Treasury acts on KSD’s R12.7m blunder

Request to roll over funds turned down after failure to account for grant

King Sabata Dalindyebo Municipality has failed to account for a R12.7m municipal infrastructure grant (MIG), forcing National Treasury to reject its request to roll over the money to the current financial year.
KSD had requested that National Treasury rolls over the R12.7m from the 2017-18 financial year so that it could continue revamping the Rotary Stadium in Ngangelizwe township. The money was part of about R18.5m in extra MIG funds given to KSD by National Treasury in April – three months before the end of the 2017-18 financial year on June 30.
While it was able to spend a portion of it, KSD applied to Treasury to have the funds rolled over to the current financial year – a request that was rejected.
National Treasury spokesperson Jabulani Sikhakhane told the Daily Dispatch that the request had been rejected because the account meant to reflect the R12.7m earmarked by the municipality for rollover to the current financial year only contained R13,000.
Sikhakhane said the municipality had requested a rollover of R12.7m and another amount of R813,000 from the infrastructure skills development grant.
“The MIG rollover was rejected because the municipality did not have enough funds to cover the requested rollover amount [R12.7m] in the designated bank account for the MIG grant. The municipality has designated accounts for each of the grants allocated to them.”
Sikhakhane said KSD’s MIG designated account had a balance of R13,000, according to pre-audited annual financial statements.
Sikhakhane said: “If it’s not there then it means it was spent on something else.”
He described the use of funds meant for the stadium as a “financial conduct offence”.
“The municipal council is the one that should take action against any individual who was responsible for the funds misuse. We are of the opinion that the municipality should be given the opportunity to institute their own internal processes.
“Grants that are misused or used for other things are regarded as unspent from Treasury’s point of view and they are therefore recalled.”
Sikhakhane said the 2017-18 rollover processes had been guided by section No 22 of the 2017 Division of Revenue Act, Act no 3 of 2017.
National Treasury further issued guidelines on the procedure that needs to be followed in assessing rollover applications.
According to the act, unspent conditional allocations, or a portion thereof, that is not spent at the end of the financial year reverts to the national revenue fund, unless the rollover of the allocation is approved.
KSD chief financial officer Eric Jiholo declined to comment, saying he had authorised municipal spokesperson Sonwabo Mampoza to comment.
However, Mampoza denied this, initially saying they had not met on the issue, but later Jiholo had told him that the R12.7m was in the municipality’s bank account.
Opposition parties meanwhile reacted with shock at the news.
DA councillor Raymond Knock said although they had been informed about Treasury rejecting KSD’s funding rollover application, they had never been informed of the real reasons behind the move.
“They just read a letter to us. “How do you accept money knowing you are not going to be able to spend it on time. Even worse, how do you spend money that is ring fenced for something else?”
Knock said the fact that the municipality was not able to collect enough revenue was one of the reasons that led to the possible use of the missing funds on things they were not allocated for.
He said heads should roll, adding that criminal charges should be laid against those responsible.
“This whole situation is a mess,” he said.
UDM councillor Mabandla Gogo called for a thorough investigation into the missing amount while also calling on Treasury to withhold any future MIG funding to KSD until the money had been accounted for.
OR Tambo District Chamber of Business president Vuyisile Ntlabati said the municipality was faced with huge infrastructure backlogs.
“We need every cent. You can’t have money returning to Treasury.”..

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