PRASA appointment unlawful, says court
25 August 2020
The Western Cape High Court has ruled that Minister of Transport Fikile Mbalula’s appointment of a sole administrator for PRASA was unlawful.
Mbalula has repeatedly failed to appoint a proper governance board for PRASA despite several promises.
#UniteBehind brought the matter to court and the judge has given Mbalula 60 days to rectify the matter.
PRASA spent R2 billion more than it earned, routes were cut, salaries went unpaid, and it only met 26% of its performance targets last year.
The appointment by transport minister Fikile Mbalula of BongisizweMpondo as the sole administrator and accounting officer of the ailing Passenger Rail Association of South Africa (PRASA) was unlawful, the Western Cape High Court has ruled.
Judge Nathan Erasmus on Tuesday found in favour of commuter activist group #UniteBehind and ordered the minister to appoint a new board within 60 days.
In the interim, he said, National Treasury must within seven days appoint an accounting officer from the ranks of another public enterprise.
Judge Erasmus said that while the minister claimed to need 12 months to appoint a new board, “he has had more than enough time”, and pointed out that last year the minister had given a public undertaking to do so before the end of November.
In November, he had said he was “busy with the process” and then, after the appointment of Mpondo in December, had assured that the process would be finalised within six months.
“We are now eight months later. The vacancies have been advertised more than once. The process has been delayed for more than two years,” said the judge.
Mpondo was a consultant in the minister’s office when he was “redeployed” to PRASA after Mbalula dissolved the entity’s interim board in December 2019.
He inherited “a mess” said Judge Erasmus.
In the 2018/2019 year, expenditure of R15.5 billion exceeded income by nearly R2 billion. Routes had been cut, salaries unpaid, and only 26% of its performance targets were met.
In papers before the court, ZackieAchmat, secretariat member of #UniteBehind, said the decision to appoint Mpondo as sole administrator would “allow PRASA to operate without any lawful and effective oversight”.
He said the minister did not have the power to appoint an administrator in the place of a Board of Control and he had contravened the Legal Succession to the South African Transport Services Act and the Public Finance Management Act.
Judge Erasmus agreed with all the points raised by #UniteBehind. He said the Legal Succession Act did not make provision for placing PRASA under administration or, as the minister once referred to it, “business rescue”.
The act only allowed for Parliament to place PRASA into “liquidation or judicial management”.
He said the act also recognised the need for a “multiplicity of skills” in running PRASA and set down expertise requirements board members needed, clearly not expecting that it would be run by one person.
The minister alleged that he had appointed Mpondo as the Acting General CEO of PRASA and not as an administrator, a term he said had only been used “colloquially”.
But Judge Erasmus said only the board had the authority to appoint senior executives, not the minister.
He ruled that in terms of the Public Service Act, Mpondo could not be seconded from one department to another.
He said Mpondo had been appointed as a “special advisor” in the minister’s office in November last year, which was terminated on 5 December when he was offered the PRASA position.
His initial appointment “was clearly a strategy” to allow for his secondment. This too was unlawful because it did not have the approval of the dissolved board.
Judge Erasmus noted that even when affidavits were filed this year, sections of Mpondo’s contract dealing with performance targets had been “left blank” and there was still no performance management agreement in place.
The Public Finance Management Act stipulated that if a public entity had a board, it was the board that was financially accountable.