AUDITOR-GENERAL REPORT

Department of Environment, Forestry and Fisheries blows nearly R3bn in irregular expenditure

By Don Pinnock 21 February 2021

The AG and the parliamentary environment portfolio committee concluded that there was concern that ‘none in the environmental portfolios received a clean audit’ and that there were problems with the preparation of Department of Environment, Forestry and Fisheries financial statements. (Photo: iSimangaliso Wetland Park Authority)

The Auditor-General’s annual review of the Department of Environment, Forestry and Fisheries’ finances has uncovered irregular, wasteful and unaccounted for expenditure and has issued a string of negative audit reports.

Don Pinnock

The Department of Environment, Forestry and Fisheries (DEFF) has accumulated unauthorised, undocumented and wasteful spending totalling a startling R2.9-billion of taxpayers’ money. 

The Auditor-General’s 2019/20 report flagged inadequate monitoring of massively expensive supply chain irregularities plus fruitless expenditure and slapped the department with a series of qualified audits. 

In a single year, irregular expenditure jumped from R342-million to R2.9-billion within the portfolio due to “inadequate monitoring of compliance with supply chain management (SCM) laws and regulations”.  There were also problems of procurement without inviting competitive bids. These issues “appeared to be a common phenomenon in the environmental portfolio”.

The AG also flagged problems with the organisations administered under the department: SANParks, the iSimangaliso Wetland Park Authority, the Weather Service, Fisheries, Forestry and the National Biodiversity Institute (Sanbi). 

The report was tabled as part of the mandate of Parliament’s environmental committee to exercise monitoring and oversight of the department. It noted that 87% of the irregular expenditure related to the department itself, where internal controls, it said, were inadequately designed and implemented.

The fruitless expenditure related to “pre-payments made to implementing agents for goods and services that were not in line with the contractual arrangements and agreed deliverables, cancellation of travel/no-show accommodation, payment of interest and penalties, payment of VAT charged by non-VAT vendors, damaged stock, misuse of vehicles and overpayment to suppliers”.

Responding to the AG report, the department notified Parliament that disciplinary action was in process, involving R152,717,823, there was preferential treatment in selecting bidders involving R379,573,308, fraud and misconduct was found in the allocation of R1,411,572,300 and poor management led to wasteful expenditure of R141,173,482. This comes to about R2-billion. According to a SANParks official, it is likely that this amount represented activities that have accumulated over a number of years.

According to the department, “the Minister indicated to the Portfolio Committee that in her view these audit outcomes are unacceptable. The Minister has already initiated consequence management for the irregular expenditure which began in the 2018/19 financial year and continues in the 2019/20 financial year.”

The AG found that Forestry was unable to “appropriately quantify and provide evidence on the value of biological assets (forests)” as well as poor controls and oversight on these assets and unreliable or ineffective monthly reports and quarterly and year-end reconciliation processes. There was also “infighting and lack of leadership… from the executive”. The audit report was accordingly qualified, these problems precluding a clean audit.

In the iSimangaliso Wetland Park Authority, liabilities exceeded current assets by R9.03-million. Problems included misuse of vehicles and overpayments to suppliers. (Its chief financial officer was recently suspended and then discharged.) 

Sanbi cracked an unqualified audit opinion despite the AG finding inadequate internal controls in terms of proper record-keeping, daily and monthly controls, and inability to review and monitor compliance. The entity, it said, lacked proper provision of quality assurance at the senior management level. It also noted “irregular expenditure due to procurement without competitive bidding or quotation process and non-compliance with procurement process requirements”.

At SANParks, there were similar problems and “daily and monthly controls were of concern, whereas the ability to review and monitor compliance was inadequate, needing intervention”.

The Weather Service audit was unqualified, but proper record keeping remained a concern, as well as wasteful expenditure. It ended the year with “a significant deficit of R37.5-million in 2019/20, though less than the prior year deficit of R65.5-million”.

The AG and the portfolio committee concluded that there was concern that “none in the environmental portfolios received a clean audit” and that there were problems with the preparation of financial statements.

The massive irregular expenditure, wasteful and fruitless expenditure, flouting of supply chain management legislation and overpayment of invoices, it said, remained a major problem.

The report also expressed concern that the department had for the past four financial years received a qualified audit with findings that were  “unacceptable, considering the amount of effort spent on facilitating the department through a series of engagements in Parliament to overcome this challenge”.

Oddly, despite its stated concerns, the portfolio committee said it was “pleased with the performance of the Department and entities as well as those of the Forestry and Fisheries branches, especially in terms of meeting predetermined objectives. The sustainability of the South African environmental sector is being ensured despite the ever-growing myriad of challenges on the sector.”

The report was adopted by the portfolio committee despite objections by the DA, which argued that the members had only received it that morning and consequently were unable to properly study it. It now needs to be adopted by the National Assembly, whereafter the minister would then be required to submit a detailed response to the recommendations in the report within 60 days. DM

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All Comments 15

    • “The massive irregular expenditure, wasteful and fruitless expenditure, flouting of supply chain management legislation and overpayment of invoices”? Blatant theft and fraud more likely!
      Why is it that we never hear of one conviction as a result of this continual thieving?!

  • What a pity that the Portfolio Committee are asleep or thinking of some other Department if they say:
    ‘the portfolio committee said it was “pleased with the performance of the Department and entities as well as those of the Forestry and Fisheries branches, especially in terms of meeting predetermined objectives. The sustainability of the South African environmental sector is being ensured despite the ever-growing myriad of challenges on the sector.”’
    What were these predetermined objectives? Why are our rivers so polluted, catchments infested with aliens, fish stocks overfished, many municipal waste sites/landfills a disgrace and major polluters, national wildlife heritage poached so much – rhinos, elephants, pangolins, old SAFCOL forests handed back to SAN Parks under-managed – think 2018 wild fires in the southern Cape, mining companies abandon their properties with little rehabilitation and consequence – and the list can go on. South Africa has such good environmental, water and related legislation. Unfortunately it is poorly enforced and applied – and some has become too cumbersome to the point that officials don’t know what to do with it, so err on the side of (over) caution instead of being pragmatic about its application. There are too few DEA and DWS officials ‘on the beat’ – doing proper field work and applying guidance to transgressors, followed by enforcement if needed. The issue of (so called) Co-operative Governance between various spheres of government is also used as an excuse to not enforce the legislation on municipalities, EG: DWS has let eMfuleni’s sewage discharges occur for far too long, impacting the Vaal. DEA and DWS need to work closure together. Consideration should be given to amalgamating similar departments with one competent minister and an overarching management committee, and a number of sub-departments/committees, with deputy ministers and specialist teams. Human Settlements must be somewhere else.

  • Another Monday and another scandal, or two. Another depressing start to the week.
    Can anyone point out a department or government agency that has performed well and without corruption or negligence.

  • Thanks to Don Pinnock for his exposure of this rot. No one can sit back and imagine that DEFF and it’s subsidary organizations are fulfilling their mandate of sustainably managing the environment.

  • Did anyone expect the results to be different just because barbara creecy is the minister? She is also an anc deployee …. As with any other anc run organisation, expect the absolute least and you won’t be as disapointed.

  • Small example of wastage: we were at the Kgalagadi’s Mata Mata camp a few weeks ago. I complained that two shelves in the door were missing. They promptly brought us a new fridge. Our neighbour saw this and had a similar problem. So they brought her a new fridge too. Sounds like a possible scheme going on. Where are those other nearly new fridges going? With only the removable shelves missing?

  • A visit to most of the SAN Parks managed resorts reflects the findings of the audit. I am undecided if the problem is criminal/ deliberate or due to sheer incompetence or perhaps both.

  • What has this to do with the heading “Our Burning Planet” unless it is a further waste of money on weather forecasting mentioned, probably about predicting planetary conditions in a hundred years time?

  • Well, we must remember that South Africa is a filthy rich country. Only R3 billion…gosh, maybe the comrades of the ANC are losing it. Well done guys, but next time do better

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