STATEMENT BY TSHEPO LUCKY MONTANA,
FORMER PRASA CEO
PARLIAMENTARY INQUIRY INTO CORPORATE GOVERNANCE AT ESKOM
CAPE TOWN
30 JANUARY 2018
1. PURPOSE
I am fully aware that the Terms of Reference of this Parliamentary Inquiry by the Portfolio Committee on Public Enterprises does not include the affairs of the Passenger Rail Agency of South Africa (PRASA). However, I was drawn into its work and ultimately invited to share my version of events after the Deputy Minister of Public Enterprises and former Minister of Transport, Honourable Dikobe Ben Martins addressed a media briefing on or about 8 November 2017 responding to the testimony to this Inquiry of Suzanne Daniels, former Legal Advisor at Eskom. In her testimony, Suzanne Daniels mentioned meetings involving members of the Gupta Family and DM Martins held at the Melrose Arch, Johannesburg. If I remember well, Ms Daniels stated that the Deputy Minister attended meetings where certain ESKOM matters were discussed.
In his attempt to clear his name and distance himself from the Gupta Family, Deputy Minister Ben Martins stated during the Media Briefing that he had met members of the GUPTA Family on a few occasions. To my surprise, DM Martins further stated that one such occasion was when he met members of the Gupta family with Lucky Montana. I got the distinct impression that DM Martins wanted to create the impression that I brought members of the GUPTA family to him.
I was extremely disappointed because I felt that the statement was not entirely truthful, fair and comradely. I felt strongly that he had a duty to call and inform me that he intended to mention my name during the media briefing. I expected this from him as my leader, friend and comrade. He knew that mentioning my name in the manner he did, in this “polluted” political environment dominated by issues of “State Capture”, would raise questions about whether I had a relationship with the Gupta Family.
I expected this from him because DM Martins and I had a long relationship dating back to 1996 when I was first introduced to him in Parliament and we became close friends. He also introduced me to his family. I worked very closely with him as the Chairperson of the Portfolio Committee on Public Enterprises where together we championed some of the most important legislative changes during the period (1999 – 2004) of the Restructuring of State-Owned Enterprises (SOEs). We worked together as comrades in the South African Communist Party (SACP) where he was a member of the Politburo and I was the Deputy Provincial Secretary of the Party in the Western Cape. This bond of friendship and comradeship was further strengthened when he was appointed Minister of Transport in 2012.
DM Martins remains my leader and a great inspiration to me. He is an intelligent and highly knowledgeable man. He is a simple, humble man - a freedom fighter, Communist and a Great South African. I have no doubt that he is committed to serving the people of South Africa. This is the man who lives for the arts. He would invite me during weekends when he visited art galleries. He would teach me about paintings, the ideas behind them and the artists behind these. As you may be aware, he writes and publishes poems. This is a man I have huge respect for.
I could however not believe it when I heard what he said at the media briefing. I felt strongly that DM Minister Ben Martins was trying to protect his own name at my expense. He knew that I had never met the Guptas until he had invited me to his Ministerial House in Pretoria and introduced me to Duduzane Zuma and Rajesh “Tony” Gupta. This happened in September 2012. What he had said at the media briefing was totally not true and I felt it important that I set the record straight. I issued a statement repudiating what he had said, to set the record straight. I had a long interview with SAFM to clarify my statement. DM Martins and I had a telephonic conversation immediately after the SAFM interview where we agreed to meet and not escalate the matter further. I attach hereto the copy of the Media Statement (Annexure A).
Unfortunately, my response to the Deputy Minister drew the attention of the Evidence Leader to this Inquiry, Advocate Ntuthuzelo Vanara, who wanted to know the context for my response and the contents of the letter referred to in my statement. I met Advocate Vanara in Johannesburg in January 2018 and took him through the letter I wrote in 2012 about attempts by certain members of the GUPTA Family and their associates to manipulate the procurement process for the acquisition of new commuter trains.
The primary goal of my submission is therefore to provide the Inquiry with the full details of these attempts by the Gupta Family and to formally release to South Africa my 2012 letter to the Chairman of PRASA at the time, the current the Deputy Minister of Finance, Honourable S’fiso Buthelezi.
I intend also to share with the Inquiry my experience working with State-Owned Enterprises and the lessons that the Committee could possible draw from various attempts at restructuring these entities over the past 20 years or so.
I will also briefly touch on the topical issue of “State Capture” and how this affected PRASA during my tenure and after I had resigned and left the entity. I resigned from PRASA on the 15th March 2015 (Annexure B) and left on 15 July 2015 when the Board resolved in my absence that I will no longer be required to serve out the remainder of my notice period.
2. ACADEMIC QUALIFICATIONS AND WORK EXPERIENCE
I am the former Group CEO of PRASA. I went through the ranks in the civil service and in the process, acquired huge experience in developing and driving corporate strategy, managing people and running companies. I was part of a generation of young, black professionals that joined Government in the aftermath of the first democratic elections of 27th April 1994. Many of us, despite having been to university and had academic qualifications, were sent for further study and technical training in the different areas of responsibilities. We were former militants in the struggle against apartheid in the 1980s and early 1990s. The democratic government presented us with the opportunity and honour to serve our beloved country and its people.
For me personally, I completed my Honours Degree in Industrial Sociology (Social Research Methods) at the University of Cape Town (UCT) in 1993. I was employed to undertake research by COSATU on grading and training arrangements in various sectors of the economy. My area of research was Post and Telecommunications. COSATU agreed to grant us permission to use the research data, which the federation rightfully owned, towards the completion of our Honours Degrees. My Honours Thesis was on Strategic Unionism as a new model to bring about social and economic transformation.
I worked for the ANC Western Cape as Elections Research Coordinator from April 1993 till April 1994 focusing on Voter Trends in the Western Cape and on Opposition Strategy.
I joined the new Western Cape Provincial Government in May 1994 as a Member of the Strategic Management Team (SMT) in the Department of Economic Affairs and RDP. I was responsible for RDP Planning and Implementation.
In August 1994 I was selected, together with 25 other new recruits in the civil service around the country, to participate in a Study Programme on “Economic Policy Formulation” for Prospective South African Economic Policy Makers held in the Hague, the Netherlands. We spent half of the year being trained in the theory and practice of International Economics and Trade Policy, Fiscal Policy, Monetary Policy, the Banking System and Taxation; the Political Economy of Public Policy; Competition Policy, Economic Regulations, Transport Planning, Social Security and Labour Market Policy.
We studied the High-Performing Asian Economies, with specific focus on Japan, Hong Kong, South Korea, Singapore and Taiwan. We spent time studying the Maastrich Treaty and visited the new institutions of the European Union in Belgium.
We received detailed training on the GATT System and its replacement with the World Trade Organisation (WTO) in Geneva.
We studied the role of the World Bank and IMF in the world and Structural Adjustment interventions.
Most importantly, we were trained to pull together information and put this into a Policy Memo to guide Policy Makers, in this case Ministers in the Economics Cluster.
To meet the requirements of this course, I completed a “Policy Paper on Industrial Policy for Post-Apartheid South Africa”.
During my stay at the Department of Economic Affairs and RDP, the Educational Opportunities Council funded in 1995 another detailed training programme on Macro-Economic Policy Analysis (MEPA).
The focus of this training programme was Inter-Governmental Fiscal Relations, Policy Simulation and Interdependence, Budgetary Procedure as well as Fiscal Policy and Growth.
We spent the latter half of 1995 in another study and training programme, this time on Regional Economic Development in Germany, with a special focus on rural development.
I joined the Department of Public Works as Director: Office of the Minister in June 1996 until 1999. I was earmarked for a role in the Construction Industry Development Board (CIDB) and was sent in 1999 to participate in the Construction Management Programme (CMP) at the University of Stellenbosch. This is the best programme in the construction industry.
Many of the construction companies listed on the JSE sent their middle managers and senior executives for training in the CMP, a programme delivered jointly by the University of Natal, University of Witwatersrand, University of Pretoria and University of Stellenbosch. I completed the requirements of this vitally important programme.
This is the best training programme for those interested in infrastructure development; with a strong focus on diagnostics engineering; procurement methods; risk management; contract law, Applied Computer; strategic management and finance. Again, I met the requirements of the programme.
I joined the Department of Public Enterprises in 1999 following the elections in that year. This was the year of major changes in the area of state-owned enterprises. One of the first task undertaken by the new Minister of Public Enterprises was the upgrading of public enterprises from an Office to a fully-fledged Department. A lot of new young skilled people were recruited with skills specializing in Defense, Telecommunications, Transport, Energy, Forestry and Finance. This was the most exciting period in the life of the Department of Public Enterprises.
I was promoted to Chief Director level in 2002 and given major responsibilities, including the responsibility to coordinate the National Framework Agreement (NFA) signed between Government and Labour Unions to guide the process of restructuring.
I had the privilege to sit, participate and even chair key meetings between Government and Labour considering restructuring options for SOEs such as Denel, Eskom, Transnet, SAFCOL, Telkom, Airports Company South Africa, Aventura, among others.
As part of this process, I was sent to the United Kingdom on a course on restructuring and privatization of public entities.
Perhaps the biggest and most exciting restructuring initiative for me was the big challenge to restructure Transnet. This was key for the economy and Government had instructed us to work on what came to be known as the “Transnet End-State” Project. This was a period of detailed analysis of data and due-diligence exercises for the different business units with Transnet, working with International companies such as Rothschild and Halcrow.
The choice to separate freight rail and passenger rail was made during this period, and it was to lead to the establishment of PRASA in March 2009.
I joined the Department of Transport in June 2004 and was appointed Deputy Director-General for Public Transport. I was responsible for trains, bus and taxi operations.
This was the biggest portfolio in the Department responsible for managing the subsidies allocated by Government for commuter rail users and enabling Provinces to manage the bus subsidies. I was appointed in 2005 to serve on the Board of the South African Rail Commuter Corporation (SARCC), the predecessor to PRASA. During this period, I was responsible to oversee the implementation of the Taxi Recapitalization Programme (TRP).
I was seconded as Acting CEO of the SARCC in July 2006 on an 18-month contract. Cabinet confirmed my appointment as SARCC in October 2007. One of the key mandates was to prepare rail infrastructure and operations for the 2010 FIFA World Cup, consolidate passenger rail entities into a single entity reporting to the Minister of Transport, which became PRASA and to drive a long-term turnaround strategy and investment plan for passenger railways.
3. LESSONS FROM THE RESTRUCTURING OF STATE-OWNED ENTERRPISES
The ANC Government has done a lot to restructure and strengthen SOEs since the advent of democracy in 1994.
Major restructuring initiatives were undertaken, which were aimed at reducing the foreign borrowing requirements, promote good corporate governance and ensure SOEs and public entities contribute to Government social and economic objectives.
In 1999, Government started the process for the development of the Policy on the Restructuring of State-Owned Enterprises, where extensive and wide consultation were undertaken with political structures, community-based organizations, trade unions, business and international investors. The Policy was formally adopted as Government Policy in 2001.
This Policy, in my view, rank amongst one of the best policies the Democratic Government has ever developed, especially when one takes into account the context of the late 1990s and the pressures at the time to privatize SOEs. Despite this, the Government was able to find that delicate balance between the role of the Government in the economy and the private sector. The Policy defined the strategic role that these SOEs should play and how they could contribute to sustainable development in terms of investment in economic and social infrastructure, development of skills in the economy, facilitating access to services. It was also expected that SOEs will play a major role in difficult economic conditions.