Irregular spending surges as metro struggles to restore financial credibility

The Auditor-General’s (AG) report on the metro’s 2024/25 financial year paints a troubling picture of a metro struggling to arrest long-standing weaknesses in financial management, internal controls and consequence management, despite limited areas of technical improvement.

While the report records a reduction in the number of audit qualification areas, it confirms that core governance failures persist, with unauthorised, irregular, fruitless and wasteful expenditure continuing to rise and accountability remaining weak.

The Tshwane metro received a qualified audit opinion for a third consecutive year. The report was tabled before the Tshwane council meeting on January 29.

A qualified audit means there are misstatements in the entity’s financial statements.

The AG, Tsakani Maluleke, noted that the metro does not yet have an effective system of internal control over key areas such as asset management and expenditure oversight.

She pointed out that unauthorised, irregular, fruitless and wasteful expenditure increased by R5-billion to R23-billion in total.

The AG found that the metro failed to take reasonable steps to prevent these losses or to act decisively on completed investigations.

The report further highlights weaknesses in revenue management and financial sustainability.

Declining revenue collection, rising cash flow pressures and growing trade payables were flagged as indicators of financial distress.

According to political parties, the National Treasury has already warned the metro that failure to address irregular expenditure could place future grant funding at risk.

Although the AG acknowledged improvements in narrowing qualification areas, it stressed that historical problems continue to undermine the metro’s financial credibility.

Against this backdrop, DA Tshwane caucus leader Cilliers Brink said the AG’s findings confirm that the metro has gone backwards under the current ANC-led coalition.

Brink argued that the report shows a sharp deterioration in key financial indicators, including cash coverage, trade payables and revenue collection, which he said dropped from 93% to 85%.

According to Brink, the increase of unauthorised, irregular, fruitless and wasteful expenditure to a total of R23-billion reflects a failure to act on investigative findings already completed.

“The metro’s inability or unwillingness to implement consequence management has placed it on a collision course with National Treasury, which warned in December that grant funding could be withheld if irregular expenditure is not addressed,” he said.

Brink further criticised what he described as a selective and inconsistent application of the metro’s credit control policies.

He pointed to outstanding debt linked to politically connected individuals as evidence that the metro’s approach to revenue collection lacks credibility.

Freedom Front Plus (FF+) leader in the council Grandi Theunissen echoed these concerns, describing the AG’s report as evidence of a collapse in financial management, accountability and service delivery under the current ANC/ActionSA/EFF coalition.

“The report points to incorrect asset valuations that inflated the metro’s financial statements, as well as the understatement of contingent liabilities by more than R4.3-billion,” Theunissen said.

Theunissen highlighted the AG’s findings on weak internal controls and poor procurement management, warning that these failures increase the risk of corruption and undermine transparency.

“Consequence management has effectively stalled, allowing irregularities to go unpunished while senior officials face political pressure that erodes professional independence.”

Beyond the financial findings, Theunissen drew attention to what he described as a parallel decline in basic service delivery. Illegal electricity connections, cable theft and substation vandalism have left residents without reliable power, while reducing municipal revenue.

He argued that progress achieved under the previous multiparty administration had been erased within nine months. He warned that the coalition’s decision to earmark R2-billion for salary increases and back payments without testing the matter in the Labour Court places an unsustainable burden on the metro’s finances.

“This decision is likely to result in an even more damaging AG report in the next financial year,” remarked Theunissen.

Tshwane Mayor, Dr Nasiphi Moya, however, has defended the metro’s trajectory, saying the 2024/25 Annual Report of Tshwane and AG outcome must be read in conjunction.

The report, tabled in Council on the same day, reflects, according to Moya, a metro stabilising after a prolonged period of institutional strain, with the number of qualification areas reduced from six to two.

Moya acknowledged that serious challenges remain, particularly in relation to internal controls and unauthorised expenditure.

She stated that the municipality has assured the AG that it will take action against corrupt officials, noting that while most officials are committed to their work, a minority is involved in criminal networks.

She referred to the annual report and said: “It provides a factual, audited account of where this city stands, what has improved, and what still requires urgent attention. It does not pretend that all our challenges have been resolved. But it does demonstrate that Tshwane is no longer drifting. It is stabilising, correcting course, and beginning to move forward with purpose.”

She also emphasised that, “we have now realised that a majority of officials in this city are good people, they mean well, we need them every day doing the work they are employed to do. But there is a minority that’s part of the criminal networks, and we are going to smoke them out of the system. On that, you have our word.”

The metro announced on the same day that it had finally applied to the National Treasury to blacklist controversial businessman Edwin Sodi and his affiliated companies from future government contracts.

This follows a failed R250-million Rooiwal Wastewater Treatment Plant upgrade awarded in 2019 to a Sodi-led consortium, which was later cancelled after the site was abandoned. The metro said delays were due to ensuring a proper process, after earlier applications were rejected.

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