Correctional Services spokesman Manelisi Wolela has denied allegations that student leader Mcebo Dla.
The R7,7billion taxi recapitalisation programme, that was meant to turn the industry around for the better, is in disarray.
Transport Minister Jeff Radebe held a meeting with the management of the Operating Licensing Boards yesterday. He had also invited the South African National Taxi Council to attend.
Santaco, the only organisation recognised by the government as representative of the taxi industry, recently pulled out of the programme.
The organisation says it will not take part in the programme until the government addresses problems that its members are facing at provincial level.
These ranged from the prices of vehicles to "contradictory legislation".
Santaco spokesman Phillip Taaibosch said: "The R50000 scrapping allowance is too little while the vehicles are expensive. There needs to be a balance there."
Spokesman for the Department of Transport, Collen Msibi, yesterday called on the national treasury to come on board to address the problems of financing the programme.
According to Msibi, the department had asked for R1billion from the treasury, but only received R470million for the 2007/2008 financial year.
"There is the R7,7billion allocated and approved at national level but each time we request a certain amount of money we get less," said Msibi.
Regarding the Operating Licensing Boards, Msibi said the department was aware of the problems at these centres.
"These licensing centres are run by the provincial transport departments but we had to come in and sort out the problems.
"Whether the problems were about finance or capacity, we have developed a turnaround strategy to improve the efficiency of the centres," said Msibi.
Sicelo Mabaso of the National Taxi Alliance said yesterday that his organisation never took part in the programme and would never be part of it.
Mabaso also said that the problem of affordability and the lack of empowerment for those in the taxi industry were not addressed by government.
"Santaco has been in cahoots with the government all these years; we are not surprised that they decided to pull out," he said.