The Democratic Alliance has requested the Office of the Auditor-General (AG) to conduct a forensic audit into R1.6 billion worth of irregular expenditure incurred between 2007 and 2017 by Road Agency Limpopo (RAL).
According to the party, they were approached by a whistleblower from the road agency who alleged that RAL has overcommitted its 2018/19 MTEF budget by almost R900 million.
During the 2017/2018 financial year, RAL was allocated R805 million for road infrastructure but it is alleged that the parastatal incurred an overspend of over R160 million on its budget before applying for the conditional grant of R103 million.
Among other allegations the whistleblower also highlights the procurement of legal services from a company without following procurement processes to the value of about R2 million.
It is also alleged the CEO has allocated tenders worth more than R6 million to his wife/wife’s relatives’ company without them being advertised and without the CEO declaring his conflict of interest.
Surprisingly, the company’s name does not appear on the list of all the companies and service providers that did business with RAL that was submitted to SCOPA, although some of the irregular transactions on the list do not divulge the name of the supplier.
“It is clear that it is very pertinent to report the matter to the Auditor-General in order to test the veracity of these allegations.” said DA Provincial Spokesperson for SCOPA, Jacques Smalle.
“This proves that there is serious financial mismanagement and corruption where tenders are being awarded erroneously and with no regard for good and prudent financial management and procurement practices whilst neglecting a huge road infrastructure backlog in the province.
The party has urged the Auditor-General to adhere to their request and prioritize the investigation to ensure that the accounting officer and all other responsible officials are held accountable for this irregular expenditure.
According to the party, the reasons that have contributed towards the irregular expenditure includes:
- Supply chain management not being followed;
- Non-compliance with the Public Finance Management Act (PFMA);
- Companies not submitting their original tax clearance certificates;
- RAL not obtaining three quotes from different companies;
- Non-compliance Supply Chain Management regulations;
- Deviations not being authorized by management;
- Variations not budgeted for;
- Tenders being allocated without following the proper procedures; and
- Not notifying treasury and Auditor General of variation