The number crunchers at the DA have tallied up the amount of irregular, fruitless and wasteful expenditure in government departments and state-owned entities (SOEs) and it comes to a staggering R100,9 billion.

Earlier this month the DA put the figure at about R76 billion. But that was before it had sight of the “serial mismanagement” offenders at SAA, SA Express and Denel. As those reports dribbled in, the figure shot to more than R100 billion.

To put that in some kind of perspective, this is equivalent to 6,7% of total revenue budgeted for 2018/19.

An analysis of 2017-18 financial reports submitted to Parliament by government departments and entities has revealed irregular expenditure of R72,6 billion.

One has to sympathise with the Auditor General who has to wade through the thicket of graft and misspent money year after year.

To get a sense of how bad things have gotten, take a look at just one government-owned entity, the Passenger Rail Agency of SA (Prasa). Its latest annual report for 2018 shows:

  • Irregular spending of R24,2 billion
  • Fruitless and wasteful expenditure of R1 billion
  • A net loss for the year of R925 million.

The AG issued Prasa with a qualified audit opinion, due to the large amount of dodgy spending, and the unclear accounting of passenger fares. Despite spending all this money, the entity achieved only 21% of its performance targets.

“Prasa’s results are a slap in the face to all those commuters who queue for hours attempting to catch trains that never arrive. With fuel prices sky-rocketing and 9.6 million unemployed, the neglect of the train system that provides vital links to jobs clearly shows that the ANC does not care about the daily struggles of South Africans,” says DA spokesperson on Access to Jobs, Geordin Hill-Lewis.

“Prasa also joins the list of departments and entities that the AG has expressed serious uncertainty over their ability to remain a going concern. There are now eight entities and one department at risk of financial collapse, in addition to the commercially insolvent SABC,” These are mind-boggling figures that in the private sector would result in mass firings or jail sentences. In the revolving door public sector, this is the result of cadre deployment and a culture of insouciance. When there are no consequences for mismanagement, mismanagement continues.”

Fruitless and wasteful expenditure across all state entities and departments came to R4,1 billion. This is money that could have been saved if reasonable care had been taken. For example, the SABC spent thousands of rands transporting board members to Cape Town for the SABC Board Inquiry‚ but then refused to appear before the inquiry. Easy when it is other people’s money.

This R4,1 billion is enough to fund the salaries of over 22 000 police officers or 21 000 nurses. Or 100 new schools.

The DA says irregular expenditure across all departments and government entities stood at R42,8 billion. The figure for the most recent year is double that of the previous year and does not include all departments and entities as some are yet to table their report. Irregular expenditure occurred when expenditure was not properly managed and was sometimes an indicator of corruption.

Eskom had the largest sum of irregular expenditure of all departments and entities with R19,6 billion‚ followed by Sanral (R10,5 billion)‚ Transnet (R8,1 billion)‚ Department of Water and Sanitation (R6,2 billion) and the SABC (R5 billion).

However‚ this is not the full picture, says the DA. “The Auditor-General also highlighted departments where irregular expenditure was identified that was not included in their reported figures.”

The Department of Police was cited for not including irregular expenditure of R968 million in its financial statements‚ leading to a qualified audit opinion.

The AG certainly has one of the toughest jobs in the country, documenting and investigating spendthrift government entities. We are repeatedly told that efforts have been made to clean up management at Eskom, SAA and other SOEs, yet the results continue to shock and amaze. To loosely paraphrase former UK Prime Minister Margaret Thatcher, we are fast running out of other people’s money.

 

Source Accounting Weekly

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