Poorly run state-owned enterprises (SOEs) continue to experience poor financial management, which has resulted in billions of rand being spent irregularly.
This is the view of Prof William Gumede of the Wits School of Governance, who said there was no political will to effectively deal with the rot in the state-owned entities that have been beset by the same problems in the past 10 years.
Auditor-General (AG) Tsakane Maluleke painted a bleak picture to parliament of the audit findings for the 2019/2020 financial year, in which some state-owned entities have performed worse than in the preceding financial year.
Gumede said the main reasons for the poor governance at state-owned entities is because it has been seen “by politicians as a place where you can appoint cadres, friends and family members to serve political interests through procurement and supply chain”.
“I'm afraid to say South Africans are going to be disappointed because there'll be very little change in these SOEs because there's no political will at the national level to really deal with issues. Of course, there's a lot of talk – people with rhetoric – but the political will is not there because the decisions are politically tough and too costly,” Gumede said.
Maluleke told parliament's portfolio committee on public accounts (Scopa) on Wednesday that Eskom, Transnet and the SABC received qualified audit opinions in the last financial year. Troubled state arms company Denel, which struggles to pay salaries and its service providers, and rail agency Prasa, look set to receive disclaimer audit opinions.
Of the six SOEs whose audit findings were outlined, only the Development Bank of SA (DBSA) will get a clean audit.
Maluleke will be tabling these audit findings next month.
However, the auditor-general revealed that irregular expenditure at Transnet worsened by R6.3bn compared to the 2018/2019 financial year.
Among the audit findings the auditor-general highlighted to parliament was irregular expenditure of R33bn recorded at Eskom, up from R22bn in the previous financial year, while fruitless and wasteful expenditure rose from R538m to R2.9bn.
Transnet recorded irregular expenditure of R49.9bn in the 2018/2019 financial year but last year it ballooned to R56.2bn, the auditor-general indicated.
“This irregular expenditure [at Transnet] was mainly caused by the incorrect application of pre-qualification criteria applied in contravention of the Preferential Procurement Policy Framework Act. The amount reported, however, needs to be considered in light of the fact that the completeness of the disclosed irregular expenditure could not be confirmed by the auditors, which resulted in the qualification,” the auditor-general stated in her presentation to Scopa.
“Systems and processes implemented by the SABC could not prevent the incurrence of irregular expenditure,” the auditor-general noted.
Despite the SABC having shown an improvement in terms of its irregular expenditure, dropping to R202m from R336m in the previous year, the broadcaster still received a qualified audit finding due to the incomplete disclosure of irregular expenditure incurred, according to the auditor-general.
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