Durban - The KwaZulu-Natal legislature is seeking legal opinion over officials in four departments that used ring-fenced funds for other purposes to ease budget pressures.
This comes after Finance MEC Belinda Scott told a legislature debate last Thursday that the finance portfolio committee could instruct departments to institute legal action against implicated officials.
Her response has now prompted the DA’s Francois Rodgers to request committee chairman Sipho “KK” Nkosi to instruct departments to start with the legal action against implicated officials.
“I have subsequently received a response from the chair in which he confirms that he is in the process of doing so. The DA welcomes this move,” Rodgers said.
“We will continue to monitor this process to ensure that those found guilty of any contravention of the legal framework face the full might of the law.
“The time has come for KZN’s government to walk the talk,” he said.
Nkosi confirmed to the Daily News that legal opinion was being sought.
“I have asked the legal advisor to request legal opinion on how to go about on the matter so that in the next portfolio committee meeting we can take a decision,” he said, adding that heads of departments who had authorised spending of ring-fenced funds on other purposes would be in trouble.
However, Nkosi said the request by Rodgers for action was already catered for in the committee resolutions contained in the report he tabled to the legislature on Thursday, which was why legal opinion was now being sought.
“Some departments don’t take seriously the money bill to address certain things.
“We took it as a contravention of the Public Finance Management Act. Funds exclusively appropriated should be spent as such,” he said.
In his report to the legislature, Nkosi said of KZN’s R97.8 billion budget for 2014/15, the provincial government under-spent by R422 million.
The conditional grant allocation was also underspent by R20.2m, with the Arts and Culture Department fingered as the main culprit.
“This is an improvement compared to the 2013/14 financial year where the province had underspent on conditional grant by R67.4m.”
Nkosi said the KZN administration also surrendered R4.4m back to the National Treasury in unspent conditional grants.
“While this is still not in line with the finance portfolio committee’s insistence on 100% expenditure on all conditional grants, it shows significant improvement and commitment by provincial departments to heed the call of the committee to spend conditional grants in full.”
Nkosi said there was a new trend where departments used ring-fenced funds to defray expenditure pressures in their departments’ budgets.
“This practice is unacceptable and is in contravention of the Section 43 (4) (a) of the Public Finance Management Act and Treasury regulations.”
He said the departments would have to pay back the ring-fenced funds they spent from their own budgets in the following financial year.
Nkosi told the Daily News that the legal action against the officials would ensure there was compliance with the country’s laws.
“Officials just undermine laws of the democratic government and often no action is taken against them,” he said.
Nkosi dismissed reports by Rodgers that the provincial government had under-spent its 2014/15 budget by nearly R1bn.
“He is mistaken. The money we (KZN) underspent is R422m and the bulk is from the education department,” he said.
Rodgers had claimed that the amount underspent in 2014/15 was under-stated.
“Provincial government failed to include a R523m under-spend by KZN public entities as well as R20m in unspent conditional grants, bringing the total under-spend in the province to R965m.
“The KZN government’s failure to include these figures is both inaccurate and disingenuous,” he said.
The departments and the funds they had spent include the following:
Transport
- R15.3 million that was budgeted for scholar transport – a conditional grant managed on behalf of Education Department – was spent to defray spending pressures in other departmental programmes.
Economic Development
- The department spent R9m on the World Pro-am Golfers Championship that took place because it did not ensure that there were sufficient funds to pay for the event prior to it taking place.
- It also overspent budget allocated for transfer and subsidies to public entities by R11m because of events that took place in December 2014 that were not sufficiently budgeted for.
It then applied for authorisation of the transfers of the events from provincial Treasury in February this year, long after the event took place.
Health Department
- The department overspent by R93.9m on goods and services because of costs related to higher than budgeted audit fees incurred due to audits by the Auditor-General and forensic units to investigate tender fraud and moonlighting by doctors.
- It overspent on its households budget by R174.3m due to medico-legal claims that totalled R123m, which far exceeded the budgeted R23m.
Social Development
- The department spent R65.9m that was ring-fenced for unnamed purposes to absorb other departmental expenditure pressures.
Departments misspending funds - revealed
Daily News
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