Failing ANC racks up R75.6 billion in irregular, fruitless and wasteful expenditure

The DA has analysed the 2017/18 Annual Reports of government departments and selected entities that have been tabled in Parliament. Our analysis reveals a shocking level of financial mismanagement and wasted funds by the failing ANC government.

Irregular expenditure

Irregular expenditure occurs when expenditure is not properly managed and is sometimes an indicator of corruption. When government spending cannot be properly tracked, it becomes much easier to cover up corruption and directly enables State Capture.

Total irregular expenditure has reached a staggering level of R72.6 billion. The composite analysis complied last year by the DA revealed that total irregular expenditure, across all departments and entities, stood at R42.8 billion. The figure for the most recent year is double what was incurred in the previous year and does not include all departments and entities as some are yet to table their report.

 The departments and entities that spent the most money irregularly are:

  • Eskom – R19.6 billion
  • South African National Roads Agency Ltd (SANRAL) – R10.5 billion
  • Transnet – R8.1 billion
  • Department of Water and Sanitation – R6.2 billion
  • South African Broadcasting Corporation (SABC) – R5 billion
  • Water Trading Entity – R4.9 billion
  • Department of Correctional Services – R3.2 billion
  • Property Trading Management Entity (PTME) – R2.3 billion
  • Department of Basic Education – R1.7 billion
  • Department of Defence – R1.7 billion
  • Department of International Relations and Cooperation (DIRCO) – R1.2 billion
  • South African Social Security Agency (SASSA) – R1.7 billion
  • South African Post Office (SAPO) – R1 billion

Fruitless and wasteful expenditure

Fruitless and wasteful expenditure cannot be explained away through misfiling of receipts or harmless delays in implementation. This is expenditure that has no benefit to the public and is wasted due to a lack of reasonable care and the basic requirements of management.

Fruitless and wasteful expenditure totals another R3 billion – enough money to build 75 new schools.

The departments and entities that wasted the most money are:

  • Water Trading Entity – R1 billion­
  • Compensation Fund – R446 million
  • Department of Defence – R398 million

Reports still outstanding:

As bad as these figures are, they are just the tip of the iceberg: serial offenders Denel, the Passenger Rail Agency of South Africa (Prasa), South African Airways (SAA) and SA Express have not yet tabled their annual reports for 2017/18. This means that the totals for irregular, fruitless and wasteful expenditure is likely to be much higher than what we are currently able to glean from the reports which have been tabled.

Departments and entities which have still not tabled their reports, as is required by law, are:

  • Department of Energy
  • CoGTA
  • State Security
  • Prasa
  • Denel
  • SAA
  • SA Express

Prasa is suffering major institutional failure and continues to lose Metrorail trains to arson on a monthly basis. SAA suffered a loss of R5 billion in 2016/17. Denel has been left scrambling to recover R400 million in losses due to its ill-fated relationship with Gupta-linked company VR Laser.

Despite this, the ANC government has continued to pour public money into bailing out these failing entities.

If these entities report the same irregular and wasteful spending figures as they did in 2016/17, the total amount of money spent irregularly could rise to R94.5 billion. Fruitless and wasteful expenditure could rise to R4 billion.

Financial collapse:

The Auditor-General has identified one department and seven entities that are at serious risk of financial collapse. These are:

  • Department of Water and Sanitation
  • Compensation Fund
  • PetroSA
  • PTME
  • Public Protector
  • Road Accident Fund (RAF) – financial loss of R26.4 billion
  • SAPO – financial loss of R908 million
  • Water Trading Entity – financial loss of R573 million

In addition, the SABC is considered to be commercially insolvent.

The Department of Social Development has a negative cash flow balance of R12.7 billion, and the Department of Water and Sanitation has admitted that it is essentially broke. The Public Protector – an office that is supposed to protect citizens from corruption and maladministration – reported an R18 million financial loss and almost doubled irregular expenditure.

These are not unimportant departments and entities. They are crucial to governance and to service delivery, yet they are treated as little more than sources of finance to be exploited – with devastating consequences.

These are not abstract figures. Mismanagement and wasteful spending results in poor service delivery and skyrocketing costs to the public. Yet the ANC continues to make the public pay for its terrible mismanagement and corruption, in higher electricity and water prices, increases in VAT and fuel taxes.

South Africans are being asked to pay more and more for their electricity. The National Energy Regulator has given Eskom four years to recover R32.7 billion and has allowed it to increase tariffs by 4.41% this coming April. Eskom wants a higher increase though and has applied for an additional 15% increase for next year.

The near-total collapse of the RAF has led the ANC government to raise the RAF levy in the fuel price – South Africans must now pay more for fuel in order to fix the ANC’s failure to manage the RAF properly.

The Department of Water and Sanitation is drowning in debt as a result of the tenue of Nomvula Mokonyane as Minister. The Department has now taken the extraordinary step of asking Parliament to revise its budget so that it can meet basic service delivery targets. Unfortunately, metros like the City of Cape Town have been forced to raise water tariffs to ensure their continued water supply because the national government has failed to do this.

Endless bailouts of the most corrupt state-owned entities have drained public funds, requiring a VAT increase that impacts poor South Africans the most.

Despite this ever-greater financial pressure on South Africans, service delivery has ground to a halt. SAPO cannot deliver the mail, never mind the social grants that SASSA can’t seem to administer successfully.

NSFAS failed to pay out to thousands of funded students, despite the promises of the wayward former president. And President Cyril Ramaphosa has admitted that lethal pit toilets at schools will only be phased out in 18 years’ time.

The country’s finances are in a dire state. Not only did they ANC get us to this point, but they have no plan to fix what they have broken.

South Africans have an opportunity in the coming election to refuse to reward this lack of accountability, and instead, choose a party that has an absolute commitment to transparency and good governance.

Where the DA has taken over failing ANC governments, it has succeeded in sorting out the financial mess and improving service delivery in remarkably short periods of time.

The DA can build One South African for All, not just the politically connected friends of the ANC.

Committee Chair shields Nkoana-Mashabane during rare appearance in Parliament

Yesterday afternoon, during a meeting of the Portfolio Committee on International Relations and Cooperation, I was thrown out after noting that Minister Maite Nkoana-Mashabane had been hiding from accountability for the past year.
The rarely-seen Minister was presenting herself to the committee for the first time since March 2016, and after failing to answer oral questions in Parliament since 2014.
Instead of taking Nkoana-Mashabane to task for her chronic absenteeism, the committee chairperson, Moses Masango, chose to shield her from accountability by ejecting me for pointing it out. In doing so, Nkoana-Mashabane was not asked to account for a host of issues identified in her department’s annual report, including:

  • Irregular expenditure amounting to more than R785 million;
  • Fruitless and wasteful expenditure of over R10 million this year;
  • The lack of disciplinary action taken against officials who had incurred and/or permitted irregular expenditure, as required by the PFMA; and
  • The Auditor-General’s determination that the Department did not hold performance management and reporting staff accountable for findings raised during the internal and external audit processes.

This is not the first time that an ANC chairperson has tried to intimidate DA MPs in an effort to shield errant members of the Executive. The DA will not allow this incident to deter us from holding dodging Ministers to account.

Irregular expenditure at National Health Laboratory Service increases by R990 million

According to the National Health Laboratory Service’s (NHLS) Annual Report, irregular expenditure increased by R990 million in just one year. Even more shocking is fact that its deficit increased by R2.2 billion over the same period, from a surplus of R273 million the previous year, to a R1.9 billion deficit.
The DA will write to the Minister of Health, Dr Aaron Motsoaledi, to demand that he provide a detailed plan of action to address the serious financial problems at the NHLS as a matter of urgency as these revelations could have devastating consequences for people’s lives.
Minister Motsoaledi must also provide this plan of action in no less than one month as this gross mismanagement of the NHLS’s finances no puts the lives of the more than 80 percent of South Africans who rely on it to diagnose HIV/Aids, Malaria, Cancer and Tuberculosis (TB).
A failure to produce this plan would be a damning indictment on Minister Motsoaledi for neglecting this looming crisis.
Included in the irregular expenditure are the following shocking figures:

  • R575 million paid despite the contracts expiring; and
  • R195 million spent on payments to suppliers with no contracts in place at all.

The NHLS is obviously in serious financial trouble and questions must be also be asked about it financial management and how it got to such serious levels in just one year.
The NHLS plays a vital role in the South African public health through epidemiology, surveillance and outbreak response activities. The majority of our people rely on the NHLS to provide them with pathology services in order to determine whether or not they have life-threatening and possibly contagious diseases.
The DA will not sit back and watch as the NHLS is run to the ground and threatens the lives of our people who have no other alternative to turn to.

Basic Education Department failed our children by missing construction targets

The Department of Basic Education’s (DBE) annual report reveals irregular expenditure amounting to R1.4 billion and underspending of R874 million on a critical programme which is responsible for school and infrastructure construction. The underspending on payments for capital assets in the school infrastructure budget is R558 million.
Given these massive problems in the construction of schools and school infrastructure, DA Deputy Shadow Minister of Basic Education, Nomsa Marchesi MP, will now conduct oversight visits to failed and delayed school projects in the fourth Parliamentary term.
Next week, the Parliamentary Committee on Basic Education will also receive a briefing by the Financial and Fiscal Commission on spending patterns on infrastructure and the Accelerated Schools Infrastructure Delivery Initiative and will thoroughly interrogate the issue following this.
School infrastructure should be a major priority for the DBE, but this is clearly not the case as it failed to achieve their targets for all four school infrastructure performance indicators.
Schools cannot be fixed – or even built – if the issue of irregular spending is also not resolved. Among the main reasons many schools have not been completed is the fact that contractors were changed without proper procedures being followed. The Auditor-General drew special attention to the high amount of irregular expenditure. This year alone, R621 million was mismanaged in this way.
This points to a complete failure by the DBE to manage this crucial programme properly. The department and the minister, Angie Motshekga, cannot continue blaming provinces and bad contractors for the delay in delivering safe schools.  It is time for them to take responsibility for the fact that thousands of children continue to learn in substandard buildings.
At an estimate of R40 million per school, 14 state of the art schools could have been built for close to 10 000 learners, but the money is simply not being spent.
Basic education is vital for improving the circumstances of South African children and building their futures, but they cannot achieve and thrive if their learning environment is falling apart. The DA will ensure Motshekga and the DBE are held accountable for once again failing our children.

The DA welcomes successful motion of no confidence in Bobani

This morning, the DA-led coalition government of Nelson Mandela Bay Municipality (NMB) managed to vote out the United Democratic Movement (UDM) Deputy Mayor, Mongameli Bobani.
The motion of no confidence was supported by the African Christian Democratic Party and the Congress of the People.
Mr Bobani has been a destructive element in the coalition, and his actions have served to undermine service delivery, most especially to the poorest and most vulnerable communities. He has voted with the ANC  on a number of occasions, conduct which is simply unacceptable and not in line with our coalition agreement.
In addition to this, Mr Bobani still needs to face the consequences of serious allegations of irregular expenditure, fraud and corruption that allegedly took place in the directorate for which he was previously responsible – conduct which is inconsistent with our collective commitment to stopping corruption, improving service delivery and creating jobs.
As such, we have had to support this motion against Mr Bobani so that we could continue prioritising service delivery which the people of NMB metro desperately need. We cannot be distracted by self-serving people who are compromising the project of clean and efficient governance.

Municipal audits reveal horrifying financial damage done to municipalities by the ANC

Today, the presentation on key findings of the Municipal Audit report for the 2015/16 financial year has shown the damage done by the ANC to the financial situation at municipalities, where it governs or governed during 2015/16, all over South Africa.
The audit, which interrogated the financial state of municipalities across the country, between 31 July 2015 and 30 June 2016, just before the DA won key municipalities, revealed the following disturbing findings:
• There was a total of almost R17 billion in irregular expenditure in 2015/16, an increase of R5 billion over 2014/15;
• The municipalities failed to notice almost 40% of their own irregular expenditure;
• The North West contributed a staggering 15% of the total irregular expenditure;
• The worst contributor responsible for the irregular expenditure in 2015/16 was OR Tambo District, ANC governed, at R1.56 billion; and
• Over half of all unauthorised, irregular, fruitless and wasteful expenditure reported was not investigated at all.
The ANC government has been directly responsible for financially crippling these municipalities through thieving and looting. This is money that should have been spent on delivering basic services to the people. Yet it has become abundantly clear that the ANC continues to put its self-interest above the needs of the people.
This is what the DA inherited where we came into government after August 2016 and now the financial situation of these municipalities is fast improving.
In Tshwane, with Mayor Solly Msimanga, the DA has presented the City’s first balanced budget meaning that revenue is equal to expenditure. The City has also embarked on a campaign to generate more income, to allow us to finance more pro-poor projects.
In Nelson Mandela Bay, the DA’s Athol Trollip secured R211 million to take services to approximately 3 000 informal homes over the next financial year. This will see around 12 000, mostly indigent residents, receiving water and sanitation services straight to the home, for the first time. Moreover, 1 900 title deeds will also be handed out to rightful homeowners.
In Johannesburg, Mayor Herman Mashaba created an Internal Investigations Unit in the City which has exposed almost R2 billion in fraud and corruption. While the ANC let corruption flourish, the Mashaba administration is decisively cutting it out.
These are excellent examples that where the DA governs, we implement good, clean governance so that we can deliver services, cut corruption and create jobs.
While the ANC abandons the people and squanders money that should go towards improving the lives of millions of South Africans, DA governments will continue to prioritise what the people voted us into power to do and that is to serve them.