Lifestyle Audit Report of the Western Cape Cabinet; PSC on latest activities in province

Meeting report

The chairperson welcomed the Committee and delegation Members. The rules of engagement were explained, followed thereafter by introductions and apologies.

Nexus Forensic Services: Lifestyle Audits on MECs and their spouses

Adv Francois Labuschagne, Director: Nexus Forensic Services, stated that Nexus had been mandated to perform comprehensive lifestyle audits and analysis of business interests of the 11 Members of the Executive Council (MECs) (Cabinet) and their spouses/life partners. The period under investigation was from 1 June 2017 to 31 May 2019.

The results of the lifestyle audits had to indicate whether:
The individual's lifestyle commensurate with his/her income;
Any income other than the individual's salary is received, and if so, whether this could cause a possible conflict in the capacity as a Member of the Executive; and
Any interest held by the Member of the Executive or his/her spouse/life partner represents a potential conflict or may interfere with his/her duties as a Member of the Executive.

Methodology:
Consent forms to Members and their spouses/life partners.
Questionnaire to Members and their spouses/life partners, together with supporting documentation from relevant sources, including banking records, ministerial declarations, etc.
Conducted Business Intelligence Searches (BIS).
Conducted net-worth analysis of each individual.
Clarifying questions to Members and their spouses/life partners.
Interviews, where necessary.

Conclusion
All of MECs and their spouses/life partners appear to be living within their means.
No suspicious transactions were identified for which satisfactory clarification could not be provided.
Other income received by MEC/spouse pose no possible conflict in their capacity as MEC.
Business interests held by any MEC or their spouse/life partner during the period under investigation (1 June 2017- 31 May 2019) pose no possible conflict or interference in their capacity as MEC.
Financial interest posed no possible conflict in their capacity as MEC.

It was recommended the MECs should be reminded of the importance to declare all interests in business entities, including interests in deregistered/dormant entities (those entities from which they did not resign).

Discussion
 
Mr C Dugmore (ANC) stated that the lifestyle audit covered the period of 1 June 2017 to 31 May 2019 - essentially the audit was one done on the previous Cabinet. As such, he wanted to know whether or not it had included the new Members who had been appointed recently. He wanted to know when the decision had been taken by Cabinet itself to do the lifestyle audits of the MECs.  Secondly, he asked for a list to be supplied with the names of the MECs who had been audited and what the process was with regard to the current Cabinet and procurement of the Nexus services. Lastly, he asked if a performance agreement between the Provincial Cabinet and Nexus, including the costs for the services, could be provided.  

Ms W Philander (DA) indicated that slide 12 stated that MECS and their partners were living within their means. She wanted further information to be supplied as to how that was determined, including the criteria used.

Mr R Allen (DA) stated that he would firstly like to commend the Premier and entire Cabinet for submitting themselves to the process which showed that they were committed to accountability and transparency within their government and their position. He wanted to know whether the Premier would be redoing the audit for the period after 1 June at the end of his term, which would then focus on the current Cabinet as well. Lastly, he asked if a percentage indicator could be supplied as to how many MECs and their spouses were called for clarifying questions.

Mr Alan Winde, Premier of the Western Cape, responded that the lifestyle audits had been his own decision and part of his manifesto which he had announced straight after being elected. The two-year period served as the baseline in which to work from. They had to give a period in which they could tell the auditors to go and look at the lifestyles of the MECs – which meant comparing and analysing their lifestyle to that of their income and looking at if there was anything suspicious with regard to that. Regarding the tender, it had been his choice to have an independent organisation versus a state organisation. The Auditor-General had oversight over the Departments and Offices already; the Public Service Commission played a role in government and the Public Protector was busy with different investigations. The usage of an independent organisation immediately avoided a conflict of interest.

The period of review is two years which gave a baseline, however, at the end of an MEC’s term of office or if any MEC left office before the end of their term, then a lifestyle audit on that individual would be done again in order to make sure that everything was in order and nothing corrupt had happened while that individual had a Member of the Western Cape Executive Council.

Mr Harry Malila, Director-General of the Western Cape, responded that the tender had been part of the normal supply chain process and had been open for anyone to apply. They then appointed Nexus Forensic Audit Services. A copy of the service level agreement would be supplied to the Committee, including a copy of the bid document which would reveal full disclosure of the entire procurement/tender question; whilst also providing the Committee with an exact cost for the service.

Adv Labuschagne responded that the way in which they determined how people lived within their means was that they looked at the income, sources of assets, revenue generated by the individual and the expenditure and lifestyle of the individual. Clarifying questions had been asked to approximately 90% of the MECs and their spouses. It had been done in the form of email and telephonic correspondence, with them holding a lengthy interview with one of the MECs.

The Chairperson asked if the investigations had included property within the country and not only the Western Cape; as well as trusts and property owned by MEC’s children, family and immediate spouse.

Adv Labuschagne stated that obviously if an MEC or their spouse had been a trustee of a trust and/or a beneficiary of the trust they would had picked it up. Regarding the dormant entities, he confirmed that none of them had done any business with any organ of state.

Mr Dugmore wanted to know if Nexus would be doing the end of office term audit and whether if that second audit had been included as part of their initial contract.

Premier Winde responded that the contract was the current investigation period which had passed. He emphasised that he had not been able to receive the full detailed documents, however the documents had been provided and locked away in their safe. The keeping of the documentation received by Nexus meant that when an investigation was to be done again, the bulk of the documentation and information would be available already. That would also help for cases where a whistleblower came forward and the documents could be utilised.

He emphasised that Nexus was also a body of integrity which linked to Member’s declarations when they declared themselves to the Constitution and the legislature.

Mr Malila explained that he ran with all the administrative processes as secretary of Cabinet. Those responsibilities were set out by legislation. It included receiving all the reports, as the Premier could not, as he had been subject to the audit himself.

Adv Labuschagne stated that the full report fell under the provision of the Protection of Personal Information (POPI) Act and the privacy clauses. Section 14 of the Constitution was applicable during the investigation and, and when forms of consent had been signed, they had been subject to the provisions of the Act and in terms of section 14 of the Constitution.

Public Service Commission: Six Month Update to the Provincial Parliament 2020/21

Mr Leonardo Goosen, Public Service Commissioner, Western Cape, took Members through the presentation which provided a six-month update on investigations conducted by the Commission in province.

The presentation addressed grievance management cases finalised in the various Western Cape government departments and the response of the departments to these cases.

Nature of cases and observations:  
Filling of posts: department requests officials to act in positions only to advertise posts with academic qualifications higher than what the acting person possesses.
Leave applications for study purposes: communication on the policy provisions are to be enhanced. The issue of what constitutes a final examination paper is often misinterpreted.
Temporary incapacity leave: applicants are incurring significant debt due to the inefficient processes between the department and the Health Risk Manager.

Nature of investigations:
Tender irregularities involving officials from Transport and Public Works.
Unethical behavior in terms of leave forms submitted; arrangement for working hours.
Service standards at health facilities.
Victimisation and unhealthy interpersonal relationships.
Recruitment and contract extension irregularities.

Lessons from Investigations
School Governing Body environment is being “left alone” by the Western Cape Education Department – recruitment practices are unregulated or monitored; level of oversight over money matters is insufficient.
The law must be strictly applied in the contracting of officials.
Leave management is susceptible to abuse. Supervisors are acting outside of policy.

What needs Improving in departments:
Regular feedback from departments lack substantive progress – the PSC is not confident that cases are being vigorously pursued.
Cases are not being properly managed or coordinated in departments. Investigation reports exist at different points in the system without the knowledge and control centrally.
The use of the Provincial Forensic Services (PFS) by departments remains an internal capacity issue that has no bearing on the PSC’s need to obtain feedback directly from Departments. In other words, the PSC holds departments accountable for investigations and not the PFS.
Investigators must be formally assigned by the HOD; letter issued stating terms of reference, timeframe, and the supervisor also informed.
Senior manager needs to be assigned to coordinate, but also to have free rein in terms of accessing and supporting investigators directly.

The PSC finalised research into “An Assessment of the Western Cape Education Department’s Response to Emergency Repairs at Schools”. The objectives of the assessment were to:
Assess the effectiveness of the system dealing with emergency repairs;
Gain insight into the end-user experience of the system; and
Assess the effectiveness of the response by the Western Cape Education Department (WCED) as perceived by principals.

Methods, findings and recommendations: A survey was sent to 82 principals (both high and primary schools), across the eight educational districts, as well as in-depth interviews conducted with officials and principals. The key findings of the study indicated that not all principals are familiar with the WCED’s Standard Operating Procedures (SOP) for emergency maintenance in schools, and that the majority of principals need to be re-acquainted with the policy. There should be an objective set of criteria introduced to define what constitutes a pressing emergency. Such a distinction would separate routine maintenance requests from emergency repair requests. Almost half of the sampled principals indicated that some of the emergency repairs requested were as a result of maintenance not being done in the first place. The lack of maintenance means that buildings are left to deteriorate to the point of it becoming a safety hazard.

Findings: from the sample it was established that a large number of emergency repair requests were not responded to within the timeframe set out in the SOP, consequently the majority of repairs where therefore only initiated long after the period in which they should be. However, this excludes what the WCED and Department of Transport and Public Works (DTPW) refer to as ‘making safe’, which is an immediate action that is taken to ensure that the emergency hazard is neutralised.

Report’s main recommendations:  
-The definition of emergency repairs needs to be more detailed and a specific criteria needs to be communicated to principals. The risk professionals should be engaged to produce a workable nonprofessional’s assessment tool that allows for principals to objectively assess the emergency repair situation at their school.
-The stipulated timeframe to undertake site inspections should be adhered to, but most importantly, they should also be monitored for performance.
-There needs to be a specific and intentional role assigned to the principal during delivery of infrastructure. This role should include the ability of the principal to oversee the repair work, to interact with the contractor, to raise issues of concern with the project manager, and very importantly, to be able to finally express levels of satisfaction with the repair work that has a material impact as to whether the contractor is paid or not paid.
-For the sake of accountability, principals are to be informed of the repair specifications (details of work to be done and materials to be used) before work commences, as well as the full value of the repair contract.
\The WCED must have a system that guarantees first contact with principals once an emergency repair has been logged, irrespective of the nature, extent and severity of the repair required.

Financial Disclosure Framework:
All members of the Senior Management Service are required to disclose the particulars of all their registrable interests (e.g. companies and properties) to their respective Executive Authorities (EAs) by not later than 30 April each year.
EAs to submit copies to the PSC by not later than 31 May of each year.
The provisions of the PFMA, 1999, (as amended), read with the Treasury Regulations, compel departments to report on finalised financial misconduct cases to, amongst others, the PSC.

Message to legislature: the PSC is a resource in terms of its reports and analysis on governance matters pertaining to departments. The PSC is mindful of its obligation to report to the legislature on all activities and welcomes such opportunities. Concerns relating to the manner in which PSC reports are dealt with in legislature.

Discussion

Mr Dugmore said he wanted to make a firm proposal that the situation which happened in the Education Portfolio needed to be corrected. It was absolutely inexplicable as to why the Commissioner had not been invited to a meeting where a public issue around the extension of the HOD’s contract was being discussed; adding further that rumor had it that certain documentation which had been provided had not been shared with Members of that Committee.

He formally requested that they proposed a request for a joint meeting between the Committees where they could discuss and ask all the questions - they needed to ask around the issue of the extension of the HOD’s contract. Secondly, neither the Commissioner himself, nor his office, had been invited which he felt to be a serious issue. He was very concerned by the presentation received.  

He wanted to know if there was any mandate for the PSC to conduct lifestyle audits, including as to whether it had the capacity in order to do so. He was concerned at some of the reports that had been raised regarding School Governing Bodies and asked if a separate or more detailed report, which highlighted some of the issues and concerns, could be provided.

Mr P Marais (FF+) requested a direct investigation by the government departments regarding the state of repair – especially referring to schools, clinics, hospitals and whatever else fell under provincial governments.

Ms Philander asked for clarity regarding the complaints of the education department and not being invited to the engagement. She felt uncomfortable supporting Mr Dugmore’s proposal without having all the facts as to who had been there and who had been invited, etc. She proposed that the Chairperson took the matter up further with the Office of the Speaker, thereafter, reporting back to the Committee.

The Chairperson wanted to know as to what measures had been put in place to protect whistleblowers that were willing to disclose details of their identification.

Mr Goosen responded that the Commission did not have a mandate in respect of Members of the Executive Council as the mandate ineffectively lied with the Public Protector’s Office. Regarding capabilities, he affirmed that it would need support in terms of getting people to assist.

He affirmed that the PSC equally respectable to Public Protector in the sense that it not only provided oversight for constitutional bodies but also interfaced with departments and shared the sentiments that on the face of it, it had not constituted a conflict of interest – very often in its daily work, it interacted with Departments and made findings.

He stated that the PSC had commissioned a particular report in respect of school infrastructure. It would only become aware of challenges in a particular area if there were grievances or complaints. It was reported it to the National Hotline. He explained that there were a number of factors concerning School Governing Bodies, which would be forwarded to the Committee.

He explained that in terms of how departments interface, provided forensic services could be portrayed as a conflict of interest. The report regarding the lack of maintenance of schools would be provided to the Speaker’s Office and Committee. He explained that it was not to say that there had been no maintenance occurring but rather that the breakdown in communication between the Department of Public Works and Infrastructure and the WCED’s functions were a very difficult environment. In terms of building new schools, the challenge was that of the two department’s relationship completely breaking down. The PSC provided recommendations to the Department and the Department had responded with some feedback as to some things which could be within and others which were not within their role. Regarding whistleblowers, these concerns were raised anonymously.   

Members were asked if the adoption of the minutes and meeting resolutions could be dealt with in the next meeting.

Members agreed.

The meeting was adjourned.