19 October 2010 | Nick Martindale
The South African Department of Justice and Constitutional Development (DOJCD) has blamed differences between two competing pieces of legislation for alleged irregularities in its spending.
The department cited discrepancies between the Broad Based Black Economic Empowerment (BBBEE) code of practice and the Preferential Procurement Policy Framework Act (PPPFA) for payments highlighted in a report by the Auditor General South Africa. The report had claimed payments were made in contravention to the PPPFA.
A statement released to accompany the DOJCD’s own annual report said: “The department proactively adopted the BBBEE codes of practice during the 2004-05 financial year in anticipation that it will be implemented in the near future.
“Although the two regulatory processes (BBBEE and PPPFA) require the use of the same formula – 80 per cent for price and 20 per cent for goals – which was followed in dealing with all procurement processes, they slightly differ in terms of their codes of practice,” it said.
The allegations of irregular expenditure made by the Auditor General related to the procurement of goods and services through quotations and bids dating back to 2004. The BBBEE codes of conduct were introduced in 2007. The total of irregular expenditure highlighted in the report was R812 million (£74.37m) for the 2009-10 financial year, following a smaller figure of R26 million the previous year.
Neither the Auditor General nor the DOJCD provided further details regarding the details of the differences between the two codes and how they might bring about irregularities. The Auditor General did not respond to SM’s requests for further information.
The earlier report by the auditor also drew attention to “fruitless and wasteful expenditure amounting to R2 million that could have been avoided had reasonable care been exercised”.
The DOJCD did not directly refer to this in its response but said: “While some deficiencies in internal control were reported, the audit committee is satisfied that key controls remained in place throughout the year under review and, where deficiencies in internal controls were identified, management has undertaken to address them.”
The department also revealed that it had investigated 121 cases of financial misconduct over the past year, resulting in 60 convictions. Of the 121 instances, around 26 related to fraud but the DOJCD did not say how many of these – if any – directly related to procurement.