Department of the Premier Overpayments & Under-Expenditure; Provincial Forensic Services Investigations

Meeting report

Briefing by the Western Cape Government: Erroneous Payments

Dr Harry Malila, Director-General of the Western Cape Government, briefed the Committee on erroneous overpayments made to provincial administration employees.

Dr Malila explained that the erroneous overpayments had occurred due to service terminations such as resignations and deceased employees.

When an employee passes away between the first and fourteenth day of the month, the salary would still be stopped on PERSAL. When death occurred between the fifteenth and month end, recouping overpayments became ostensibly more difficult.

Appropriate measures had been implemented, though managing terminations such as resignations was easier.

Total expenditure by the Department of the Premier totalled R1.7 billion. The final appropriation stood at R1.745 billion. The Department had underspent by R42 million. This was still below the two percent margin.

Briefing by the Provincial Forensic Services

Mr Ruthven Janse van Rensburg, Chief Director, Forensic Services, Department of the Premier, briefed the Committee on the ongoing forensic investigations within the provincial administration.

For the two quarters under review, 24 new allegations had been received, of which 14 had been finalised. A total of 27 investigations are in progress. Forensic Services followed a moving target. The outcomes of these investigations either pointed towards institutional risks such as non-compliance or criminal activities such as fraud, corruption and malfeasance. There were three investigations with no adverse findings as outcomes. A total of 13 were referred for disciplinary action. Five of the 14 finalised cases had warranted a criminal investigation by the South African Police Services.

See presentations for further details

Discussion

On people management issues, Ms M Maseko (DA) asked for more clarity on the employee engagement tool, particularly the difference between the current survey and previous ones. She also referred to the method previously used by the Department.

She noted that instances of erroneous payments had been flagged for the past three to four years and that all departments had referred the Committee to the Department for clarification.

Mr I Sileku (DA) touched on the erroneous payments. He stated that, when it comes to budgets, the ideal is to spend 100% of it.

Mr Sileku recalled Dr Malila's comments about being hamstrung by current policy prescripts, and asked what the accepted norms were for underspending. He further honed in on whether the Department had attended to the impediments faced by the Children’s Commissioner, and whether these had been resolved.

Mr Sileku’s final question pertained to the progress made by the Department to fill vacancies in the Legal Services Unit.

Mr A van der Westhuizen (DA) recalled that he had previously received several extra payments as well. He eventually received a letter of demand, without any letterhead/logo. It was purportedly sent by the provincial parliament. He had ignored repeated letters of demand, but made arrangements with the relevant officials directly and the matter resolved itself.

Mr van der Westhuizen further noted that the provincial administration had thousands of workers in its employ, deployed to various workstations.

He also asked what other mechanisms had been implemented to mitigate the over-expenditure risk.

He said that it seemed as if the one hand did not know what the other hand was doing. That experience had taught him that the whole process relied on a person’s honesty and financial situation.

The Chairperson said that the DG had been called to account, as erroneous payments continued to be flagged.

The Committee, he added, also needed information on other provincial departments, since the Department acted as the human resources focal point for the entire provincial administration.

The Chairperson also wanted to ascertain whether the money could be recouped. He requested that the DG focus only on the “living” and leave the “dead". In the same vein, he also asked whether the DG could quote any examples of erroneous payments.

Responses

The Director-General said that he understood the concerns that the Committee had raised. He informed Members that each department had its own debt management policy. It was further stated that, when overpayments occurred, the respective debt management policies within the provincial departments would kick in.

He recalled a recent example where someone had resigned from the provincial administration and had taken up a position at a local government.

The debt had been outstanding for a couple of years. After several non-payments, the provincial administration indicated it would undertake legal action to recoup the costs. In other instances, departments also had the option to recoup via the Government Pension Employment Fund.

There used to be a “Help Yourself” policy. However, this has been rescinded. This meant that departments could recoup these funds directly from the GPEF, before gratuities were paid out to retirees/resignations, etc.

The new policy indicated that all requests to settle debt had to go via the debt management nodal points located within the respective departments. Other measures included actions such as flagging Persal as well as bank reversals.

He further explained that the provincial administration wanted to use a system that had baseline information. The current set of values had emanated from a Barrett study and was made available online for employees to access. The information was useful and contributed to change management within the provincial administration.

On over-payments, he said that Treasury set a norm of two percent. The AG set the same norm. The provincial administration continued to keep overpayments below the norm.

On the Children’s Commissioner, Dr Malila stated that the entity faced challenges filling its staff complement. It managed to secure accommodation in the old Western Cape Gambling Board building, on Orange Street. There had been issues with the previous tenants in the building.

In reply to Mr van der Westhuizen's question, the DG threw cold water on the assertion that over-payments constituted a significant risk and seemed rampant. The provincial administration had appropriate policies in place that significantly mitigated the risk. The DG deemed the risk as acceptable.

Mr Nico Boshoff, DDG, Legal Services, Department of the Premier, said that an offer was about to be made to fill a Director-level position. Shortlisting for the vacant legal advisor positions was about to commence with another temporary position soon to be filled.

Follow-up comments by Members

The Chairperson said overpayments continued to be a reoccurring theme in the Western Cape provincial administration, yet the DG had indicated major success with recouping large sums. The fact that the administration had recouped large sums indicated success. These success stories, he stated, had to be celebrated and publicised for a sceptical South African populace.

The Chairperson proposed that an additional column be added to the report. The column will indicate how much money has been recouped by the provincial administration.

Responses by the Department

The Chief Financial Officer of the Department explained that culpability for wasteless and fruitless expenditure rested on whether reasonable care had been taken by an accounting officer. He made an example of an accounting officer having been made aware of a colleague’s death and not reporting that fact.

In this instance, the Accounting Officer had not taken reasonable care, as opposed to overpayments that occurred due to an official on probation being made permanent. PERSAL paid salaries on the 15th. This meant that the Department had overpaid that newly permanently employed employee by 15 days. In such an eventuality, flaws are inherent. As such, the relevant Accounting Officer could not be held responsible.

The CFO added that reasonable care had been undertaken to enforce policies, as each CFO remained accountable for their own respective debts and that the quantum should also be taken into account and not just the threshold.

Ms Maseko noted the comments and stated that the risk remained. She called for enhanced training and coordination as the debt continued to accumulate.

Briefing by the Department of the Premier: Forensic Investigations

Mr Janse van Rensburg, Forensic Services, said that investigation processes commenced once Forensic Services received the relevant information from the respective departments.

Forensic Services also had access to electronic data. Findings submitted were based on the data extracted from these various methods.

Mr Janse van Rensburg also added that sometimes implicated persons might be out of the system and that circumstances were on a case-by-case basis.

On police investigations, the official informed the Members that when the police had concluded their investigations, forensic services would normally request information on how the South African Police Service (SAPS) had arrived at that decision.

He also referred Members to Section 106, which dealt with the recommendations in the local government sphere.

Mr Janse van Rensburg added that when an employee jumped ship and resigned, his/her PERSAL number would normally be tagged. Should a person then reapply for a position in the public sector, the system would pick it up.

The challenge that forensic services experienced related to the local government sphere. The local government sphere was not governed by PERSAL. The Public Service Commission (PSC), in conjunction with the Department of Public Service and Administration (DPSA), undertook legislation to plug these loopholes.

Part of the recruitment and selection process across government’s recruitment process included contactable references.

The information received from whistleblowers remained untested until it had been investigated and found true. He deferred to one of the slides that reflected on the investigation outcomes.

He said that if an employee had been part of a process, the relevant head of department would be part of that process.

There had been cases where allegations had been levelled against quite senior officials. In these circumstances, the delegation powers they enjoyed had been rescinded. The official emphasised that each case had its own merits. It remained on a case-by-case basis and included a mixed bag.

He added that Forensic Services’ mandate was to investigate instances of economic crimes. It had no discretion whatsoever.

Ms Wendy Hansby, Forensic Services, asked whether it would be appropriate to make a proposal. She proposed that the mandate be distributed to Members.

She further explained that, of the five cases under SAPS investigation, detailed on page 10, results could only be expected in five years. Ms Hansby indicated that Members could be furnished with information on all finalised SAPS investigations.

The Chairperson recalled that 29 cases had been subjected to investigations. Of these 29 investigations, how many had been concluded?

Mr Janse van Rensburg replied that of the 29 cases under investigation. None had yet been finalised by the second quarter. This information is reflected on pages 26-27.

He further explained that, as of 12 February 2023, 12 cases had been finalised and that it remained a moving target. Forensic services also completed about seven investigations per quarter, and 12 investigations have been finalised since 01 October 2022. Some of these cases have been referred to SAPS for further investigation. Ms Hansby added that the five cases listed emanated from quarters one and two of 2022 and that Forensic Services currently had 62 cases to follow up on.

Questions

Ms Maseko asked whether the particulars about the 62 cases could be provided to the Committee. She requested a detailed breakdown per department, and expressed surprise at the large number of outstanding SAPS criminal cases. She asked for a diagnosis of what the problem could be, and stated that the Committee might be able to assist with follow-ups with the SAPS.

The Chairperson echoed Ms Maseko's comments about following up with the SAPS. He thanked Forensic Services in advance for sending the mandate. He requested that the Committee also be apprised of any guilty verdicts, as this would show results.

Committee Resolutions

The Chairperson recalled that the Forensic Services promised to furnish the Committee with the mandate and the 62 cases being broken down per government department as well as the relevant particulars.

Ms Maseko added that the Committee had requested Forensic Services to implement measures or systems that alerted human resources/finance about resignations and/or overpayments, etc.

The Committee should also call SAPS and other departments to discuss matters emanating from the recommendations.

She recalled that officials had mentioned something about quotations and three signatures. She wanted to ascertain how many of these actually evolved into fraud cases. She urged for specifics.

Overpayments continued to be highlighted as a risk by the Auditor-General. “We get all the information they have”, she added.

Ms Maseko further asked that the Committee be provided with the respective debt policies of the provincial departments. These departments should also indicate whether their debt recollection processes occurred in-house or externally.

The Chairperson added that the overpayment amount seemed huge, and recalled the DG’s comment that monies had been recovered from that total amount. He recommended that departments be encouraged to report on how many or how much had been recouped.

Mr van der Westhuizen asked that the Committee request the Standing Operations Procedure manual and the letter templates sent out to debtors.

The Chairperson replied that the DG had spoken about debt management policies.

Mr van der Westhuizen said that it concerned not only overpayments but other discrepancies as well.

Update on the South African Association of Public Accounts Committees (SAAPAC)

The Chairperson said that he had attended a SAAPAC meeting. At that SAAPAC Executive Committee meeting, the audit reports from 2017-2019 could not be provided. The audit reports for 2019 up to the present moment would be smooth sailing. The report would be ready by the end of March 2023.

The Chairperson thanked Members for attending the meeting.

The meeting was adjourned.