Environmental Affairs & Tourism: Marine Living Resources Fund


01 Sep 2008

Presenter: Minister of Environmental Affairs and Tourism, Hon Marthinus van Schalkwyk

Mr Mava Scott, Spokesperson for the Department of Environmental Affairs and Tourism (DEAT) introduced the Minister, Mr Marthinus van Schalkwyk, the Director-General Ms Nosipho Jezile-Ngcaba, the Deputy Director-General Dr Monde Mayekiso, and the Chief Financial Officer Mr Salem Mohammed.

The Minister announced that, for the first time since 2002, the Department was able to present an unqualified audited financial report on the Marine Living Resources Fund (MLRF), which funded the operations of the Marine and Coastal Management Programme (MCM). He explained that the MCM was responsible for the development and sustainable use of the marine and coastal resources, as well as the protection of the marine and coastal ecosystems. He commented in detail on the report, noted that the Department had committed itself to bringing clean audit reports, and thanked the former and present staff for their valuable contribution. He noted that a firm basis had now been laid for the MCM to operate properly.

The Director General set out the composition and functioning of the entity, setting out the turnaround process undertaken since the audit reports of 2002 to 2005 (which were audited in one year) had revealed problems. The corrective action corrective action addressed issues of corporate governance, risk management and compliance with international accounting standards. She noted that part of the operations included cutting back operations. She reported that at present all funds were fully accounted for and there was a surplus of R29 million.


Q: The Minister was asked, now that the paperwork was in order, when there would be reports and graphs showing the thousands of tons of perlemoen being poached. He was also asked why it seemed to be so difficult to arrest and charge these offenders, when they were well known in the communities where they lived.

A: The Minister replied was that not only could the financial health be maintained, it could also be improved. The public was absolutely correct to expect that government manage its budgets properly, and that the legal requirements for administering the funds be met.

Q: A question was asked whether the long term sustainability of the fund, and the assets issue had now been rectified. The Minister was also reminded that the specific question on abalone poaching had not yet been answered. .

A: The Minister responded that the level of utilisation of the fund was at the right level, and the accounting officer was now properly compliant now, whereas this had not been the case before. With respect to assets, the department now had an approved asset management procedure, which meant that international best practice could be maintained.
The Minister said that perlemoen poaching was not a new problem, and was affected by South Africa’s long coastline. The problem was also not limited to South Africa, as many other countries with long coastlines had experienced a similar problem. For example, in the United States of America, where there was a much higher capacity, it remained a problem. However, the Department was doing a commendable job, and had appointed more patrol officers to increase their capacity. Ultimately this was not only a MCM issue, but was also a safety and security issue, as well as a South African Revenue Service (SARS) issue. There were currently cases before the courts in which the Department was positive that a guilty verdict would be obtained.

Q: A question was asked whether the turnaround, at great cost, had in fact been worthwhile, as during that time the Department had had to stop a number of other activities. For instance, the Department had its own boats for inshore patrol, yet now the Navy was complaining they did not have the right kind of boats. The question was posed whether, and how, the Department fitted in to the system.

A: The Minister responded that in respect of the costs, a proper job could not have been done without the budget and finances being sound and in order. The first step was to ensure that MCM was financially healthy. There was a desire to do much more, but there was a greater responsibility to ensure that the Department could afford what had to be done. There was now a basis from which to leverage much more effective compliance.

In terms of funding, the Minister said that there was commitment. Because of the cost of fuel, some operations at the moment needed to be cut back. A submission to National Treasury had been presented and had been approved, so that more funds would be available. There had been partnering with other departments, such as Science and Technology, for research work. That would not only benefit MCM but also the country in terms of science. This meant the Department of Environmental Affairs and Tourism in some areas did not fund the operations fully, but it would be important to utilise available resources optimally.
In response to the question of the Navy inshore patrol, the Minister said that the Navy had its own mandate to protect the integrity of South African waters. The DEAT had the responsibility to undertake the fishery patrols, but it would share information with the Navy and Defence Force. Those links would be strengthened in order to better cooperate on the use of smaller inshore vessels.

Q: The Minister had said that the fact that poaching was carried out with impunity, especially along the Cape coast, was not only an MCM challenge, but also a safety and security issue. He asked, in an ideal situation, how many boats, how many people, and what budget would be needed to prevent it. The question was also asked how poaching could be stopped.

A: The Minister responded that DEAT had a duty to make sure that there was proper management and comparisons over the last 3 or 4 years already showed a huge improvement. Because of the threat presented by organised crime, the number of fishing patrol officers had been increased, and modern equipment was being used to deal with poaching.

Q: A question was asked around the income that the Department did receive from the sale of confiscated abalone. The Minister was asked whether this was increasing, and what were the trends of income into the fund. He was also asked how lower stocks of pilchards would affect levies, and what was the projection of income for the fund now that one of South Africa’s most important fishing stocks was experiencing decreasing volumes.

A: The Minister responded that there was a perverse incentive here, but in comparison with three or four years ago, the figure had actually declined considerably. He was of the view that there should not be dependence on the sale of confiscated perlemoen to generate funds. Care must be taken to not sell to very people involved in organised crime syndicates.

Dr Monde Mayekiso, Deputy Director General, DEAT, said that the anchovy levels were high and should compensate for losses as a result of the lower pilchard stock.

Q: It was noted that there had been a statement in one of the past annual reports that the Department was looking at doing away with the fund completely. The question was asked how such negotiations were proceeding, or whether they had been concluded. The Director General of the Department had indicated that more finances would mean more sea days and the Department was therefore asked to give an indication of what percentage increase could be expected in use of sea vessels as a result of increased funds.

A: The Minister responded that this fund should come into the normal budget of the Department, and not be held separately. There was an ongoing engagement with National Treasury and an announcement would be made as soon as the matter was concluded. This would ensure better management and control, on a day-to-day basis.

Q: The Auditor-General’s report stated that there was an investigation on the basis of improper conduct and improper relations between officials and stakeholders in the industry, and the Minister was asked to explain this further.
A: The Minister responded that there were three cases of improper relations between officials and industry stakeholders. In the first case the person who had made the allegation refused to come forward and confirm that allegation or provide further information. The second complaint emanated from somebody who was consistently complaining about staff, and the Department, having investigated, could not find information to support that allegation. The last case concerned some possible wrongdoing, but the Department was advised that a criminal case could not be sustained.

The Minister said that if there were any indications of improper conduct the Department undertook not only to investigate the matter itself, but also to engage external agencies to investigate. The rumours were not widespread but needed to be dealt with. He noted that if sufficient grounds were found to substantiate, the official could be asked to leave DEAT.

Q: The question was posed whether any disciplinary action would be taken, criminal proceedings followed or, in light of what had happened with the fund, whether anyone would be called to account.

A: The Minister responded that people should own up to any wrongdoing. On the basis of information received, it was discovered that the senior officials responsible were guilty rather of a lack of good judgment in performing their administrative duty, than of any wrongdoing itself. In weighing up the pros and cons, it was concluded that DEAT’s energies would be better spent on turning the financial position around than pursuing the somewhat grey areas where there was wrongdoing.

Q: The report stated that one of the priorities for the coming year in terms of the business plan was an increase in levies, and the question was asked how much the levies would be raised.

A: The Minister responded that on page 86 of the report it was noted that confiscated fish products reduced from R57 million to R39 million. With regard to levies there was a constant amount of R54 million  in the last two years.

Q: The question was asked if there was any statistical correlation between a sea day and number of poachers caught.

A:  The Minister responded that there was a correlation. Increased patrols meant also an increase in the number of criminals apprehended, and therefore an increase in effectiveness. There would also be an improvement in accuracy of information obtained for research purposes.

Q: The Minister was asked to give clarity of the total operating revenue, net confiscated fishing products and the confiscated fishing products. A further question was asked in relation to overtime worked and whether it would negatively affect operations, in view of the fact that hours worked had been reduced.

A: The Minister responded that the total revenue, as depicted on page 53, was R108 million, and the confiscated fish products were shown on page 86 of the annual report.

He added that overtime was available on a quarterly basis, but must be duly authorized. However labour laws need to be considered so that overtime was limited to no more than 30% of salary and not more than 15 hours per week. The DEAT preferred staff to do shift work.

Q: The question was asked whether vessels had night vision.

A: The Minister said that he understood the need for more detail to be given, and appreciated that the public had a right to information. However, revealing too much around operations could be to the detriment of the Department in formulating a strategy to deal with the poachers. He could, however, say that the vessels were equipped with infra-red night vision.
Q: The question was asked what had happened to the marines.

A: The Minister responded that the marines were absorbed into the department. .

Q: A question was asked as to the level of cooperation was there between the DEAT and the Scorpions and Sea Watch, in poaching operations, especially with regard to the 2000 tons of abalone landed in Hong Kong.

A: The Minister stated that with regard to the abalone landed in Hong Kong, the DEAT did not have any knowledge on whether this was cultured abalone, nor whether it came from South Africa.

Q: The Minister was asked if he intended to stay in the political arena.

A: The Minister said this was his intention but the final decision was not up to him.

The briefing was adjourned

Marine Living Resources Fund (MLRF) turnaround achieved two years ahead of time

1 September 2008

The Minister of Environmental Affairs and Tourism, Marthinus van Schalkwyk, announced today that the Marine Living Resources Fund (MLRF) for the first time ever received an unqualified audit report.

The MLRF Annual Report for 2007/08 was tabled in Parliament on Friday 29 August and shows a turnaround in the management and administration of the MLRF. The MLRF finances the operations - including research, resource and coastal management and monitoring, control and surveillance of the Marine and Coastal Management (MCM) branch of the Department of Environmental Affairs and Tourism (DEAT).

The unqualified Audit Report is the culmination of work that was started in August 2006 in response to a number of concerns raised about the MLRF, including cash flow problems, a lack of skills and capacity and inadequate financial systems.

Van Schalkwyk said the corrective strategies focussed on corporate governance, risk management and compliance with International Accounting Standards. I am very pleased that these improvements were achieved two years ahead of the initial schedule, which aimed to achieve an unqualified report with no emphasis of matter in the 2009/10 reporting period, the Minister said.
According to Van Schalkwyk, the latest Annual Report of the MLRF reflects a healthier financial position. The MLRF now has a positive accumulated surplus of more than R29 million, compared to a deficit of more than R65 million in the 2005/06 financial year. This means that MCM is now better able to fulfil its mandate and is in full compliance with the statutory reporting requirements of the MLRF. The improved financial position means, amongst others, that there are now more sea days available for compliance vessels and research. This growth allows the MLRF to now build on and leverage off its strengthened balance sheet, the Minister said.

The MCM branch is tasked with:
* managing the development and sustainable use of South Africa's
* marine and coastal resources
* protecting the integrity of our marine and coastal ecosystems; and · Striving to achieve a healthy balance between the sustainable
* utilisation of marine and coastal resources and protecting and
* conserving these same resources.
In the Annual Reports for 2002-05, which were submitted three years late, the Auditor General identified a number of concerns, including:
* a lack of internal controls
* a lack of compliance with the Public Finance Management Act (PFMA). No proper accounting and fixed asset systems. A lack of historical data and supporting documentation; and · Insufficient debtor and income controls.

In the Annual Report for 2005/06 there were 22 qualifications and an amount of R247 million was incorrectly presented in the financial statements. This resulted in the Auditor General not expressing an opinion on the financial statements. The report for 2006/07 had six qualifications with a misstated amount of R25,7 million. In contrast to this, the most recent report was released with an unqualified audit opinion and no emphasis of matter.


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