R220m of USAF untouched

The USAF has not been spent because every cent in government must be accounted for and so a plan must be established, says communications minister Dina Pule.

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Approximately 98% of the Universal Service and Access Fund (USAF) was unspent this year, despite SA slipping in global ICT ranks, according to communications minister Dina Pule.

Presenting its 2011/12 annual report at the communications Parliamentary portfolio committee meeting last week, the Universal Service and Access Agency of SA (USAASA) said the fund was allocated a total budget of R260.9 million.

It explained that the unspent budget occurred because none of the projects that the USAF had to be spent on could get off the ground due to instability at senior management and board level.

Cash reserves totalled R255.3 million at year end. The entire budget had been the subject of a roll over request that was presented to National Treasury.

Telecommunications operators pay a levy of 0.02% of their annual turnover into USAF to increase universal access to the poorer segments of society. USAASA is supposed to use this fund in a number of ways, such as subsidising access costs, building and maintaining community access centres and other projects.

USAF received an unqualified audit opinion with emphasis of matter on the material under-spending of the grant amounting to R220 million.

There was also emphasis of matter on the fruitless and wasteful expenditure of R3.7 million for amounts paid to Telkom and Sentech despite there never being Internet connectivity at cyberlabs and telecentres.

There was also irregular expenditure amounting to R19.5 million for procurement transgressions and the unauthorised fund transfer from USAF to USAASA.

Speaking at the SA Communications Forum meeting this week, Pule commented on the under-spending of the USAF and said spending money in government cannot happen without a plan as every cent has to be accounted for.

She also said the department wants to set aside a day this month or early next month to address the plan.

USAASA briefed the committee on its performance on key targets and the newly elected board also informed the committee that the organisation had not performed well, as many projects had been delayed due to financial mismanagement problems and forensic investigations taking place.

Disciplinary action is being taken and a number of staff members have resigned.

Committee members were concerned that bonuses were being paid to management when USAASA had not met most of its targets and when the institution is in great trouble. They also warned that a full blown investigation is needed for every staff member that received a bonus.

Democratic Alliance shadow communications minister Marian Shinn said the 'looting' has to stop where an entity that is falling apart is paying massive bonuses. The annual report shows the acting CFO received a R44 000 bonus, the acting head of business development received R49 000, and the acting head of performance management received a R48 000 bonus.

Members also noted that previous CEO Phineas Moleele had been awarded R770 000 as a settlement upon his resignation and questioned this pay-out.

The high salaries being paid to management are also concerning and it was suggested that the board consider making salary cuts.

The committee said it sees a dysfunctional body that consumes money for salaries, with some of the top officials earning close to what the president of the country is earning.

Last week, the board received the results of the forensic report and the value for money report, which it interrogated, according to chairperson of the board Pumla Radebe.

She added that the outcomes of the report confirmed that disciplinary actions should continue. Given the information received, there is every reason to take civil action to recover the money USAASA had lost, which amounted to approximately R92 million.

Criminal action also has to be taken against those involved.

USAASA executive caretaker Sam Vilakazi briefed the committee on the agency's performance against key targets for the 2011/12 financial year, saying the entity did not manage to, among other things, implement a pilot for systems and processes for subsidy applications regarding the broadcasting digital migration programme.

Forensic investigations also hindered the implementation of a set-top box scheme-of-ownership model.

In terms of the implementation of the establishment of access centres, USAASA did not achieve its goal of establishing 20 access centres in the first quarter and 24 access centres in the second quarter. These projects were placed on hold as a consequence of the forensic audit taking place.

Members were not impressed with the conditions of the telecentres that USAASA already established, some being completely dysfunctional. The annual report speaks of USAASA rolling out 65 more telecentres in 2012/13 but the committee said before more are established, the existing ones must be fixed.

USAASA had a budget of R83.2 million of which 92% was spent during the financial year; 43% of the budget was spent on compensation of employees, 2% on capital expenditure, 47% on operational expenditure, and 8% or R7 million was not spent.

USAASA received an unqualified audit opinion with several emphasis of matter. The first was for wasteful expenditure of R1.03 million on rental of offices not occupied, penalties and interest for late payments to SARS and for an amount paid for a venue for a cancelled workshop.

The second was for irregular expenditure amounting to R42.1 million due to non-compliance with bidding processes as reported by the forensic audit.

The committee said it understands that the new board had been appointed a month ago, having come into term on 1 September, and so decided to give the agency one month to create a new strategic plan as there was no hope that the current strategic plan could be achieved.

USAASA's existence was again questioned, after the committee last year considered shutting it down, as it is not performing.