Pay it back, AG tells Prasa's 350% boss

The auditor-general has recommended that Collins Letsoalo, former acting CEO of the Passenger Rail Agency of South Africa, should repay all the money he awarded himself by hiking his salary 350%.

In a special audit seen this week by the Sunday Times, the auditor-general says that Letsoalo - who is still a member of the Prasa board - should repay the money, but does not give a figure. 

Then-transport minister Dipuo Peters seconded Letsoalo to Prasa from the Department of Transport in July 2016.

Three months later he gave himself a massive pay increase, taking his salary from R1.3-million a year to R5.9-million. Four months after that, in February last year, the Prasa board fired him.

A Prasa management report at the time said Letsoalo and other senior executives who received millions of rands in overpayments, salary increments, bonuses and promotions were not entitled to the money and should reimburse the agency.

In firing Letsoalo, the Prasa board said it had passed no resolution authorising the pay hike.

When Peters seconded Letsoalo to Prasa, his letter of appointment said his salary, rank and seniority would not change, meaning he was not even entitled to the standard 12% increase that managers who act in a senior position normally receive.

However, the High Court in Pretoria ruled in April last year that Letsoalo was entitled to be paid at the same rate as former group CEO Lucky Montana, who had received R5.9-million. The Public Service Commission came to the same conclusion.

"These matters have gone to court and the court has declared on it. There's no way the auditor-general can go above the courts," Letsoalo told the Sunday Times this week.

The special audit was undertaken after the auditor-general found that Prasa omitted crucial information about overpayments and irregular contracts awarded when the initial 2016-17 audit was performed.

Another Prasa executive alleged by the auditor-general to have benefited from undue overpayments is Lindikhaya Zide, who was the company secretary at Intersite and Autopax, which are part of the Prasa group.

The auditor-general said Zide should repay just over R420,000 he received between November 2015 and December 2016 but to which he was not entitled.

The special audit also found that Nathi Khena, who was fired as Prasa's chief operating officer in July 2016 but later reinstated, had received bonuses and leave payouts for the period that he was not at the agency. The auditor-general said Khena should repay payments for the months of August, September and October amounting to R660,000 which were wrongly made to him. 

The auditor-general also tracked the career progression of another executive, Pearl Munthali, from the position of chief information officer to her appointment in July 2014 as CEO of the Prasa Development Foundation at an annual package of R2.9-million.

It was found that she was not entitled to acting allowances she received each time she was moved to a different position.

The auditor-general's office also ruled that her appointment as CEO of the foundation was irregular because there was no evidence that the foundation was operational.

"We further inspected the cost centre for the foundation to assess the nature of costs incurred ... It was noted that the only cost incurred under the foundation's cost centre is salaries."

The auditor-general also wants the R2.6-billion paid to Swifambo Rail Leasing for the controversial Afro4000 locomotives to be paid back. Prasa awarded a R3.5-billion contract to Swifambo in 2012 to supply 70 locomotives. Swifambo procured the locomotives from a Spanish company, in a contract that a court later ruled was invalid.

Prasa refused to provide a detailed response to the special audit, saying the original annual report for 2016-17 had not been approved nor submitted to parliament by the Department of Transport, its shareholder.

"Until such time as the audit report is final, Prasa is not in a position to respond to findings that have not been taken through proper governance processes and adopted as such. When the annual report is made public, Prasa will communicate to the public how it is dealing with the findings," said spokeswoman Nana Zenani.