Audit reveals ‘culture of no accountability’ at KZN transport department

The KwaZulu-Natal department of transport (DoT) has come under fire for weak financial management, recurring irregular expenditure and poor project performance, despite receiving an unqualified audit opinion for the 2024/25 financial year.

This emerged during a sitting of the provincial legislature’s Standing Committee on Public Accounts (Scopa) in Pietermaritzburg on Tuesday.

The Auditor-General of South Africa (Agsa) acknowledged that the department had steadily reduced its irregular expenditure over the past three years from R3.02bn in 2022/23 to R1.33bn.

However, Khabiso Madlala, deputy business unit executive at Agsa, noted that the department’s cumulative irregular expenditure still stands at R34.4bn, with less than 1% of it condoned and not enough recoveries made.

“When we say there’s a culture of no accountability, that’s what we mean. Year after year, we see billions in irregular expenditure, and this creates an environment where such practices are seen as normal.”

He said this lack of accountability drains resources as new investigations must be launched each year into unresolved financial irregularities.

Agsa senior manager Manelisi Njisane revealed that uncompetitive and unfair procurement processes were identified, mainly relating to two contracts: a R483m rehabilitation of road P20-1 and a R512m quotation process where the highest-scoring bidder was not appointed.

Agsa also highlighted four material irregularities, including R2.4m in fruitless expenditure on a border wall project between uMkhanyakude and Mozambique, unrecovered performance guarantees worth R4m, and payments not aligned with contract terms.

Njisane said the border wall project, which had also been investigated by the Special Investigating Unit, had failed to obtain environmental approval before construction began.

“Unfortunately, the official responsible for this process died before the issue was raised, so the department could not recover the loss from anyone. It was recommended that the accounting officer should write it off.”

On the unrecovered performance guarantees, he said the debt had prescribed by the time recovery efforts were initiated, which meant that the department could no longer act. Other issues were classified as irregular expenditure, though no financial loss was confirmed.

In terms of assets under investigation, Njisane said the department was reviewing movable assets worth R143m that it could not locate during verification.

“It’s not necessarily that the assets aren’t there. Some might have been moved to other locations. The department is doing a fact-finding process to confirm where they are.”

Njisane further noted that another area of regression for the department in the past year was in its performance information: mainly asset management and under-compliance, which resulted in both programmes being qualified.

I want to be emphatic that I am not a fanatic of a clean audit at this point in time. This department is one of the major pillars of developing economic corridors and shaping the province’s economic outlook.

—  Transport MEC Siboniso Duma

Transport MEC Siboniso Duma defended the department’s audit performance, saying that while financial controls were improving, persistent funding shortfalls and systemic pressures continued to affect service delivery.

He said the department had made significant progress after years of instability and poor audit outcomes.

“For the last 11 years, the department has failed to acquire an unqualified audit opinion, and that must be understood within the correct context,” he said.

“When we entered office, we invited the Auditor-General to sit with us because of the high levels of irregular expenditure and accruals. We had to delve deeper into assets and registration at that time, and we dealt with those issues.”

He said the department had since achieved two consecutive unqualified audit opinions, marking a turnaround from its troubled financial history.

However, Duma cautioned that achieving a clean audit was not his primary goal.

“I want to be emphatic that I am not a fanatic of a clean audit at this point in time. This department is one of the major pillars of developing economic corridors and shaping the province’s economic outlook.

“While ensuring that the paper trail is clean is important, we must balance that with service delivery. We are an infrastructure department that has to do a lot of work.”

He admitted that the department continued to face operational challenges, including delays caused by the migration from the Basic Accounting System (BAS) version 5 to BAS 6 and funding shortfalls that forced delays in infrastructure projects.

The people of our province deserve a transport department that delivers safe, reliable infrastructure and operates with integrity. As a member of the Government of Provincial Unity, we will continue to hold the executive accountable.

—  Scopa chairperson Tim Brauteseth

Another major source of their financial pressures was scholar transport, which Duma described as a “systematic and existential problem.”

He said the department had been forced to redirect funding from infrastructure projects to cover a shortfall in the department of education’s learner transport budget.

“Do we then just cut off scholar transport and say it’s okay, even when matric exams have started? The answer is no. It means we have to balance the equation by stopping some infrastructure projects and setting aside R359m for the department of education.”

CFO Thabani Nkosi also flagged the funding shortfall in learner transport, where the allocated funds were exhausted by August.

“If we don’t receive additional funds in the adjusted budget, then we’ll have to reprioritise within the infrastructure budget. That may slow down projects and lead to more irregular expenditure,” Nkosi said.

He added that the audited financial statements for the transport infrastructure programme showed a marked improvement in budget spending, with 50% of the allocation spent for Programme 2 and 57% for Programme 3, up from 37% and 36% respectively in 2023/24.

Nkosi said the department had taken the Auditor-General’s findings seriously and implemented a number of measures to address shortcomings.

However, he noted that material findings remained in areas including financial statements, revenue management, expenditure control, performance management, consequence management and asset management.

He told the committee that previous material irregularities, including unrecovered performance guarantees and contracts awarded to bidders who did not score the highest points, had been cleared.

DA MPL and Scopa chairperson Tim Brauteseth expressed concern about the department’s performance, describing it as a reflection of “poor planning, weak project management and a lack of accountability”.

“While the DoT received an unqualified audit opinion, serious and persistent failures remain in performance, compliance and governance,” he said.

Brauteseth highlighted R1.3bn in irregular expenditure, R4.2m in fruitless and wasteful expenditure and noted that 99.57% of irregular expenditure remained unresolved.

He also cited infrastructure projects such as the Klein Boesman River Bridge and road P242 rehabilitation as examples of systemic failures due to poor workmanship and excessive fees.

He further called for swift disciplinary action against officials responsible for mismanagement and for the urgent filling of critical vacancies, including the supply chain management director.

“The people of our province deserve a transport department that delivers safe, reliable infrastructure and operates with integrity. As a member of the Government of Provincial Unity, we will continue to hold the executive accountable.”