…as it continues operating as service provider despite expired contract
Mohloai Mpesi
A locally registered company owned by Chinese, Atlantic Hi-Tech, is alleged to have defrauded the government more than M11.7 million through the collection of inflated resident permit fees, while continuing to operate despite an expired contract.
The allegations surfaced this week during a sitting of the Public Accounts Committee (PAC), where Auditor-General ’Mathabo Makenete and her team appeared to explain findings contained in the government audit reports for the financial years ending 31 March 2023 and 31 March 2024.
Ms Makenete was accompanied by Deputy Auditor-General, Paul Letlela, and other officials from the Office of the Auditor-General.
In both reports, the Auditor-General issued adverse audit opinions, stating that the government’s consolidated financial statements did not fairly present its financial position.
The reports highlighted unreconciled balances amounting to M3.49 billion for the 2022/23 financial year and M3.09 billion for 2023/24.
However, one of the findings that drew sharp attention from PAC members related to the administration of resident permits by Atlantic Hi-Tech.
Mr Letlela told the committee that the government lost an estimated M11.78 million after Atlantic Hi-Tech allegedly collected resident permit fees contrary to the government regulations.
According to the Auditor-General’s report, Cabinet approval granted on 29 August 2018 maintained the gazetted resident permit fee at M1500, while allowing the service provider to charge an additional service fee of M1300 for each application processed. In total, applicants were charged M2800.
The report states that the government revenue was supposed to be collected by the government while the service provider retained only the approved service charge.
Part of the report reads: “The gazetted government fees of M1500 charged for permits remained the same, while the service provider was to charge the service fee of M2800 per application processed. The government revenue (M1500) will be collected by the government, while the service provider will collect only the service fee (M1300).”
Mr Letlela said investigations revealed that the government never received its share of the permit revenue.
“The government incurred a loss of revenue estimated at M11.78 million relating to 7851 applications submitted during the seven-year period after the Ministry of Local Government, Chieftainship, Home Affairs and Police entered into an agreement with the vendor to assist in issuing resident permits,” Mr Letlela said.
He explained that under the Aliens Control Regulations of 1996, resident permits are pegged at M1500.
“However, we discovered that the service provider was allowed to charge M2800. We further discovered that all these amounts were deposited into the service provider’s account.”
According to figures presented before PAC, Atlantic Hi-Tech processed 3334 applications between 2018 and 2020, 3003 between 2021 and 2022, and another 1514 between 2023 and 2024 — bringing the total to 7851 applications.
Mr Letlela further stated that the M2800 service charge had never been gazetted and that the government had not received any of the collected revenue.
“These amounts were not even gazetted. The service provider took all the money and not even the M1500 due to the government was remitted to the ministry over all those years,” he said.
PAC member, Lephoi Makara, expressed disbelief over the findings and sought clarification.
“Are you saying the government lost the gazetted M1500 per application and, over and above that, applicants were charged M2800 without any of the government portion being remitted?” he asked.
Responding, Mr Letlela confirmed the position.
“Yes. Of all the 7851 applicants charged, Hi-Tech retained the collections and the ministry did not receive even the gazetted M1500 per application.
“Applicants were effectively charged an additional M1300 above the prescribed fee, which was contrary to the Aliens Control Regulations,” he said.
Mr Makara questioned why no action appeared to have been taken.
“So Atlantic Hi-Tech has allegedly defrauded the government of M11.7 million and applicants may also have paid millions more, yet no action has been taken?” he asked.
The committee also heard that Atlantic Hi-Tech continues to provide the service despite its contract having expired.
Mr Letlela said the Auditor-General’s office requested evidence that the agreement had been renewed but no documentation was provided.
“Our office realised that the contract had expired and requested proof of renewal. We were never furnished with any evidence of a renewed contract, yet the company is still operating,” he said.
The Auditor-General’s report confirmed that the contract expired in 2023 but remained active in practice.
“The contract between the service provider and the Ministry expired in 2023; however, the review noted that Atlantic Hi-Tech continued providing the service until the time of the report. Despite this, my Office was not provided with a new contract or any evidence of renewal,” the report states.
The report further noted that there was no indication that the government intended to recover or offset the lost revenue.
“Outsourcing aims to enhance service delivery; however, there is no evidence that the government’s revenue loss was to be offset by service fees from the supplier,” the report says.
In her recommendations, Ms Makenete urged the Chief Accounting Officer (CAO) to develop a solution that protects both the government revenue and applicants while ensuring uninterrupted service delivery.
“The CAO should find a solution that does not adversely affect both applicants and the government, while ensuring service delivery by private suppliers,” she said.