Sale of state bus firm comes under Scopa scrutiny

The sale by the national transport department of a bus service has left the Eastern Cape with a R2.1bn irregular expenditure headache as the deal forced the provincial department to pay monthly subsidies worth millions to the private company from 2017.

The auditor-general (AG) disclosed the irregular expenditure in its Thursday briefing to shocked Bhisho MPLS in the standing committee on public accounts (Scopa).

The Algoa Bus company was sold for an undisclosed amount in June 2017 by the national transport department, MPLS heard. But the provincial transport had to pick up the bill of subsidising the company even though it was in private hands.

Scopa chair Veliswa Mvenya asked provincial head of transport Mzi Mafani to categorically state whether the R2.1bn was irregular expenditure as his office contended it was an “unfair” finding by the AG.

The AG’S office, according to its report, had obtained an external legal opinion on the matter and found the expenditure did not comply with the provisions of the National Land Transport Act.

“The payments made should be considered irregular expenditure,” the report said.

Mafani said the initial contract between national transport and Algoa Bus, and the subsidy were ceded to the provincial department.

“What had then happened in 2009, there was an announcement of the land transport act ... The AG, towards the audit process [for 2019/20], then requested we provide how we ended up with that contract. The initial stages of the contract were actually concluded through the national department.

“Then there was the issue of the company, Algoa Bus, that was sold. The AG requested that information,” Mafani said.

He said the bus company refused to divulge information based on a confidentiality clause in the contract.

They approached the national treasury and transport departments, where in various meetings it was “indicated” that similar contracts with private bus owners were common.

The assistant to Algoa Bus’s CEO, Elsa Barnard, said she had printed the Dispatch’s queries for the company’s three directors, who would phone back. By print deadline they had not done so. National transport spokesperson Collen Msibi did not respond to e-mailed questions.