Real scandal of ‘irregular’ R46bn

Two government weaknesses at core of corruption

WE all have someone in our lives who is calm and calculated in all they do. They are the kind of people who, even during a time of great panic and stress, are always chilled.

Kimi Makwetu, the auditorgeneral, is one such guy: always a smile, always positive and, most of all, always calm.

But not even he could contain his frustration this week as he reported the lack of material progress in the financial management — or the mismanagement — of our provincial and national government departments.

His report tore into the root causes for the slow progress. He called on leaders to stop sticking their heads in the sand, and for movement on what he calls the “doable actions”.

He said: “Accelerating the pace basically requires auditees to constantly and properly perform the basics my office has persistently pointed out to leadership over a while now. These doable actions include auditees implementing plans to address shortcomings in financial controls based on commitments already made.

“Had these simple actions, aimed at improving internal control systems and eliminating governance risks and other concerns raised by our office, been implemented with relentless vigour, we would be reporting much improved audit results today.”

You can’t blame Makwetu for lambasting the government when you consider that, of the 484 entities he audits, only 152 have clean audits.

Over the past three years, 24% of them improved their audit results, while 14% regressed.

In essence, we have had only a 10percentage-point improvement in three years.

Total irregular expenditure is up 80% to R46-billion. Politicians are often quick to point out that irregular spending doesn’t necessarily mean someone stole money. Even the auditor-general notes that 89% of irregular spending on procurement is attributable to goods and services that were actually delivered.

The issue is not whether the goods and services were delivered, or ought to have been procured in the first place. If this was questionable, they would be “fruitless and wasteful”.

The issue with irregular expenditure is whether due process was followed in spending these amounts.

That is a serious transgression when you consider how often emergency sourcing, sole-supplier arrangements and arbitrary contract extensions lead to artificially inflated pricing.

Add to that the missed developmental agenda opportunity of driving targeted spend to designated groups such as black women, black youth and black people living with disabilities.

So, irregular spend is not “regularised” by the goods or services being delivered.

Any spending from the public purse must be in compliance with supply-chain management legislation and failure to do so must lead to consequences for those responsible.

Which takes me to another point. The auditor-general raises two key reasons or root causes for the continuous weakness in financial and performance management of the poor audit outcomes.

The first relates to management’s failure to respond with the required urgency to his office’s consistent messages about addressing risks and improving internal controls.

The second relates to the number of vacancies and instability in the key positions of accounting officers, CEOs, chief financial officers and heads of supply chain management units.

What the auditor-general doesn’t say is that these two conditions are notorious for the emergence, or continuance, of corruption and are potentially there by commission by the powers that be, as opposed to some unintentional omission.

This remains the fundamental reason we receive the auditorgeneral’s reports year in, year out but see the same laissez-faire approach to rectifying the situation and improving the internal controls.

The truth is that it serves many people’s interests not to respond to the auditor-general’s reports and to keep financial posts vacant.

For as long as the big bark of the auditor-general’s report is not followed by the bite of decisive leadership, we are all going to lose our cool.

And, as the UK and the US have recently shown us, this could have disastrous consequences.

Khumalo is the chief investment officer of MSG Afrika Group and presents “Power Business” on Power 98.7 at 5pm, Monday to Thursday

Any spending from the public purse must be in compliance with supply chain legislation