Parliamentary committee hears of billions spent irregularly by DoD

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Parliament’s Portfolio Committee on Defence and Military Veterans (PCDMV) heard two of six irregular expenditure cases at the Department of Defence (DoD) involve over R1.5 billion.

The committee met yesterday (Wednesday, 24 November) in a follow-up to its August meeting on the status of fraud and corruption cases in Minister Thandi Modise’s DoD, of which the national defence force is the major component.

An update prepared for the PCDMV ahead of the meeting notes the omission of fraud and corruption with only irregular expenditure elaborated on in the presentation by Provost Marshal General, Rear Admiral Mokgadi Maphoto. The senior police officer in the SA National Defence Force (SANDF) is quoted as saying “instances of irregular, fruitless and wasteful expenditure are not in the domain of Inspector General of the DoD and Military Police Division. Cases of Irregular Expenditure are handled administratively by services and divisions co-ordinated by Chief Finance Division”.

Key aspects of Maphoto’s presentation highlighted by Parliament’s research unit include 12 convictions and fines of R392 170 issued; 56 people suspended, some for apparent offences dating back to 2007, and 120 civilians employed by the DoD as Public Service Act (PSA) personnel put on precautionary suspension. It further reports on six cases totalling R1.578 billion; two cases investigated and “under consideration by the DoD”; three cases where consequence management is being implemented and  one investigation report handed to the Hawks, SA Police Service Directorate for Priority Crime Investigation.

Suggested questions to shed further light on irregular expenditure, corruption and fraud in a major national security organisation relate to R102 million missing in “11 different procurement deviation in the sensitive projects environment”; R105 million for asset verification in the 2017/18 financial year and R37 million missing in an “unfair bidding process” for fuel for military use in Gauteng and North West.

Minister Modise’s department, like others at national, provincial and local government level, apparently went overboard when it came to acquiring personal protective equipment (PPE) in the wake of the COVID-19 pandemic. The research unit states the DoD “deviated from National Treasury’s instruction”. This deviation reportedly saw R37 million incorrectly spent.

Ongoing thorny questions regarding compensation of employees (CoE) are also raised in the report. Between 2017/18 and 2020/21, the SANDF overspent by R7.4 billion on the compensation of employees.

“Overspending on CoE has resulted in irregular expenditure for several years. Clarity is required on corrective measures in this regard or whether such expenditure has been condoned. For example, National Treasury indicated to Parliament, in previous Quarterly Reports, as part of its early warning system, the DoD was cautioned during the financial year it is likely to incur irregular expenditure in 2019/20 should the expenditure trend on CoE continue. The department was also reminded the accounting officer should not commit a department to any liability for which money has not been appropriated as per the Public Finance Management Act of 1999.”

Other irregular expenditure includes R604 million awarded for DoD asset management in 2015. An investigation is completed and under consideration by the DoD. Investigations are also finalised into a R616 million asset management contract, a R239 million TLCM (through life capability management) contract and unutilised properties at Eco Park (R108 million). “Consequence management” is being implemented for the latter three.