DoD a top 10 contributor to AG irregular expenditure list

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Minister Nosiviwe Mapisa-Nqakula’s Department of Defence (DoD) and its operating arm – the SA National Defence Force (SANDF) – regularly bemoan a lack of funding hampering ability and capacity to execute official taskings.

Yesterday’s release of national and provincial government audits as per the Public Finance Management Act (PFMA) by Auditor General Tsakani Maluleke shows the defence sector of the public service is not entirely above blame for the way it spends at least some of the close to R50 billion allocated by National Treasury.

Among others, her report notes R.19 billion in irregular expenditure incurred on ongoing multi-year contracts awarded in prior years. The main reason for non-compliance found by Auditor General personnel is related to non-compliance with legislation restricting overspending on the budget for employee compensation. Compensation of employees (CoE) is the major consumer of funds received from Finance Minister Tito Mboweni’s National Treasury, accounting for 61.4% (R88.4 billion) of its total expenditure of R140.2 billion over the MTEF (Medium Term Expenditure Framework) period.

Other issues involving the defence budget Maluleke reported on include “material irregularities” totalling over R358 million.

One was a contract for inventory and asset verification awarded in February 2017 to two bidders on a 50/50 basis and not to the bidder scoring the highest points in the evaluation process. This, she said, resulted in an increased project cost with a financial loss of R250.6 million.

Another, according to the AG report, incurred a financial loss of R108.3 million for the DoD, where the accounting officer is Secretary for Defence Gladys Kudjoe. This was for lease payments over two years (2015/16 and 2019/20) for unoccupied office buildings. A third, which incurred a loss of R2.57 million, was for the supply and delivery of fuel “using different evaluation criteria from those stipulated in original request for quotations, resulting in higher prices being paid”.