'We were responding to an emergency': Social development DG justifies R15bn unauthorised expenditure

• The Department of Social Development has incurred R15 billion in unauthorised expenditure.
• This was due to the Covid-19-induced disaster declared in March 2020.
• Officials briefed Parliament on Tuesday on the department's unauthorised expenditure.

The top brass of the social development department says R15 billion in unauthorised expenditure was never misused.

They said it was the main arsenal in their response to an impending Covid-19-induced humanitarian crisis.

On Tuesday, the Standing Committee on Public Accounts (Scopa) heard the unauthorised expenditure in the department was due to the Covid-19-induced disaster declared in March 2020.

The department's director-general, Linton Mchunu, said at the time of the financial discrepancy, the most affected people at the time were the poorest of the poor.

Despite more than R15 billion being declared as unauthorised expenditure, Mchunu added the funds were not mismanaged.

"This was a response to an emergency. There was no investigation and no consequence management taken as this was essentially measures to safeguard the country.

"We have experience now to manage a situation where we go into another lockdown. The grants payments were accordingly accounted for."

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According to the department officials, the payment of social grants during the Covid-19 pandemic could be attributed to unauthorised expenditure. 

Mchunu said before the pandemic, grants were paid on the first of every month, and everyone flocked to ATMs and retailers.

But because of Covid, the queues at ATMs and retailers were considered as main super-spreader events, he added. 

"Everyone wanted their money before the hard lockdown. At the National Joint Operational and Intelligence Structure we were told to put together plans especially with grants.

"We were advised that people had to come on different dates and not all at once."

The department's chief financial officer, Fanie Esterhuizen, told Scopa: "The payment date of social grants for 1 April 2020 was brought forward to be paid out on 30 March 2020.

"The implication was that expenditure budgeted for in April 2020 was paid out in March 2020 and no budget was available. This matter was discussed with National Treasury."

Social Development Minister Lindiwe Zulu said the biggest challenge so far was consolidating social grants and ensuring quality service delivery.

"There were issues with the Covid-19 pandemic and the national lockdown. The past financial year was the most challenging. We had to overall step up to support communities.

"In March 2020, the lockdown was announced. When it happened, it was a big challenge for us. We had 18 million grant beneficiaries. People could not move, and we had to find the quickest and most effective way."

ANC MP Bheki Hadebe asked why this would be termed unauthorised if there were pre-approvals in place.

"I am raising this because at the time there were processes in place for the release of whatever necessary funding that is to cater for a disaster.

"Why would this be unauthorised? Was something not done? Over and above the instructions are there no provision or policy that allows you to do certain things?" he asked.

Scopa chairperson Mkhuleko Hlengwa said disasters were about spending.

"Real-time audits are also needed to deal with these matters. We need proactive steps for implications [that are] both direct and indirect," he added.

Statistics SA also reported on its unauthorised expenditure.

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According to Statistician-General Risenga Maluleke's presentation, National Treasury reduced the compensation of employees (CoE) budget to an extent that the cost of currently filled positions at the time exceeded the reduced budget allocation.

He said the CoE budget reduction resulted in unauthorised expenditure amounting to R163.877 million.

This includes:

Maluleke added during the 2017/18 financial year, discussions were held with National Treasury about the implications of excessive budget reductions.

"A once-off funding amounting to R70 million allocated in 2018/19 was utilised to appoint temporary contract employees to deliver on the core mandate of Stats SA.

"In March 2021, Stats SA briefed the portfolio committee that budget cuts had impacted negatively on the work of Stats SA. 

"This narrative continued until the additional funding was received from National Treasury after continued deliberations/consultations as to the impact of not recruiting at all has on the mandate of Stats SA," he said.