full screen background image

Leda losses millions in investments


Limpopo Economic Development Agency (Leda) appeared before the Provincial Legislature’s Standing Committee on Public Accounts (Scopa) to account on the Auditor General’s (AG) report regarding irregular expenditure for the 2015/16 financial year during a committee meeting held at Parliamentary Village on Friday.
The AG report revealed that irregular expenditure amounting to R141 214 094 has been incurred by the agency due to contravention of supply chain management policies. It is alleged that effective steps were not taken to prevent irregular expenditure as required by section 51 of the Public Finance Management Act (PFMA) and Treasury Regulations.
However, the entity emphasised that measures to prevent irregular expenditure needed improvement and an improved policy and procedure manual on avoidance of irregular expenditure, fruitless and wasteful expenditure has been developed and implemented.
It was further stated that the policy provides for improved accountability and regular monitoring in order to increase levels of adherence to rules, thus eliminating the prevalence of irregular expenditure.
The report further indicates that material impairments to the amounts of R165 516 561, R183 334 534 and R92 866 096 respectively were made to loans to (from) group companies-associates, other financial assets – loans and other receivables as a result of irrecoverable loans and debts. Furthermore, material impairments to the amounts of R14 752 700 and R88 356 136 respectively were made to investment in associates and loans to (from) group companies-subsidiaries as a result of losses incurred by associates and the agency deferring its rights to claim payments of debts due.
The committee asked why the executing authority allowed the accounting authority to make investments and loans which resulted in losses and Leda responded by saying major investments of the entity are in the mining subsidiary companies which normally would take time before they realise operating profits.
The investments decisions were made on sound business grounds. However, the mining sector subsequently experienced declining fortunes due to unfavourable market conditions and increasing production costs.