EATERN CAPE MUNICIPALTIES LOSES R82 MILLION TO WASTEFUL EXPENDITURE AND FRAUD

Local government in the Eastern Cape is festered with fraudulent and fruitless and wasteful expenditure.

In a written response to a parliamentary question, it emerged that 21 municipalities incurred fruitless and wasteful expenditure while 13 others incurred some fraud activity in the 2009/10 financial year. The combined amount of the fraud and waste was a staggering R82.482 million. For the response, click here:

oral reply question 16

Of the 45 municipalities in the province, 34 (or 75%) are implicated in this fiasco.

This issue highlights the seriousness of how the government’s policy of cadre deployment has resulted in unskilled and ill equipped financial officers being appointed to run municipal finances in many of these municipalities.

While the fruitless expenditure alone amounted to R59.187 million, some R35 million was wasted on late payment interest to creditors including SARS.

An amount of R8 million alone was interest due to the Department of Water Affairs for outstanding debt incurred by OR Tambo municipality.

Service delivery will be seriously compromised in Joe Gqabi municipality due to a withholding of the equitable share by National Treasury due to poor financial controls.

The Nelson Mandela Metro is the biggest culprit of cyber fraud with a whopping R19 million of funds being electronically transferred to irregular bank accounts.

In Buffalo City, an IT company was paid R880 000 for work not done, while in Alfred Nzo municipality R254 798 was wasted as a result of a fabricated hi jack of a hired vehicle used by the department by a municipal employee.

While the various investigations and criminal charges are underway this state of affairs is a serious indictment on the lack of prudent financial oversight by Municipal Managers and is leading to a crises situation in the province.

I will be following up regularly with the MEC for Local Government as to what corrective training plans will be put in place in all cases reported and how the MEC intends avoiding a large scale municipal financial crises (as has happened in the Metro) from happening throughout municipalities in the province as a result of the current information reported.