The National Treasury building at Church Square in Tshwane. Treasury is challenging a Special Investigating Unit report making adverse findings against it. Picture: Jacques Naude/Independent Newspapers
THE National Treasury is set to square off against the Special Investigating Unit (SIU) following adverse findings the unit made in its probe of the contentious R822 million integrated financial management system (IFMS).
The IFMS is the system chosen by Cabinet to assist the public service in properly managing the government's human and financial resources in 2015.
Treasury awarded the contract to multinational computer technology company Oracle.
In addition, Treasury is disputing several findings, including that the deal led to the material financial loss of R400m.
Auditor-General Tsakani Maluleke revealed the court action by the National Treasury in her latest audit of its finances for the 2023/24 financial year.
According to Maluleke, as of the end of March this year, a material financial loss of R400m has been determined and this expenditure has been incurred between the 2016/17 and the 2021/22 financial years.
She also found that no expenditure was incurred in the 2022/23 and 2023/24 financial years on the IFMS.
Maluleke provided details of the National Treasury’s disputes over the years.
In May 2021, then Treasury director-general Dondo Mogajane was notified of the material irregularity, and he responded two months later, disagreeing that there was fruitless and wasteful expenditure and maintaining that no long-term financial loss has been suffered by the government.
The A-G’s office referred the material irregularity to the SIU in January 2022 for further investigation as provided for in the Public Audit Act.
When Maluleke referred the matter to the SIU, the unit already had a proclamation to institute an investigation.
”The investigation is complete, and the final report has been submitted to the president as confirmed by the SIU during May 2024. National Treasury confirmed that they have taken steps to take the final report under legal review,” reads the Auditor-General’s audit report.
Maluleke found that the IFMS project has been reporting contraventions of the Public Finance Management Act (PFMA) in relation to fruitless and wasteful expenditure since the 2016/17 financial year.
In terms of the PFMA, the accounting officer (director-general or head of department) of a department is responsible for the effective, efficient, economical, and transparent use of the resources of the department, trading entity, or constitutional institution.
Accounting officers are required to take effective and appropriate steps to prevent unauthorised, irregular, fruitless, and wasteful expenditure and losses resulting from criminal conduct.
The PFMA also states that an official in a department is responsible for the effective, efficient, economical, and transparent use of financial and other resources within that official’s area of responsibility.
Reasons cited for the IFMS incurring fruitless and wasteful expenditure include Treasury paying technical support and maintenance for software licences that are not in use, and based on the 2015 approved plan, the entire project was expected to follow a phased in approach and to be fully implemented by March 2021 but this still has not happened.
The SIU investigation has led to five criminal matters being referred to the National Prosecuting Authority, two for a possible disciplinary hearing and another for the blacklisting of a supplier.
Additionally, the unit briefed a senior counsel earlier this year to assist in reviewing the available evidence as it relates to the Oracle contract with the view of possibly launching civil proceedings.
Before the SIU finalised its report, the National Treasury submitted its representations, which were reviewed with the accompanying documentation and considered against the report’s findings.
The SIU felt that the National Treasury’s documents were in fact instrumental in its investigation and had been considered when making its findings, and after a thorough review and evaluation process of the representations, Treasury was advised in March this year that the position was still the same and that the findings, stood.
loyiso.sidimba@inl.co.za