How your tax money is wasted

Public Protector Thuli Madonsela released the Nkandla report recently, which showed that the estimated total cost of improvements to President Jacob Zuma’s Nkandla home is R247 million.

According to Madonsela’s report, service delivery programs were negatively affected because money earmarked for these programs was used to upgrade Nkandla.

The public protector found that Zuma “improperly benefited” from upgrades “in the name of security”. She suggested that Zuma should repay some of the money spent on Nkandla.

The Nkandla saga continues to make headlines, but this is not the first time taxpayers’ money was wasted.

In the communications space millions of taxpayer rands have been wasted on ineffective projects and through mismanagement.

Here are some of the prominent communications projects where the Department of Communications (DoC) and other organisations blew money which could have been better spent elsewhere.

Paying consultants, contractors and outsourced services – R452 million over 5 years

Former auditor-general Terence Nombembe criticized government’s extensive use of consultants, saying that government is often paying for services which should be done in-house. This is particularly relevant with the Department of Communications.

In the 2012/2013 financial year the Department of Communications (DoC) spent R76 million on consultants, contractors and agency/outsourced services.

Here is how much money the DoC spent on consultants, contractors and agency/outsourced services over the past few years:

  • 2008/2009 – R108 million.
  • 2009/2010 – R151 million.
  • 2010/2011 – R44 million.
  • 2011/2012 – R72 million.
  • 2012/2013 – R76 million.

In the 2008/2009 financial year, the Department of Communications spent R82 million on 25 consultants alone. This included:

  • Paying R1.368 million for 1 consultant for 1 day for the ICT Achievers Awards;
  • Paying R14 million for 1 consultant (event organiser for WTSA) for 9 months;
  • Paying R5.8 million for 1 consultant for 2 months to train young graduates; and
  • Paying R1.724 million for 1 consultant for 1 month to train young graduates.
DoC consultants
DoC consultants – summary

SABC – R1.5 billion

Times Live reported in September 2013 that financial mismanagement continues to plague the SABC, and that the state broadcaster failed to account adequately for R1.5 billion spent on consultants for services that could have been provided by its own staff.

The Times Live report also highlighted that “R106-million was spent irregularly as proper tender procedures were not followed”.

Gauteng Online – R 1 billion

In June 2013 The Star reported that the Gauteng Department of Finance has scrapped the Gauteng Online Schools Project.

In May 2013 it was reported that more than R1.3 billion was already spent on the Gauteng Online project.

Free State Online WordPress website development– R40 million to R140 million

News emerged in March 2013 that the Free State government had awarded a R140 million tender to have a new website developed for the province.

The Free State government disputed this figure and the National Treasury later confirmed that it was closer to R40 million for a number of sites related to the Free State government.

According to an eNCA report, Treasury called for criminal charges to be laid against anyone involved in the various tenders awarded to the same company that handled the Free State websites.

Durban 2010 website – R6.5 million

The Durban City Council paid R6.5 million for the development of the Durban 2010 website in 2009.

According to the Democratic Alliance (DA) the website could not possibly have cost more than R250,000, and may well have cost less than half of that amount.

Adapt IT, the JSE listed IT company which is developing and managing the 2010 Durban website, said at the time that most of the critics simply don’t understand the scope of the full project.

Wasting money on legal battles against competition – possibly millions of rands

In 2008 the late communications minister Ivy Matsepe-Casaburri was involved in numerous legal battles to try to stop Internet service providers and other companies from building their own networks.

Matsepe-Casaburri therefore used taxpayers’ money to fight against true competition in the South African telecoms and broadband market. The minister lost the legal battle, and it was not long before new networks started to emerge and prices started to fall.

In the 2008/2009 financial year, the Department of Communications spent the following money on legal costs:

  • R1 million for legal advisors to the minister for 2 months.
  • R2.276 million in legal costs to consultants.

Although all this money may not have gone to the legal battle with Altech, the legal battle was unnecessary and did not serve the needs of consumers.

ICT Indaba in Cape Town – reported R102 million

The Department of Communications (DoC) spent R102-million on an ICT Indaba held at the Cape Town Convention Centre from 4 to 7 June 2012. According to the DoC, the aim of the Indaba was to look at international models on how to boost the development of the ICT sector in Africa.

The Sunday Times later revealed problems associated with event’s finances, which ultimately lead to the downfall of former communications minister Dina Pule.

Ineffective telecoms colloquiums – million of rands

In 2005 the communications department hosted two telecommunications colloquiums at Gallagher Estate in Midrand to find ways to drive down prices for telecoms services in South Africa.

Then deputy communications minister, Roy Padayachie promised delegates an action plan after 8 weeks and the implementation to follow short afterwards. This never happened.

It is not clear how much money the DoC blew on these two colloquiums, but what is clear is that the money was completely wasted. The same talk shops were repeated a few years later to try to address the same problems.

Former communications minister Dina Pule and her romantic partner – amount uncertain

In December 2013 the public protector Thuli Madonsela found that former communications minister Dina Pule unlawfully extended her spousal benefits to her romantic partner Phosane Mngqibisa.

At the time Madonsela said that the amount of money spent on Mngqibisa had not yet been determined. She said that the communications department should be reimbursed every cent.

South African Post Office – billions of rands

The Sunday World reported in October 2013 that a “looting spree totalling billions of rands at the South African Post Office has been uncovered”.

The paper, which based its report on a forensic investigation, stated that:

  • During February 2007 and April 2008, 11 labour brokers were paid R1.2 billion;
  • R551-million a year is being paid for 228 unmonitored services for which there are no contracts;
  • Of the 2,312 Post Office properties, 1,763 are unaccounted for amounting to around R1-billion; and
  • a R30-million security contract was awarded to disqualified companies that submitted fraudulent BEE credentials.

More on the Post Office:

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How your tax money is wasted