Dispute over Graaff-Reinet drought grant millions as mayor insists the money did not disappear

As Dr Beyers Naudé Local Municipality Mayor Deon de Vos insisted that R25-million of a R30-million drought grant did not disappear, the Auditor-General’s office said on Monday it would not withdraw its statement that it could not find the funds when it was auditing the municipality.

De Vos said the municipality received an allocation for drought relief funding of R30,020,060 during the 2018/2019 financial year.

At the time, the region was in the grip of a crippling doubt that led to severe water shortages.

“This allocation was received on 28th March 2019. Due to the various supply chain regulations and laws it was impossible to spend the full allocation by financial year end, 30th June 2019,” he said.

In another letter written to the Graaff-Reinet Development Forum, municipal manager Edward Rankwana described it as “absolute madness” to expect them to spend the money in two months. Rankwana said the government was late with the transfer of the money.

De Vos said expenditure at the end of June 2019 was R5,952,128.70, which was 19.83% of the allocation.

According to the municipal business plan, the funds were intended to replace filters in the municipal water works, replace water mains in Jansenville, R15-million was earmarked for emergency water supply, R2.4-million for the refurbishment of existing boreholes and R1.5-million for groundwater development in Rietbron. Another R400,000 was intended for incremental groundwater development and R6-million for the installation of water meters.

“All the projects were fully committed and all service providers were appointed,” De Vos said.

He said the municipality acknowledged in the 2019 financial statements that an amount of only R5.9-million was spent during the 2018/19 financial year and that an amount of R24m was an unspent conditional grant.

He said that they applied for funds to be rolled over and this was approved.

“Let me state categorically that no false information was presented in this regard. The municipality was transparent with how the information was presented to the user. Of importance would then be the disclosure of the spending of this grant in the 2019/20 financial year.”

He said they had two meetings with the office of the Auditor-General on 1 July and 8 July where it was agreed that the spending of the rest of the grant would be explained in the financial statements for the 2019/2020 year.

“All projects were implemented and service providers were informed that projects should be completed by 30 June 2020.

“A schedule of all projects with progress indicated is available, and the office of the Auditor-General is most welcome to audit the available documentation to satisfy any queries,” De Vos said.

According to the report by the Auditor-General, the unspent grant money was used on other expenses.

“The R25-million was recorded as an unspent conditional grant in the financial statements. This amount was not cash-backed as the municipality did not have cash reserves of R25-million in their bank account. This means that the unspent grant money was spent on expenses not relating to the drought relief. The municipality applied for a rollover of the grant even though the money had been spent. Due to the poor state of record-keeping, we could not confirm on what the grant money had been spent. Furthermore, the municipality did not have evidence of the reported service delivery performance relating to water services,” the Auditor-General’s report read.

A spokesperson for the Auditor-General, Africa Boso, said on Monday that they were not withdrawing their findings.

“We would like to reconfirm that the findings reported in the audit report of the municipality and in our general report are factually correct and were also agreed to by the management of the municipality. Like all our auditees, the municipality knows our existing dispute resolution channels if they have further issues they would like to bring to our attention,” he said. DM/MC