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AG’s report exposes billions of irregular expenditure by government, SOEs

National and provincial government departments have accumulated R46-billion in irregular expenditure. Auditor general Kimi Makwetu said the Passenger Rail Agency of South Africa (Prasa) contributed R13.9-billion in irregular expenditure.

Makwetu released the auditor general’s report on national and provincial audit outcomes for the 2015-2016 year on Wednesday. He said that the irregular expenditure in 2015-2016 had increased by 80% since the previous financial year when national and provinicial government departments had incurred R25.7-billion in irregular expenditure.

Along with Prasa, the health departments in KwaZulu-Natal and Mpumalanga, the department of water and sanitation, and Gauteng’s road and transport and human settlements departments are behind 50% of the R46-billion uncovered in Makwetu’s report.

Earlier this year, Collins Letsoalo, the acting group chief executive of Prasa, admitted that the rail agency had incurred R13.9-billion in irregular expenditure. The announcement came after Prasa received an unqualified audit from the auditor general

The beleaguered train service provider has faced continued criticism and backlash after a deal for new locomotives with shell company Swifambo Train Leasing went wrong, leading to an investigation. There was a R3.5-billion tender awarded to Swifambo in the course of the deal.

Makwetu said he was concerned about the financial future of state-owned entities in South Africa, saying that poor leadership impacted poorly on their audit outcomes.

“The poor leadership included instability at board level, vacancies in key positions, inadequate consequence management and poor monitoring and oversight of procurement processes led to weak leader,” Makwetu said.

The auditor general’s report audited 169 national and provincial departments and 315 public enterprises. It contained 484 auditees in total, with a budget of R1.2-trillion for 2015/16.

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