Limpopo intervention indefinite, govt says

2012-02-09 21:45
Cape Town - The national government's intervention in Limpopo would carry on indefinitely, Treasury director general Lungisa Fuzile said on Thursday.

"There are no dates. We don't know, we don't know," he said when asked how much longer the two-month-old intervention would last.

"We are saying this intervention will go on until national government is satisfied that there is a sustained basis going forward."

In a briefing by the task team on Limpopo to Parliament's select finance committee, Fuzile said the province's cash shortfall of R2bn was a moving target.

The team had trimmed the cash shortfall to R1.1bn since December 5 when Cabinet endorsed a decision to place five Limpopo departments under administration.

However, it also feared it could yet uncover more debt.

"The shortfall is a bit of a moving target," he told MPs.

"We hope that we are right when we say that the maximum that it could eventually become was the R2bn.

"In an instance where there are accruals recorded and possibly unrecorded, one has got to say this guardedly because there is always the chance that invoices might come out of drawers.

"I am not saying I know this for a fact, but that could upset the situation."

He added: "It is getting closer to R1bn now, and we hope that we can squeeze it down further so that it is a very small shortfall or there is no shortfall."

Finance Minister Pravin Gordhan, one of eight ministers to brief the committee, reiterated that there would be no bail-out for Limpopo and said government had halved the shortfall by "trimming the fat" off the provincial budget.

Gordhan said Treasury had written a budget for the province for the coming financial year and Premier Cassel Mathale was "beginning to agree with it".

"You have got to utilise the opportunity to say: 'Where is the fat, how do you re-jig the entire provincial budget and overcome the difficulties that you have?'"

But both he and Fuzile stressed that Treasury was not merely focusing on debt, but also making sure the province had enough money to keep essential services running.

Illegal tenders

Outlining the ills that prompted the intervention, Gordhan said the provincial treasury had "collapsed", senior staff had been forced to leave and payments were made irrespective of whether cash was available.

Unpaid invoices were "placed in a drawer" in the hope there would be money to pay them in the next financial year.

Instead, the situation grew more dire after requests for R1.5bn in credit lines were refused by the Reserve Bank and a commercial bank.

Gordhan said the provincial executive council "endorsed illegal tender processes and there is evidence of illegal payments beginning to emerge," but confirmed that no disciplinary or criminal proceedings had been instituted yet.

He said investigators were collecting evidence.

"Let's give them a couple of weeks and let's see what happens."

Asked how soon steps could be expected, he said: "How long is a piece of string? Some cases can be investigated for three years before you can do anything, others maybe six months before you can do something."

Gordhan also briefly informed MPs about the central government's intervention in Gauteng and Free State departments.

He did not exclude the possibility that more departments may face the same fate.

"It is hard to say. Let's work with what we have with us and try to get things right."

Read more on:    cassel mathale  |  pravin gordhan  |  lungisa fuzile  |  polokwane  |  local government  |  tenders  |  government spending

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