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AG slams Blue IQ

Audra Mahlong
By Audra Mahlong, senior journalist
Johannesburg, 25 Sept 2009

The auditor-general has slammed the state of affairs at Gauteng agency Blue IQ, revealing irregularities and financial transgressions in the agency's technology holdings.

According to the report, spending at the Blue Umbrella project - the Gauteng broadband infrastructure development initiative - has not followed the required supply chain management processes and has not been based on approved budgets.

“The expenditure incurred was unauthorised as it was not budgeted for. Services were not procured in accordance with supply chain management policy and procedures. The bulk of the payments made were as a result of expenses relating to consultancy work, which was made in foreign currency,” the report states.

The report also implicates Blue Catalyst, which focuses on funding innovation and developing commercial opportunities in Gauteng. The report reveals irregular expenses relating to claims from former Blue Catalyst CEO Gregory Voigt. The report uncovers improper expenses incurred by the former CEO, related to travel and other business payments.

A R5 million guarantee was issued in contravention of the Public Finance Management Act, by Voigt, the report also states. A forensic investigation is under way and the “necessary actions will be taken” once it has been completed.

Unacceptable

Firoz Cachalia, MEC for Economic Development in Gauteng, who expressed disappointment at the auditor-general's report, says the department would introduce recovery measures.

“The auditor-general's opinion and the audit outcome are not acceptable as the department and four of its agencies (Blue IQ, Gauteng Economic Development Agency, GTA, and Dinokeng and Cradle of Humankind) have material audit findings. In total, there are 11 disclaimers, 10 qualifications, 26 emphasis of matter, and 52 other matters,” he said.

A dedicated supply chain manager has been employed to ensure strict compliance to supply chain management policy; action has been taken against senior managers who were responsible for the contraventions; and attempts are being made to recover the money spent.

Slow progress

The report also notes the slow progress made by the Blue Umbrella project. In the GSSC budget speech, in August, Gauteng finance MEC Mandla Nkomfe said the department had concluded the business plan for the Gauteng Link broadband project or Blue Umbrella.

He added that, in the current financial year, National Treasury would consult with civil society to seek input and buy-in. A strategic investor conference, to engage business on the role it can play, will also be held, he revealed.

While no specific allocation was made for the initiative, it will be funded under the Technology Support Services unit of the Gauteng Shared Services Centre (GSSC), which received the highest allocation - R765 million of the total budget. In 2008, it was estimated that anything between R15 million and R35 million would be spent - but it is not known how much has been spent on the project already.

Operation cleanup

Cachalia added a task team is already implementing concrete initiatives and target dates to help the agencies receive clean audits.

“Allow me to state upfront that one of this administration's priorities is to instil a culture of sound financial management and accountability across the Gauteng Provincial Government departments and agencies. The chief financial officer (CFO) of the department has been asked to establish a task team, which include the CFOs of all the agencies, to analyse the auditor-general's findings and to implement a project to achieve clean audits,” said Cachalia.

He added that CFOs have identified immediate successes and are working at issues that require more time to resolve. Target dates have been set and the department and its agencies have identified systems, which must be addressed in order to achieve clean audits.

“Most officials are keen to do their jobs well and it is my responsibility and that of the head of department to ensure they have the support they need to do so,” he said.

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