Cronin: Public works misspent R3.65bn

Sep 18 2013 15:08
Jeremy Cronin

Jeremy Cronin. (File)

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Cape Town - The troubled public works department has racked up R3.65bn in irregular spending since 2009, Public Works Deputy Minister Jeremy Cronin revealed on Wednesday.

"What we are reporting is R3.6bn [that] appeared to be irregular expenditure, problematic expenditures, out of 40 000 transactions that were identified over the period from 2009 to March 2013," Cronin said after briefing Parliament's public accounts watchdog committee, Scopa.

"So, an enormous set of problems which we are not proud of obviously," he told reporters.

Cronin said the department arrived at the sum, which he termed "immense", after spending months trawling through 930 000 transactions, and was trying to root out corruption in its ranks.

"We are not just lamenting, we are actually undertaking a whole range of actions, including criminal cases, some of which have already gone to court."

He said a large share of the sum of irregular expenditure resulted from irregular lease contracts - including the department's notorious office space deals with empowerment mogul Roux Shabangu.

The lease contracts with Shabangu for buildings to house police management were among those cases that had made it to court. Nedbank was embroiled in the matter.

Unscrupulous dealings

Cronin implicitly accused the bank - one of the country's four biggest - of unscrupulous dealings after stressing that the private sector had played a role in corruption in the department.

"To make the point, which I think is very strongly borne out in the case of the leases, is that certainly there are problems inside the department but with these leases typically also the private sector and private sector individuals are very active in the problems.

"A number of the criminal cases that we have taken up deal not just with public sector individuals but with private sector individuals including some big institutions in South Africa.

"One bank for instance, in our view could not have been an innocent bystander and must have had a very good sense of what was happening. That is a case currently going to court."

Legal action against Nedbank

In the briefing to Scopa the department confirmed that it was involved in legal action against Nedbank [JSE:NED] because Shabangu had ceded his monthly payments from public works to the bank in case he defaulted on his R380m bond.

Cronin said the wasteful transactions concluded by public works also ran towards smaller but untenable cases, such as renting wine glasses for the presidential guest house in Pretoria at R200 each.

He said the extravagant contract was discovered last year and had been signed by the prestige unit of public works, not the presidency.

"It is a smallish indication of at the very least a lack of diligence when departmental officials have been contracting for services... it is unforgivable," he said.

Cronin was addressing the media after a detailed briefing by the department to Scopa which included a brief appearance by Public Works Minister Thulas Nxesi.

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