IFP MP and chairperson of Scopa Mkhuleko Hlengwa. (Jan Gerber)
- The Department of Water and Sanitation and its entities saw irregular expenditure grow by R1.4 billion in 2018/2019, and fruitless and wasteful expenditure by R208 million.
- The Auditor-General of South Africa gave the department an unqualified audit opinion with findings.
- The Standing Committee on Public Accounts wants to conduct a full-scale parliamentary investigation into the department.
When the Department of Water and Sanitation finally handed in its annual report for the 2018/2019 financial year, it contained an increase in irregular expenditure of R1.4 billion and R208 million in fruitless, and wasteful expenditure on the previous year for the department and its entities.
Parliament’s public finances watchdog, the Standing Committee on Public Accounts (Scopa), now wants a full-scale investigation into the department.
Representatives of the Auditor-General of South Africa (AGSA) presented a report on the department and its entities’ annual reports to Scopa on Friday.
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Section 65 of the Public Finance Management Act requires ministers to table reports annually on departments and public entities they are responsible for by 30 September.
The department’s annual report was only tabled in March.
According to the AGSA’s report to Scopa, the department’s audit outcomes had improved from a qualified audit opinion with findings to an unqualified audit opinion with findings, with the Water Trading Entity (WTE) remaining stagnant with a qualified audit opinion with findings.
The AGSA audited the Trans Caledon Tunnel Authority (TCTA) for the first time for the 2018/2019 financial year and it had regressed from an unqualified audit opinion with findings to a qualified audit opinion with findings.
It found material misstatements in the financial statements of both the WTE and TCTA.
Fruitless and wasteful expenditure
Fruitless and wasteful expenditure incurred by entities in the portfolio in 2018/2019 was R754 million, compared to the previous year’s R546 million.
“The majority of the disclosed fruitless and wasteful expenditure for the current year was caused by contractor invoices not being paid, resulting in interest and standing time being incurred as well as excessive management fees being charged,” read the presentation.
Irregular expenditure rose to R5.694 billion in 2018/2019 from the previous year’s R4.227 billion.
The majority of the department’s irregular expenditure was caused by not following procurement processes and expenditure incurred due to improper deviations.
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Furthermore, the department’s War on Leaks project of almost R3 billion has been declared irregular expenditure as funds earmarked for another purpose were used without obtaining prior approval, while supply chain management processes were not observed.
At the TCTA, the majority of the irregular expenditure was caused by non-compliance with National Treasury Instructions and at WTE, the majority was caused by not following procurement processes, expenditure incurred due to improper deviations and sundry payments.
“So, the water and sanitation headache remains with us for the foreseeable future,” said Scopa chairperson Mkhuleko Hlengwa.
He added the committee would be “probing very seriously what happened in the department”.
Systemic corruption
Hlengwa said it appeared “systemic corruption began to entrench itself ” at the department in 2014.
He added towards the end of its term, the Fifth Parliament undertook to conduct a full parliamentary inquiry into the department, but this never came to full fruition.
In a statement released after the meeting, Hlengwa said: “Scopa believes this process should resume to give clarity on how the department ended up where it is financially.”
He added it was important the full extent of the financial mismanagement at the department was known.
“This is why Scopa believes the inquiry should begin as far back as 2014. The committee will proceed with the necessary processes in its efforts to ensure that the full parliamentary inquiry into the department takes place as soon as conditions allow.”
