GARDEN ROUTE NEWS - The Good Party has raised concerns over millions of rand in irregular, unauthorised and fruitless expenditure at the Garden Route District Municipality (GRDM), saying greater accountability is needed.

Speaking during the council meeting on 24 June, Good Councillor Rosa Louw said the party was not satisfied with the Municipal Public Accounts Committee’s (MPAC) report. 

She questioned recommendations to write off approximately R27.5m in irregular expenditure, R21.4m in unauthorised expenditure and R95 867 in fruitless and wasteful expenditure.

Louw argued that MPAC should play a stronger oversight role to ensure taxpayers’ money is spent responsibly and said the party would take its concerns to National Parliament.

However, GRDM MMC for Financial Services, Councillor Dave Swart, said it is important to understand what irregular expenditure means. He explained that it does not necessarily indicate that money was lost, stolen or wasted, but rather that prescribed procurement procedures were not followed.

Investigations

Swart said legislation requires every instance of irregular expenditure to be investigated. Where investigations find that the municipality received the goods or services, no financial loss has occurred and the non-compliance resulted from administrative errors or the interpretation of procurement legislation, Council may approve the expenditure to be written off as an accounting entry.

MMC for Financial Services, Councillor Dave Swart

“The write-off does not involve money leaving the municipality,” Swart said. “It simply removes the amount from the accounting records as irregular expenditure after the required investigation has been completed.”

He added that irregular expenditure is common across municipalities, including those that receive clean audits. As examples, he said George Municipality wrote off irregular expenditure of about R58.7m during the previous financial year, while Mossel Bay wrote off approximately R43m.

Legislative interpretation

Swart cited the municipality’s former contract with Telkom as an example, where R3 188 314 was written off as irregular expenditure. “The GRDM procured services from Telkom based on the understanding that Telkom qualified as a government entity under Section 110(2)(a) of the MFMA. However, a recent High Court ruling altered Telkom’s status as a state entity,” said Swart.

“Using this ruling, the auditor-general rendered the procurement approach of Telkom as non-compliant. The municipality has since terminated the arrangement and procured the services through a National Treasury transversal contract. The irregularity, therefore, arose from a legislative interpretation that changed during the contract period.”

Swart said that MPAC, which includes representatives from all political parties, thoroughly examines every case before making recommendations to council and that the municipality has implemented measures to strengthen compliance and reduce future instances of irregular expenditure.

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