Sacks lifts the lid on massive Prasa-related corruption

Forensic accountant Ryan Sacks last week blew the cover on alleged corruption and financial irregularities within and without the Passenger Rail Agency of South Africa (Prasa), exposing for the first time how billions in tax payers’ money was stolen.

Sacks opened a Pandora’s box into corruption during his explosive testimony at the Judicial Commission of Inquiry into State Capture before Deputy Chief Justice Raymond Zondo.

What was only meant to be a two-hour appearance at the commission turned into almost two days of riveting testimony. Evidence leader Vas Soni questioned Sacks about his findings into Swifambo, the now liquidated local company behind the notorious, ill-fated, multibillion rand tender to procure locomotives.

Four years ago, the Hawks commissioned Sacks, 43, the director of Crowe Forensics SA to present a cashflow analysis of the corrupt Swifambo tender. He presented his report, which revealed outrageous movements of funds linked to Prasa’s contract with Swifambo Rail Leasing (SRL).

His preliminary report alleged financial irregularities masterminded by a widescale web of corrupt activity within and outside the stricken government-owned entity. However, at the time, his report seemingly fell on deaf ears, he told the commission.

He asked police to furnish him with further information to complete his analysis. He was again ignored, and has not heard from the Hawks regarding Swifambo since.

Last week, however, Sacks was heard loud and clear when he presented his report after being summoned to do so. His report – until recently kept highly confidential – was presented to the public for the first time.

The report revealed the astonishing movement of funds linked to Prasa’s corrupt contract with SRL, a local company set up only a year before Prasa first advertised the tender. This was under the watch of then Prasa Chief Executive Lucky Montana, who oversaw the shady acquisition.

SRL was the front company in 2012 that clinched a R3.5 billion contract to supply 70 locomotives to Prasa. It had no track record in the rail industry. Swifambo, merely acting as a middleman in the corrupt deal, ordered the locomotives from Spanish supplier Vossloh España.

Prasa ended up paying Swifambo R2.6 billion and in return, received only 13 Afro4000 diesel-electric locomotives. These trains were too tall and totally unsuitable for South African rail specifications, as revealed by Rapport newspaper.

Sacks’ testimony exposed the hundreds of millions in tax payers’ money that should have been used to supply Prasa with new trains but was instead diverted. The money went to Auswell Mashaba, Swifambo’s former managing director, and businessman Makhensa Mabunda, as well as to several entities, high ranking public officials, and individuals linked to them.

Mashaba failed to appear before the commission last week in spite of being served with a summons.

“Last week was the first time that the public and a judge has had the opportunity to hear and see evidence of actual cashflows. It was the first time this real evidence has been produced,” said Bernard Hotz, commercial litigator and head of business crimes and investigations at Werksmans Attorneys.

“Instead of false allegations about Werksmans being a white monopoly capital law firm that was unlawfully appointed to investigate Prasa, the public and the judge focused on the large-scale theft of billions from Prasa, and got to see where those billions went,” Hotz told the SA Jewish Report this week.

According to Sacks, Werksmans Attorneys was appointed by Prasa in 2015 to conduct a forensic investigation into various instances of irregular, fruitless, and wasteful expenditure incurred by Prasa, which had been outlined by the auditor general. Crowe Forensics was appointed by Werksmans as expert forensic accountants to assist it. Sacks was appointed by the Hawks to perform a cashflow analysis relating to the Swifambo tender debacle.

Sacks’ testimony last week revealed how Swifambo funnelled about R80 million of its Prasa earnings to Maria Gomes, an Angolan businesswoman with strong ties to former President Jacob Zuma, and to George Sabelo, a lawyer also with close ties to Zuma. Mashaba has stated in an affidavit that Gomes and Sabelo were introduced to him as fundraisers for the African National Congress. Mashaba allegedly took a handling fee of R8 million for this.

“My report shows payments linked to Mashaba amount to millions,” said Sacks.

The Jacob Zuma Foundation was also shown to have received thousands of rands from Swifambo.

Swifambo was going to earn only about R118 million from the entire deal, according to the contract. Of the R2.6 billion Prasa paid Swifambo, Vossloh had received R1.8 billion.

About R600 million was pocketed by Swifambo, and disbursed inter alia to a number of beneficiaries.

Mabunda received more than R50 million from Swifambo, and was paid a further “consultancy fee” of R88 million by Vossloh when the contract was concluded, records show.

Out of the first payments that were made by Prasa to Swifambo, Vossloh received its first payment only about 116 days after Prasa had paid out the money, the report revealed.

Before that time, there were a lot of payments to various beneficiaries, namely to Mabunda’s group of companies.

The company Sebenza Forwarding, to which former Prasa chairperson Sfiso Buthelezi (former deputy finance minister) is linked, was paid just less than R100 million, according to the report.

As background to the saga, in July 2017, Johannesburg High Court Judge EJ Francis ruled that Prasa had awarded the contract to Swifambo through a “corrupt tender process”, and that Swifambo acted as a front for Spanish manufacturer Vossloh. The court ruled that the contract needed to be set aside.

Swifambo took the matter to the Supreme Court of Appeal (SCA), where the SCA agreed that “the tender was procured through corruption”. It also affirmed the high court’s decision that Swifambo had been part of a “fronting practice”. The SCA confirmed that the Afro4000 locomotives Swifambo delivered to Prasa weren’t suited for South African railway lines.

“There’s a sense of vindication,” said Hotz, “At long last the public and Judge Zondo can truly understand admissible evidence and cashflows that show how much was stolen from Prasa and who benefited. It’s high time that people go to jail for this.”

Sacks told the SA Jewish Report, “The financial information shows that this whole Swifambo tender was one massive corrupt exercise. Officials running the state-owned enterprise wanted money and the best way to get it was through procurement and the vehicle within procurement was the tender. They set up fronting companies, gave false motivations for why they needed to spend money, and there was collusion on multiple levels to sign the multibillion rand contract. People allegedly stole money before making the first payments to the supplier, it was brazen.”

Sacks is busy doing a forensic analysis of the VBS banking scandal. We should be seeing a lot more of him in the future.