Madibeng allegedly spent R 1 billion on leased vehicles – SCOPA

The Madibeng municipality allegedly spent R1 billion on leased vehicles in the 2017/2018 financial year, the Standing Committee on Public Accounts (SCOPA) said this week.

Madibeng also acquired a loan of about R.1 billion from the Public Investment Corporation and never disclosed it, Success Marota of the Auditor-General’s North West branch said.

North West SCOPA has harshly criticized the Madibeng Local Municipality for lack of consequence management on irregular expenditure of R51 million due to contraventions of supply chain management requirements.

This follows a virtual Municipal Finance Management Act public hearing with the municipality to account on the 2017/18 audit report.

How much is a billion rand?

R1 000 000 000? The easiest way to explain it is that a million seconds is 12 days and a billion seconds is 32 years. If Madibeng takes out R1.00 out of their budget every second of the day it will take them 32 years to spend it. In short – Madibeng paid R2.7 million rand per day on leased vehicles!

According to Marota, a business executive at the Auditor-General South Africa’s North West branch, Madibeng acquired the fourth consecutive disclaimer audit opinion due to lack of sufficient appropriate audit evidence. “There has been lack of consequence management in the municipality in the current and previous financial years although there is sufficient evidence of financial misconduct and transgressions.

“There is significance reliance on consultants for preparation of annual financial statements although the municipality has a staff component of about 134 at its budget and treasury office. It spent about R35 million on these consultants who are not yielding any results,” said Marota.

He said there is general lack of accountability on public funds in the municipality as in a case where the municipality acquired a loan of about R1,1 billion from  the Public Investment Corporation. “The loan was never disclosed on the financial statements of the municipality during audit.

“We were also unable to determine the level of unauthorised expenditure due to lack of sufficient audit evidence. There is also no political will to improve the status of the municipality as we witnessed that in some instances there were unauthorised debit orders for clothing; cutlery and digital television accounts on the municipal bank account but no official was ever charged.”

He further elaborated that there is lack of documentation on many contracts in the municipality which never went into proper tender processes. The municipality is also failing to pay its creditors on time which include electricity and water boards.

The Provincial Public Accounts Chairperson, Hon. Job Dliso said it is worrying that the municipality omitted the last question of the responses which dealt with consequence management. “This is a complete act of sabotage on our work as an oversight Committee which should guard public funds,” he said.

“The municipality deliberately left out the important part of implementing consequence management and it is not properly signed off by the Mayor or accounting officer. There are 17 recurring qualification areas on the report and they don’t even have a plan to address them.”

“It is concerning that it took a High Court judgement for the municipality to admit that it took a loan from the Public Investment Corporation and still, there is no concrete plan to repay it as it is in a financial distress. There are also allegations that the municipality leased vehicles for a tune of R1 billion but no plan to fix the problem,” Dliso said.

The Chairperson of the Municipal Public Accounts Committee (MPAC), Cllr. Diale Diale also said it is disturbing that the municipality has been placed under multiple administrations but this never yielded any positive results. “There is no consequence management even for people who transgressed supply chain management policies. Officials implicated in corrupt activities or matters such as VBS were suspended for a short period but are later reinstated. We are prohibited from probing municipality as a public accounts committee.”

Dliso said the MPAC should submit a comprehensive report on all issues they have raised with the municipality within 72 hours. “We also need performance agreements of all senior officials; list of all cases opened; nature of the cases and updates on them as well as which law enforcement agencies are involved.

“The municipality should submit a detailed report on how it will implement consequence management on issues raised on the audit report; action on people who are implicated on procurement transgressions such as goods and services procured without inviting competitors. The municipality should also submit a list of consultants in the finance unit and how they were appointed, paid and whether there is value for money as they are duplicating the work of treasury unit. Madibeng should submit a detailed report on payment of DSTV and clothing accounts paid from the municipal bank account and names of officials implicated and what action has been taken against them as we cannot allow public money to be used for personal interests.”

He said a comprehensive report should further be submitted on how the matter of VBS was handled with a list of implicated official.