Scathing court decision on fronting!

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Soria Hay | Head of Corporate Finance | Bravura | shay@bravura.net | http//www.bravura.net |


The R600 million train blunder that broke in July 2015 is still fresh in the memory of corporate South Africa. The Passenger Rail Agency of South Africa (Prasa) received 13 new diesel locomotives that were too high for the long distance routes they were intended for.

Prasa ordered brand new diesel locomotives from Spanish manufacturer Vossloh España which were too tall for local use. The 13 Afro 4,000 diesel locomotives were worth R600 million and formed part of a larger R3,5 billion order for 70 new locomotives.

Fortunately, this was not the end of the story.  Prasa applied to the High Court to have a decision by its previous board reviewed and set aside in terms of the Promotion of Administrative Justice Act.  The court application related to the irregular, fraudulent and corrupt agreement with Swifambo Rail Agency, a BEE company, for the supply of locomotives. Swifambo bought the locomotives from Vossloh, based in Spain, and on-sold the locomotives to Prasa.

Guidelines

The High Court set the contract aside in July 2017, based on various tender irregularities.  It also found that the parties…


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