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Probe finds USAASA lost R34m in irregular expenditure

Read time 3min 10sec

The Universal Service and Access Agency of SA (USAASA) has been the subject of three probes by the Special Investigating Unit (SIU), including the alleged irregular appointment of former CEO Zami Nkosi.

This is according to minister Stella Ndabeni-Abrahams's written response to Parliamentary questions posed by National Assembly and Democratic Alliance member, Cameron Mackenzie.

USAASA, which falls under the Department of Communications and Digital Technologies, was established to help roll out universal connectivity with government and private sector partnerships. It is also in charge of overseeing SA's multibillion-rand digital TV set-top box rollout.

The state entity has, over the years, come under fire for failing to deliver, abuse of funds and low staff morale. In 2018, public protector Busisiwe Mkhwebane issued a damning report against the board of directors at USAASA following a complaint related to governance, abuse of power and malpractice.

The SIU was mandated to investigate matters relating to maladministration and irregular expenditure at USAASA. The investigations in question took place from 1 June 2014 to 30 June 2019.

In her reply, Ndabeni-Abrahams indicated she has been advised by USAASA that the investigations included the probe into Nkosi’s appointment, a R500 million funding subsidy to mobile operator Cell C for the construction and expansion of an electronic communications network for the Emalahleni Local Municipality, as well as the appointment of Mthinthe Communications for phase two of the Rapid Development Programme.

Out of the three investigations, two were found to be irregular.

According to the minister’s reply, in respect to the Cell C investigation, the SIU found there was no funding of irregular expenditure.

However, the forensic investigation and litigation agency found the appointment of Nkosi as CEO was irregular, and as such, USAASA incurred irregular expenditure in the sum of R255 211.27.

“Mr Nkosi’s contract expired before the report could be released. Therefore, his contract could not be nullified as legislatively required. Resulting from this, the SIU referred the matter on the irregular expenditure of R255 211.27 to the National Prosecuting Authority in respect of three former board members of USAASA (2013/2014 and 2014/2015 financial years) on 16 November 2017.”

The Mthinthe Communications appointment was also determined to be irregular, with USAASA incurring irregular expenditure to the value of R33.9 million.

As a result, the SIU found the accounting authority of USAASA at the time represented by the former board (2013/14 and 2014/2015 financial years) were grossly negligent and/or wilfully negligent in the execution of their fiduciary duties, reveals the minister’s reply.

“The SIU further found the evidence substantiating the commission in offence of financial misconduct as envisaged in Section 86 (2) of the PFMA.

“The SIU referred the matter to the National Prosecuting Authority as the evidence pointed to the commission of an offense of financial misconduct as envisaged in Section 86 (2) of the PFMA on 16 November 2017.”

Concerning the Mthinthe Communications, the minister’s response further noted USAASA contravened the following:

  • Section 217(1) of the Constitution which effectively requires USAASA to procure its goods and services by means of a system which is fair, equitable, transparent, competitive and cost-effective.
  • Section 51 (1)(a)(ii) of the PFMA which requires USAASA to ensure it has a procurement system which is fair, equitable, transparent, competitive and cost-effective.
  • Regulations 16A3.(2)(a) of National Treasury Regulations which required USAASA to have and maintain a procurement system that is fair, equitable, transparent, competitive and cost-effective, and that is consistent with PPFA.
  • USAASA effectively contravened its own supply chain management policy.
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