Transport Minister Dipuo Peters accompanied Sanral when it briefed Scopa on Tuesday.
It was Sanral’s second attempt at giving Scopa an update on interventions into its irregular expenditure.
The auditor-general also pointed out in 2013 that R2.4bn worth of routine road maintenance was not done in compliance with the Preferential Procurement Policy Framework Act.
Sanral admits these contracts are still in place but said the amounts lost had been reduced to R1.5bn in 2015 and R1.1bn in 2016. Sanral said all contracts that did not comply with the act would have expired by 2017.
Sanral said the Preferential Procurement Policy Framework Act was not appropriate for its procurement purposes as it allowed major contractors to exploit the small businesses that provide services to Sanral.
Sanral instead used a method researched by the University of Pretoria‚ in which an optimum price is determined “to ensure that value for money is achieved at the same time as the sustainability of [small] businesses“.
The auditor-general found this alternative method did not comply with the Preferential Procurement Policy Framework Act and Scopa did not accept the explanation as a justification for flouting legislation.
Scopa chairman Themba Godi told Sanral it was not enough to reduce the value of money spent outside of the provisions of the act over multiple years‚ especially given that the law had existed longer than the contracts in question.
“Some of the contracts lasted three years with some having a two-year extension. The extensions were in place through a system adopted in 2002 until the auditor-general made a finding on the agency in 2013‚” said Godi.
Sanral chief financial officer Inge Mulder said: “The contracts were not cancelled because the transactions were not declared illegal. We have been allowed to continue with the contracts until they run out and they are due to expire next year.”
Asked by Scopa member for the IFP Mkhuleko Hlengwa whether Sanral had internally audited its financial statements‚ Mulder acknowledged that the agency had assistance from outsourced auditors but said these auditors only saw financial statements through an audit and risk committee.
“In terms of financial statements the external auditors are not directly involved in the production of financial statements. We have a database which we use to get the audits done. We pay those less than R500‚000‚” said Mulder.
Peters said Sanral had tried to get the Treasury to respond to its requests to revisit the Preferential Procurement Policy Framework Act guidelines‚ but had no response to its request to continue using the model they have been using.
The minister pointed out that Treasury had a representative on Sanral’s board.