‘Culture of lack of accountability’: Government departments, SOEs rack up R120bn in irregular expenditure

Billions of public funds and taxpayers’ money have been lost as government departments and state-owned entities (SOEs) racked up R120 billion in irregular expenditure over the past five years.

On Tuesday, officials from the Auditor-General’s (AG) office briefed the Standing Committee on Appropriations in Parliament regarding the financial misconduct of government departments and its entities.

Fruitless and wasteful expenditure

During the meeting, Bongi Ngoma, head of the audit unit at the AG’s office, informed members of Parliament that 36 national government departments accumulated over R1.48 billion in fruitless and wasteful expenditure from 2018 to 2023.

This type of spending refers to money spent unnecessarily, which could have been avoided had “reasonable care been exercised”.

The amount of fruitless and wasteful expenditure increased over the last three years, rising from R199.96 million in the 2020/2021 financial year to R286.59 million in 2021/2022, and reaching R432.22 million in 2022/2023.

“What is more concerning, almost half, which is 43% of all these departments, incurred these fruitless and wasteful expenditures in each of the past five years.

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“What we see, what this speaks to is a culture – a lack of accountability towards the prudent usage of these scarce resources,” she said on Tuesday.

The top five departments responsible for the highest wasteful and irregular expenditure were forestry, fisheries, and the environment (R292 million), basic education (R210 million), police (R208 million), the National Treasury (R202 million), and tourism (R91 million).

SOEs accumulated just over R2 billion in fruitless and wasteful expenditure.

The South African Post Office leads with R650 million, followed by the South African Broadcasting Corporation (SABC) at R299 million.

Government irregular expenditure

Furthermore, Ngoma informed the committee that 38 government departments accumulated R50.65 billion in irregular expenditure over the past five years.

In the same period, 27 SOEs recorded R69.35 billion.

Irregular expenditure refers to spending that violates rules or laws, but differs from unauthorised expenditure.

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Ngoma highlighted that delayed payments to suppliers and overpaying for services, were some of the factors driving the irregular and wasteful use of public funds.

The AG’s office also revealed 266 material irregularities in the 2022/2023 financial year, indicating non-compliance and suspected fraud, with an estimated cost of R14.34 billion.

These irregularities include cases where projects, such as hospitals, are completed and millions spent on equipment, but the facilities remain unused or inaccessible as intended.

Accounting officers to blame?

Ngoma cautioned that laws allowing the AG’s office to hold accounting officers accountable for wasting public funds would be ineffective if the root problem stemmed from senior management.

“The root causes are very clear; and when they come back to address the issues, they must address the issues at the root cause level,” she told the committee.

The committee’s chairperson, Mmusi Maimane expressed his concern over AG’s report.

“We have a situation where we have leadership at the top tasked with effecting consequence management to their subordinates.

“However, those at the top are of poor leadership quality themselves. And it is obvious that if you have dreadful leadership at the top, you will get dreadful results every time,” Maimane said on Tuesday.

Meanwhile, committee members called for measures to be implemented to curb rampant fruitless and wasteful expenditure, as well as to address the reliance on external auditing firms by local municipalities, which has not led to any significant improvements in their financial controls.

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