Auditor general points to the state’s flaws enabling Covid-19 graft

Lester Kiewit

Auditor general Kimi Makwetu has highlighted a glaring lack of control over the government’s Covid-19 relief packages.

It’s the first report in Makwetu’s “real-time” audits of Covid-related contracts and relief schemes after being instructed by President Cyril Ramaphosa to audit 16 of the key Covid-19 initiatives introduced by the government. He was also tasked with looking into the management of R147.4-billion of the funds made available for these initiatives.

The report found that the government’s systems were inadequate and could not keep up with the number of applications and the disbursement of Covid-19 relief money, which include: 

  • Unemployment Insurance Fund (UIF) and Temporary Employee/Employer Relief Scheme (Ters) payouts;
  • South African Social Security Agency (Sassa) grants; 
  • Farmers’ relief fund;
  • Sport, arts and culture social relief fund;
  • Tourism relief fund; and
  • Support for small businesses.

These and other schemes were meant to provide a financial cushion for South Africans during the lockdown period. 

The auditor general said there was “an increased risk of payments to ineligible beneficiaries, overpayments, underpayments, the invalid rejection of beneficiaries, fraud and double-dipping by individuals”.

Makwetu said this is partly because significant changes were made to processes and systems in a short time to enable these payouts. These changes were done without ensuring that preventative controls were in place. Data was not integrated and shared across government departments and grant applicants were not adequately verified to ensure they qualified for relief. 

In investigating the Ters payments, the auditor general said a high number of payouts had been identified that will require investigation. These include people who were below the legal age of employment, dead people, people working for the government, people who received government social grants and students funded by the National Students Financial Aid Scheme. 

Regarding the government’s R350 special relief of distress grants for the unemployed and people who do not qualify for social grants, more than 30 000 payments, to the total value of R10.5-million, will have to be investigated. They included government employees and people who already get some form of social grant assistance.

The auditor general also criticised how Sassa’s food relief programme was handled. Makwetu said the way in which government-issued food parcels — a total of 146 936 — were provided was not cost-effective. Makwetu said it would have been considerably cheaper if nongovernmental organisations and social relief partners had been used. 

In addition, control over the distribution of the food parcels was not always effective. “This increased the time from application to distribution and resulted in incidents of damaged and poorly packaged food parcels and beneficiaries who received more food parcels than they were entitled to,” Makwetu said.

On the procurement of personal protective equipment, mainly to keep medical workers safe, Makwetu said various investigations are at different levels of completion. He said there were “clear indicators of fraudulent activities in the procurement processes, which we will further investigate and share with the newly-established fusion centre and other investigating agencies”.

In some cases, prices for personal protective equipment clearly “exceeded the maximum prices prescribed by the treasury. Some items were priced at more than double, or even five times, the prescribed price”.

Makwetu described an array of provision irregularities detected during visits to schools and hospitals.

  • In some schools, masks were sized for adults and not children;
  • Protective equipment ordered by health departments were substituted by the supplier with items of a lower specification, which the department accepted and even paid for at the higher price of the originally ordered item; and
  • Protective equipment was received and paid for without having been ordered. 

The Special Investigating Unit is separately already investigating more than 600 cases of alleged personal protective equipment fraud, corruption and price-gouging in the nine provinces, government departments and state entities. 

Makwetu said the rapid implementation of Covid-19 relief measures in an already compromised control environment created significant risks that most government departments were not able to address.

An already weak supply-chain management system has also been blamed. And poor record-keeping by government departments and entities made it “made it difficult for us to audit”, Makwetu said. 

Offending government entities as well as local, provincial and national departments have already been notified about the auditor general’s findings, with corrective action being instructed in some instances.

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