PRASA’s hiring and firing of CEO has cost R15 mn and counting

Legal botchups with the hiring and firing of the Passenger Rail Agency (PRASA) Group Chief Executive Officer Zolani Matthews have cost the embattled rail agency at least R15-million and counting in payouts to Matthews.

Following an arbitration award and a Labour Court ruling, PRASA was forced to reinstate Matthews last month and back pay him for the 31 months he sat at home.

No sooner had he returned to work than PRASA fired him again, this time citing “operational requirements”.

The board relied on a termination clause in his employment contract. It told him, in a letter, it would not allocate any duties to him “as it does not require you to perform any duties”.

The position has been filled and “it is neither practical nor desirable for you to perform your duties when the incumbent is already performing these duties”.

The letter, signed by board chairperson Nosizwe Nokwe Macamo, records that in line with the arbitration award and Labour Court ruling, PRASA had reinstated him retrospectively and in July 2024 had paid his arrear salary of 31 months, being R15,345,833.

“You were employed on a fixed term contract of five years, commencing 8 March 2021 until 7 February 2026. Your contract is still left with 17 months … as a result the board has resolved to put you in the position you would have been in had your contract not terminated for operational reasons. The effect of your termination of employment is that you will be paid the remainder of your contract,” Macamo says.

This amount was still being calculated.

A legal opinion, sourced by PRASA, states that Matthews signed up for the job with a package of R5.8-million a year. He was also given a “sign on incentive fee” of R300,000, a company car, cell phone allowance and could claim performance bonuses.

Matthews was first fired in November 2021. At that time there were many red flags about his performance. He was still on probation (for six months, with a further extension of three months, if required as per his contract). GroundUp also pointed out that he was appointed CEO in contravention of the rail agency’s policy that sets an age limit of 63, while Matthews was already 64.

His assessment scores were well below what was acceptable and the board had advised him to go on leadership and other courses which would educate him on the workings of the rail and train industry.

But the board, inexplicably, did not raise his performance issues in its first letter of termination. Nor did it take issue with allegations that he was a director of a company doing business with PRASA.

Instead it relied on the fact that he had not disclosed to the board that he held dual South African/British citizenship.

This has emerged in a written legal opinion by Advocates William Mokhane and Masonwabe Mhambi who were briefed by the PRASA board for guidance in dealing with Matthews.

The advocates, in a report dated 10 July, said Matthews had challenged his dismissal in the Labour Court but the parties had agreed to an “expedited” private arbitration.

This was conducted by retired Judge Robert Nugent who, in April 2022, found in favour of Matthews, ruling that the citizenship issue was not material to his job and ordering PRASA to reinstate him retrospectively. He also ordered that PRASA pay the costs associated with the hearing, and Matthews’ costs.

Then PRASA did two things: In spite of binding itself to the arbitration proceedings, it challenged the finding in a review in the Labour Court and then it purportedly fired him for a second time.

This time it based its decision on his poor performance in his probation period.

It informed Matthews that this had previously been discussed by the board but that decision “could not be formally communicated to you at the time due to the fact that the board also resolved to terminate your employment contract for reasons associated with your non-disclosure of your dual citizenship”.

The advocates, in their opinion, said it was not “legally possible” to fire someone who had already been dismissed.

Matthews had to be reinstated and PRASA had to comply with the arbitration award.

The Labour Court then dismissed PRASA’s review application, also with costs.

This was “not surprising”, the advocates said.

“There existed no basis in fact and law for PRASA to have challenged a well-reasoned award, the court made it (the arbitration award) an order of court, so it then assumed the status of a court order which must be complied with,” they said.

“There are no prospects of success in PRASA appealing the judgment. The judgment is correct in law and fact.

“Nothing prevents PRASA from subjecting him to a lawful termination process after it has reinstated him,” the advocates said.

But if it wanted to fire him for poor performance it would have to be through a fresh, lawful process, they said.

PRASA appears to have taken heed of this advice. In its termination letter to Matthews, it now says it is relying on the “termination clause” in his contract for operational requirements and “the operational requirements of your contract have rendered your duties at PRASA redundant”.

The board said the unresolved issues - including the fact that the State Security Agency had declined to issue him with “top security status” - would simply be a distraction while it was implementing critical projects of national importance.

Zackie Achmat of the rail commuter activist organisation #UniteBehind isn’t convinced that the board has followed the spirit of the advocates’ legal advice. He told GroundUp: “Zolani Matthews should never have been appointed as PRASA Group CEO. He had no background in engineering, the management of a major company or in the rail industry. However, the then PRASA Board failed in following the basic precepts of our labour laws. In this era of punishing austerity every cent of public money should be used to improve people’s lives. PRASA has failed to do this. The Board once again sought a legal opinion and then chose to ignore it. Whether their interpretation of the law is correct or not, there is no evidence that the PRASA Board acted in good faith.”