Sicelo Shiceka, minister of cooperative governance and traditional affairs, has been pressuring employees in his department to approve financial transactions that have led to irregular expenditure, a forensic report suggests.
Senior staffers quoted in the report say procurement processes and the Public Finance Management Act were flouted because of pressure exerted by Shiceka.
The Mail & Guardian is in possession of the forensic audit report by Volker Wattrus & Mkhize (VWM). It was commissioned by former director general Lindiwe Msengana-Ndlela to investigate three payments to suppliers apparently made without following proper procurement procedures. She left the department before acting on the audit.
The payments involved what the department called ministerial imbizos in the Eastern Cape which were held just months after Shiceka took over as a caretaker minister following Sydney Mufamadi’s resignation in 2008.
The first was at the Nqadu Great Place near Willowvale in November that year and the second at the Bumbane Great Place in Mthatha in December.
VWM’s report says all three Âpayments constituted irregular expenditure. The Act classifies irregular expenditure as financial Âmisconduct.
The firm’s investigators also established that suppliers engaged in “cover quoting” — an individual or one company submitting multiple quotations purporting to be from competing entities.
“The alternative quotations were visibly part of a cover-quoting process, which should have been identified and questioned by the officials tasked in preparing documents for payment,” the report says, adding that the competitive nature of procurement was “fatally undermined”.
The report focuses on the department’s role in the questionable transactions. “Cover quoting is always done in collusion with officials tasked with the administrative process of securing alternative quotations. [It] is considered irregular and illegal,” it says.
Sources in the department told the M&G that no action has been taken on the report.
The forensic auditors interviewed staff in the department who complained of pressure from the minister’s office to make funds available for the imbizos and to pay the suppliers, despite clear evidence of irregularities.
One senior employee told investigators that Shiceka’s office, including the minister’s personal assistant, exerted pressure on them to process the payments. “From this, she [the official] deduced that the minister was taking a personal interest in this matter,” the report says.
Another official told investigators that Shiceka’s chief protocol officer, Zolani Mkiva, was actively involved in the administrative processes of the imbizos.
“The minister personally inquired about the various quotations,” said the official, who added that she believed the event was “imposed” on them by the office of the ministry.
The VWM investigators describe the involvement of Shiceka’s staff in procurement processes as ”inappropriate”.
The department’s chief director of traditional leadership and institutions, Professor Wellington Sobahle, was not invited to either of the imbizos, despite the ministry’s claim that Shiceka would meet traditional leaders, the report notes.
Sobahle’s section of the department reluctantly funded the events after he had unsuccessfully questioned the process.
“The chief director perceived himself to be under ministerial pressure to fund the event, alternatively perceived it to be the wishes of the minister that he does so,” the report says.
Sources close to the department say Shiceka often “shoots from the hip” when speaking to staff, and often makes comments seen as undermining senior managers.
“Sobahle feels aggrieved that he has become a victim of circumstance, but feels strongly that he did not have a choice in the matter,” the auditors say.
He also claimed he was prejudiced by the absence at the time of the director general, who would normally play a “buffer role pertaining to ministerial instructions or expectations”. Msengana-Ndlela was out of the country when the first imbizo took place.
VWM finds that Sobahle’s failure to prevent irregular expenditure was “negligent” and fell within the ambit of the Act’s definition of “financial misconduct”.
But the report says Sobahle’s actions were neither “wilful [nor] grossly negligent” — suggesting that the staffers’ claims of political pressure from Shiceka carried some weight.
The investigators conclude that they are “not satisfied” that the expenses of the two events should have been paid by the department.
The auditors also find that:
- Procurement processes could not be completed reasonably within the limited time frame provided. The two events came to the attention of the officials a few days before they were to take place;
- The ANC constituency office in Mthatha was instrumental in obtaining quotations and invoices for the event — another factor VWM considers “inappropriate”;
- ANC officials assisted with alterations to prices on quotations; and
- Two people who had been facilitating quotations were teachers in the Mthatha region who help at the ANC constituency office as secretaries.
The report says: “We question the involvement of members of the ANC constituency office in Mthatha in what is clearly an attempt to circumvent procurement policies and procedures to obtaining credible alternative quotations.”
The department achieved clean audits for seven years under Mufamadi, but the forensic audit suggests the auditor general will be asking some tough questions after Shiceka’s first year in office.
Questionable payments
The transactions auditors find irregular:
- R750Â 00 for catering;
- R50Â 000 for transport to the event for the locals; and
- R65Â 000 for tents and other equipment.
The department spent R200Â 000 on the imbizos, of which auditors find R190Â 000 irregular.
Signs that gave investigators grounds for concluding that there was fraud in quotations obtained during the procurement process included:
- The handwriting on some of the quotations was similar;
- All the quotes were faxed with no covering pages attached;
- All the faxes had been Âmanipulated by cutting off the fax header identifying the sender; and
- The contact numbers on some quotations were the same as those of purported competitors.