Buck stops with board that is answerable for malfeasance

The Public Finance Management Act (PFMA) sets the rules for how state-owned entities handle public money.

It requires procurement systems that are fair, transparent, competitive and cost-effective, and it places a legal duty on leadership to prevent irregular, fruitless and wasteful expenditure.

On Airports Company of South Africa’s own version of events, several safeguards failed. An emergency was declared while there was still time for a normal process.

Multiple procurement breakdowns at Acsa

An RFQ (request for quote) was issued without an RFQ number. A supplier was invoiced before a contract or purchase order existed. A 50% deposit was then paid on that basis and then the goods were delivered well after the time when they were needed.

The full amount was later classified as irregular expenditure and confirmed by the auditor-general Tsakani Maluleke.

These are outcomes the PFMA instructs entities to avoid.

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Under the PFMA, the accounting authority of a state-owned company is its board, which carries fiduciary responsibility for financial management, internal controls and procurement systems.

Delegations do not remove accountability. Also not in the case of the CEO, who serves as an executive head and board member.

While not automatically liable for every procurement decision, a CEO is part of the leadership structure responsible for ensuring that proper systems, oversight and consequence management exist.

PFMA accountability rests with boards, executive leadership

If those systems fail, the PFMA expects both executive leadership and the board to be answerable for how and why.

At such a juncture, further accountability to the minster of transport and National Treasury must be pursued.

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