Parliamentary Committee Takes National Treasury to Task Over "Irregular" Billion-Rand IT Project

South Africa’s National Treasury has been subjected to scathing critique by parliament's standing committee on public accounts (Scopa) for its handling of the Integrated Financial Management System (IFMS), a project valued at over R1 billion. After a thorough investigation by the Special Investigating Unit (SIU), the project was found to be irregular, sparking severe criticism from Scopa chair Mkhuleko Hlengwa.

For around twenty years, the IFMS has been in development, aiming to streamline financial management across national and provincial departments. Despite the longevity of the project and significant financial input, it has yet to be operational, leading the Treasury to accrue additional costs for ongoing technical support.

The scrutiny escalated when the auditor-general qualified the Treasury’s 2021/22 financial statements over what was perceived as wasteful expenditure linked to the project. This finding not only raised concerns about financial management within the Treasury itself but also set a troubling precedent for other government departments, which look to the Treasury for governance leadership.

Despite vehement denials of corruption in the contract with tech giant Oracle, the SIU referred the matter to the Treasury for potential blacklisting. Deputy finance minister David Masondo acknowledged the high governance standards expected of the Treasury while admitting shortcomings in this instance. Scopa has given the Treasury a three-week deadline to review its approach and submit a report on corrective measures.

The inquiry conducted by the SIU under a presidential proclamation identified a string of issues, including irregular supply chain management, policy non-compliance, conflicts of interest, and unproductive expenditure. Disciplinary measures have been recommended for the involved officials, and criminal prosecutions are on the horizon.

In another twist, Treasury director-general Duncan Pieterse disputes the SIU's assertion of irregularities and wasteful spending. However, SIU head Andy Mothibi, responding to representations from the Treasury, has announced intentions to initiate civil proceedings to potentially cancel the contract and recover funds.

Amidst this controversy, all activities related to IFMS are paused, including a cloud solution implementation with Oracle. Instead, the Treasury is considering alternative approaches for IFMS, which are expected to align with the department of public service & administration's plans for a human resource management system.

The Treasury’s adherence to sound financial management is now under more scrutiny than ever, as Scopa aims to resolve the matter before the forthcoming general election. The saga is both a challenge and a precedent-setting opportunity for South Africa's oversight and fiscal management processes.