Resources, restrictions hinder audit into E576m road – AG

Auditor General Timothy Matsebula has revealed that they encountered challenges in conducting a forensic investigation into the over E576 million used for the construction of the Nhlangano-Sicunusa (MR13) road due to limited resources and restrictions.

This, the AG said, prevented their office from working independently to engage competent investigators.
Matsebula was addressing the Public Accounts Committee (PAC) after Deputy Chairman Manzi Zwane asked him to update the committee on the forensic investigation yesterday.

The ministry of public works and transport was also before the PAC to detail how the E576 101 574.86 was used during the construction of the road and also the number of irregularities noted like loan requirements, contractual obligations and construction standards.
Matsebula said they tried working on the forensic issue, however, they could not fully perform their duties as they wanted to get people who could gather evidence that could be admissible in court.

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He said their challenges were caused by limited resources in their office and other restrictions that were preventing them from working independently to engage people who were competent to do the job.
Nevertheless, he said the audit investigation would take place this year adding that the progress report would be presented to the PAC, five years later.

He said they would seek assistance from their foreign counterparts because Funduzi was also brought into the country since there were no forensic investigators locally.
He said this was a skill that was scarce because people were also faking their resumes.

“We were delayed because we did not have the resources, but we will conduct the investigation,” he said.
Matsebula said they now had someone who was responsible for the legal parts of the forensic audits, adding that he was hopeful that they would make progress.
“This is a specialised field, it requires one to source the right people outside. We are joining hands with other institutions to help us. We have already made bids so that we can do the work. If there are restrictions, they result in inefficiencies.

These issues are solved better by someone who is trained, committed and a legal expert,” he said. Adding, he said they were trying to build capacity and train people as auditor generals in the region so as to have the skills locally.
When asked if the ministry was asking for quarterly updates on the issue, Under Secretary in the ministry Nhlanhla Motsa said they have not engaged each other on the matter, but visited one another in the offices.

Meanwhile, the Principal Secretary Thulani Mkhaliphi said there were many instances where they engaged the office of the AG, but stated that the challenge was that they could not reduce it into writing. He said there were many issues that they were discussing with the AG’s office and apologised for the inconvenience.
“We know of the updates by the AG to the committee, we know where the issue is now,” he said.

In the PAC first session report, the office of the AG reported that the construction of Nhlangano to Sicunusa (MR-13) Road-Project T50010/93/99 was supposed to cost E465 990 202.85 at inception and take only 24 months to complete, but over 60 months later, it was still not complete yet payments made had already exceeded E576 101 574.86.

It said the irregularities started during the pre-qualification of suppliers where the main contractor, Kukhanya/Gabriel Couto Joint Venture, was recommended for tendering despite failing to meet pre-qualification requirements twice.
The AG’s office added that the contractor was appointed without being approved by the funding agencies, yet this was part of the loan agreement (that the funders would have to pre-approve the contractor).

It said Gabriel Couto, who was a major shareholder in the joint venture, pulled out of the joint venture after the funders indicated that they would no longer finance the project yet they (Gabriel Couto) were the ones who were the leading partners as they could do the work.
It added that an interest amounting to E14 457 18.15 was paid due to late payments and an amount of E16 444 660.00 was paid by government to consultants, MZCK Consultants as consultancy fees despite the fact that the loan agreement between government and the funders stated that the funders would pay the consultancy fees.

“The consultancy fees were supposed to be E10 million but government added E5 million more to the fees without any explanation. A farm owner who was supposed to be compensated with E191 132.88 for a portion of his farm, which was affected by the construction was eventually paid E3 million without any justification,” reads the report by the AG’s office.

When the PAC attempted to deliberate on the matter in 2020, the main witness did not appear before the PAC for unclear reasons.
It was then resolved that a forensic audit should be instituted to gather evidence that could be utilised in court, either in a criminal case if fraud was committed or a lawsuit to recover the funds from those who were unduly enriched through the project.

A South African forensic audit firm was hired in 2023, but could not complete the task after auditors were attacked while returning from the site. They ended up submitting an incomplete report, which lacked the vital part of the evidence. Since then, the AG has been trying to get another firm to complete the exercise. That is until his revelation that there is finally light at the end of the tunnel.
The road was eventually completed and commissioned last year at a cost of E1.2 billion.

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