SPEECH NOTES: Consideration of SCOPA Committee report

Issued by Bobby Stevenson, MPL

The Auditor General’s provincial audit outcomes paint a bleak picture of the Eastern Cape provincial government that is failing to practice consequence management.

Not only did the province have the highest unauthorized expenditure in the country of R1.59 billion, but the Department of Health also still faces contingent liabilities of R36.75 billion, the highest of all national and provincial auditees.

The AG says there’s significant doubt whether the health department will be able to continue with their operations as planned based on their current financial position which is plagued by accruals.

The Health Department also had contracts to the value of R1.805 million which were awarded to employees of the department. Awards totaling R49. 909 million were made to close family members, business partners and associates of officials of the department.

The devastating outcomes revealed why the AG can in part be attributed to the ANC’s cadre deployment policies and the complete lack of accountability of those guilty of wrong doing.

The AG highlighted how the poor internal control environment has effected the outcomes of key service delivery departments such as health, transport and education. The most common areas of non-compliance were with legislation where there was a failure to prevent irregular and fruitless and wasteful expenditure, as well as inadequate procurement and contract management.

The AG also found that a number of Eastern Cape departments had repetitive findings and had stagnated on an unqualified opinion with findings as the leadership did not sufficiently implement the preventative controls.

There is some light at the end of the tunnel, which is the implementation of the amendment to the public audit act which states that if a material irregularity is found to have occurred, it allows the AGs office to take necessary steps, if the accounting officer or authority fails to do so.

The only way for the Eastern Cape to improve on audit outcomes, eradicate corruption and maladministration is to practice consequence management, but this requires a capable state. A capable state that delivers to all rather than a connected few.

This requires adherence to the principle of the separation of the party and state and the non-political public appointments be made on ability to deliver rather than political loyalty as is the current case.

The Democratic Alliance welcomes the fact that the New Public Audit Act that was amended in 2019 is now being implemented. This act gives the Auditor General the power to report a material irregularities that are detected during the audit.

A material irregularity is defined as, ‘…any non-compliance or contravention of legislation, fraud, theft or breach of fiduciary duty that results in material financial losses.’
The amendment empowers the Auditor General to refer a material irregularity to another public body for investigation and to take binding remedial action if the audit recommendations are not implemented.

If the remedial action is not implemented, the auditor’s office can issue a certificate of debt to recover the lost money from the accounting officers or relevant authorities.

This step is long overdue and will go a long way to assist in enforcing consequence management, which is so lacking in the Eastern Cape.

When the Auditor General gave her presentation on the 5th March this year to the legislature, she highlighted that there nine material irregularities that have been identified in the province:

Two were for the Department of Transport

One was in relation to the R1.5 million grader that was mysteriously stolen with the keys left in the ignition.

The second one relating to a vehicle that was paid for but not delivered.

There was also four material irregularities that were identified in the Department of Human Settlements

They are all in relation to procurement irregularities where the department did not give the contracts to the party that scored the highest bidder. These contracts should not have been awarded in the first place, and this has resulted in a R23 million loss.

The Democratic Alliance will be watching this space very closely and we continue to keep watch to ensure that this money is recovered. We cannot tolerate procurement irregularities in this province.

Other procurement irregularities were identified in the Department of Education where R8.7 million was paid for services that were not rendered and, interest on late payments.

The Health Department also had to pay R14 million on interest for late payments

Honourable Speaker, as we have previously reiterated in this House, it is only when we build our house on the rock of good governance that we will fix what is wrong with the Eastern Cape.

It is in this way that we will get value for money and have a more efficient and effective government.

The Western Cape provincial government needs to be congratulated for again being able to produce exemplary audit outcomes. The AG announced that the Western Cape with 70% of departments and entities receiving clean audits. These results show that this DA run province is the best run in South Africa and is indicative of the DA’s commitment to clean governance, service delivery, and creating a capable state.

While the DA Western Cape has excelled in good audit outcomes, ANC governed provinces have proven themselves incapable of running clean and accountable government. The fact that the next best province behind the Western Cape is a meager 30% in clean audits proves that the DA is miles ahead of the ANC and consistently shows its commitment to dealing with non-compliance, lack of accountability, corruption and irregular tender processes. The DA gets things done.
Under the leadership of Premier Alan Winde, the Western Cape has demonstrated itself to be the province that has zero tolerance for corruption and 100% commitment to delivering services to residents through a clean and capable government.

Getting government spending right is paramount, especially at a time when many South African families are reeling due to the effects of the extended lockdown which has affected their lives and livelihoods.

The DA brand of governance has proven that it is committed to deliver services to the people who entrusted it to govern and we look forward to sharing this commitment to South Africans across the board in the upcoming elections.

The DA difference will create the hope and change that people need.