Transport Minister Sbu Ndebele is to report financial services company Deloitte to the South African Institute of Chartered Accountants (Saica) because of its alleged failure to uncover irregularities at the Road Traffic Management Corporation (RTMC), the road safety organisation which has been plagued by mismanagement for many years.

Mr Ndebele said in a statement at a meeting of Parliament’s standing committee on public accounts yesterday that Deloitte had also accepted a contract that was irregularly issued, in that it was not put out to tender as is required for all government contracts over R500 000.

The accounting firm, which drew up the accounts for the RTMC for the 2009-10 year, did not pick up irregularities which were later highlighted in a forensic report by Gobodo, which uncovered irregular expenditure of more than R200-million.

The auditor-general gave the RTMC an unqualified audit report on the basis of Deloitte’s financial statements, RTMC acting CEO Collins Letsoalo said yesterday.

On the issue of the contract awarded to Deloitte, he said it flew against "accounting and auditing ethics" for Deloitte to accept a contract which was irregular.

"We are going to ask Saica to investigate," Mr Letsoalo added.

Mr Ndebele told MPs that the government would "be engaging Saica to assist in the evaluation of the appointment of Deloitte", which was hired irregularly to do what was then called a "financial clean-up" project, which resulted in irregular expenditure to the tune of R11-million.

"There is something amiss when a firm of Deloitte’s status is hired in the way it was hired to do the kind of work that results in the taxpayer being ‘duped’, and we therefore believe that this has to be investigated by the relevant body," he said.

A Deloitte associate for communications and markets, Ilse Blank, responded to the minister’s remarks by saying the company "believes that it has delivered on its mandate in regard to this assignment and reported accordingly to the CEO of RTMC in our report dated September 2, 2009".

She said Deloitte had been engaged in 2009 to second staff to assist the RTMC’s finance department with financial management accounting processes, as the department had been experiencing staff shortages, accounting system inadequacies and accounting backlogs. "Deloitte was never engaged to perform an audit," Ms Blank said.

"In light of the minister’s comments, we will discuss this matter with our client and will be making no further public comment."

Mr Ndebele highlighted the "serious lapses" in the RTMC’s control environment and the abuse of procurement procedures which led to R360-million in irregular expenditure. This included the irregular use of R200-million of e-Natis transaction fees which were supposed to be paid over to the Department of Transport but were instead used for operational purposes.

Mr Ndebele told MPs that the forensic report had been handed over to the South African Police Service for further investigation and possible criminal charges against various individuals and companies implicated in the alleged irregularities. A civil case was also being pursued in a bid to recover taxpayer monies which were found to have been wasted.