CAPE TOWN, August 31 – A forensic investigation by Deloitte found no wrongdoing by the National Treasury team working on the Integrated Financial Management System, but concluded a lack of human resources was partly to blame for adverse internal audit findings, a source in the department said on Thursday.
“They found nothing wrong, nobody stole money,” the source said, adding that the audit firm’s investigation included scrutiny of the IFMS2 project team’s computers and lifestyles and the outcome had proven a political disappointment to National Treasury’s new leadership.
“They raised the issue that a team this small could not have been expected to handle a project of this scope. This report is being rejected because it did not find what people wanted it to find.”
The much-delayed delivery of the new finance management system turned into a political storm this week after Finance Minister Malusi Gigaba rejected the Deloitte report as “shoddy” and called for the firm to be reported to the Independent Regulatory Board for Auditors (IRBA).
On Tuesday, Gigaba and top National Treasury representatives appeared before Parliament’s Standing Committee on Public Accounts (Scopa) to face questions about the fact that the project had yet to deliver a workable payment system and an internal audit of work done in 2015 yielded 54 findings, most carrying a high risk warning.
The director-general of Finance, Dondo Mogajane, told Scopa he had on August 7 instructed that no further payments be made in relation to the IMFS.
Mogajane said he had also ordered the project management office to be restructured after learning that it had a staff complement of only five people, one of whom worked part-time.
It was “very worrying” that a critical project was so understaffed, he said.
But the issue rapidly turned into a political football, as the African National Congress Women’s League weighed in with a call for it to be investigated as an instance of state capture, in a reference to Gigaba’s allegations against Deloitte.
The minister suggested that the multi-national firm had improperly sought to secure a guarantee of future contracts from National Treasury.
He was reported as saying: “I fail to believe that I can remain independent while I have a 120-year contract with you.”
Deloitte has yet to respond to this claim directly.
ANA was told that in the report, it said it hoped that the investigation did not jeopardise a future working relationship with the government department.
“They could sense from the atmosphere surrounding the whole exercise that there was pressure on them to come up with a particular conclusion. They did not, and therefore the report merely said that they hoped this would not be held against them.”
An external investigation was ordered by former director-general Lungisa Fuzile last year, and Deloitte secured the contract to conduct it. Treasury sources said Fuzile left it to the chartered accountant who chaired the audit committee to liaise with Deloitte as he did not want compromise the independence of the exercise.
The chair is understood to have rejected the report after a near-complete draft was submitted in March, and accused Deloitte of changing the terms of reference.
Fuzile did not immediately respond to a request for comment, nor did Gigaba’s spokesman.
The IFMS project was initiated in 2002. The system is meant to integrate human resource‚ payroll‚ financial and supply chain management functions throughout the public service to cut costs.
In 2013, Cabinet was informed that work on it would start from scratch after the World Bank advised that attempts to develop bespoke technology should be abandoned in favour of commercial, off-the-shelf models.
At Scopa this week, MPs said this meant that the R1.2 billion on phase one of the project was wasted public money. The overall cost, including the first phase, is R4.3 billion.