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Risks force Treasury to stop internet payments [Sunday Independent (South Africa)]
[June 22, 2014]

Risks force Treasury to stop internet payments [Sunday Independent (South Africa)]

(Sunday Independent (South Africa) Via Acquire Media NewsEdge) NATIONAL Treasury has stopped national and provincial government departments from making payments via the internet due to risks associated with such transactions.

But the Treasury has denied the move was in response to elaborate online frauds such as phishing and 419 scams.

"However, it might well assist |in combating these schemes as well," spokesman Jabulani Sikhakhane said.

According to the instruction issued by Accountant-General Michael Sass earlier this month, the Reserve Bank and commercial banks will be advised not to grant departments direct internet access to capture payments, except for payments released from the Corporation of Public Deposits to a province's revenue fund, into which all money received by a provincial government including their equitable share and grants must be paid.

The Corporation of Public Deposits is a subsidiary of the Reserve Bank, accepts deposits |from the public sector and invests the funds in short-term money-|market instruments and special Treasury bills.

Sass said all banks had been ordered to process only payments that had been generated by departments' financial systems.

For urgent payments an additional cashbook had to be arranged with the national Treasury.

"Under no circumstances may the direct internet payment facility be used for this type of transaction," Sass warned.

Sikhakhane told The Sunday Independent that the national Treasury was in discussion with the Co-operative Government and Traditional Affairs Department to introduce similar measures for the country's 278 municipalities.

"The national Treasury cannot impose the current restrictions on municipalities as they (municipalities) do not use the same financial systems as national and provincial government," he said.

The Treasury continuously reviewed payment systems and processes to safeguard cash and the banking environment.

"There are a number of risks associated with the use of multiple payment systems and these include the payment of invalid invoices, duplicate payments, as well as inaccurate cash-flow planning," he said.

According to Sikhakhane, these risks prompted Sass to introduce additional control measures to ensure that no losses were suffered by the fiscus.

He said the instruction ensured that only payments captured and duly authorised on the department's financial systems could be processed for payment.

Sikhakhane assured those in business with the government that the instruction note would not impede service delivery and the state's ability to pay small businesses within 30 days, and that the decision had improved the control environment by ensuring only valid payments originated from the financial system would be processed.

In February, former finance minister Pravin Gordhan announced that the government would invest up to R847 billion over the next three years on public infrastructure.

Sass's office promotes and enforces transparency and effective management of revenue expenditure, assets and liabilities of institutions in all three spheres of government including the administration of the National Revenue Fund and the Reconstruction and Development Programme Fund, as well as banking services for national departments.

He is also responsible for capacity building, Municipal Finance Management Act implementation, accounting support and integration, internal audit support, risk management, technical support services, governance monitoring and compliance, specialised audit services and financial systems.

Last year, Dihlabeng Local Municipality mayor Tjhetane Mofokeng paid R109 900 in "service and accreditation fees" to the Europe Business Assembly, which would award him the world's best |mayor award.

Free State Premier Ace Magashule intervened and cancelled it, saying it was improper to pay for an award, which would have seen Mofokeng travel to Switzerland to receive his dubious honour.

In 2012, then deputy Auditor-General Kimi Makwetu warned that lax government information technology system security should be tightened to make it less vulnerable to hackers.

In 2010, the auditor-general's official website was hacked by the Ashiyane Digital Security Team, which has a programme that automatically detects websites with lax security.

The national Treasury instruction will officially be in force |from July 1. The Sunday Independent (c) 2014 Independent Newspapers (Pty) Limited. All rights strictly reserved. Provided by SyndiGate Media Inc. (

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