About this case study: This narrative explains the nature of corrupt activities relating to high-profile cases, and is produced in the public interest. It relies on the final reports from the Judicial Commission of Inquiry into Allegations of State Capture, Corruption, and Fraud in the Public Sector, including Organs of State (the Zondo Commission), court documents, books, investigative journalism reporting, and other media articles, all in the public domain. The ISS has made all reasonable attempts to report the details accurately. Details for the cases in the Zondo Commission reports are provided up to December 2023. Further updates are ‘Recent Case Updates’ section below.
Story Summary
Between 2009 and 2021, the Passenger Rail Agency of South Africa (PRASA) was the victim of networks that perpetrated extensive corruption and procurement fraud. Two major corrupt contracts alone cost the state-owned enterprise R6bn.
Two multi-billion-rand contracts that PRASA entered into with companies Swifambo and Siyangena were scrutinised at the Zondo Commission as possible cases of state capture.
PRASA executives Lucky Montana, Chris Mbatha and Daniel Mthimkhulu, along with Bid Evaluation Committee (BEC) Chairperson Ntombeziningi Shezi and businessman Makhensa Mabunda, allegedly initiated and supported irregular bidding for new locomotives by Swifambo Rail Leasing.
In 2014, a new Board of Control was appointed with Popo Molefe as chairperson. Within a few months, the Board declined two contracts with a combined value of R4bn. When the Board became aware of the Public Protector’s interim report into PRASA, it launched investigations into all contracts over R10m awarded, as recommended by the Public Protector.
InsightISS Analysis
Our key insights on this case
This is an example of corruption and state capture at a state-owned enterprise, where service delivery was outsourced to companies with political connections and little capacity to deliver public goods and services.
Lessons for prevention and early intervention.
2007 |
Between 2007 and 2009 Jacob Zuma allegedly received a monthly payment from Royal Security, a company that businessman Roy Moodley is associated with. The payments totalled R1.5m according to the Zondo Commission’s investigators and ended a few months into Jacob Zuma’s presidency. In 2008, Royal Security reportedly began receiving contracts from PRASA. |
2009 |
PRASA was officially launched in March, combining the assets of Metrorail, Shosholoza Meyl, Autopax and Intersite Property Management Services.
In July, PRASA requested an expression of interest to lease locomotives for passenger trains on various national routes due to a shortage. In preparation for the Confederation Cup, Intersite (a PRASA subsidiary) was engaged to develop two railway stations (Nasrec and Doornfontein). Intersite awarded the contract to upgrade Nasrec station to a company called Enzo and the contract to upgrade Doornfontein station to a company called Rainbow. Enzo and Rainbow in turn appointed electronic security systems group Siyangena Technologies (Siyangena) as a sub-contractor to install speed gates. Moodley was connected to Siyangena. |
2010 |
PRASA extended Siyangena’s scope of work to include the supply and maintenance of an integrated security access management system (ISAMS) for five additional railway stations in preparation for the 2010 Soccer World Cup (Phase 1). Because Siyangena had been a sub-contractor on the Nasrec and Doornfontein stations, there was no legal basis for an extension. No formal procurement process preceded the extension, which was deemed to be irregular. Project manager Luyanda Gantsho reportedly advocated for Siyangena while Montana gave his approval for the extension. |
2011 |
Headquartered in Germany, Vossloh AG is one of Europe’s leading railway technology and infrastructure companies. In May, Vossloh AG’s Spanish subsidiary, Vossloh España (Vossloh), inspected PRASA’s fleet of locomotives and provided PRASA with expansion and modernisation recommendations for the short, medium and long-term.
In July, Daniel Mthimkhulu, Executive Manager of Engineering Services at PRASA, sent Lucky Montana, PRASA Group Chief Executive Officer (GCEO), a memorandum written by Vossloh assessing PRASA’s needs. Mthimkhulu reportedly indicated that PRASA’s ‘outdated’ locomotive fleet was negatively impacting service delivery. Vossloh estimated a cost of R5bn over six years and Mthimkhulu recommended that Montana and the Board of Control approve the purchase of 100 locomotives. On 2 December, PRASA published a Request for Proposals (RFP). This was followed by a compulsory briefing session for tender bidders on 2 December. Swifambo Holdings was present at this meeting. |
2012 |
On 7 February, Swifambo Holdings acquired a company called Mafori Finance Vryheid (Pty) Ltd, which later changed its name to Swifambo Rail Leasing (Pty) Ltd. Twenty days later, Swifambo submitted a bid to PRASA with Vossloh España as its supply partner. On 7 March, Auswell Mashaba was appointed as a director of Swifambo Rail Leasing.
Businessman Makhensa Mabunda reportedly invited Mashaba to submit a tender proposal to PRASA. Between 2011 and 2015, Vossloh allegedly made ten payments to companies owned by Mabunda, amounting to R88.9m. Six bidders responded to PRASA’s RFP by the closing date: Mafori Financing/Swifambo Rail Leasing (Pty) Ltd; Havdap Investment Solution (Pty) Ltd; Thelo Rolling Stock Leasing (Pty) Ltd; CRM Consortium; RRL Grindod; and GE South Africa. Swifambo’s bid did not include a tax clearance for Vossloh España, which was required by all joint venture partners; it did not comply with local content requirements, due to the locomotives being designed and manufactured in Spain; and it did not provide evidence that the company, which was only three weeks old, had the required experience in the railway industry to undertake a contract of this size. At a meeting of PRASA’s Bid Evaluation Committee (BEC) on 27 March, Swifambo was recorded as the only bidder to reach the threshold compliance of 70% and was recommended as the preferred bidder. Both PRASA’s Corporate Tender and Procurement Committee and its Bid Adjudication Committee (BAC) agreed with and approved Swifambo as the preferred bidder. The BAC allegedly stated that Swifambo should be appointed the preferred bidder based on ‘outright purchase option’. On 19 July, the Finance Capital Investment and Procurement Committee proposed designating Swifambo as the preferred bidder for 67 dual electric diesel locomotives and recommended a separate procurement process for 25 diesel-only locomotives. On 24 July, the Board approved Swifambo for the procurement of the dual electric diesel locomotives. PRASA notified Swifambo on 27 July. The Public Protector began investigating PRASA after 37 complaints were lodged by the South African Transport and Allied Workers Union, alleging maladministration and improper conduct involving procurement irregularities, conflicts of interest, nepotism and human resource mismanagement by Montana and other executive members. |
2013 |
On 23 March, the main contract was concluded between Swifambo Rail Leasing (Pty) Ltd and PRASA for the purchase of 70 locomotives (20 Euro 4000 locomotives and 50 Euro Dual locomotives) for R3.5bn. The contract was signed by Montana on behalf of PRASA.
PRASA made its first payment of R460.5m to Swifambo Holdings in April. In July, Swifambo sub-contracted Vossloh for the supply of the locomotives. PRASA made its first payment of R64.5m to Swifambo Rail Leasing in December. |
2014 |
In June, PRASA appointed Siyangena to execute Phase 2 of the ISAMS Project. Three months later, PRASA and Siyangena agreed, in an addendum, that Siyangena would provide an additional R800m of services to PRASA. Montana signed this addendum on 30 September.
In August, a new Board was appointed at PRASA with Popo Molefe as its chairperson. Molefe was a veteran African National Congress (ANC) leader reportedly inspired by the opportunity to improve the experience of commuters. Between August and October, Montana was involved in interactions that led to the purchase of three properties valued at R36m. Montana worked with Pretoria lawyer Riaan van der Walt, who owned a company called Precise Trade and Investment and represented Siyangena. Precise Trade bought a house from Montana for R6.8m, when it had been valued at R3.3m 20 months earlier. A house in Waterkloof, Pretoria, was sold to Precise Trade for R11m but the keys for the house were handed directly to Montana. After Montana’s Trust offered to buy a house in Sandhurst, Johannesburg, Precise Trade bought it for R13.9m. Montana bought a house in Hurlingham, Johannesburg, for R11.5m. |
2015 |
Montana left PRASA in July after the Beeld newspaper reported that PRASA had spent R2.6bn purchasing locomotives that were allegedly too tall for the country’s rail network.
Molefe met with the ANC’s six most high-ranking members, including President Jacob Zuma and Vice President Cyril Ramaphosa, to discuss evidence of irregularities at PRASA, including ‘the Mashaba payments’. These were alleged payments to individuals ‘collecting funds’ on behalf of the ANC and contracts awarded to companies associated with Moodley such as Siyangena, Prodigy and Strawberry Worx. In August, the Public Protector’s report, Derailed, was finalised, which found significant acts of corruption, maladministration, abuse of power and tender irregularities. The Board under Molefe appointed law firm Werksmans to conduct forensic investigations required by the Auditor General’s report. Irregular expenditure within PRASA had been identified by the Auditor General in the 2014/2015 financial year. On 31 August, Molefe met with Mashaba who was aware that Swifambo was under investigation. Mashaba allegedly claimed that Mabunda asked him to bid in the locomotives tender. Mashaba claimed that throughout his involvement with Mabunda, he had been in contact with Maria Gomes (an ANC ‘fundraiser’). Mashaba further claimed that Mabunda had instructed him to pay a portion of the money received from the PRASA contract into specified accounts that would ‘benefit the movement’. Ryan Sacks, a Chartered Accountant (CA) and director of Crowe Forensics – an independent firm of specialised financial analysts and CAs – was appointed in December by the Directorate for Priority Crime Investigation to conduct forensic investigations into the reported irregular expenditures incurred by PRASA, one of which concerned the Swifambo contract. In his investigation into the cash flow between PRASA, Swifambo and Vossloh, Sacks found that there were large differences in the amounts that PRASA paid Swifambo compared to what Swifambo paid Vossloh (Figure 1). This irregular cash flow ultimately benefited Swifambo. Mthimkhulu was dismissed in August after a disciplinary process found him guilty of misrepresenting his qualifications to PRASA. |
2016 |
Swifambo delivered 13 of the 70 locomotives. However, the locomotives did not comply with the specifications detailed in the RFP sent out by PRASA nor were they compatible or safe for use with the South African railway network as they were designed for European railway networks.
In November, Molefe approached the High Court in Johannesburg with an application to have PRASA’s R3.5bn contract with Swifambo reviewed and set aside. |
2017 |
Molefe’s application for review was challenged by Swifambo in court, on the basis that it was unreasonably and unduly delayed, that it had relied on inadmissible hearsay evidence and that it was not appropriate, just or equitable to set aside and review the Swifambo tender retrospectively.
In July, the High Court found that the procurement process regarding the Swifambo contract was highly flawed and corruption was involved, and that ‘The irregularities raised in this case have unearthed manifestation of corruption, collusion or fraud in this tender process.’ The High Court concluded that the contract between PRASA and Swifambo for the procurement of 70 locomotives be reviewed and set aside, with Swifambo incurring the legal costs as well as reserved costs. From July 2017 until 2021, only acting GCEOs were appointed at PRASA. The term of Molefe’s Board ended in August. A report by Werksmans detailed that at least five companies associated with Moodley received contracts from PRASA. Molefe further testified at the Zondo Commission that the Werksmans investigation uncovered that Siyangena allegedly paid Moodley R500m after being awarded the ISAMS contract through a company called Hail Way Trading, of which Moodley is the sole director. Prodigy, a company that had allegedly benefited from dubious contracts with PRASA and with which Moodley is reportedly associated, transferred R4.5m to Hail Way Trading as well, according to a News24 investigation. |
2018 |
In March, PRASA made an application to the High Court that certain contracts concluded between PRASA and Siyangena (the ISAMS Phase 1 and 2 projects) be reviewed and set aside. The matter was postponed to August 2020.
In November, Swifambo appealed to the Supreme Court of Appeal against the High Court’s decision to set aside the contract with PRASA for procuring the locomotives. During the hearing, Swifambo argued that while they agreed Mthimkhulu behaved dishonestly regarding tailoring the locomotives’ specifications, Swifambo claimed not to be aware of this. Swifambo did not take issue with the fact that the bidding process was irregular, but denied the accusation that it acted as a front company for Vossloh. Swifambo also denied that it was the only bidder to offer locomotives, and maintained that PRASA’s evidence of fraud and fronting was hearsay. Swifambo was unsuccessful – the Supreme Court of Appeal upheld the High Court’s decision to set aside and review the contract with PRASA on 30 November. In December, Swifambo went into voluntary liquidation. |
2019 |
PRASA pursued Mthimkhulu in a civil claim for falsely representing his qualifications. On 24 September, the High Court ordered him to pay damages of R5.7m to PRASA. |
2020 |
In August, a full bench of the High Court heard the review application by PRASA to have the Siyangena contracts set aside.
In October, the High Court upheld PRASA’s review application, finding that the contracts entered into by PRASA and Siyangena (valued at R2.5bn) were invalid and should be set aside. The Court concluded that the initial approach to the installation of ISAMS by Siyangena had been abandoned and that the scope and cost of work had increased dramatically thereafter. There was no budget to pay for the work, procurement processes were completely disregarded, and the functionality of the systems installed had deteriorated. The Court ordered that an independent engineer be appointed to determine the value of the work already provided by Siyangena, which would be offset against the payments already made by PRASA. The deficit (if any) would be paid by PRASA, with Siyangena being required to pay back any excess. On 20 October 2020, Mabunda said in a statement that he had provided consultancy services to the ‘Swifambo consortium’ regarding the RFP in 2011. A document prepared by Siyaya Rail Solutions (Pty) Ltd (Siyaya), a subsidiary of Mabunda’s SGroup, stated that for the purpose of the Expression of Interest, Siyaya entered into a partnership with two international companies, one being Vossloh. The partnership with the two international companies was entered into to provide turnkey solutions to PRASA for leasing locomotives. |
2021 |
In February, Zolani Matthews was appointed PRASA GCEO after five years of acting GCEOs holding the position. He was fired in November after failing to disclose his dual citizenship.
Mashaba was summoned, in terms of section 3(2) of the Commissions Act, to appear before the Zondo Commission as a witness regarding Swifambo’s liquidator’s report, his interactions with Molefe, as well as payments he made to certain entities from the proceeds of the contract between Swifambo and PRASA. Mashaba refused to recognise the summons as lawful and did not appear before the Zondo Commission. The Zondo Commission’s Secretary laid a criminal complaint against Mashaba with the South African Police Service, but the matter has not yet been concluded. |
2022 |
In January, Mthimkhulu was found guilty of corruption and fraud by the Johannesburg Specialised Commercial Crimes Court for submitting fraudulent qualification papers to PRASA.
In November, Siyangena appealed to the Supreme Court of Appeal in relation to the ISAMS Phase 1 and 2 contracts that were reviewed and set aside. Siyangena argued that the remedial order by the High Court was inconsistent with the Constitutional Court’s approach to a just and equitable remedy. Siyangena claimed that it was an innocent party and, therefore, should not be stripped of any rights it would have been entitled to under the contract with PRASA. Siyangena also claimed that the High Court had wrongly disregarded the affidavits of certain witnesses and that the remedial order by the High Court was imprecise and incapable of implementation because it failed to specify how the appointed engineer would attach a value to the work already done. The Supreme Court of Appeal found that Siyangena’s argument had no merit and ordered that the appeal be dismissed with legal costs. |
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The ANCAlleged misconduct: Individuals within the ANC allegedly neglected their oversight responsibilities regarding PRASA. The six highest-ranking members of the ANC (including President Jacob Zuma and Deputy President Cyril Ramaphosa) reportedly failed to address the alleged misconduct, maladministration, irregular expenditure and corruption at PRASA that Molefe raised with them. The ANC allegedly received a payment of R79m from the Swifambo tender, which was fraught with corruption. Status of accountabilityThe identities of the ANC members who received the R79m payment remain unknown. There are no official reports indicating that any ANC members have been charged in relation to the allegations made against them concerning PRASA and the Swifambo payment. |
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Mshushisi Daniel MthimkhuluPRASA Executive Manager: Engineering Services Alleged misconduct: Recommended that PRASA’s fleet be upgraded and designed the specifications for the bid to match the locomotives manufactured by Vossloh. The specifications contradicted many of the requirements stated in PRASA’s procurement policy. Reportedly misrepresented his qualifications to PRASA when applying for the position of Executive Manager of Engineering Services, falsely claiming that he had a National Diploma and a Bachelor’s Degree from the Vaal University of Technology, a Master’s Degree in Engineering from Wits University and a Doctorate from the Technische Universitat Munchen in Germany. Allegedly falsely represented that he had received a job offer for the position of engineering specialist at a German entity for a salary of R2.8m, prompting PRASA to make a counteroffer for the same salary. Status of accountabilityDismissed from PRASA in August 2015. PRASA pursued him in a civil claim and the High Court ordered him to pay damages of R5.7m on 24 September 2019. In January 2022, he was convicted of fraud in the Johannesburg Specialised Commercial Crimes Court. Sentencing was delayed for more than two years due to postponements requested by him. |
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Auswell MashabaSwifambo Chairperson Alleged misconduct: Bid on the PRASA contract for locomotives, which his company could not fulfil, and did not meet the requirements set out by PRASA’s procurement policies; paid R79m to the ANC through his company, AM Consulting Engineers (Pty) Ltd; paid large sums of money to Mabunda, who had encouraged him to bid on the locomotive contract. Was reportedly instructed by Maria Gomes to make payments to specific entities, none of which were creditors of Swifambo Rail Leasing or Swifambo Holdings. Status of accountabilityRefused to appear before the Zondo Commission in response to the corruption allegations made against him. Launched a review application against the Zondo Report and the summons issued against him. A responding affidavit was filed by the Zondo Commission’s lawyers, with the matter due to be heard in court in June 2024. |
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Makhensa MabundaS-Group Chairman Alleged misconduct: Influenced the procurement process by reportedly persuading Mashaba to bid on the PRASA locomotive contract through Swifambo Rail Leasing. He and entities he was associated with allegedly received large sums of money from Swifambo. Status of accountabilityCurrently being investigated by Spanish authorities who have submitted a Mutual Legal Assistance request to the NPA. |
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Lucky MontanaPRASA Group Chief Executive Officer Alleged misconduct: Influenced PRASA’s locomotive procurement bid in favour of Swifambo, recommending the company despite their bid’s shortcomings. Reportedly involved in a number of property deals during the same timeframe that he signed off Phase 2 of the Siyangena contract, which placed him in a ‘conflict of interest’ as GCEO of PRASA at the time. Status of accountabilityLeft PRASA in July 2015. No charges have been brought against him in relation to PRASA. The Zondo Commission recommended that serious consideration be given to prosecuting him for his role in the allegedly corrupt PRASA contracts. |
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Chris MbathaPRASA Chief Procurement Officer Alleged misconduct: Played a role in PRASA awarding Swifambo the locomotives contract. Allegedly instructed PRASA’s BEC ‘not to concern’ itself with the compliance issues raised in respect to Swifambo’s bid. Status of accountabilityDismissed from PRASA in August 2019 after being found guilty of involvement in the illegal awarding of the Siyangena contract. |
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Ntombeziningi SheziPRASA BEC Chairperson Alleged misconduct: Involved in the misconduct, corruption and irregular procurement of the Swifambo contract. On the instructions of Mbatha, directed the BEC to disregard compliance issues. Allegedly endorsed a falsified report stating that Swifambo’s bid had been evaluated for compliance with PRASA’s bid requirements, while disregarding apparent deficiencies in Swifambo’s bid, including the absence of a Value Added Tax number on their tax clearance certificate and the failure to submit one for Vossloh. Status of accountabilityNo charges have been brought against her in relation to PRASA. The Zondo Commission recommended she be investigated for possible prosecution. |
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Dipuo PetersMinister of Transport Alleged misconduct: Requested the free use of PRASA services for ANC events from Lucky Montana in 2014 and 2015. Hindered the appointment of a new GCEO for PRASA. Reportedly dismissed the Board under Molefe after it uncovered R14bn of irregular expenditure at PRASA. Status of accountabilityRelieved of her duties as Minister of Transport in 2017. On 28 March 2024, after a month in her new position as Minister of Small Businesses, placed on unpaid suspension following allegations made against her concerning PRASA and alleged breaches of the Code of Conduct while she was Minister of Transport. |
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Roy MoodleyBusinessman Alleged misconduct: Used his substantial influence at PRASA to steer decision-making and procurement processes, especially those involving entities with which he had known associations, such as Siyangena. Had direct or indirect interests in several companies providing services to PRASA. Entities with which he was associated received preferential treatment at PRASA. PRASA awarded payments and contracts to entities connected to Moodley, including Siyangena, Prodigy and Strawberry Worx. Received large sums of money from Siyangena through Hail Way Trading, of which he was sole director. Status of accountabilityNo charges have been brought against him in relation to PRASA. Filed an affidavit in reaction to the allegations against him at the Zondo Commission but did not testify. |
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Bid Evaluation CommitteePRASA Alleged misconduct: Implicated in and recommended the corrupt and irregular procurement of Swifambo’s tender. The individuals involved were named in the Zondo Commission report as: Benedict Khumalo, Thabo Mahlobogwane, Jabulani Nkosi, Joseph Magoro and Ntombeziningi Shezi. Status of accountabilityThe Zondo Commission recommended that the extent of the BEC’s involvement be determined and a decision to prosecute made. |
RecentCase Updates
Latest developments from news sources
- 16 February 2024: President Cyril Ramaphosa requested that the Special Investigating Unit (SIU) investigate PRASA. In terms of Proclamation 153 of 2024, the SIU is empowered to investigate offences committed in terms of the Prevention and Combating of Corrupt Activities Act (PRECCA) concerning the award of tenders for the supply of locomotives by Swifambo and the ISAMS installation by Siyangena. The SIU is further empowered to investigate maladministration, malpractice, corruption, fraud and system failures at PRASA and make recommendations to prevent future losses. The SIU states that it will refer any evidence found to the National Prosecuting Authority (NPA).
- 14 March 2024: Swifambo’s liquidators, Tshwane Trust auctioned off eight of the 13 locomotives that Vossloh delivered in order to recover costs owed to PRASA. The R100m received for the auctioned locomotives is a small percentage of the R1.8bn Vossloh earned from the contract. Swifambo’s liquidators have also instituted several ongoing civil claims in order to recover funds from Swifambo.
- March 2024: The NPA’s Asset Forfeiture Unit (AFU) obtained an order to seize Mthimkhulu’s assets in order to pay PRASA more than R5.5m owed from a fraudulent salary hike. However, the magistrate, Phillip Venter, ruled that NPA was restrained from confiscating more than 50% worth of Mthimkhulu’s properties in Cape Town and Langebaan due to them being co-owned by his former wife. The NPA was further restrained as at least R1.1m from the sale of Mthimkhulu’s Bedfordview apartment in Johannesburg was needed to pay Assetline, a short-term loan company that Mthimkhulu was ordered to pay back a loan of R550 000 and failed to do.
- 3 September 2024: Daniel Mthimkhulu, former head of engineering at PRASA, was sentenced to an effective 15 years in prison by the Specialised Commercial Crime Court in Johannesburg. He was sentenced to 15 years’ imprisonment on the first count of fraud, and to six years’ imprisonment for each of the other two other counts of fraud. The sentences will run concurrently.
- 10 September 2024: PRASA filed a court application to operate the AFRO4000 locomotives that had been delivered by Swifambo but returned because they were “too tall” to run on South Africa’s rail network. Swifambo is under liquidation and the locomotives are being auctioned to recover debts owed to PRASA. However, an affidavit by acting PRASA CEO, Nathaniel Roesch, states that an inspection conducted on the locomotives stored overseas has found that the trains are capable of operating on South Africa’s rail network.
- 18 September 2024: The SIU briefed Parliament’s Standing Committee on Public Accounts on their ongoing PRASA investigation. The updates included: a payment of R110m to Company A, where one of its directors was a former chairperson of the PRASA board; a payment of R1.5m to Company B, where one of its directors was also a director of Swifambo at the time of the payment; and that a majority of the funds from Swifambo and its directors went to Company C, where a former PRASA head was a director. The SIU announced that it anticipates completing its investigations in March 2025.
Public Impact
- In 2019, Cape Town’s central train line, which serves the city’s poorest communities, ceased all services.
- PRASA passenger Zack Benjamin, along with his mother and many other passengers, were stuck in a Shosholoza Meyl train for three days without food or water and un-flushable, overflowing toilets. Zack described the experience as ‘horrific’ explaining that his mother, who has a heart problem, struggled to breathe and that another passenger was reliant on an oxygen tank.
- In Gauteng, PRASA has let the East Rand rail line and its train stations decay. Memory Mpomba used to pay R14 for a return train trip from New Era station in the East Rand to Johannesburg to buy snacks and clothing to sell on the streets. She now pays R50 to go by taxi and is often without stock because she can’t afford the taxi fare.