Johannesburg – A massive R3.5billion in unauthorised, irregular, fruitless and wasteful expenditure has highlighted the alleged dire state of Joburg’s finances.
The auditor-general revealed that Joburg’s wasteful and irregular expenditure worsened by R758million in the 2018/19 reporting period, compared to the previous year.
The city has also been flagged for not paying its creditors within 30 days, which is a repeat offence that the auditor-general has highlighted in his previous report, including that there was a lack of competitive bidding processes for Joburg contracts.
The auditor-general revealed that goods with the value below and above R200000 were procured without inviting competitive bidders, in line with supply chain regulations.
The finding by the auditor-general appears to corroborate what Joburg mayor Geoff Makhubo alleged about the dire state of the city’s finances.
At a briefing last month, about two months after he succeeded Herman Mashaba as mayor, Makhubo claimed the city was on the brink of financial ruin and blamed the DA-led coalition government for the situation.
Makhubo formed an ANC-led coalition government in December, following the resignation of Mashaba from his mayoral position and the DA.
“We can confirm with certainty that the DA-led administration in the City of Johannesburg has brought the city to near financial collapse and created an environment where maladministration bordering on fraud and corruption has thrived,” Makhubo said at the time.
Mashaba, however, slammed these claims, saying Makhubo had been predicting collapse since August 2016, when the DA took over Joburg.
“Contrary to these allegations, the pre-audit financial statements for the 2018/19 financial year reflected a significant improvement in the City’s financial health and liquidity, with its closing cash balance increasing from R2.2billion at the end of 2017/18, to R5.3billion by the close of 2018/19,” Mashaba said.
But alleged maladministration was also revealed by the auditor-general, where a supposed lack of consequences and repercussions for bad financial management in the city was highlighted.
Joburg spokesperson Nthatisi Modingoane acknowledged that the city was not paying all its creditors within 30 days, but said that it was remedying this anomaly.
“The City of Johannesburg currently pays 90% of its creditors within 30 days. There are several reasons for non or delayed payment, which include queries and disputes with suppliers on the delivery of goods and services; incorrect invoices; and incomplete documentation for payment processing.
“The city is actively alert to the impact of non or delayed payment on creditors – specifically small and medium enterprises – and is continuously looking at improving all its supply chain management processes,” Modingoane said.
“The city is implementing several remedial actions. These include the re-implementation of a system to streamline processes – making them more effective and efficient.
“This will be coupled with city-wide training of finance staff on the improved payment systems.”
On the action to be taken to stop wasteful spending, Modingoane said: “The city has already implemented consequence management through investigations and enquiry of fruitless expenditure.
“Where individuals are found guilty, disciplinary action is implemented – including the recovery of monies deemed irregular, fruitless and wasteful expenditure.”