Half a billion in unspent funds returned to Treasury by Gauteng social development department

Auditor-General Tsakani Maluleke. (Supplied/GCIS)

• The Gauteng Department of Social Development underspent on important social welfare services throughout 2023/24.
• The AG identified “material misstatements” in the department’s performance reports and found that it was non-compliant with procurement legislation.
• Chaos in the department led hundreds of non-profit organisations to enter the new financial year without subsidies.

The Auditor-General of South Africa has found that the Gauteng Department of Social Development did not have sufficient control of procurement and other expenditure during the 2023/24 financial year.

The department underspent its budget by R554 million, spent R6.5 million irregularly, approved transactions without following proper procurement processes, and made “material misstatements” in its performance report, the Auditor General found, according to a GroundUp report.

This was a year in which the chaos inside the department, under the leadership of former social development MEC Mbali Hlophe and head of department Matilda Gasela, became public.

In the second half of the financial year, the department’s funding process for non-profit organisations collapsed, causing hundreds of organisations to go through the first two months of the new financial year without receiving subsidies. 

Many organisations retrenched staff and some had to close their doors.

READ | How three businessmen raked in millions from Gauteng social development department

The department’s first quarter performance report for 2024/25 reveals that several of the department’s programmes have severely underperformed. 

These include services for older people, behaviour change programmes, family preservation, and substance use treatment.

For example, the department aimed to sponsor 1 308 people to complete in-patient drug rehabilitation treatment, but only 149 had done so by the end of June.

Then-MEC Mbali Hlophe committed her department to clean governance and transparency with respect to the NPO funding environment. (Fani Mahuntsi/Gallo Images)

The department had cut funding to more than half of its non-profit in-patient drug rehabs due to the findings of forensic audits.  

These findings were later successfully appealed by most of the organisations and their funding has since been restored. But the department’s largest drug rehab, run by Life Healthcare, has still not received funding.

Earlier this year, former MEC Hlophe spent tens of thousands of rand from the department’s communications on advertorials, praising her track record and claiming that the department had achieved 81% of its performance targets.

But the Auditor-General found that there were “material misstatements” in the department’s performance report for 2023/24, particularly relating to social welfare services. 

READ | Social development dept scandal: Last three suspended officials return to work

The department’s financial statements for 2023/24 reveal that the department underspent its budget by R554 million in programmes focusing on children and families, restorative services such as substance use treatment, and research and development, which includes the troubled “sustainable livelihoods” programme (see The three businessmen and the Gauteng social development department’s millions).

The unspent funds have now been returned to the Treasury.

The department’s annual report explains that the underspending was due to vacant posts in the department, funds not being transferred to non-profit organisations, and tenders for school uniforms not being finalised. 

Faced with underspending on its food programme due to delays in tender processes, the department authorised a series of budget deviations, invoking emergency regulations to procure food parcels from non-profit organisations without inviting competitive bids. 

Matilda Gasela. (@GautengProvince/X)

GroundUp reported on these deviations in July.

Documents seen by GroundUp show that the deviations were approved by top management, including now former head of department Gasela. 

Her contract came to an end in April and left the department without her facing any disciplinary process.

The Auditor-General found that deviations to approve quotations for more than R1 million without competitive bids were non-compliant with legislation. 

“It was practical to invite competitive bids,” the Auditor-General found.

The department spent R6.3 million irregularly on “five urgent transactions that were entered into by the department without following the proper procurement processes”, according to the department’s financial statements.

Teddy Gomba, the spokesperson for the new MEC for Social Development, Faith Mazibuko, did not respond to GroundUp’s questions.