1. FINANCIAL MISCONDUCT Presented by Cox Mokgoro – Finance Stabilisation 01 August 2013

2. IRREGULAR EXPENDITURE DPWPMTETOTAL 2012/13 R’000 Opening balance 171 643 1 410 817 1 582 460 Add: Irregular expenditure – relating to prior year 442 792 33 470 476 262 Add: Irregular expenditure – relating to current year 431 722 1 163 906 1 595 628 Less: Amounts condoned -947- Less: Amounts recoverable (not condoned) -- - Less: Amounts not recoverable (not condoned) -- - Irregular expenditure awaiting condonation 1 045 210 2 608 193 3 653 403 DPW & PMTE IRREGULAR EXPENDITURE – 31 MARCH 2013

3. DPW & PMTE FRUITLESS AND WASTEFUL EXPENDITURE – 31 MARCH 2013 FRUITLESS AND WASTEFUL EXPENDITURE DPWPMTETOTAL 2012/13 R’000 Opening balance69 269239 311308 580 Fruitless and wasteful expenditure – relating to prior year 50 505 Fruitless and wasteful expenditure – relating to current year 4 31315 21719 530 Less: Amounts condoned --14 Less: Amounts transferred to receivables for recovery - - TOTAL FRUITLESS AND WASTEFUL EXPENDITURE – 31 MARCH 2013 124 087254 514378 601

4. 4 PMTE CLASSIFICATION AND ANALYSIS OF FRUITLESS EXPENDITURE PER AMOUNT AS AT 31 MARCH 2013 Threshold Amount % Number of Trans R0 - R500 00044 983 345181 251 R500 001 - R1 000 00016 106 434626 R1 000 001 - R5 000 00016 679 51176 R5 000 001 - R20 000 00056 231 257224 R20 000 000 >120 527 583472 TOTAL AT 31 MARCH 2013254 528 1321001 289

5. 5 DPW CLASSIFICATION AND ANALYSIS OF FRUITLESS EXPENDITURE PER AMOUNT AS AT 31 MARCH 2013 Threshold Amount % Number of Transactions R0 - R500 0002 240 9342145 R500 001 - R1 000 0001 374 02012 R1 000 001 - R5 000 00011 280 06796 R20 000 000 >109 192 575882 TOTAL AT 31 MARCH 2013124 087 597100155

6. 6 PMTE CLASSIFICATION AND ANALYSIS OF IRREGULAR EXPENDITURE PER AMOUNT AS AT 31 MARCH 2013 Threshold Amount % Number of Transactions R0 - R500 000782 523 3943015 458 R500 001 - R1 000 000226 989 1109320 R1 000 001 - R5 000 000499 392 14319268 R5 000 001 - R20 000 000478 332 3541850 R20 000 000 >620 963 1322414 TOTAL AT 31 MARCH 20132 608 200 13410016 110

7. 7 DPW CLASSIFICATION AND ANALYSIS OF IRREGULAR EXPENDITURE PER AMOUNT AS AT 31 MARCH 2013 Threshold Amount% Number of Trans R0 - R500 000317 031 3383040164 R500 001 - R1 000 000112 440 98711167 R1 000 001 - R5 000 000217 183 09821105 R5 000 001 - R20 000 000241 106 8842328 R20 000 000 >157 458 229154 TOTAL 31 March 20131 045 220 53910040 468

8. ANALYSIS OF IE PER INCIDENT AS AT 31 MARCH 2012 & 13 - DPW INCIDENTAMOUNT% NO OF TRANSACTIONS DELEGATIONS NOT FOLLOWED106 9207%2 FINANCE LEASE EXTENDED WITHOUT NATIONAL TREASURY'S APPROVAL10 858 5573%30 OVERTIME - APPROVAL GRANTED AFTER WORK COMMENCED111 9020%41 PETTY CASH IN EXCESS OF R200082 59914%6 SCM PROCESSES NOT FOLLOWED670 959 5390%39 630 SITA - TRANSACTION NO IN LINE WITH SITA ENGAGEMENT MODEL28 226 7110%88 SIU INVESTIGATION135 606 6190%424 TAX CLEARANCE CERTIFICATE NOT ON FILE7 224 61474%207 TRANSFER PAYMENT NOT APPROVED BY NATIONAL TREASURY17 066 0000%2 TRANSFER PAYMENT NOT INTO PRIMARY BANK ACCOUNT 174 977 0801%38 31 March 20131 045 220 539 40 468

9. Row LabelsTOTAL F&WE NO OF TRANS FOR DC NO OF TRANS UNDER INVESTIGATION NO OF TRANS FOR RECEIVABLE AMOUNT IN EXCESS OF APPROVED/AUTHORISED BID AMOUNT4 0501 Departmental asset used by an Official who resigned721 IMPLEMENTATION OF SAAS IT SYSTEM48 724 9039 INTEREST PAID ON OVERDUE ACCOUNT 169 85811 NO SHOW FEE8891 OVERPAYMENT ON STIPEND94 112145 TRAINING NOT ATTENDED87 1591 EXPENSIVE ITEM PROCURED6 7231 LEVY FEE ON CANCELLED ARBITRATION1 8501 PROCUREMENT OUTSIDE RT CONTRACT - DIFFERENCE IN AMOUNT8 9001 SIU - CANCELLATION OF CONTRACT - SKILPADHEK BOARDER POST68 818 208 1 LEGAL COSTS FOR LATE PAYMENT5 0001 DEPARTMENTAL ASSET USED BY OFFICIAL WHO RESIGNED1813 DPW - ANALYSIS OF FRUITLESS & WASTEFUL EXPENDITURE AS AT 31 MARCH 2013

10. DPW - ANALYSIS OF FRUITLESS & WASTEFUL EXPENDITURE AS AT 31 MARCH 2013 CONT… Row LabelsTOTAL F&WE NO OF TRANS FOR DC NO OF TRANS UNDER INVESTIGATION NO OF TRANS FOR RECEIVABLE CATERING FOR PEOPLE WHO DID NOT ATTEND 173 4831 ADDITIONAL AMOUNT INCURRED IN PRINTING ANNUAL REPORT 89 1771 NO STAMP ON INVOICE CERTIFYING THAT GOODS/SERVICES WERE DELIVERED AS PER CONTRACT 121 01823 VALIDITY OF QUOTES EXPIRED AND ORDER PLACED AGAINST EXPENSIVE QUOTE 19 8705 VAT CHARGED BY A NON-VAT VENDOR 32 40426 TRAVEL COSTS ON PEOPLE WHO DID NOT TRAVEL 1 1881 SIU - PROCUREMENT OUSTIDE MINISTERIAL HANDBOOK 98 681 5 PROCUREMENT ON LOST PETROL CARD 93 5441 SIU - PROCUREMENT FROM MIDDLEMEN 362 554 47 SIU - DIFFERENCE BETWEEN APPOINTED BIDDER AND ONE THAT SHOULD HAVE BEEN APPOINTED 3 475 381 2 SIU - AMOUNT IN EXCESS OF APPROVED/AUTHORISED BID AMOUNT 1 661 440 4 PURCHASE OUTSIDE THE MINISTERIAL HANDBOOK 36 9541 Grand Total 124 087 598 16 97 1

11. 11 PMTE – ANALYSIS OF IE PER CATEGORY AS AT 31 MARCH 2013 Incident Description Amount % Number of Transactions DELEGATIONS NOT FOLLOWED104 038 5294% 1 185 FACILITY MANAGEMENT FOUND TO BE IRREGULAR 77 976 9743% 518 INTEREST NOT DECLARED BY EMPLOYEE1 262 2020% 17 LEASING586 557 18222% 2 228 LIMITATION OF SCOPE112 102 8324% 23 MAINTENANCE CONTRACT - INVESTIGATION8 561 6070% 1 ROOSTER CONSULTANT APPOINTMENT24 722 4081% 36 SCM PROCESSES NOT FOLLOWED1 535 647 47559% 11 854 SIU - LEASE TRANSACTIONS8 490 5940% 39 TCC NOT ATTACHED148 840 3336% 209 Total 31 March 20132 608 200 135100 16110

12. 12 PMTE FRUITLESS & WASTEFUL EXPENDITURE AS AT 31 MARCH 2013 Incident Description Amount % Number of Transactions Interest paid on overdue account4 101 4952113 Rental on Unoccupied buildings239 854 81394735 VAT by non-VAT vendors4 902 790224 Settlement of contract and legal fees501 17004 Overpayment to Suppliers885 217021 Excess markup charged2 176 7701511 Other avoidable expenses2 105 877124 Total 31 March 2013 254 528 132 100%1 432

13. Level of Financial Misconduct Transactions DPWPMTETOTAL Financial YearNo of transactions AmountNo of transactions AmountTotal No of trans Total Amount 2009/2010271 499 10 972 474 579 145 557 12 110 490 147 417 05623 082 964 726 2010/2011275 239 16 171 038 370 153 641 12 801 371 414 428 88028 972 409 784 2011/2012261 537 17 191 500 208 110 502 11 210 010 514 372 03928 401 510 722 2012/2013122 149 16 532 229 417 122 14916 532 229 417 TOTAL Trans.930 42460 867 242 574409 70036 121 872 0751 340 12496 989 114 649 Irregular Exp.40 4681 045 21016 1102 608 200 13456 5782 609 245 344 No. of trans. F & W E155124 087 5981 289254 528 1321 431378 615 730 No. of trans. TOTAL40 623125 132 80817 3992 862 728 26658 0092 987 861 074

14. Action plan on Irregular Expenditure ACTION PLAN ON IRREGULAR EXPNDITURE - 2012/2013 No.ActionTarget DateProgress 1Review all transactions for financial year 2012/201315 May 2013Done 2Issue circular on immediate cut of IE01 April 2013Done 3New SCM database to be operational Sept 2013In progress 4Approval of Policy on Financial Misconduct30 Aug 2013Served before DBC & EXCO 5Review all disclosed IE in line with guide from National TreasuryFrom Sept 2013In progress 6Complete the analysis of IEMarch 2014 7Allocate irregular expenditure to responsible officialFrom April 2014 8Establish the Investigative capacity to investigate cases reported30 Apr 2014In progress

15. Action plan on Irregular Expenditure cont.… ACTION PLAN ON IRREGULAR EXPNDITURE - 2012/2013 No.ActionTarget DateProgress 9 Establish a Condonment CommitteeSept 2013Once policy is approved 10Formulate a combined condonment frameworkOct 2013In progress 11Request approval to condone investigated and finalised cases/transactions From Apr 2014Once policy is approved ACTION PLAN ON NEW CASES REPORTED/IDENTIFIED FROM FINANCIAL YEAR 2013/14 1Validate all new reported cases/transactions of IEMonthly30 days after reported 2Investigate all new reported cases within 30 days of validatedMonthlyCases to be finalised within three (3) months 3Intensify training on IE in the DepartmentFrom Sept 2013Will resume once policy approved

16. All reported and validated cases of IE are reported to National Treasury monthly; Analysis of all reported cases and valid if indeed IE; Refer cases/transactions for investigate all reported to Branch Heads/Regional Managers; Accountability lies with Branch Heads and Regional Managers; Investigated cases/transactions referred to Condonment Committee for approval and condonment; Refer case to Financial Accounting to open debt account against officials, if liable in law; Take disciplinary actions against officials found liable; New transactions of IE must be finalised within 3 months; Condonment is not a given – compelling reasons should exist for it to be granted; Process of Clearing Irregular Expenditure reported

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