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The Standing Committee on Public Accounts (Scopa) has ordered a full-scale forensic investigation into the financial administration at the Compensation Fund (CF).

The directive came during a briefing held on Wednesday in the form of a hearing with the CF on the entity’s annual report and financial statements, as well as irregular, fruitless and wasteful expenditure for the 2019/20 financial year.

The committee told Employment and Labour Minister, Thulas Nxesi, who led the delegation that the CF has in the last 10 financial years received worse and unacceptable audit findings that included disclaimers.

The committee also told the Minister and the delegation that the appearance of the CF before it on irregular, fruitless and wasteful expenditure has become a permanent feature.

“This indicates a total collapse of internal controls, no audit action plan and the situation is untenable. The entity has been on the red in spite of the fact that its senior managers have been there for more than five years, yet the situation is worsening under their watch,” Committee chairperson, Mkhuleko Hlengwa said.

Nxesi acknowledged that there are challenges at the fund and the reason for that arises from a combination of many factors, including deepening corruption and deep structural challenges.

The Minister said the only thing that can save the entity from the current quagmire, is the institution of forensic investigations and organisational review.

He also assured the committee about the application of consequence management to the responsible officials.

The committee also noted that only seven officials, out of more than 80 officials who underwent disciplinary action for corruption that has placed the entity to the appalling situation it is in.

“The system is a resource that is used and managed by people, it is the people who have failed to manage it or manipulated it for deliberate nefarious reasons. Tolerance of the disastrous audit findings for the period of 10 years indicates clearly that the problem is with the people, not the system at the CF,” Hlengwa said.

The committee has ordered the Minister to institute a full-scale forensic investigation at the CF and that all the audit findings-related matters should be central points of reference.

It added that the Special Investigative Unit (SIU) should be part of the investigations.

The committee has also directed the Minister to assess the performance of the department’s Director-General and the Commissioner of the CF.

It has also asked the Minister to present to it in a period of 30 days, a road map regarding how the investigations are going to unfold.


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