8.1.1 The Portfolio Committee had resolved to visit Limpopo Provincial Government after a meeting with National Treasury and the Department of Public Service and Administration to assess the state of public service and administration in that province. This was after it had been placed under administration by the South African Cabinet since 5 December 2011. 8.1.2 Section 100 (1) (b) of the Constitution, 1996, provides for the national executive to assume responsibility for the relevant obligation in that province to the extent necessary to: a) maintain essential national standards or meet established minimum standards for the rendering of a service; b) maintain economic unity; c) maintain national security or d) prevent that province from unreasonable action that is prejudicial to the interests of another province or to the country as a whole. Sub-section 100 (3) of the Constitution, 1996, refers to national legislation that "may regulate the process" established by section 100. It should be noted that such national legislation currently does not exist. 8.1.3 The approach of the Portfolio Committee on Public Service and Administration was to assess whether there has been improvement since the South African Cabinet's intervention in terms of section 100 (1)(b) of the Constitution, 1996. The Committee requested the Public Service Commission, Auditor-General, National Treasury and DPSA to give their view on the current state of public service and administration in that province. 8.1.4 The Public Service Commission highlighted the following issues with regard to the state of the Public Service in Limpopo. 8.1.4.1 In terms of the National Anti-Corruption Hotline (NACH), cases received from the Limpopo Province have been low. Departments are required to provide feedback on the progress made with respect to the investigation of NACH cases within 40 days of the receipt of the case. In Limpopo Province, the feedback rate is 53%. The strategy to refer cases for investigation to departments is premised on the assumption that departments have the capacity to deal with cases. The feedback rate in Limpopo suggests that departments do not have the necessary investigative capacity. 8.1.4.2 Out of the 358 cases on which feedback was received, 61% are not finalized and closed on the Case Management System (CMS) as at 31 March 2012. It was reported that 40% of the reported cases in the province related to fraud and bribery, and 19% to procurement irregularities. 8.1.4.3 In terms of financial misconduct, in the Limpopo Province, the number of cases of financial misconduct has remained more or less the same over the last two years (73 in 2009/2010 and 77 in 2010/11). Corruption, fraud and theft represented 48, 1% of the cases, and financial mismanagement, gross negligence and misappropriation and abuse represented the remaining cases. 8.1.4.4 One of the contentious issues was around the expenditure versus the performance of the province. The PSC found that in most cases the entire budget was almost spent, yet the achievement of the predetermined outputs was low. 8.1.5 The National Treasury highlighted the following issues since its intervention in Limpopo Province: 8.1.5.1 The National Treasury indicated that financial stability in the province had more or less being achieved. The liquidity risk had been reduced significantly. There were now month-on-month spending trends for departments which were in line with other provinces. In an attempt to control growth in headcounts, there were processes in place to manage recruitment across the province. It was further indicated that recovery plans for the affected departments had been drafted by the various administrators and were presented for sign-off to national departments. 8.1.5.2 The Committee was informed that there has been interference by the Office of the Premier in issues related to HOD appointments, redeployment of senior staff, creation of parallel programmes to intervention, and duplication of treasury functions within OTP under 'what is called provincial protocol'. However, there were positive outcomes observed as a result of the commendable posture and strong support of the intervention staff from some national Directors-General. It was under these circumstances that even a relatively small intervention team deployed had a significant impact. 8.1.5.3 The National Treasury was of the view that a resolute stance was needed in respect of the appointment of administrators and accounting officers and practical support for existing deployees. There was a need for unequivocal endorsement of recovery plans by Ministers, including the Finance Minister, for each provincial department over which they are directly responsible. This will clarify the pre- eminence of national project plans over all other initiatives in provinces. There was a need for a panel that includes representatives of the Minister of Finance, to concur with all appointments of HODs for departments placed under intervention. 8.1.6 The Auditor-General highlighted the following issues with regard to the state of the Public Service in Limpopo. 8.1.6.1 The departments and entities that have achieved the goal of clean audit outcomes (unqualified opinion with no findings) are characterised by having sound internal financial management and control systems that function effectively throughout the financial year. A high incidence of leadership involvement in monitoring these in-year processes was also noted. 8.1.6.2 On the other hand, the departments and entities that are still struggling to achieve to clean audit outcomes do not have effective continuous processes to ensure that information on financial performance is maintained and monitored throughout the period. Such information is only compiled at year-end and areas that need corrective action can consequently not be identified and addressed during the year. The financial information on which decisions are based must be credible and verified by the audit committee and internal audit on a quarterly basis. 8.1.6.3 The Limpopo Province has a shared audit committee which oversees all the departments in the province. The audit committee needs to improve on their monitoring of action plans and needs to play a greater role in ensuring the quality of annual financial statements prior to their submission for audit. Currently there is insufficient time between the annual financial statements being completed by auditors and the legislated submission date to A-GSA for either the audit committees or internal audit to contribute significantly to the quality of the financial statements. 8.1.6.4 The Premier and his leadership team must act decisively to implement corrective measures and address non-performance. It was further explained that departments should focus on addressing shortcomings in controls over capital assets, both moveable and immoveable. The A-G was concerned that the province, which has been without an asset management system for the past four years, faces a significant risk in sustaining positive audit outcomes, specifically around asset management. This is already evident in the 2011-12 financial year, where the Department of Roads and Transport faces a possible new qualification on assets, due to deficiencies identified around asset management. 8.1.7 The response by the Limpopo Provincial Government highlighted the following issues with regard to the state of the Public Service in Limpopo. 8.1.7.1 The presentation was led by Dr. Pheme on behalf of the director-general who had apologised due to the directors- general's workshop that was taking place in Pretoria. Dr Pheme commenced his presentation by indicating that the province's Compensation of Employees (CoE) was estimated to be approximately 68% of the total budget and this is well above the national norm for provinces of approximately 58%. It was indicated that the high CoE cost places tremendous budgetary constraints on the service delivery performance of the province. However, the Executive Committee (EXCO) took a decision that the province must reduce CoE by 2% per annum over the MTEF-period. Furthermore, the EXCO directed that a task team be set up to achieve the target of 2% reduction in CoE over the MTEF-period. 8.1.7.2 One of the eight principles of Plan of Action on Women Empowerment is equality in the work place, promoting employment equity status of women based on the NEDLAC mandate of reaching 50% target. The Committee was informed that the provincial treasury is the best performer in this area wherein they are at 49% for female SMS and 2.4% for persons with disabilities at SMS level. 8.1.7.3 The Committee heard that all departments in Limpopo have developed Service Standards for 2012/13 and the Service Delivery Improvement Plans for 2012/13. In strengthening and broadening public participation in local service delivery, ward committees have been established in all wards and are operational. A Municipality debt recovery forum has been established to address the debts owed to municipalities. 8.1.7.4 The province's overall performance has improved by 10.23% between 23 April 2012 and 06 July 2012. It was further indicated that the province had received 28 corruption- related cases for the 1st Quarter, of which six cases were completed. Feedback to the public on anti-corruption hotline cases is provided through the Provincial Communication Services during the Limpopo Anti-Corruption Forum, as well as to complainants who are not anonymous. 8.1.7.5 In terms of the payments within 30 days, the rand value of invoices paid within 30 days has decreased from 82.94% in May 2012 to 78.96% in June 2012. The Office of the Premier is the best performer in this category, achieving 100% in June 2012. Leadership, financial and performance management, and governance have been identified as key areas in which action needs to be taken to improve audit outcomes. 8.1. Key Observations - Meeting with Limpopo Provincial Government 8.1.1 The Committee was gravely concerned that, since the South African Cabinet announced its intervention in the Limpopo provincial government, there has not been clearing of responsibilities by the administrators and the Provincial Executive Committee at the political level 8.1.2 The issue of lack of textbooks had not been cleared, despite the intervention of the administrators. The Committee was concerned at slow progress in this regard. 8.1.3 The lack of a Memorandum of Understanding (MOU) is a cause for concern. Indeed, there is no law that governs how the intervention should be processed. But the Committee found it totally unacceptable that, despite promises by Cabinet to have the MOU in place, by the time the Committee undertook its oversight visit, the MOU had not been signed, and thus there was no clear indication of roles between MECs and the Administrators.