Johannesburg council requests National Treasury's approval for R5 billion write-off of irregular expenditure

The City of Johannesburg has asked for permission from the National Treasury to write off over R5 billion in irregular, unauthorised, fruitless, and wasteful expenditure.

At its recent council meeting, the city tabled two reports from its municipal public accounts committee (MPAC) detailing the seeking to certify as irrecoverable and regularise more than R1.92bn in irregular expenditure incurred for the 2017/18 to 2023/24 financial years.

A similar process was initiated for over R2.28bn in unauthorised expenditure for the period between the 2020/21 and 2023/24 financial years.

The accounting officer (acting City Manager Kiba Kekana) must submit standard operating procedures to be implemented to ensure that budget rebasing does not immediately result in unauthorised expenditure.

A report must be submitted to the MPAC within 30 days of the adoption of the two reports and, where applicable, Kekana must comply with the requirements of the Municipal Finance Management Act, which requires the accounting officer to report all cases of alleged irregular expenditure constituting a criminal offence, as well as theft and fraud occurring in the municipality to the SA Police Service.

Kekana must also submit the reports to the Treasury, together with the minutes of the council meeting reflecting the resolution for the reports, within seven working days of their adoption.

The second report details R883m in unauthorised, irregular, fruitless, and wasteful expenditure.

About R805m in unauthorised expenditure incurred between 2010/11 and 2021/22, nearly R77m in irregular expenditure for the 2011/12 to 2024/25 financial years, and about R1.4m in fruitless and wasteful expenditure for the period between 2016/17 to 2022/23 financial years could be written off.

Just less than R15,400 in fruitless and wasteful expenditure has been recommended to be recovered by Kekana.

About R1.21bn in irregular expenditure was accumulated paying a panel of service providers between 2018/19 and 2021/22, and the city has undertaken to implement record keeping procedures, monitoring, and enforcement of the supply chain management (SCM) policy and regulations as remedial action.

From 2019/20 to 2020/21, the city's panel of legal service providers received payments totalling about R434m, which has been declared irregular expenditure.

"The Group SCM should ensure that the processes of the bid specification and bid evaluation committees (BSC and BEC) are adequately monitored to avoid the unnecessary delays that may affect the finalisation of the tender process. BSCs and BECs are adequately trained and understand their respective roles," reads the recommended remedial steps.

Over R1.25bn overspending of its budget due to budget rebasing and the debt impairment was incurred as unauthorised expenditure in 2023/24, and the city will implement improvements to controls over collection forecasts and bad debt provision to avoid significant variances against budget.

In July, Finance Minister Enoch Godongwana expressed concerns that the city had a cumulative amount of R1.45bn in unauthorised expenditure, over R22.3bn in irregular expenditure, and over R705m in fruitless and wasteful expenditure, and that there was little or no action taken to address this. 

loyiso.sidimba@inl.co.za