Transnet developing plan to plug the leaks

Transnet said yesterday it was developing a “comprehensive corrective action plan” to prevent the recurrence of irregular expenditure which resulted in the external auditors issuing a qualified audit opinion relating to the completeness of the identification and reporting of irregular expenditure.

This as the state-owned logistics company reported R8.1 billion in irregular expenditure for the year ended March 31, 2018, up from R692 million in the previous financial year, due to the company reviewing contracts from as far back as 2009 and identifying the procurement issues in these results.

Transnet said that the year under review had been characterised by a number of serious procurement related governance challenges which has impacted on its reputation and the ability to attract investment.

“It is apparent from the expenditure that is classified as irregular, although not necessarily giving rise to fruitless and wasteful expenditure, that the detection and prevention controls in this area are not achieving the desired level of compliance,” it said.

“The corrective actions will focus on developing additional controls to prevent irregular expenditure while a mechanism to ensure the completeness of reported irregular expenditure is developed and implemented. These corrective actions will cover both financial and business controls as well as enhancements to the Transnet Integrated Assurance Model.”

Despite this, Transnet reported a revenue increase of 11.3% to R72.9 billion for the year ended March 31, 2018, up from R65.5 billion the previous year, driven by a rise in railed export coal volumes, an increase in railed automotive, container volumes and port container volumes.

The standing committee on public accounts (Scopa) yesterday said corruption and looting of resources were impacting negatively on Transnet.

Scopa said it has told the Transnet board and management to put a stop to the looting to enable the monopoly to be efficient and profitable.

In addition, the commission said it had noted the breakdown in internal controls in the internal auditing and procurement departments. – ANA