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Mineral Resources dept's irregular spend balloons to a whopping R11.6m

Oct 09 2018 14:46
Lameez Omarjee, Fin24

The Department of Mineral Resources's irregular expenditure has spiked from R424 000 reported in 2016/17 to R11.6m reported in 2017/18.

While the Auditor General’s report noted that this increase was more than 100%, according to Fin24’s calculation, this is an increase of some 2000%.

The department’s fruitless and wasteful expenditure also spiked to millions, increasing from R33 000 recorded in the previous year to R6.5m.

Fruitless and wasteful expenditure is that which could have been avoided.

Overall regression

Members of the portfolio committee on mineral resources heard from representatives of the AG about the department and its entities’ financial position.

Overall, the department’s audit outcomes regressed.

Only 33%, or two of the department’s entities – Mintek and the Mine Health and Safety Council – achieved an unqualified opinion with no findings.

The remaining four – the DMR, the State Diamond Trader (SDT), Council for Geoscience (CGS) and South African Diamond & Precious Metals Regulator (SADPMR) – achieved an unqualified opinion with findings.

Unfair, uncompetitive procurement

The AG said the irregular expenditure was incurred due to contravention of supply chain management legislation.

There has been a regression in compliance, the AG’s report said.

About 67% of entities had engaged in unfair and uncompetitive procurement processes and there had been a false declaration of interest made by one supplier.

Most of the irregular expenditure was incurred by the department (about R10m), the SDT (about R1.2m), SADPMR (about R70 000) and the CGS (R74 000).

R6.1m on renovating unused spaces

The bulk of this expenditure (about R6.1m) was incurred through the refurbishment of the department’s rental premises which eventually was not used or occupied. The remaining R31 800 was incurred by the SDT.

The AG also noted that management had been slow in responding to its messages to address the risks and to improve internal controls. However, management had made improvements in filling key vacant posts in the DMR and CGS.

The AG recommended timely consequences be implemented for officials who "deliberately or negligently" ignore their duties, and contravene legislation. The AG also recommended that the DMR provide to the portfolio committee a list of actions taken against the transgressors which have incurred the irregular and wasteful expenditure.

The AG further recommended that the portfolio committee actively monitor the actions to be implemented and should request feedback on progress from the DMR.

Chairperson of the committee Sahlulele Luzipo said that consequence management by the DMR should not simply be the sacking of contravening individuals. "To me that is not consequential," he said. The losses need to be recouped, he explained. 

According to the AG, pending the outcomes of investigations into misconduct related to supply chain management, actions to be taken against transgressors will be determined, including the recovery of losses.

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