Clean audit masks rot in Department of Tourism

The South African Department of Tourism received an unqualified audit with no findings, a clean audit from the Auditor General of South Africa (AGSA), despite one of its entities, South African Tourism, being flagged by the AGSA for financial mismanagement.

SA Tourism received more than 50% of the budget allocation for the department, as pointed out by the Parliament Portfolio Committee on Tourism, which heard the department’s annual report and AG report on 14 October. 

Despite this, “to say that SA Tourism has failed in its mandate is an understatement,” according to committee chairperson Ronalda Nalumango.

SA Tourism is a public entity responsible for the promotion and marketing of the South African Tourism sector. This is the second consecutive year that it has received a qualified audit opinion with findings. 

It has lately been plagued by controversy after the board of the entity was dissolved by Minister of Tourism Patricia De Lille for suspending its CEO, Nombulelo Guliwe.

The board took the decision after allegations emerged that the CEO was involved in serious financial mismanagement.

De Lille said that the decision was unlawful and taken during an irregular board meeting; therefore, she suspended the board. 

Acting CEO of the interim board, Darryl Erasmus, presented the entity’s annual report after joining the board in September. Minister De Lille was not present for the meeting.

The parliamentary committee said the qualified audit opinion can be directly attributed to the entity’s leadership instability and unfilled critical vacancies.

SA Tourism is operating with a 22% vacancy rate, with mostly management positions vacant.

The committee noted that Minister de Lille has gazetted her intention to fill the vacancies, particularly with regard to implementing a permanent board. 

However, the committee said it was concerned that the dissolution of the previous board had been taken to court by the board members to request an urgent interdict.

It is unclear how the court proceedings will affect the Minister’s efforts to fill the vacancies. 

‘To say SA Tourism failed in its mandate is an understatement’

The Audit outcome was also a result of poor record keeping, lack of discipline in monthly and daily controls, the poor quality and non-compliance of the entity’s financial statements, along with material misstatements that were not corrected when flagged by the AG.

While being allocated the biggest share of the tourism budget, SA Tourism was also the biggest contributor to the department’s cumulative irregular expenditure, which stood at R89 million at the end of the 2024/2025 financial year. 

For the last financial year, SA Tourism reported an underspend of R42.6 million. Erasmus said that this is due partly to the late implementation of the Global Brand Campaign and staff vacancies. 

Democratic Alliance (DA) MP Haseena Ismail questioned the entity on the underspend. “We always cry, ‘ we want more budget, we want more budget,’ but here we have budget and we’re not spending it,” she said. 

It was found that there was no consequence management within the entity for material irregularities, as the previous board was dissolved before it could implement the AG’s recommendations. 

The committee questioned how SA Tourism can celebrate a 2.8% increase in international arrivals in the financial year when the overall spend of these visitors has declined by 2.5%. 

The entity’s finances were affected by the Tourism Business Council of South Africa withholding an annual levy, the TOMSA levy, which is paid annually and voluntarily by tourism businesses. 

These businesses said they would withhold funds following the recent controversy.

They argued that the council is better equipped to take on the task of marketing South Africa as a destination.

The committee said that if this amount is not received, it will have to investigate introducing a tourism tax, which Nalumango said would be “unfortunate.”

Material irregularities include R4.1 million that was paid in the previous financial year for “dome activities” in which services were not received. The entity said that it was in the process of recovering these funds. 

The amount was related to a 2021 dome structure for the Dubai Expo that was not delivered. 

Department of Tourism under fire

The Department of Tourism itself, while receiving a clean audit, did not escape the committee unscathed. 

The committee criticised the department for failing in its mandate to create 5,820 jobs. Nalumango described this as a “serious travesty to service delivery.”

The Department also had notable failures in its financial management and compliance despite its clean audit. 

It underspent its allocated budget by R128.8 million, which the committee said indicated failures in project planning. 

It also confirmed R127,000 in irregular expenditure for the year, linked to non-compliance with supply-chain management procedures. Fruitless and wasteful expenditure amounted to R41,000. 

Allegations of bullying were made against the Director General Nkhumeleni Victor Vele, which are under investigation by the Special Investigating Unit (SIU). 

The committee took the opportunity to criticise Minister De Lille herself, saying that she was “acting like a messiah” by firing people “willy-nilly” while not taking the committee into confidence. 

Shunmugam Ramsamy Moodley, uMkhonto weSizwe committee member, concluded that, “If we don’t do anything about the department’s management now, tourism will never work properly.”

Boardroom battles, waste, and stalled projects: Insiders warn of ‘rot’ in Tourism Department