A Ziwaphi investigation has revealed that the auditor-general failed to report a possible fraud of over R26 million in Mpumalanga province’s department of public works, roads and transport.
The auditor-general is the constitutional institution whose mandate is to audit and produce reports on all government departments, but in Mpumalanga, different rules seem to apply.
According to information seen by Ziwaphi, the department of public works roads and transport (PWRT) presented to the auditor-general a variation order which appears to have been forged when audited in the 2018/19 financial year.
The auditor-general admitted that they audited the contract, which was issued to a company named Van Dyksdritf Joint Venture, for the rehabilitation of a road between Van Dyksdirft and Hendrina in Nkangala.
“The Auditor-General of South Africa (AGSA) audited the contract and the variation order you are enquiring on as part of its normal, annual audit of the department. There were findings raised and communicated to the department’s management through a management report.
“As management reports are a confidential audit communication mechanism between the auditor (AGSA) and the auditee (department), the department will be best suited to give you more details on the findings raised. As part of our current, normal annual audit of the department, we will follow up on how the department has dealt with the matter,” said AGSA spokesperson, Africa Boso.
AGSA also referred Ziwaphi to the department’s annual report.
The AG’s report, however, does not even mentioned that PWRT submitted a possibly fraudulent variation order, instead, the AG awarded the department an unqualified audit.
“Material misstatements of current assets, expenditure and disclosure items identified by the auditors in the submitted financial statements were corrected, resulting in the financial statements receiving an unqualified opinion,” reads the AG’s opinion.
While the AG found nothing wrong with the possible fraudulent variation order to the point of not even mentioning it in the report, the department of provincial treasury disowned the letter purportedly written by the provincial treasury.
They also confirmed that they received an enquiry from the auditor-general about the variation order, but denied ever issuing the authorisation to the PWRT department.
“The provincial treasury received a inquiry during the 2018/19 audit process from the Auditor General about approved variation orders for the department of public works, roads and transport. As indicated in response to the initial inquiry, the provincial treasury did not receive a written request for variation for the contract as mentioned above from the department of public works, roads and transport,” said treasury departmental spokesperson, Letshela Jonas.
The possibly forged authorisation, addressed to the former HOD for PWRT, Sindi Xulu, who is now the province’s director-general, states that the variation was for the construction of concrete side drains, fencing storm water drainage and pollution management at Gloria coal mine. The letter, however, also contradicts these reasons.
“The time related costs for the additional works, above normal rainfall and community disruptions to the project,” reads the letter.
The signature that appears on the R26 million authorisation is purportedly that of the former head of provincial treasury department, Nombedesho Nkamba, signed on 18 August 2018.
Nkamba failed to respond to texted messages or to verify if the signature that appears in the letter was hers or not. Whatsapp shows that she has opened the messages sent to her.
Protesting workers frog-marched Nkamba from provincial treasury following corruption allegations into the R70 million Nelson Mandela memorial scandal. She also, allegedly, did not even possess a security clearance, which is a requirement for senior managers in the public service.
The value of the contract, according to the department of PWRT’s annual report, was R12 237 500, but when the contract was finally issued, it amounted to R198 000 000.
In 2016, National Treasury issued what’s commonly known as Instruction No 3 of 2016 to guide expansions following the abuse of government supply chain management practices.
To circumvent competitive bidding processes government officials would appoint contractors who have quoted lowest, but then apply for variation orders after the signing letters of appointment, thus increasing the money well beyond the prices of other bidders.
The National Treasury Instruction put a threshold of not more than R20 million in variation orders. Any deviation from the threshold must be submitted to the relevant treasury.
It is against this background that the department of PWRT apparently, fraudulently, authored the letter to itself to hoodwink the AG.
PWRT spokesperson ignored email enquiries and failed to answer his calls.
MEC for PWRT, Gillion Mashego also promised that the department would respond, but more than a week later, no response was forthcoming.
Ziwaphi has applied for the access to information from the Auditor General’s office through the Promotion of Access to Information Act, to get answers on how the AG found, what appears to be a fraudulent approval, lawful and adequate.