RTMC allegations confirmed
The independent task team investigating mismanagement at the Road Traffic Management Corporation (RTMC) found IT-related irregularities to the value of R139 million.
The task team report shows all allegations against the corporation were true, with only two out of the 17 allegations being partially confirmed and the rest being completely confirmed. This included R300 million worth of electronic National Traffic Information System (eNatis) transaction fees that were used irregularly.
Transport minister Sibusiso Ndebele appointed an independent task team on 8 February, to investigate several complaints about the company and the findings of an independent audit.
The report, which was expected in March, showed key findings of the investigation to be irregular expenditure, inappropriate procurement procedures and the unauthorised use of eNatis transaction fees, says the Department of Transport (DOT).
The report shows one of the key findings of the task team relates to an irregular lease agreement of R658 million over a 10-year-period.
“The actual loss on this lease is estimated at R11 million. This lease has now been cancelled,” says Ndebele.
“According to the task team, the total value of confirmed irregular expenditure actually incurred at the RTMC is currently estimated at R144 million,” he adds.
The Public Finance Management Act (Act 1 of 1999) makes it clear that the accounting authority for a public entity commits an act of financial misconduct if that accounting authority wilfully or negligently makes or permits an irregular expenditure or a fruitless and wasteful expenditure, according to Ndebele.
“Those found guilty of such offences are liable on conviction to a fine, dismissal or imprisonment.
“The report will also be presented to the next RTMC shareholders' committee meeting scheduled for August, as well as to the Portfolio Committee on Transport. Our legal advisors are currently studying the report as well as the recommendations,” says Ndebele.
He adds that, although this task team has completed its task, there are still various matters which require further investigation and are subject to future decisions through the RTMC shareholders' committee.
“Further, the forensic audit process is still under way, the results of which will be actioned by the acting CEO of the RTMC. Therefore, those matters which are still subject to due legal process and internal HR procedures cannot be publicly disclosed at this stage.”
He outlines the department's interventions going forward as the provisioning of the RTMC Act being reviewed to facilitate operational and governance support of the RTMC, optimal functioning of the RTMC shareholders' committee being ensured, the strengthening and enhancement of oversight by the Department of Transport over the RTMC, introducing a controlled and monitored performance management system for the RTMC, and improving the process of the appointment of the RTMC board and CEO to ensure accountability.
The report also listed several recommendations, with the introduction of financial control systems being one of them.
Summary recommendations in the report include disciplinary action, possible criminal charges and civil action, and possible recouping of losses.
DOT spokesperson Logan Maistry says Ndebele will only make a decision on the matter when he has studied the report and its recommendations fully.
“I'm very pleased that the task team has finally come back with the report,” says Democratic Alliance (DA) shadow minister of transport Stuart Farrow.
However, he says the minister needs to call a meeting with the stakeholders, who are the MECs of transport from all nine provinces. “The stakeholder meeting must be brought forward. We can't sit around and wait for another couple of months while the report sits on his desk.”
He also feels the board of directors of the RTMC should be held accountable for all management processes, and must answer questions about what they did to stop the expenditure, or to alert the minister and other relevant authorities about the mismanagement.
“The CEO should be held accountable for all the public funds lost.”
Ndebele suspended CEO Ranthoko Rakgoale when the task team was appointed in February, and Collins Letsoalo, deputy DG of financial services at the DOT, was appointed acting CEO.
Complaints first rose after a damning independent financial audit detailing procurement irregularities and gross financial mismanagement at the RTMC.
Farrow says the audit cost R13.3 million and had been completed in September 2009.
The DA said the report revealed several irregularities implicating Rakgoale. The RTMC's R4.5 million spend on provincial workshops was questioned when only R1.5 million had been budgeted for the purpose.
The company also entered into a 10-year, R658 million lease for nine office blocks, only two of which are being used for a staff component of 144.
The audit also revealed that over R1.3 million of RTMC funds was wasted for the hire of private suites at Ellis Park and Loftus Versfeld during the Confederations Cup. The CEO's purchase of an Audi A4 for personal use, using RTMC funds, was also questioned.
Apart from appointing a task team, Ndebele also instructed the RTMC to pay over all monies collected as eNatis transaction fees.
He also stopped the salaries of several top officials, as concerns were raised that the money meant to be used for the new point demerit system was not being allocated correctly.
Transaction fees received from all annual motor vehicle licensing transactions are supposed to be used to finance the maintenance and updating of road traffic records and information, according to the RTMC Act and National Treasury regulations.
The company was supposed to use the funds to enhance current traffic information registers and to introduce new registers such as the Aarto register, computerised learners licence register, and to create and maintain a national register which combines provincial registers for accidents and contraventions.
The RTMC is tasked with the roll-out and facilitation of Aarto.
When the Aarto demerit point system is implemented, the demerits will reflect against the driving licences of infringing motorists on the National Contravention Register, on eNatis.
The RTMC announced it would spend over R300 million on IT and marketing for the new demerit system for motorists.
The system was supposed to be implemented later this year but the deadline for national rollout has now been postponed to April 2011.
Please click here to see the task team report on allegations and findings of mismanagement within the RTMC.