Bosman Grobler MPL
Spokesperson for SCOPA
On Tuesday 14 October 2014, the Mpumalanga Economic Growth Agency (MEGA) appeared before SCOPA to respond to the preliminary questions by the committee.
The parastatal, which has been critiqued by the DA since its establishment in 2008, has yet to prove itself as anything but a cash cow for well-connected ANC cronies and comrades. On 19 August 2013 the DA warned that the board members of the parastatal were hampering the agency’s growth. (Click here to see this press release)
In the meeting with SCOPA on Tuesday the parastatal was in total disarray and struggled to answer questions by members of the committee. Their responses were in fact so poor that it is questionable whether MEGA has any knowledge of the Mpumalanga economy at all.
Resulting from the meeting, the following issues are of serious concern for the Democratic Alliance:
Implementation of 2011/2012 house resolutions:
The entity has yet to implement all the resolutions taken by the house 3 years ago. This is the symbolic of the disregard MEGA has for the provincial legislature as the legislative and oversight authority in our province. One can only speculate that the agency enjoys protection from the executive authority, and thus disregards its approved resolutions.
From the report submitted to the committee, it is evident that staff turnover in this entity is extremely high. The entity has currently got an acting CEO, no CFO and a former CEO who is still in the structure, but without a job description. Members tried tirelessly to investigate what the job description of the former CEO is, but to no avail. The high number of vacant posts is also alarming.
Ineffectiveness of MEGA:
During 2011/2012 the parastatal reached only 42% of their targets. In 2012/2013 only 51% of the targets were reached. The main blame for this ineffectiveness is being placed on the merger of three entities (Mpumalanga Housing Finance Company, Mpumalanga Agriculture Development Corporation and Mpumalanga Economic Empowerment Corporation) without a board being appointed to provide leadership during the merge.
Lack of political will to implement strategies that will achieve targets, seems to be at the forefront of their problems. Various aspects in the report show MEGA has little accountability towards the house as well as a no-care attitude. MEGA storms from one endeavour to the next endeavour, spending money on consultants and planning, disregarding all guidance and achieving very little.
Fruitless and Wasteful expenditure:
A total of R2 599 913,00 was identified by the Auditor General as fruitless and wasteful expenditure in the 2011/2012 report. MEGA responded that this was due to interest and penalties on VAT (R1 869 941,00) and rental for unused offices (R729 972,00) were the main cause. This is evidence of the gluttonous way in which the entity spends the taxpayers’ money. One cannot help to wonder whether a private company will spend almost R750 000,00 per year on renting offices which are not needed.
High expenditure on consultants:
As on 31 March 2014, an amount of R35 605 666,40 was spent on the use of consultants. Fifteen consultants were used, but the top paid consultant was Deloitte Consulting (Pty) Ltd, whom was paid a whopping R28 501 278,12 for a turnaround intervention project. This is an expenditure of almost R30m to ensure that a governmental parastatal functions suitably – which is yet to happen.
Preliminary questions on the 2012/2013 annual report:
Responses on the preliminary questions by the committee are filled with promises of systems that will be implemented, follow-ups that will be made and perpetrators that will be prosecuted. It is however highly concerning that the merger of the three entities, commissioned in 2009, is still not completed and MEGA is still not functional. Talks within the committee are lingering towards reversing the decision to merge the 3 entities, resolving that the entities will function separately once again.
It is quite clear that MEGA is dysfunctional and must be disbanded. It is a bottomless pit to which government is allocating huge amounts of funds, without any results. As the official opposition in Mpumalanga it is the responsibility of the DA to hold government to account. The DA will write to the premier and request that MEGA is disbanded and that a formal investigation is launched into every cent spent by the entity. The DA feels strongly that individuals’ who are responsible for the fruitless and wasteful expenditure in the entity, be held accountable in their personal capacity.