North West SCOPA lambasts Madibeng Local Municipality for lack of consequence management on irregular expenditure of R51 million
The North West Provincial Legislature’ Standing Committee on Provincial Public Accounts (SCOPA) has strongly lambasted Madibeng Local Municipality for lack of consequence management on irregular expenditure of R51,4 million due to contraventions of supply chain management requirements.
This follows virtual Municipal Finance Management Act public hearings with municipality including Matlosana Local Municipality to account on the 2017/18 audit report.
Madibeng Local Municipality
According to the Business executive at the Auditor-General South Africa’s North West branch Success Marota, Madibeng Local Municipality acquired the fourth consecutive disclaimer audit opinion due to lack of sufficient appropriate audit evidence. “There has been lack of consequence management in the municipality in the current and previous financial years although there is sufficient evidence of financial misconduct and transgressions.
“There is significance reliance on consultants for preparation of annual financial statements although the municipality has a staff component of about 134 at its budget and treasury office. It spent about R35 million on these consultants who are not yielding any results,” said Mr. Marota.
He said there is general lack of accountability on public funds in the municipality as in a case where the municipality acquired a loan of about R1,1 billion from the Public Investment Corporation. “The loan was never disclosed on the financial statements of the municipality during audit.
“We were also unable to determine the level of unauthorised expenditure due to lack of sufficient audit evidence. There is also no political will to improve the status of the municipality as we witnessed that in some instances there were unauthorised debit orders for clothing; cutlery and digital television accounts on the municipal bank account but no official was ever charged,” said Mr. Marota.
He further elaborated that there is lack of documentation on many contracts in the municipality which never went into proper tender processes. The municipality is also failing to pay its creditors on time which include electricity and water boards.
The Provincial Public Accounts Chairperson, Hon. Job Dliso said it is worrying that the municipality omitted the last question of the responses which dealt with consequence management. “This is a complete act of sabotage on our work as an oversight Committee which should guard public funds.
“The municipality deliberately left out the important part of implementing consequence management and it is not properly signed off by the Mayor or accounting officer. There are 17 recurring qualification areas on the report and they don’t even have a plan to address them,” said Hon. Dliso.
“It is concerning that it took a High Court judgement for the municipality to admit that it took a loan from the Public Investment Corporation and still, there is no concrete plan to repay it as it is in a financial distress. There are also allegations that the municipality leased vehicles for a tune of R1 billion but no plan to fix the problem,” said Hon. Dliso.
The Chairperson of the Municipal Public Accounts Committee (MPAC), Cllr. Diale Diale also said it is disturbing that the municipality was placed on multiple administrations but never yielded any positive results. “There is no consequence management even for people who transgressed supply chain management policies. Officials implicated in corrupt activities or matters such as VBS were suspended for a short period but are later reinstated. We are prohibited from probing municipality as a public accounts committee,” said Cllr. Diale.
In conclusion, Hon. Dliso said the MPAC should submit a comprehensive report on all issues they have raised with the municipality within 72 hours. “We also need performance agreements of all senior officials; list of all cases opened; nature of the cases and update on them as well as which law enforcement agencies are involved.
“The municipality should submit a detailed report on how it will implement consequence management on issues raised on the audit report; action on people who are implicated on procurement transgressions such as goods and services procured without inviting competitors,” said Hon. Dliso.
The municipality should also submit a list of consultants in the finance unit and how they were appointed, paid and whether there is value for money as they are duplicating the work of treasury unit. “Madibeng Municipality should submit a detailed report on payment of DSTV and clothing accounts paid from the municipal bank account and names of officials implicated and what action has been taken against them as we cannot allow public money to be used for personal interests.
“A comprehensive report should further be submitted on how the matter of VBS was handled and list of implicated officials,” said Hon. Dliso.
Matlosana Local Municipality was strongly criticised for regression from an unqualified audit opinion with findings in 2016/17 financial year to a qualified audit opinion on the year under review due to material findings on supply chain management. The municipality incurred unauthorised expenditure of R223 million (R1,8 billion in previous years); Fruitless and wasteful expenditure of R68, 3 million and an irregular expenditure of R242 million (R2,7 billion in previous financial years) due to transgressions on supply chain management policies. It also could not implement repair and maintenance plans due to cash flow challenges.
Financial statements of the municipality were also not submitted within 2 months after the end of financial year and it owes Eskom R407 million and Midvaal water about R407 million and had unspent capital expenditure of R97,5 million which was meant for infrastructure projects.
MPAC Chairperson, Cllr. Juda Bogatsu said the Committee cannot conduct investigations as it does not have resources. “There is lack of support from the municipality to ensure that there is accountability on public funds,” said Cllr. Bogatsu.
Public Accounts Committee Chairperson, Hon. Job Dliso there are lot of contradictions on the responses of the municipality as it does not address current and prior year audit findings which include contraventions on supply chain management requirements.
“The municipality continues to unlawfully award contracts without following proper procedure. There is no record management and creditors are also not paid on time as it takes over 380 days to receive their money,” said Hon. Dliso.
He said it is appalling that the Municipal Public Accounts Committee is still struggling with resources such as office space, personnel and tools of trade. “No matter can be referred to MPAC that does not have proper resources,” said Hon. Dliso.
He said the municipality has failed to complete infrastructure projects such as Khuma Stadium due to lack of planning and accountability.
“As a matter of urgency, we need the municipality to send us a report on how it will assist MPAC with resources.
“The Speaker should also assist the Council to ensure that audit report‘s recommendations are implemented. We need a comprehensive Post Audit Action plan and on matters relating to Unauthorised, irregular and fruitless and wasteful expenditure. The report should reflect the date and amount involved; action taken and which officials are implicated and cases opened with the law enforcement agencies,” said Hon. Dliso.
He said both municipalities should submit creditors’ payment policies with a breakdown of payment of creditors which need to be within 30 days not like it is where they are paid in a period of 358 days. “After receiving the information, we will engage with law enforcement agencies to receive an update on all cases opened and still unresolved and we will further open cases of financial irregularities as those implicated should face the mighty of the law. We will never allow our communities to be deprived service delivery and we will ensure there is accountability and there is value for money,” said
Source: Government of South Africa