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Prasa has shown itself to be the ultimate gravy train

The Passenger Rail Agency’s 2019 financials are shameful.
Prasa incurred a deficit in revenue of R1.7bn, while its operations – and passengers – suffered massively. Image: Moneyweb

The Passenger Rail Agency of South Africa (Prasa), incorporating the South African Rail Commuter Corporation, Metrorail, Shosholoza Meyl, Intersite and Autopax, was launched in March 2009. Then chair Sfiso Buthelezi proudly proclaimed that transport is the heartbeat of the economy. But over the ensuing decade Prasa sucked up all the oxygen, and left a toxic sludge.

In a nutshell, in the year to the end of March 2019 Prasa:

  • Incurred a deficit in revenue of R1.7 billion (2018: R1.4 billion surplus). However, without the government grant of R3.7 billion (2018: R4.7 billion), the deficit would have been R5.4 billion (2018: R3.3 billion deficit);

  • Squandered billions;

  • Placed lives at risk due to attacks taking place on trains and numerous faults such as signal problems;

  • Negatively impacted productivity as employees cannot get to work on time;

  • Could not safeguard its assets from vandalism and theft;

  • Could not provide appropriate documentation to enable the external contractors to write up the books; and

  • Could not provide appropriate audit evidence to enable the Office of the Auditor-General (AG) to do its job.

The AG issued a disclaimer of opinion on the 2019 annual financial statements. That means no reliance can be placed on the financial statements. The shame of it.

A disclaimer of opinion is worse than the qualified opinion issued on the 2018 annual report. 

Read: Prasa’s financial management out of control

Recently Transport Minister Fikile Mbalula announced that he has dissolved the interim board, and has placed Prasa under administration.

Read: Prasa placed under administration – minister

AG report to Parliament

The AG had 79 findings, including the following:

  • Irregular expenditure amounted to R27.3 billion (2018: R26.2 billion); 41 cases with criminal intent are currently under investigation by the Hawks. Management was not able to provide any report or indication of when these matters will be finalised.

  • Fruitless and wasteful expenditure amounted to R383 million (2018: R1 billion).

  • The AG could not verify the value of property, plant and equipment (PPE) of R42.6 billion.

  • There was insufficient appropriate audit evidence to show that management had properly accounted for the unspent conditional grants and capital subsidy and grants amortised in accordance with Generally Recognised Accounting Practice (Grap) requirements.

  • Prasa did not keep proper records, did not keep sufficient or appropriate audit evidence, did not follow required accounting conventions, and did not maintain complete governance records (minutes of meetings of the board, its sub-committees and executive committee). The AG also raised material findings on the reliability of the reported performance information.

  • There were numerous material irregularities, including the locomotive saga (R2.5 billion has gone down the drain, and the locomotives are not fit for purpose), and the appointment of overhaul and upgrade contractors resulted in Prasa overpaying for the work.

  • Prasa has not provided evidence of any consequence management.

The AG has made recommendations, and will follow up on them

The AG will be following up on various investigations and the implementation of planned actions (disciplinary steps, financial recovery, and civil and criminal cases arising from the outcome of the investigation) during the next audit.

These include:

  • The unfair procurement process for the R3.5 billion contract purchase of locomotives.

  • The appointment of general overhaul and upgrade contractors since 2009, which has been handed over to the Special Investigating Unit.

  • The procurement process followed in the appointment of the signalling contractor, which is likely to result in a material financial loss.

  • The processes followed in appointing suppliers to provide bus services in the Western Cape, surveillance services (drones), security services, emergency repairs to signalling equipment, and the control of vegetation.

Other investigations

Various other investigations are under way:

  • Allegations of maladministration relating to financial mismanagement, conflict of interest, and procurement and appointment irregularities.

  • A forensic investigation instituted by National Treasury in accordance with the remedial action recommended by the Public Protector in her August 2015 report.

  • An investigation in terms of the Prevention and Combating of Corrupt Activities Act.

  • An investigation into allegations relating to the contravention of the Competition Act.

  • The Directorate for Priority Crime Investigations has been investigating the R3.5 billion locomotive saga since 2015.

  • The Special Investigating Unit has been requested to investigate the appointment of general overhaul and upgrade contractors

Is Prasa financially solvent?

Its plant, property and equipment is valued at R42.6 billion, and this represents 54.3% of its total assets. However, the AG could not verify this value. This places a large question mark over whether the financial assets exceed the liabilities.

In the years 2008 to 2019, Prasa included in its revenue some R39 billion of government grants and subsidies.

Citing “material inconsistencies”, the AG was not able to confirm the unspent capital subsidy and grants figure of R44.8 billion (2018: R40.1 billion).

With no consequence management and no financial control, Prasa has proved to be the ultimate gravy train.

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Absolutey Not Competent shows their skills again and again. It will never change.

Seriously, guys, how can we – readers of Moneyweb who undoubtedly contribute massively to SA’s tax income – DO something about this rampant criminality? It is freaking disgusting how the ‘old’ ANC’s criminal looters are enriching themselves with hundreds of millions of rands while SA’s poor starve? I really hope that Shamila Batohi and Hermione Cronje can quickly present some watertight cases to the court that will see rapid convictions, without Stalingrad defences being allowed. This disgusting ANC criminality can’t continue. Mr Ramaphosa, now is the time to go for broke. For the sake of SA.

It is much more important to go after people who have somehow lost the plot and embarked on a racist rant. They need to be in jail.

The dignity of our citizens is more important than preserving assets in Pasa.

TryingToRetire, there is no dignity in poverty. Being the victim of a racists rant is nothing compared to the effect of hyperinflation. I know who I am, I know that I am not a baboon, so if someone calls me a baboon, it does not mean that I am one, it only means that this person is wrong. When I know that I am a baboon, but I don’t like to be reminded of it, then it becomes an issue.

The same issues that destroyed PRASA will destroy the sustainability of the social grant. The money to pay the grant will be printed in order to prevent anarchy. This very same act will dilute the value of pension funds, ask any Zimbabwean who had pension savings. The cost will come in the form of rapidly escalating food prices. Food will become unaffordable, medicine will become unavailable. There is no dignity in this situation. This is our future under the ANC

@Dougalan: Unfortunately the criminality can and will continue. The whole arrogant bunch are involved to a greater or lesser degree, ably supported by their patronage networks of looters. Those that may feel a tinge of guilt or embarrassment unfortunately do not have the gonads to turn over a new leaf and come clean and rebel by renouncing their beloved party – entitlement is ingrained in the new DNA. So basically I see very little if anything being done by those in charge. Non-party people or people in the private sector will be tackled and the ANC will hope to gain some political points out of that. So be prepared to work around the new Mzanzi which is well on its way to taking its proud place in the list of failed states. Maybe a new financial coloniser will soon arrive, but that then will be farewell to any resources that any be left – economic rescue does not come cheaply. If you cannot live with that then it’s time pack. If you are unable to pack, then pray.

Dougalan.. you might not like reading my solution, but as far as I see it it is perhaps the only solution. We need to ditch the rand, and withhold them of the capital they use to enslave the population. There are many options, gold/silver coins, new paper currencies for those areas that would like to go that route, fully mobile digital currencies. The point here is stop giving them money, and stop giving them power.

When I read this article, I thought about Mr Kieswetter lecturing us taxpayers about tax morality, and then I shook my head and started laughing uncontrollably.

“Madam” at the NPA is still building capacity. This is about a year later now and “Madam” has so little capacity she could not even take one corrupt ANC deployee to court.

I don’t think it is lack a capacity “Madam”. It looks like lack of political will of a captured NPA.

The NPA should change its name to – Not Prosecuting Anybody

Apart from dragging medical specialists in handcuffs to court, to stand trial on “manslaughter” while any form of negligence still has to be adjudicated by their professional body, the HPCSA. Easy prey and not political masters.

The problem is that madam does not have capacity herself to manage anything. Another token appointee.

At the rate train carriages are being burnt there will be no Prasa left very soon. Problem solved.

It was somewhere suggested that the taxi industry might be involved, behind the enormous numbers of train carriages being set alight.
Can be just a conspiracy theory, but knowing how rotten and violent the taxi industry is, it would not surprise me.

Collectivism is very efficient at motivating plunder at a maximal rate. This is the hallmark of collectivism. In a society where resources are shared, nobody takes any responsibility for the security or safekeeping of the shared resources. Under such circumstances, plunder is the logical, and unavoidable consequence, because the system incentivises the most unscrupulous people in that community to exploit the resource at a maximal rate. The person with the most cattle degrades the soil and overgrazes the pasture to the detriment of the whole society, while he keeps the profits for himself. He privatises the profits and nationalises the costs. This system puts huge pressure on people to exploit the resource before his neighbour can deplete the resource. This is the classic race to the bottom.

In this system, comrades even fight one another for an opportunity to loot. We see this within the ANC and the infighting in the NEC. When the top leadership is embroiled in a fight for the priveledges to loot, then what can remain of the economy?

This is the exact same situation we see at all SOEs and municipalities and in government as well. The ANC incentivises the most unscrupulous individuals to plunder at a maximal rate. The shared resources in South Africa are dilapidated, overexploited, degraded, plundered and destroyed. The ANC promised to take the people out of the homelands into civilization, but what they delivered is the opposite. They took the infrastructure of a civilized country and destroyed it to resemble circumstances in the homelands.

Privatisation brings property rights and accountability. This is our only solution. Any delay incentivises and rewards further looting.

Sensei, you are so right! Now someone with the necessary power and influence must urgently bring this message to the attention of all in parliament and warn them before it is too late. Or is it already too late?

The collectivist looters form the majority in parliament. The exploitation virus has infected the brain of the country. Each decision from parliament will be for the self-preservation of the virus, and not for the benefit of the country.

It is not too late yet. We will know when it is too late. That will be the moment when the incompetence and criminality of the ANC forces the Reserve Bank to save the banking system from collapse. That will be the day when the hyperinflation starts. Then it is too late to turn around. This moment arrived in Zim and Venezuela when they expropriated landowners without compensation.

@ham: Alas, there is no “someone with the necessary power and influence”. If any such persons potentially do exist, they are well ensconced on the gravy train together with the band of collectivist looters. As Sensei points out, there is no incentive to try and swim upstream in the collectivist political river running through SA. Those that do must be admired but they are unfortunately destined to fail.

Spot on “boet”. South Africa is the simply one big “Homeland”, a term not to be confused with the word “motherland”!

Our Judicial system needs an urgent major overhaul. Identifying the crime and the person/s who committed it without extensive and lengthy commissions of enquiries, while also having in place a system of rapid processing and fast tracking through the courts and effective sentences without the option of medical parole will stem the continual losses. But, you need a government in place that is a willing partner to justice and not one that appears to be a willing partner to criminal activity.

I am under the impression that the Judicial system is 100% fine. It is the people that work in the system that are incompetent.

As long as the ANC is run by the corrupt it will continue to fight back against any prosecutions and weaken our democracy.

Where are the heroes of the struggle? They are all pretty silent now that they are feeding off the taxpayer.

Also does not help much when the leadership does not know what the problem is.

Just heard our first citizen on TV during a walkabout telling people the problems are due to the “previous” regime and he is going to fix it.

Honestly??? Then respect is expected??? They seemingly think everybody is like a typical ANC voter.

Not clever.

Heroes of the Struggle !!! They dont exist !! the Population are struggling more than they ever did !! Your “heroes’ have simply lined their pockets !!

“Prasa has not provided evidence of any consequence management” and “The AG has made recommendations, and will follow up on them”

Watch for the following evidence:

Executive management will be promoted to another SOE and
Nothing will happen as the AG simply has no teeth.

So in other words, business as usual and the Gravy Train will continue to run “downhill” until the economy stops.

Typical Absolutely Not Competent modus operandi.

PRASA is another vital service SOE decimated by national (ANC) incompetence. Truly sad.

What happened to Lucky’s trains that were too tall and how much did that cost the tax paying portion of the public

Last I heard they went on auction?

What starts wrongly can never end rightly. The ANC is a criminal syndicate masquerading as a political party.

100% correct, Izzy. Since 1994 it has morphed from a political organization into an elected mafia, complete with a code of omerta. The Freedom Charter is long forgotten and ignored. The sole object of it’s existence is the enrichment of the cadres and the rentseekers … they feel nothing for us ordinary South Africans… we are in big trouble. I don’t see why the DoJ in the US has placed sanctions on the Guptas but not on the ANC. Every time I go to ORT to pick up friends, I wonder what the statue of Tambo would say about our country if it came back to life today. Hartseer.

The cheapest thing in SA is a vote. You can buy it with a SASSA grant and a T shirt. The most expensive thing is a knippie …. it sank SAA.

So let PRASA grind to a halt, then the masses will rise up and we may see change……

This is what you get when there is no personal accountability.

PRASA, just another reflection of the corrupt ANC looting SA.

prasa is another soe, what more can one expect? – they can’t even look after / protect the entity’s core income generator: carriages / trains or does it point fingers to another government department’s incompetence, the police???

“Sucked up all the oxygen and left a toxic sludge.” That’s my favorite quote of the year. Welcome back! We need your articles!

If I pay tax that is used to fund Prasa, am I aiding and abetting crime ? Is it still moral to pay tax, or has it become immoral to pay tax ?

Yet another unmitigated disaster under the ANC’s watch. Not only incompetence, but wilful theft. How else can ‘fruitless and wasteful expenditure’ be interpreted? Alongside SAA and ESKOM, PRASA must surely sit as one of the crown jewels of state capture, as nothing but a vehicle to abuse at will for ill-gotten gains.

This is scandalous! All PAYE and VAT payments should be withheld until at least some of these criminals are arrested! Mr Kieswetter should shut his face when moaning about tax compliance when just about everything is stolen from taxpayers.

Just imagine how great SA could’ve been had the ANC focused on growing the economy and not looting SA to the where we find ourselves now. The Another National Crisis party has mastered the art of vote buying/looting and will continue in this vein until SA is just a pile of dust. If talk = action then things would be great – but it doesn’t, so it isn’t. So far Cyril has done a LOT of talking and very little DOING. Ramaphoria what a farce.

Sigh …. it seems that the only good news we can expect in SA in 2020 will be sunrise.

Now that the Prasa gravy has run out what’s next? My bet is the NHI? Any takers?

Have you noticed an innocuous little press release about ANC (government) oaficials etc being restrained by a time period before they can apply for “land redistribution”? EWC and NHI are the next obvious candidates for looting by the ANC.

Only option is a “Boston Tea Party” by avoiding tax and refusing to pay tax. A tax revolt will hit them in their pockets but will also hit the poor but what other options are there? When NHI comes in, I leave on the same plane with all the medical doctors.

It is the poor, the people we don’t want to inconvenience with a tax revolt, that used their power over the legislature to crucify the taxpayers, my brother. They should live with the unavoidable consequences of their actions. Accountability is a bitch. Either the tax revolt strikes first, of famine and disease strikes later. This is written in the stars.

End of comments.



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