N2 Gateway Project: Progress of reporting; Annual Reports: report back by Committee groups & consideration of draft resolution

Meeting report

Report back from Committee groups on Annual Reports tabled
The Chairperson noted that in this meeting each of the Committee sub-groups would report back on the Annual Reports considered by its group.

Group One Report back
Mr R Ainslie (ANC) informed the members that 132 reports had been tabled. Of that 132, the Committee had managed to process 108 of the reports. Ten reports had not yet been tabled, including the report from the Department of Transport. He noted that there had, however, been an explanation.

This group recommended that 22 of 34 departments or entities that it considered should be called in by the Standing Committee on Public Accounts (SCOPA) for hearings on some very serious short comings.

The group had considered three additional reports since the last time it reported back to the Committee. The first report was from Airports Company of South Africa (ACSA). ACSA was given an unqualified opinion by the Auditor General (AG), but with emphasis of matter on various items, and the group recommended that ACSA be called in for a hearing.

The second additional report related to MINTEK. There were no serious findings or concerns in that report, but the group thought that some questions should be put to this entity.

The third additional report related to the Mine Health and Safety Council (MHSC). Although the Council had received a clean bill of health when it came to the financial statements, there were some very serious governance issues. The Auditor-General (AG) had listed 18 governance categories, and the group felt that MHSC had failed in every one of them. The group had debated whether it was necessary to call in the Council, but had decided that because the financial statements were in order, apart from one report of R86 000 fraud, as a first step questions should be sent to the Council for written responses, after which Group 1 would consider whether the Council needed to be called in at a later stage.

The only entity out of the 34 considered by this group, with an unqualified report with no matters of emphasis was the Council for Scientific and Industrial Research (CSIR), which Mr Ainslie said Members should read to “rekindle your pride as to what our country is doing in terms of research”.

Group Two Report back
Ms T Chiloane (ANC) told the Committee that this group had 14 report-backs. The first report related to the Municipal Demarcation Board (MDB). This had received an unqualified opinion from the AG. The group had no concerns with the MDB, as the entity had a clean bill of health. Its expenditure was 96.8%.

The second report related to the Films and Publication Board (FPB). It had a budget of R519 million and received a qualified report. The group was concerned about the way in which the property, plant and equipment and the assets register were designated in the financial statements. The initial costs of the finance list were not accurately calculated. There was also an omission to disclose irregular expenditure amounting to R1.2 million. The group recommended that the entity be called in for a hearing.

The third entity was the Independent Electoral Commission (IEC). This had a budget of over R1 billion. The AG's opinion was unqualified, but there was emphasis of matter. There were concerns with regard to irregular expenditure. Cheques were written without the approval of National Treasury. There was non compliance with some aspects of the Public Finance Management Act (PFMA) and National Treasury regulations. The group recommended that the IEC be called in for a hearing.

The Compensation Commission for Occupational Injuries and Diseases and (COID) received an adverse opinion. The COID had a budget of R1.3 billion. Some of the concerns which the group had were that the entity was unable to account for debtors, its system was inadequate and its audit committee was non-functional. The group recommended the entity be called in for a hearing.

The South African Medical Research Council (MRC) received a qualified report. One of the concerns was it had written off some of its equipment without the approval of the executive authority. Its asset register was not up to date either. Senior officials were absent during the audit. Its internal controls were also inadequate and its financial statement was submitted four days after the dead line. The group recommended that it be called in for a hearing.

The report of the Council for Medical Schemes was unqualified, with emphasis of matter. One of the concerns was that its financial statements were not prepared on the basis of the accounting principles as determined by the National Treasury. The group recommended that written questions be sent to the entity.
 
Public Administration Leadership and Management Agency (PALAMA) received an unqualified opinion from the AG with emphasis of matter. it had a budget of R140.1 million. The concerns raised included that there was non-compliance with its Human Resources Management Plan, which was not up to date. In addition to its budget, PALAMA received R40 million of donor funding, and had been unable to account for this. It also had a rollover of R60.6 million, which was done without the permission of the donor. It also had a 45% vacancy rate in its Human Resource Plan. The group recommended that it be called in for a hearing.

South African Local Government Association (SALGA) had a budget of R139 million. The AG had issued a disclaimer. Some of the concerns which were raised were that there was no access to the KwaZulu-Natal (KZN) offices of SALGA. Its property, plant and equipment to the value of R5.114 million had been appropriated by the KZN offices. There was irregular expenditure amounting to R4.8 million. This was incurred as a result of non-compliance with supply chain management policies. There was also fruitless and wasteful expenditure, which amounted to R289189 as a result of penalties due to late payment. The group recommended that the entity be called in for hearing. It fell under the category A reports.
 
The Department of Cooperative Governance and Traditional Affairs (COGTA) received an unqualified opinion. However, the group was concerned about the AG’s comment that the Department did not have a proper record of its assets in terms of the PFMA and the National Treasury regulations. The AG could therefore not determine the accuracy and existence of capital assets to the total estimated value of R4.4 million, due to the absence of supporting documentation. The group recommended that the Department be called in for a hearing.

The Refugee Relief Fund, which had a budget of R480 000, received an unqualified report. This fell under Category C.

The Social Relief Fund had a budget of R20 .8 million. It received an unqualified report from the AG. It had a clean report and fell under the Category C.

High School Voorentoe Disaster Fund had a budget of R149 000. It received an unqualified report. It had a clean report and fell under the Category C.

The Department of Social Development received an unqualified report with matters of emphasis. Amendments were made to the financial statements. In terms of categories, it fell under Category C. The group recommended that the Department be called in for a hearing, as there was irregular expenditure.

The South African Social Security Agency (SASSA had a budget of R4.6 billion. It received an unqualified opinion with emphasis on matter. The concerns were that there was an exemption from having to prepare the financial statements in accordance with the Generally Accepted Accounting Practices. There was also an irregular expenditure from previous years which was condoned during the financial year. Its asset register could not be verified by the AG therefore it was not updated. The entity fell under Category C and the group recommended that it be called in for a hearing.

N2 Gateway Project: Committee’s draft report and resolutions
The Chairperson tabled the Committee’s draft report and recommended that Members go through the document page by page.

Mr N Singh (IFP) said that on page 1, under the heading 'Report of the Committee' there should be mention made of which provincial Department was being named. Where there was a reference to the 'Municipal Manager of the City of Cape Town’, Mr Singh thought that this was incorrect. He suggested a revision of the entities referred to, so that the document firstly referred to the National Department of Human Settlements, then to he Western Cape Provincial Department of Housing, and then, not to the municipal manager, but to the City of Cape Town.

The Chairperson agreed.

Mr Ainslie suggested that wherever the report stated 'the AG raised specific concerns' it should be changed to 'the AG made a finding'.

The Chairperson agreed.

Mr Ainslie said that the AG found that the Steering Committee (SteerCom) was no longer meeting. However, during the hearing and in the documentation given to the Committee, it appeared that the SteerCom had been re-established and was meeting. He was wondering if the report should not make mention of this fact.

The Chairperson agreed and said that the AG's findings would stand but under the Committee's recommendations this should be added.

Ms M Matladi (UCDP) said that her understanding was that the findings of the AG were based on facts at the time that the audit was done. It was therefore not possible to add things that were done after the audit.
 
The Chairperson said that at the findings of the AG would remain as stated. However, the Committee, when making its recommendations, had to take account of the fact that at the time of the hearing there were some further developments on these issues.
 
Mr Ainslie agreed with the Chairperson. He reminded Ms Matladi that while the core of SCOPA’s resolutions were based on the AG's report, it had however had interactions after the AG’s report was submitted. Therefore, the Committee must take into account events that it heard after the AG's report.

Mr M Steele (DA) suggested that each of the headings should begin with the statement 'the AG made the following findings' but that what the Committee found, based on the AG's findings, should then go under a separate heading.

The Chairperson agreed.

Mr N Du Toit (DA) referred to page 2, which contained paragraphs (a), (b) and (c) on the Committee Recommendations. It was stated that the project conformed to the prescripts of national Acts and policies. He commented that much of the project was 'water under the bridge' and could not be made to conform now. Correctly speaking, it was only the remainder of the project which now conformed to the prescripts of national Acts and policies on housing.

Mr Singh referred to paragraphs (c) and (d) and said that the Committee had not yet seen a forensic report but was aware that there was a report. He asked whether it was not correct that this report should be made public at some stage.

The Chairperson said that some of the findings that the AG made in his report were based on that forensic report. Mr Singh had correctly pointed out that, from a legal point of view, it was not correct to say that the Committee had seen this report and used it as a basis for making these recommendations.

Mr Singh said that he was not present when the Committee did an on site inspection at Joe Slovo, but his understanding was that that Committee went out, things were said in the meeting, and then the media reports that evening had carried something different to what was said in the meeting. The findings that the Committee made were surely material to what the Committee was reporting, which was the fact that the Committee, having been misled at the hearing, found out that something different was in fact happening on the ground.

The Chairperson agreed and said that Members saw pictures on the news which told a different story to what they had been told. Subsequently, when the Members visited Joe Slovo, they found problems in terms of the physical structure. The Chairperson then had a meeting with the Director General, who provided the Chairperson with documentation that indeed repairs had been done, from the roof to the physical cracks. However, the implications of this were now clearly witnessed; whatever had been repaired had either caused problems somewhere else, or, as evidenced from discussions with the residents, the repairs had simply failed to fix the original problems and in some cases had worsened them, such as roof leaks. That told the Committee that the whole quality of the houses was extremely poor.

Mr S Thobejane (ANC) said that the Chairperson should have then returned to the SteerCom with the new information and asked them what they thought should be done.

Ms Matladi said that at the end of the day, it seemed that the Director General had lied to the Committee. The main issue was not whether or not the repairs had been done. The Director General had informed the Committee that the conditions in which people were living were fine, and this was clearly not so. He had also said during the meeting that everything had been taken care of, and that all problems were being addressed. However, the media reports the following day showed that this was not the case.

The Chairperson confirmed that after the hearing, then the media news, the Committee had been to visit Joe Slovo. What the Committee saw contradicted what the Director General had said. The Committee reported this fact to the SABC, and it was broadcast. The Director General, having seen that broadcast, contacted the Chairperson and said that he had not lied at the meeting, and then produced the evidence of the repairs that were done. It seemed that there was no deliberate intention on the part of the Director General to mislead the Committee.

Mr Singh said that the conclusion of the Report should then state that the Committee had undertaken an on site visit, during which it noted that the repairs were not satisfactorily completed.

The Chairperson agreed that the conclusion needed to be changed. The report would recognise what the Department had done, but also add what the Committee had found.

Mr Ainslie emphasised the fact that another draft of the report should be presented to the Committee before it made its final decisions.

The meeting was adjourned.