The launch of the Bus Rapid Transit (BRT) transportation in Soweto, 2009 before the start of the 2010 FIFA World Cup hosted in South Africa, it was hailed as a game changer for the taxi operators and commuters alike.
Piotrans the Bus Operating Company (BOC) entered a 12-year contract to operate Rea Vaya in 2011. This is a relationship between the City of Johannesburg and nine taxi associations.
To qualify as shareholders in this Black Economic Empowerment (BEE) bus scheme, taxi operators had to transfer their operating licenses to the BOC, and withdrew vehicles from routes to make way for the Rea Vaya.
To qualify as shareholders in this Black Economic Empowerment (BEE) bus scheme, taxi operators had to transfer their operating licenses to the BOC, and withdrew vehicles from routes to make way for the Rea Vaya.
This led to 309 taxi owners and their families’ becoming shareholders, others became board members and employees of the company. Taxi drivers of surrendered vehicles also benefitted, they received training and employment as Rea Vaya bus drivers.
The BRT system aims are to provide an alternative efficient, safe, and affordable public transport for commuters.
However, due to mismanagement of the business, the wheels of the Rea Vaya’s operator begun to come-off, leading to the company being placed under business rescue in December.
“The BRT Rea Vaya’s empowerment scheme was rushed and not well planned as authorities were focused on implementing it for the sake of meeting the objectives of 2010 World Cup,” he said.
City of Johannesburg MMC for Transport, Kenny blames Pio Trans operational challenges on the empowerment model.
“The way this deal was structured from the beginning it set up shareholders for failure.
“It must be remembered taxi owners gave away their taxis. Taxi owners were used to cashing every day from taxi drivers whatever they made that day. Now you are putting them on a corporate business model, and then you are saying they must sit on the
board with no proper mentorship and training,” he said.
Kunene said the company’s management took advantage of the shareholders’ lack of knowledge on how to exercise control and oversight over the company.
“Over the years there had been maladministration, theft, and fraud. CEO’s, financial managers, board members just came in and realized that the shareholders were not informed about how things should happen (to run a company), they just took whatever they can take, and just walked away without any accountability,” he said.
According to 2020/21 financial reports of the company it is alleged that over R50 million could not be accounted for. But the 2021/22 financial reports paint a bleak picture about the operations of the Rea Vaya with over R100 million missing.
Shareholders at different times reached out to the City of Joburg to intervene on their behalf fearing to lose out on their investment, and disruptions in their income.
This intervention led to the old board being replaced by an
independent board of directors that did not include shareholders. The board was tasked with the running of the company including to investigate and understand the problems faced by Pio Trans.
Kunene says the board managed to uncover mismanagement and wrongdoings at the company.
“During the time that an independent board was in place, the directors managed to uncover the rot n Piotrans. As the board was intending to apply for Piotrans to be placed under business rescue – there were CIPC issues, however, coincidentally creditors applied to the court that Piotrans to be put under business rescue which was a good move,” he said.
Kunene pointed out that before the establishment of an independent board, there had been attempts made by the City of Joburg to mediate in the Piotrans’ operational and corporate governance challenges.
“The city has been mindful of the operational challenges which affected Piotrans. This led to mediation processes in 2014 and 2019, which involved starting the appointment of external service providers and audit firm to help and support the bus operator. But the recommendations made by the experts on how to turn the business around were never implemented by the earlier boards and senior management,” he said.
He vowed to fight for the shareholders to get what is due to them.
“These 309 families have given away their sources of income – their taxis. There are owners of these taxis that have been shot and died – their children are now beneficiaries of this empowerment deal. But over the years – heartless and evil people came in and stole from 309 families which gotten Piotrans to where we are now.
“It is the duty of the City of Joburg to help these families and make sure that Piotrans is back on its feet.
“My view is that the business rescue process is the best route for the shareholders. Piotrans is not bankrupt but has cashflow problems,” he said.
Mahier Tayob, the Business Rescue Practitioner (BRP) has taken over the running of the business, and the Rea Vaya board has since dissolved.
