Auditor-General has condemned "no-consequence culture" in government
Auditor-General Tsakani Maluleke says the government's "no-consequence" culture is keeping the country back from better service delivery and financial performance.
Officials implicated in irregular or fruitless expenditure are seldom held to account, Maluleke said in the 2023/24 Public Finance Management Act report, which covered the country's sixth administration and President Cyril Ramaphosa's first term in office. The 2024/25 report will be released later this year.
Irregular expenditure
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At least R407-billion was irregularly spent by South Africa's national and provincial governments between 2018 and 2024.
Irregular expenditure peaked in 2020, at R177-billion. National Student Financial Aid Scheme (NSFAS) was the main contributor to this, spending R77.5-billion without sufficiently consulting with the minister of higher education. Transnet also spent R31.1-billion irregularly that year.
Irregular expenditure is when the Auditor-General finds breaches in procurement and financial regulations. This does not necessarily mean that the government received no goods or services for this money. Rather, it means there were problems with how suppliers were appointed, or how contracts were managed.
It could, for example, be that contracts were granted without a competitive bidding process or went to companies that were not the most qualified. It could also be that goods and services were delivered, but were charged at prices higher than market value.
Irregular expenditure can result in departments facing legal action and in projects being delayed or of low quality.
In the vast majority of cases between 2018 and 2024, government entities did not take steps to recover, write off, approve or condone the expenditure. In many cases, officials were not disciplined.
Fruitless and Wasteful Expenditure
National and provincial governments had R10.3-billion of fruitless and wasteful expenditure between 2018 and 2024.
Fruitless and wasteful expenditure occurs when the government receives no or very little value for money. This includes when suppliers are paid and no goods or services are delivered, or when penalties and interest are imposed for late payments. Legal claims against departments and overspending of budgets are also included.
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The biggest contributors to fruitless and wasteful expenditure in 2023/24 were Transnet, which lost R0.6-billion to overpayments, interest, penalties, and cancellation costs; the Gauteng human settlements department, which paid half-a-billion rand on feasibility studies for housing projects that were cancelled, and the Free State Development corporation, which overpaid R270-million for assets related to a Special Economic Zone.
The amount of money the government actually wastes on corrupt contracts and deals is likely much higher than the amount of fruitless and wasteful expenditure found by the auditor general each year.
In many cases, irregular contracts will still result in value for the government, so these are not always included in fruitless and wasteful expenditure.
There is also general lack of transparency within government entities, which often makes it difficult to quantify actual financial losses. Many entities have qualified audits and billions of rands worth of contracts cannot be audited by the Auditor-General because documents are incomplete. Corrupt deals are often exposed years after the fact. GroundUp has for example uncovered hundreds of millions of rands of theft of Lottery money which has not been included in the Auditor-General's reports.
