Sassa's irregular expenditure skyrockets 1000% to R1.1 billion

Cape Town - The South African Social Security Agency's (Sassa) irregular expenditure over the last financial year skyrocketed by over 1000%, from R93m in 2014/15 to over R1bn in 2015/16.

The bulk of the R1.14bn, a total of R414m, was irregularly spent on the extension of contracts with security companies, Sassa told Parliament's portfolio committee on social development on Thursday.

It was reporting on its performance in the 2015/16 financial year.

According to Sassa's annual report tabled in Parliament in September, the rest of the irregular spending was classified as:

  • - R316m for re-registering grant beneficiaries;
  • - R223m for lapsing lease contracts (for property etc);
  • - R74m for forensic investigations; and
  • - R18m for "other matters".

For four of the five categories above, "internal investigations" were still ongoing as at March 31 2016.

The re-registration of grant beneficiaries was referred to National Treasury for approval in 2015, but only approved in June this year.

"The R316m is linked to a very important project for the country,” Sassa chief financial officer Tsakeriwa Chauke told the committee.

“This amount spent was very necessary. In excess of R2bn was saved in the project.”

Treasury had an issue with the R316m figure because Sassa’s report on the project did not contain an official audit. Chauke said Sassa had since satisfied Treasury’s requirements.

Democratic Alliance MPs Bridget Masango and Evelyn Wilson asked what was being done to address the “very concerning” issues.

Sassa was being blamed for “poor contract management”, not if the actual work was necessary, acting director general Wiseman Magasela said.

In its report, Sassa failed to include the progress of a court case between the department and Corruption Watch. The matter would be heard in the high court on Monday and Tuesday next week.

Private security contract

Chauke said the problem with the R414m was that the department had renewed expiring contracts with a company, when it should rather have opened up a new bidding process.

The R414m was accumulated over four years since 2012, and did not represent expenditure for only the last financial year.

Sassa resolved the issue in July this year by signing a three-year contract with a security company after completing a bidding process.

“The committee no longer has to worry about this,” Chauke said.

“A little cure for you, you can move on,” committee chairperson Rosemary Capa said.

Missing documents, incomplete bidding processes

For the other three categories, R223m was recorded as irregular because it had been paid to a landlord between 2006 and 2009, without any adequate documentation available. The final outcome of an internal disciplinary process is still pending, the department said.

A total of R74m was spent on a three-year contract to a forensic investigation service provider without the proper bidding processes having been completed. A final report on the matter had been submitted to Cabinet for consideration, the department said.

Of the R18m spent on “other matters”, R16m related to an unnamed lease expiring, but Sassa still making payment. The matter was being dealt with.

Sassa acting chief executive officer Raphaahle Ramokgopa told the committee the irregularities were not acceptable and steps had been taken to deal with them.

The department was expected to meet the committee in November to address its readiness to take over the distribution of all of South Africa’s social grants, after the Constitutional court ruled that the contract with current service provider, Cash Paymaster Services, was invalid.

Acting Director-General Magasela said Sassa was confident of being able to handle grants for 17 million people.

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