DA receives confidential RTMC audit report - writes to public protector over serious irregularities

The Democratic Alliance (DA) has obtained a copy of a seven month, R13.3-million independent financial audit of the Road Traffic Management Corporation (RTMC) carried out by Deloitte and Touche. The confidential financial audit was completed in September 2009, and provides yet further concrete evidence that Ranthoko Rakgoale, the CEO of the RTMC, needs to be suspended pending the completion of a full investigation into the problematic state of affairs at the RTMC.

In light of this report, supported by other information revealed by whistleblowers and obtained from the annual report, the DA will be writing to the Public Protector to ask for an investigation into the board.

First, the confidential audit report reveals that the CFO and CEO approved "salary increases in excess of approved limits". Although the report does not say which members of staff benefited from these salary increases, on examination of the RTMC's 2008/09 annual report, it is revealed that in 2008 the non-executive directors' total salaries amounted to R287 262. In 2009 this had escalated to R720 170, despite there being two fewer members.

The board also seems to have approved a 389% increase in the RTMC's executive directors' salaries; from R647 090 in 2008 to R3 164 510 in 2009.

Any increase in salaries should be approved within defined performance grounds, as is best practice. But the audit report's finding that there was "...no measurement of the performance of the board/committees" makes it clear that no such considerations were taken into account.  

Second, the audit revealed that there was a "...lack of monitoring of controls over the RTMC's budget" and a "lack of evidence to suggest that payments were made in conjunction with the RTMC budget". This finding is substantiated in the audit report by the fact that from a sample of 42 supplier payments selected, 24 did not so much as contain a requisition form.

Although the report does not elaborate on which specific payments were made outside the RTMC's budget, it certainly provides further substantiation for the set of allegations which have surfaced in the past by whistleblowers at the RTMC against the CEO. These allegations include:

• Spending R4.5-million on provincial workshops, when only R1.5-million had been budgeted for the purpose
• Entering into a 10-year R658-million lease for nine office blocks, only two of which are currently being used for a staff component of 144
• Blowing R1.3-million of RTMC funds for the hire of private suites at Ellis Park and Loftus Versfeld during the Confederations Cup
• The purchase by the CEO of a Audi A4 for personal use, using RTMC funds, despite receiving a hefty car allowance.

Third, the audit discloses that serious mismanagement of the database of traffic violations contained on the National Traffic Information System (e-Natis). The RTMC had not followed up on approximately R93-million apparently owed to it by the Provinces for e-Natis transaction fees. The debtor provinces had refused to accept responsibility for the 2007/08 balances owing to RTMC as they were unable to "...prepare a reconciliation of the amount per their records and the balance per RTMC records".

According to National Treasury regulations, the RTMC must collect these transaction fees from provincial departments of transport and transfer these to the national department, and produce a consolidated statement of funds received and transferred. The fact that the RTMC alleges that it is owed R96-million by the provincial transport departments indicates that they have not carried out their mandate in ensuring that these fees are paid timeously. Furthermore, the refusal to accept responsibility for this debt due to discrepancies in the RTMC's financial records, indicates that further investigation of this issue needs to be investigated.

Fourth, the audit report reveals a lack of adherence to the Public Finance Management Act (PFMA) with regard to procurement procedures. Inconsistencies between payment certificates and supplier claims were identified, as well as the awarding of contracts to service providers despite the rejection of these service providers by bid committee. The audit report made reference to a specific contract where the tender had originally been approved by the DoT for R9-million and was extended by the RTMC without approval to R65-million.

Whistleblowers also allege that the CEO approved a R9-million tender for RTMC adverts to be screened on television without following proper tendering procedures, and that the CEO purchased R1.2-million worth of furniture without following proper tendering procedures - from a non-existent company called either Machaba or Mochabo Trading and Projects.

In relation to the issue of the acquisition of the office furniture, in a reply to a DA parliamentary question the Minister of Transport admitted that there was no open bidding process for the procurement of the office furniture and was disclosed as ‘irregular expenditure' in the 2007/08 annual report. The Minister further replied that "...the request for price quotation was sent to three (3) service providers, namely Hetseikani Development and Projects, Mochabo Trading and Projects and Malusi and Son Computer Services and Projects, Only one response was received from Mochabo Trading and Projects to which an order was issued."

No reference is made to the further procurement of furniture from the same provider. The whistleblowers alleged that none of these companies exist. Certainly, neither exists in any public record that we have been able to find; they are not listed in any of the phone, web or business directories that we have searched.

The allegations against Rakgoale first came to light in a Sunday Times article on the 7 July 2009. The DA then called for an investigation into these allegations and subsequently wrote three letters to the Minister of Transport, Sbu Ndebele, requesting Mr. Rakgoale's suspension pending a full investigation. No reply was received from the minister. The DA then raised the issue in a Portfolio Committee on Transport meeting and the Chairperson agreed to liaise with the Minister in this regard. The DA further submitted numerous parliamentary questions to the Minister with the hope of obtaining clarification on the matter.

In October 2009, the DA was leaked documents from a number of whistleblowers at the RTMC that suggested that the mismanagement and fraud allegations against the CEO Ranthoko Rakgoale were well founded. This matter was brought to the attention Minister Ndebele; once again, the Minister did nothing.

This newly acquired report serves as yet more proof that the CEO of the RTMC must be investigated. This is an overwhelming indication that the ANC continues to be a closed, crony society intent on protecting its members from prosecution for self-enriching themselves with public funds.

Although the audit report resulted in a review of the RTMC's systems, it did not result in any action being taken against the individuals concerned, or any reversal of the actions they took. The DA will consequently be writing to the Public Protector in an attempt to bring to book those who continue to pillage public funds.

Statement issued by Stuart Farrow, MP, Democratic Alliance shadow minister of transport, January 31 2010

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