SAWS Board responsibility for CEO termination; SAWS & SANBI 2016/17 Annual Report

Meeting report

Opening remarks
The Chairperson greeted members of the Committee and welcoming new and familiar faces to the meeting. An apology was received from the Minister of Environmental Affairs, who was launching the ‡Khomani Cultural Landscape World Heritage Site in the Northern Cape. The Deputy Minister was in Durban attending a workshop, hosted by South Africa on biodiversity. The Director-General was out of the country and Ms H Nyambi (ANC) was attending another meeting.

On the agenda was interacting with the board of the South African Weather Services (SAWS) on the premature dismissal of former Chief Executive Officer (CEO) Dr Linda Makuleni and the irregular expenditure incurred by the SAWS as a result of that. The board was to explain why individual members of the board should not be held liable for the irregular expenditure.

The Chairperson received a letter confirming that seven members of the board shall be there on that day. He was expecting a report and a copy of the Minister's letter - that she wrote on her interaction with the SAWS board - but did not see that in front of him.

After a interaction between the chairperson of the SAWS board, Ms Ntsoaki Mngomezulu in which she said that she expected it to be in the pack the Chairperson replying it was the Annual Report only, the secretary of the Committee Ms Tyhileka Madubela saying she expected copies to be provided as usual and the Chairperson asking Ms Mngomezulu if she expeted members to haul all documents with them the whole time - the board and  SAWS delegation were sent out of the room to get copies reproduced for circulation. This was unacceptable.

Briefing by South African National Biodiversity Institute (SANBI)
The Chairperson handed over to the chairperson of the board, Ms Nana Magomola and welcomed her and her team.
 
Ms Magomola, Board Chairperson, SANBI,  who has not missed a single meeting in her term, said that this was her last meeting, but as she is working for South Africa (as those present in the room) she hopes to see them in other places. During her time SANBI has always had unqualified audits.

She introduced her team and gave the following opening remarks:
*SANBI was recently accredited as a national implementing agency for the Green Climate Fund and there is team working on the requirements to successfully implement projects.
*The Department of Science and Technology (DST) gave SANBI a budget to work on a Science Collection Centre that will be launched this year.
*In addition to the ten National Gardens the Thohoyandou garden is also almost complete. The human and financial challenges there will be addressed.
* The planned takeover of the National Zoological Gardens (NZG) in Pretoria that were, according to DST, supposed to happen in the last quarter of this year will now happen at the beginning of next year.
 
Dr Moshibudi Rampedi, Chief Executive Officer, SANBI, said that performance indicators that were only partially achieved included
*The number of new National Botanical Gardens being established and operational – that was because of the memorandum of understanding between SANBI and the Limpopo Department of Economic Development, Environment and Tourism (LEDET) has not been implemented yet, but a draft  Service Level Agreement (SLA) has been developed. Also the Kwelera Nature Reserve Management Plan between SANBI and the Eastern Cape Parks and Tourism Agency (ECPTA) has not been implemented.
* The National Invasive Species Report (NISR) was initiated - but the plan was only partially implemented.
*The number of annual updates of non-detriment findings for the Scientific Authority to support National Environmental Management: Biodiversity Act (NEMBA) regulations have only been partially achieved. The final report will be submitted late due to other urgent matters that arose from the 17th CITES Conference of the Parties which included the trade in lion bones, leopard monitoring, and applications to export rhino.
* The number of black biodiversity professionals developed through human capital development initiatives has also been only partially achieved. Only 66 out of a target of 92 were developed.

Highlights in her presentation included:
*The number of visitors to gardens that has increased by 9%, being the most visitors ever on more than two million.
* The annual target of 50 000 users and beneficiaries of botanical gardens and school-based programmes for education, awareness, training and recreation that has been exceeded with 55 373 beneficiaries.
*A 100% of policy requests from DEA, provinces, municipalities and other organs of state responded to within the timeframe stipulated in the request.

Ms Lorato Sithole, Chief Financial Officer (CFO), SANBI, said the entity received an unqualified clean audit opinion and adjusted material misstatements on the annual performance report. Misstatements were in programmes 2, 4 and 6. For the first time the programmes were audited in totality. She said that misstatements were more of the evidence that were submitted. There was a surplus of R47 801 205. That arose due to various accounting adjustments as required by the Generally Recognised Accounting Practice (GRAP).

Discussion
The Chairperson thanked the chairperson and said to make sure all documents are received referring to annexures or pages that were not in the pack.

Mr S Mabilo (ANC) congratulated SANBI for their unqualified report and asked for a brief elaboration on their role as implementing agent on the Green Climate Fund budget. Where were they concerning that development? He said that the day before the Auditor General (AG) reported a slight transgression that was corrected after the AG’s intervention. SANBI do not disappoint so they should get rid of the “reds” and not use the surplus to offset liabilities which is a matter that also occurs in SANParks. How sustainable is funding from donors and can SANBI give an indication on the amounts of money that is being pledged? What is the level of accountability on SANBI’s part? In which journals are SANBI scientists publishing? Regarding the funding received from DST: how are other provinces gaining?

Mr T Hadebe (DA) was concerned over misstatements. He asked for an undertaking from SANBI to include asset records in their quarterly reporting and to ensure that the findings that were picked up, are put in place.

Mr R Purdon (DA) said that it was highly commendable for Ms Magomolo to not have missed a meeting in her term. The report was well presented and easily readable. SANBI is aware of their shortcomings. He asked the CFO for more detail on the deficit of disposal. What was disposed of and where? How did the takeover of the NZG in Pretoria came about? Some other zoos like in East London are in a disastrous condition. Why are the other zoos left in the care of municipalities? Lastly he asked the new CEO, Dr Rampedi for details on her background.

Ms H Kekana asked if they will be invited to the launch of the Science Centre. Unqualified reports should be kept up. She wished the chairperson well and said it was a pleasure to work with her.

Mr Z Makhubele (ANC) said indeed the report was good, comparatively speaking and looking at it on its own, but refusing to be rendered ineffective Committee members must still raise questions. Congratulating SANBI on their position as implementing agent – he urged that not all money must be used in gardens or urban areas. A fair must be used in the rural areas, even to the point of being bias. When are you going to fully integrate the NZG into SANBI? There was an indication that a land claim was affecting the area of SANBI’s new garden. iSimangaliso Wetland Park is also having the same problems. Is SANBI challenged or are community cooperating? Lastly, if almost all targets were exceeded - were they pitched accurately? SANBI should not be afraid to come to Parliament without achieving all their targets.

The Chairperson referred to a very tough session the previous year. This year the Committee were told, by the AG that there has been a huge improvement. Ms Sithole would remember that the Committee were very critical of her work the previous year. This year her good work must be commended. The material misstatements and the slow response by the accounting officer and senior management to the AG are areas to improve on. The Chairperson also asked about the status as implementing agent for Green Climate fund. What capacity does SANBI have and what does this mean?

Ms Sithole answered SANBI did not include pledges in their statements. Resources are unencumbered. For 2016/17 there were no gains or losses on foreign exchange. Al funding were received in Rands. Figures were audited by the AG. Through monitoring tools it is possible to look two to three years ahead to expected donor funding.

She answered that the accounting surplus is calculated through instruction from National Treasury. Al debtors and liabilities are included in the instruction to calculate the surplus. SANBI agreed to quarterly report on internal controls and asset management. She agreed that the figure of R5.5 million was a substantial figure for a deficit. The figure relates to assets that were utilized beyond their natural life. The assets that were still slightly useful were disposed of via fair bidding. This includes office machinery and very old vehicles that could not be operated anymore. Assets were causing health and safety challenges.
She answered that the slight transgression that were corrected on the annual statements and reported by AG referred to an item that was disposed of but not removed from the record and one that was not included. In all material aspects the annual statements fairly reflected SANBI’s position.

Ms Rampedi answered that SANBI – as implementing agent for the Green Climate fund - will not ignore rural areas. The land claim in Thohoyandou is not only affecting the garden, but the entire area. SANBI has met with the Commissioner and LEDET and it is a matter of great concern that will affect the garden and the area. She answered that at the time when targets are set, resources are looked at and plans are set accordingly. SANBI does not under plan, but because of working with partners there is additional capacity and targets are exceeded.
She answered that the NZG should have been transferred by 1 October, but it now it will be on 1 April. SANBI is working with DST, DEA and the National Research Foundation to look at the integration of staff and the ability of National Treasury to advance additional funding. An invitation will be extended to the Committee on the opening of the Science Centre. There is a commitment from DST to ensure that SANBI maintains a micro-level information system when it comes to biodiversity, a commitment that was made for the next three years.

Ms Rampedi answered that her background is as such:
She was work in public service for the last 32 years, the first 11 as a biology teacher, then as education specialist before joining DEA in 2002 when SANBI was established, making her part of the history of the Biodiversity Act. She was in the DEA for five years before becoming Deputy Director General (DDG) in Water Affairs for six years. The past five years she was an agriculture attaché in Rome where she represented South Africa at the United Nations.

Mr Moeketsi Khoahli Chief Corporate Officer (CCO) of SANBI answered that the Pretoria Zoo is the only research institution of all the zoos in the country. The Minister of DST instructed that the Zoo should come to SANBI as there is a clause in NEMBA enabling SANBI to look at animals in enclosures.
 
Ms Carmel Mbizvo, Head: Biodiversity and Policy Advice Branch, SANBI, said that after a number of workshops with the board it had developed a draft funding investment strategy for the Green Climate Fund. The strategy has clear indications on where funding should go to and the focus is on vulnerable communities that are geographically spread and impacted by climate change. Other criteria are around vulnerable households. Because of being first selected as an agent for the Adaptation Fund SANBI has experience on how to manage a big fund. SANBI knows what additional capacity is needed and they have a plan to allocate resources.

She answered that SANBI contributes to national and international high impact journals. An important criteria is the impact value of the journals. The research career ladder encourages scientist to publish in these journals as well as to contribute to national journals. The funding that SANBI received from DST funding to fund the Science Centre is part of DST Research Road Infrastructure Map which has a 15 year timeline, therefore it is a long term commitment from DST.

The Chairperson thanked the chairperson of SANBI. She said it was said in jest that the Committee gives them a hard time the last time they have met and that she has enjoyed working with the Committee. The questions asked by the Committee are focussed. Ms Magomola did not want to take credit as there is a great team behind her such as Ms Rampedi, who was subjected to three thorough interviews (because sometimes people look good on paper and rehearse for interviews, but when they get the job they do not deliver). As far as the issues raised by the AG and members’ concern about it , the Audit Committee decided to appoint someone to assist in that function - a Compliance Manager at a director’s level are now also on board in SANBI.

The Chairperson thanked SANBI. He once again said it was good work. A colloquium on Climate Change will be organised soon and SANBI will be invited.
SAWS Board responsibility for CEO termination

There was a short break after which the Chairperson opened the next session by saying he wants the board of SAWS to give the Committee reasons why they should not be responsible in their individual capacity for the fruitless and wasteful expenditure incurred relating to the termination of the contract of the former CEO.
The Committee felt that the manner in which that process was undertaken and concluded was not proper and that it has resulted in expenditure incurred. Five months of the contract was outstanding, which was paid to the former CEO after she launched a dispute with the CCMA. An additional three months was then also paid making it eight months of payment made to her. The Committee is not happy with this and they could not get a satisfying explanation before - which is why the board was invited on that day. The Committee is aware that it was not a unanimous decision.
Ms Ntsoaki Mngomezulu, Board Chairperson, SAWS, thanked the Chairperson and said that she could not respond to the Committee the previous time because she was off sick for three weeks. She apologised for that and introduced her board. The current CEO, Mr Jerry Lengoasa was still acting.   

Ms Mngomezulu said the document was supposed to be presented by the Minister and it is written as such, but that she has made her own summary. She wanted direction from the Chairperson whether to go through the Minister’s report or her own summary.

The Chairperson said the Committee was simply interested in what happened and why it happened, but what they have gotten the first time was insufficient.

Ms Mngomezulu shared the following – part of a six page report written by the Minister after consulting with the board - with the Committee:
The former CEO’s first employment contract period was from 1 April 2009 to 30 March 2012.
The second employment contract was from 1 April 2012 to 31 March 2015. On 23 July 2013 the Minister wrote to the then chairperson of the board to approve the revised number of years for renewal of the contract to 1 April to 31 March 2017 to achieve alignment of the term of the employment contract among the CEO’s in other entities reporting to the Minister. On 26 August 2015 the Minister wrote to the former CEO confirming her re-appointment to the SAWS board as an ex-officio board member in her capacity as CEO until to 31 August 2018.

On 6 June 2016 the board chairperson requested the former CEO to provide her employment contract as part of the agenda of a bilateral meeting. The meeting was confirmed for 8 June – but the former CEO did not attend.

On 14 June the board chairperson requested the employment contract urgently. On the same day she was furnished with the Minister’s letter that had extended her contract on the SAWS board until August 2018. The company secretary confirmed that it was only in reference to the appointment as an ex-officio member of the current board.
On 2 August 2016 the board chairperson held a meeting with the former CEO to formally notify her that her contract will not be renewed and that the process of recruitment of a new CEO would be initiated. The former CEO walked out of the meeting and indicated that she would “fight the process”.
Requests from the former CEO for international travel in the period of June and July 2016 was turned down and appeared to have contributed to tensions.
A meeting scheduled between the Minister, the chairperson of the SAWS board and the former CEO was scheduled for 15 August 2016. This meeting was requested by the former CEO. She did not arrive and called to say that the vehicle she was travelling in broke down. An offer to arrange for her for transport was declined.

An acting CEO was appointed from 3 November 2016 and approval from Cabinet was received for the appointment of Mr Jerry Lengoasa as new CEO. He started on 8 May 2017.

The report from the Minister included the definition of fruitless and wasteful expenditure as found in the Public Finance Management Act (PFMA) and said that as illustrated there - this matter does not fall into that category.   

The Chairperson asked at what point the relationship breakdown was. He said that the Committee had a session with the board during which they were congratulated the same as SANBI was being congratulated on that day. There was no indication of a breakdown in relationship. At what point was the breakdown experienced? Was there any report presented to the board of SAWS that recommended the decision that the board took? If there is such a report can we get copy?

Ms Mngomezulu answered that the relationship started to breakdown around June 2016 but there was still hope. When the board came to Parliament there was an indication that the relationship was breaking down but because of a communications framework between the board and the Minister they could not discuss the matter with the Committee. She answered that there were no report at that stage, but that what informed the board’s decision was the fact that the recruitment process has already started and the former CEO did not apply. Instead of that there was a letter from her stating her intention to litigate and the board did not feel it was correct of her to expect them to talk to her through her attorneys. Many other allegations were also made. Trying to follow the disciplinary code for the former CEO was going to be very costly.  

The Chairperson asked the board chair to please answer his question. He asked if there was a report in front of the board when they took the decision and then said that there were no report, the board saw the letter and became angry and terminated the relationship without any report. A sensible thing for the board to do was to get advice from lawyers as employment relationship is governed by law. Even if the chairperson of the SAWS board was an expert, she would still need opinion from somebody. For now the Chairperson wanted individual comment from board members.

Mr David Lefutso, Board Member, SAWS, concurred with what the chairperson of the board has just said. The removal of the former CEO was done in good faith and that it related to her not doing her duty. She missed meetings and they had to act. The decision taken was rationally. According to his own research the decision was in line with the law. He referred to a case of the Minister of Defence and the Constitutional Court saying that a board act as collective. The Chairperson of the Committee asked him what he was doing. Was he arguing a case in court or was he responding?

Mr Lefutso said he was responding.

The Chairperson said there were specific requests to respond to and a lecture on what the Constitutional Court has done in another case is not needed. Mr Lefutso did not have something to add.

Dr Keabetswe Modimoeng, Board Member, SAWS, thanked and greeted members and said that in essence what the chairperson of the board said captured what has transpired. The relationship had broken down, behind any reasonable doubt. The CEO was also at the tail end of her contract. She stomped out of meetings and she did not attend meeting without phoning or making an apology. These relational dynamics had to be taken into cognisance when evaluating the situation. The law should guide and the board has their discretion to apply and it is on that basis that the decision was taken. He said it would be helpful if the Committee could give reasons about why that was fruitless and wasteful expenditure. The year that was referred to has been duly audited and the fact of the matter was disclosed.

After a loaded exchange of words between the Chairperson and Mr Modimoeng, who stated that the decision that the board took was legal, it was established that Mr Modimoeng voted in favour of the decision. 

Mr Rowan Nicholls, Board Member, SAWS, said he voted against the resolution and he recorded his vote as such. According to him the matter could have been mediated as long before the alleged breakdown of the relationship the former CEO wrote to the board and wanted to meet with them to strengthen the relationship. The former CEO also came from a background of clean reports that were achieved under her guidance.

Ms Judy Beaumont, SAWS Board Member & Deputy Director General (DDG): Climate Change and Air Quality, DEA, said she was part of the meeting and that she concurs with the report by the chair of the board and said that the board acted legally, rationally and in good faith.

Ms Nandi Madiba, Board Member, SAWS, expressed her appreciation to appear in front of the Committee and apologized for not appearing a previous time saying that the Committee’s invitation did not reach all of the board members. She voted against the decision. As a member of the Audit and Risk Committee the risk the decision could have on the organisation was taken into account. There had never been a formal report. There was only an oral presentation. Also, even though submissions of agenda items about the matter (and how to mediate it) was made for a special board meeting such a meeting did not take place - the reason being that it was not the majority that requested it. She concurred with Mr Nicholls that the matter could have been avoided if the board acted in a professional and mature way and prioritised the interest of the organisation instead of looking at individuals. She believed that the board did not act as a team, even though now, they are not a divided board. Some of the information in the presentation came across as new information for her such as how long ago the relationship breakdown was.

Prof Elizabeth Mokotong, Board Member, SAWS, agreed with Ms Madiba that they are not necessarily a divided board. As a social scientist she could observe that the relationship had broken. A big source of unhappiness was whether the contract was finished already or if it will finish with the current board. One could see that one was dealing with a very delicate organization. Morale of the staff was very low that while dealing with important matters. The relationship between leaders, was not as well oiled as it is known to be. There was dialogue between Prof Mokotong and the previous CEO and she could feel that the relationship with the true leaders have broken down. On the day the decision was taken it was to either save the organization or the CEO had to go. Unfortunately several meetings were called and the CEO did not pitch up. Ms Mokotong remembered the meeting with the Minister not materializing. Initially there was hope that functional relationship would be re- established. That did not happen. SAWS have to be a 100% level or it could lead to national disaster.

The Chairperson asked if she voted for or against the decision.

Prof Mokotong said she had to leave early the day of the vote – but that when the decision was put to her she concurred with the decision to save the organization.

The Chairperson thanked members of the board and said it took many months to get the explanations. He summarized that there was a relationship breakdown between the chairperson of the board and the former CEO. Various attempts were made to reconcilement, but it failed. During the last meeting of SAWS and the Committee with the former CEO and current chairperson together the chairperson congratulated the CEO – although information is now that the breakdown in relationship had already occurred, but it was concealed. During a meeting of the board a verbal presentation by the chair and some deliberation by members after which as decision was taken. Some members of the board did not agree and felt that the matter could have been mediated properly. Some members felt that the organization was doing well under the leadership of the CEO. Basically there was a contractual dispute about the termination date of the contract. The CEO send a letter to the chair, members became angry and took an emotional decision.

Mr Mabilo expressed his dissatisfaction about the conduct of the board and the time it took for the report and for the board to come and appear before the Committee. It is nothing but undermining the Committee. The board is not doing the Committee any favours to appear, it is obligatory and the Committee takes strong exception to their behaviour. Some of the members have had the privilege to interact with the former CEO and they have always received clean reports. The former CEO represented the country well at global forums such as Southern African Development Community (SADC). According to Mr Mabilo the board on that day was the weakest of the past three years. It has degenerated to its lowest ever, it is rudderless and incoherent. This is perhaps a subject for discussion in the Study Group. The board has been dishonest and they have given only one side of the story for it is not reflected anywhere that there was an attempt to reconcile from the side of the former CEO. Find it strange that new chairperson comes in and her first priority is the contract of the CEO and subsequent to that the broad term: “breakdown of relations”.
Mr Mabilo was concerned over the haste to not wait for the contract to run its five month course. As a rhetorical question: Was there something there that the presence of the CEO was blocking?  Some explanations that were given were not helpful. There is no compelling argument that there were no fruitless and wasteful expenditure. The board is found wanting with their explanations and every explanation must be taken with pinch of salt.

There board was acting on anonymous allegations - that is nothing but rumours. There was no report, no material substantive. There is no evidence that board have applied their minds in the decision. This should act as a warning that the Committee will not accept malicious arbitrary decisions. There is but one issue and that is “ego”. It seems that the problem was between the CEO and the board chairperson and the board members were roped in. There is a need to probe deeper in terms of underlying factors. If it is informed by corruption or grappling a forensic audit is needed. The CEO was subjected to audits and investigations and she was cleared. The Committee is not attached to person, but the principle of fairness. Why SAWS is underperforming now is attributed to the matter. The board members must take responsibility for this and they must pay for the fruitless and wasteful expenditure. The board has failed.

For clarity’s sake Mr Purdon asked exactly how much was paid in rands. Was the decision taken to pay the former CEO without legal opinion? There was no reference in the report of the Public Protector or Price Waterhouse Cooper (PWC) investigations. Was any disciplinary action taken prior to the decision based on those investigations?

The Chairperson asked the acting CFO to quantify the amount.

Mr Lulama Gumenge, Acting CFO, SAWS, answered that it was around R2 million in total, R1.4 million for the five months still left of the contract and R660 000 for the extra three months.

Mr Hadebe noticed some abnormalities in the board. Who was responsible to filter down the message of the meeting that did not go through to all? That is a huge communication breakdown and the function of the Committee is affected. No legal opinion was sought about the matter. Mr Hadebe supported Mr Mabilo’s view that the Committee needs to get to the bottom of the matter with a forensic investigation. What was happening on the ground? Why would a contract be terminated so suddenly? The decision was irrational and they insist that it was rational. Currently there is R4 million of irregular expenditure. Tenders were also not approved. Mr Hadebe expressed his disappointment with the current board.

Ms Kekana asked how many CEO’s change in a year because of no relationship.

Mr Makhubele said the main concern was about fair treatment which should apply across the board. Where there are tensions employees suffer. The Committee should ensure that the matter doesn’t repeat, proper procedures should to be followed and authorities should stick to that. No one is in an institution for their own sake and for their own interest. All actions should be guided and differences in personalities should be dealt with. Around the time of the CEO’s dismissal there were tensions in the organisation, a number of senior managers jumped shipped. A broader report may perhaps be needed. More money could have been lost in this way if there were more settlements for other former employees. It was the first time Mr Makhubele has heard of this kind of settlement. Was it could a “nuisance settlement”?

Mr Makhubele understood that five months can be long but to him it seemed that the source of the tension was about who said what. The board should not be reckless in their decisions. Also, the Committee does not want to be subjected to suspicions, which they are when they hear that arrangements about meetings were not communicated thoroughly with all board members. SAWS should be honest and they should not come there with attitudes. SAWS must do what they are supposed to do and the Committee should do what they are supposed to do - for the ultimate good of the country.

The Chairperson echoed the sentiment of members of the Committee by saying he was extremely disappointed with the board. According to him there was a greater degree of incompetence in the handling of the affairs of SAWS. The issue was raised many months ago. There first time the Committee asked for report they got a one pager and the issue of the relationship breakdown was not in the report. The matter was introduced by Ms Beaumont and subsequently it was included in a report. When the Committee interacted with the one pager they said the board should give them reasons why the board should not pay for the fruitless and wasteful expenditure incurred. The Committee was first asked for an extension and then referred to the Minister. Why would the board ask for an extension if they were just going to refer the Committee to the Minister?

The Committee insisted on a report from the board, but even on that day a report was not presented – what was presented was a letter written to the Committee by the Minister. For that day a presentation by the board and then an explanation by the Minister were expected. The board has got certain rights and responsibilities and the Minister oversees. The board was holding this Committee and by extension Parliament in contempt. The board is taking decisions about spending of public money. The board have got no right to treat Parliament with contempt. One board member said she did not get the information about being needed in Parliament – but the Committee was told that the members are busy and cannot come on short notice.

The Chairperson’s view is that the chairperson of the board and the board exhibited the highest levels of incompetence both in dealing with the Committee and matters of the board.  There are a couple of things that are clearly wrong. There was a dispute around the interpretation of the ending of the contract. There was no report and no legal advice given. The board has got an audacity to tell the Committee that they took a rational decision. Rationality means that the board has applied their minds looking at a report and advice given. The decision was nonsensical and it is a decision that led to the board having to part with R2 million. The view of the Committee is that there was no value derived from the expenditure of the R2 million. Nobody can convince the Committee that the R2 million that was spent was in the best interest of SAWS. The Chairperson answered Mr Purdon that there were no disciplinary processes undertaken. The Committee heard from one board member that such a process was decided against because it was towards the end of the contract and it would take time.

The Chairperson concluded that the Committee will develop a proper report out of the engagement that will be presented to the Committee in a subsequent meeting. The Committee will deliberate and take a decision. Then the Committee will communicate with board formally on the decision that was taken by the Committee.

He said once more that the Committee was disappointed. The Committee will give the board fair treatment, even though the board was not able to give the former CEO fair treatment. The decision will be communicated to the board and the Minister. The Chairperson asked if a member of the board wants to respond or comment.

Mr Lefutse said that they have also made notes as the Committee was speaking and that there was a glaring misunderstanding, for the lack of a better word.

Mr Mabilo called for a point of order and said that a member of the board cannot cast suspicion on the Committee. The board cannot subscribe the Committee on how to interact with their presentation.
 
The Chairperson said that that comment has to be withdrawn. That is not how to interact with the presentation. Members are public representatives. They take decisions on behalf of the people out there. The board cannot come there and cast suspicions. There was another day when a member of SAWS had to be called to order. The conduct of board members in meetings says a lot about what they do when they are not in Parliament. Comments and view expressed by members cannot be appealed, unless a board member wants to undermine Parliament – but there is a price to be paid in doing that. The least the board can do is express humility because they are using money of Parliament.

After saying that the board was expected to stay for the annual report presentation Ms Mngemezulu said some of the board members have requested to leave early. The Chairperson said that those who have requested to leave early are allowed to leave early.

The meeting was adjourned for a short lunch.

After the break the Chairperson expressed his dismay to the Committee that two members of the board still did not attend the meeting on that day. Out of the seven members expected there were only five board members present. The Chairperson also had a discussion during the break that left him extremely worried as it shows complete refusal to listen and leaves one thinking of an incorrigible situation.

He handed over to the Chairperson, Ms Mngomezulu who thanked the Committee and said that it was a clean audit, but as mentioned it did not go so well. She gave over to the CEO to do the presentation.

Mr Lengoasa said 84% of their targets were achieved. 10% were not achieved and 6% were partially achieved. In the strategic goal of the provision of products and services a marketing plan was supposed to be developed and it has been delayed which has an impact on other targets such as the establishments of partnerships for products and services. The strategic goal to position SAWS as an employer of choice has been only partially achieved. Another goal that was only partially achieved was the overall stakeholder satisfaction rating expressed as a percentage.

Mr Lengoasa handed over to the Acting CFO and apologised in advance that there were two additional slides included in the presentation that was not included in the presentation that was sent out. Misstatements in the annual financial statements were found by the AG. Adjustments had to be made. One of the findings was lack of training for personnel in key financial positions and SAWS has responded to this by sending people to courses and filling the vacancy of a Financial Accountant in June. Irregular expenditure is around R3 million and is broken down into two parts: a payment of around R800 000 that was made to a legal firm to defend the organisation from accusations from the former CEO and to get an opinion on the bonuses being paid to senior management as there was a dispute between senior management and the board.  

The Chairperson interrupted and said that the explanation by the board was that the reason beyond the termination of the former CEO’s contract was to avoid exactly this.

Ms Mngomezulu said that they received a letter stating her intention to litigate which gave them time to respond.

The Chairperson asked if the response cost R400 000.

Ms Mngomezulu answered that she thought so, yes. The rest of the money was paid to het a legal opinion on the varying directives on the bonuses from the board who wanted to pay up to 35% and the Minister, who wanted to lower it to 10%.
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The Chairperson said more information on that matter was needed. He apologised for interruption, but said that even senior council do not ask that much to appear in court per day.

Mr Gumenge said that the second part of the irregular expenditure occurred when a Senior Manager was suspended. The initial budget for that was R400 000 – but then it took longer to resolve the case and it ended up to cost around R1.8 million. National Treasury deemed the amount above R500 000 to be irregular expenditure. Unfortunately the people who initiated the case are no longer working at SAWS.

The Chairperson asked who the Senior Manager was and what the issue was.

Mr Lengoasa answered said it is an ongoing matter and it was a Senior Manager in Information and Communications Technology (ICT). There was a disciplinary process initiated over period of time. In the end management took the decision to close the disciplinary process and to initiate a new process. The Senior Manager took the matter to the labour court where he lost, but was allowed to appeal. He was given a week to submit heads of argument for the appeal. The matter was again heard in the labour court. SAWS had to pay for legal counsel every time they had to appear in court. Proper procedures were not followed. A new Senior Manager was appointed since.

The Chairperson asked if the legal budget was set at R400 000.

Mr Gumenge said that it was the budget for that case, but that it was exceeded. In order to keep something similar from happening SAWS have advertised to source their own legal panel and they updated their supply chain management policy to include new regulations in terms of deviations. A work shop is being organised for all staff who work with the budget so that they can be trained on Treasury regulations.

Mainly due to an increase in government grant SAWS has had an 18% increase in revenue.

The Chairperson thanked the CFO and said the Committee wants a detailed report on the spending of the amount on the legal matter because the CEO’s contract termination was not meant to go the legal route.

Mr Mabilo said that they knew SAWS had an unqualified report that the report has emphasis on two aspects. One was the aspect on internal controls and failure to comply. What are the reasons for not complying? Give us an explanation why you did not achieve your targets? According to Mr Mabilo there was no quality assurance of their reports as it contains spelling errors. Why was there such a steep increase in liabilities?  Why ask for donations and then not spend that money. What are implications of not spending? Can you quantify you donations, is it international donations?  Do we have a footprint of property in all nine provinces? Can SAWS supply the Committee with a supplier list? Are we empowering black people? Lastly he observed that the non-current liabilities have also increased.

Mr Hadebe said that the presentation covered what he wanted to ask, especially if there is a dashboard coming. Does the R42 million that Treasury was asked to ring-fence include unspent donor funding?

Ms Kekana said SAWS submitted a financial statement to the AG with material misstatements. Why has that not been corrected by SAWS. Do they have internal controls?

Mr Makhubele raised the following:
On p96, item 35, that said contracts were awarded to bidders that did not submit a declaration on whether they were employed by the state or connected to people employed by the state. Have you found that there are people afflicted by conflict of interest in the organisation?  
On p97 it said that management did not adequately monitor the entity’s compliance with laws and regulations. Is there a dedicated unit or high level personnel to ensure no re-occurrence of that?
On the same page information on the forensic investigation was not shared.  The Committee need that information when the process is concluded.
Lastly has SAWS in the recent past engaged with KPMG?

Mr Gumenge answered the increase in liabilities was in line with increase in revenue and an increase in government grant. SAWS are spending more on repairs and maintenance on the upper air observation network. The unspent donor funds were received from the Limpopo Agricultural Department towards end of the last financial year. Around R4 million were also received from the Rain for Africa project from the Dutch Government. Those funds will be spent in the coming financial year. The ring-fenced funds include donor funds. SAWS have infrastructure in all provinces.

Mr Gumenge answered that SAWS will provide a suppliers list in the next meeting. Material misstatements were not picked up my management mostly because the Financial Accountant resigned.  SAWS do not have dealings with KPMG.

The Chairperson reminded the CFO about the question on compliance.

He answered that SAWS have a compliance unit and that the supply chain management officer has recently resigned. SAWS are looking at having a division for monitoring and evaluation.

Mr Lengoasa answered about non contracted suppliers that SAWS need uninterrupted power supply to operate their radar and that is their problem with small suppliers.  Also small and medium enterprises (SMME’s) want to be paid in advance for diesel.

The Chairperson asked how much prepayments are.

Mr Gumenge answered around R400 000.

Mr Lengoasa answered that SAWS have buildings in Garsfontein, Bethlehem and Calvinia and three non-operational aircraft. SAWS now have the opportunity to acquire buildings that were custom build for them in various parts of the country such as in Springbok and De Aar. Municipalities have little money to maintain those buildings and SAWS are entering into negotiations. There is 15 radar units across the country. He answered that the board took the resolution to continue with the forensic investigation on the radar.

The Chairperson asked what the cost of radar is.

Mr Lengoasa answered that it was in the order of R220 million for the radar itself while the total project cost is around R280 million. The radar has a 25 year lifespan. There is 15 years left on the current radar.

The Chairperson asked when the project started.

Mr Lengoasa said it was in 2008.   

The Chairperson asked what the concern for the forensic investigation was. Was it the process or what?

Mr Lengoasa said it was the process, the project the project management. Once a project is completed the necessary steps will be followed.

Mr Lengoasa said there was a question about non-disclosure about persons who has benefitted from declarations of SAWS. Mr Gumenge said they are following up with the people who have made such declarations, but that he does not have that information about who that people was, now.

Mr Mabilo said he needs to know if property is disposed of to the value it is or if discounts are given to members.  Are local people involved in the manufacture of radar?

The Chairperson asked if the disposal of assets can be linked in when answering the question.

Mr Gumenge answered that the proceeds of the disposal of assets are on slide 25. It amounted to R83 658 and related to computer equipment that was not useful anymore. There is a team going around the country to do asset verification to and if un-useful items are found it goes through a disposal committee. The committee was a part of the supply chain policy.

Mr Lengoasa wanted to clarify about the radar. He has gone around the country. There is new radar, acquired in 2008 as well as old MR35 Russian radar and with the radar there is highly specialized materials, including that which is used to calibrate. The team that is going around the country is compiling an inventory of that which needs to be disposed of. At the end of this financial year there will be a different figure.

The Chairperson said that brought SAWS and the Committee to end of discussion. The impact of board decision on the matter of the CEO is felt now, but the new CEO gives impression that he knows his story. Next time we do not want to see regression, but progress. The Committee is worried about the irregular expenditure and wants to get details about that as well as on the senior IT manager. That is two separate submissions that are expected.

The Committee will get a sense about where things are going with the second and third quarter reports.  The Chairperson condoned the board member for giving the Committee attitude as it seems he does not appreciate the Committee’s role. Whatever the Committee do they do on behalf of country. When called to order, one must accept. The chairperson of the board must perhaps call a meeting and explain the institution and how it must be treated to members.

The meeting was adjourned.