Transnet ‘biggest contributor’ to irregular expenditure - AG

The troubled railway company’s irregular spending sits at more than R1 billion. 

Fhumulani Rabonda, who represented the auditor-general’s office, briefed the committee on the audit outcomes of state-owned entities and the department of public enterprises. 

The department recorded irregular expenditure of over R300 million, while the South African Forestry Company Limited (Safcol) sits at nearly R60 million.  

In March, Finance Minister Enoch Godongwana granted Transnet a three-year exemption - in terms of the Public Finance Management Act - from complying with the Preferential Procurement Policy Framework Act.  

“Transnet remains the biggest contributor of irregular expenditure in the portfolio with R1.1 billion, and that may not be complete as I indicated that the exemption took it out of the space of an audit opinion. Hence we are unable to comment on whether it’s complete or not. So, that R1.1 billion incurred by Transnet may be more than that if were to do a full-blown audit on it,” Rabonda said.  

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Rabonda also gave a picture of the movement in audit outcome of the department and state-owned companies under the current administration – which took over in 2019. 

At the time, the department had received an unqualified audit with no findings, while Transnet, Eskom, and Safcol received qualified financial statements with findings.  

Denel, diamond company Alexkor, and SA Express received disclaimers, while South African Airways had outstanding audits.  

“The department could not manage to retain its good audit status. They are now sitting with unqualified financial statements but with findings in compliance. They are joined in there by Safcol who have managed to improve from a qualified outcome to unqualified and Transnet has managed to improve.” 

Rabonda says the AG remains concerned with the high number of outstanding audits.