Former premier Ace Magashule fingered for mismanagement amid fears that the province will be placed under administration
The Free State government’s finances are in a dire state.
There are various reasons for this: the botched R250 million Vrede dairy farm project; millions of rands shelled out for demolition works for the new provincial legislature complex; and more than R100 000 in monthly rentals for the provincial treasury department.
In addition, the provincial health department is facing R1.5 billion worth of lawsuits for malpractice, while the education department is alleged to have recorded a bank overdraft of R800 million to help alleviate the financial crunch.
A senior ANC Free State leader told City Press this week that a report about the province’s state of affairs was being prepared for the party’s national officials with a view to placing the province under administration.
Some insiders say that Ace Magashule – who quit as the Free State’s premier and chairperson following his election as the ANC’s secretary-general at Nasrec in December – still controls the province.
Details of the province’s finances are allegedly being kept under wraps amid fears that revealing them could damage the ANC ahead of next year’s general elections.
National Treasury spokesperson Jabulani Sikhakhane confirmed yesterday that Treasury was aware of the Free State government’s financial difficulties.
“However, there has been no consideration, at this stage, of national government intervention in the running of the provincial government,” he said.
Sikhakhane said that should such an intervention be decided upon, it would have to be approved by Cabinet and, ultimately, the National Council of Provinces, as stipulated in the Constitution.
This is despite claims by some that discussions were under way to place certain departments under administration by the national government.
An official said the provincial treasury’s decision to move to a privately owned building had worsened the situation.
“No explanation was given to us. The provincial treasury is supposed to be a leader in financial prudence,” the official said.
But provincial treasury’s head of department, Godfrey Mahlatsi, defended the decision to move, saying: “The Free State provincial government buildings in Bloemfontein are not adequate to accommodate the government officials. Hence, we have recently revamped the old Hamilton government building and are also occupying private buildings.
“The reason provincial treasury and other provincial departments occupy private buildings is constrained office space in government-owned buildings.
"The building that we have recently occupied provides us with the flexibility of an open-plan arrangement and has allowed us to accommodate more officials,” Mahlatsi said.
Mahlatsi then accused lawyers of “milking” the department of health and said this was a national problem. “We are the least affected province,” he added.
Mahlatsi said the challenges facing the education department had been compounded by government’s soaring public wage bill.
“There is a challenge in the country. We need to make difficult decisions. As would have been the case in the private sector, we would have had to lay off people,” he said.
Mahlatsi said an investigation had been launched to determine whether money paid for the new provincial legislature complex was worth it.
Responsibility for the financial meltdown in the province has been pinned on Magashule and the role he played as the former leader of the province.
Auditor-General Kimi Makwetu’s report on the outcome of the national and provincial audit for the 2016/17 financial year provides more detail on the severity of the province’s financial situation.
In his report, Makwetu said that irregular expenditure disclosed in the 2016/17 financial statements of the Free State provincial government had increased from R1 927 billion to R5 421 billion.
“The provincial leadership continued to make use of implementing agents to deliver some key projects, without ensuring that they complied with supply chain management requirements,” reads Makwetu’s report.
“We are concerned about the continuous disregard for procurement processes by the administrative and political leadership that resulted in irregular expenditure, coupled with limited consequences for these transgressions, as it created an environment conducive to misappropriation, wastage and abuse of state funds.”
Makwetu will release his 2017/18 general report on national and provincial departments next month.
Tiisetso Makhele, the spokesperson for Free State Premier Sisi Ntombela, said the province had financial challenges like any other province.
He attributed the situation to a decline in the equitable share of funding given to provinces by Parliament, which had other pressing national priorities.
“We would like to state that the Free State provincial government is not in a financial crisis,” added Makhele.
He said the province was unaware of any intention to place some departments or entities under administration.
“The Free State provincial government will continue to march forward in transforming the lives of the people, irrespective of the limited financial resources at our disposal.”
DA chief whip David Janse van Vuuren said it was clear that the financial health of the province had deteriorated faster under the premiership of Magashule.
“He made sure that he controlled all the money that went out of the coffers of the province through large projects that were awarded through tenders.”