From the Lucky Montana files: PRASA and State capture

31 Jan 2018

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.

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Lucky Montana, the former CEO of the Passenger Rail Agency of South Africa (PRASA), made an explosive claims about corruption in his presentation to the parliamentary inquiry into corporate governance (state c apture) at state owned power utiltiy Eskom.

Here follows the chapter titled PRASA and state capture from Montana’s statement:

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, state owned enterprises (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.

Lucky Montana, during his PRASA tenure, addresses President Jacob Zuma and other government leaders.

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.

Politics and narrow interest

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.

Former ANC Treasurer General Zweli Mkhize. Source: GCIS

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.

Lucky Montana, during his PRASA tenure, addresses President Jacob Zuma and other government leaders.

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 into 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 department of Trade and Industry (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.

Enters Popo Molefe

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 independent 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.

The bankrupt man

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.

The ANC factor

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.

info@probonomatters.co.za

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