South Africa Audit Chief Concerned How Virus Funds Were Spent
South Africa Audit Chief Concerned How Virus Funds Were Spent
(Bloomberg) -- South Africa’s government spent almost half of the 147.4 billion rand ($8.8 billion) in direct funds allocated for the fight against the coronavirus pandemic by the end of July, money the country’s Auditor-General says landed in a “weak control environment.”
The first audit report on the financial management of the government’s virus response comes as a graft scandal related to the procurement of personal protective and medical equipment engulfs the nation.
“We are concerned about the indicators of high risk of fraud and abuse we observed – not only in the areas that we were able to audit, but also where information for auditing was not forthcoming, which could be a deliberate tactic to frustrate our audit efforts,” Auditor-General Kimi Makwetu said Wednesday in a statement.
President Cyril Ramaphosa announced a 500 billion-rand support package to offset the damage wrought by the virus and direct resources to the country’s health response in April. That included 310 billion rand of mostly indirect relief through tax measures, income protection and loan guarantees, and 190 billion rand in direct funds.
The National Treasury allocated 145 billion rand in a emergency budget tabled in June and will make provisions for the remaining 45 billion rand in next month’s medium-term spending framework.
These are some of the key findings:
- Due to a limited verification process, there is a risk that the 350 rand social-relief grant is being paid to people who are not in distress.
- The 410 million rand pledged by the U.S. government for South Africa’s health response has not yet been received and of the 1,000 ventilators pledged, only 150 had been delivered by July 5. The availability of ventilators in the market remains a problem –- 1,144 were ordered for the health sector and by July 31 only 58 could be delivered.
- Record keeping is inadequate and there are concerns about how suppliers and beneficiaries who may not have been eligible for the voucher-relief scheme for small-scale farmers were selected.
- By July 15, no loans for debt relief from the 2.5 billion rand ring-fenced by the Industrial Development Corp. had been approved because businesses did not meet the qualifying criteria.
- Distributing food parcels could have been significantly cheaper if the social security agency used non-profit organizations already working with the Department of Social Development instead of appointing new service providers.
- There are clear indicators of fraudulent activities in the procurement processes of personal protective equipment and these will be further investigated.
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