The department of cooperative governance and traditional affairs is seeking a chartered accountant to rescue it from its worst financial crisis to date.
The department has just received its second successive qualified audit, a major reason behind the decision to bring in external help. Before the arrival of controversial Minister Sicelo Shiceka, who has been on sick leave for most of the year, the department had received clean audits for seven consecutive years.
The Mail & Guardian is in possession of a communiqué between the department’s director general, Elroy Africa, and its acting minister, Nathi Mthethwa, in which the former asked permission to appoint an independent chartered accountant to assist the department to turn around its financial management. Mthethwa approved the request two weeks ago.
Department spokesperson Vuyelwa Qinga said the accountant should not be appointed solely to “sort out” a financial crisis. She said the appointee would “assist in monitoring the implementation of the post-audit action plan of the department. [The chartered accountant] will work in close collaboration with the finance department.”
Auditor general Terrence Nombembe found that the department’s irregular expenditure amounted to R420-million in the 2010-2011 financial year, mainly because of inappropriate financial procedures ranging from mismanagement to the flouting of procurement processes.
Mthethwa, through Qinga, said he had approved the appointment of a chartered accountant because the implementation of the post-audit action plan was “a priority that enjoys the support of the ministry”.
In his report Nombembe said the department did not have an adequate system of identifying and recognising all irregular expenditure. “There were no satisfactory alternative procedures that I could perform to obtain reasonable assurance that all irregular expenditure had been properly recorded.”
Africa, in a letter to Mthethwa seeking approval to appoint the accountant, painted a miserable picture of the department’s financial accountability.
“The department was given an opportunity in the final stages of the audit to make an amended submission to the auditor general on irregular expenditure information. The second submission made by the chief financial officer was also incomplete, resulting in the qualification,” said Africa’s letter, signed by the ministry’s chief of staff, Thandi Moyo.
“It is the view of the director general that expert advice is needed in addition to the advice being provided by the office of the chief financial officer in order to secure an unqualified audit for the financial year 2011-2012.”
The revelations of a second qualified audit and plans to obtain external help come barely a month after Mthethwa allegedly approved the reinstatement of a R500-million property lease to a Limpopo-based property and medical management company, Folang Holdings. The lease process was apparently cancelled before Mthethwa’s arrival because the department could not afford it.
A senior department official, who spoke on condition of anonymity and confirmed that Mthethwa ordered the restoration of the lease process, told the M&G that it was “irresponsible to commit the department to the lease” because it was “expensive, unnecessary and fruitless expenditure”.
This week Mthethwa, through Qinga, denied that he had ever instructed that the lease for the Van Riebeeck Medical Building be reinstated. “The minister has never ordered a resuscitation of any lease discussion, including the one you have referred to.” She said the lease with Folang Holdings had been procured but was later cancelled by the department of public works, which is responsible for helping government departments to secure office space.
Melato Mogodi, a co-director of Folang Holdings, disputed the department’s version of the story. “The acting minister and the department of public works have informed us about the decision [to reinstate the lease],” Mogodi said. The department has not paid any rental for the building yet.
When told that the department had denied reinstating the lease, Mogodi insisted that he had held a meeting last Thursday with Africa and one of the department’s deputy directors general, who both assured him that the deal was still in place.
Despite Mogodi’s claims, the ministry maintained that it knew nothing about the lease being revived “after the department had written a letter to the department of public works requesting cancellation towards the end of 2009 or beginning 2010”.
“I can say categorically there was no assurance given to Folang by the acting minister that the lease was going ahead, as Folang alleges,” said Qinga.
“In response to a request for a meeting by Folang about three weeks ago, the director general asked a senior official to meet the company and listen to them. Even at that meeting there was no assurance given to Folang about the lease being revived or going ahead.”
Qinga said Africa did not attend the meeting with Folang Holdings. “If there is any outstanding matter to resolve, the department will talk to all parties concerned and that will obviously include Folang and the department of public works.”
The M&G has a letter from public works, dated November 2008, informing Folang Holdings’ director, Leonard Phathela, that the company’s offer has been approved.
A second letter from public works in September 2009 asks cooperative governance to provide a “funding certificate” before the lease can be signed.
A close associate of Shiceka in his department said both Africa and Mthethwa should be held responsible for the lease. He said Shiceka had turned down Africa’s proposal to procure the Van Riebeeck building in 2009 because “it’s not urgent and we cannot afford it”.
Public Works spokesperson Thami Mchunu said the department has not received the confirmation of funds from Cogta and can therefore not enter into a lease agreement with Folang Holdings.
“At this stage there is no financial commitment or expenditure incurred by the national government,” said Mchunu.
I’m on top of the world — Shiceka
It has been more than seven months since Sicelo Shiceka last reported for duty. He has signalled twice through the media that he is keen to return to work, but President Jacob Zuma is yet to call him back. Zuma granted Shiceka indefinite, fully-paid sick leave to recuperate from an undisclosed illness.
But even before the leave was granted, Shiceka was repeatedly absent from work and reports circulated that he had been beaten up in the course of a romantic entanglement last July, a controversial matter that was shrouded in secrecy. He was on crutches and had a scar on his head when he reappeared in public. The official version was that he fell down stairs. Police Minister Nathi Mthethwa has been acting in Shiceka’s position since March.
Despite his sick leave, Shiceka has continued to conduct media interviews. Mthethwa’s allies in government said this was irritating the acting minister — he apparently believed that Shiceka should stay clear of the media because his presence defeated the purpose of being granted leave because he could not perform his duties.
Shiceka is under investigation by Public Protector Thuli Madonsela for alleged corruption linked to R355 000 spent on a trip to Switzerland, where he allegedly visited a jailed girlfriend. He is also being probed about R640 000 spent on a luxury Cape Town hotel and more than R160 000 used for plane tickets for family members. Shiceka has blamed Madonsela for dragging her feet with the investigation, thus delaying his return to work.
But Madonsela said Shiceka had failed to make himself available for the probe or to provide the required information, citing ill health.
Zuma said he was awaiting Madonsela’s report before making a decision about Shiceka’s future. Speculation is growing that Zuma is preparing to dismiss Shiceka and Madonsela’s report — largely expected to be damning — will come in handy.
In an interview with Talk Radio 702 last week Shiceka said: “My body is carrying me very well. I thank God and the gods for making me to be where I am now. I’m on top of the world.”
He refused to disclose the nature of his illness but undertook to do that soon. “You know this thing is between the doctor and yourself. I think I’ll do that [share the information] when I come back to work.”
Now that he had recovered, Shiceka said, he was travelling the world and playing tennis.