Scandal-prone OR Tambo district municipality was yesterday named by Auditor-General Kimi Makwetu as the biggest culprit of irregular expenditure in the country, with R1.569-million irregularly spent in the 2015-16 financial year.
Makwetu said three other Eastern Cape municipalities – Buffalo City Metro (BCM), Nelson Mandela Bay Metro (NMBM) and Alfred Nzo – were also among the worst 10 in the country. In total R16-billion nationally was irregularly spent in 2015-16.
Makwetu named and shamed OR Tambo after the Mthatha-based municipality recorded a more than 1000% increase in its irregular spend from R94-million to a record R1569-million.
NMB’s irregular spend hit R1286-million.
The Alfred Nzo district municipality irregularly spent R405-million.
Makwetu found that the district authority issued a R34.6-million water supply scheme tender in Matatiele, among the contracts under question, without advertising it and to a bidder who had no tax clearance.
While BCM managed to decrease its irregular spend from R479-million to R370-million, it was still in the top 10 of irregular spenders in the country.
Irregular expenditure is spending that was not incurred in the way prescribed by legislation, meaning somewhere in the process the municipality did not comply with legislation.
BCM cases related to R222-million on internal road projects which were not subjected to competitive bidding as well as R2.5-million for expenditure on building the Nompumelelo Community Hall, the report stated.
Makwetu said the R16.81-billion irregular expenditure was “the highest since we started tracking the values”.
“Such expenditure does not necessarily mean that money has been wasted or that fraud had been committed,” he said.
“It is an indicator of non-compliance in the process that needs to be investigated by the council to determine whether it was an unintended error, negligence or done with the intention to work against the requirements of legislation.”
The AG said all the cases of irregular spending need to be confirmed “through investigations to be done by the council, but losses could already have risen or may still rise if follow-up investigations are not undertaken”.
But the results revealed that not all is gloom in Eastern Cape municipalities, as the province received a special mention for recording the highest number of municipalities with marked improvement – a record seven Eastern Cape councils and three entities received clean audits.
This is a remarkable improvement compared with the previous financial year, when only five municipalities and two entities received clean audits.
Outstanding results were achieved by Joe Gqabi, Matatiele, Ingquza Hill and Senqu along with Nelson Mandela Bay Development Agency, who all retained the clean bills of health they attained in the 2014-15 financial year.
The new kids on the block of star performers are Engcobo, Nyandeni and Mzimvubu, as well as the development agencies of Ntinga OR Tambo in Mthatha and Chris Hani in Komani.
Makwetu said the improvement in audit outcomes of some of the Eastern Cape municipalities can be attributed to improved record-keeping and to support from provincial departments such as the treasury and cooperative governance and traditional affairs (Cogta).
The Eastern Cape also ranked among the top three provinces to have received clean audits, with 16% of the province’s municipalities having received a clean bill of health.
The AG called on all municipal councils to hold managers to account.
“Municipalities should implement consequence management for officials who fail to comply with the applicable legislation, while appropriate and timely action must be taken against transgressors.”