By Eliaser Ndeyanale
THE Ministry of Defence has failed to account for N$44 million in the past financial year, an official inspection by the Auditor General has revealed.
“Although Treasury approval was obtained to utilise certain expected savings for the defrayal of expenditure through virements during the year, eight subdivisions were exceeded with a total amount of N$43 961 781.80 which is unauthorised in terms of Section 6(a)(iii) of the Act,” reads the report.
The hard-hitting report by the AG, Junias Kandjeke has painted a picture of gross-mismanagement at the defence ministry with unauthorised expenditure and deviation from tender procedures amounting to close to N$6 million.
After the Ministry’s funds were depleted, the defence officials nevertheless put through purchases of N$4.2 million which were rejected by the system.
Ministry of Defence Permanent Secretary Petrus Shivute approved Tender Board exemptions amounting to N$650 million for various goods and services.
However, all that Shivute would say on the AG’s findings is that “it is unfortunate.”
Amidst the financial mess at the Ministry, Deputy Defence Minister Billy Mwaningange, a fortnight ago in Parliament sought the cover of “secrecy” after he was probed to disclose the financial books of the Ministry’s subsidiary, August 26 Pty Limited.
Mwaningange claimed that the Ministry’s business dealings could not be made public because of national security. Kandjeke cautioned Shivute that as accounting officer, he should put measures in place to avoid overspending and ensure that planned activities are implemented within the approved budget.
Of the N$6 million deviation, N$4.3 million alone was gobbled by travelling allowances while about N$2.1 million of transfers remain unexplained.
Kandjeke issued a qualified (negative) audit opinion on the Ministry because of several financial irregularities including unaccounted for donations and deviations from normal tender procedures.
Although the ministry which is one of the largest beneficiary of the national budget got a qualified audit from Kandjeke, he pointed out that the such huge overspending was unauthorised in terms of Section 6 of the State finance Act.
“If specific activities are expected to exceed the budgeted funds due to unforeseen circumstances, funds should be viremented from activities where savings are expected,” read part of the report.
According to Kandjeke, even though the Tender Board exemptions were granted for acquiring goods and services which could not reasonably be procured through Tender procedures, the Ministry exceeded the approval exemption amount on Travel and Subsistence Allowance with N$4 million and grant transfers with N$2 million.
“The actual expenditure paid under this exemption could not be verified by the auditors as no supporting documents were provided for audit purpose,” Kandjeke said in the report.
Furthermore, Shivute has failed to report the donation of 15 trucks and 16 trailers amounting to N$6.9 million as well as equipment and training aids with a total value of N$1.2 million. Shivute in his response indicated that it was unfortunate that the donations received were not disclosed.
The Auditor General further revealed that in the previous report 2013/14, Shivute indicated that after all virements were approved by Treasury, it was realised that some anticipated saving were not available anymore as funds were not properly reserved on Integrated Financial Management System (IFMS). Despite giving this explanation, similar differences were found for the year under review.
Also cited by Kandjeke in his report, is that the ministry spent a total amount of N$840 231.19 in compensation payments while N$26 million was spent on bursaries and study assistance for staff members undertaking “qualifying and short courses.” In the annual report, the Auditor-General also revealed that the ministry has indicated that it operates 16 bank accounts including a Nedbank one named August 26 Trust Account with an amount of N$8 million, which the military company August 26 Holdings which has been criticised for not making public its financial standings, said it does not own.
August 26 Holdings administration manager Josiah Kasheeta said the account is not owned by the conglomerate but that it is under the control of the Ministry of Defence and is meant for UN peacekeeping operations. In a telephonic interview with Confidente on Sunday, Defence Minister Penda yaNdakolo who is a member of Parliament and could have seen the report when it was tabled in the National Assembly by finance minister Calle Schlettwein last week refused to comment saying he had not seen the report.
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