Parliament’s premier public-spending watchdog – the standing committee on public accounts – has called for Limpopo Premier Cassel Mathale and his entire cabinet to be fired for bankrupting the province last year.
This unprecedented move follows a briefing by National Treasury officials on Tuesday which painted a “disturbing picture of a gross mismanagement of funds, disregard of the prescripts of the law and poor internal controls”, according to committee chairman Themba Godi.
“We believe the Limpopo executive should have been sacked because all these things happened right under its nose. The appropriate response should have made sure that the political leadership is fired. We believe this is the way to show that we are serious about good governance and that we are committed to promoting good financial management,” Godi said in a statement after the meeting.
President Jacob Zuma stunned the nation – and infuriated Mathale – on December 5 last year when he invoked section 100(1)(b) of the constitution and placed five provincial departments in Limpopo under national government administration. These were the departments of education; transport and roads; health; public works; and the provincial treasury.
The intervention came after Mathale’s government exhausted two overdraft facilities – one of R500 million from a commercial bank and another of R757m with the SA Reserve Bank – and could no longer pay teachers, doctors, nurses, social workers, service providers and other civil servants.
Government services in various sectors ground to a halt as the province ran out of cash and, by the end of October last year, its treasury had racked up R2.7 billion in unauthorised expenditure – of which R2.2bn was in education alone. The province also failed to provide documentary proof for spending commitments totalling R2.9bn, prompting Zuma to send in a Treasury task team to rescue the situation.
Reporting on progress this week, officials told MPs the provincial treasury’s position had improved from a “negative” position at the end of November to a “positive position of R231m” by the end of the financial year in March.
“The liquidity and solvency crisis is thus effectively solved and payments to suppliers are normalising,” said Treasury deputy director-general Kenneth Brown. And though the province still had outstanding payments totalling about R1.1bn, its bank balances “now exceed this amount”.
The rescue team has also put together a “credible budget” for the 2012/13 financial year, including a surplus of R3bn “to deal with expenses from the past”. And they have placed notices in the local media to inform suppliers that they may now submit outstanding invoices directly to the provincial treasury “so that these can be verified and settled”.
Officials pointed out that, depending on how many suppliers came forward with “valid” invoices, much of the R1.1bn in outstanding payments could actually turn out to be “attempts to claim fraudulently”.
Meanwhile, officials have uncovered instances of fraud, widespread maladministration and financial irregularity, particularly in the areas of asset management, supply chain management – the realm of tenderpreneurs – and payment processes. The intervention team was in the process of reviewing all rental and lease agreements. In one case, the provincial education department entered into a R600m supplier agreement for school textbooks, but when Treasury officials took a closer look they found that the deal should not have cost more than R200m.
The Treasury team has also found that Mathale and his executive team “endorsed illegal procurement processes”, found evidence of “illegal payments and irregular lease agreements”, and concluded that the finance function in the province was dysfunctional and had serious “capacity constraints” – government-speak for ineptitude.
Treasury officials impatiently dismissed claims that the national government’s intervention had made things worse by cutting off funding to hospitals, leaving patients without food, by explaining that service interruptions were caused by the “rumour” that suppliers would no longer be paid – part of what Finance Minister Pravin Gordhan described as an attempt to sabotage the Treasury’s intervention.
They also dismissed suggestions that the intervention was politically motivated as it came within days of Mathale’s re-election as provincial ANC chairman. Mathale has been a vocal supporter of former ANC Youth League leader Julius Malema – rumoured to have made millions doing business with the provincial government – and is widely seen as opposed to a second term for Zuma.
Mathale’s spokeswoman, Mashadi Mathosa, said the premier would be able to respond to Godi’s comments on Thursday.
FINDINGS OF THE TASK TEAM
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