Oversight reports & First Term Committee Programme: adoption

Meeting report

Draft first term Committee programme
The Chairperson reminded the Committee that it had been agreed that there would be meetings on the 9 February 2016 where the Auditor-General South Africa (AGSA) would brief the Committee. However, he had received an invitation to present at a conference for those two days. He was proposing that the briefing by AGSA on SA Xpress (SAX), the Department of Military Veterans (DMV) and the Post Office annual reports be moved to the 16 February 2016. 17 February would then be reserved for a briefing by the Minster of Justice and Correctional Services on the state of the Department of Correctional Services (DCS). The hearing with Passenger Rail Agency of South Africa (PRASA) had previously been adjourned as the Committee had found that responses from the entity were quite unsatisfactory. PRASA had not complied with the deadline given to it to submit the information.

He continued to take Members through the draft programme to 23 March 2016.

Mr V Smith (ANC) asked how the Committee wanted to engage with the Minister on 17 February 2016. Personally, he felt that the brief had to focus on specific areas, otherwise the Minister may deal with unnecessary issues. He proposed that the following topics be specifically raised with the Minister:

- The reliance of DCS on consultants and contractors
- The issue of the entire information and communications technology (ICT) plan of the DCS.
- A focus on human resources (HR) and the cooperation between senior management and the audit Committee of DCS and AGSA.
- An update on infrastructure projects by the DCS.

At the last hearing in December 2015, this Committee had raised the matter of DCS ignoring National Treasury (NT) advice. The DCS had then sent the Committee a letter where it had disputed the advice and raised the matter with NT. The letter given to members did not specify why NT’s findings against the DCS were being disputed. Mr Smith suggested that on 17 February; the Committee should allow NT to come and account for its advice to the DCS, since the DCS had not explained why it had gone ahead on that matter despite advice.

Mr C Ross (DA) supported the proposals by Mr Smith, which indeed would result in more meaningful recommendations from the Committee and improve its effectiveness in terms of its work overseeing public accounts.

Ms T Chiloane (ANC) said she supported the draft first term programme with the proposals by Mr Smith. However, she wanted to emphasis the importance of the attendance of meetings by department and entity officials, noting the challenges the Committee had had in its last encounter with PRASA. She wanted clarity whether the hearing on SAX’s Annual Report (AR) meant engagement with SAA leadership as well, or whether it would speak to SAX leadership only; there was potential for confusion and overlapping of matters.

The Chairperson agreed that he would entertain the suggestions by Mr Smith. A particular challenge with SCOPA was that at the time of the last meeting, parliamentary staff had been on strike.  In answer to Ms Chiloane, he noted that both SAX and SAA were entities of the Department of Public Enterprises (DPE). The Minister of Public Enterprises had sent a section 65 letter, which in terms of the Public Finance Management Act (PFMA) could be sent when an entity could not meet a deadline, and this letter was to the effect that SAA would not meet its legal deadline as the external auditors were having challenges in completing their work because of SAA’s poor state of financial records as a going concern. He asked what suggestions the Committee had in relation to the outstanding SAA documents.

Ms Chiloane asked why the Committee could not wait until SAA had submitted its documents, so that when called to the entire leadership from the department to SAA and SAX could all be available to account.

The Chairperson asked the Committee whether anyone knew whether SAX had moved over to being administered by NT or whether it remained under the DPE.

The Committee researcher replied that SAX was still under DPE.

Mr Ross said it was important for the Committee to establish whether the current bailouts in SAA had any bearing on SAX. On Ms Chiloane's point, he recommended notification to SAX that time was of the essence.

Mr Smith said the Committee needed to be careful as the reference point was the ARs. If the bailouts were within the AR then he agreed with Mr Ross however if they occurred outside this timeframe then he was not sure how they could be introduced into that hearing.

The Chairperson thought Ms Chiloane was saying it was possible to have a hearing with SAX, independent of SAA. 

The Committee Content Advisor said that it could be useful for the Committee to set timeframes for the establishment of an audit Committee by DCS, so that at a later engagement in the year this was something against which to measure the DCS performance.

The Chairperson asked if there were any other matters in regard to the Department of Military Veterans (DMV) and PRASA, in order to refine their briefs in a manner similar to that suggested by Mr Smith.

Mr N Booi (ANC) recalled that DMV owed the Committee a report.

The Chairperson replied that DMV had submitted a presentation to the Chairperson, which it had presented to another Committee and he asked the Committee staff to re-send that to Members.

Ms Chiloane reminded the Committee of the challenges it had in getting responses from PRASA. She did not see how PRASA would respond differently in the forthcoming interaction as the same people would probably be returning to the Committee. As proposed, the Committee would have to propose a timeframe for the conclusion of the internal investigations conclusion.
The Chairperson said that if members looked at the report of AGSA on PRASA, not all matters required intervention by the Special Investigating Unit (SIU). There were some concerns that required management intervention. The Committee had rejected the assertion that everything wrong at PRASA had been done by one individual.

The draft first term programme of the Committee was adopted with amendments.
 

Unauthorised expenditure requests: Consideration
The Chairperson said there were two requests for processing of unauthorised expenditure. Therefore the Committee would have to prioritize that work, in its draft annual programme, and call NT and the involved departments, The amounts were each between R2million to R3 million. The Committee had already had hearings with the Departments of Home Affairs (DHA) and Water and Sanitation (DWS) as well as Transport (DoT) respectively, on their unauthorised expenditure requests.    
He summarised that there had been agreement between NT and DHA, on DHA looking at a self-financing mechanism. When DHA made money which it normally paid over to the National Revenue Fund (NRF), any unauthorised expenditure requested by DHA would be funded from that money. However, senior management at NT had later reneged on that agreement saying that it would not work. Instead of calling the mechanism self-financing, the Management Committee (MANCO) had said it would be a direct-charge to the NRF. He asked if the Committee was satisfied with that proposal.

Mr Booi said that the recommendation by the MANCO was acceptable to him as it was senior management of NT that had backtracked and had not returned to explain to Parliament.
The Chairperson said the issue with NT was that it sent junior officials to Parliament whilst senior management remained behind. As a result discussions that led to resolutions ended up being questioned and halted.
Mr Ross pointed out that there was irregular and unauthorised expenditure of close to R700 million for the DHA. It did make its own money, which it paid to the fiscus, but he thought that it seemed a little harsh for the NRF to treat this own income as a reward to grant it a further tranche for unauthorised expenditure as a direct charge. He was not in agreement with that proposal. However, if he had misunderstood the position, then he would be pleased if the Chairperson could correct him.

The Chairperson explained what happened with the processing of an application for unauthorised expenditure. An affected department wrote to NT informing it of the fact that the said department had gone beyond its budget. NT would review the application and send it to the Committee with its recommendations. The Committee would then call NT and the affected department in to discuss the matter. That had happened already and NT had accepted that the unauthorised expenditure in the DHA had not occurred as a result of any negligence on the part of the DHA. That was why the NT delegation to the last meeting proposed self-financing as a possible solution. However, the Deputy Directors General of NT were not happy with that proposal and backtracked on it.

He noted that the DWS had had unauthorised expenditure which totaled R3.7 million. At the Committee’s hearing with DWS and NT, there had been agreement that the expenditure was to be a direct charge to the NRF.

The DoT had around R1 billion in unauthorised expenditure, which was incurred through an obligation to pay in terms of a court order. In a similar manner the process of hearings with NT and DoT had been concluded, and the Committee had recommended that that expenditure had to be a direct charge to the NRF.

Mr Ross said he had similar sentiments about the incurred unauthorised expenditure by DoT and the DHA, and he was reserving his right on adoption of the recommendation.

Ms N Louw (EFF) said she would also not endorse any of the recommendations; as she had not been present during any those hearings.
The Chairperson understood their position. He agreed that these figures were quite large. However, after sitting through the hearing, the initial anger and frustration at the situation diminished to a realisation that the numbers were there. Having looked at the administration and the politics of departments, the Committee had realised that it was a reality borne from the historical circumstances that people from, for instance, kwaNdebele, were forced to wake up at 01:00 to leave for work at 02:00 on a bus to Pretoria, through a government subsidy that amounted to more than what those people earned. That was a historical creation that remained with the current administration. The DoT had reported that if that historical arrangement were to have been reopened with new tender specifications, the cost of that unauthorised expenditure would escalate in a way Government simply could not manage.
Ms Chiloane noted that she would second the motion by Mr Booi to approve the unauthorised expenditure for all three departments.

The Chairperson repeated that Mr Ross and Ms Louw were recorded as abstaining from that adoption.

Committee’s oversight reports: Consideration and Adoption
Oversight visit to the DHA
The Chairperson said the Committee could rely on him that content of that draft report was 100% accurate as he had read it and made corrections where those had been necessary.  

Members were happy to adopt the Report.

Oversight visit to the Kgoshi Mampuru and Johannesburg Correctional facilities
The Chairperson asked staff to research where the name for “mampoer” - a specific South African beverage - came from. He then went through the draft report with the Committee, paragraph by paragraph.

Ms Chiloane recalled that when the Committee visited the offices of Johannesburg Correctional Centre, it had found that there were paper records of inmates still, which had taken up physical space. She asked whether this concern should fall under the IT section.

The Chairperson suggested that the concern be recorded under infrastructure concerns.

In respect of the draft oversight report for Kgoshi Mampuru, Ms Chiloane reminded the Committee that a DCS National Commissioner had said the DCS had been intending to install surveillance cameras at all its facilities. The Committee could possibly recommend something in terms of ICT infrastructure.

The Chairperson thought that recommendation would be better placed under the challenges facing the DCS. Earlier discussions with DCS left unanswered the question of whether the company that had the tender for that installation had customised information technology (IT) equipment. If it was customised, that meant that the particular company had a contract via the backdoor for all correctional centres in the country, and this could fall under the brief, as earlier suggested by Mr Smith, for the Minister of Justice and Correctional Services.

Mr Smith expanded on the draft recommendations to DCS, and suggested that the DCS should develop and table a comprehensive IT roadmap to the Executive Authority and the Standing Committee on Public Accounts (SCOPA), within three months of the adoption of the draft report before the Committee in which it must outline infrastructure, hardware and software upgrading to enable DCS service delivery.

The Chairperson said that it was necessary to emphasise that the roadmap must come to SCOPA; the DCS had to go via the Minister in any event.

Mr Smith said that if that was the case, he wondered whether the three months time frame could be more specific; he had merely selected this, but it would make sense to match the time frame to when SCOPA would need to adopt its resolutions on DCS as set out in the draft programme.

The Chairperson said he thought three months could be too long; DCS was supposed to have had a working IT roadmap anyway. Perhaps two weeks was a better deadline, leaving it to DCS to ask for an extension if necessary.

After discussion, Members resolved that a four week deadline for submission of the roadmap be set.

Mr Smith continued with more proposed draft recommendations in respect of DCS:
The IT unit had to be resourced by appointing permanent staff and reduce the reliance on consultants and contractors. 
A standardised surveillance expansion system had to be installed in all the facilities.
Consequence management had to be in place.
The Chairperson lamented that the term “consequence management”- seemed too sophisticated and unpalatable to be adopted. He suggested that it should rather be rephrased along the lines of disciplinary action or accountability.

Mr Smith said that if the Committee wanted to make specific mention of disciplinary action, then a time frame had to be set for that otherwise if it was left open-ended it could imply years to finalise.

The Chairperson proposed saying that the DCS had to report back to Parliament within two months of instituting disciplinary action against inmates and officials. After the first two months of reporting, he suggested that more time intervals be set for ongoing progress reports.

Ms Chiloane said that since departments and entities had agreed to provide the Committee with quarterly reports, this would probably suffice for reports on disciplinary actions instituted also.

Members agreed on that proposal and on the previous proposals by Mr Smith.

Mr Smith continued with further draft recommendations: 
DCS had to ensure that bid specifications were not written or developed by parties that would later participate in a tender. He explained that the current situation was that contractors developed the specifications and then tendered as well, since DCS did not have the capacity internally.
Contractors or consultants with a history of unfinished or unsatisfactory work had to be barred from any future work within DCS.

The Chairperson said he believed that this was acceptable. However, the law of the country did not bar individuals who had managed failed projects whilst with one company, then left to form their own companies and tendered as a new company. He proposed that the recommendation had to speak to individuals and not just companies.
These further recommendations were supported.

Mr Smith set out his final proposal: that the Accounting Officer had to ensure that the audit committee was properly constituted.

Mr Ross said he agreed, but he would like to add that bid specification meetings must be held transparently.

Mr Smith said that bid specification and bid adjudication were two different things. Specification was about what was desired and that was not a public matter. However, he agreed with Mr Ross on the need for transparency of adjudication and awarding meetings.

Mr Ross said his issue emanated from the fact that the Committee had never received the draft Procurement Bill though there had been a presentation. Perhaps some of the issues would be avoided if that document could be given to members. Possibly the Committee could also ask for a progress report on that draft Bill and why it had never been sent. However, he agreed with the draft recommendations including the discussed amendments.

The draft oversight report to the Kgoshi Mampuru and Johannesburg Correctional facilities was adopted with these substantive amendments.

The meeting was adjourned.