Vandalism, disorder, mismanagement led Prasa to lose R1bn in two years, says Mbalula

15 January 2020 - 16:38
By Mpumzi Zuzile
'Prasa has suffered from mismanagement and deteriorating corporate governance. Today it is a broken organisation,' says Fikile Mbalula.
Image: Ruvan Boshoff 'Prasa has suffered from mismanagement and deteriorating corporate governance. Today it is a broken organisation,' says Fikile Mbalula.

The Passenger Rail Agency of South Africa (Prasa) - incorporating the South African Rail Commuter Corporation, Metrorail and Shosholoza Meyl - has in the past two years lost almost R1bn to train fires, vandalism, public disorder, train collisions and floods.

Speaking at a media briefing on Wednesday, transport minister Fikile Mbalula and Prasa’s administrator Bongisizwe Mpondo conceded that the state entity was a "broken" business in need of urgent intervention.

“Prasa has suffered blows from many years of mismanagement and deteriorating corporate governance. Today it is a broken organisation, struggling to provide an efficient commuter and passenger rail service,” said Mbalula.

Mbalula said overcrowded trains, ageing infrastructure, old rolling stock, rampant crime, poor internal controls and other ills were the order of the day at Prasa.

“In the 2018/19 financial year, the auditor-general has flagged irregular expenditure, which has escalated to R27.2bn,” said the minister.

Mbalula said his department initiated a war room in August after realising that Prasa had seen a sustained decline over the years in its ability to provide a reliable, safe and predictable service with Metrorail and Shosholoza Meyl.

He said the war room focused on service recovery and getting operations to a level that meets, if not exceeds, expectations. He added that the war room unearthed many landmines due to internal dynamics and external factors.

Mbalula also took a swipe at the old interim board, which he fired in late 2019, stating that even if they went to court and challenged his decision, they would never return as Prasa board members.

“They can do all their tricks. The thing is the old board lied about the problems at this entity. In this place people do as they please … there are no consequences for poor performance and theft.”

He said the downward spiral of Prasa was self-inflicted due to poor and indecisive leadership, which had allowed a culture of impunity to prevail.

“In his 2018/19 audit report, the auditor-general was scathing in his assessment of leadership at Prasa. We declined from an unqualified opinion … we are now at disclaimer,  the worst audit you can get … but all this happened when we had an interim board."

The work of the war room was supplemented by an organisational assessment conducted by the Government Technical Advisory Centre (GTAC), part of the National Treasury.

Mbalula said the GTAC report "flagged critical systemic issues that caused bottlenecks in the achievement of the war room targets", including:

  • the collapse of internal systems and controls;
  • dysfunctional supply-chain management processes;
  • hollowed-out project management capability; and
  • a business model that requires urgent review.

"These were further compounded by incidents of theft and vandalism and prevalent crime,” he added.

In the past year, Prasa incurred a deficit in revenue of R1.7bn. In 2018 it had a surplus of R1.4bn.

Prasa could not provide appropriate documentation to enable the office of the auditor-general to do its job. The A-G issued a disclaimer of opinion on the 2019 annual financial statements, meaning that no reliance could be placed on the financial statements.

Mbalula dissolved the interim board in December and placed Prasa under administration.