Cape Town - Auditor-General (A-G) Tsakani Maluleke is determining the most suitable action to take against the Department of Defence after the department did not fully address material irregularities in the procurement of a Covid-19 drug from Cuba and the leasing of unoccupied office buildings.
The Public Audit Amendment Act, signed into law four years ago, empowers Maluleke to refer suspected "material irregularities" found during audits to law enforcement agencies for further investigation and to compel heads of department to "take appropriate remedial action" where irregularities existed.
In her 2021-22 audit report, Maluleke said the Department of Defence imported an unregistered Cuban drug in 2020 without approval of the South African Health Products Regulatory Authority (Sahpra) in contravention of the Medicines and Controlled Substances Act.
She said the department procured 970 695 vials of Heberon at a cost of about R260.59 million.
“Of this amount, only R33.5m had been paid to the supplier as at March 31 2022. This non-compliance was likely to result in a material financial loss of R260 342 813 for the Department of Defence, as Sahpra had authorised the department to use only 10 of the 970 695 vials imported.”
Maluleke said she had notified Secretary for Defence Sonto Kudjoe of the material irregularity in August 2021 and invited her to make a written submission on the actions that would be taken to address the matter.
Kudjoe provided a written response the following month.
Maluleke said: “The response did not appropriately indicate all the required actions to address the matter and I requested additional information to enable me to conclude on appropriateness of the actions being taken.”
A ministerial task team probed the procurement of Heberon drugs and made certain recommendations, which included returning some of the drugs to Cuba and taking disciplinary action against implicated officials.
The drugs were returned to Cuba on instruction of Sahpra and Cuban representatives acknowledged receipt of the two shipments in January and February 2022.
“I did not receive any further response from the accounting officer on actions taken to resolve the material irregularity, including the R33.5m paid, and have concluded that the actions taken are not adequate to fully address the material irregularity.
“I am in the process of determining the most suitable action to take,” Maluleke said.
The A-G also said she was considering the most suitable action to be taken regarding the lease payments made for unoccupied office buildings during the 2015-16-2019-20 financial years that resulted in a financial loss of R1 083m.
Maluleke said Kudjoe provided in June 2022 a written submission which acknowledged the financial loss, but stated that the board of inquiry did not find anyone liable for the loss and no disciplinary action could be taken against anyone.
“I assessed the outcome of the board of inquiry and concluded that its conclusion was not appropriate and that appropriate action was not taken to implement the AGSA’s recommendations,” she said.
Maluleke said no appropriate action was taken to address the material irregularity flagged in the procurement of 1 000 infra-red thermometers at a price of R3 984,75 each, spending a total of R3 984 750 for Personal Protective Equipment.
The A-G added that she informed Kudjoe in January 2022 that she was not satisfied with the progress on implementation of the directive and remedial actions involving a five-year inventory and asset verification contract awarded in 2017.
The department did not award the entire contract to the bidder that scored the highest points in the evaluation process.
The non-compliance resulted in an increase of R250.56 million in the project cost and the department had spent R616.90 million on the contract as at the end of the 2021-22 financial year.
Maluleke has referred the R13.9m contract for supply and delivery of fuel that also flouted tender procedures after Kudjoe disagreed that there was non-compliance in awarding the contract to the Hawks for investigation.
“The referral was accepted by the DPCI on 6 December 2021 and as at the date of this report, the investigation was still in progress,” Maluleke said.
Cape Times