/ 28 August 2007

Financial misconduct in govt costs taxpayer R45m

Fraud, theft and unauthorised spending are on the rise in government departments, according to a Public Service Commission (PSC) report tabled at Parliament on Tuesday.

The PSC’s Report on Financial Misconduct for the 2005/06 Financial Year says this cost the taxpayer at least R45-million at the time.

The report covers financial-misconduct cases reported to the PSC by national and provincial government departments, and aims to provide a ”statistical overview” of the problem.

”A total of 771 cases of financial misconduct were reported for the 2005/06 financial year,” the report says. The number of cases in 2004/05 was 513.

It defines financial misconduct as ”any material losses through criminal conduct, unauthorised, irregular, fruitless and wasteful expenditure”.

Government departments had reported on the various types of financial misconduct committed by employees.

”Cases in the category ‘fraud and theft’ comprise a significant portion [64,7%] of the overall number of cases reported.”

It says the high prevalence of these offences ”remains disconcerting”, and ascribes the problem to a lack of proper control systems.

The report says the total cost of the financial misconduct for the year was R45,65-million, but notes not all departments had reported on costs.

Further, ”this report reflects the trend of a higher ratio of financial-misconduct cases at national level as compared with provincial level”.

Although this could be seen as a positive indication that provinces were managing to curb the problem, ”the more probable explanation is that provinces are not effectively dealing with financial misconduct, or not accurately reporting on such cases”.

The report says some departments appear ”indifferent” to accurate reporting, or lack the capacity to pay proper attention to it.

”This observation is based on the fact that even though the departments had the reporting format at their disposal, some information was still not reflected in some of the reports that were submitted to the PSC.”

According to a table in the report, of the 319 cases of financial misconduct at national level during the 2005/06 financial year, 86 of these — the highest number for any government department — occurred in the Department of Justice and Constitutional Development.

Second was the Department of Defence (74 cases) and third the South African Police Service (63 cases).

These three institutions between them accounted for almost 70% of the financial misconduct at national level.

Among the provinces, of the 454 cases reported, 173 occurred in the Eastern Cape. The Western Cape was second with 75 cases.

The report notes there is an ”anomaly” in the number of financial-misconduct cases reported by provinces, and says they are not effectively dealing with the problem. — Sapa