CoGHSTA lambasted by SCOPA for underspending and irregular expenditure
The Department of Cooperative Governance, Human Settlements and Traditional Affairs (CoGHSTA) underspent their budget on the human settlements programme leading to around 1 040 houses not being built for those in need.
POLOKWANE – The Standing Committee on Public Accounts (Scopa) last Thursday castigated CoGHSTA for the irregular expenditure of R111,7 million in respect with the contravention of the supply chain regulations and several other matters.
The department was asked to rewrite several answers to questions posed to them and to submit some missing documents.
One of the matters discussed was the underspending of the budget on the human settlements programme by R87,379 million and on the traditional institution development programme by R37,059 million.
The underspending of the human settlement development grant by R86,332 million could have yielded 1 040 houses to beneficiaries, based on a subsidy amount of R83 000 per house.
Fruitless and wasteful expenditure amounted to R108,360 million for the acquisition of land in Tubatse. A special audit was conducted on possible supply chain management irregularities on the acquisition of this land, issued on 26 May 2017, and the department has subsequently requested the Auditor-General (AG) to conduct a full forensic investigation into the matter.
The Hawks were approached to investigate the matter and the department is conducting a preliminary investigation to identify officials who caused the fruitless and wasteful expenditure.
The process of the land purchased was facilitated by the Housing Development Agency (HDA). The purchase price was offered at R116,500 million, excluding VAT. The land was purchased at R133,000 million.
An Implementing Protocol signed in 2010 authorised the HDA to facilitate the purchasing of privately owned land on behalf of the province to enable the department to undertake human settlement development projects. LIM 476 (Greater Tubatse) requested the department to acquire the land for human settlement and at the beginning of March 2015, HDA forwarded a letter of recommendation to CoGHSTA based on the fact that Burgersfort is a priority human settlements development area. Three independent property valuers were appointed in January 2015 assisting with the determination of the market value of the property. The initial asking price was R170 million. The national Department of CoGHSTA advised a market price of between R74 million and R85 million to be paid on 30 March.
Prior to the department purchasing the land, Proline Trading 60 Pty Ltd, sold the land to Blue Horizon Investments 10 Pty Ltd for an amount of R18,363 million on 20 October 2015. The land was then sold to the department on 20 October 2015 for R132,810 million. The properties were then registered at the deeds office on 16 March 2016. The AG detected the transaction during their audit and on the basis that the department may have paid more for the land than what it was worth, resolved to conduct an investigation.
An independent valuer appointed by the AG valued the property at R8,14 million and the AG submitted their findings. The purchase price was exceedingly inflated and the amount of R108 million is to be disclosed as fruitless and wasteful expenditure. The department, when receiving the findings, asked the AG to conduct a forensic investigation.
Pay progressions to personnel calculated and paid contrary to the directive issued by the Department of Public Service and Administration, amounted to R46,6 million. The department wanted to recover the money from employees but were advised not to do so. The matter will be referred to the Labour Court for a Declaratory Order to get direction on what process to follow.
