10 ‘irregular’ government projects in South Africa – and how much they’re costing taxpayers


Auditor General Tsakani Maluleke has released the National and Provincial Government Audits for 2019/2020, providing an overview of government spending and areas of concern during the annual period.

In his first PFMA since taking office, Maluleke said there were “signs of improvement” seen in a number of areas. However, she urged government leaders to ensure “gradual and lasting improvements” in their performance.

“(Our office) cannot yet see the incremental and lasting improvements needed to prevent accountability failures and address them appropriately and consistently across national and provincial governments,” she said.

One of the main thrusts of the Maluleke report is the “material irregularities” that have been identified in various government departments in recent years.

A material irregularity is defined as any non-compliance or contravention of the law; fraud; flight; or a breach of a fiduciary duty, identified during an audit conducted under the Public Audit Act.

The irregularity must also have caused or is likely to cause a significant financial loss, the misuse or loss of a significant public resource or substantial harm to a public sector institution or the general public.

A total of 45 significant irregularities were highlighted by the Auditor General in her report, ranging from irregular offers to stolen goods. Here are 10 of the most glaring:

Late payments from the Ministry of Water – Rand 13.4 million

  • Or: Department of Water and Sanitation
  • What happened: Late payments in 2018-2019 to the water body responsible for the hydraulic infrastructure project resulted in the temporary suspension of the project. The contractor charged the rest time and the interest on the unpaid invoices.
  • The taken procedures: An investigation by the Ministry’s internal risk management unit, completed in August 2020, found that the reason for the late payment at the time was insufficient funds and that no official could be held responsible.
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Defense Ministry paid for rental of unused buildings – R108.3million

  • Or: Department of Defense
  • What happened: Lease payments made from 2015-16 to 2019-20 for unoccupied office buildings.
  • The taken procedures: The accountant opened an investigation in September 2020 and will take action against the officials responsible and take action to recover financial losses based on the outcome.

Incorrect subsidy payments to a Cogta supplier – R 103 million

  • Or: Department of Cooperative Governance
  • What happened: Incorrect payment of the grant to a vendor in July 2018 and August 2018 due to ineffective internal controls for approval and processing of payments – the ministry was unable to recover all of the money from the vendor.
  • The taken procedures: Hawks, the state attorney and the Special Investigative Unit took the case to court to recover the financial loss from the supplier – currently pending.

Non-billed customers for water – Rand 346.2 million

  • Or: Water business entity
  • What happened: Customers have not been billed for their water consumption for several years.
  • The taken procedures: An investigation was completed in February 2021, which identified significant control weaknesses that caused significant irregularities. Customer billing has started and will continue until it is complete. Legal opinion is being obtained on the potential impact of the Ordinance Law on old water debts. Appropriate actions are planned against officials found responsible.

ICorrect bidding process for IT systems – Rand 148.9 million

  • Or: Gauteng Department of Health
  • What happened: The information technology infrastructure was acquired without competitive bidding, resulting in financial losses as cheaper alternatives were available.
  • The taken procedures: In July 2019, the case was referred to the National Prosecuting Authority to consider possible criminal charges and to the state prosecutor to consider possible civil lawsuits.
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ICorrect tender process by Ministry of Transport – Rand 21.3 million

  • Or: Department of Community Safety and Transportation Management in the Northwest
  • What happened: A contract was awarded to the supplier for the learner driver training and empowerment program in October 2015 without complying with the legislative requirements for such participation. As the tendering process was not followed, the ability of the supplier to provide services was not assessed. The prepayment was made in November 2015 to the supplier for whom the services have not been received to date.
  • The taken procedures: A criminal case was opened with Hawks in 2017; investigation still ongoing. Civil action brought against the supplier in September 2017 through the state attorney to recover the loss.

Outstanding IT Services Contract – R85.2 Million

  • Or: Limpopo Education Department
  • What happened: Goods and services were received from the IT service provider, but invoices were not paid because the contract was canceled when the ministry was placed under administration, resulting in litigation and an order against the ministry for pay the unpaid amount plus interest.
  • The taken procedures: The ministry committed in September 2020 to facilitate the mediation process to identify responsible parties.

Incorrect tendering process by Defense – Rand 250.6 million

  • Or: Department of Defense
  • What happened: Contract for verification of inventories and assets awarded in February 2017 to two bidders on a 50/50 basis and not to one bidder with the highest points in the evaluation process, resulting in an increase in the cost of the project.
  • The taken procedures: The accountant took no action in response to the notification of a material irregularity. New recommendations made from November 2020 to resolve the issue.
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Multiple problems with buying trains – Rand 2.2 billion

  • Or: South African Passenger Railway Agency
  • What happened: Numerous instances of non-compliance in the locomotive procurement process in July 2012 resulted in the unfair award of the contract. A prepayment of 2.6 billion rand was made to the supplier, but the auditee did not derive any value from it because the locomotives were not fit for their intended use. The supplier filed for liquidation in December 2018, which makes recovery of the financial loss unlikely and results in a write-down of R2.2 billion of debt owed by the supplier to the auditee in 2018-2019.
  • The taken procedures: The accounting authority canceled the contract with the supplier and the Special Investigation Unit has been investigating since 2015. No further action has been taken. Further recommendations made in March 2020 to resolve the issue.

Contract failed to complete construction – R20.2million

  • Or: Free State Department of Human Settlements
  • What happened: The contractor paid from 2014-2015 to 2016-2017 for the development of community residential units in Thabong which was not completed. A new contractor had to be appointed to complete the work.
  • The taken procedures: The accountant took no appropriate action to resolve the material irregularities. Further recommendations must be implemented by July 21, 2021 to resolve the issue.

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