Prasa fights its BEE Locomotive Supplier

Black Economic Empowerment Eonsortium Swifambo Rail Leasing says Transnet and the Passenger Rail Agency of SA (Prasa) are the only companies doing business with it.

Prasa has taken action against Swifambo and wants a R5bn contract to supply it with locomotives set aside.

Swifambo was responding to allegations in an affidavit by Prasa chairman Popo Molefe that it did not have experience in the rail industry as it was formed four months before the contract was awarded.

Last week, Prasa applied to the High Court in Johannesburg to review and set aside the contract with Swifambo to supply 70 Spanish locomotives from manufacturer Vossloh España.

The contract was initially for 88 locomotives at R3.5bn, but poor currency hedging resulted in it changing to a R5bn contract for 70 locomotives.

Prasa said the court application was the beginning of a process by its board to deal with a report by the public protector and findings by the auditor-general of "alleged … fraud, corruption and gross irregularities".

Swifambo spokeswoman Alicia Mngadi said the company had "every intention" of concluding its deal with Prasa.

"There is only Transnet and Prasa that we can work with … we were set up for the sole purpose of improving the rail system," she said.

In Prasa’s 2013-14 financial results, the auditor-general found that the evaluation criteria used to award the contract to Swifambo were not consistent with its request for proposals.

The auditor-general found that Swifambo’s technical capabilities were based on those of Vossloh España, but there was insufficient evidence of a sub-contracting relationship at the time the company was evaluated for the contract.

Swifambo should have been disqualified from the tender process for not submitting "the letters of good standing with the relevant tax authority in its country of origin" as required, the auditor-general said.

It also failed to provide "tender documents … signed by both the winning bidder and the subcontractor as required by the request for proposal".

Ms Mngadi said Swifambo had supplied all the required documents to Prasa.

Prasa paid Swifambo a deposit of R468m four months before the company paid a performance bond of R307m. Prasa’s procurement policies required that the "performance security be provided prior to concluding the contract", said the auditor-general.

Prasa is also claiming R20m in remuneration, bonuses and travel expenses paid to Daniel Mtimkulu, who lied about his engineering qualifications.

Prasa spokesman Victor Dlamini would not be drawn on Sunday on whether the agency would take similar action against former CEO Lucky Montana.

"We are acting against Daniel Mtimkulu and Swifambo Rail Leasing … we are dealing with the agreement that was entered into irregularly. Our focus is to have it set aside," he said.

Earlier this year, reports emerged that the locomotives were too tall and would damage the rail network’s overhead lines. A report on the trains’ suitability has yet to be released to the public by the rail safety regulator.

"The Afro 4000 is still the best locomotive for SA and is compliant with all of Prasa’s specifications," said Ms Mngadi. She said Swifambo was looking forward to the open court process to resolve the matter.