Prasa cracks under pressure

CAUTIOUS: Acting Road Traffic Management Corporation CEO Collins Letsoalo and Santaco's July Msiza.
CAUTIOUS: Acting Road Traffic Management Corporation CEO Collins Letsoalo and Santaco's July Msiza.

Probity from the Standing Committee on Public Accounts pushed Prasa acting Group CEO Collins Letsoalo to confess that the agency lacked mechanisms to curb instances of irregular expenditure.

In the Auditor General’s consolidated audit outcomes for the 2015-2016 financial year‚ Prasa was recorded as having incurred close to R14bn in irregular expenditure “as a result of significant non-compliance with its own supply chain management policy and legislation”.

This makes Prasa the single largest contributor to irregular expenditure amongst all state owned enterprises. The board of Prasa was cordial as the standing committee interrogated their progress report on interventions into irregular expenditure.

When Scopa member for the DA David Ross grilled the board on whether they would admit that there was no attempt to prevent irregular expenditure at the agency‚ Letsoalo admitted that such systems were either non-existent or had 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.

Asked whether political meddling caused or worsened the problem‚ Letsoalo said between 2012 and 2014 there was a lack of consequence management at the agency‚ which had nothing to do with politics.

“I would not say the problem is political. Political oversight would not have known if irregular spend was being picked up in any event. There are a couple things we have done to ensure consequence management‚” he said.

Prasa chairman Popo Molefe told the committee that while the board was aware that it contributed more than any other parastatal to irregular spend‚ it had incorporated methods to address breaches in procurement and supply chain rules.

“I agree but there is a context to it and if we ignore that we run the risk of distorting. We have exposed matters and instances that the Auditor General has not. We are dealing with legacy issues as far back as 2012‚” Molefe said.

While questions of whether the board should resign were not met with a straight answer‚ Letsoalo acknowledged that the board should take the blame for the R218m wasteful expenditure on locomotives.

The agency also admitted to operational expenditure losses of R1.8bn that further hampered the financial situation of Prasa. This made it hard to pay contractors and creditors.


- TMG Digital/BusinessLive