EThekwini Municipality’s failure to discipline staff blamed for over R1bn of irregular expenditure
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DURBAN - THE failure of the eThekwini Municipality to institute disciplinary measures against senior staff members is the main reason the municipality incurred more than R1 billion in irregular expenditure.
The municipality has no record of holding its officials accountable when they do not follow legal processes in the procurement of goods and services on behalf of the council, resulting in the city incurring irregular expenditure.
These concerns were raised in an oversight report, compiled by the city’s watchdog body the Municipal Public Accounts Committee (MPAC), which was tabled before councillors recently.
Irregular expenditure is incurred when the legal processes that need to be followed to spend the money are not complied with by municipal officials. For instance, the officials might have failed to source three quotes when awarding a contract.
Some councillors in the committee said the disciplinary processes in the municipality were in disarray, as the term of the disciplinary board had expired and many officials who should have faced scrutiny escaped scot-free.
In the report, MPAC recommended that immediate disciplinary action be taken against officials when their conduct led to the city incurring irregular expenditure.
The eThekwini Municipality’s R1bn in irregular expenditure for the 2019/20 financial year is down from the R2.3bn incurred in the 2018/19 financial year.
“Notwithstanding, the huge reduction in irregular expenditure … irregular expenditure of R1.07bn is still unacceptable. It is our view that the lack of consequence management for officials whose actions result in irregular expenditure is the root cause of the municipality’s inability to prevent irregular expenditure.
“The auditor-general found that reasonable steps were not taken to prevent irregular expenditure of R1,07bn. The majority of the irregular expenditure was as a result of non-compliance with supply chain management (SCM) regulations,” read the report.
It said the majority of irregular expenditure related to deviations being approved when it was practical to invite competitive bids, invalid amendments to SCM contracts and competitive bidding process not being followed with three quotations not having been obtained.
After the matter was highlighted by the office of the A-G, read the report, the municipality resolved that a raft of measures would be implemented to ensure serious consequence management for allowing/incurring irregular, fruitless, and wasteful expenditure.
Other recommendations include that there should be a thorough review of SCM reports for compliance before an order is placed for goods and services and a specific compliance checklist for the approval of SCM procurements should be developed and enforced.
There would also be monthly monitoring of the procurement timetable at meetings of the Executive Management Team and other relevant oversight structures, and consequence management for non-adherence to procurement time lines.
IFP councillor and MPAC member Prem Iyer said the watchdog body had been complaining about the issue of consequence management for some time, and that no senior manager who should have been disciplined had faced the music. He said the city’s disciplinary process was in disarray. At one point, a law firm whose own appointment was irregular, was holding staff disciplinary proceedings.
“The term of the disciplinary board that is responsible for disciplining officials expired, and the municipality is still looking for new people, but the lack of consequence management has been going on for some time – at least for the past three or four years.
“At one point we were paying millions to this law firm, and stipends to the disciplinary board for the same work,” he said.
He said officials in the supply chain unit who should have been sanctioned heavily “got away scot-free and are back at their jobs”.
The DA said consequence management was a serious issue and it was unfortunate it was simply being ignored by the municipality.
DA councillor Thabani Mthethwa said irregular expenditure was a result of poor planning by management.
“There are unnecessary delays in the procurement of goods and services because officials wait until late to start the procurement process and as a result, irregular expenditure is incurred,” he said.
Mthethwa said there was also the abuse of section 36 – which allows officials to bypass the normal tender processes – as this is used when it is unnecessary to do so.
“What is embarrassing is when a municipality this size transacts with entities that are not on the database and in some cases not tax compliant.
“This happens because officials are not held accountable for these serious transgressions. A classic example is that just recently the DA was very shocked to hear that a very senior official in the SCM unit who is facing serious fraud and corruption allegations is back in the same office and it is business as usual,” he said.