6 March 2024
Payments for services not rendered constituted the largest part of the Department of Agriculture, Land Reform and Rural Development’s fruitless and wasteful expenditure of R30 million in its 2022-23 financial year.
This is one of the alarming findings in the budget oversight and recommendations report of the parliamentary committee on agriculture, land reform and rural development.
Dr Theo de Jager, chairperson of the Southern African Agri Initiative (Saai), says the squandering of millions “does not come as a big surprise to many farmers who work directly with the department; on the contrary, many were aware of it and had expected this report earlier”.
De Jager attributes the waste to “poor command and control in the department, cadre deployment, and political appointments in management positions of people who do not have the expertise or experience to monitor or manage expenditure budgets”.
According to the committee’s report, the department’s wasteful expenditure from the 2021-22 financial year to the 2022-23 financial year “increased nearly a thousandfold”, from R33 000 to R30 million. The report expresses serious concern that the expenditure was identified through a forensic investigation.
In 2022-23, only R6 000 of fruitless and wasteful expenditure was accounted for, while R5,5 million that could not be accounted for was written off. There were further fruitless and wasteful expenditures of R234,5 million related to the Presidential Employment Stimulus.
The previous financial year’s fruitless expenditure of R33 000 was for interest charged by a service provider on invoices the department did not pay within the required timeframe.
According to the report, there were also historical expenditures of R41 million and R4,9 million that could not be accounted for and were written off in 2021-22.
Bennie van Zyl, general manager of TLU SA, says the report is a test for the department’s integrity. The department’s misuse of funds still needs to be considered by the National Assembly.
“It should be a simple task to determine who the culprits are. Heads should roll. The question is, what about the oversight role and responsibility of the political head of the department?” says Van Zyl.
Inadequate control system
An independent audit committee found that the department’s internal control system in 2022-23 was not entirely adequate and effective because deficiencies were identified and reported. This issue was also raised in the previous financial year.
“While management continued to pay attention to control deficiencies reported by the internal audit department, the audit committee is seriously concerned about incidents of fraud identified in the department and inadequate internal control structures to prevent and detect fraud,” the report states.
The auditor-general issued an unqualified audit opinion on the department’s financial statements for 2022-23 and highlighted specific issues, most of which are repetitions of previous findings. They include:
- Significant uncertainties about claims of R1,58 billion against the department which are subject to the outcome of legal proceedings. In the previous financial year, the amount was R2,2 billion.
- Annual financial statements submitted for auditing were not prepared fully in accordance with the prescribed reporting framework and/or supported by complete and proper records as required by law.
- Effective steps were not taken to prevent fruitless and wasteful spending.
- Disciplinary action was not taken against officials who incurred or allowed irregular expenditure.
- Leadership did not implement adequate oversight control to ensure action plans to address previous years’ findings were monitored.
- There were materially misstated representations in certain annual performance reports.
DA calls for action
In response to the findings, the DA called on the auditor-general to take action.
Noko Masipa, the DA’s shadow minister for the portfolio, says where necessary, cases should be referred to the police to ensure the government stops corruption and wasteful spending in the department.
“It is necessary for the auditor-general to engage with the Special Investigating Unit on this longstanding issue so that it can be addressed.”
Masipa says according to the department, disciplinary action was taken over the 2021-22 problems and warning letters were issued to offenders in 11 cases totalling R43,7 million. However, there is no indication whether the department has taken legal action to recover the misused funds.
