Department of Public Works turnaround strategy has uncovered R34.9 billion in irregular expenditure dating back to 2001

SEPTEMBER 29, 2014

The Department of Public Works turnaround strategy has uncovered R34.9 billion in irregular expenditure dating back to 2001, Public Works Minister Thembelani Nxesi announced on Monday.

Briefing reporters in Pretoria, Minister Nxesi said a total of R1.1 billion of the amount is being investigated for fraud and corruption.

“Our Turn-around interventions are beginning to yield the desired results. Our investigations have uncovered R34.9 billion in irregular expenditure which has accumulated over a long period in some cases going back as far as 2001,” he said.

More than 70% of the department’s business is related to property management and historically this is the area that has been poorly managed.

“One of the first areas of intervention that we prioritised as part of the Turn-around was to stabilise the finance and supply chain management functions. These function have been substantially stabilised enabling us to further improve efficiencies in line with function operations,” he said.

However, Minister Nxesi made it clear that the shocking R34.9 billion irregular expenditure does not represent transactions processed in a single year, that it is the cumulative result of transactions processed over five years, while some of which have their origins further back to 2001.

The Minister said it is crucial to understand that an irregular transaction does not necessary mean that fraud has been committed.

“It also does not mean that it represents money lost or wasted. The department may have obtained value through such transactions although some technical discrepancies occurred during the procurement or payment process,” he said.

Some of the issues that gave rise to the irregular expenditure include procurement documentation not completed; incorrectly approved, where signed documents did not meet the required levels of authority or signatures of delegated officials.

Another area is an instance where tenders were not advertised for the full 21 days, negotiated procedures followed for procurement of contracts or minimum number of quotations was not received.

Minister Nxesi said there is already a significant decrease in the value of irregular transactions throughout the five year period. He said 2009/10 and prior years makes up 65% of the total irregular expenditure; 2010/2011 makes up 14%; 2011/2012 makes up 11%; 2012/2013 makes up 8% and 2013/2014 was reduced to only 2%.

“I am also aware of the fact that there may be transactions identified through this intervention that may be the result of suspicious practices.

“My team has already identified transactions to the value of approximately R1.1 billion that have been referred to the Special Investigations Unit (SIU) as well as the Department’s Fraud Awareness and Investigations Unit. This amount forms part of the R34.9 billion,” he said.

The Minister said the department has also bolstered its own internal first-line of investigative capacity to ensure that this all-important task is completed expeditiously in the new financial year.

He also vowed that appropriate action will be taken against perpetrators where there are found to be reasonable grounds for it.

“We have repeatedly mentioned that fraud, corruption and maladministration have no place in the Public Works we are seeking to rebuild,” he said.

Property Management Trading Entity

Minister Nxesi has also hailed the Property Management Trading Entity (PMTE). He said they have begun to experience some of the positive contributions brought by the existence of the PMTE. “…particularly in the area of irregular expenditure which, in the past, contributed to both the department and the PMTE incurring successive adverse audits in the form of disclaimers.” - SAnews.gov.za