Passenger Rail Agency of South Africa (PRASA). However, I was drawn into its work and ultimately invited to share my version of events after the Deputy Minister of Public Enterprises and former Minister of Transport, Honourable Dikobe Ben Martins addressed a media briefing on or about 8 November 2017 responding to the testimony to this Inquiry of Suzanne Daniels, former Legal Advisor at Eskom. In her testimony, Suzanne Daniels mentioned meetings involving members of the Gupta Family and DM Martins held at the Melrose Arch, Johannesburg. If I remember well, Ms Daniels stated that the Deputy Minister attended meetings where certain ESKOM matters were discussed.
In his attempt to clear his name and distance himself from the Gupta Family, Deputy Minister Ben Martins stated during the Media Briefing that he had met members of the GUPTA Family on a few occasions. To my surprise, DM Martins further stated that one such occasion was when he met members of the Gupta family with Lucky Montana. I got the distinct impression that DM Martins wanted to create the impression that I brought members of the GUPTA family to him.
I was extremely disappointed because I felt that the statement was not entirely truthful, fair and comradely. I felt strongly that he had a duty to call and inform me that he intended to mention my name during the media briefing. I expected this from him as my leader, friend and comrade. He knew that mentioning my name in the manner he did, in this “polluted” political environment dominated by issues of “State Capture”, would raise questions about whether I had a relationship with the Gupta Family.
I expected this from him because DM Martins and I had a long relationship dating back to 1996 when I was first introduced to him in Parliament and we became close friends. He also introduced me to his family. I worked very closely with him as the Chairperson of the Portfolio Committee on Public Enterprises where together we championed some of the most important legislative changes during the period (1999 – 2004) of the Restructuring of State-Owned Enterprises (SOEs).
We worked together as comrades in the South African Communist Party (SACP) where he was a member of the Politburo and I was the Deputy Provincial Secretary of the Party in the Western Cape. This bond of friendship and comradeship was further strengthened when he was appointed Minister of Transport in 2012.
DM Martins remains my leader and a great inspiration to me. He is an intelligent and highly knowledgeable man. He is a simple, humble man – a freedom fighter, Communist and a Great South African. I have no doubt that he is committed to serving the people of South Africa. This is the man who lives for the arts. He would invite me during weekends when he visited art galleries. He would teach me about paintings, the ideas behind them and the artists behind these. As you may be aware, he writes and publishes poems. This is a man I have huge respect for.
I could however not believe it when I heard what he said at the media briefing. I felt strongly that DM Minister Ben Martins was trying to protect his own name at my expense. He knew that I had never met the Guptas until he had invited me to his Ministerial House in Pretoria and introduced me to Duduzane Zuma and Rajesh “Tony” Gupta. This happened in September 2012.
What he had said at the media briefing was totally not true and I felt it important that I set the record straight. I issued a statement repudiating what he had said, to set the record straight.
I had a long interview with SAFM to clarify my statement. DM Martins and I had a telephonic conversation immediately after the SAFM interview where we agreed to meet and not escalate the matter further. I attach hereto the copy of the Media Statement (Annexure A).
Unfortunately, my response to the Deputy Minister drew the attention of the Evidence Leader to this Inquiry, Advocate Ntuthuzelo Vanara, who wanted to know the context for my response and the contents of the letter referred to in my statement. I met Advocate Vanara in Johannesburg in January 2018 and took him through the letter I wrote in 2012 about attempts by certain members of the GUPTA Family and their associates to manipulate the procurement process for the acquisition of new commuter trains.
The primary goal of my submission is therefore to provide the Inquiry with the full details of these attempts by the Gupta Family and to formally release to South Africa my 2012 letter to the Chairman of PRASA at the time, the current the Deputy Minister of Finance, Honourable S’fiso Buthelezi.
I intend also to share with the Inquiry my experience working with State-Owned Enterprises and the lessons that the Committee could possible draw from various attempts at restructuring these entities over the past 20 years or so.
I will also briefly touch on the topical issue of “State Capture” and how this affected PRASA during my tenure and after I had resigned and left the entity. I resigned from PRASA on the 15th March 2015 (Annexure B) and left on 15 July 2015 when the Board resolved in my absence that I will no longer be required to serve out the remainder of my notice period.
2. ACADEMIC QUALIFICATIONS AND WORK EXPERIENCE
I am the former Group CEO of PRASA. I went through the ranks in the civil service and in the process, acquired huge experience in developing and driving corporate strategy, managing people and running companies. I was part of a generation of young, black professionals that joined Government in the aftermath of the first democratic elections of 27th April 1994. Many of us, despite having been to university and had academic qualifications, were sent for further study and technical training in the different areas of responsibilities. We were former militants in the struggle against apartheid in the 1980s and early 1990s. The democratic government presented us with the opportunity and honour to serve our beloved country and its people.
For me personally, I completed my Honours Degree in Industrial Sociology (Social Research Methods) at the University of Cape Town (UCT) in 1993. I was employed to undertake research by COSATU on grading and training arrangements in various sectors of the economy. My area of research was Post and Telecommunications. COSATU agreed to grant us permission to use the research data, which the federation rightfully owned, towards the completion of our Honours Degrees. My Honours Thesis was on Strategic Unionism as a new model to bring about social and economic transformation.
I worked for the ANC Western Cape as Elections Research Coordinator from April 1993 till April 1994 focusing on Voter Trends in the Western Cape and on Opposition Strategy.
I joined the new Western Cape Provincial Government in May 1994 as a Member of the Strategic Management Team (SMT) in the Department of Economic Affairs and RDP. I was responsible for RDP Planning and Implementation.
In August 1994 I was selected, together with 25 other new recruits in the civil service around the country, to participate in a Study Programme on “Economic Policy Formulation” for Prospective South African Economic Policy Makers held in the Hague, the Netherlands.
We spent half of the year being trained in the theory and practice of International Economics and Trade Policy, Fiscal Policy, Monetary Policy, the Banking System and Taxation; the Political Economy of Public Policy; Competition Policy, Economic Regulations, Transport Planning, Social Security and Labour Market Policy.
We studied the High-Performing Asian Economies, with specific focus on Japan, Hong Kong, South Korea, Singapore and Taiwan. We spent time studying the Maastrich Treaty and visited the new institutions of the European Union in Belgium.
We received detailed training on the GATT System and its replacement with the World Trade Organisation (WTO) in Geneva.
We studied the role of the World Bank and IMF in the world and Structural Adjustment interventions.
Most importantly, we were trained to pull together information and put this into a Policy Memo to guide Policy Makers, in this case Ministers in the Economics Cluster.
To meet the requirements of this course, I completed a “Policy Paper on Industrial Policy for Post-Apartheid South Africa”.
During my stay at the Department of Economic Affairs and RDP, the Educational Opportunities Council funded in 1995 another detailed training programme on Macro-Economic Policy Analysis (MEPA).
The focus of this training programme was Inter-Governmental Fiscal Relations, Policy Simulation and Interdependence, Budgetary Procedure as well as Fiscal Policy and Growth.
We spent the latter half of 1995 in another study and training programme, this time on Regional Economic Development in Germany, with a special focus on rural development.
I joined the Department of Public Works as Director: Office of the Minister in June 1996 until 1999. I was earmarked for a role in the Construction Industry Development Board (CIDB) and was sent in 1999 to participate in the Construction Management Programme (CMP) at the University of Stellenbosch. This is the best programme in the construction industry.
Many of the construction companies listed on the JSE sent their middle managers and senior executives for training in the CMP, a programme delivered jointly by the University of Natal, University of Witwatersrand, University of Pretoria and University of Stellenbosch. I completed the requirements of this vitally important programme.
This is the best training programme for those interested in infrastructure development; with a strong focus on diagnostics engineering; procurement methods; risk management; contract law, Applied Computer; strategic management and finance. Again, I met the requirements of the programme.
I joined the Department of Public Enterprises in 1999 following the elections in that year. This was the year of major changes in the area of state-owned enterprises. One of the first task undertaken by the new Minister of Public Enterprises was the upgrading of public enterprises from an Office to a fully-fledged Department.
A lot of new young skilled people were recruited with skills specializing in Defense, Telecommunications, Transport, Energy, Forestry and Finance. This was the most exciting period in the life of the Department of Public Enterprises.
I was promoted to Chief Director level in 2002 and given major responsibilities, including the responsibility to coordinate the National Framework Agreement (NFA) signed between Government and Labour Unions to guide the process of restructuring.
I had the privilege to sit, participate and even chair key meetings between Government and Labour considering restructuring options for SOEs such as Denel, Eskom, Transnet, SAFCOL, Telkom, Airports Company South Africa, Aventura, among others.
As part of this process, I was sent to the United Kingdom on a course on restructuring and privatization of public entities.
Perhaps the biggest and most exciting restructuring initiative for me was the big challenge to restructure Transnet. This was key for the economy and Government had instructed us to work on what came to be known as the “Transnet End-State” Project. This was a period of detailed analysis of data and due-diligence exercises for the different business units with Transnet, working with International companies such as Rothschild and Halcrow.
The choice to separate freight rail and passenger rail was made during this period, and it was to lead to the establishment of PRASA in March 2009.
I joined the Department of Transport in June 2004 and was appointed Deputy Director-General for Public Transport. I was responsible for trains, bus and taxi operations.
This was the biggest portfolio in the Department responsible for managing the subsidies allocated by Government for commuter rail users and enabling Provinces to manage the bus subsidies. I was appointed in 2005 to serve on the Board of the South African Rail Commuter Corporation (SARCC), the predecessor to PRASA. During this period, I was responsible to oversee the implementation of the Taxi Recapitalization Programme (TRP).
I was seconded as Acting CEO of the SARCC in July 2006 on an 18-month contract. Cabinet confirmed my appointment as SARCC in October 2007. One of the key mandates was to prepare rail infrastructure and operations for the 2010 FIFA World Cup, consolidate passenger rail entities into a single entity reporting to the Minister of Transport, which became PRASA and to drive a long-term turnaround strategy and investment plan for passenger railways.
3. LESSONS FROM THE RESTRUCTURING OF STATE-OWNED ENTERRPISES
The ANC Government has done a lot to restructure and strengthen SOEs since the advent of democracy in 1994.
Major restructuring initiatives were undertaken, which were aimed at reducing the foreign borrowing requirements, promote good corporate governance and ensure SOEs and public entities contribute to Government social and economic objectives.
In 1999, Government started the process for the development of the Policy on the Restructuring of State-Owned Enterprises, where extensive and wide consultation were undertaken with political structures, community-based organizations, trade unions, business and international investors. The Policy was formally adopted as Government Policy in 2001.
This Policy, in my view, rank amongst one of the best policies the Democratic Government has ever developed, especially when one takes into account the context of the late 1990s and the pressures at the time to privatize SOEs. Despite this, the Government was able to find that delicate balance between the role of the Government in the economy and the private sector. The Policy defined the strategic role that these SOEs should play and how they could contribute to sustainable development in terms of investment in economic and social infrastructure, development of skills in the economy, facilitating access to services. It was also expected that SOEs will play a major role in difficult economic conditions.
The Policy was clear that both the Government and Private Sector had an important role to play in the economy. This was an attempt to transcend the ongoing debate about either Government or private sector. This was not winnable or sustainable.
The Policy required Government to balance the commercial goals of these SOEs and their social mandate. This Policy enabled the Government to drive the key trade-offs that needed to be made to achieve the economic goals that
Government had set itself at that time. Government had also set as one of its key objectives the separation of infrastructure and operations in certain identified economic sectors.
Among key objectives for the restructuring of SOEs and key public entities was to strengthen the financial position of these entities so that they could be in a position to borrow against their own balance sheet and meet their own investment requirements.
Government had wanted to introduce competition in sectors like ports operations, telecommunications and energy. These would require creation of independent regulatory capacity to determine sustainable tariffs, access to networks and reduce market dominance. This was also a key condition for private sector investment in key sectors like energy.
Some of the restructuring initiatives undertaken between 1999 and 2009 had created the material basis for SOEs to contribute to sustainable economic development. This includes the decision to transform Eskom from a State Commission into a fully-fedged company through the passage by Parliament of the Eskom Conversion Bill in about 2003 and the introduction of proper corporate governance mechanisms. These had enabled Eskom in later years to go out to the Capital Markets to raise the necessary capital to invest in new generation capacity.
The other example of Government example was the restructuring of the Transnet pension fund, which served as a major break on this vitally important SOE to play its strategic role in the economy. Parliament played a key role with the amendments introduced to the Transnet Pension Scheme. This also ensured the compensation to black widows whose husbands worked for decades at this entity but there was no contribution made by the employer on their behalf, unlike their white counterparts.
The Telkom IPO process and subsequent restructuring over the years had created the modern company that we see today. Despite difficult domestic and global market conditions, Government was decisive and ensured the listing was a success. Many of the market analysts had thought then this would not be a success.
There is a story of South African Airways. Swissair came in as Strategic Equity Partner (SEP) with 20% equity and had an option to increase this to 30%. The SEP was critical in injecting much-needed capital into SAA, strengthen its financial position and bring management skills into the business. We seem to have forgotten that in recent times when the aviation sector faced massive challenges and following the events of 9/11, the national carrier was in a far stronger position than most of its competitors.
The issue of SAA is not only limited to how the business is run and issues of costs and efficiency but fundamentally linked if not depended on POLICY. Many countries seem to adopt robust policies about how they would support their aviation sector enabling this to contribute to tourism and economic development. This, in my humble view, is one of major shortcoming as a country.
Some of the measures to allow different airlines to land anywhere in the country may be the major contributor to undermining OR Tambo International Airport as the hub for SAA and eroded its revenue base. There is no way SAA could sustain its huge asset base or debt levels when its revenue base keep on being eroded. In my view, there is a major failure of Government Policy.
There are many other examples of success in the manner the Government managed its SOE portfolio and how these were restructured at the time. This includes the changes at the Airports Company of South Africa (ACSA) and how this enabled this entity to invest in its modern airport infrastructure around the country. Government also adopted bold and long-term view that ensured King Shaka International Airport become a reality, use this as a major anchor for the Dube Trade Port and develop capacity to meet future demand for the aviation sector. ACSA was at the time that keen from relocating from the old Durban International Airport but Government was firm in its resolve. The same could be said about Coega/Nquga Development in the Eastern Cape.
There are also failures in the restructuring of SOEs. One of the main failures was the decision that the proceeds of restructuring must go into the National Revenue Fund. Due to difficult economic conditions and competing priorities, not all restructuring proceeds were invested back to strengthen these SOEs.
As the Portfolio Committee embarks on this critical clean-up process and facilitates renewal at ESKOM and other SOEs, it is also vitally important that through this Inquiry, the Committee should assist the country and contribute to the country building on its previous successes in respect of its SOEs. Not everything about our SOEs is bad.
4. PRASA AND “STATE CAPTURE”
The notion of “State Capture” has different meanings. It is viewed by some to refer to the unlawful activities undertaken by the Gupta Family and their associates in Government Departments, SOEs and Public Entities. To others, it is a proxy to fight political battles. For others, it embodies and captures the national effort to combat corruption within Government and its different arms.
PRASA became a major battleground for political forces and vested economic interests all fighting for control and the right to influence the award of its tenders. There were the Guptas and their Associates who used underhanded, unlawful methods to achieve their goals. I will return below to discuss in detail their conduct. The Guptas and their Associates were resoundingly defeated in 2012 but unfortunately, they were not the only ones.
There were vested interests within black business that had entered into agreements with international rolling stock companies. They were unhappy with the PRASA decision regarding the appointment of the 30% BBBEE Partner for the Rolling Stock tender. PRASA gave the Original Equipment Manufacturers (OEMs) the right to find their own black partners for 70% of the transaction but that this would not be credited. PRASA insisted that only the 30% BBBEE Partners would be credited but these would be selected through an open, transparent and competitive process. This was to prevent politically connected individuals or groupings from either fronting or manipulating the process.
There were the International Rolling Stock Manufacturers themselves, who wanted to secure probably the biggest rolling stock tender at the time. They maneuvered, played one player against the other and tried to manipulate, if not blackmail, existing local industry players to lower their prices.
Some of the International companies had made provisions during bidding for marketing. Marketing in this context could mean making provision for payment of bribes. As the country intensify the fight against corruption, it is important that the flow of funds for purposes of marketing is placed under serious scrutiny.
However, the most powerful political force that won the day and changed the course of PRASA forever, was driven by none other than the former Minister of Transport, Honourable Dipuo Peters, working with the former ANC Treasurer-General, Dr Zweli Mkhize. The two, with the support of other unnamed officials at Luthuli House, were key to the appointment of the new PRASA Board that served their interests.
It all began in March 2014 when the former Minister of Transport, Honourable Dipuo Peters convened a meeting in Cape Town of the Chairs and CEOs of all public entities reporting to the Minister of Transport. The purpose of the meeting was to discuss Corporate Plans, Budgets and Deliverables of the Department of Transport and its public entities for the 2014/15 Financial Year.
Each entity was given an opportunity to present to the Minister. When the turn for PRASA came, the Minister focused her comments on the PRASA Rolling Stock Fleet Renewal Programme. She further stated that “we cannot be dictated terms to by the French” referring to the Gibela Rail Consortium led by French company, Alstom that won the tender to supply 600 new commuter trains to replace the entire fleet of Metrorail.
We explained to the Minister that we were not driven by the French but by the condition of Metrorail, which was facing collapse. The Minister concluded the discussion by indicating that she will arrange a one-on-one meeting with PRASA to discuss this matter further.
The follow-up meeting with the Minister, accompanied by the then Acting Director-General, Mawethu Vilane took place in late April 2014 at Umjantshi House, Braamfontein. PRASA was represented by its Chairman, S’fiso Buthelezi, Group CEO Lucky Montana and Group Executive for Strategic Asset Development, Piet Sebola.
Shockingly, the Minister demanded that we cancel the award to Gibela Rail Consortium. We refused to accede to her request, indicating to her that this would be unlawful. PRASA had obtained a Legal Opinion showing that such cancellation will be in breach of the procurement laws of the country and provisions of the RFP itself.
S’fiso Buthelezi and I had discussed the matter prior to the meeting and had agreed that we better be fired than give in to her unlawful and irrational instruction. It was at this meeting that she informed us that she intended to change the Board of PRASA and was considering bringing Popo Molefe as new Board Chairman. Minister Peters was clearly unhappy that we defied her to cancel the rolling stock tender.
Dr Zweli Mkhize, was furious with me for rejecting his demand in a meeting held in a Sandton Hotel early in 2014. He demanded that 10% of R465 million of the first payment that was due to Swifambo Rail Leasing in terms of the contract, be paid to him. Like we did with the Guptas, I rejected this demand as unlawful and stated firmly that it will not be done.
Like Minister Dipuo Peters, Dr Mkhize admonished us for appointing the “French Colonialists” with “a terrible track record in Africa”. He made veiled threats that he will deal with us. One of his accusations was that we were giving the ANC “peanuts” whilst we took the bulk of the money for ourselves.
I was angry with him for this unfair accusation. However, I left the matter to my diplomatic, respectful, patient and forever dignified Chairman, S’fiso Buthelezi, himself a long-time friend and comrade of Dr Zweli Mkhize, to explain the process followed in appointing Gibela Rail Consortium and that this tender was evaluated not only by PRASA but National Treasury, the dti and Department of Transport.
S’fiso Buthelezi further explained that the ANC cannot come only to PRASA when it needed help as if the two of us were the only deployed cadres in SOEs and Public Entities. S’fiso Buthelezi explained that if indeed the ANC is afraid to approach the Chairs and CEOs of other SOEs in the same manner they were putting pressure on PRASA, then the ANC has failed to deploy the right cadres.
The appointment of the new Board of PRASA was therefore agreed to between Minister Dipuo Peters and the former ANC Treasurer-General, Dr Zweli Mkhize. This is what Minister Dipuo Peters kept on saying to S’fiso Buthelezi that he is discussing the new Board with “Luthuli House”.
Minister Dipuo Peters would bring in Popo Molefe and Willem Steenkamp, the same persons she appointed to the PETROSA Board when she was Energy Minister whilst Dr Zweli Mkhize had demanded the appointment of Ms Zodwa Manase. She was to be in charge of the Audit Committee and PRASA Finances, so that she could manage the flow of money in the business.
The new Board of PRASA was appointed by Cabinet in July 2014, with effect from 1 August 2014, with Popo Molefe as new Chairman, and Willem Steenkamp and Zodwa Manase among the new Directors.
I discussed the appointment of the new PRASA Board with Dr Zweli Mkhize in August 2014 at the house of Maria Gomes in Sandton. He assured me the new Board has been given the mandate to work with me. At the next Audit and Risk Committee meeting, Zodwa Manase mentioned to me the discussion I had with Dr Zweli Mkhize. However, later events were to prove that I was being lied to.
However, there were other ANC leaders who were angry with me because their demands for contracts and/or appointment of companies where they had financial interests were not appointed. They accused me of being arrogant.
However, I am not certain the specific role they played in the appointment of the new Board.
For example, the Head of ANC’s Economic Transformation Committee, Mr Enoch Godongwane, had met with me in Sandton to ask for my support for a particular company that was bidding for a security tender at PRASA. He provided details of the company he was representing. He was angry when the said company was not appointed. We have not spoken since that time.
The ANC itself had failed to take firm measures against allegations of impropriety against its own leaders. For example, the ANC had direct dealings with Ms Maria Gomes of Angola but had consistently issued public statements denying she had links with the party and made financial contributions on a regular basis.
In fact, Dr Zweli Mkhize and I had met Ms Maria Gomes at her house on so many occasions to discuss ANC Finances and fundraising. In September 2016, en-route to the Innotrans in Berlin, I travelled to London to see Ms Maria Gomes and to verify allegations made by Popo Molefe in his Affidavit that Swifambo Rail Leasing, through her and George Sabelo, had paid R80 million to the ANC.
She rejected this as nonsense but had confirmed that she was a business woman who donated to the ANC and had paid, on many occasions, money into accounts provided to her by the ANC Treasury-General.
In one instance, Dr Zweli Mkhize brought his wife, May, to the house where she introduced her to Maria Gomes and that they should do business together. I was at the house for a lunch meeting with Maria Gomes.
The ANC has issued statements rejecting that they have received any money from Maria Gomes or Swifambo Rail Leasing. The most logical thing to do is for the ANC, of which I am a loyal and disciplined member, to institute an independence investigation to establish whether indeed such contributions were made, if yes, in whose bank accounts were these donations made. Are these ANC accounts or private accounts? If not, then Popo Molefe owes the ANC an apology for his accusation. These are important questions if we are serious about fighting corruption.
Popo Molefe himself, a veteran of the ANC and the democratic movement in our country, has been successful in projecting an image of corruption buster. He spoke about fighting corruption but has been involved in corruption himself. On three different occasions, Popo Molefe got companies contracted to PRASA to make financial contributions to his Development Foundation.
The first was held in April 2015 at Sun City. I was still in the employ of PRASA then and this was planned to coincide with my birthday on the 25th April. I pulled out so that my name is not connected to this event.
This is not only a serious Conflict of Interest by a Board Chairman but these activities constitute serious acts of corruption and money-laundering. Many of the companies had mentioned to me personally that they were told “Lucky is no longer here and if you do not pay, your contract will be investigated, declared irregular and cancelled”.
When relations between Minister Dipuo Peters and Popo Molefe started to deteriorate, she instructed the Board of PRASA to pay back the huge monies that the Board had unlawfully paid itself at PRASA.
Popo Molefe came to PRASA a bankrupt man and told me that his company, Lereko was facing financial difficulties and no longer in a position to pay even salaries. He told me the Directors of Lereko had agreed that only the CFO and a few supporting staff members should remain in the full employment of the company.
Today, Popo Molefe is doing so well after having served 3 years as Chairman of PRASA. Popo Molefe will never be investigated, FIC authorized to follow the money trail in the Foundation, the millions paid to Werksman Attoneys and subject him to a lifestyle audit. This is because politically, he is part of the ANC veterans that are seen to be against “State Capture” and fighting corruption in Government. He speaks the language of the veterans.
There are instances where the ANC had used PRASA resources for its events but failed to pay. I had to find business people to settle bills on behalf of the ANC. However, I have consistently refused to use PRASA money for ANC activities. The Treasurer-General can confirm and had agreed with me that I approach certain business persons or creditors for them to help the ANC settle its bills not only with PRASA but other creditors as well.
The ANC has an Integrity Commission but it seems it is failing to investigate these serious matters, is acting selectively and failing to hold its own leaders to the highest of ethical standards. The ANC has called for “swift action” against many of us but it fails to apply the same standards to its leading people.
I am making this point to remind the Inquiry that those making the loudest noise about “State Capture” and “fighting corruption”, are usually the most corrupt.
There will never be meaningful renewal in our country unless we deal with corruption firmly irrespective of who is involved. Personally, I am being chased and accused of corruption even if there is nothing found of any wrongdoing on my part and/or activities that directly link me to corrupt and fraudulent contracts. All I hear is that many wrong things happened at PRASA during my tenure as Group CEO yet the people directly involved with these fraudulent activities are still working at PRASA and never held accountable.
5.THE FIGHT AGAINST CORRUPTION AT PRASA
In October 2014, following PRASA’s Presentation to Parliament’s Standing Committee on Finance, Popo Molefe requested a private meeting with the Chairperson of the Portfolio Committee on Transport. He followed this with one-on-one meetings with other members of the Transport Portfolio Committee. He informed them that he was informed of corruption at PRASA and had been given a clear mandate to address this. He claimed as Group CEO, I was not acting alone in this but was doing dirty work for the Gupta Family and the “big fish” itself, HE President JG Zuma, whom he apparently described in derogatory terms.
He informed the Chairperson and other members of the Portfolio Committee that his mandate was to investigate this corruption and in particular the involvement of President Jacob Zuma.
A major assumption was made by Minister Dipuo Peters, Dr Zweli Mkhize, Popo Molefe and others that PRASA was “captured” by the Gupta Family and therefore they were the largest beneficiary of its investment programme. This assumption led to the Strategic Blunder to chase after me and other people.
This resulted in Popo Molefe embarking on one of the biggest investigation against individuals costing almost R200 million. They did not know that I had fought the Guptas in 2012, and supported by S’fiso Buthelezi and the Board, stood firm against Gupta attempts to manipulate the procurement process for the acquisition of new trains. I will return to this below.
As part of his fight against corruption, Popo Molefe had irregularly appointed Werksman Attorneys to conduct a forensic investigation into numerous contracts. The contract was originally meant for Ngubane and Associates, who were expected to sub-contract part of the work to Werksman Attorneys.
However, this had changed with Werksman Attorneys emerging as the main contractor and Ngubane and Associates the sub-contractor. Employees at Ngubane and Associates had complained that they were only given minor administrative roles in the entire investigation and did not receive the bulk of the money.
In their reports, Werksman Attorneys confirm “surveillance of individuals and/or entities identified during the investigation process…”. PRASA had spent almost R200 million on this investigation, with the bulk of the money directed to this unlawful surveillance.
Werksmans Attorneys ran surveillance on certain individuals and/or companies in violation of various laws of the Republic. The surveillance was mainly conducted through the following companies: Basileus Concilium Professional Services (BCPS) and Crowe Howarth Forensics (Crowe). They later enlisted the services of “Ukhozi” and other individuals like the former SARS Executive, Ivan Pillay, Paul ’O Sullivan, Deon Pienaar.
I had written to the Minister of State Security (Annexure C) as well as the Head of the HAWKS (Annexure D) to call for urgent action against this criminality and private companies being allowed to “capture” the security functions of the State.
The said companies and individuals subjected me to a vicious campaign of illegal surveillance. I was followed wherever I went. My house in Waterkloof, Pretoria was broken into three times where computers, memory sticks and documents were taken. Some of the documents taken illegally at my house found their way into reports compiled by Werksman Attorneys. Individuals and companies were summoned and interrogated on the basis of this. I had reported this to the Brooklyn Police Station and the case numbers are included in the letters to Minister of State Security and the Head of the DPCI.
I had to take urgent measures to protect my family. I had to procure private investigators to establish the origin of this surveillance and the people involved. At the time, I still had in my possession the firearm issued to me by PRASA. On few occasions, I had to take out the firearm to protect my family or cgase after those following me. PRASA pressurized the Police at Brooklyn to retrieve the firearm from me, with the sole purpose to disarm me and expose my family to danger.
The PRASA investigation was not making significant progress. Popo Molefe and Werksman Attorneys chose to engage directly with the Directorate for Priority Crimes Investigation (DPCI), commonly known as the HAWKS. PRASA claimed that the HAWKS did not have the relevant capacity to investigate the matters they had reported.
To this end, Popo Molefe recommended that the HAWKS appoints Howarth Forensics, a firm of forensic Chartered accounts, already part of the Werksman Investigation, to assist DPCI with its investigation at PRASA’s cost. This was clearly unlawful and a deliberate attempt to write the script for the DPCI. Infact, this compromised the very independence of the DPCI. Howarth Forensics could not be party assisting the complainant and at the same time assisting DPCI with its independent investigation.
The complainant, PRASA in this case, had laid criminal complaints against certain persons and entities. It was proper that DPCI was given the space to investigate the complaint independently and conclude the matter.
As if this was not enough, PRASA and BCPS embarked on a massive media strategy, with the help of certain journalists, to damage the reputation of some of us being investigated by Werksman Attorney. The truth became the biggest casualty in this media campaign.
I highlight below some of the most common stories and lies repeated in the media:
Tender for the Modernization of the Braamfontein Depot
PRASA had issued a tender to the market on 6 January 2014, which was followed by an optimised tender on 28 February 2014. The tender closed on 5 May 2014, and six (6) bidders submitted their bids.
The technical and financial evaluation of the bids show that Nthuthuko Joint Venture comprising of Aveng Grinaker LTA, Keren Kula and UvukoCivils Maintenance and Construction won the bid and the award should have been made to them in November 2014.
Auditors had found weaknesses in the process but these were not of a material nature. The Board used this to cancel the tender. However, a review of procurement documents on the Braamfontein Depot Modernization demonstrates that the bidding process was substantially fair, transparent and competitive in line with the requirements of the Constitution, the PFMA and PPPFA.
However, the Board cancelled the award claiming there were tender irregularities. The Media carried stories that there was tender fraud on the part of management amounting to R2.4 billion. The tender was recommended to the Board in November 2014 by a Committee of the Board (Finance, Capital Investment and Procurement Committee of the Board) and dealt with in December 2014.
If indeed tender fraud and corruption as alleged by PRASA, then this suggest that the Nthuthuko Joint Venture comprising of companies listed in the JSE were involved in paying bribes to win the tender. This was a serious allegation made against the Ntuthuthuko Joint Venture led by Aveng.
The media focused its articles on me as Group CEO but failed to investigate and verify if the story was first true, how much was paid and by whom and to whom, failed to contact the JSE and establish what penalties could be imposed on listed companies like Aveng if they were found to have paid bribes.
This was to be the first story in a long list of articles aimed at damaging my reputation.
The Story of Tall Trains
The biggest of the media strategy was the false claim that PRASA purchased trains that were “too tall for the South African rail network”. This has been repeated so many times in the media that it sounded to be true. In court papers confirming this lie, the Chairman of the Board of PRASA, Popo Molefe argued that the Afro 4000 locomotives with a height of 4140 mm is “175mm higher than what the Transnet Track Maintenance Manual requirement of 3965mm”.
In the same papers before the Gauteng South High Court, the Board further argued “….any reduction in height of the TFR contact wire height from its minimum allowed height as a result of tamping activities, will pose a greater risk of contact with this locomotive than any other type of locomotive in the country. This also increases the likelihood of a flashover”. This story was reported as “Breaking News” by NEWS24.
Unfortunately, the previous PRASA Board and sections of the media were gravely mislead. The Transnet Track Maintenance Manual is an internal operational document of Transnet. It is not the standard that governs electrical lines of South African railways.
The SANS 101280-1:2013 nrs 041-1:2013 Edition 2 (Annexure E) is the only standard that regulates overhead power lines for conditions prevailing in South Africa. This standard is given practical application in the railway environment by the Transnet Freight Rail (TFR) Electrical Safety Instruction of 2012 (BBF 3690,2012) signed between Transnet and PRASA in the same year (Annexure F).
The SANS standard, supported by the Electrical Safety Instruction of 2012 stipulates that the electrical contact wire should be a minimum of 4,5m and meet minimum clearance requirements or or clearance gap of 150mm. This means that the gap between the electrical contact wire and the train should be a minimum of 150mm.
The minimum height of the AFR4000 locomotive at 4140mm does not only meets the minimum clearance requirement of 150mm but far exceeds this requirement by 210mm.
Transnet Engineering, a division of Transnet, was unfortunately behind the story of “tall trains”. They had briefed the unions about PRASA buying locomotives from Spain whereas they have the full capacity to build these trains. At the time, the former Minister of Public Enterprises, Honourable Malusi Gigaba, had argued that Transnet had the capacity to build modern trains in South Africa. I am on record challenging this erroneous conclusion.
The choice of Transnet’s Track Maintenance Manual by the board as the basis of their legal argument was deliberate and used to mislead the nation into believing that new PRASA locomotives were not suitable for the South African rail network.
Transnet has massive infrastructure, workshops and facilities for heavy engineering, maintenance and operations around the country. However, they lacked at that time the capacity to design and build modern trains. They did not have at the time design engineers, technology, drawings or even equipment to build either modern locomotives or commuter trains.
They had contracted the building of their own new locomotives to General Electric (GE), and later China South Rail (CRS), Bombadier Transportation and other rolling stock manufacturers. Most of the locomotives were designed and manufactured outside the country but assembled in Koedoespoort in Pretoria.
The main reason Transnet had embarked on this campaign was to put pressure on PRASA to procure locomotives from Transnet, with the sole objective of giving these to China South Rail to build and benefit the Guptas and their associates. The GUPTAS worked with China South Rail on the Transnet locomotive tender and during the bid for the new prasa commuter trains.
The Rail Safety Regulator (RSR) had granted conditional approval for the introduction of the AFRO4000 locomotive (Annexure G). Evidence indicates that the RSR applied the SANS standard and the Electrical Safety Instructions in its decision. The RSR acted correctly in this regard.
There exist no other standards governing overhead lines other than what is stipulated in sans 101280-1:2013 nrs 041-1:2013 edition 2.
Popo Molefe was grossly misled by Transnet Engineers to believe identified risks would materialize. In a report dealing with “locomotive and infrastructure height assessment”, the RSR identified numerous risks that may occur.
But such risks are not limited to the new PRASA locomotive or unique to South African railways. The occurrence of flashovers, as an example, is so common and widespread in railway operations all over the world, including in Europe. railways operators and safety regulators all over the globe are always required to implement mitigation strategies to deal with risks.
For example, there is a big risk of “stray current” between the Gautrain Rail Link and Metrorail system in the Tshwane area. However, this could not be the reason not to proceed with the implementation of the Gautrain Rapid Rail Link. Instead, the RSR had issued directives to both Metrorail and Gautrain for them as operators to implement plans and strategies in order to mitigate the risks identified between the two systems.
THE RSR itself recognized that the height of the locomotive “poses an operational risk on the 3kv lines where 3kv contact wire is lower than 4.5m”. The RSR did not ask PRASA to cancel the purchase of these locomotives, instead, it instructed Transnet and PRASA to take steps to address this and accepted mitigating controls that were developed. The RSR Report states that PRASA and Transnet Freight Rail conduct “a corridor by corridor assessment” to ensure that adherence to a clearance of 150mm is adhered to.
This RSR statement is perhaps the clearest indication that that the problem does not rest with the locomotive but in most instances with the poor maintenance of infrastructure that has deteriorated below the minimum requirement of 4.5m as required by the SANS standard and the Electrical Safety Instruction. The RSR granted its conditional approval for the introduction of the locomotives into “revenue service” on 4 November 2015.
“Overstating Irregular Expenditure to suite an Agenda”
It would appear that PRASA has deliberately withheld critical information and supporting documents to the auditors on the 2016/17 financials of PRASA. Irregular expenditure was overstated in order to sustain the lie that PRASA under Montana was a “jungle”. This was not only deliberate misrepresentation but the Accounting Authority at PRASA committed fraud and not only misled the Minister of Transport and Parliament, but also the other USERS of its Financial Statements.
But of serious concern is the fact that the Auditors from the Auditor-General South Africa (AGSA) appear to have violated the Constitutional Mandate of the AGSA and abdicated key of its legal responsibilities. A detailed analysis of the Financials Statements, Audit Report and Management Letter, which was leaked to the media before the audit process was concluded, suggests the audit team may have abdicated their legal responsibilities or at worse, acted improperly and colluded with the PRASA Board and Management.
Throughout the Audit Report and Management Letter, the audit team indicates that PRASA failed to provide them with information and supporting documents for major transactions.
A simple calculation would indicate that the transactions where PRASA failed to provide information amounts to R12 billion of the R14 billion of Irregular Expenditure. I raised these in a letter to the Speaker of Parliament to institute an investigation and take appropriate action (Annexure H). Nothing was done about this.
The Story of Toilet Seats
Another story leaked to the media was the extraordinary claim that PRASA procured toilet seats for the new locomotives at R42 million per unit. The journalist did not even bother to check the facts because there are simply no toilets in these new locomotives, let alone toilet seats.
Documents leaked to the media indicate that the operational team at Shosholoza Meyl requested for the introduction of toilets as part of the modification of the Euro4000 locomotive. However, this request was never approved because the development cost for such a toilet system would have been costly.
However, it has been reported as “Breaking News” that PRASA had bought toilet seats for R42 million each when this was not true. No such toilets or toilet seats existed in the first place.
Blue Train with 10 Women
The City Press newspaper had reported that I had undertaken a trip to Cape Town with a Group of Women on the Blue Train. This was based on pictures that were apparently taken during the trip.
In her investigation of the complaint, the Public Protector wrote in her Provisional Report that this was true and that the full cost of the Blue Train trip was R170 000 of public funds abused by Montana. When the Public Protector realized that there was never such a trip in the first place, she deferred the matter to her final report on PRASA, which was never finalised.
The truth of the matter is that there was never a Blue Train trip with the women. There was a trip on the Premier Classe. I was travelling with my two kids, two nephews and a niece. There were many pictures taken of me and my family on the train.
The women were on the same train and requested to take pictures with us in one of the train stops in Klerksdorp and in Kimberley. However, the complainant selected pictures where I was shown with the women but deliberately ignored pictures where I was with my own children, nephews and niece on the same train.
If indeed I wanted to entertain these women on the train, why would I take my children with on such a “jolly ride”. These pictures were sent to Fariel Haffajee, Editor-In-Chief of the City Press, and she was more than happy to publish another story to discredit Montana without supporting facts.
Story of Montana’s houses
It was claimed that Mr Montana owned houses bought for him by a lawyer representing a contractor. I provided proof to the media that I bought all my houses I owned. I obtained a bond facility of R10.5 million from ABSA and another small one from FNB for my properties. My monthly bond repayment was R97 000 covering 5 properties I owned at the time. The media was not interested in these facts.
I issued a formal statement on the 8th February 2016 repudiating this allegation and providing details of all my properties. I also confirmed the relationship I had at the time with the lawyer, which had nothing to do with any contractor. This was a relationship of two people who had invested in properties they owned to make money and pursue legitimate business. This is absolute lawful.
Again, the story about houses was one of those published to damage my reputation without any facts or legal basis to pursue.
Montana’s Friend paid R75 million by a Spanish Contractor
The most recent story published in News24 is the payment of R75 million by a Spanish company to a friend of Montana. The story had nothing to do with me but the headlines and pictures were of Montana. This is story about a relationship between two private companies. I am not a Director of any of these companies. I am not involved in any of their financial dealings. There is no explanation what makes the said beneficiary a friend of Montana.
One of the complaints investigated by the Public Protector in 2012 was that Mr Mabunda was awarded a contract because of his friendship to Montana. The Public Protector in his report “Derailed”, dismissed this complaint. The author of the News24 article failed to inform his readers of this important fact and continue to repeat a lie as if it was a fact.
Most importantly, the News24 article further makes a startling claim that Mabunda, a friend of Montana, has been awarded contracts at PRASA of R5 billion. No evidence is provided to substantiate these claim. It cannot be supported by any evidence because it is simply false. Mr Mabunda has never been awarded contracts amounting to R5 billion at PRASA during my tenure.
It is a case of the end justifies the means. It was more important to continue to publish the stories that discredit Montana irrespective of the facts of the story.
6. THE PRASA ROLLING STOCK FLEET RENEWAL PROGRAMME (RSFRP)
PRASA embarked on a bold and ambitious programme to modernize the passenger railways system through investing significantly in new rolling stock, modernise depots, replace the old signaling system and embark on infrastructure and station modernization. The plan would result in the introduction of a new train service from 2017 and changing the travel experience of South Africans.
In 2011, a detailed feasibility study was conducted to determine the number of coaches that should be procured, the associated costs and the economic viability of the project. The feasibility study concluded that the project was economically viable and it was then recommended that the acquisition be divided into two 10-year batches, with 3 600 vehicles included in each batch.
The overall investment outlook amounted to R123 billion over a twenty year period.
On the 19th April 2012, the Minister of Transport launched the Request for Proposals (RFP), invitingBidders to submit their detailed proposals for the design, manufacture and supply of rolling stock to PRASA over a period of 10 years (between 2015 and 2025) and the provision of technical support and spares supply in respect of such rolling stock over a period of 18 years (between 2015 and 2033).
In addition to the supply of New Trains, the RFP solicited commitments to achieve the following:
65% Local Content by 2021/22, with New Trains being delivered from a South Africa factory by June 2016;
Use of Transnet Rail Engineering factory site for production;
Sustainable job creation for South Africans, including youth, women and people with disabilities;
Intellectual Property transfer;
Skills development for artisans, technicians, engineers and technologists;
A minimum 30% B-BBEE equity participation in the South African incorporated and domiciled Project Company which will enter into the Project Agreements (namely the Manufacture and Supply Agreement (the MSA) and the Technical Support and Spares Supply Agreement (the TSSSA) with PRASA);
The creation of a South African supply chain through the sourcing of locally produced components from South African companies participating in the value chain.
7. THE GUPTAS AND THE RSFRP
In September 2012, I was scheduled to travel and attend the biggest railway exhibition and conference event in the World, the INNO TRANS that takes place every two years in Berlin, Germany. On the eve of my departure, I was called by the Minister of Transport, Dikobe Ben Martins who invited me to his Ministerial House in Delphinus Street, Waterkloof Ridge in Pretoria. I arrived at the house to meet the Minister. We had a conversation and tea was served.
We were joined 30 minutes later by two Gentlemen that the Minister introduced to me. This was Duduzane Zuma and Rajesh “Tony” Gupta. The Deputy Minister claim in his media briefing of 8 November 2017 that we had met to discuss the Board of PRASA. This is not true. I had no business to discuss the appointment of the Board of PRASA with the Guptas. The Minister had introduced them to me and informed me they had expressed an interest in the PRASA Rolling Stock Fleet Renewal Programme. I did not know or previously met Duduzane Zuma and Tony Gupta.
I indicated to them that I was travelling abroad but would be keen to listen to what they had to offer on my return. I made an undertaking that I will see them on my return from Berlin.
When I got to Berlin, I was approached by representatives of rolling stock manufacturers who made the claim that indicated they were approached by representatives of the Gupta family. The Guptas were extorting money from manufacturers and had wanted this money paid into some account in Dubai and stated they were working for President JG Zuma, Minister Ben Martins and Lucky Montana.
The manufacturers were apparently “summoned” to come to Zurich, Switzerland to attend a meeting chaired by one Salim Essa. It was at this meeting that they were instructed to pay monies if they wanted to get a share of the PRASA new-built programme. I was so furious with this. I could comprehend this conduct other than to explain it as extortion.
On my way back to South Africa, I called the Minister of Transport and requested him to convene a meeting with Duduzane Zuma and Rajesh Gupta.
I went to the house of the Minister in Pretoria. Duduzane Zuma, Rajesh Gupta and a third gentlemen from India whom I can’t remember his full name, arrived at the house.
At the meeting, I spoke at length and condemned their conduct. I told them they had no right to collect monies in our names and they had to stop. I told them they were compromising the President by using his name to collect monies from international companies.
We had a big fight at the meeting and they even suggested that I could work with them and get my money in Dubai as well. I made it clear that what they were doing was unlawful and that they could not collect monies in our names. They were arrogant and reminded Ben Martins that they did not want me but he had convinced them that I was his comrade. After an hour of fighting, they ultimately relented but after they had accused me of favouring Bombadier over other companies. I rejected the accusation very strongly.
They confirmed during the meeting that they will no longer make these demands on rolling stock manufacturers but will henceforth work with China South Rail. Rajesh Gupta indicated that the third gentleman will be responsible for coordinating their relationship with China South Rail and will contact me when they have issues.
Subsequent to the meeting, the man made contact with me and gave me a cellphone to communicate on with him. I did not use the phone but gave it to an unknown young man in the streets of Pretoria after our meeting.
A week later, the man called and met with me at the Park Hyatt Hotel where he brought the CV of Salim Essa (Annexure I) and Iqbal Sharma (Annexure J), demanding the two be appointed to the Bid Evaluation Committee (BEC) for the rolling stock tender. I rejected this. They went to complain to the Minister that I was still not cooperating.
During this time, I had appointed a BEC comprising PRASA, National Treasury, the dti and Department of Transport, supported by teams of transaction advisors.
The Evaluation results came and China South Rail and China North Rail were not shortlisted. The Guptas were angry and demanded that the process be cancelled. I refused. They pushed and demanded that the PRASA AGM be postponed so that they could appoint new Directors. I was told by this man that the PRASA AGM scheduled for September 2012 would be postponed. The PRASA AGM, which is the meeting of the Shareholder, was indeed cancelled without a valid reason. This is another prove that the Guptas were in charge.
Having failed to secure the tender for China South Rail, the Guptas pushed for the dissolution of the PRASA Board and my dismissal as Group CEO. They pushed the Department of Transport to appoint a new Board, with Mzwanele Jimmy Manyi as Chairman. When I saw the draft Cabinet Memorandum from the former Direcxctor-General, Gerage Mahalela, I was livid. We fought these attempts and I threatened to resign and speak out if the Department of Transport was to give in to GUPTA attempts to appoint a new Board and interfere with the rolling stock procurement process.
I wrote a detailed letter to the Board Chairman detailing the sheninagans of the Guptas and their associates attempts to capture and manipulate the PRASA Rolling Stock tender (Annexure K).
Minister Martins met with Sfiso Buthelezi and I here at the Cape Town Station in November 2012. He took us into his confidence and explain to us the circumstance of inviting me to a meeting at his house. He indicated that PRASA should proceed with its procurement process and that he will defend the Board. He said he will fight alongside us as his comrades and will take the matter to Cabinet for approval.
They lost the fight and the Evaluation Process was finalized in November 2012 and was submitted to the Board for approval. This was also taken though the Cabinet by Minister Ben Martins to note the decision of the PRASA Board to appoint the preferred bidder for the manufacture and supply of new commuter trains.
8. BIDDERS AND EVALUATION RESULTS
The following parties submitted Bid Responses by the closing date of 30th September 2012:
|Bidder Full Name||Abbreviated Name|
|Gibela Rail Transport Consortium||Gibela|
|CSR WICTRA (Pty) Limited||CSR-Wictra|
|Bombardier Transportation (Rolling Stock) South Africa Pty||Bombardier|
|Dudula Rail (Pty) Limited||Dudula|
|China CNR Corporation Limited||CNR|
|CSR EMU Supply (Pty) Limited||CSR|
|Construcciones y Auxiliar de Ferrocarriles S.A. (CAF)||CAF|
9. EVALUATION RESULTS
The bid evaluation was undertaken in two stages:
stage 1 – qualification against defined threshold requirements for (i) Legal, (ii) Technology, (iii) Financial, and (iv) Economic Development as set out in Part B of the RFP (Qualification Criteria) and, if passed, the Bid Responses proceeded to the stage 2; and
stage 2 – comparative evaluation where Bid Responses that had met all of the qualification criteria were scored against (i) Price, which was out of 85 points and (ii) Economic Development criteria as set out in Part C of the RFP, which was out of 15 points.
Stage 1 Results
The Bid Response submitted by CAF was non-compliant and did not qualify as it failed to submit an irrevocable binding Bid Response in accordance with the requirements of clause 34 of Part A of the RFP (General Provisions, Rules and Requirements). Clause 34 of Part A of the RFP (General Provisions, Rules and Requirements) provided that all Bid Responses were to constitute an irrevocable binding offer by the Bidder to PRASA. The offer submitted by CAF was still subject to the approval of their board.
CAF was therefore not evaluated further, as it failed legal.
The failures of CSR-Wictra, CNR and CSR are attributable to their failure to meet the technology requirements, as stated in the RFP. These failures were due to failures to meet one or more of the following:
Rolling Stock Specification;
Response to Maintenance Requirements Specification;
Response to Capacity and Capability Requirements; and
Response to Programmes and Plans.
Stage 2 Results
The table below sets out the resulting total scores for each Bid Response that fulfilled the qualification requirements, based on 85% weighting for Price and 15% weighting for Economic Development:
|Bidder Name||Total Score (out of 100)||Ranking|
10. BENEFITS OF THE PREFERRED BIDDER
The Preferred Bidder will offer the following:
3600 vehicles delivered over a 10 year period 2015 to 2025, with a cost implication of R51 billion;
Maintenance, spares supply and technical support on vehicles over 18 year period 2015 to 2033;
8,088 direct jobs created;
Ownership – 30% be set aside for Equity Partners, plus additional B-BBEE participation in their structure (2.3% effective black shareholding through Actom);
Spending of R797 million on skills development initiatives;
R 32.8 billion to be spent on subcontracting to black empowered entities;
R 5.3 billion to be spent on subcontracting to Qualifying Small Enterprises and Exempted Micro Enterprises (SMMEs);
R 1.6 billion to be spent on subcontracting to entities owned by black women;
Spending of R746 million on the development of enterprises in the rail sector;
Spending of R273 million on Socio-Economic Development contributions;
Local Content of 69% by year 2
To utilize the Transnet Rail Engineering factory for production.
11. TNA BUSINESS BREAKFAST
Before I conclude, I want to state that the terrible conduct of the Guptas became evident when we decided as PRASA to sponsor TNA Business Breakfast. I had met with Nazeem Howa, still head of the New Age. I mandated two of my executives to negotiate details of the sponsorship with him.
We were not getting the benefits of the sponsorship. I had a discussion with Nazeem Howa to change the terms. However, Nazeem Howa failed to meet the terms PRASA put on the table, I cancelled their contract immediately and banned the New Age from PRASA.
Again, the GUPTAS were angry and Nazeem Howa ran to report me to the Minister of Transport, Dikobe Ben Martins. This time, the Minister was angry with him and supported me. He told Nazeem Howa he was not a Minister to serve their interests and reminded all of us that he was a backbencher in Parliament, a freedom fighter and a Poet. He did not agree to serve in the Cabinet to serve narrow interests.
We defeated the Guptas and their Associates.
But we also defeated our own ANC Comrades who are similar if not worse than the Guptas and their Associates.
We paid the price for this.
Thank you, Honourable Chairperson, Honourable Members and to you, Advocate Ntuthuzelo Vanara, for affording me the opportunity to testify and tell my own story.