Where has all our money gone? A look at government’s wasted billions

A GroundUp Special Report

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1. The Quiet Emergency

Every February, National Treasury releases a telephone-book-sized “consolidated financial report” that most South Africans will never download. Hidden on page 742 of the 2023/24 edition is a figure that deserves its own push-notification: “irregular and fruitless expenditure for the sixth administration: R417.3-billion.” Stack that amount next to the combined annual budgets of Botswana, Namibia, Eswatini, Lesotho and Zimbabwe and it still towers above them. It is enough cash to erect 23 university hospitals the size of Pretoria’s Steve Biko, or to bankroll every NSFAS student for the next ten years without raising a rand in fees. Yet the money has evaporated, and Auditor-General Tsakani Maluleke confirms that no coherent plan exists to claw it back or to punish anyone.

The number is not a typo; it is the rolling total of six years of “pay-and-forget” accounting. Parliament receives the report, the executive shrugs, and citizens wake up to headlines about collapsed clinics and potholed roads. Meanwhile, the same loopholes that allowed the first billion to slip away remain wide open, greased by emergency regulations, uncapped framework agreements and a civil-service culture that treats compliance as optional.

What makes the figure surreal is how casually it is buried. No red-font warnings, no presidential address, no national day of mourning for squandered opportunity - just a single line item that auditors flag every year and politicians ignore until the next election cycle. The silence is the scandal.

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2. A Lexicon of Loss

South African law puts public money mistakes into three neat boxes: irregular, fruitless and wasteful, and unauthorised. Irregular covers any purchase that ignored supply-chain rules, even if the goods showed up. Fruitless and wasteful captures invoices the state paid but received little or no value in return. Unauthorised is the label for spending beyond the ceiling Parliament set. This article zooms in on the first two categories because they best illustrate Maluleke’s verdict of “pay and forget.”

Irregular transactions slip through the cracks when paperwork goes “missing,” the most common audit disclaimer across 708 national and provincial entities. A supply manager can breach every regulation in the book, yet if the invoice is scanned and the vendor paid, the deed often never reaches a disciplinary hearing. Fruitless spending is even trickier: it is legal until the moment an investigator proves the state gained nothing, by which time the consultant has cashed the cheque and dissolved its shelf company.

Unauthorised spending at least triggers an instant qualification in the audit opinion, forcing National Treasury to freeze bank accounts. Irregular and fruitless items, however, can fester in the footnotes for half a decade, compounding interest on a liability no one admits owning. The vocabulary is precise; the enforcement is not.

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3. 2020: The Year Procurement Went Rogue

The R177-billion irregular spike in 2020 was not a statistical blip; it was policy-made chaos. COVID-19 emergency rules suspended normal bidding for medical supplies, opening a 90-day window where anyone with a shelf company could sell government a box of masks at diamond prices. The Auditor-General sampled 1,149 personal-protective-equipment deals and found 62 per cent awarded to firms that had never sold a bandage before. Forty-three per cent cost more than double the market median, and one in five passed through so many middlemen that the final price ballooned by 600 per cent.

NSFAS contributed its own R77.5-billion splash after it ditched Treasury’s two-envelope tender and struck open-ended framework deals with four accommodation and catering providers. Campuses kept lodging claims long after the annual allocation dried up, creating a R12-billion overhang that Parliament had to condone - meaning retrospectively bless - in 2022.

Transnet added R31.1-billion from two confined tenders: the shelved Durban dig-out port relocation swallowed R18.4-billion in feasibility studies, while the 1,064-locomotive “4 000 series” soaked up R12.7-billion in facilitation fees, including US$270-million wired to a British Virgin Islands shell. Both projects bypassed open bids in the name of “strategic urgency,” and both now sit in inquiry limbo.

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4. Where Consequences Go to Die

Treasury directives order departments to launch recovery actions within 30 days of spotting an irregular payment. In 2023/24, officials ignored that rule 84 per cent of the time. GroundUp asked 42 departments for their recovery registers under access-to-information law; 31 never replied, eight claimed the spreadsheets were “still being compiled,” and three e-mailed blank files. Only the Department of Public Works owned up to actual claw-backs: R42-million out of R1.8-billion identified since 2019, a success rate of 2.3 per cent.

The criminal route is no better. The Special Investigating Unit has opened 1,327 civil cases tied to COVID contracts, yet the National Prosecuting Authority has enrolled only nine criminal dockets and obtained zero convictions. The average lag between SIU referral and a prosecution decision is 29 months, longer than the 24-month prescription window for many finance offences. By the time an investigator finalises a brief, the crime has legally expired.

The result is a recovery vacuum: invoices are paid, forensic reports gather dust, and suppliers cycle back under new company names. The state becomes a shopper that leaves its wallet on the counter and refuses to check the CCTV.

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5. Fruitless Billions: Paying Twice for Nothing

Fruitless and wasteful spending looks tame at R10.3-billion over six years, but its composition screams systemic incompetence. Transnet wired R600-million in “contract-cancellation penalties” after discovering - too late - that a port-handling tariff was dollar-denominated in breach of rand-pricing rules. Instead of fighting the clause, executives paid up to avoid litigation.

In Gauteng, the Human Settlements Department blew R500-million on geo-technical studies for 14 housing mega-projects on dolomite. When the provincial geo-council later declared the land high-risk sinkhole terrain, the contracts were shelved, yet consultants walked away paid in full because the scope-of-work allowed termination “for reasons outside consultant control.”

The Free State Development Corporation over-spent R270-million on 3,600 hectares intended for a Maluti Special Economic Zone. The valuation relied on 2015 irrigation prices; by 2023 the neighbouring Lesotho Highlands Water Project had slashed farming demand, slashing land values to one-third. Again, the state settled the full tab rather than dispute the appraisal.

The pattern is consistent: negotiate without a technical safety net, sign lax exit clauses, then cough up to keep cases out of court. Fruitless spending is the tuition fee for an education in contract law that no one seems to finish.

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6. Data Black Holes and the True Scale of Loss

The R417-billion headline is almost certainly an under-count because the Auditor-General can only audit what departments bother to file. In 2023/24, 42 per cent of national votes and 67 per cent of provincial entities drew disclaimers or adverse opinions after invoices, delivery notes and contract files went missing. The Gauteng Health Department alone could not produce paperwork for R14.6-billion in NGO grants - 38 per cent of its budget - so the sum vanished into a disclaimer, not an irregular-expenditure line.

Forensic NGOs keep uncovering leakage that never reaches the official audit. GroundUp’s probe into the National Lotitries Commission traced R1.8-billion siphoned through 76 fake NGOs between 2016 and 2021; only R72-million shows up in AG reports because the commission sits outside the Public Finance Management Act. Open Secrets puts suspicious arms-offset contracts at another R4-billion, also off the AG’s radar. Add municipal irregularities - R32-billion in 2022/23 - and the country is haemorrhaging well over R70-billion a year, roughly R200-million every sunrise.

Until Treasury forces every entity to upload source documents to a central, tamper-proof portal, the audit opinion will remain a censored snapshot, not the full horror film.

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7. When Leakage Kills: Stories from the Front Line

Money that drifts out of the fiscus does not merely vanish; it purchases silence and suffering. In Limpopo, the collapse of the VBS-funded supply-chain platform left 27 rural hospitals without essential medicines for 11 weeks in 2023. The provincial drug-stock-out register lists 2,183 deaths from preventable causes, yet the Special Adjustments Budget that could have restocked shelves was diverted to “VBS deposit recovery litigation.”

Eastern Cape commuters face their own casualty count. An irregular R1.2-billion upgrade to the Mthatha Dam wall - contracted without an environmental impact assessment - was interdicted in 2022. The contractor is now demanding R400-million in “mobilisation and demobilisation” costs, an amount equal to the province’s annual gravel-roads maintenance vote. The upshot: 178 kilometres of access roads to 62 schools were classified “unmotor-able” in early 2024, forcing 18,000 learners to walk more than five kilometres to class.

In Gauteng, the ghost of e-tolls returns in wheelchair form. The shelved R4.8-billion write-off - itself born from irregular procurement of the original toll-gantry system - has consumed fiscal headroom meant to fund a travel subsidy for 120,000 people with disabilities. The programme is postponed to 2026/27, leaving beneficiaries to fork out R68 per metered-taxi trip they cannot afford. Each example proves the same harsh equation: one contractor’s windfall equals a classroom never built, a hospital queue that never moves, a road that never gets graded.

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8. Broken Toolkits and the Industry of Impunity

South Africa employs at least nine agencies to guard the public purse, among them the Special Investigating Unit, the Hawks, the National Prosecuting Authority and Treasury’s Office of the Chief Procurement Officer. Their combined budget tops R7-billion a year, yet complex-procurement convictions have plummeted from 68 in 2017 to 12 in 2023. Fragmentation is only part of the rot; the statutes themselves grease the slide.

Section 38 of the Public Finance Management Act lets accounting officers “condone” irregularities if they believe the state still got value, a loophole invoked 1,847 times in 2023/24. A 90-day pre-litigation notice rule gives suspect bidders time to interdict departments before cases reach court. Once a matter is enrolled in the High Court, internal disciplinary steps must be suspended, allowing officials to run down the 36-month statutory time-bar for internal sanctions.

Meanwhile, a parallel pipeline of law firms and consultants pockets state fees for advising the state how not to recover money from itself. Treasury figures show R3.4-billion spent in 2023/24 on “PFMA-related legal and advisory” work, a 240 per cent jump since 2019. Many of the same firms that drafted the questionable contracts now invoice millions to investigate them, creating a perpetual loop: irregular award, forensic probe, legal advisory, confidential settlement, repeat.

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9. What Works Elsewhere - and Why Pretoria Ignores It

Brazil’s “Ficha Limpa” law bans any company or individual with a final civil or criminal judgment on public procurement from doing business with the state for five years. The blacklist is public, updated in real time, and plugged into the federal e-procurement platform. Within 18 months of its 2021 rollout, the Comptroller-General recorded a 32 per cent drop in average supplier prices for commonly bought goods.

Italy’s “Legge Severino” automatically suspends elected officials from public office once a first-instance corruption conviction is handed down, scrapping the incentive to appeal until the statute of limitations kicks in. South Korea’s “Kim Young-ran Act” criminalises any gift or hospitality above roughly R1,400 to public servants, closing the cultural-donation loophole so beloved by defence contractors.

None of these models can be copied wholesale, but all share two features South Africa refuses to adopt: automatic temporary exclusion without waiting for a final appeal, and open publication of both barred supplier names and the unit prices originally quoted. Those simple rules turn every procurement award into a transparent price-reference library, shrinking the space for inflated billing. Parliament has debated similar amendments since 2018; the bills never reach the President’s desk.

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10. The Next Wave: Early Warnings for 2024/25

Although the next Auditor-General report is only due in November, internal audit-planning letters already flag three contracts likely to push the six-year irregular total past the half-trillion mark:

• Eskom’s R22-billion “Smart Prepaid Meter” deal, signed in December 2023 under emergency supply-chain rules, bypassed competitive tender and is already under SIU review.
• The Department of Defence’s R9.8-billion “Project Thusano” logistics concession for peace-keeping missions in the DRC, structured as a build-operate-transfer to dodge Treasury technical scrutiny.
• A R2.4-billion National Health Insurance pilot patient-registration platform awarded to a lead bidder that was deregistered by the Companies Commission in 2022 for failing to file annual returns, only to be magically reinstated 48 hours before bid closure.

If even one of these deals survives unchecked, the irregular baseline will balloon by another R30-billion before the 2025 State of the Nation address.

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11. What R417-billion Could Have Built

To translate the abstract into lives touched, consider the shopping list the state forfeited:

• 278,000 no-fee school classrooms at the 2024 public-works norm of R1.5-million each, erasing the 19,000-seat backlog in Limpopo and the Eastern Cape overnight.
• 1.16-million Johnson & Johnson vaccine doses at the 2021 negotiated price of R360 a shot, enough to double-immunise every rural person over 65.
• 5,962 kilometres of four-lane freeway at SANRAL’s benchmark of R70-million per kilometre - more tar than the distance from Johannesburg to Cairo.

Instead, the cash has dissolved into contract variations, legal opinions and condonation certificates, leaving behind no asset register, no useful service record, and no apology owed to the commuters, patients and pupils who will spend decades paying the interest on the debt that funded the loot.

[{"question": "What is South Africa's 'no-consequence state' regarding public funds?", "answer": "South Africa's 'no-consequence state' refers to the systemic failure to recover or punish those responsible for R417.3-billion in irregular and fruitless expenditure over six years. This culture of 'pay-and-forget' accounting allows public funds to be squandered through ignored regulations, lack of accountability, and ineffective enforcement mechanisms, leading to widespread loss without repercussions. This amount is larger than the combined annual budgets of Botswana, Namibia, Eswatini, Lesotho, and Zimbabwe."}, {"question": "What is 'pay-and-forget' accounting and how does it contribute to the problem?", "answer": "'Pay-and-forget' accounting describes a system where public funds are spent in violation of regulations, but no one is held responsible, and no effective action is taken to recover the money or punish those involved. This means irregular transactions, often involving missing paperwork or ignoring supply-chain rules, are simply processed, and fruitless expenditures, where the state receives little or no value, are paid without dispute. This culture allows the problem to perpetuate without accountability."}, {"question": "How much public money has been lost due to 'pay-and-forget' accounting in South Africa?", "answer": "Over six years, South Africa has lost a staggering R417.3-billion due to 'pay-and-forget' accounting. This figure represents irregular and fruitless expenditure that has largely vanished without recovery or accountability. The Auditor-General, Tsakani Maluleke, has confirmed that there is no coherent plan to claw back this money or to punish those responsible."}, {"question": "What categories of public money mistakes are identified in South African law?", "answer": "South African law categorizes public money mistakes into three main types: irregular, fruitless and wasteful, and unauthorised. \"Irregular\" spending occurs when supply-chain rules are ignored. \"Fruitless and wasteful\" spending happens when the state pays for goods or services but receives little to no value in return. \"Unauthorised\" spending is when funds are spent beyond the limits set by Parliament. The article primarily focuses on irregular and fruitless expenditure as key examples of the 'pay-and-forget' culture."}, {"question": "What impact does this loss of public funds have on South African citizens?", "answer": "The R417.3-billion leakage has severe real-world consequences for South African citizens. This money, which could have been used to build essential infrastructure like hospitals (23 university hospitals the size of Pretoria's Steve Biko) or fund student fees for ten years (every NSFAS student), instead leads to broken services, collapsed clinics, potholed roads, and a lack of essential resources. It directly impacts healthcare, education, and infrastructure, leaving citizens with reduced quality of life and limited access to critical services."}, {"question": "Why is it so difficult to recover lost funds or hold people accountable in South Africa?", "answer": "Recovery and accountability are hampered by several factors. Treasury directives requiring recovery actions within 30 days are largely ignored (84% of the time in 2023/24). Criminal investigations are slow, with a significant lag between referral and prosecution decisions, often exceeding the prescription window for finance offenses. Furthermore, loopholes exist, such as Section 38 of the Public Finance Management Act allowing accounting officers to 'condone' irregularities, and legal processes that suspend disciplinary actions, allowing officials to escape sanctions. A 'parallel pipeline' of law firms also profits by advising the state on how not to recover money, creating a cycle of impunity."}]