Public Works and Infrastructure (DPWI) Minister Patricia de Lille has initiated an internal probe into the KwaZulu-Natal flood intervention projects following a report by the Auditor-General (AG) where risks such as contracts awarded to newly-registered companies or companies that never traded with the department, were flagged.

This comes after her visit to a number of sites last week to inspect the progress of the repair work done by DPWI through contractors in KZN.

“In the interest of transparency, I can today confirm that we have received a brief preliminary report from the AG’s office on its live audit and I have acted swiftly to avoid a repeat of the PPE corruption experienced in the country during the Covid-19 pandemic,” De Lille said on Tuesday.

The initial report was processed in the department for officials to respond to the risks identified and provide supporting documentation on various matters.

Based on the response from DPWI and further investigations, De Lille said, the AG’s office would then complete their final audit report on the KZN flood intervention projects.

Risks identified in AG’s preliminary report

The preliminary report from the AG’s team identified a number of risks.

These included:

• contract awards made to companies owned by the same director,
• some awards were made to newly-registered companies that had never traded with the department before,
• awards were made to companies that never traded with the department in the previous three years,
• awards were made to companies owned by employees of the state,
• and some awards were made to suppliers that did not exist on government’s central supplier database.

“These initial results are extremely worrying and I have engaged the department on these risks and findings to get to the facts and determine which officials need to face consequences where wrongdoing is confirmed,” De Lille said.

The AG’s preliminary audit findings revealed that service providers were approached by departmental management using a deviation process where there was no competition amongst service providers and no market analysis done to assess price reasonability.

The report also revealed that five quotations exceeding R1m were awarded to the same company. There were also quoted amounts by contractors which exceeded the authorised amount while some quotations were received after the contract had already commenced on site.

The AG’s office recommended an investigation into instances of non-compliance to determine the real root cause of the risks and that irregular expenditure identified from the projects should be included in the 2022/23 annual financial statements.

De Lille said they also confirmed that the matter had been referred to the labour relations and legal services unit to investigate further.

“When I was first notified of the above information by the AG’s office, I immediately asked whether we could stop payments to contractors until the full investigations and final audits are completed.”

“The regional manager of DPWI in KZN has confirmed that no services have been paid thus far. All payments and services will be subject to approval and ratification by the relevant committees such as the bid adjudication committee and delegated authority,” De Lille said.

De Lille has initiated an internal audit

In order to investigate the flags by the AG’s office further, she said, the department’s internal audit unit also conducted an audit on the KZN flood intervention projects.

Similar areas of concern were highlighted by the internal audit team as was highlighted by the team from the AG’s office.

The initial conclusion by the DPWI’s internal audit unit, De Lille said, found that key controls implemented by management were found to be inadequate and ineffective to minimise the identified risks to a minimal or acceptable level.

“These initial findings are disappointing and worrying and I will work with the department and AG’s office to get to the bottom of all risks identified and where there is clear evidence of wrongdoing, we will ensure that officials face serious consequences.

“It is extremely disappointing that we continue to see such flags being raised on work where government is needing to respond to an emergency and bring about service delivery to people in need in a responsible manner,” De Lille said.