Department of Defence faces critical audit findings; urgent reform needed

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The Department of Defence (DoD) received stark warnings from its audit committee chair during a presentation to the Portfolio Committee on Defence and Military Veterans (PCDMV) last week.

DoD Chairperson: Audit Committee Luyanda Mangquku highlighted four areas of grave concern, including performance, discipline, consequence management, and accountability.

These areas of concern, according to his presentation, require urgent improvement and attention if the DoD “is to turn around its fortunes, avoid regressing in its audit outcomes, improve its service delivery capabilities and ultimately maintain its current mandate”.

Going further he warned unless the DoD “adopts a full ethics management approach alongside committing to a zero tolerance to fraud and corruption, driven by leadership commitment and capable forensic and investigative capabilities, this department will continue to be consumed by rampant acts of fraud and corruption”.

Democratic Alliance (DA) shadow defence and military veterans minister Kobus Marais – taking one example from Mangquku’s presentation of “only” R800 recovered from a fruitless and wasteful expenditure bill of R438.7 million – maintains the DoD is dysfunctional and should be placed under administration.

“Failure to act now will lead to a summary collapse in government’s ability to provide a working administrative service for our defence force,” he warns.

Due to the underfunding of the wage bill (compensation of employees), the DoD has recorded R2.6 billion in unauthorised expenditure this year alone, set to top R5.6 billion by the end of the 2023/24 financial year.

The total irregular expenditure figure stands at R15.98 billion, arising from the compensation of employees bill reaching a total of R10.1 billion and R4.9 billion coming from within the procurement environment and logistics division.

With regard to irregular expenditure, the Audit Committee observed that, “management has failed to prevent or clear irregular, fruitless and wasteful expenditure balances, with failing investigations, and ineffective consequence management.”

On fruitless and wasteful expenditure the audit committee chair informed the PCDMV it “reduced marginally” by R3.1 million to R438.7 million, adding R431 million of this was “reported prescribed”. “This may result in a material irregularity as it is due to department’s inefficient investigation and recovery processes,” the presentation has it.

On why the situation has reached its current nadir, the presentation notes an audit action plan “remains in draft”; management does not respond to calls for re-establishing the accountability management forum (AMF) and that services and divisions are not providing responses for the audit action plan.

Human Resources are “concerning” with, high levels of occupational health and safety issues, among others seeing 95 officials dying in six months – 71 of medical causes. There are and 893 grievances outstanding from longer than the prescribed 90 days. There are also leave applications pending since 2021.

Another red light warning area is the DoD Inspector General where “extremely delayed investigations” undermine consequence management and improvements to internal controls. Additionally “critical shortages” of capacity, “insufficient tools of trade”, fuel shortages, delays in obtaining security clearances for auditors and delayed management responses on audit requests compromise audit execution audits.

Critical findings were made during a weapons and ammunition audit at one (unnamed) ammunition depot with the audit committee also calling for a review of the “Reserve Force process management” and nine material irregularities. They range from inventory and asset management to lease payments for unoccupied office buildings; unfair fuel supply award; personal protective equipment (PPE) not procured in a cost effective manner; unregistered drugs imported without approval; non-usage of medical equipment at 1, 2 and 3 Military Hospitals; payment of “inflated invoices for emergency ambulance services” and two unnamed Defence Intelligence (DI) material irregularities.

Other Audit Committee observations included a lack of ambulances for the SA Military Health Service (SAMHS) alongside paying inflated prices for ambulance services resulting in irregular expenditure of R17 million; and high medical costs incurred by SAMHS due to expensive outsourcing of healthcare services.

R225 million has been allocated by National Treasury for border safeguarding technology but this has not been spent accordingly. “The additional allocation of R500 million in 2024/25 and R200 million in 2025/26 will be monitored.”

In closing, the audit committee informed the PCDMV Minister Modise’s department needs “a revised defence strategy which reconciles to the shrinking budget appropriation to address what is quickly appearing to be a systematic defunding of the defence force, to the detriment of our sovereignty and national security”.

The risk of the SA National Defence Force (SANDF) not meeting its mandate, performance objectives and outcomes has never been this elevated, the presentation stresses, demanding immediate redress through deliberate measures by all stakeholders, especially Parliament and National Treasury.

The Audit Committee added that another Defence Review is necessary to assist the department address some of its critical challenges, including archaic ICT infrastructure, growing cyber security threats, and underfunded mandates that undermine the department and “its ability to fill critical vacancies, procure its critical prime mission equipment and to implement its vital maintenance programme.”