Security Seta on Mat for Tenders
The auditor-general has found gaping holes in the procedures followed by the police, private security, legal and correctional services (Polsec) sector education and training authority (Seta) in awarding tenders to five companies.
These findings add to widespread corruption allegations that have dogged the training bodies, set up three years ago to boost SA's skills base.
The auditor-general's report, sent to Labour Minister Membathisi Mdladlana, shows "significant control deficiencies in respect of the awarding of contracts for procurement of goods and services" at the Polsec Seta.
This contravention of the Public Finance Management Act could result in the Seta's council or board being summoned to appear before Parliament's standing committee on public accounts.
The labour department's senior executive manager of Setas, Sam Morotoba, said the minister could order a full-scale forensic audit or criminal investigation, pending Poslec's response to the report.
Auditors found that no quotations were obtained for payments for services amounting to R260329. Also, service providers were awarded contracts without proper procedures.
There were no legal contracts specifying terms of reference.
In terms of correct tender procedure, contracts worth more than R70000 must be advertised before being awarded.
"Due to the significance of the above, we could not satisfy ourselves with the validity and authorisation of contracts to the value of R1,08m," said auditor Natasha Manik in the report. These amounts were not disclosed in the Seta's annual report. In addition, auditors learnt that the companies which had been awarded tenders had "interests with members of the board or council."
The report named the following companies and the amounts paid to them by the Seta: Annette Lotter Consultants for R82500, Internet Solutions for R72333, Ayanda Mbanga Communications for R178945, People Metrics for R485873 and Global Technology for R2622002.
Furthermore, the report noted that the Seta on two occasions did not comply with section 51 of the act having not established an audit committee and internal audit function.
There was also "no framework for acceptable levels of materiality and significance, resulting in non-compliance with ... the treasury regulations".
The Seta was reprimanded by the auditor-general's office for submitting its financial documents late.
These findings could have huge implications for the training body's future operation, especially after the minister announced in July that underperforming Setas had about five months to implement turnaround strategies or face losing their independence.
The Seta's CEO, Hennie Richards, said he had already put in place measures to "implement and maintain effective financial and management systems, policies and procedures to ensure accountable management of public resources".
These included cutting the telephone bill from R30000 to R15000 a month and all managers taking a pay freeze.
By dissolving the human resources department each manager is now responsible for his or her own personnel Richards cut his operating costs by 25%.
He also re-established the audit committee in August, and an internal audit function will be effected before the next auditor-general's report. The committee will meet for the first time next month .
Richards said he was changing the Seta from being "bureaucratic to client focussed".
He said: "In future, council will concern itself with governance and I will control operations."
Commenting on the audit findings, Richards appointed in November after former Polsec Seta CEO Peter Nkuna was fired despite an inquiry exonerating him of corruption charges said the tenders were "contract expenditure" incurred on an ad-hoc basis, with approval from the council. He explained that most of the invoice amounts were less than the trigger level for tender procedures, incurred over a number of months.
"Only when aggregated did they exceed the trigger amount. Accordingly, nothing sinister should be read into this qualification. It is a technical infringement and the Seta will manage the situation differently in future."
With acknowledgements to Sharda Naidoo and the Business Day.