Tax theft shocker

2011-07-02 18:33

A sizeable chunk of the money wasted by municipal officials last year went into the pockets of officials and their family members.

Auditor-General (AG) Terence Nombembe’s Consolidated General Report on Local Government Outcomes 2009/10 paints a dismal picture of the way in which municipalities execute their financial ­responsibilities.

Released in Pretoria this week, the report points a finger at mayors, accounting officers and other officials who do not execute their legislated responsibilities, comply with laws and regulations, and keep and submit proper records of administering taxpayer funds.

Irregular expenditure
Nombembe found that more than R4 billion of irregular expenditure (spending in contravention of ­financial legislation) was incurred last year.

A total of 168 municipalities and 22 municipal entities incurred this amount in irregular expenditure – a 71% increase from R2.4 billion in the 2008/9 financial year.

These municipalities were able to identify only R440 million worth of irregular expenditure themselves. AG audits unearthed R3.7 billion.

What were these irregular amounts spent on? R3.9 billion was spent on went to supply chain management items such as tenders or ­contracts with service providers, and R16 million to employee compensation.

As for supply chain management, irregular expenditure resulted mainly from contracts being awarded by 63 municipalities to people in the service of the state or their ­family members and uncompetitive or unfair procurement at 159 municipalities.

The AG found that:
» Contracts to the value of R139 million were awarded to state employees;

» Municipalities awarded contracts to the value of R76 million to people in their employ, which ­included 19 councillors, a mayor and a municipal manager;

» Further contracts to the value of R110 million were awarded to close family members of municipal employees, which included five councillors, three mayors and two municipal managers;

» There were probes into 87 (more than a third of) municipalities for supply chain management irregularities, fraud or financial misconduct;
 
» At 32 municipalities more than one forensic investigation took place in the review period;

» Most irregularities surfaced in KwaZulu-Natal (36 incidents), Eastern Cape (21), Gauteng (15) and Western Cape (15).

Unauthorised expenditure
A total of 110 municipalities and two municipal entities incurred another R5 billion in unauthorised expenditure – almost double the amount of R2.7 billion in the 2008/9 financial year.

So bad are their financial systems that municipalities managed to identify only about half (R2.7 billion) of the unauthorised expenditure (spending that is not in accordance with the purpose of a budget vote) themselves. The AG picked up the rest.

Significant increases in unauthorised expenditure occurred in Gauteng (235%), Eastern Cape (61%), North West (39%) and Western Cape (65%).
Gauteng accounted for 33% (R1.7 billion) of unauthorised ­expenditure and the Tshwane metro for a staggering R1.5 billion.

Wasteful expenditure
A total of 105 municipalities and 16 municipal entities incurred R189 million in fruitless and wasteful expenditure (spending in vain and which would be avoidable had reasonable care been exercised), compared to R128 million in the 2008/9 financial year.

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.

Inside News24

 
/News

Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.