Virtual oversight report to 11 South African Missions abroad; with Deputy Minister

Meeting report

Mr T Mpanza (ANC) announced that the Chairperson was experiencing internet connection issues and that she would be late. He thanked and welcomed the Members and officials from the Department of International Relations and Cooperation (DIRCO) that were present. This included Deputy Minister Alvin Botes, and Ms Hlengiwe Bhengu, Chief Director: Finance.  

Once the Chairperson was able to join the meeting she explained what her internet connection issues were and asked the Committee Secretary, Mr Lubabalo Sigwela, to share the meeting agenda. She explained that the meeting will focus on the consideration of the Committee Oversight Report and then requested that everyone else should leave afterwards so that the Portfolio Committee can consider its minutes as they were confidential.

Mr Sigwela apologised for the absence of the Minister Dr Naledi Pandor; Deputy Minister Mashego Dlamini and the Acting Director-General, Ms Nonceba Losi Tutu. He pointed out that Ms Hlengiwe Bhengu would be representing the Acting Director-General.

Report of the Portfolio Committee on International Relations and Cooperation on conducting a Virtual Oversight visit on South Africa’s cash Missions and Missions with vacant land parcels and state-owned properties abroad

 The Chairperson took the Members through the different parts of the report. She firstly pointed out that this was the first time a virtual oversight was conducted due to COVID-19 restrictions. It was a verification process necessitated by the qualified audit findings of the Auditor-General on the Department for the 2018/19 and 2019/20 financial years. In 2018/19 the Department was qualified on cash and cash equivalence and on the completeness of the asset register. The Department was also qualified in the 2019/20 financial year on unexplained receivables to the amount of R188 million. The virtual oversight covered South African Missions in Funchal, Teheran, Iran, Angola, Namibia, Sudan, Cuba, Brazil, Eswatini, Malawi, Switzerland, Portugal and France. Some properties, such as Eswatini, Namibia and Brazil, were ear-marked for accelerated maintenance in repairs for state use in 2021. The other parts of the report were about the methodology of the virtual oversight as necessitated by the pandemic, the mandates of the Department and Portfolio structure for the report, the objectives of the virtual oversight visit, the key questions for the oversight, property portfolio of the Department which it has reported to owning 14 land parcels and having 20 vacant unused offices and residences abroad. The penultimate parts reflected on oversight meetings with South African Missions in Teheran, Iran and all the listed Missions. Each Mission report has its own findings and responses. The last parts were on the Committee’s common findings which were similar to the Missions and the draft recommendations which focus on the roadmap recommended by the Committee to the Department.

The Chairperson asked Ms Lineo Mosala, the Committee Content Advisor, to deal with the findings, the recommendations of the Committee and the conclusion of the report.

Common findings

Ms Mosala said that the state of decay and dilapidation of some of the state-owned properties abroad, has been left unattended over time and this situation has created diplomatic embarrassments because some of these properties and land parcels were donations made to the Government of South Africa before and after 1994. It was found by the Committee that if the Department does not develop a property management structure that is implementable, the problems will persist.

One of the main cost drivers of the Department’s budget is the renting of property for office and residential purposes by Missions abroad as some Missions are renting properties in countries where South Africa owns vacant land and properties. Another contributing factor was the money spent on cleaning supplies, security and the upkeep of these vacant properties and land parcels.

It was observed that the Department developed a property management strategy in 2017, the Public- Private Participation (PPP) model, which was specifically targeted for a pilot project in New York that failed because it was not effective for the scale of vacant land parcels and state-owned properties in Missions abroad. The current parliamentary oversight model has created serious oversight issues for the Committee because it has not allowed it to conduct oversight abroad in the hotspots. It was also observed that the Department needs a property management strategy that is fit for its purpose and backed by a sound capital budget as well as in-house qualified personnel to manage and monitor state-owned properties abroad.

The Foreign Service Act 2019 allows the Department to assume custodianship of state-owned properties and vacant land parcels under the responsibility of 125 Missions abroad. The Chief Director of Property Management has inspected the state of decay of these properties, however, there is no evidence that the recommendations aimed at rescuing the situation have been followed through. Her name has been associated with non-delivery on recommendations made by the various Missions in relation to vacant property and land parcels.

The Committee noted that there were still challenges regarding the asset register for movable assets.

The title for the official residence in Teheran has not been secured since 1994 when the democratic Government took over from the apartheid regime.

State-owned properties need to be assessed by a professional to decide whether to renovate, sell as a better commodity or to rent them out or sell them as is.

Conclusion

As a result of the neglect of respective mandates by both the Department and the Department of Public Works, there has been a resultant fruitless and wasteful expenditure around the upkeep of the vacant state-owned properties. Although there has been several visits and communication between the Missions, there has not been any evidence of a deliberate action to address the challenges with these properties.

The Department neglected its fiduciary duty to either maintain or seek authority for the disposal of unoccupied state-owned properties.

Recommendations

Ms Mosala highlighted that, as usual, a progress report on responses from the Department will be expected within three months of the adoption of this report by the National Assembly.

The recommendations were as follows:

-The Minister should consider separating the property management business unit from the Finance branch, capacitating the new unit with people qualified in the built environment.

-The Minister should develop a property management strategy focusing on effectively managing the huge portfolio of state-owned land parcels and properties abroad in line with the Foreign Service Act 2019. This strategy should also have a targeted budget and timeframes for addressing the challenges presented.

-The Minister should also consider developing a comprehensive report on the number of rented properties for South African Missions abroad, how much each is paying per annum, and a turnaround strategy to curb the payment of exorbitant rental costs.

-The non-delivery or non-implementation of the recommendations by the Chief Director should be investigated.

-All state-owned properties and land parcels should have title deeds to guarantee exclusive ownership by the Republic.

-The Department should acquire land or build on the vacant land instead of renting.

The Committee also had recommendations for the National Assembly, which were for it to recognise the dedication and innovation to find possible means to continue with oversight, including virtual oversight, to ensure service delivery to the people of South Africa. It should also consider exploring the virtual oversight model which could be embraced to develop a hybrid oversight methodology workable even in the middle of a pandemic.

The Chairperson called for questions.

Discussion

Mr B Nkosi (ANC) said that the report was comprehensive and informative. He suggested that the Department should use full names first and then subsequently use acronyms in the report. He said that the regulations contained in the Foreign Service Act could delay the implementation of the recommendations because it could take a whole year to bring the regulations into operation. He expressed concern about all the Missions that were visited through this virtual process because they experienced serious hardships, but the situation was particularly acute in Cuba as there is broken and old furniture and beds that are not fit for human use. Therefore, it required urgent attention.

Ms T Msane (EFF) referred to a page in the report which stated that an internal audit performed proactive reviews in the form of computer assisted auditing techniques to ensure the migration of assets from excel to net trace was done effectively. However, she said that this statement is not entirely correct because the Committee has been requesting for immovable and movable asset registers which have not been seen.  The migration is not effective as some of the Missions have still not migrated. She also noted that the Foreign Service Act should have been enforced already by the Department. It was reported that the Department spends R575 million per year on leases in countries where it does not own properties. It is also important for the Department to highlight the amount spent on leases in countries where it owns properties. She also referred to the ineffective New York pilot project that was adopted by the Department and the title deed for Iran and how the Committee has been waiting for an update for two months. Lastly, she asked who the Department was leasing the property from in Luanda.

Mr Mpanza said that his views were covered by his colleagues but added two more points. Firstly, he stated that Members are in support of the recommendations but the issues about the property management must be elevated and treated with urgency. He also noted that at the last engagement with the Department and the Deputy Minister, the Department indicated that it was in the process of restructuring the organogram to solve the issues of human resources and the organisational structure. His view was that the recommendation made about separating the property management business unit from the Finance branch, should not wait for this process. The Department must consider this as a priority. Secondly, he agreed with Mr Nkosi and Ms Msane on the issue of the Foreign Service Act and that the issues that are about property must be dealt with urgently.

Mr M Chetty (DA) said that he will save his comments for the Portfolio Committee meeting, but he reflected on three parts that had been covered. He asked whether the representatives from France were given the documents that they were unaware of when the Committee cross-questioned them. The Committee had previously requested the Department to send a report for the Paris parking bay costs, the leases as well as the title deeds and had given it two weeks to do so. He asked if the Department had submitted this report. His last question was where the money to fund the controversial New York pilot project came from because the Committee was told that it came from other departments and other projects.

He also said that the Missions are dilapidated yet the money that was allocated for them to be fixed was removed and transferred for the New York pilot project. The Committee was told that the money for the Missions was not used and that is the reason why it was transferred for the New York pilot project. However, he disputed this reasoning provided by the officials of the Department and said that the money was transferred because there were other under-handed shenanigans.

He wanted to make it clear that the Department’s report has confirmed that the New York pilot project failed. It failed from its inception. This means that all the time, money and effort put into this project was a waste. Till this day, nothing has been said by the Department about the New York pilot project.

The Chairperson said that the report would be edited in accordance with the suggestions and questions raised. She then asked if the Members agreed for the report to be adopted.

Ms B Swarts (ANC) moved for the adoption of the report with the amendments.

Mr D Moela (ANC) seconded.

The Chairperson stated that the report will be amended and circulated to all the Members. She also asked for everyone, except for the Members of the Portfolio Committee, to leave the meeting because the minutes to be discussed next were confidential. 

The meeting was adjourned.