Auditor General performance audit of handling of confiscated abalone at Department of Environmental Affairs & Tourism: Hearings

Meeting report

Auditor-General (AG) Performance Report on handling of confiscated abalone at Department of Environmental Affairs and Tourism (DEAT)
The Chairperson informed the Committee that the reason for this meeting was that the Committee gain some clarity over the abalone report, in order to make a proper report to parliament.

The delegation from the Office of the Auditor-General (OAG) consisted of the following people Mr J Diedricks, Business Executive, OAG, Western Cape, Mr E Marais, Senior Manager, OAG, Mr G Swartz, Manager, OAG Western Cape and Miss Zanele Keto, Manager, OAG, Western Cape.

The delegation from the Department of Environmental Affairs and Tourism (DEAT), as it was formerly named, consisted of Ms Nosipho Ngcaba, Director General, Dr Monde Mayekiso, Deputy Director General: Marine and Coastal Management, Mr Saliem Mohammed, Chief Financial Officer: Marine Living Resources Fund, Mr Nasir Daniels, Director Facilities Support Management.

Members of the Committee addressed its questions under separate topics:

Status of court cases relating to confiscated abalone
Mr R Ainslie (ANC) asked for details on the extent of abalone poaching.

Dr Mayekiso replied that due to poaching the abalone fishery was closed in February 2008 because it had reached such low levels that it was deemed that the species could not be fished. The other reason for the closure was to make enforcement and control easier. Once the fishery had closed, anyone found in the waters would be deemed to be acting illegally. There were challenges in controlling the abalone poaching and one of the reasons for this was the leakage of information in the system. Normally the process consisted of the Department investigating the abalone poaching, passing the information to the police, and a docket being prepared and sent to the prosecution services, but through leakage of information this was not being done.

Mr Ainslie asked if there was danger of commercial extinction if things did not improve.

Dr Mayekiso replied that the animal was commercially extinct, which was why the Department had closed down the fishery. However, there was a difference between the animal and the species being extinct.

Mr Ainslie asked if the Department had a crisis on its hands.

Dr Mayekiso replied that the situation was serious, and was indeed at a crisis point, but he would not say hat this was out of control.

Ms Ngcaba felt that there had been a crisis, which had led to the closure. However, the Department was in the process of monitoring the stock’s recovery and was going to report on the progress. She added that the Department was still facing the problem of poaching even though the fishery was closed, and one of the reasons was that abalone poachers were sophisticated. There was also a link between the poaching and real syndicates, and this posed real danger to the staff. For this reason, the Department had been working with the security cluster. Nevertheless, the resources the Department had were not sufficient for it to monitor all the zones, with the result that some areas were not being monitored. The Department did not want such information in the public domain, as it was more likely to cause increased poaching. Currently the Department was concentrating on the zones that had viable commercial recovery.

Mr Ainslie asked the Department why there was no emphasis on farming abalone if abalone was so important and in demand, especially in Asia.

Dr Mayekiso replied that abalone farming was the most successful sector and had seen tremendous growth, with an increase in production from 20 tonnes in 1996 to over 1000 tonnes in 2008. He added that the sector had grown irrespective of the fact that it had not received support from the Department. There had recently been a change in this as the Department had started to support the farming of abalone as a way of getting more players.

Mr M Steele (DA) suggested that the Committee should meet with all the responsible agents dealing with abalone fishing, as it was useless to deal with the Department alone when there were other responsible bodies such as the South African Police Services (SAPS) or the municipality. He asked if the Department was the accountable department when it came to came to marine recourses, and if not, whether the Department should not be speaking to other departments that did have the capacity to deal with the situation.

Ms Ngcaba replied that the issue of marine resources was a joint effort with joint responsibility. It went beyond the ability and the capacity of the Department alone. This was one of the reasons it had approached the government security clusters to increase security. 

The Chairperson remarked that he could not believe that three years after the issue of capacity was initially discussed, the Department was still raising this issue.

Ms Ngcaba replied that there had been improvements in the resources but there was still a need for more capacity, especially when it came to security.

The Chairperson asked if she was talking about the ability to combat and police this area.

Ms M Matladi (UCDP) asked the Department if it was acknowledging the fact that it had failed to perform the duty put before it, being the farming of abalone. She wanted to know if the Department was saying that it had no resources and capacity to deal with the work, with the result that it was looking elsewhere.

Dr Mayekiso noted, for the sake of clarity, that there were about 20 different species the Department had to manage. However, the Department was struggling with those species inshore, and not the ones that were offshore. In particular the Department was struggling with abalone. He pointed out that other countries had also had problems with abalone, such as United States of America.

The Chairperson asked if in essence the Department was saying that it had failed.

Ms Ngcaba replied in the affirmative.

Mr Ainslie remarked that he wanted to confirm the failure, by asking if the Department had staff working 24 hours. He pointed out that the poachers worked every day with no rest, without fail.

Ms Ngcaba replied that the Department was unable to have people working round the clock.

Mr Ainslie remarked that in essence the Department did not have effective measures to combat the poaching.

The Chairperson noted that the Director General had indicated that the Department had areas that it was not monitoring at all, but could not publicise this due to the adverse effects. This was the extent of the problem.

Mr N Singh (IFP) remarked, in relation to the suggestion that other departments should also come before the Committee, that one of these departments was the Department of Justice. He added that if DEAT had a crisis on its hands, then it was not the fault of this department alone, but the fault of government. He argued that had the Department been listing abalone poaching as high priority, considering the involvement of syndicates, then this would have made the issue much easier to address. Abalone poaching was not in the media as much as ivory, shark or some other poaching, and for this reason too it was not getting the attention it needed. He also wondered if the Department should not request international assistance.

Mr L Ramathlakane (COPE) said that he was taken aback by the fact that that abalone poaching had not been listed as high priority, particularly in view of high levels of organised crime in this area. He added that if his information served him correctly, the Department of Justice had created special units to deal with the abalone issue. He wanted to know what had happened to these units.

Mr Ainslie asked why, after apprehending the poachers, the same poachers were still seen again the next day repeating the poaching.

Ms Ngcaba replied that it was one of the reasons that her Department was partnering with the Department of Justice, as there did seem to be lack of understanding of the severity of the crimes, largely because they were “victimless” crimes. The court’s emphasis was more focused on violent crimes than on the poaching of abalone.

The Chairperson remarked that the fact that the poachers might be charged or prosecuted one day, but continuing to poach on the next, was a critical area that needed to be analysed. He was of the opinion that it was useless to set aside human resources to catch the poachers, who might be fine R10 000, only to have them proceed to poach more abalone worth R1 million.

Mr Singh said that the Act had penalties for poaching. It stipulated fines of up to two to five million rand. He agreed with the Chairperson that SAPS and the Department of Justice should be asked to give their comment, and that government must regard this area as a high priority to even begin to tackle the issue.

Mr Steele requested statistics on the arming of people and incidents that had occurred between the poachers and the SAPS and other organ, because he thought that the crime was escalating to the stage where someone was bound to be killed, as there had been reports of shooting..

Ms M Matladi UCDP requested the record of the people that were supposed to have done their jobs in the Department but had failed to do so, and also asked how they were being dealt with. She was of the opinion that the Department could not continue to pay people when there was no corresponding performance.

Mr Ainslie asked if the Department had been able finally to establish a link between poaching, gangs and drugs.

Ms Ngcaba replied that there was a connection, and the Department had put this information forward when presenting before the clusters in the previous year. She reiterated that this was a reason for wanting to increase security.

Lack of Policy and Guidelines regarding the handling of confiscated abalone
Ms F Mathambi (ANC) noted that during a SCOPA meeting held in 2006, it was resolved that the Marine Living Resources Fund (MLRF) should be incorporated into the Department. She asked whether that resolution had been implemented.

Ms Ngcaba replied that the Department had undertaken an investigation with National Treasury, who had recommended that the Department continue with the situation where the MLRF was a separate entity with a board of its own, rather than have the accounting officer of the Department as its accounting authority.

The Chairperson asked to be given the current status, since the Department had not taken the recommendation into consideration.

Ms Ngcaba replied that the status quo had not changed. The Chief Financial Officer of the MLRF was still the accounting authority. A Board was established for the MLRF, which required funding, but no legislative changes were effected.

Ms F Mathambi (ANC) remarked that SCOPA had expressed concern over the lack of policy regarding the handling of confiscated abalone in March 2007. In September 2009 the issue was still yet to be addressed, and the policy was still in draft form.

Mr Mohammed replied that the policy and procedure was being turned around. The Department and MLRF currently had protocols and service level agreements n relation to the handling of confiscated abalone. He added that although there might not be an overarching policy, there were procedures and protocols that were in compliance with the accounting systems.

The Chairperson remarked that the question was why there was no fully fledged policy.

Mr Mohammed replied that the Department did have fully fledged policies, but in this particular area the protocols and procedures were tantamount to policy.

The Chairperson said that the Committee wanted to see “the real thing”, not something similar to it.

Ms Ngcaba replied that the Department acknowledged that the process of developing the policy had indeed taken long, but she understood that it would be resolved and finalised by November.

Ms Matladi remarked that she was not happy that despite the House making a resolution, on recommendation of SCOPA, and giving it to the Department, the Department had decided that rather than implementing the resolution, it would go back to do research.

Ms Ngcaba replied that her answer might fall short, but the main reason for this was that some of the decisions that the Department had to make were done in collaboration with other departments. The Department had done the work, and was willing to present on it.

Mr M Mbili (ANC) agreed with Ms Matladi’s point. He said that there was a resolution passed for the proper accounting and management that the Department should have taken into consideration.

The Chairperson commented that the question had been narrowed down to why, for abalone, the draft policy was still not finalised.

Ms Ngcaba replied that the Department did have a draft policy, which was going to be finalised at the end of this financial year. The delays arose through processes and protocols and other technicalities. The Department conceded that there had been a delay. The framework would, however, be finalised before the end of this financial year.

Ms Mangena asked why the Department had not taken the AG’s proposal that the Department integrate the two entities, but instead looked into creating a board when there was no money to do so.

Mr S Thobejane (ANC) asked what the Department was using for guidance, since the Department did not have formal policies in place.

Mr S Thobejane (ANC) asked who was responsible for the work, and asked again what action would be taken against this person. He pointed out that any failure for work not done was going to fall on the Director-General’s shoulders.

Ms Ngcaba replied that the narrowing down of the answer was linked to other elements. After this hearing, the Department had to set up proper governance and infrastructure so as to improve. Some staff appointments and work had happened prior to her appointment as Director-General, but the Department did have guidelines.

Mr Thobejane asked what was guiding the work she was alluding to.

Ms Ngcaba replied that there were protocols that were not yet amalgamated, as the Chief Financial Officer had said.

The Chairperson remarked that the Department should not talk about protocols and procedures, The truth of the matter was that there was no formal policy.

Ms Mathambi remarked that the policy was still not in place. The issues were set out in the papers. The then-Minister, during 2003, had announced that there would be a formal policy. In 2009 this was not finalised. She found this to be unacceptable.

Ms T Chiloane (ANC) asked how the Department’s arrangements with other agencies, such as SAPS, were intended to work efficiently in the absence of guidelines. 

Mr Daniels replied that the Department had co-operation agreements with other government agencies, and in these areas the agencies and Department knew who to contact.

Ms Chiloane asked how the arrangements between the various parties were to work optimally, when there were no norms and standards in the handling of confiscated abalone.

Mr Daniels replied that, as indicated earlier, the Department had norms and standards in place.

The Chairperson remarked that the draft policy did not specify on the norms and standards

Mr Mohammed replied that the policy that was going to be finalised had the norms and standards.

The Chairperson remarked that the short and long of it was that there could be no optimal co-operation.

Mr Mohamed replied that it was not true that a lack of formal norms and standards meant a non-optimal co-operation. There was interaction and coordination, because the Department did have structures in place such as agreements and memorandums of understanding. These clearly delineated the handling of confiscated abalone.

Mr Thobejane remarked that Mr Mohamed seemed to be playing with the Committee. He could not argue that the Department had structures in place, when the AG’s report was saying that they were not in place. He asked if Mr Mohamed was disputing the contents of the AG’s report.

Ms Ngcaba replied that the Department was not disputing the report, and she had made this acknowledgement to the Committee early on in the proceedings.

The Chairperson asked if there could be optimisation of cooperation, in the absence of clarity as to what the parties were doing.

Ms Ngcaba replied that she believed that what the Department currently had in place was adequate, but the Department did understand the risk elements of the situation.

Mr Ainslie asked who was the person responsible for the so called protocols and service agreement, and if that person also oversaw whether the Department had conformed to the standards needed. He also asked who was the person who was responsible for the non-action in the Department for five years. 

Mr Thobejane asked how it was possible for the Department to uphold and sign the memorandum of agreement when the draft policy did not have guidelines for the scope of the monitoring of activities and functions for the Project Management Team (PMT).

Ms Ngcaba replied the Department had service level agreements with PMT that specified the activities for which PMT was responsible.

The Chairperson commented that the report on page 4 clearly stated that there were no specified instructions. The reality of the situation was that the Department did not have a policy in place. This should have been done by May, yet still had not been done.

Ms Mathambi asked if the Department was aware of how much confiscated abalone had lost value through the mishandling because PMT had not published the handling guidelines.

Ms Mayekiso replied that figure was in the report.

Ms F Mathambi said that she wanted to hear the actual figure.

Mr Mohammed replied that although there had been losses, these were not due to the lack of protocol

Ms Matladi remarked that the DG seemed to be getting information from the AG’s report, when it was supposed to be the other way round, and this was not a good sign.

Awarding of tenders
Ms Chiloane asked why there were only three service providers that had submitted tenders to do the work.

Mr Mohammed replied that there were two bids that were advertised for the processing and marketing of salmon. The bids were dealt with. Three processors were appointed. It was the intention of the Department to build capacity in that sector. A third company was brought on board, and, through this process, the Department could assist in capacitating this service provider to get on par with the others. The other bid related to the monitoring and processing of salmon, and here only one service provider was appointed.

Ms Chiloane remarked that there was a contract that was terminated in 2007. She asked the reason for the termination.

Ms Ngcaba replied that the termination was based on performance.

Ms Chiloane asked how the selection committee selected the company, if it had later needed to terminate the services based on performance. This was not the first time that the Department had needed to select service providers who would give the services that the Department needed.

Mr Mohammed replied that the initial appointment included three processors. Subsequent to the adjudication of the bid, the ownership of Tuna Marine changed, and ownership was transferred to another company. In order to protect the Department, it had put the new company initially on probation, and required it to process 1.1 tonnes of abalone. The outcome of this was that the dry product was not of any value to the Department. Therefore, the Department had needed to take drastic action to terminate the contract, because the skills were clearly not there. 

The Chairperson asked if the Department was saying that the when the ownership of the company changed, the new company brought its own workers. 

Ms Chiloane asked who had been doing the company’s work since termination. She asked whether the Department had lost money, since termination happened in the middle of the contract. There was an initial service level agreement for Tuna Marine but this was not signed.

The Chairperson asked why it was not signed.

Mr Mohammed replied that it was because the Department was in the middle of negotiating the sale of the company. After the sale, the service level agreement was then signed with the new owner, but its expertise was not transferred to the new holding company.

The Chairperson asked how the Department awarded the tender if the company was in the process of being sold. He also asked how the Department could have awarded the contract to a company after it had stated that it had certain skills, but had pulled out before it undertook the project. This should have been a matter of concern for the Department in itself. He asked whether this did not create the impression that this was simply a clever way of giving predetermined people a contract

Mr Mohammed replied that when the adjudication was done, a letter was issued to the three service providers. In terms of the supply management precepts, the Department must give approval if the ownership of a company changed, and decide whether to accept the change of ownership. In this case the Department had done so. The company had indicated that it had the skills to undertake the processing. However, the Department was concerned about the person who was to be used for the processing of abalone.

The Chairperson asked why the Department awarded the tender if it had concerns.

Mr Mohammed replied that in hindsight, the Department then placed the company on probation.

The Chairperson asked why this was done.

Mr Mohammed replied that the Department was thinking of improving capacity. When the Department established that the company did not have basic skills, it had then terminated the contract.

Mr Thobejane asked when the Department had appointed the company, and how it was appointed, prior to the termination.

Mr Mohammed replied that he was not sure of the dates, but could provide them later to the Committee.

The Chairperson remarked that the Department needed the details now, at least of the months in which this took place.

Mr Mohammed replied that the Department appointed the company in May 2006, but the last service agreement was signed in February 2007. There was a time lapse and this was the period when the ownership changed.

The Chairperson announced that there was insufficient time to address all issues.

The meeting was adjourned.