Payment without proof running rife
EASTERN Cape education officials have been abusing the department’s overdraft facility for years without any consequences.
Often, officials – many of them not authorised to make withdrawals at all – fork out millions with no documentation to back up transactions.
The latest 2011/12 audit report reveals the overdraft has now topped the R425-million mark.
Within a month of the overdraft being approved by Absa bank in 2005, the department was in the red for R655-million.
The overdraft has fluctuated over the years, but reached an all-time high of R839-million during the 2010/11 fiscal. This is despite the fact that the department periodically under-spends its budget.
And every year auditor-general Singa Ngqwala battles to find documents to prove the bank transactions were above aboard. He is mostly unsuccessful. Ngqwala’s concerns are passed on to the legislature’s watchdog, the Standing Committee on Public Accounts (Scopa), on an annual basis.
Scopa chairman Max Mhlathi told The Herald the provincial Treasury should scrap the overdraft as it created unauthorised and irregular expenditure, often linked to corruption.
"The department will never turn the tide unless such loopholes are done away with,” Mhlathi, who is also a UDM MPL, said.
Approval for the overdraft was also never signed off by the MEC at the time, Mkhangeli Matomela, or by the provincial Treasury.
This flouts the Borrowing Powers of Provincial Government Act.
"They rely on the overdraft facility when issues of non-payment crop up willy-nilly,” Mhlathi said.
Ngqwala has repeatedly stated in the reports the department lacks the correct controls to comply with the public finance laws and regulations.
Evidence of the abuse of the department’s overdraft stems from an analysis of the provincial authority’s audit reports by The Herald.
This includes fiscal reports between 2004/05 to 2011/12.
The audit reports reveal the department is spending the overdraft money with no concrete evidence of delivery or service. The analysis paints a grim picture of maladministration within the chaotic department and reveals:
- Millions of rands are withdrawn from the overdraft account without supporting documentation;
- Adequate control measures are not in place to control transactions;
- R24.9-million was not correctly deposited into the correct bank accounts during the 2007/08 fiscal. It is not clear if the money was ever recovered;
- Supporting documentation for R14.2-million, withdrawn from the overdraft during the 2007/08 period, was unavailable and;
- Overdraft payments are often made by unauthorised officials.
