Abuse of Supply Chain processes leads to R168.8mill in unauthorised, irregular, fruitless and wasteful expenditure in AbaQulusi

R168.8 million.

This is the amount of unauthorised, irregular, fruitless and wasteful expenditure that AbaQulusi Municipality has accumulated in the 2017/2018 financial year.

Ward councillor, Alta de Kock, is urging all councillors to stop being, “oxygen thieves,” and compelled them to, “start working,” while, in a shocking turn of events, Mayor Jerry Sibiya informed the council that, aside from the Chief Financial Officer (CFO), the municipality does not have a single qualified accountant.

“We are relying on consultants for the finance and internal audit functions. This is where we have found errors in terms of accounting and monitoring. We need to do away with consultants and drastically review the financial section. We have made arrangements with the municipal manager (MM) to, at least, appoint one accountant internally because there is no one in that section as we speak,” said Cllr Sibiya.

Hair-raising abuse of Supply Chain processes brought to light

“The majority of this irregular expenditure was the result of a competitive bidding process not being followed,” said Preshnee Moonia, a representative from the Auditor General’s (AG) office, at the council meeting held on Thursday last week.

AbaQulusi has received a qualified audit report with findings for the second consecutive financial year, following an unqualified audit opinion in the 2015/2016 financial year.

While the qualification was based mainly on discrepancies in the manner in which property, plant and equipment was presented in the annual financial statements that were submitted, it became clear during the presentation of the AG’s report that the Supply Chain Management Department (SCM), the Finance Department and the Human Resources Department (HR) are in need of immediate intervention.

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The SCM Department has not had a manager, since an investigation into the previous manager began in 2016 following allegations of unscrupulous procurement practices.

Among the issues raised by Ms Moonia regarding this department are:

• Goods and services under the value of R200 000 being procured without the required price quotations being acquired;
• Contracts being accepted from bidders whose tax matters were not in order with SARS;
• Invitations for competitive bidding not being advertised for the required minimum period of days;
• Awards being made to suppliers whose principle directors were in service of other state institutions;
• And payments to suppliers not being made within 31 days in violation of the Municipal Finance Management Act (MFMA).

“Similar issues were identified in the previous year and no effective steps were taken to prevent or combat the abuse of the SCM process. Reasonable steps were not taken to prevent unauthorised, irregular, fruitless and wasteful expenditure,” she said.

In the sound clip below, Preshnee Moonia, a representative from the Auditor General’s office, talks about the issues she uncovered in the Supply Chain department, mayor, Jerry Sibiya, gives feedback as to what steps are being taken to rectify these issues, and Cllr Alta de Kock doesn’t hold back as she expresses her frustration about staff that doesn’t do their work:

“There is already a management report incorporated in the annual report to respond to the issues relating to SCM,” reassured Cllr Sibiya. “It is true that one of our challenges is that we did not have an SCM manager because he was under investigation. The outcome of the investigation has now been tabled in council and we are addressing it. We are about to conclude the issue and appoint a qualified person.”

“My jinne!” exclaimed Cllr de Kock. “I realise we have been sitting for years with people who are used to doing nothing but it is about time we got them out of the grave and made them alive again. I would like to see a report every month in terms of procurement processes. Every month, the council needs an explanation for any expenditure that was irregular, fruitless and wasteful. We need to determine what we can do to prevent it. There are too many cases in the AG’s report where proof was not communicated, or reports were not handed in, or checklists were not updated and included with the financials. We need to ask why this is not being done.”

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She continued, “I understand some of the irregular expenditure may have been for urgent repairs and maintenance to infrastructure that was not budgeted for, but it is up to the MM, the directors, the council and the Municipal Public Accounts Committee (MPAC) to seriously tackle the issues highlighted by the AG so that, at the end of the next financial year, we are not sitting with the same problems. We need to be clear. If it is your job, you must do it. You are getting paid. If you don’t do your job, you will face disciplinary action. Talk is cheap but money buys the whiskey, but in this place we don’t have the money. We have to stop talking to make sure the train goes forward.”

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