Johannesburg's staggering R13 billion write-off: A wake-up call for financial accountability

The City of Johannesburg this week revealed that by the end of June this year it had written off over R13 billion in unauthorised, irregular, fruitless and wasteful (UIFW) expenditure.

Details of the UIFW expenditure were presented during this week’s joint oversight visit by Parliament's portfolio committee on Cooperative Ggovernance and Traditional Affairs (Cogta), the standing committees on Public Accounts and the Auditor-General as well as the Gauteng provincial legislature at the Ferndale Recreation Centre in Randburg, Johannesburg.

According to the municipality’s submission to Cogta portfolio committee chairperson, Dr. Zweli Mkhize, it had an opening balance of over R23.6bn in UIFW expenditure and just more than R13bn was regularised by council and/or boards of municipal entities.

During this period, there was R6.12bn in in-year UIFW expenditure declarations, leaving the total balance at just over R16.7bn before submission and consideration by the council’s municipal public accounts committee (MPAC) and audit and risk committees (ARCs) of municipal entities.

Out of the R16.7bn total balance, R5.5bn was approved by MPAC and various ARCs and another R400.6 million has been submitted to the committees for potential write-off, the city’s submission outlines.

This means the municipality could be sitting at a total balance of over R10.8bn in unauthorised, irregular, fruitless and wasteful expenditure post submission and consideration by the MPAC and the ARCs of the R5.5bn and R400.6m.

Responding to the Auditor-General South Africa’s (AGSA’s) consolidated 2023/24 Municipal Finance Management Act (MFMA) report that the city has not investigated UIFW expenditure over the last three audited financial years, the municipality indicated that it continues to implement its UIFW expenditure reduction strategy.

The strategy, which was approved in April 2021, entails timeous in-year declarations of UIFW expenditure transactions by senior management including heads of departments in the administration and chief executives and managing directors of municipal entities.

It has also established a UIFW expenditure investigations task team to ensure timeous investigations and coordinate reporting.

Other historical matters, dating back to before and up to June 2018, are being probed by the group forensic and investigation services while the group risk and assurance services department is responsible for UIFW expenditure incurred from July 2018.

The city assured the committees that historical matters were receiving specific attention and are being attended to in line with the MFMA and the National Treasury’s guidelines.

The MPAC and the ARCs of municipal entities have been considering the outcomes of investigations and advising council and the entities’ boards on write-offs or recovery.

Phumla Williams, who is part of the Joburg Crisis Alliance (JCA), a coalition of residents, activists and organisations working to end corruption, restore governance and improve service delivery, complained that in reports presented in council in the past two weeks it emerged that the city undertook to improve its record-keeping as far back as the 2010/11 financial year but by 2017/18 it was still incurring UIFW expenditure for the same reasons.

Williams said the JCA found this shocking and unacceptable.

JoburgCAN, a network of community associations and businesses, said UIFW expenditure does not just happen as there are officials that sign off on it.

"While some of the debt cleared at the extra-ordinary council meeting has prescribed and is realistically uncollectable there is no level of accountability and action taken against officials in the city to prevent this going forward," JoburgCAN manager Julia Fish said after the municipality asked for approval to write-off over R5bn this week.

Fish added that AG-SA has repeatedly flagged the issue, and Finance Minister Enoch Godongwana has written to Mayor Dada Morero, demanding a response regarding the lack of improvement in IUFW expenditure over several financial years.

"Without vigorous disciplinary action and investigations into employees in the City of Johannesburg or the oversight of the city manager we will not see a culture change and improve the city's cash flow," she warned.

loyiso.sidimba@inl.co.za