Department of Agriculture: Import Inspection Services Performance: Interrogation of Auditor General's Special Report

Meeting report

PUBLIC ACCOUNTS STANDING COMMITTEE (SCOPA)
15 August 2007
DEPARTMENT OF AGRICULTURE: IMPORT INSPECTION SERVICES PERFORMANCE: INTERROGATION OF AUDITOR GENERAL'S SPECIAL REPORT

Chairperson: Mr T Godi (ANC)

Relevant Documents:
Auditor General's Special Report on performance audit of Import Inspection Services

Audio recording of meeting [Part 1] & [Part 2]

SUMMARY
The Committee interrogated various aspects of the special report of the Auditor General on the performance audit of the Import Inspection Services of the Department of Agriculture. Members were particularly concerned about the apparent understaffing, vacancy rate, need for further skilled staff, and comments that further funding was required in order to undertake the training, particularly in light of underspending in the previous year. The Department had reported that a new system was in the process of being set up, that would interface with other government departments such as SA Revenue Services, but Members expressed concern that this would only be functional in a year's time, and suggested that the current manual systems should be backed up by independent audit. This applied particularly to the Extended detention orders permitting goods to be inspected not at port of entry, but inland. Further questions were raised on sniffer dogs and scanning devices, issuing of permits, identification of the source of disease outbreaks, domestic inspections and confiscated goods. The Committee expressed the need for the Department to strengthen the internal audit systems. The Department was asked to send through a table of the staffing situation and copies of the plans to address staffing issues, within the next two weeks.  

MINUTES
Special Report of Auditor General: Department of Agriculture Import Inspection Services
The Chairperson announced that the purpose of the meeting was to address the various inadequacies and issues highlighted by the Auditor General in a performance audit of the Import Inspection Services of the Department of Agriculture.

Mr P Gerber (ANC) stated that it was common knowledge that pest and disease could create damage to a regional economy, and that recent globalisation had increased the risk of exposure to foreign and exotic species. It appeared that the Import Inspection Services entity had been understaffed since its inception, and he described this situation as a "timebomb" with the potential of creating strategic risks for the economy. South Africa had also been flooded with unregistered products from all over the world. He asked the Department to comment on what had been done to prevent these risks, and to state whether the necessary measures to prevent the spread of diseases such as foot and mouth had been taken. He further asked whether the Department had been caught unprepared by the Report of the Auditor General (AG) in respect of the registration and importation of products, since it had apparently not been able to provide the necessary figures and documentation.

Mr Masiphula Mbongwa, Director General, DOA, responded that a foot and mouth case had occurred in 2000, but this had affected the areas around a small area of Kwazulu Natal. The whole issue was correctly handled, and the Department was commended by both local and international organizations on their handling of the matter. He conceded that in regard to risk prevention the Department had faced many challenges. These had resulted in the decision to split that part of the Department that was too large to handle into two segments, one to deal with the production and the other to deal with security.

Mr Mbongwa said that in respect of the registration and importation of products, the Department was to some extent dependent on interchange with the South African Revenue Services (SARS), which also held information.

The Chairperson asked if this was a constraint on the ability of the Department to effectively do its work.

Mr Mbongwa said that the procurement of the information system had recently been outsourced, so that the systems of the Department of Agriculture and SARS could interface, so that the DOA was aware of all consignments coming in to the country.

The Chairperson asked if the software was already in place, or, if not, when it was likely to be in place.

Mr Mbongwa stated that the system was not in place. At present it was in the planning phase, during which the developer would plot the necessary steps. The tender would go out 1 September and in March 2008 the development would begin. By September 2009 the system would be fully functional.

The Chairperson asked when the Department had taken the decision to purchase the system

Mr Mbongwa replied that the decision was taken in October 2006, but it was necessary first to procure funding, which had delayed the process. 

The Chairperson noted that there was then already a delay from October to now, and the Committee was concerned about the situation.

Mr P Gerber (ANC) hoped that the systems could be synchronised. He noted that there was mention made that inspections were performed on around 2% of consignments, but he queried whether this figure was correct, since he now seemed to suggest that not all consignments fell under the control of the Department. Inspectors were not aware of all consignments to be inspected, and reliance was placed on third parties at ports to inform the Department of Agriculture of the entry of goods. In Port Elizabeth there were no inspections of certain high-risk products, because inspectors were not aware of them. The AG's report said that consignments that included fuel, sparkling wine, unfortified wine, and feathers, and goods on cruise and passenger ships were not covered by the procedures. There were not structured procedures for inspections. Reliance was placed on the Post Office to inform the Department of other goods. He asked what was being done to improve this lack of information.

Mr Mbongwa said that part of the answer lay in the system being developed. However, the Border Control Operational Coordinating Committee (BCOCC) had a subcommittee dealing with cruise ships docking at the ports, and there was now an inter-governmental approach, that filtered down information to departments involved. The Border Control Operational Coordinating Committee was also establishing rail inspection points. Six more dogs had been procured for the mail centres, and there was a full time leader handling the consignments at OR Tambo International Airport.

Mr Gerber noted that sniffer dogs were being imported to South Africa from the USA. He asked for an indication of the costs, and whether the handlers were being trained in USA.

Mr Eben Rademeyer, Chief Director: DOA, said that personnel were sent across to USA to receive training on handling, once their dogs had been trained, at the time of the first import of sniffer dogs. For the second batch of dogs, a trainer flew out to South Africa. During that session, a South African handler was also trained to be a trainer, and this would in future cut down on the costs. The cost of a dog would be in the region of R12 000 although the whole exercise would cost more. One had to compare the cost against what was achieved.

Mr Gerber noted that reconciliations were not performed between import permits and goods imported. He asked what was done to improve this problem.

Mr Mbongwa said that the report had failed to highlight that not all consignments were imported on the basis of a permit, but some were exempt. However, the inspection information was being reconciled, so there was clear linkage between permits and notes coming with the permit.

Mr Gerber noted that different methods were being applied in different countries. Overseas countries seemed to have more ingenious methods of checking what was being brought in. He asked if the Department was looking at better or different methods of checking.

Mr Mbongwa noted that some measures that Mr Gerber had cited by way of example related specifically to outbreaks of disease such as foot and mouth. Sniffer dogs would be used for certain material and animal products, and this was a particular aspect that needed to be strengthened, as it was a more general procedure that was not dependent on outbreak of disease. SARS took a sample of 2% and would verify this sample against what had been checked through in the exporting countries. The Department was seeking to improve its inspection ratio to 5%.

The Chairperson noted that the AG report had identified ineffective and incomplete procedures at various ports of entry. He asked if this was correct, and what had been done to address it.

Mr Mbongwa said that the various ways of capturing data were being addressed in the restructuring process, and noted that the Department in fact was covering both animal health and plant inspection services. Those reporting procedures were not harmonised at the time that the AG report had been compiled. Since then, a harmonised system was being introduced into the various ports. At BCOCC level an office was established to which records were now being sent weekly, and were being reconciled at month end. As part of the performance appraisal, each inspector now had to ensure that records were checked by supervisors.

The Chairperson said this would address inconsistency, but asked if it addressed effectiveness.

Mr Rademeyer said that to be totally efficient it would be necessary to have an electronic system in place. Free standing manual operating procedures had been developed in the interim, but he acknowledged that these would not be totally effective and efficient.

The Chairperson noted that this then seemed to suggest that all the problems identified in the report would continue. It also again highlighted his point that the decision to purchase the new system should have been taken much earlier. The new system would not be fully functional for more than a year.

Mr E Trent (DA) noted that the inspection services seemed to be in chaos.

Mr Mbongwa said that he felt that the word chaos was too strong.

Mr Trent noted that if the trained personnel were not in place, no matter what systems existed, the Department would not have the physical ability to deal with matters. The AG had noted that, despite the high vacancy rate, there was no plan to address the high turnover and staff vacancies and there were insufficient personnel. According to the report, Security and Disease Management fell under the control of a Deputy Director General, but this post was vacant.

Mr Mbongwa noted that the Deputy Director General post had been filled when it was created in 2005. He reminded the Committee that one previous position had been split into two functions, and therefore two posts were created. The Production and Resource Management post was not filled.

Mr Trent enquired the reasons for such a high vacancy rate.

Mr Mbongwa replied that inspection was a specialised area requiring scarce skills in entomology and animal health. At the time of the audit, the Department was still waiting for the results of the recruitment process. The current vacancy rate was around 10%. There was a great deal of rotation within the directorate.

The Chairperson asked how the vacancies were spread.

Mr Moketsa R Ramasodi, Director, Agricultural Products, DOA, said the directorate had about 305 posts, spread across three distinct areas of domestic control, imports and exports. 109 fell within the port environment, with a spread over sea ports, having a smaller component, and the land borders had 68 posts. This was a quick calculation and might differ from figures in the report.

Mr Trent said there were about 54 posts of entry. It was necessary to correlate the sites and the people across the land, sea and air ports of entry. He asked if the sites were open 24 hours a day.

Mr Rademeyer noted that some were open over 24 hours, and some were closed.

Mr Trent said that the Auditor General had suggested that there was a 20% vacancy rate. He asked if the posts allocated were sufficient to cover all the entry points. The organogram was one matter, but he wanted to be assured that there were enough people to cover all the ports, in view also of the shift work.

Mr Rademeyer said that 22 of the 54 land ports were commercial. The Department had a presence at 11. If it was not a declared port of entry for agricultural products, then the Department of Agriculture should not be present. There were 68 people currently holding posts for land entry points, but in fact there was probably a need for around 140 people to man agricultural ports of entry. Beit Bridge currently employed around 18 or 22 people but it was envisaged that around 40 were needed, as there were a number of stations where people needed to be placed. In some instances, he conceded that not all the areas were being covered. More personnel were needed, but the Department was constrained by its current budget options. 

Mr Trent noted that there was difficulty in finding the right people for vacancies, yet it was also noted that further posts were needed. He asked how the Department intended to attract the required number of people if it could not even fill the current vacancies. This was a high priority area that had significant knock-on effects on the economy, yet the Department seemed to be somewhat unconcerned about the urgency to address the issue. He noted further the comment on budgetary constraints, but said that the Department had in fact underspent its budget last year.

Mr Rademeyer replied that from 2003, when the BCOCC was established, the Department had started to focus on border control, and money had been allocated to upgrade that infrastructure. The Department was now focusing on other areas, and was indeed attempting to fill vacancies. Funds could not be spent until the systems were properly running. Posts had been established, and some current incumbents had applied for higher posts, leaving lower level vacancies. The Committee should remember that movement within government and between government and the private sector had been identified as a problem throughout the public service. The Department was also working on "workbench training" for those with tertiary qualifications, who needed further training on the specific processes, and this training should shortly be accredited by the South African Qualification Authority.  He still believed that if sufficient resources could be obtained, then the Department would be able to undertake the necessary in-house training.

Mr Trent and the Chairperson both reiterated that there had been money available.

Mr Mbongwa said that some staff would have to be imported. The Department had been discussing the issue with Cuba and other countries in the sub-region, particularly in regard to animal health, to try to fill the posts as speedily as possible.

Mr Trent noted that the AG had said that no action plan had been put in place to facilitate the filling of long outstanding vacancies. He asked if there was a plan to fill existing vacancies, and new posts, with time frames.

Mr Ramasodi said that there was a plan. The intention was to have less than a 5% vacancy rate, and a target was set for the beginning of October.

The Chairperson asked that a staff establishment graph and the plans to address staff vacancies should be forwarded to the Committee within the next two weeks.

Mr Trent noted that the AG had indicated that inspectors had said they had received no or insufficient training. He asked the Director to clarify this, since he had stated that there was a training plan in place.

Mr Mbongwa said that Department of Public Service and Administration (DPSA) had recently reported a country-wide shortage of experience and skills. It seemed that this was likely to last for some time. However the Department was making attempts to meet the negative impacts.

The Chairperson asked if these attempts were contained in the plan.

Mr Mbongwa said that this could be added into the plan to be sent to the Committee.

Mr Ramasodi added that it was already in the plan, since the five critical areas would be set out.

Mr Trent said that the AG report had also addressed the issuing of permits, stating that these were issued from Pretoria and Stellenbosch, and only two or three people were responsible for this function.

Mr Ramasodi said the permits would be issued either under plant health (where there were three people) and animal health (where he was not sure of the numbers). However, it was to be noted that the issuing of the permit was the final step in the process. The risk assessment was a more critical area and capacity was needed there rather than at the administrative stage of final issuing of the permit. The Department was working on this area.

Mr Rademeyer added that there were various directorates involved. There were other steps to the process, such as quarantine, and the risk analysis lay with another division, rather than import inspection.

Mr Trent asked if records were kept of permits refused.

Mr Rademeyer said that the Department did keep these records, as information was needed on the risk factors, and this would all be filed and considered at the final stage.

Mr Trent said there were rumours that cattle were being brought through the Kruger Park from Zimbabwe. He believed that this risk should surely have been picked up by the Department. Zimbabwe's economy was based on agriculture, and the Department should surely have picked up the signs of economic meltdown of that economy. He asked if the Department had anticipated the influx of animals, and had put in place a plan to deal with it.

The Chairperson noted that most of those crossing the border from Zimbabwe were not importing goods legally, and there was nothing that the Department of Agriculture could do to prevent movement of people.

Mr Mbongwa said that the approach to the situation had been guided by earlier comments. Since 1994 the borders and movement of people and goods had been opened up, so the Department had some contingency plans in anticipation of greater movement. Particularly in regard to direct neighbours, a system had been put in place to ensure that management of fences and movement of animals was being dealt with both internally and by liaison between governments. In Swaziland and Mozambique, the system was holding well. In Zimbabwe and the North-east, where there were game parks, the problem had in the past been caused apparently by animals breaking through fences, and here the Department, the provinces and the neighbouring countries had been trying to strengthen the breaks. Only now was there an indication that the fences were being purposely broken by humans, and not animals. Some measures had already been put in place and the Department was also investigating whether there was a need for further attention along the Zimbabwe border. Recommendations would be made to Cabinet.

Mr Trent was pleased that there had been an assessment of the situation and asked when it was likely that the recommendations would be made, and what action might follow.

The Chairperson suggested that there was not a need to deal with this question at this stage.

Mr Gerber noted that industry was using its own inspectors, in respect of counterfeit goods, and asked whether there was any possibility of public / private partnerships (PPP) being set up to assist the Department. Further, he asked what retention strategies were in place for trained personnel.

Mr Rademeyer noted that there were areas where PPPs could be established, and there were other instances where information was already being conveyed to the Department.

Mr Gerber asked what retention strategies were in place for those people that had been trained by the Department.

Mr Rademeyer noted that government should accept that it had a responsibility to train people as they would, in the long run, benefit the country in other sectors. The retention policies used by the Department were the standard strategies set for the public service.

Ms Nomvula Hlangwana (ANC) asked what progress had been made to ensure sufficient equipment, infrastructure and personnel at ports of entry.

Mr Rademeyer said that the BCOCC encompassed five key departments working together. Infrastructure was being shared. The spending would address the needs of all departments, as there was coordination across that structure.

Ms Hlangwana asked what coordination there was to ensure that shared equipment tools were properly handled and maintained, as the AG had expressed a concern on this issue.

Mr Ramasodi said that there was an infrastructure development committee, which handled the use of shared facilities. The Department had also done an inventory list and ensured that the Department's equipment being used at border posts was being properly maintained.

Ms Hlangwana noted that the AG said that monthly reports on management information were inaccurate or unreliable. She asked if there had been progress to ensure that reporting inspections now were sufficient.

Mr Ramasodi said that he had previously explained the reporting system now being used, and added that the Department had embarked on a harmonised system using a spreadsheet, which was escalated up to regional level. Furthermore there was now a standard operating procedure to deal with record keeping.

Ms Hlangwana asked if the necessary policies and procedures for record keeping had been established, and whether there was progress in the review of consistency of service delivery.

Mr Ramasodi said that standard operating procedures and systems had been developed. In respect of service delivery, there had been consideration of how to take the individual contributions to performance level. A portfolio of evidence for each inspector must be put together for the quarterly review, to find out what each was delivering in his individual capacity, at the offices.

Mr E Vezi (IFP) noted that the AG had reported that most of the monthly reports were inaccurate, incomplete, invalid, inconsistent or unreliable. This suggested that in the event of outbreak of disease, the Department would not be able to trace back the origins of the disease. He asked if the Department could now assure the Committee that its reporting procedures had improved to the extent that they would be able to trace any outbreaks.

Mr Ramasodi said that any diseases introduced by consignments legally imported would be able to be traced. However, the Department was not able to account for illegal imports or natural movement of disease. He confirmed that information entered into the system from legal imports could now be retrieved.

The Chairperson noted that this aspect could be taken up again after September.

Mr V Smith (ANC) noted the AG's comment that, because of the lack of equipment at the ports of entry, large amounts of consignments were not inspected. Instead, the Department would order that the consignments be inspected later at a pre-determined place. He asked for examples of what types of goods were involved.

Mr Ramasodi noted that it was not lack of equipment per se, but lack of facilities to unpack the consignments, that led to such orders. The consignments would depend on the mode of transport.  Extended detentions could be given for flowers, dairy or meat products, depending upon how they were packaged in transport. Extended detention would facilitate trade, and avoid bottlenecks at ports.

Mr Smith said that the AG had reported that this process was not backed up by reconciliations, so that there was no proof that the items for which permission was given to move inland were in fact produced at the time and place specified. He asked what the Department was doing to ensure that the goods were in fact being inspected, and if the process was effective.

Mr Ramasodi noted that the reconciliation processes of the Department also dealt with these extended detentions. Some borders were not connected, and here the inspector giving the extended detention would send the documents through to an inspector inland, who would then verify once the goods had been inspected at the inland authority.

Mr H Bekker (IFP) said that this did not sound completely effective. He wondered if the integrated system of Australia, that used scanners at port of entry, could be introduced to ensure scanning of all imports, and if verification of samples could also be introduced.

Mr Ramasodi clarified the issue of extended detentions. He said that until the new system under development could be implemented, the Department was doing a reconciliation as he had described. South Africa was already looking at some of the Australian systems, and an expert from Australia was working in South Africa to see what could be done to improve the systems on alien species. The BCOCC had also sent staff to the USA to investigate their scanning procedures and it was likely that the shared facilities would probably include scanners in future.

Mr Smith did not think that the system described was sufficient. He suggested that the Department needed to have an independent audit process done, especially since there was not currently an automated system, to help to safeguard against human error. He further suggested that independent audits were probably needed for all manual processes.

Mr Mbongwa noted that the internal audit officer already covered these areas, and at OR Tambo he reported on imports and confirmed what needed to be done on a regular basis.

The Chairperson asked if there were sufficient staff to support him, and whether he was doing the import inspection services in addition to the audit in the entire Department. He further asked when that internal auditor was appointed, since there were apparently insufficient systems at the time of the AG's visit.

Mr Mbongwa noted that he had been in position since 2005, and that it had been agreed that he must strengthen his systems, as also address the loss of staff from his department. Another function had also been added, to cover the provinces and risk management in general. This was work in progress.

The Chairperson noted that whatever he had been doing was not covering the inspection services.

Mr Mbongwa said that in fact he had managed to identify many of the issues were brought to the AG.

Mr Trent noted that work in progress implied that there were currently no systems in place, which invited corruption.

Mr Trent asked if there was a difference between temporary release and extended detention.

Mr Ramasodi said it was effectively the same thing. The extended detention would keep the goods under control of the Department.

Mr Trent asked how there was monitoring of temporary release, whether conditions were attached, and whether there was a way of following up on it.

Mr Ramasodi said that there was provision for this in the Act.

The Chairperson thought the lack of reconciliation procedures in fact applied to the temporary release. The importer was allowed to take the goods, but would have to produce them in another place. He asked if the reconciliation procedures related to the temporary releases.

Mr Ramasodi agreed that there was need for an internal debate on whether the releases were being done correctly. He noted that there was a regulatory audit being done on inspections, and this was done regularly.

The Chairperson noted that the procedure was not correct and needed to be attended to, and that the Department should follow up on Mr Smith's suggestion. He said that there was a danger of a consignment being release in Cape Town, to be produced in 24 hours for inspection in Somerset West, but ending up, without having being inspected, in George, where the goods could be sold on the open market.

Mr Trent also noted that there was a danger of illegal contraband in containers being sent through and replaced with other goods. He could not believe that there was sufficient control.

Mr Gerber said that the report had noted that in certain harbours and airports there was insufficient equipment. He asked for assurance that all the border posts had now been visited by the Department to note what was needed and what stock was held.

Mr Ramasodi said that all ports with agricultural quarantine technicians had been visited.

Mr Gerber said that the AG had highlighted problems in getting certain documentation. He read out the numbers of documents that were requested, noting that only small percentages were received. He further asked if the discrepancy between DOA and SARS records was being addressed.

Mr Ramasodi said that the tracing issues also related to the lack of linkage of the systems of DOA and SARS. The Department now had in place a system whereby it had copies of SARS documentation, Part of the challenge during the audit was that certain documents could not be reconciled with those of SARS, or did not match their reference numbers. The DOA had asked the AG to get these documents from SARS, where consignments were linked to SARS bills of entry issued by SARS.

Mr George Lawrence, Office of the AG, said that the database of customs was used, and the Department was asked for inspection certificates. Not all the documents could be found, therefore the AG had to report that the documents could not be submitted. Where the customs references were not linked, the documents were not produced. The AG could only report that the documents were not submitted, or that they did not exist to verify the information.

Mr Gerber said that there also seemed to be a problem with domestic inspection services. The AG had reported lack of communication between the State Veterinarian and the inspectorate. He asked if the situation would improve.

Mr Ramasodi confirmed that communication had been improved. For every consignment with an extended detention, there was notification of the goods and any possible risks, to the State Veterinarian.

Mr Gerber asked what happened to confiscated goods, and whether there was a paper trail to ensure that goods did not end up elsewhere.

Mr Ramasodi replied that a destruction certificate was issued and the internal auditor would audit this process.

Ms D Hlengethwa, Chairperson, Portfolio Committee on Agriculture and Land Affairs, said that this matter would be dealt with next week in the Portfolio Committee. The questions posed were useful, and she was grateful for the invitation to attend the Committee. She had not received the report and therefore could not participate fully in the discussion.

Mr D Dlali (ANC) asked if the staffing plans could be copied to the Portfolio Committee on Agriculture and Land Affairs.

The Chairperson noted that the Import Inspection Services seemed to be manned by dedicated staff, who needed support from management. It was to the Department's credit that various systems and processes had already been put in place, although he was worried that the deficiencies had been identified only on the report of the AG. He suggested that the Department should take a more proactive stance in looking at risks and shortcomings.

The Committee noted that the Fidentia matter would be discussed the following Tuesday.

The meeting was adjourned.