Entities in the defence portfolio have failed to address outstanding financial irregularities flagged by the Auditor-General.
A soldier participating in the South African Air Force and South African National Defence Force capability demonstration on 19 September. Picture: Michel Bega / The Citizen
Entities under the Department of Defence and Military Veterans are being accused of ignoring billions in financial waste.
The Auditor-General of South Africa (AG) was before the portfolio committee on defence on Wednesday, where it provided its audit findings for the 2025-26 financial year.
The AG’s report to the committee focused on five entities: the Department of Defence (DoD) and military veterans (DMV), Armscor, Denel and the Castle Control Board (CCB).
Together, the entities control a combined R63.2 billion budget, with the unlawful, irregular, fruitless and wasteful expenditure (UIFWE) accumulated over the last 10 years amounting to almost half of that.
All five were found to have material findings against their compliance with key legislation, prompting committee members to deliver several strongly worded statements.
Material findings at all entities
In the last financial year, the DMV, Armscor and CCB received unqualified audits with findings, the DoD received a qualified audit with findings, and Denel a disclaimer audit.
Denel had the worst record, reporting a disclaimer audit – an inability for auditors to form an opinion due to insufficient financial information – for the ninth consecutive year.
The AG stated there was rampant “repeat material non-compliance with legislation on consequence management”.
This was reflected in the entities’ failure to address a combined R25.9 billion in UIFWE, owing, which was mainly due to the DoD’s R25.4 billion in unauthorised and irregular expenditure.
The AG said some entities were seemingly ignoring outstanding financial matters, noting that Denel had unresolved UIFWE matters between five and nine years old, and the defence department had matters older than 10 years.
Fresh material irregularities for the recent audit totalled R443 million in estimated financial losses, with no appropriate action taken in five of the seven irregularities linked to the DoD.
The AG noted that the financial waste had a cascading effect on the defence entities’ core functions.
Across their main performance targets, only Armscor achieved over 50%, while Denel and CCB were the lowest, at 43% and 25%, respectively.
“The DoD did not achieve several performance indicators due to declining availability of ageing prime mission equipment and supportive financial and operational systems.
“Reduced flying hours and sea hours are a direct result of low serviceability rates and delays in maintenance, repair and replacement.
“These challenges have been exacerbated by ineffective support from Denel and Armscor, limiting the department’s ability to sustain and modernise critical platforms,” the AG stated.
‘Going to come to haunt us’
Committee member Chris Hattingh described the presentation as a case of “deja vu“, stressing the defence sector continued to spend with abandon.
“These figures demand explanation about decisions taken, controls ignored, consequence management and accountability delayed,” he said.
Hattingh called for the department to establish a timeline on addressing expenditure backlogs, as well as details on consequence management and who will be tasked with carrying out these actions.
Carl Neihaus said the AG’s report revealed a “department under strain”, warning against kicking the can down the road.
“These issues are going to come to haunt us in the future because we do not address them in the present. The culture of accountability has to be addressed right now,” said Neihaus.
At least R423 million in procurement contracts were flagged by the AG, with Neihaus noting a point on the procurement of automatic rifles.
“In the years to come, ourselves, or future committees on defence and military veterans, will be sitting here talking about this particular replacement of automatic rifles and what went wrong.
“As we sit here this morning, there are some very serious problems with that particular RFI, with information coming out that an amount of weapons had in fact been purchased, paid for, without them being delivered,” said Neihaus.
‘A national embarrassment’
Emma Powell was more scathing of the defence sector’s financial condition, demanding structured and decisive remedial action.
“The sheer scale of unresolved irregular expenditure is truly extraordinary. It is a national embarrassment.
“Those responsible for this mess over the course of the preceding decade should really hang their heads in shame,” she said.
Powell noted that in the private sector, unauthorised expenditure – the spending of funds without permission – was not only a dismissible offence, but a crime.
She warned that the committee had the power to withhold the department’s budget if justified, and listed sections of the Public Finance Management Act that compelled heads of department to ensure accountability, risking criminal sanction if they failed to comply.
“Patterns and departmental culture are not changing. It is incumbent on us to ensure the findings of the AG are implemented and that the parameters of the law are enforced,” said Powell.
Defence minister Angie Motshekga stated the department met regularly with the AG, and that it noted the committee’s comments.
The minister said she was committed to collaborating with the AG to “clarify where things we think are possible to remedy”, but was non-committal on results.
“We have started work but, I don’t expect that next year when we come here, we would have dealt finally with this, but we will report progress,” said Motshekga.
