Thursday, January 19, 2012

Limpopo: World Cup-style courts on standby

Limpopo: World Cup-style courts on standby
2012-01-19 22:42

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Spendthrift Limpopo faces R2bn shortfall

Johannesburg - A forensic investigation into bankrupt Limpopo's possible R2bn shortfall starts this week, Finance Minister Pravin Gordhan said on Thursday.

"As and when any evidence of breaking the law is revealed by the forensic investigation, the perpetrators will be charged, whether they are government employees or service providers, and we will have special courts, World Cup 2010 style, on standby," Pravin said.

He was briefing the media on Cabinet's initial findings into the province's financial crisis.

At the end of last year it emerged that the province could not pay its civil servants and was broke.

This was because of its large accumulated unauthorised expenditure which had grown from R1.5bn in 2009 to R2.7bn in 2011, Gordhan said.

Five departments - finance, education, health and social development, public works, and education - are under complete control of national government while the remaining departments are operating under guidelines provided by national government.

Gordhan said: "National Treasury will have to restructure the province's finances in order to find savings of R2bn to cover the shortfall."

So far, teams had found that the health department owed suppliers R138m, but only half these payments, R67m, could be verified and approved for payment by December 23.

Another R427m in assets had no supporting documents, and there was R400m in irregular spending on goods and services, mostly medical equipment.

Education Minister Angie Motshekga said there was no supply chain management in the education department, with the department not ordering pupil support material on time.

It had accumulated unauthorised expenditure of R2.2bn and there was a R190m accrual of "stale debt" - money owed.

At least 200 "ghost" teachers were paid and there were 2 400 excess teachers in the province.

Certain schools had not got the money they needed in 2011 for basics, such as electricity and photocopying.

Public Works Minister Thulas Nxesi said the modification of existing contracts to push up tender values and consultancy fees contributed to the financial crisis in that department,

"A security contract of R1.8m a month - and I am not saying a year - a month - was extended without proper procedures from 2010," Nxesi said at the briefing.

Other findings were supply chain violations, tenders awarded without proper processes, and no asset management.

"We cannot run government like this," he said.

Transport Minister Sbu Ndebele said there was no contract management system in place in the province's transport department and no oversight of the Limpopo Roads Agency.

Gordhan confirmed that Limpopo's treasury had an overdraft at the South African Reserve Bank of R757m in November 2011 and wanted to increase it by R1bn.

It also wanted another R500m on its overdraft facility from a commercial bank.

The bank refused because National Treasury would not guarantee repayment on Limpopo's behalf.

Limpopo Premier Cassel Mathale had co-operated, but some of his officials were trying to sabotage and discredit national government's efforts.

Cabinet's move to take control of Polokwane was initially described as a ploy by President Jacob Zuma to discredit Mathale.

Gordhan dismissed this claim, saying, "... No other province has a cash crisis which requires a billion rand bail-out".


Read more on: jacob zuma | cassel mathale.pravin gordhan | polokwane | government spending | politics

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