Interrogation of Department of Public Works 2014 Annual Report and Financial Statements, in presence of Deputy Minister

Meeting Summary

The Standing Committee on Public Accounts, with the Deputy Minister of Public Works also present, interrogated the Annual Report and financial statements of the Department of Public Works (DPW) for the 2014 financial year. Engagement was centred around the qualified audit opinion in relation to the Property Management Trading Entity (PMTE). This entity had received three prior years of disclaimed reports, so the Committee was appreciative that some strides had been made for improvement but noted that should it not deal with the issues, it would not improve further and may regress.

Members raised a range of questions, the first batch relating to whether the Department was capable of instituting and managing internal investigations, and what its relationship was with the external investigators, Special Investigating Unit and SAPS. The Committee took note that 250 allegations of fraud/corruption had been reported during the period under review, including those from whistle-blowing, 16 were referred elsewhere, 56 were at various stages and 151 were finalised, whilst 26 were being handled by internal disciplinary units. Some related to the Nkandla inquiry. A full lease audit had been done and the Asset Register completed.  Members also raised questions around the R34 billion of irregular expenditure, asked what had been done to ensure that DPW did not face this again, and pointed to the fact that most of the problems arose through simple lack of compliance. Members were insistent that officials responsible be named and shamed. They noted the overdraft of R300 million and R332 million of impairments and accruals, and were critical of the fact that due to its failure to keep proper supporting documentation, DPW was unable to invoice client departments. They asked if this suggested major problems with the business model, doing work and waiting for payment instead of taking payments up front, or with the inability to produce documentation afterwards.  The Committee questioned whether DPW had capacity to deal with the leasing transactions and were heavily critical of R500 million being paid in consultancy fees, which strongly indicated lack of capacity. Other Members questioned whether there was any skills transfer, why vacant posts were not filled instead of hiring consultants, and were assured that the use of consultants was a specifically planned intervention running over three years, as part of the turnaround strategy, and that this was being reduced. Members asked how the under and over payments were being followed up, and about litigation.   

They also asked if DPW was paying its rates and taxes on time to municipalities. Members called for a list of employees against whom disciplinary action was taken. They wanted information on the free services of the Property Management Trading Entity and how this was achieved, given the overdraft. Overall, questions of poor controls, poor management, poor compliance and the responsibility of the DPW were raised many times and one Member was alarmed about the conclusions of carelessness and suggested that a full skills audit was needed, also questioned whether the workshops for staff had achieved any positive results. The DPW noted that the turnaround strategy was to last for seven years and in the last three there had been attempts to "stop the bleeding" and deal with the most urgent matters before turning to completely new interventions. Members questioned whether the staff debt was ever likely to be recovered, were worried that some matters had been sitting with the State Attorney for three years. The Audit Committee of the DPW confirmed that capacity was an issue. Members urged DPW to engage also with National Treasury and expressed their worry about the lack of reliability on the financial and operational information, urging DPW to follow a rigorous process to ensure that all information was accurate.