Letter dated 3 November 2003, from the Minister of Social Development to the Speaker of the National Assembly, in terms of section 65(2)(a) of the Public Finance Management Act, 1999 (Act No 1 of 1999), explaining the delay in the tabling of the Annual Report of the National Development Agency for 2002-2003:

Dear Madam

EXPLANATION ON THE LATE SUBMISSION AND TABLING OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS OF THE NATIONAL DEVELOPMENT AGENCY (NDA) FOR THE YEAR ENDED 31 MARCH 2003

The National Development Agency (NDA) is a Public Entity that is listed as a Schedule 3A of the Public Finance Management Act, 1999 (Act No 1 of 1999) [PFMA] and reports directly to me in my capacity as its Executive Authority.

In terms of section 65(1)(a) of the PFMA, I am compelled to table in the National Assembly the Annual Report and Financial Statements of my department and public entities reporting to me. Sub-section (2)(a) further requires me to table a written explanation in Parliament in circumstances where I am unable to table such reports within six months of the end of the financial year (i.e. 30 September 2003), setting out the reasons why they were not tabled.

In this regard I would like to report that I am unable to table the annual report and audited financial statements of the NDA for the year ended 31 March 2003 for the following reasons:

1....... The NDA failed to furnish the Auditor-General with its annual financial statements by 31 May 2003 as required by section 55(1)(c) of the PFMA. The financial statements were initially submitted on 30 May 2003 and were found to contain a number of errors and were referred back to the management of the NDA for correction. The revised statements were submitted on 31 July 2003 and still contained some errors. Consequently, the Auditor-General could not be able to finalise the audit and issue his Audit Report. The reason given by the NDA's accounting officer was that the Financial Director of the NDA was put on suspension during this critical period of the audit.

2....... Following the suspension of the Financial Director, the Head of Internal Audit who was then appointed as Acting Financial Director also tendered his resignation from the organisation. This was immediately followed by the resignation of the Financial Manager who reports directly to the Financial Director.

3....... Towards the end of August 2003, serious allegations of financial mismanagement, conflict of interests, impropriety and nepotism were leveled against the Chief Executive Officer (CEO) of the NDA.

On account of the seriousness of these allegations, I commissioned a preliminary forensic investigation into these allegations under the auspices of the Auditor-General's Office. Preliminary findings collaborated most of these allegations and I then took the decision to put the CEO on precautionary suspension with effect from 27 October 2003 to allow the forensic investigating team to conduct a detailed forensic audit into these matters.

I am setting up a management team consisting of mainly senior officials from my department, under the supervision of the Director-General, to go and assist the management of the NDA in bringing back sound management practices in that organisation. I expect that the annual report of the NDA and its audited annual financial statements will then be ready for tabling in Parliament by February 2004.

King regards,
Signed
Dr Z S T Skweyiya, MP
MINISTER