31 January 2012
As the SACP we would like to set the record straight with facts.
Where actually did public finances of the province go and how have they been handled?
We believe a tip in the iceberg , the media statement by the joint ministerial team on Limpopo section 100 intervention, released Thursday, 19 January 2012, and the Auditor General`s report on the provincial audit outcomes of Limpopo for the financial year 2010-11 provide an answer in part: incompetence, lack of proper leadership and internal systems, contravention and disregard of the Republic`s Constitution and procedures as laid out in relevant legislation, lack of proper monitoring, fruitless and wasteful expenditure, among others.
As the SACP we regret to highlight a few material facts about the unwelcome conduct in the administration and handling of public finances in the province.
1. The Republic`s Constitution has been disregarded in the provincial government`s cocoon of anarchy with Mr Mathale as premier. This relates in particular to the principles of contracting for goods and services in a manner that is fair, equitable, transparent, competitive and cost-effective.
2. Coupled with this disregard to the Republic`s Constitution in the provincial government is an institutionalised-style contravention of relevant legislation, notably the Public Finance Management Act (PFMA) and Treasury Regulations which prescribes the processes and rules to be followed by departments and public entities in order to consistently and correctly apply the stated constitutional principles and to safeguard the process against abuse.
3. As such, payments in excess of approved contract amount were made, inadequate monitoring and irregularities regarding contract extension or amendment were committed, and hence huge proportions of money evaporated into fruitless and wasteful expenditure.
4. By 2009 Limpopo provincial government had historically accumulated unauthorised expenditure of R1.5 billion. Instead of solving this, the administration under the stewardship of Mr Cassel Mathale, who by the way became the premier before the 2009 elections, exacerbated the problem. By 2011 the province had accumulated unauthorised expenditure to the value of R2.7 billion. This means that in just two years from 2009 newly accumulated unauthorised expenditure sky-rocketed by R1.2 billion.
5. In 2010-11 financial year irregular expenditure by both departments and public entities amounted to R1.1 billion. This is an alarming increase over the prior year total of R6.5 million of which itself is out of order. The education and health departments contributed significantly in this mess. Each incurred R696 million and R401 million respectively, thereby being responsibly of 96% of irregular expenditure.
6. The education and health departments alone are responsible for 98% of fruitless and wasteful expenditure identified so far by the Auditor General. An expenditure all in vain and would have been avoided had reasonable care been exercised, the education department`s fruitless and wasteful expenditure amounted to R60 million, and that by the health department to R161 million. In agriculture department, fruitless and wasteful expenditure amounted to R2.608 million, local government and housing R5.000, public works R219.000, roads and transport R860.647, social development R30.312, and in the office of the premier R152.000.
7. In health department alone, a number of 28 payments in excess of the approved amount were made, totalling a value of R78.020 million. In social development a number of 6 contracts, totalling R76.483 million suffered inadequate performance monitoring. In public works a number of 27 contracts, totalling R10.137 suffered irregularities regarding extension or amendment.
8. In varying degrees poor internal controls exist with health and education departments in a worse position and, as stated in the joint ministerial team statement, the management function in the provincial treasury collapsed with its budget section appearing to have been dysfunctional. Payments to certain providers in the province were in recent times, as the statement highlights, made eight times in a month.
9. Not only did it become clear, as stated in the joint ministerial statement, that by November 2011 the province would not be able to pay teachers, doctors, nurses, social workers and other public sector employees, but it was technically bankrupt and facing a potential shortfall of R2 billion at the end of the present financial year. No other province except ours is in this crisis condition that necessitated the all correct national intervention in terms of Section 100. But in all these, premier Cassel Mathale appears to have been consistently concerned almost about payments to service providers as opposed to workers. Why?
10. One of the problematic phenomena that our province is faced with is illustrated by a significant number of public officials and family members “doing business” with government. Of the numbers identified in the Auditor General`s report for the financial year under review, agriculture department had three officials in that regard with contracts to the value of R348.000, education one (R4.495 million), health eleven (R25.589 million), public works two (R36.000), and local government and housing two (R10.000). Uncompetitive and unfair procurement processes cannot be understood in isolation and disconnected from the web of directorships, shareholdings, “sleeping or silence partnerships” and cuts in different expressions of corruption.
11. In economic development, tourism and environment department the value of R3.485 million went to contracts without three quotations obtained, in health R34.926 million and in the office of the premier R319.000. In numbers economic development, tourism and environment account for 36, health 46 and office of the premier 13.
Contact:
Gilbert Kganyago – Interim Provincial Secretary
072 586 7340