Buffalo City Metro’s council this week agreed to write off more than R1.6bn in irregular expenditure relating to six tenders it awarded without following due process.
Writing off irregular expenditure is necessary if a municipality does not want it to build up and annually reflect in its audit accounts.
But, that money must only be written off if deemed irrecoverable.
In terms of the Municipal Finance Management Act, the council needs to investigate the noncompliance that led to the irregular expenditure, identify why it happened, who was responsible, how much money was lost and how it might be recovered.
It is hard to imagine R1.6bn simply being written off. To put it in context, if one could fit R1m in a suitcase, R1.6bn would fill 1,600 suitcases. It could also build 8,000 RDP houses.
It’s a lot of money that could do a lot of good in a municipality where vital infrastructure is increasingly decrepit and dysfunctional.
The AG has already pronounced that some of the irregular expenditure was incurred as a result of criminal acts and that these had not been reported to police.
But, we have heard nothing more about BCM finding out exactly who was responsible or what consequences they faced. It has also not yet reported these criminal acts to the police.
The council’s municipal public accounts committee (MPAC) said last week it had investigated and only now was it recommending criminal cases be opened against senior metro officials responsible.
It seems unclear how thorough the investigation is or whether officials have been identified.
It is hard to imagine R1.6bn simply being written off. To put it in context, if one could fit R1m in a suitcase, R1.6bn would fill 1 600 suitcases. It could also build 8,000 RDP houses
The unlawful awards referred to by the AG were made between three and six years ago and yet nothing has happened in the interim. The municipality admits that prescription has kicked in on the older matter and that no action can be taken.
The contracts were for vital upgrading and maintenance of water, sanitation and electrical infrastructure and refurbishment of dilapidated municipal buildings.
In March this year, BCM admitted it was finally auditing its underperforming service providers and unlawfully appointed contractors, some of which date back more than 20 years.
Municipal manager Mxolisi Yawa last week gave an assurance that consequence management would be pursued in respect of the R1.6bn irregular expenditure.
But that is very vague. The MPAC needs to ensure that there is a timeline attached to ensuring that those responsible face the consequences, including criminal charges where appropriate.
The AG’s office says the lack of consequences “remains one of the key root causes of municipalities’ poor audit outcomes”, including that of BCM.
The municipal leadership need to implement adequate consequences swiftly, bravely and consistently. If it does not, it may be time for that leadership to be terminated too.
After all inaction should also have consequences.
Accountability and consequences are vital for good governance.
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