EC’s irregular spend almost half of SA’s R28bn total

Almost half of South Africa’s R28.33-billion irregular spend was accumulated by Eastern Cape municipalities in the past three years, Auditor General Kimi Makwethu said yesterday.

[gallery td_select_gallery_slide="slide" size="large" ids="217688,217689"]

Municipalities such as the OR Tambo district in Mthatha and the Buffalo City and Nelson Mandela metros are among the top 10 worst offenders.

Makwethu also singled out Mnquma municipality, which is among five provincial municipalities to receive a disclaimer from the AG indicating it had found insufficient documentation on which to base an audit opinion. He said disregarding the AG’s advice had lead to the total collapse of the municipality.

“The disregard for our messages and warning signals was most noticeable at Mnquma, where there was a collapse in oversight and governance accompanied by a breakdown in internal controls, caused by leadership that was in conflict with itself, unrest and strikes.”

The Daily Dispatch has reported on the collapse of the Butterworth-based council, where ANC factional fighting has led to a total shutdown of operations several times in the past year.

Irregular expenditure is spending that does not comply with the manner prescribed by legislation.

The AG scrutinised 257 municipalities and 21 municipal entities nationwide. Of these, 39 municipalities and 10 municipal entities are from this province.

The report revealed that Eastern Cape municipalities alone spent a whopping R13.558-billion of taxpayers money irregularly, and this accounted for 35% of the province’s local government budget.

This is a drastic regression from the 2015/16 financial year, where the province recorded a R5.55-billion irregular spend.

The details show that Nelson Mandela Metro leads the province’s irregular spender offenders list substantially at R8.1-billion in the past three financial years. OR Tambo accumulated R3-billion and BCM R584-million.

This is despite BCM’s books showing a marked audit improvement compared to the previous year as it moved from qualified with findings to unqualified with findings in 2016/17.

Addressing the media yesterday Makwethu said the challenge with Eastern Cape municipalities is that “municipal leadership did not heed our numerous warnings about the impact that changes at an administrative level and the failure to fill vacancies timeously would have on accountability”.

Another example was that of an Eastern Cape municipality – which Makwethu did not name – that used a contract secured by another municipality to appoint consultants to assist with financial reporting at a cost of R62-million over three years.

“The original contract stipulated a contract value of R7-million over 10 months, which the second municipality exceeded by R55-million and 26 months.

“Thus, this municipality did not comply with the requirements of regulation 32, as it was not participating in an existing contract but entered into a new contract with the supplier. Therefore, this contract was irregular and should have gone out on open tender,” he said.

But not all is doom and gloom. Two municipalities –- Ingquza Hill in Lusikisiki and Senqu local municipality – received clean audits.

The AG said the department of cooperative governance should assist municipalities to investigate the prior year’s irregular expenditure and to deal with the large number of investigations required.

“Councillors should receive training on how to conduct investigations into irregular expenditure appropriately, which will ensure that oversight bodies take a strong stance against irregular expenditure and that transgressors face adequate consequences,” he added.