Taxpayers money falls through the cracks

Johannesburg - The Auditor-General (AG) and National Treasury clearly keep records of municipal financial affairs, but decline to say how much wasted money is recovered from those responsible - that while municipal regulations enforce recovery.

It would seem that neglect to do so is shrugged off.

In its recent report on municipal finances from 2006/07 to 2012/13 Treasury clearly set out how city councils should handle unauthorised, irregular, fruitless and wasted expenditure.

Unauthorised spending may be permitted under certain circumstances. Irregular, fruitless and wasted costs may under no circumstances be sanctioned.

Unauthorised spending that is not subsequently sanctioned, as well as irregular, fruitless and wasted expenditure must be recovered from those responsible unless, after an investigation by a council committee, the council should declare it irrecoverable.

In practice this means the following: in the 2009/10 financial year, for instance, municipalities spent R5bn without authorisation. Only R1.1bn was authorised or written off.

A total of R4.14bn was irregularly spent, R77m of which was written off.

There was a total R189m fruitless and wasted expenditure, only R1m of which was written off.

Municipalities should therefore have recovered the balance - more than R8bn - from the responsible parties. This equals about a quarter of the cost of the Gautrain project.

Enquiry has revealed that Treasury has no record of this R8bn being recovered. The AG failed to respond to Sake24’s enquiry, and in its voluminous consolidated report on municipal audit results for 2009/10 there is no mention of recoveries.

Anita Botha, a municipal consultant at Pro-Active Management Services, said that in all the years that she had been involved with municipalities she had never heard of such money being recovered from a politician, even when there had been clear grounds for doing so. She was aware of isolated cases where a municipal official had had to cough up.

Botha reckoned there was no reason for Treasury’s inability to insist on reporting on recoveries from local authorities. She said it was the task of the municipal manager, as accounting officer, to set the recovery process in motion. “But he could not succeed without political support from the mayor.”

Botha says it is important for politicians to be accountable because voters are becoming increasingly aware of the reasons for the lack of service delivery.

“We are sitting on a powder keg,” she warns.

Advocate Paul Hoffman from the Institute for Accountability says squandered money is not recovered owing to the ANC’s policy of cadre deployment. Officials' party loyalty ranks above their dedication to service delivery. He said civil organisations should compel the recovery of these amounts by reporting them to the Public Protector.

From questions addressed to the Public Protector, the Special Investigations Unit and the Asset Forfeiture Unit, it would appear that investigations into misapplication of funds take place at municipalities, but the organisations could not say whether the money recovered had gone to the municipality or to the fiscus.

Afriforum legal representative Willie Spies said if the guilty party was a municipal official, the matter should be handled in terms of labour legislation. If a party outside the council was involved, the council should lodge a civil claim in court. If a municipal manager had neglected to recover the money, it could be recovered from him personally.

Spies said communities or opposition parties could also approach the court for an order to force the municipal manager to do his job of recovering the money.

If the municipalities should recover the money, it need not be lost to service delivery.