The cash-strapped Eastern Cape health department has wrongfully paid almost R40m to an undisclosed number of former and current employees in the past four years.
The payments, flagged by auditor-general (AG) Tsakani Maluleke as part of the material irregularities she identified in the department’s latest audit assessment, were made between March 2021 and this year.
The ailing department paid a total of R38.2m to a number of its undeserving employees, as part of commuted overtime, nodal allowances, salaries for staff members whose service had already been terminated, and for grade progression of medical registrars.
The AG’s report was part of the department’s annual report which was tabled in the Bhisho legislature on Tuesday by MEC Ntandokazi Capa.
According to the AG, between the 2021/22 and 2022/23 financial years, the department paid R18.2m in nodal allowances to undeserving staff members.
In addition, R6.8m in grade progression funds was paid last year to an undisclosed number of employees who did not qualify for the payments.
The department had also paid more than R1.8m in commuted overtime allowances to undeserving employees, the AG found, while R1.2m was paid to former employees as part of their salaries, after their services had been terminated.
In her report, Maluleke said the department incorrectly paid nodal allowances to employees who were not entitled to receive the allowances according to a resolution of the Public Health and Welfare Sector Bargaining Council.
Nodal allowances are non-pensionable allowances intended to compensate designated personnel for working in specific “nodes”, or rural areas.
The AG said: “The incorrect payment of nodal allowances constitutes noncompliance with Treasury regulations, which requires that for all employees, the person in charge at the respective pay-points must certify on the date of payment that all persons listed on the payroll report, are entitled to the payment.”
Maluleke said she had notified the department’s administration head, Dr Rolene Wagner of this material irregularity as far back as July 2023.
The AG said the department had committed to the termination of nodal allowances for the affected employees by August 2024, and to institute a process for them to repay the money they had undeservedly received.
The department had also promised Maluleke to investigate whether any employee was responsible for the circumstances that led to this material irregularity.
“I have since determined that the accounting officer is not taking appropriate action to resolve this material irregularity, hence I am in the process of making a decision on further actions to be taken.”
Maluleke said the incorrect grade progression payments constituted noncompliance with the Public Finance Management Act (PFMA) and that the department’s officials “did not ensure that the system of financial management and internal control was carried out within their area of responsibility”.
The AG said the department had sent notification letters to affected medical personnel in March, informing them that they would have to pay back the money, adding she would follow up on whether the repayments were made in her next audit assessment.
The payment of the R1.8m in commuted overtime to non-qualifying employees, Maluleke said, resulted in noncompliance with the PFMA, and was likely to result in material financial loss, if not recovered from the responsible employees.
Maluleke said the noncompliance should be investigated and the financial loss quantified. A recovery process should be instituted and appropriate disciplinary steps initiated, “without undue delay”, against any official found to be responsible.
Health spokesperson Siyanda Manana said officials acknowledged that “debt” was owed to the department by the different categories of employees and former employees.
“In relation to persons or doctors, in terms of committed overtime, there are doctors that had signed acknowledgment of debt and they are repaying the money to the department,” he said.
“There are three companies that the department has employed in terms of making sure that there is recovery from employees that owe the department money. So those three companies are then collecting debt on behalf of the department. So in a nutshell, yes, we acknowledge.”
DA MPL Dr Jane Cowley said the payment of almost R40m to undeserving employees was “an absolute indictment on the department”.
“This department started this financial year with almost R7bn in payment accruals. That means that companies that provided services have not been paid since last year.
“This R40m might seem like a drop in the ocean, but it is a clear indication that the department is not serious about fiscal management, and instead the fiscal malfeasance continues.”
EFF MPL Nokuthula Mlokoti said the revelations were “gut-wrenching and utterly disgraceful”.
“It raises serious questions about the integrity of the department’s payroll systems, the competence of its leadership, and the possibility that similar ‘errors’ have gone undetected for years.”
Daily Dispatch
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.