The Gauteng Department of Finance was found to have not followed the correct tender procedures when it spent almost R50 million on assorted ICT projects.
In the department's latest annual report, for the 2011/12 year, the auditor-general highlighted irregular spending of R50.36 million, and fruitless and wasteful expenditure of R55.47 million. The bulk of the irregular expenditure - at R47.49 million - relates to ICT services.
However, despite the AG's findings, the Gauteng finance department says its financial year "began with the department proceeding firmly in its march towards good financial health". Along with several other government departments, it is targeting a clean audit by 2014.
During the year, the department initiated eight investigations into allegations of fraud and corruption, of which three matters are still in progress. The annual report does not provide details of these investigations.
Spending issues
However, in the notes to the annual financial statements, it is revealed that tender processes were not followed in several instances, including in migrating the current SAP licence agreement and rolling out a SAP HCM project, as well as enterprise-wide licences.
The single largest contributor to irregular expenditure - at R23.8 million - was the tender process not being followed with the inclusion of Security Operations Centre items committed from the master services agreement.
The Gauteng Security Operations Centre was officially launched in April 2011 and "continues to produce excellent results", says the report.
In addition, the AG found there was delayed approval in an ex-post facto payment of R127 million to Neotel for Internet connectivity. There was also delayed approval of the R1.6 million integrated business plan.
The AG says the department's accounting officer, Stewart Lumka, did not take effective steps to prevent these issues in terms of the Public Finance Management Act.
It also found that some goods and services worth less than R500 000 were procured without obtaining the required price quotation and goods. There were also instances of contracts being awarded to bidders that did not submit a declaration as to whether they are employed by the state or connected to someone employed by the state, in contravention of a National Treasury regulation.
Open to abuse
Mike Moriarty, the Democratic Alliance's spokesman on finance, says the report shows that tendering processes are vulnerable to corruption.
The AG indicated that staff members are getting paid for other work outside of government without written permission from the department, says Moriarty.
In addition, Moriarty notes that contracts worth less than R500 000 are being awarded without obtaining three price quotations. "Other paperwork that is required in submitting a tender is also missing."
Making progress
Finance MEC Mandla Nkomfe writes in the forward that the department achieved key milestones in projects and programmes during the year.
"We are committed to Operation Clean Audit. In the previous financial year, we introduced strategies to reduce and finally eliminate findings that prevent the achievement of clean audits."
Nkomfe says the department "continued with its work to turn around the finances of the province, resulting in the significant improvement in cash flows".
According to the report, the department had an income of R1.7 billion, compared with last year's R1.6 billion. Its surplus for the year was higher at R232 million, compared with R73.2 million last year, after expenditure that was flat year-on-year of R1.486 billion.
"We remain committed to ensuring that municipalities in Gauteng work better," writes Nkomfe.
The department's spokesperson did not return a call requesting comment this morning.
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