“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 couldn’t comprehend this conduct other than to explain it as extortion.”
In an explosive testimony to a parliamentary inquiry on state capture, former CEO of the Passenger Rail Agency of South Africa (PRASA) Lucky Montana claims that the Gupta’s tried to strong arm him to hand them the multi-billion job of renewing the agencies rolling stock fleet.
Here follows the Guptas focused chapter of the testimony.
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 couldn’t 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 Director-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 explained 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.
The big bid
The following parties submitted Bid Responses by the closing date of 30th September 2012:
- Gibela Rail Transport Consortium
- CSR WICTRA (Pty) Limited
- Bombardier Transportation (Rolling
Stock) South Africa Pty
- Dudula Rail (Pty) Limited Dudula
- China CNR Corporation Limited CNR
- CSR EMU Supply (Pty) Limited CSR
- Construcciones y Auxiliar de
- Ferrocarriles S.A. (CAF)
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;
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: 62 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:
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;
- 63 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;
- Preferential Procurement: 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.
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.