EXCLUSIVE: It's payback time - Prasa demands R2.6 billion for trains that were too tall

Passenger Rail Agency of South Africa is demanding more than R2.6 billion from the company that provided the controversial locomotives which were unsuitable for the local rail network.

This comes just a week after the High Court in Johannesburg found that the tender was rigged and specifically designed to favour Swifambo Rail Leasing and its “joint venture” partner‚ Spanish locomotive manufacturer Vossloh España.

"Harm will be done to the administration of justice if this award is not set aside from the onset. Corruption will triumph if this court does not set aside the tender‚" said Judge J Francis when he set aside the 2013 contract on July 3 2017.

Yesterday‚ Prasa lawyer’s Werksmans Attorneys issued a letter to Swifambo Rail Leasing demanding a R2 650 208 400 payment with interest.

“In view of the findings in the judgment payment is hereby demanded in accordance with the summons in the aforesaid action. To the extent that locomotives supplied are in the possession or under the control of our client‚ the return thereof continues to be tendered. Unless our client receives payment of the aforementioned amount‚ together with interest thereon‚ by 16h00 on Wednesday‚ 19 July 2017‚ our client shall take the appropriate steps to enforce its rights‚ all of which remain reserved‚” said Bernard Hotz in the letter to Swifambo.

Swifambo’s lawyer Deon Lambert said he had not yet seen the letter as he was in meetings the whole day. But Swifambo had indicated earlier this month after losing the court battle‚ that it would appeal the High Court’s decision.

Prasa launched the dramatic court action in November 2015 for Swifambo to take back its stock and refund the R2.65-billion already paid to it. There was also R80-million paid by Swifambo to companies which were not its creditors. 

The deal attracted international headlines when it was discovered in 2015 that the trains were too tall for South Africa’s railways. Prasa’s chairman Popo Molefe approached court to ask it to have the R4.8-billion locomotive deal scrapped. 

Swifambo had delivered 13 of the required 70 locomotives‚ which were found to be too tall for the local railway system. 

In the application which Prasa won last month‚ Molefe had detailed how Swifambo‚ a company owned by former senior government official Auswell Mashaba‚ was formed specifically for the multibillion-rand deal — was assessed on the experience and technical capabilities of Vossloh España‚ even though the two had no joint venture or any legal agreement in place during the bid process.

It was also discovered by Prasa after adverse findings by both the Auditor General and the Public Protector‚ that Swifambo was not disqualified despite submitting a tax clearance certificate that had no VAT number‚ and no tax clearance certificate at all for Vossloh “as part of a joint venture or subcontractor” agreement; it was a new company and had not traded before. The company had no financial history which the Standard Bank could use to evaluate its financial viability”. 

Despite Swifambo failing to produce “previous experience of supply and leasing of locomotives‚ including attaching letters of referral from at least three clients for [which it] had done work‚” Molefe had uncovered through forensic investigation that Swifambo could not have had any experience in rail because it had been formally established on March 1 2012‚ just four months before the awarding of the contract.