R2.9bn in wasteful expenditure at DEFF
The Auditor-General’s annual review of the Department of Environment, Forestry and Fisheries’ finances has uncovered extraordinary irregular expenditure and has issued a string of negative audit reports. By Don Pinnock
The Department of Environment, Forestry and Fisheries (DEFF) has accumulated unauthorised, undocumented and wasteful spending totalling R2.9-billion of taxpayers’ money.
As a result, in its 2019/20 report, the Auditor-General (AG) has slapped it with several qualified audits.
In a single year, according to the report, DEFF’s irregular expenditure jumped from R342-million to R2.9-billion owing to “inadequate monitoring of compliance with supply chain management laws and regulations”. A qualified audit is given when the auditor is not able to gather sufficient evidence to support various aspects of the financial statements.
The AG also flagged problems with the organisations administered under DEFF: SANParks, the iSimangaliso Wetland Park Authority, the Weather Service, Fisheries, Forestry and the National Biodiversity Institute (Sanbi).
The report was tabled as part of the mandate of Parliament’s Environmental Portfolio Committee to exercise monitoring and oversight of DEFF. It noted that 87% of the irregular expenditure related to the Department itself, where internal controls were inadequately designed and implemented.
The fruitless expenditure related to “pre-payments made to implementing agents for goods and services that were not in line with the contractual arrangements and agreed deliverables, cancellation of travel/ no-show accommodation, payment of interest and penalties, payment of VAT charged by non-VAT vendors, damaged stock, misuse of vehicles and overpayment to suppliers”.
According to DEFF, “Minister Barbara Creecy has indicated to the Portfolio Committee that in her view these audit outcomes are unacceptable. The Minister has already initiated consequence management for the irregular expenditure which began in the 2018/19 financial year and continues in the 2019/20 financial year.”
Responding to the AG report, DEFF notified Parliament that disciplinary action was in progress involving R152,717,823; there was preferential treatment of select bidders involving R379,573,308; fraud and misconduct was found in the allocation of R1,411,572,300; and poor management led to wasteful expenditure of R141,173,482. This comes to about R2-billion. The additional R900-million was not mentioned.
The AG found that Forestry was unable to “quantify and provide evidence on the value of biological assets (forests)” as well as poor controls and oversight on these assets and unreliable or ineffective monthly reports and quarterly and year-end reconciliation processes. There was also “infighting and lack of leadership ... from the executive”. The audit report was accordingly qualified, these problems precluding a clean audit.
Inadequate internal controls
In the iSimangaliso Wetland Park Authority liabilities exceeded current assets by R9.03-million. Problems included misuse of vehicles and overpayments to suppliers. (Its chief financial officer was recently suspended and then discharged.)
Sanbi cracked an unqualified audit despite the AG finding inadequate internal controls in terms of proper record-keeping, daily and monthly controls, and inability to review and monitor compliance.
At SANParks there were similar problems and “daily and monthly controls were of concern, whereas the ability to review and monitor compliance was inadequate, needing intervention”.
The Weather Service audit was unqualified, but proper record-keeping remained a concern, as well as wasteful expenditure.
According to SANParks CEO Joanne
Yawitch, DEFF’s present financial problems are most likely inherited from previous administrations.
“I joined the
SANParks board in 2015 and found there had been significant misadministration in the period before then. We spent a lot of time investigating what had happened and trying to rectify it.
“A lot of it was about there not being efficient systems or people not doing the paperwork and breaking Treasury rules...
“Under Barbara Creecy there’s been rigorous consequence management and attempts to get administration problems under control... Incorporating Forestry and Fisheries was a disaster. DEFF inherited huge issues of corruption in Fisheries under previous administrations. When you put consequence management in place people under investigation often resign. Unless there is fraud, corruption or theft which you can charge them for, the information is gone.”
Environmental organisations were less than sympathetic. A climate and energy campaigner at Greenpeace Africa, Thandile Chinyavanhu, said it was concerning that DEFF has received a qualified finding for the fifth consecutive year when real action is required on several environmental issues.
“The department is squandering money from South Africans, who are faced with the financial burden of surviving a pandemic compounded by a looming hike in electricity tariffs. And the underspending in environmental programmes highlighted by the report demonstrates DEFF’s lack of commitment to environmental and social justice.”
Michele Pickover of EMS Foundation said DEFF’s mismanagement came as no surprise. “We are entering a sixth mass extinction and are responsible for the unravelling and destruction of Earth’s ecological systems and wildlife … But, terrifyingly, the very department that should be the bulwark against wildlife destruction has dropped the ball in an indefensible way.”
Targets not met
The AG also assessed the outcome of targets set by the various entities. For oceans and coasts “the overall departmental targets in the year under review were actually half of the past two prior years”.
In biodiversity and conservation “the Department achieved more in the two prior years than what was achieved in the current reporting year”.
The performance of its environmental programmes “was poor relative to 2018/19” and in waste management it was found to have performed unsatisfactorily, a comment also made for Sanbi, SANParks and
the Weather Service.
The AG and the Portfolio
Committee concluded that there was concern that “none in the environmental portfolios received a clean audit” and that there were problems with the preparation of financial statements.
The report also expressed concern that for the past four financial years the Department had received a qualified audit with findings that were “unacceptable, considering the amount of effort spent on facilitating the Department through a series of engagements in Parliament to overcome this challenge”.
The Committee was also concerned about the R160-million underexpenditure in environmental programmes. It also noted concerns about high rhino poaching numbers, especially in the Kruger National Park.
The Committee expressed concern at the lack of updates of rhino and elephant statistics in national parks. It also requested more information on waste from
We are entering a sixth mass extinction... Terrifyingly, the very department that should be the bulwark against wildlife destruction has dropped the ball in an indefensible way
water leakages as a result of ageing or decaying infrastructure and was concerned that funds meant for infrastructure maintenance were not used.
Oddly, the Portfolio Committee said it was “pleased with the performance of the Department and entities as well as those of the Forestry and Fisheries branches, especially in terms of meeting predetermined objectives. The sustainability of the SA environmental sector is being ensured despite the ever-growing ... challenges on the sector.”
The report was adopted by the Portfolio Committee despite objections by the DA, which argued that the members had only received it that morning and were unable to properly study it.
It now needs to be adopted by the National Assembly, whereafter the minister would be required to submit a detailed response to the recommendations in the report within 60 days.