In a briefing that was held on Wednesday in Johannesburg to members of Parliament’s Standing Committee on Public Accounts, it was revealed that PRASA lacked mechanisms to deal with and curb instances of irregular expenditure.
This admission was made by the parastatal’s acting Group Chief Executive Officer, Mr Collins Letsoalo when he faced the SCOPA, which was following up on the company’s bad showing when the Auditor General presented his audit outcomes for the financial year 2015-2016. The AG revealed that Prasa had incurred the worst results in the financial year. He said they had incurred a total of R14 bn in irregular expenditure. This, he posited, was as a result of significant non-compliance with its own supply chain management policy and legislation”. This effectively made Prasa the single biggest contributor to irregular expenditure among the government owned companies.
Under grilling from the members of the Standing Committee, Letsoalo admitted that there were no attempts to prevent irregular expenditure at the agency, adding that systems for curbing irregularity were either non-existent or had completely collapsed. We must concede that there was a general collapse in controls in all areas of the business. Be it financial‚ administrative‚ human resources as well as other levels and in areas where they did exist they were inadequate‚” said Letsoalo. Also addressing the committee, the chairman of the Prasa board, Popo Molefe, said that his agency had put in place measures to address breaches in procurement and supply rules. Letsoalo further admitted that the agency had made operational losses of R1.8 bn, which had further exasperated the financial woes of the parastatal. As a result, he said, it had become harder to pay contractors and creditors.
Asked by the members of the Standing Committee about whether the financial standing of the parastatal had been worsened or caused by the meddling of politicians, Prasa CEO Letsoalo disputed this fact and instead posited that the problem was as a result of lack of consequence management, adding that even if there had been political interference, it would not have picked up on irregular spending.