The auditor general has exposed a shocking state of affairs, but the national government is reluctant to intervene.
Wasted millions, bad financial management and poor service delivery are not the monopoly of the embattled Limpopo provincial government—they have spread south of the Olifants River into Mpumalanga.
Although the situation in Mpumalanga is not as bad as that in Limpopo, audit reports, investigations and the current budget all show how Mpumalanga’s civil servants are coining it from government contracts worth at least R8.2-million in two departments alone, while R130-million was diverted from infrastructure spending to pay for salaries and other provincial and local government expenses this year.
“The entire provincial administration is on a disastrous collision course which could result in widespread governance collapse if not addressed urgently,” warned Democratic Alliance provincial leader Anthony Benadie.
The DA has asked public protector Thuli Madonsela to investigate what it said was R2.9-billion of public money that was misspent by the provincial and local governments in Mpumalanga. But the national treasury does not agree. It believes Mpumalanga runs a tight ship with a positive budget balance.
“In the case of Mpumalanga, the province has been running positive cash balances throughout,” said treasury spokesperson Bulelwa Boqwana last week. However, the provincial departments’ own annual reports and the auditor general’s latest audits paint a different picture.
The Mpumalanga government spent R535-million irregularly in the past financial year, unauthorised expenditure amounted to R84-million and R3.4-million was wasted.
Auditor general Terence Nombembe’s audits of Mpumalanga indicated serious problems:
- Civil servants held a majority of government contracts in most departments without declaring their interests in the companies that were awarded them;
- Some employees were moonlighting without permission;
- Contracts above the value of R500 000 were awarded without being put out to tender and some goods and services worth less than R500 000 were procured without getting three quotations, as the law requires; and
- R241-million of movable tangible capital assets disappeared from Mpumalanga’s health department in one year.
When the auditor general tried to assess the departments’ service delivery performances he found that most of their information was “deficient” and he could not establish the validity, accuracy or completeness of the information presented.
A total of 37% of the health department’s reported targets were not valid, accurate and complete based on the evidence provided.
About the education department’s 2010-2011 financial year audit the auditor general said: “The validity of 88% of the reported targets could not be established because relevant source documentation could not be provided.” He also found that most of the heads of department did not prevent irregular expenditure.
Premier David Mabuza has suspended only one head of department, Johnson Mahlangu, who was in charge of health.
But the treasury did not believe Mpumalanga was in the same boat as Limpopo. “Mpumalanga is not a section 100 case,” said Boqwana.
Section 100 of the Constitution was used by the government last month to intervene in Limpopo. It states: “When a province cannot or does not fulfil an executive obligation in terms of legislation or the Constitution, the national executive may intervene.”
Derek Luyt, advocacy head of the Public Service Accountability Monitor, said the government should also use this section to ensure that service delivery was efficient.
“Section 100 is not a choice but a duty and a responsibility of the national government to ensure it delivers on its electoral mandate. The failure of letting provinces like Limpopo deteriorate so far must be placed on national and provincial governments. Why didn’t the national department pick up on these things in Limpopo before it got so bad?”
In Mpumalanga, a recent auditor general audit of 30 infrastructure projects worth R250-million highlighted:
- Poor planning that resulted in unused and underutilised completed infrastructure;
- Procurement systems that were not consistently applied, resulting in compromised transparency, accountability and economy; and
- Project management that was ineffective, resulting in projects that were not completed on time, compromised quality and rocketing costs.
David Nkambule, spokesperson for Mpumalanga’s public works, roads and transport department, said last week that all maintenance work, except in emergencies, had been placed on hold. The department had also “slowed down on construction and rescheduled start dates for newly awarded projects”.
Several departments have withdrawn tenders in the past month. Late last year the MEC in charge of finance, Pinky Phosa, cut the health department’s infrastructure expenditure by almost R70-million. The department of education’s infrastructure budget was slashed by R48-million. According to the current adjusted budget estimates, the majority of the cuts in the health department went to prevent “overspending on compensation of employees”.
“It is a tragedy,” said Neville Gurry, chief executive of the South African Federation of Civil Engineering Contractors. “There are numerous reasons for this, but one of the biggest contributing factors was the lack of capacity and expertise in government departments to both implement new projects and maintain existing infrastructure.”
Gurry said the adjustment of provincial infrastructure budgets created further service delivery problems for communities because municipalities were failing to spend their infrastructure budgets at grassroots levels. He said municipalities across South Africa had underspent on their infrastructure projects by R12.4-billion in the past financial year alone.
Mpumalanga finance department spokesperson Letshela Jonas said Phosa and the provincial legislature were still committed to improving the province’s infrastructure.
“The changing environment requires the government to constantly review its performance with a view to respond to the changing needs of society and ensure qualitative delivery.
This has to be done within the available means and in accordance with all applicable regulations and prescribed governance processes.”
Last month Mpumalanga’s treasury confirmed that the co-operative governance and traditional affairs department had overdrawn its account by R2-million.
“Most of the provincial departments in the province do not have overdrawn accounts. Only the department of co-operative governance and traditional affairs had an overdrawn account due to an administrative communication challenge,” Jonas said.
He said the departments were not allowed to overdraw their bank accounts, but could not explain how co-operative governance had been able to do so. Jonas said the interest incurred on overdrawn bank accounts was treated as fruitless and wasteful expenditure in terms of the Public Finance Management Act. According to the Act, fruitless and wasteful expenditure should be “recoverable if liability is determined, or written off”.
Meanwhile, the MEC of the department of economic development, environment and tourism, Norman Mokoena, commissioned an audit of the financial affairs of the embattled Mpumalanga Tourism and Parks Agency last year. He appointed accounting firm Diale Maphothoma and Associates to assess the financial management, governance and compliance of the agency.
Mokoena was responding to media reports that the parastatal, which has an annual budget allocation of R212-million, had a salary budget of R198.4-million for the 2011-2012 financial year. Moreover, the reports mentioned that the agency carried over a R51-million debt from the 2010-2011 financial year. This resulted in the agency failing to make contributions to staff medical schemes and provident funds every month. Electricity and phones were cut off so often that the agency’s operations had almost come to a standstill.
Also last year, the provincial education department was hauled before the select committee on public accounts for failing to recover R22-million worth of assets after top officials admitted they had hired a matriculant to manage the department’s assets. This came after head of department Mahlasedi Mhlabane failed to account for assets that had not been registered in the department’s name. Mhlabane blamed an unnamed official, who has since been removed from the position.
“The man who was in charge of asset management has been transferred to the human resource department, where he is dealing with learnerships,” Mhlabane said at the time.
The committee criticised Mhlabane for the move, asking how the official was expected to mentor trainees when he had failed to manage assets. Mhlabane said the department had hired private accounting firm PricewaterhouseCoopers to train officials in asset management.
The committee also said the department had not registered assets belonging to its parastatal, the Mpumalanga Regional Training Trust.
The Mpumalanga Economic Growth Agency has yet to explain more than R268-million in loans that the auditor general found had not been recorded properly. The agency is tasked with bringing new investment to the province and providing financial and mentoring support to emerging businesses with local links.
The auditor general found that the agency had budgeted to provide R12-million in finance to businesses during the 2010-2011 financial year, but had given out R35.9-million in loans. It was also found that only 67 of the planned 300 businesses were helped with funding.
The parastatal’s executive manager, Anton Scheepers, told the legislature that “all the loans were recorded on different spreadsheets but could not be reconciled”.
According to the auditor general’s 2010-2011 report, the agency cost the taxpayer R5-million because it failed to pay its taxes on time. The parastatal also incurred R23-million in fruitless and wasteful expenditure by failing to pay the Development Bank of Southern Africa on time.—African Eye News Service