The Auditor-General has cleared the Commission for Conciliation, Mediation and Arbitration (CCMA) of fraud and corruption, but found the organisation spent millions on ICT procurement irregularly.
The irregular expenditure was revealed by the AG's report to Parliament late last week, after it conducted an investigation into the CCMA at the Department of Labour's request.
Last October, the Labour Department referred the Commission to the AGs office, citing several concerns, including the appointment of service providers and the employment of personnel - including the risk and human resource managers - without proper processes being followed.
The Auditor-General's report, completed last month and now tabled in Parliament, reveals the CCMA spent R23.6 million irregularly, because the proper procurement processes were not followed. The majority of this amount - approximately R22.85 million - was allocated to ICT expenditure.
The report will face Parliament's Portfolio Committee on Labour's scrutiny when discussions kick off tomorrow.
Counting the costs
The AG's report cites several instances where ICT contracts did not meet the requirements of the Public Finance Management Act.
This includes:
* R4.9 million on the supply and maintenance of printing services;
* R4.1 million on the supply and maintenance of ICT services;
* R4.6 million on the extension of a contract for IT services for server equipment maintenance and support;
* R839 967 on the provision of portable voice recording devices;
* R856 736 spent on acquiring accounting and payroll solutions;
* R4.56 million on migrating its case management system; and
* R3 million was paid to a service provider to assist with the structure, innovation and design of a process system.
The Auditor-General investigated three reporting periods, dating back to the 2007/8 financial year. It says the findings related to supply chain management deficiencies are “predominantly due to non-adherence to policies, directives and delegated authority by senior management of the CCMA”. Additionally, it noted service providers were appointed without following National Treasury's procurement guidelines.
The “significant” findings are indicative of inadequate monitoring and oversight by the leadership in the area of supply chain management, the report says.
Qualifying outcomes
In a statement issued this morning, CCMA governing body chairman Tanya Cohen declared that the Commission “is not a corrupt body - there are no fraudulent dealings at the CCMA”.
She went on to refute the AG's findings, pointing out that they related to historical matters and had either been fixed or are in the process of being rectified. She says the AG's report is “misleading”.
Nerine Kahn, CCMA director, adds: “We are of the opinion that the second audit report, and especially its executive summary, is an unclear and misleading reflection of management, due process and corporate governance at CCMA.”
Cohen argues that the irregularities in the Auditor-General's report stretched back to 2005 and identified irregularities that previous routine audits had not flagged.
”Many of these irregularities were inherited by CCMA's present management. Nevertheless, CCMA has addressed, or was addressing each of the issues to resolve them,” she says.
Moreover, she points out, the commission had received an unqualified report of good standing from the Auditor-General for the 2009/10 financial year that ended 31 March, a period that was included in the Auditor-General's report.
“We are confident that irregularities noted in the second report are easily explained and remedied,” Cohen says. “Indeed, most of the issues noted in that report have already been addressed.”
Members of the CCMA's governing body are set to join the Parliamentary Portfolio Committee on Labour meeting tomorrow to answer questions following the Auditor-General's presentation.
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