Police reports and documents provided to the National Prosecution Authority (NPA) have brought grave allegations against Electronic Toll Collection (ETC) and its parent company, Kapsch TrafficCom.
Among the allegations are that ETC, with full knowledge of Kapsch, made payments totalling R10 million over three years to a company called ProAsh Business Services without receiving any services or deliverables from the company.
According to the allegations in the police report, ETC defrauded the South African National Roads Agency Limited (SANRAL) by misrepresenting these payments.
The police reports also contain allegations that ETC and Kapsch may have bribed Zambian government officials via a local subsidiary called Intelligent Mobility Solutions (IMS).
The head of IMS allegedly claimed that he spent $2.6 million (US dollars) on bribing various Zambian officials.
When Kapsch was informed of the claims being made by the head of its IMS operations in Zambia, the person who reported the issue alleged that he was placed on suspension instead of the matter being investigated.
The third allegation, contained in the documents which were submitted to the NPA, was that Kapsch and ETC had presented a falsified B-BBEE certificate to bid on a SANRAL tender in 2020.
Kapsch and ETC denied the allegations.
“For the past number of years ETC has had to respond in various forms to repeated unfounded allegations emanating from a disgruntled former employee who seems intent on defaming the good name and reputation of ETC,” the companies stated.
In response to these allegations, Kapsch and ETC said that they are conducting an extensive independent external investigation and will act on the findings.
SANRAL declined to comment on the allegations.
“SANRAL notes your queries as untested allegations which have been around since the inception of e-tolls. SANRAL urges [individuals] to report any acts of corruption to relevant law enforcement officials, and can therefore not comment on this matter,” said Vusi Mona, the general manager for communications at the roads agency.
Reporting E-toll corruption to law enforcement
SANRAL’s dismissal of these accusations as “untested allegations” that have plagued e-tolls since at least 2012 may be premature, as these allegations are far more specific than any that have previously been levelled at the unpopular E-toll scheme.
It is also interesting that SANRAL urged people to report acts of corruption to law enforcement, as that is exactly what happened with the ProAsh and IMS allegations.
MyBroadband has seen two Section 34 reports that were filed with the Directorate for Priority Crime Investigation (DPCI – the Hawks) in 2019. These are reports filed in terms of Section 34(3)(a) of the Prevention and Combating of Corrupt Activities Act to disclose potential corruption.
We have also seen two acknowledgements of receipt from the Hawks showing reference numbers for each Section 34 report.
A spokesperson for the Hawks confirmed that these reports were assigned to the Gauteng/Pretoria division and referred our queries up the chain.
The Hawks provided no further feedback by the time of publication regarding whether there was any investigation into the allegations of corrupt activities at ETC.
The ProAsh allegations — R10 million over three years
Carte Blanche reported on Sunday night that ProAsh Property Investments, trading as ProAsh Business Services, has two directors – Mahomed Bawa and Yusuf Mahomed.
Both men have ties to South Africa’s telecommunications sector, most notably to the origins of Cell C and Ubambo Investment Holdings.
According to the CIPC, Bawa has held 89 directorships in South Africa. He is also the director of several companies in the United Kingdom.
Mahomed has also held directorships in several UK companies and 112 South African companies, including Blue Label Telecoms which is currently the largest shareholder in Cell C.
The allegation made against ETC with respect to ProAsh was essentially that the relationship between the companies amounted to fronting.
According to the Section 34 report filed with the Hawks, ETC was contractually obligated to spend some of its budget with small and medium enterprises.
ETC counted the money that it spent on ProAsh towards this obligation. However, the allegations stated that the payments were not in-line with the contractual requirements SANRAL placed on ETC.
Asked for comment on the matter, ProAsh responded through their attorneys.
ProAsh confirmed that it was paid R279,999.96 per month for 36 months, totalling just over R10 million. The payments were made between 2009 and 2012.
The company said that it provided services to ETC in respect of a service level agreement and that there was a contract between ETC and ProAsh.
It denied that ETC’s relationship with ProAsh amounted to fronting.
“ProAsh is not and was never a BEE front for ETC,” the company stated.
It emphatically denied allegations that ProAsh was paid to use its influence to help Kapsch secure the SANRAL e-tolls collections contract for ETC.
Zambia bribery allegations – $2.6 million
According to the documents supplied to the National Prosecuting Authority, the possibility that Kapsch’s subsidiary in Zambia (IMS) may have bribed government officials was reported to senior executives in April 2019.
This came after the chairman of Intelligent Mobility Solutions, Walid El Nahas, informed ETC and Kapsch executives that he had bribed several Zambian government ministers.
El Nahas, a Lebanese national, was CEO of a Zambian company called Lamise Trading. Lamise owned 49% of Intelligent Mobility Solutions, while Kapsch TrafficCom owned 51%.
IMS received a contract from the Zambian government in August 2017 to design, install and operate systems for traffic surveillance, vehicle speed enforcement, road safety education and intelligent traffic solutions.
In total, El Nahas allegedly claimed that he had spent at least $2.6 million on bribes, and had highlighted the following:
- $100,000 to bribe the relevant people to get Ronald Chitotela, then the Minister of Housing and Infrastructure, arrested. This was apparently after he and El Nahas had a falling out.
- $250,000 to bribe the then Minister of Transport and Communications, Brian Mushimba.
- $35,000 for a watch for the Finance Minister.
- $200,000 for a bribe for Minister Chitotela.
- An amount to the CEO of the Road Transport and Safety Agency, Zindaba Soko.
- An amount to the Chairman of the Zambian PPP Commission.
- 10% of profits to Zambia’s ruling party, amounting to around $1 million.
The documents also stated that there were major problems with the concession contract IMS had in Zambia, resulting in the Zambian government refusing to pay.
Several of these allegations and details have since emerged in the Zambian press.
News Diggers reported towards the end of 2019 that Zindaba Soko faced a grilling in the Zambian parliament because fines collected by IMS were being deposited into a private bank account, and not a government account.
In January 2020 the former special assistant to the president for press and public relations, Amos Chanda, along with Soko and El Nahas appeared in court on charges relating to bribes paid by IMS. All three men pleaded not guilty.
A witness reportedly told the court that El Nahas transferred all of his shares in IMS to Kapsch in February 2020.
El Nahas also reportedly stormed out of court after an adjournment in April and mysteriously told the prosecutor that he wants to turn state witness.
Shortly thereafter, around mid-May 2020, all charges against Chanda, El Nahas, and Soko were dropped via nolle prosequi.
The last report about El Nahas in News Diggers’ archive is that the renewal of his Zambian residence permit had been denied, and that his appeals and attempts to secure a temporary work permit had failed.
MyBroadband sent a request for comment to El Nahas’ last known e-mail address, but did not receive a response by the time of publication.
MyBroadband also contacted the Zambian government, and Ministers Chitotela and Mushimba for comment.
Our e-mails to the Zambian Ministry of Finance, where Mushimba now holds office, and to the Ministry of Information and Broadcasting services were returned due to errors with their mailboxes.
Sanral’s 2020 tender — Kapsch hiding behind Kusa
Documents given to the National Prosecuting Authority, which MyBroadband has seen, reiterated concerns raised over the bid by Kusa Kokutsha on a SANRAL tender last year for the management of the e-toll system.
The Organisation Undoing Tax Abuse (OUTA) highlighted when the bids for the tender were submitted that Kusa Kokutsha was only registered on 26 August 2019, and that the names of the company’s directors suggest it is just ETC in another guise.
OUTA said that, during the court case that Kusa brought against SANRAL for cancelling the tender, the company revealed that Kapsch is a 49% shareholder in Kusa.
Allegations were also made in a sworn affidavit that Kusa had submitted a “suspicious” B-BBEE certificate. A level 1 B-BBEE status was required to qualify for the SANRAL tender.
Questions were also raised about the “improper role” played by Ettienne du Toit in the tender process.
Du Toit was reportedly involved in developing the tender specifications while working for his previous employer, and he has since started working at ETC.
Kapsch did not answer direct questions about Kusa’s B-BBEE certificate or why it bid in SANRAL’s tender as Kusa rather than ETC.
MyBroadband contacted Ettienne du Toit for comment, who referred us to the prepared statement from Kapsch, which is reproduced below.
In the meantime, ETC remains responsible for collecting e-tolls until such time as SANRAL awards a new tender.
Full response from Kapsch / Electronic Toll Collection (ETC)
Kapsch’s full response to MyBroadband is reproduced below.
These allegations are not new to us. For the past number of years ETC has had to respond in various forms to repeated unfounded allegations emanating from a disgruntled former employee who seems intent on defaming the good name and reputation of ETC.
In response to these allegations we have conducted extensive independent external investigations.
The same former employee also peddled his allegations to OUTA which informed us about the allegations.
Following engagements with the former employee and OUTA, the ‘whistleblower’ was asked to substantiate the allegations. In fact, the former employee had previously been asked, on numerous occasions, to substantiate the allegations. The investigators have received nothing but hearsay, conjecture and incorrect conclusions offered by the former employee. Despite repeatedly offering ‘conclusive proof’, it has not been forthcoming.
ETC is committed to doing business ethically. It has undertaken to complete the independent external investigation and to act on the findings in accordance with its statutory and ethical obligations. We are confident that the truth will prevail, and have every faith that the relevant authorities, to whom the former employee has repeatedly reported his allegations, will deal with same properly and appropriately.
We trust that MyBroadband will treat the allegations and the source thereof with appropriate circumspection.
Kapsch declined to answer any follow-up questions about the “disgruntled former employee” or provide more details regarding its “extensive independent external investigations”.
MyBroadband’s follow-up questions can be summarised as follows:
- Why was the former employee suspended and how soon after reporting the alleged bribery in Zambia were they placed on suspension?
- Did Kapsch launch its independent external investigations in 2018 or 2019 when the matters were first brought to the attention of the company?
- Are those independent external investigations still ongoing, or has Kapsch since launched a new investigation? What were the findings of the initial investigations?
“Neither Kapsch nor ETC will be responding further over and above the statement that was sent,” the companies said.