News24.com | Auditor-General Kimi Makwetu: Why it‘s getting worse

The man responsible for auditing government books blames the “state capture years” under former president Jacob Zuma for municipal coffers being looted with impunity.

In an interview with City Press on Friday, Auditor-General Kimi Makwetu painted a picture of increasing looting with neither accountability nor consequences over the past five years at municipal level.

This week, Makwetu announced that out of a total municipal budget of R362.13bn in 2016/17, irregular expenditure amounted to R28.376bn (an increase of 75% on the previous financial year), and fruitless and wasteful expenditure amounted to R1.5bn, a 71% increase from the year before.

Makwetu said that while he and his predecessors were busy with outreach programmes to help local government officials compile their financial statements properly, a number of municipalities neglected to institute accountability mechanisms against those responsible for misusing ratepayers’ money.

He said corruption had been on an upward trajectory from the period before former auditor-general Terence Nombembe took the position in 2006, and continued to escalate since he assumed control of the office in 2013.

The past five years, he said, had been especially bad, with an accelerated trend of corrupt officials behaving with impunity.

During Nombembe’s tenure, staff went out on door-to-door programmes and preached the importance of leadership in the management of financial resources. Makwetu said this period was signified by the flouting of regulations and people getting away with it.

Since he took over, Makwetu said, his office has intensified its visibility in various institutions and in the public domain. But even new officials at some municipalities have grown in confidence, secure in the knowledge that they can loot the state because of a lack of accountability and because they would face no consequences.

Compounding the problem, Makwetu said, is that many financial officials were placed in their positions without having the required skills, thereby enabling people inside and outside the municipality to abuse its coffers and create a “free for all” situation.

He said those with constitutional obligations to act – namely the politicians in charge of those municipalities – always promised to act, but in many cases never managed to fix or reverse this trend.

“Issues of political instability between councillors and executive management affects administration,” he says, reversing the gains made.

This can be seen in the case of Eastern Cape’s eNgcobo municipality, which regressed from a clean audit last year to an unqualified audit with findings this year.

Lack of accountability

One of the lowlights of the 2016/17 local government audits has been lack of accountability of officials, who have failed to produce financial statements to councils, and the lack of oversight from councils and structures like the municipal public accounts committees (MPACs). Makwetu said there were instances where MPACs did not have the technical capacity required to perform their tasks due to budget constraints, which rendered them ineffective.

Makwetu said the councils had a responsibility to supervise and monitor municipalities and their Integrated Development Plan programmes.

The Auditor-General said there were, however, glimpses of hope in that a significant number of municipalities were getting the financial management aspect right.

However, procuring goods and services by taking short-cuts has remained the biggest challenge, even at those municipalities which had shown signs of improvement.

“They tend to drop the ball in supply chain. It’s the biggest issue and dark spot,” he said.

Amid this looting and political instability, his staff members have also been targeted by corrupt elements threatened by their auditing work. Although he has never been threatened personally, he raised concerns about threats made to his staff and has reported the matters to the police.

Having the power to act against officials responsible for irregular expenditure, fruitless and wasteful expenditure and municipalities failing to submit their financial reports would be a way of dealing with the state of affairs.

Makwetu said parliamentary processes were underway towards amending the Public Audit Act. The standing committee on the Auditor-General chaired by ANC MP Vincent Smith this week approved the amendment of the act, and regulations would be formulated to detail how his office would use the proposed watchdog powers they would receive. If all goes according to plan, the amendments will be signed into law by President Cyril Ramaphosa “before 2019”.

Makwetu said the new regulations could entail that once an audit has been done at a municipality and an irregular transaction had been picked up, the matter would be referred to the police or Hawks for investigation.

When the investigation was completed, a report would be referred to his office and the Auditor-General could then decide on a course of action, which could include issuing a certificate of debt to attach liability to anyone involved in an irregular transaction.

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