Prasa's acting chief financial officer Brian Alexander said management had addressed all issues raised during the 2023/24 audit.
Image: Marsha Bothma
Banele Ginindza
The Passenger Rail Agency of South Africa (Prasa) is considering legal action against the Auditor-General (AG) following a dispute over audit findings linked to its Global System for Mobile Communications Railway (GSM-R) signalling contracts.
The AG recently flagged the contracts for irregular expenditure, citing procurement non-compliance and other deficiencies. However, Prasa has strongly disputed these findings, maintaining that it received a clean regulatory audit outcome for the 2023/24 financial year.
Presenting to Parliament’s Standing Committee on Public Accounts (Scopa), Prasa's acting chief financial officer Brian Alexander said management had addressed all issues raised during the 2023/24 audit.
"Management responded to the findings, resolved them, and no irregularities were identified in the 2023/24 regulatory audit," Alexander said.
"In the subsequent financial year, the same tenders were then re-audited, and over and above the findings that were raised in the 2023/24 financial year, there were additional findings that were raised in the 2024/25 financial year."
The rail agency said the AG has now pronounced additional findings, which include the serial requirements that were not assessed during the tender process, the subjective criteria on functionality, while the winning bidder did not meet the minimum functionality scores and mandatory compliance was not evaluated.
Prasa said others included a performance guarantee that did not meet the minimum requirements, no explanation was given for the functionality scores, and the winning bidder failed to meet the subcontracting requirements. And the winning joint venture did not provide all compliance documents
"Management reviewed the findings raised by the AG and provided a detailed response," Alexander said.
The audit dispute comes against the backdrop of broader governance concerns at Prasa. In its 2023/24 annual report, the AG noted that the Special Investigating Unit (SIU) is still probing allegations of maladministration, unlawful conduct, and improper expenditure at the agency between 2010 and August 2019.
The SIU investigation covers a wide range of contracts, including security services, infrastructure upgrades, supplier development programmes, cable theft detection systems, travel management, and procurement of mobile transporters and forensic services.
"The SIU is yet to issue a final report in this regard," noted the AGS in that report.
Prasa told Parliament that in essence, management disagreed with the additional findings raised by the AG.
Alexander said Prasa engaged with the AG regarding this disagreement and in terms of the dispute resolution process, applied to the Accountant General at National Treasury.
"We received a response from the Accountant General's office. This was unsatisfactory because it failed to help resolve the dispute. Upon consideration of this feedback, management responded and reaffirmed its disagreement and dissatisfaction with the position taken. The dispute has been resubmitted to the Accountant General," Alexander said.
"We have received feedback that it has been handed over to the director of compliance within the Office of the Accountant General. We await to make contact with the director of compliance. Whilst we are waiting, concurrently we are engaging our legal team to see what avenues we have available in resolving this dispute."
Meanwhile, Prasa said that due to intense vandalism of the rail network, some belonging to Transnet in which it has lost more than 25,000 kilovolts of network capacity, it was looking into manufacturing diesel locomotives. This would also create a business case for exporting into the continent.
"We have the design of the new blue train for 25,000 KV. And what we are also now considering is developing a diesel blue train. And this will be an electrical multiple unit (EMU), which currently runs around the country," said Prasa CEO, Hisham Emeran.
"We're now considering designing a DMU, which is a diesel multiple unit. And we're weighing off those pros and cons. Just for example, the DMU does give you other benefits. You can run it on large, other portions of the network in the country where you do not have electrification. It also opens up options in Africa, as an example, that you could find a use for this. So that is the current discussions."
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