S. Africa Rail Agency Alleges Fraud in $250 Million Tenders

  • Affidavit by chairman alleges bid-rigging, corrupt activities
  • Graft ombudman found `systemic failure' in Prasa supply chain

The Passenger Rail Agency of South Africa has asked the country’s High Court to declare two contracts awarded to a security company invalid, two months after asking for the cancellation of an agreement to supply locomotives.

Prasa, as the agency is known, wants two contracts awarded to Siyangena Technologies (Pty) Ltd. worth about 4 billion rand ($250 million) set aside because the company was given an advantage through “bid-rigging” and the agreements were coupled with alleged “corrupt activities,” according to an affidavit by chairman Popo Molefe, which was filed with a motion on Feb. 2 at the High Court in the capital, Pretoria.

The contracts were awarded to Siyangena for the supply and installation of integrated security-access management systems at Prasa stations, according to an e-mailed statement from the rail company and a copy of the court filing. The tenders were designed so that only Siyangena could supply the equipment, Prasa said.

‘Systemic Failure’

South Africa’s Public Protector, Thuli Madonsela, said in a report published in August that an investigation into Prasa covering the period from about 2008 to 2013 found the company had a culture of “systemic failure” to comply with its own supply-chain policy. Madonsela also concluded that former Chief Executive Officer Lucky Montana acted improperly regarding the awarding of service contracts and treatment of some employees.

Montana denied any wrongdoing at a Johannesburg press conference Monday, according to a report by EyeWitness News.

Prasa asked the High Court in Johannesburg in December to cancel a 3.5 billion-rand contract awarded to Swifambo Rail Leasing (Pty) Ltd. in March 2013 to supply the company with locomotives made by Vossloh Espana SA. The bidding process included “irrational” specifications whose sole purpose was to rig the outcome, and the decision was unreasonable and unlawful, Molefe said at the time.

Prasa spokesman Victor Dlamini said by phone on Sunday he couldn’t provide any contact details for Siyangena.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE