Rampant looting: Almost R1bn written off at OR Tambo Municipality

OR Tambo Municipality’s audit outcome for the 2022-23 year painted a poor picture of service delivery as it suffered during political and financial turmoil.

Chairperson of Parliament’s Standing Committee on Public Accounts (Scopa), Songezo Zibi had a follow-up meeting with officials from the Auditor-General of South Africa (AGSA) on Thursday afternoon.

The virtual meeting saw officials outline the state of the Eastern Cape municipality’s finances and performance for the year in question. They also discussed what caused this and the way forward.

OR Tambo Municipality well short of its targets

The AGSA’s head of portfolio, Vanuja Maharaj explained the municipality supplies water services for five municipalities within its jurisdiction. Millions of residents depend on this.

However, troubles at the entity led to a collapse of service delivery for a year or two before action was taken.

In March 2022, the municipality was placed under administration by Treasury. There was much infighting between council factions during this time and it ended up with two councils running concurrently.

Various acting municipal managers were appointed, which created further chaos.

This all impacted service delivery before the council started to stabilise in the 2022-23 year. There were disciplinary hearings held for the chief financial officer during this time before he resigned. A new chief financial officer and municipal manager were appointed.

Then, for the first time, OR Tambo received an unqualified audit opinion in 2023.

However, the situation is far from perfect.

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OR Tambo’s performance for 2022-23:

• Percentage compliance of drinking water quality – 89% achieved vs 95% targeted;
• Percentage compliance of wastewater effluent quality – 57% achieved vs 93% targeted;
• Number of households with access to basic level sanitation services – 2 133 achieved vs 7 500 targeted;
• Total volume of water delivered by water trucks (kilolitre) – 25 327 achieved vs 64 800 targeted.

This was despite reservoirs being built. They were left unused due to lacking infrastructure.

Maharaj said failings like this brought illness to communities while non-compliance led to possible spillages of sewage into rivers.

Irregular expenditure is still increasing

On the financial front, the creditors’ payment period increased from 314 in 2021-22 to 409 in 2022-23. This may have led to delayed and/or abandoned projects.

Overdue accounts also attract interest, increasing municipal debt.

The Auditor-General found that after an improvement in 2021, annual irregular expenditure still increased from R113 million in 2021-22 to R171 million in 2022-23. This is an increase of R59 million.

About 50% of irregular expenditure was dealt with and is in the process of being recovered if not recovered already. However, the other 50% (R997 million) was written off.

However, there are cases where irregular expenditure is still being investigated and there may be consequences and funds recovered.

Material irregularities were also found and are being investigated.

Maharaj said the municipality confirmed to AGSA that it would take action to ensure ongoing projects are implemented and supervised properly.

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Scopa members discuss the report

After receiving the report, Zibi allowed members of Scopa to comment and ask questions.

Democratic Alliance’s Patrick Atkinson asked for clarity on material irregularities and the recovery of R10 million that was found in fruitless and wasteful expenditure. To this, AGSA said though the figure had been found in 2022-23, it was carried over to the 2023-24 audit currently being performed and still needs to be recovered.

 Economic Freedom Fighters’ Veronica Mente said she was not satisfied that almost R1 billion in irregular expenditure had been written off. She questioned AGSA’s seemingly content response that they had done the best they could to recover funds and yet write off such an amount.

To this, Maharaj responded that the process the municipality took in such expenses was investigated thoroughly.

Where the goods and services were received, for instance, it was easier to recover funding. In other expenses, some investigations are still ongoing and taking time. Otherwise, looking at processes where recovery is highly unlikely, they simply had to be written off.

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