MPs question national labs’ R1.8 billion irregular spending

During a virtual meeting of the National Assembly health committee, MPs questioned the National Health Laboratory Service (NHLS) over irregular spending of R1.8 billion, weak procurement controls, and heavy reliance on consultants. The NHLS had moved from a disclaimer with findings to a qualified opinion for the 2025/26 financial year, according to the auditor-general's report.

This improvement came after the NHLS submitted its annual financial statements late for three consecutive years, causing recurring audit delays, and led to the dismissal of the chief financial officer and suspension of the chief procurement officer pending an investigation.

MP Michéle Clarke raised concerns about the Auditor-General's findings on contracts, stating that R9.7 billion contracts lacked sufficient audited evidence. She requested a full register of contracts, including suppliers, values, and deviations, and highlighted failures in how contracts were awarded, such as some procurement taking place without competitive tenders, some tenders not advertised for the required minimum period, and contracts awarded despite missing mandatory supplier declarations.

The NHLS acknowledged these issues, admitting that the auditor-general's evidence showed transgressions among tenders below R1 million.

The NHLS had about 80% of its finance personnel as external consultants, with 20% being internal staff. The auditor-general raised concerns about a consultant hired specifically to respond to audit queries, which is the sole function of management. The human resources executive confirmed that two senior officials faced disciplinary processes over irregular expenditure.

The NHLS had also experienced a ransomware attack in 2024, affecting its core infrastructure, backups, and some of which were not recoverable. Three cybersecurity issues were fully resolved, while six were still ongoing.