Independent Electoral Commission Annual Report: Briefing by the Independent Electoral Commission

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02 November 2009
Chairperson: Mr B Martins (ANC)
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Meeting Summary

The Committee was briefed by the Independent Electoral Commission (IEC) on the IEC's Annual Report for the 2008/09 financial year. The IEC's function was primarily to ensure the smooth running of free and fair elections. The first part of the presentation enumerated the strategic objectives of the IEC and what had been done to further them. The second was a detailed description and explanation of the financial statements. It was reported that financial controls were functioning effectively, and both internal and external audits had been implemented. Most of the income came from a R1 billion grant. There had been an unqualified audit certificate, but the Auditor-General had raised several matters of emphasis. These included three instances of irregular expenditure,. A change of accounting systems without getting the necessary National Treasury approval, lack of daily bank reconciliations, the fact that some cheques were inappropriately crossed, some payments were not made timeously, there had been some deviations in respect of payment to sole service providers, such as SABC, and a failure to advertise some bids correctly. In addition, the Auditor-General noted that some tender awards were not published timeously, documentation was not always made available on time and there had been a delay in submitting the financial statements to the Auditor-General for audit. Full explanations, together with an outline of what remedial action had been taken, were given.

Members questioned the vacancy rate and the fluctuating staff numbers, questioned payments of R296 million on professional services, requested information on the disciplinary processes, and enquired whether perhaps it was not time to have a debate on the electoral system. Members also asked about the high catering charges, the training given to police in preparation for the election, why so many teachers were used in the elections, instead of the unemployed youth, and whether it was likely that automated voter registration systems would be introduced. Members also pointed out that the failure to pay invoices on time had serious consequences on suppliers, and said that a solution would have to be found to the cheques where no banking facilities existed.

Meeting report

Independent Electoral Commission (IEC) Annual Report 20078/09
Ms Pansy Tlakula, Chief Executive Officer, Independent Electoral Commission, briefed the Committee on the  IEC's Annual Report for the financial year ending 2009.

Ms Tlakula took the Committee through the strategic objectives of the IEC. The first strategic objective was to project the IEC as the global leader in electoral affairs. It had participated in four international observer missions and one technical assistance programme. It had also assisted with the management of elections of 38 other institutions. The second strategic objective was the development and maintenance of organisational policies and strategy for effective and efficient functioning of the IEC. The third objective was the provision of independent and objective assurance and consulting activities designed to add value and improve the operation of the IEC. She said that the Audit Committee had met four times; an internal audit had been conducted and a Risk Management Committee had been established and had convened on three occasions. The fourth objective involved the maintenance of an optimal network of voting districts and voting stations for elections which would ensure reasonable acceptability by voters and lead to an accepted and up to date voters roll. In relation to this, Ms Tlakula noted that in preparation for the 2009 national and provincial elections, approximately 19 000 voting stations were established and that most would be used for the 2011 municipal elections. She stated that creating a stable network of voting stations was important so that voters would identify certain locations as places to vote. The average number of voters per voting station was 1175 and that there were 23 million registered voters.

The fifth strategic objective was the implementation and promotion of efficient processes that would facilitate the participation of political parties and individual ward candidates, and delivery of free and fair elections. She said that the IEC had to meet with representatives of all political parties, of which 156 were registered for the last election. Over the past year, 161 by-elections were conducted, compared to 65 in the previous year. Vacancies were due mainly to resignations, followed by deaths and expulsions. The sixth strategic objective was the provision and maintenance of an effective electoral logistics and infrastructure for warehousing and distribution of materials and equipment. Ms Tlakula stated that 100% accuracy was achieved in the distribution of materials and equipment. 16% of voting stations had no electricity; 6% lacked toilets and 10% had no water. 30 000 “zip-zips”, and electronic scanner used to register voters were introduced.

The seventh strategic objective was to inform civil society, with a view to maximising active participation in democratic and electoral processes. The IEC had conducted about 250 000 civic education initiatives, which included community presentations, workshops, site visits and seminars. One large-scale voter survey was undertaken, and two in-house desktop research on voting in prisons and voters with special needs were conducted. The eighth strategic objective was the development and maintenance of an effective and integrated policy and strategy that enabled the IEC to engage stakeholders utilising various media platforms. She stated that the IEC had held two staff briefing sessions and six issues of an internal newsletter had been printed. Sixteen media briefings had been conducted and an efficient call centre had been established. The ninth strategic objective was the development and maintenance of effective business practices, which included legal, human resource and IT aspects, to ensure the effective functioning of the IEC. The current staff of the IEC numbered 806, with a 21% vacancy rate. Disciplinary action had been taken against seven members who had since been dismissed.

Ms Tlakula then said, in respect of financial management, that the financial controls were functioning effectively. Internal and external audits had been implemented. Statutory monthly reports were delivered to the National Treasury on or before the 15th of each month and the National Treasury reporting requirements were implemented. She further stated that out of 653 contracts, 494 were awarded to Black Economic Empowerment (BEE) enterprises. 94% of bids awarded for e-Procurement went to BBE firms. Only 14% of bids were awarded to non-Small, Medium and Micro Enterprises (SMMEs). An unqualified audit had been received from the Auditor-General.

Mr Zolisa Matuya, Chief Financial Officer, IEC, presented the financial statement. He stated that most of the IEC income was in the form of a R1 billion grant, with a comparatively small amount (approximately R28 million) generated through interest. Expense figures and tables were also provided.

Mr Matuya then tabled and took Members through the Auditor-General’s report on the financial statements as included in the IEC's Annual Report. He reiterated that the Auditor-General (AG)had issued an unqualified audit but, without qualifying his opinion, had drawn attention to several matters. The report had raised three matters under the heading of “irregular expenditure.” He claimed that the first two matters did not concern funds that had been irregularly spent, in the sense that due process was not followed or that irregular payments had been made, but that this was a failure to follow “ancillary administrative prescriptions”. The amount of R184 085 highlighted was in respect of petty cash replenishments, where individual cheques had exceeded the R2000 threshold. He said this was due to the high turnaround inherent in conducting an election. This problem also arose in the financial year ending 31 March 2008. As a corrective measure, the IEC had programmed its system not to release payments by cheques in excess of R2 000. This problem was restricted to the earlier part of the financial year only, and would not be repeated. In any case, the IEC was to discontinue payments by cheque from 1 December 2009, and funds would only be transferred electronically.

Mr Matuya stated that in March 1998 approval was given by the Accountant-General for the implementation of the IEC's own computerised financial accrual and administrative system, since its staff could not be remunerated on the Public Service-operated PERSAL system. National Treasury preferred the accrual system rather than the cash-based Public Service system. During 2066 /2007 the software support for the system was withdrawn from South Africa by the provider. The IEC had no alternative but to immediately change its systems. He expressed regret for overlooking the amended Treasury Regulations, published in March 2005, which required a new Treasury approval for the new software. When this was reported by the AG on 31 March 2008, the IEC had requested condonation from National Treasury, but this was refused on 6 June 2008. The matter was unresolved and was still currently being pursued with the National Treasury.

With regard to the amount of R2 403, this was a simple case of theft or fraud. The employee responsible had been dismissed. The amount would be recovered from the employee's leave pay.

Paragraph 11 of the audit report had cited a lack of daily bank reconciliations. Mr Matuya said this was also cited in the previous report. He again referred to the introduction of a new financial system, and said that it had been difficult for the IEC to comply with the relevant Treasury regulations. The monthly reconciliations had been done at year end, and were approved. The IEC was currently negotiating a host-to-host banking system with its bankers to facilitate daily and monthly bank reconciliations. He emphasised this was not a simple matter but that the IEC had every intention of resolving the problem and complying with the prescripts.

Paragraph 12 of the audit report concerned the issue of inappropriately crossed cheques. These cheques could be cashed by a shopkeeper. This practice stemmed from a lack of banking facilities in rural areas, rendering appropriately crossed cheques “worthless” to causal staff in such areas, as they often had to spend more than the cheque was worth to travel to and from towns with banking facilities. IEC had now terminated this practice, had recalled all inappropriately crossed cheques, and placed a ban on the issue of such cheques. This resolved the audit issue, but did not address the problem of the areas where there were no banks.  National Treasury would be consulted on this matter.

The comments by the AG in paragraph 13 related to the failure by the IEC, on occasion, to settle accounts promptly within 30 days. He said that the IEC generally settled accounts promptly, but it was currently reviewing and implementing control measures in its nine provincial and 254 municipal offices, to ensure that all were paid within 20 days. All late payments had been or would be identified and, where necessary, appropriate disciplinary steps would be taken.

Paragraph 14 noted transactions to sole providers of particular services, such as the South African Broadcasting Corporation (SABC) and Human Sciences Research Council (HSRC). He conceded that deviations were not reported, as required, within the stipulated timeframe. A report on deviations had been prepared and submitted to the Auditor-General and National Treasury.

Paragraph 15 concerned bids that were not advertised for the prescribed minimum of 21 days or, in some cases, not advertised at all. Mr Matuya said that that IEC would ensure that bids would be advertised in the Government Tender Bulletin for no less than 21 days, but warned that this would be difficult if not impossible during election periods where unplanned and unplanned requirements and events often required that tenders be run for shorter periods with a speedy resolution, to ensure the credibility of an election.

Paragraph 16 of the audit report raised concerns that tender awards were not published timeously. Mr Matuya said that in future, IEC would do so as soon as possible after adjudications processes have been concluded. Paragraph 17 concerned the provision of cellular services. Mr Matuya said that the cellular provider who rendered SMS services had since been invoiced, and policy and procedure changes would be made to ensure better control in future. Paragraph 18 raised concerns on the sale of maps to political parties. Mr Matuya said that this did not have a material influence on the revenue yield, but the tariff structure would be disclosed in future.

The AG had also commented, in Paragraph 21.1, that documentation was not always made available timeously. 
Mr Matuya explained that some documents had to be obtained from provincial and local offices whilst conducting an election. In future he undertook to ensure that the information requested by the Auditor-General would be made available in a more timely manner.

Paragraph 21.4 reported on a delay in the submission of financial statements to the Auditor-General. Mr Matuya again pointed out that the IEC was engaged in elections and could not focus sufficiently on the preparation of financial statements. The implementation of a new computerised financial and administrative system caused further delays. He said that the IEC would enhance its internal control and governance environment during the current financial year, which was a non-election year, in preparation for 2011.

Discussion
Mr M Mnqasela (ANC) thanked the IEC for its attendance, commenting that there was seemed to be a trend, not only with the IEC, but also with many other institutions accountable to Parliament,  to give lip service to the idea of conforming to financial requirements as mandated by law.

Mr Mnqasela asked why there was such a high vacancy rate.

Ms Tlakula responded that the IEC was a cyclical organization, which required more staff at certain times and did not wish to employ people just for the sake of doing so.

Mr Mnqasela asked why R296 million had been spent on professional and other services.

Ms Tlakula responded that that amount was largely monies paid for the provision of IT services.

Mr Matuya said that this cost also included the cost of legal services as well as the services of DeafSA, a non-government organization (NGO) for hearing and sight impaired persons, for the development of a ballot template that could be used for blind voters, as well as the use of sign language.

The Chairperson requested more information on the disciplinary measures taken against the seven dismissed employees.

Ms Tlakula said that more information was included in the Annual Report. She said that the reasons for dismissal were gross negligence, drinking on duty and offences involving dishonesty.

An ANC Committee member asked what the difference between GAAP and GRAP was.

Mr Matuya responded that the first stood for “Generally Accepted Accounting Practices” and the second for “Generally Recognised Accounting Practices” and that the former was the one primarily used, even though it was geared for private enterprise.

An ANC Committee member asked whether it was now time for a debate on the electoral system used. He noted that Members of both Parliament and Provincial Legislatures claimed to have a constituency, the people living in that constituency quite possibly had never even heard of that MP.

Ms Mosoho Moepga, Deputy Chief Executive Officer, IEC said that the proportional representation was a system that could only be changed by Parliament. She did note that fewer would be in Parliament if this system was not used.

An ANC Member raised the issue of high catering expenditure, asking if it could not be managed better.

Ms Moepga replied that in impoverished rural areas, the IEC workshops were a place where the residents could obtain a proper meal, including meat. In urban areas, IEC would usually only provide sandwiches. She emphasised that she was not making excuses, but noted that the expenses did arise from outside civic work.

Mr Gasebunwa (ANC) wanted to know if the IEC trained police officers when conducting an election, so that these officers knew their responsibilities. He said that in previous elections, people voting for the “wrong” political party had been deliberately directed elsewhere by the police.

Ms Moepga responded that the police were not formally trained by the IEC, but did attend workshops. She said that she wished there could be a system where there would be a dedicated unit who fully understood and were responsible for enforcing electoral laws.

Mr Maduna wanted to know why many of the people trained and employed during elections were drawn from the ranks of teachers, instead of from the ranks of the unemployed, especially the youth.

Ms Moepga replied that in other jurisdictions, election monitors were drawn from civil servants, which included teachers. In South Africa, the group was mixed, but a large proportion was teachers. Principals and teachers were selected as they were respected members of the community. She said that there had been problems with unemployed people before, including the fact that they would immediately leave if they found another job that paid better than the minimum stipend (usually covering only travel costs) offered by the IEC. Another issue concerned the need for training first. Generally, an unemployed person was seeking a job, not training. However, no teachers serving in union offices or as a party official could serve as an election monitor.

Ms Tlakula added that teachers were a stable network that could be used for more than just one election. They were also less likely to “walk off” like many unemployed.

Ms Moepga expanded by saying that the IEC employed three categories of staff. Permanent employees were in the majority. There were also short-term contracts, such as technicians, and thirdly the leadership served seven year terms.

An ANC Committee member asked about the direction towards automatic voter registration in s South Africa, as was happening in several other countries.

Ms Moepga replied that South Africa had a comparatively complex system. A person had to be added to a voters’ roll and could only vote in his or her area of residence. A person could only register if he or she had an ID. There were instances where it took 18 to 24 months to get an ID. In other countries, most people were registered at birth and automatically added to the voters’ roll once they turned 18. However, this method would have constitutional implications in South Africa, where it was a person's choice whether or not to be added to the voters’ roll, and once added, it was their choice as to whether to exercise the right to vote.

An ANC Committee member asked whether electronic voting devices were planned for future use.

Ms Moepga replied that a task force was looking at electronic voting and examining systems in place in other countries. However, there were limitations. South African voters were not sufficiently technologically literate, and no self-checking was possible. Once a selection was made, even in error, it could not be corrected on such a system.

An ANC Committee member commented that not paying bills on time was a serious matter, especially as it could have a detrimental effect on SMMEs.

Ms Tlakula replied that late payments were taken very seriously, and that the IEC was not proud of failing to pay on time. She undertook to be more vigilant in future.

An ANC Committee member stated that simply refusing to issue cheques did not solve the problem of inappropriately crossed cheques.

Mr Matuya replied that this was a serious policy problem that he honestly did not know how to resolve, adding that even the Mzanzi accounts would be closed if not used regularly.

The Chairperson asked why there was a budget surplus.

Ms Moepga said that part of the reason was that not all vacancies were filled, and that money allocated for this purpose was not used elsewhere.

The meeting was adjourned.

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