AP

The Road Traffic Management Corporation (RTMC) – tasked with co-ordinating law enforcement to keep the country’s roads safe and in good condition – has run out of money and is teetering on the brink of financial collapse.

Acting CEO Collins Letsoalo shocked members of the National Assembly’s transport committee on Tuesday when he admitted that the organisation was “effectively insolvent” after National Treasury turned down a request for additional funding.

This has led to all vacant posts at the corporation, currently about 30 percent, being frozen. It has also caused “low staff morale” because “deserving staff members” had not been awarded performance bonuses, Letsoalo said.

The cash crisis has put a question mark over the agency’s ability to roll out the long delayed Administrative Adjudication of Road Traffic Offences (Aarto) system – better known as the licence demerit system – which was to have begun in 2010.

Its cash woes stem largely from the fact that previous managers – and the board – presided over chronic mismanagement and gross irregularities that culminated in unauthorised spending of about R600 million.

According to an earlier report by a task team appointed to investigate, millions of rand went down the drain as public funds were splurged on luxury cars, unused office space, unnecessary auditing contracts and inappropriate information technology.

For instance, the previous management bought an accident reporting system for R85m, installed an IT helpdesk for R9m, a payroll system for R34m and entered into a R658m, 10-year property lease – dwarfing its annual budget of R78m.

In an attempt to sort out the mess, the RTMC hired auditing firm Deloitte to clean up its books – despite already employing a fully staffed financial management team – at a cost of R13.3m. Investigators found that most members of the financial management team had “no tertiary qualifications or experience in the financial field”.

And despite Transport Minister Sibusiso Ndebele’s promise in September last year that he would take a “zero tolerance” approach to fraud, corruption and mismanagement – and that wrongdoers would “face the consequences” – not a single official has been successfully prosecuted.

Instead, former CEO Ranthoko Rakgoale spent nearly two years at home – suspended on full pay – before reaching an undisclosed “financial settlement” in December last year when his services were finally terminated.

The entire board was sacked in April 2010. Five other senior officials have since been dismissed, two of whom are challenging their axing at the CCMA. They also spent two years suspended on full pay.

In September (2011), when the RTMC appeared before the Standing Committee on Public Accounts, Parliament’s public spending watchdog chairman, Themba Godi described it as “essentially a spaza-shop type organisation... that showed flagrant disregard for the law”. He slammed the former board for allowing itself to be “pulled by the nose”.

While initial findings of the task team suggested irregular expenditure of about R300m, information later provided by the new management team indicated the figure could be as high as R600m – including a whopping R82m payment for postal services that should never have been approved.

At the time, Scopa member and ANC MP Roy Ainslie described the revelations as “mind-boggling” and evidence of a “total collapse” in the organisation’s internal and financial controls.

On Tuesday DA MP and the party’s new transport spokes-man, Ian Ollis, said capping staff vacancies was “clearly an unacceptable solution” to the corporation’s cash crunch.

“I am, therefore, calling on Transport Minister Sibusiso Ndebele to urgently intervene in the matter and resolve the financial deadlock”, he said

But addressing the committee on Tuesday, Ndebele expressed satisfaction at the “interventions” under way to address the “challenges besetting (the RTMC)”.

“I am glad that we are making headway in stabilising the RTMC, particularly at the level of leadership”, he said.

Ndebele said the process of appointing a new CEO – Letsoalo has been acting in the post for nearly two years now – was “well under way”.

“I am confident that the finalisation of this process will bring much needed renewed hope to the organisation that, as you know, has been plagued by leadership challenges for some time,” Ndebele said.