KZN has lost almost R1?billion to fraud

2010-04-14 00:00

THE KwaZulu-Natal government, including its entities and municipalities, has been defrauded of almost R1 billion in the last financial year, Finance MEC Ina Cronjé revealed yesterday.

Delivering the KwaZulu-Natal Provincial Treasury budget speech in the legislature, Cronjé said that 25 cases are being investigated, and that all these cases relate to allegations of fraud, corruption, theft, mismanagement of public funds, maladministration, money laundering, graft and other irregularities.

The investigation is being conducted jointly with the South African Police Force and other organisations in the forensic fraternity, said Cronjé. “Twenty-five cases involving R768 827 043,89 have been investigated in the 2009/10 financial year. These cases are being investigated by the internal audit unit. The statistics exclude investigations conducted by the departments themselves,” she said.

The provincial internal audit unit, said Cronjé, remains one of the most important vehicles government utilises to promote good gover­nance and combat fraud and corruption throughout the province. However, the unit is not without its challenges.

Cronjé said that although the unit has made satisfactory progress in promoting a culture of effective risk management, by establishing risk management forums and promoting awareness through focused strategic and operational risk assessment, the main challenge faced by the unit is the demand for skilled internal auditors, which contributes to a high staff turnover.

“We have also focused on proactive and preventative strategies to combat IT fraud and corruption.

“To this end, an IT assessment was conducted at all KZN departments through Project Nembeza, which was launched in 2008 after a successful pilot in 2007,” said Cronjé.

The MEC said Project Nembeza is aimed at identifying control weaknesses in the provincial IT system and networks.

Project Nembeza was initiated when 19 fraudulent basic accounting systems transactions — used to pay suppliers — amounting to R179 million, were reported between 2006 and 2008.

“An investigation resul­ted in the laying of 19 criminal charges with the SAPF and [the Hawks],” said Cronjé.

Progress made with reference to the cases is as follows, said Cronjé:

• One case has been remanded to March 1 2010, and another to March 15.

• In one case, the accused has been found guilty of fraud and sentenced to five years’ imprisonment, suspended for five years;

• In one case, the accused has been found guilty of fraud and sentenced to 10 years’ imprisonment, suspended for five years. The accused is to repay R735 000 in monthly instalments of R12 500;

• Two cases have been remanded for plea to February 26 2010;

• Four cases have been withdrawn by the public prosecutor;

• One case has been remanded to January 19 2010, and another to March 1 2010;

• Two cases were closed as undetected: and

• Five cases are in progress, and awaiting updated information.

Cronjé said: “Since the implementation of the programme, no new cases of external manipulation through our systems have been reported. However, we remain vigilant and follow up on any suspicious activity that is reported.”

Given the findings of a 2008/09 report on go­vernance issues, Cronjé said security and the general control of provincial government systems is crucial to significantly improve the control environment of government’s IT systems.

Government has to introduce a variety of mechanisms to promote integrity and combat corruption, said Cronjé.

“Currently, the financial disclosure framework is being reviewed to compel all officials in government to disclose their financial interests, irrespective of their ranks or responsibilities,” ad­ded Cronjé.


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