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AG reveals company directors received social grant benefits while doing business with government

Auditor-General Tsakani Maluleke.

  • Auditor-General Tsakani Maluleke has revealed that some directors of companies doing business with government also received social grant benefits from the state.
  • Addressing a press briefing on Wednesday, Maluleke said 1 513 social grant beneficiaries were flagged because they were directors of companies.
  • The South African Social Security Agency is investigating the matter.

Apart from scoring lucrative government contracts, some company directors have also received social grants meant for the poorest of the poor, Auditor-General (AG) Tsakani Maluleke has revealed at a press briefing in Pretoria.

Investigations by the AG showed that 1 513 social grant beneficiaries were directors of companies that had government contracts.

By the end August, more than 60 000 social grant beneficiaries were potentially receiving income from other government sources.

READ | Sassa determined to get back ‘every cent’ owed by Cash Paymaster Services

At the briefing on Wednesday, Maluleke said the South African Social Security Agency’s (Sassa) outdated systems, limited databases and inadequate verification controls led to a situation in which people who were not in distress received the social relief of distress grant, “while those who were in distress were sometimes unfairly rejected”.

“Although Sassa had embarked on a project to improve beneficiary validation, this has not yet borne fruit and the auditors continued to identify beneficiaries that are potentially also receiving income from other sources. These sources include government pensions, social grants, UIF payments, national student financial aid scheme bursaries and benefits from other Covid-19 relief funds,” she said.

The AG’s office had, by the end of August, identified 67 770 beneficiaries who were potentially receiving income from these sources.

“The auditors also reported 1 513 beneficiaries who are directors of companies that have government contracts for investigation. According to Sassa, all the flagged beneficiaries are currently being investigated and planning is under way for an appropriate debt recovery process,” she said.

Maluleke also said they raised the issue and asked that it be further investigated by Sassa and the different components of the Fusion Centre.

She added:

We have submitted these findings and how we arrived at them to the Fusion Centre. The reason we raised the flag is not to say that none of those directors should have gotten the benefit. It may well be that they are not benefitting [from] these contracts, that they’re just a director of this company. The specifics indicate that there wasn’t an inappropriate benefit, but may well be that there was an inappropriate benefit.

“We are not sure, we’re just raising the alarm in saying that you (Sassa) need to look at this. It looks odd…it’s unusual that a director of a company that is active in a commercial endeavour should need to benefit out of that R350 grant. It needs some investigation and recovery if that must happen.”

Maluleke also touched on the procurement and import of an unregistered medical drug from Cuba.

“What we found were invoices to the value of R260 million, invoices and evidence of goods that would have come through by 17 August. Some time up until August, [there were invoices for] R230 million, but [only] R34.86 million [was paid]. We will follow up on this when we complete our year-end audit,” she said.

READ HERE | Sassa loses R282 million to fraud over the past 5 years

“The Department [of Defence] themselves are conducting an investigation that will give us some clarity of what the impact of this transaction was and whether or not there are irregularities associated with it. What we have understood is that the procurement process did not go as well as what it should have. In response, the department is investigating,” Maluleke said.

She said several shortcomings in the planning, procurement, transportation, warehousing and recording of medicines were also identified.

She said:

Approximately 40% of the vials were exposed to temperature variations that could have compromised the integrity of the drug, which may result in these drugs not being usable and the money spent being wasted. The auditors also observed inadequate planning for the procurement of medical equipment and PPE (personal protective equipment).

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