Dumisane Lubisi, Wisani Wa Ka Ngobeni And Dominic Mahlangu
9 April 2006
Johannesburg — TOP officials in the Department of Justice doctored their books to hide R840-million they had failed to spend and then brazenly misled Parliament about their financial affairs.
A Sunday Times investigation has found that the department's top officials, including director-general Menzi Simelane, conspired to conceal the underspending by making a series of irregular changes to the department's books on February 6, just 24 hours before presenting them to a parliamentary committee.
The officials risked losing out on performance bonuses because of the spending failure.
It is not clear whether Justice Minister Brigitte Mabandla was aware of the fiddling.
The practice of hiding unspent money, known as "fiscal dumping", is prohibited by the Public Finance Management Act and involves the invention of improperly planned budget items.
In just seven hours, the department's top officials reduced the original underspending by more than half by allocating unspent funds to projects that were not budgeted for.
These projects included:
- R150-million for digital court recording equipment;
- R100-million for IT networks; and
- R150-million for X-ray machines and security fencing.
Officials were also encouraged to allocate funds for spending in the future on new cars, offices and furniture.
Senior government officials told the Sunday Times that a high-level decision was made to hide the under-spending a day before the department was to appear before Parliament's portfolio committee on justice to account for its spending and to discuss the new budget.
The R840-million underspending would have raised questions about the department's ability to spend its budget. It might also have caused the department to face a budget cut.
The concern about the underspending led to the production of two new financial statements.
The first one was produced at 4pm the day before the parliamentary briefing and showed a reduced underspending of R386-million.
But the department's management was still unhappy with this figure.
Another financial statement was produced at 8am the following day, just hours before the briefing began, and showed underspending of R120-million.
When the department's chiefs appeared before the portfolio committee, they attributed the R120-million underspending to a large number of unfilled posts. The department had a budget of R5.1-billion in the last financial year, half of which was budgeted for personnel.
Much of the unspent money was budgeted for goods and services.
An independent financial accountant who studied the department's books on behalf of the Sunday Times said there was "no accounting basis" for adjustments made to the financial statements.
He also noted that the department had grossly exaggerated its capacity to spend its budget to further reduce the underspending.
Minutes of the department's executive committee meeting held six days after the figure of R120-million had been presented to Parliament show that Simelane and his deputy directors-general discussed the unspent R840-million.
The minutes also show that Simelane was so concerned about the underspending that he ordered his deputies to find projects that could be allocated the excess funds in the future.
He suggested to his deputies that spending could be undertaken by directing funds to new, unplanned projects "such as appointing two prosecutors per court, facilities ... and filling of posts in various structures".
Deputy directors-general were given a week to submit funding requests.
They were encouraged to use the excess funds to buy new offices, cars and furniture.
In an interview this week, Simelane denied any wrongdoing.
He said the excess funds were "re-prioritised" and channelled to various projects that the department had been unable to fund due to lack of money.
He denied that his suggestion to his deputies to direct funds to new projects was reckless.
He said the money had been transferred into projects to provide the courts with digital equipment and for security services.
Simelane did not give a clear explanation of how the department planned to ensure that spending on new projects took place when it had failed to do so on budgeted projects.
Gordon Hollamby, Chief Director of Budgets in the Justice Department, said it would have been "unwise" to return excess funds to the national treasury.
"We could not afford to return such a huge amount to [the] national treasury," Hollamby said.
He denied any wrongdoing in the adjustments of the financial statements.
He said some of the budget items that showed underspending had to be "zero-rated" as the department was confident that it would spend the funds by the end of the financial year.
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