Commission for Gender Equality Annual Report 2007/08 and 2008/09, Budget and Strategic Plans for 2010/13 and turnaround strategy: Briefing

Meeting report

Introduction
The Chairperson welcomed Members and delegates, among whom were Mr K Tweni, Director, Office of the Speaker, Mr Pat Gagai, Director, Office of the Speaker, Ms Vuyokazi Mafilika, Parliamentary Manager, Office of the Auditor-General, Ms N Ketshangana, Ministry of Women, Children and People with Disabilities (WCPD), Mr Ken Terry, Acting Director-General (DG), WCPD, Dr Manhla Mkhize, Acting Deputy Director-General (DDG), WCPD; and Mr D Segwage, Parliamentary Liaison Officer, WCPD.

The Chairperson expressed disappointment; she had expected an Acting DG from the Department of Women, Children and People with Disabilities or somebody from the Ministry as very serious issues were to be discussed and the Ministry needed to understand what was going on in the Commission for Gender Equality (CGE). She asked where the Minister was.

Dr Mkhize replied that the Minister was still on sick leave.

The Chairperson said that should have been communicated to the Committee. It could not send a card or flowers because it did not know what was happening; there should be healthy communication. It was expected that at least her advisors would have attended the meeting.

Ms H Malgas (ANC) suggested that in future there should be written confirmation as to who would be representing the Ministry.

The Chairperson asked that that message be conveyed to the Minister.

Dr Mkhize agreed to convey those concerns to the Minister.

Parliamentary Research Unit briefing
Ms Joy Watson, Parliamentary Research Officer, briefed the Committee on the Research Unit’s findings following the meeting of the Committee on Public Accounts the previous Friday regarding challenges facing the CGE that needed to be addressed and how the Committee needed to exercise oversight. The Research Unit had found four key issues: the non-submission of strategic plan and annual reports to Parliament; lack of an effective financial management system; lack of an effective human resource management system; and organisational development issues, including governance issues. If the strategic plan and annual reports had been submitted on time the problems could have been detected much earlier. There was non-compliance with the PFMA, which was a criminal offence; and no proper supply chain management system, which resulted in irregular expenditure; and also significant mismanagement and misappropriation of funds. Irregular expenditure of R14 868 719 was not disclosed in the annual report.  R4 036 761 was paid to Four Rivers Consultants to assist with financial management, but with no clear deliverables.

At the time of the Auditor-General’s report, all six head of department positions were vacant. It was reported that the former CGE chairperson had not gone to work yet had earned a salary. There was a need to amend the CGE Act so that the chairperson would not only have to account to Parliament but to the Commission as a whole. It should be recommended to CGE that all Commissioners and senior staff undergo training in the PFMA.

Ms Crystal Levendale, Researcher: Gender, highlighted the key issues of an analysis of the Annual Reports 2007/08 and 2008/09 of which the Committee needed to be vigilant including:

- Under the Finance and Administration programme for 2007/08, programmes were set that included effective supply chain management. In terms of adhering to budgetary control, a target to achieve that was set at 90% but only managed 20%. The CGE was able to produce an annual finance report that indicated resource allocations and also monthly management reports which allowed for appropriate decision making, so if those reports were produced it had to be asked why the CGE had achieved only 20%.

- In terms of Human Resources CGE set a target of maintaining a vacancy rate of only 10% and that no positions would be vacant for longer than two months, yet 13 staff members left the organisation, 10 of whom resigned. There were six head of department (HOD) vacancies in 2007, so it had to be asked who headed the different programmes of the Commission and why the people left.
 
- The aim of the Chief Operations Office was to ensure that provincial offices adhered to the strategic framework of the CGE. The report indicated that the office achieved all its targets, and in particular that the CGE ensured that financial systems were in line with legislation, yet the Auditor-General had given a disclaimer.

- Financial statements indicated that there were overdrafts in some of the offices. Bloemfontein and Kimberley had R17 000 and R18 000 overdrafts, the head office had an overdraft of R2.2 million, and there was no explanation as to what that money was used for.

- Disclosure of remuneration of the Chief Executive Officer (CEO) indicated that the CEO’s salary increased by 37% from 2007 to 2008. If the organisation was experiencing financial difficulties it had to be asked what the motivation for that increase was.

Commission for Gender Equality briefing
In welcoming the Commission, the Chairperson said that the Commission had been called to take full responsibility for the negative reports and to answer questions pertaining thereto.

The Acting Chairperson of the Commission replied that the CGE would report on its performance for the period 2007/08 and 2008/09, the budget for 2010/11; and turnaround strategy to address issues raised by the Auditor-General. The Auditor-General had raised the breakdown of internal controls. A strategy for internal control had been implemented. Commissioners would also submit reports to the Portfolio Committee on a monthly basis until the organisation was stabilised.  There were negative media reports and anyone who had knowledge of any wrongdoing could report that to the relevant body, such as Parliament, if those reports were verified.

The Chairperson explained that the Committee would entertain the annual report but not the turnaround strategy that had only just been tabled to the Committee and Members would need to study it before again calling the Commission.

Ms Keketso Mgema, Acting CEO, CGE, prepared to brief the Committee, but Members were not happy that copies of the presentation had not been received. There was considerable delay until the documents arrived.

Ms Mgema presented the performance information contained in the two annual reports for 2007/08 and 2008/09.

The CGE was established in terms of Section 187 of the Constitution for the promotion, protection, monitoring and evaluation of gender equality in South Africa.

Its Legal Department assisted vulnerable people in terms of gender rights valuations. In 2007/08 the department handled 630 complaints related to gender discrimination. The highest number of complaints received was for maintenance and divorce cases, and domestic violence. It had monitored 44 court cases, and during the year under review engaged in litigation on four cases – Mpanza, Pensionable Age, Shilbane and Sylvester vs Crossroad.

Its Parliamentary Unit evaluated two pieces of legislation towards gender policy in legislation.

The CGE submitted research to Parliament to share its findings and recommendations on widowhood, representation in the private sector, and gender mainstreaming in the curriculum. Ms Mgema suggested that the Committee invite the CGE to present on those reports.

The CGE’s Public Education and Information Department promoted awareness on gender rights and assisted people to access their rights and gain understanding of challenges as citizens; and also to bring about changes in attitudes and behaviour with regard to equality. A number of interventions had been put in place.

Ms Mgema began to report on performance for 2008/09, but the Committee agreed that, as the reports did not address financial management and the Auditor-General’s report was on finances, CGE should speak to the finances.

Mr Moshabi Putu, Acting CFO, CGE, said his presentation was a combined report for both financial years, so he could present after the CEO’s presentation for 2008/09.

Ms Mgema continued that in 2008/09 the Legal Department opened 424 files, and 403 of those were closed. 538 walk-in complaints were dealt with and the CGE litigated on four cases.

Five research reports were completed for the year under review. These were a study on monitoring Mainstreaming of Gender in HIV/AIDS, Monitoring and Evaluation responses to reduced gender based violence, the Victims Charter, the Gender Barometer; and the Land Study. The Land study had almost rolled over into the current financial year. The printing, layout and design were only taking place now.

Because 2008/09 was the year of general elections, the Public Education and Information department focused mainly on women in legislative processes, issues of 50/50 representation, and forged partnerships with radio stations to create awareness on issues of gender equality. Some of the work planned was not achieved due to lack of funds or lack of capacity.

The Chairperson asked the Acting CFO to try to tell the Committee what it wanted to hear, bearing in mind that it had attended some of the Committee on Public Accounts meetings.

Mr Putu replied that he would talk to financial management and compliance.

Over the MTEF period budget allocated and approved by National Treasury was R49 112 000 for 2009/10, increasing to R60 826 000 for 2013/14; indicating an average annual growth in budget of 5.4 percent.

Most of the money catered for salaries of R29 361 000 for 2009/10, increasing to R39 228 000 for 2012/13.

Ms D Ramodibe (ANC) did not understand; the Committee was supposed to be looking at 2007/08 and 2008/09, but the figures were for 2009/10 to 2012/13.

The Chairperson agreed it was being presented in an awkward way and asked for the 2008/09 financials.

Ms H Malgas (ANC) expected the Acting CFO not only to speak to the trends, but also to the actuals for oversight on the Auditor-General’s report. He needed to speak to the audit report.

Mr Putu referred Members to the balance sheet as at March 2008 on page 61 of the Annual Report.

Ms P Duncan (DA) said that the meeting was making no progress. Members did not need a briefing on what every page meant, the handover report was before the Committee on Public Accounts;  the Committee was well aware of what was in the two annual reports and also of the Auditor-General’s opinion. The Commission should know that the Committee was looking for answers to issues such as why staff had not been appointed, why there were still an Acting CFO and an Acting CEO. The Researchers had done their work and she felt it was time for questions to be answered.

Ms Malgas agreed. She referred to the irregular expenditure that was not disclosed, and the R14 million not disclosed in the annual report, and the Auditor-General’s disclaimer.  The Commission was not giving answers; it would be better to ask questions.

The Chairperson said that was why she had asked the Acting CFO to tell the Committee what it wanted to hear; the Committee had done its work. It was trying to understand what had taken place.

Discussion
Ms Ramodibe said the annual report indicated that an organisational diagnostic specialist along with an in house finance consultant had been engaged to ensure that the organisation met all its financial objectives. What was the progress in that regard? She also asked, in light of the above, and that the organisation had set a target for obtaining unqualified audit reports, why did the Commission in 2007/08 receive a disclaimer from the Auditor-General?

Commissioner Janine Hicks, CGE, responded that the report revealed that there were specialists within the house of the CGE working to assist the CGE to clean up its act and to obtain a clean audit, yet despite the target of clean audits the Commission received disclaimers for the two periods.

Ms G Tseke (ANC) referred to the CGE Acting Chairperson in terms of negative media reports with regard to the performance of the CGE; the instability of the organisation was a disgrace to the Committee and to the community; and according to the Auditor-General’s report it was spending money recklessly.

Commissioner Hicks responded that instability was related to the fact that the Commissioners had not been in place for more than a year and the governance structures had more or less collapsed.

Ms Mgema responded to the negative media perception of the CGE. That originated from two processes, one being when staff complained to Parliament and the Public Protector and that information was leaked to the media. Some allegations were factual and some were not. The former CGE chairperson had announced her resignation on the media, prior to giving her letter to Parliament; and the letter was negative. It alleged that CGE was ‘toxic’ and stated that she was leaving because she did not get support from CGE. Subsequently negative media statements started again with the investigations by the Office of the Public Protector (OPP) and the Auditor-General.

Ms Tseke said that the lack of intervention, especially in the rural provinces and Limpopo, meant that the CGE was not known in some of the provinces and the rural communities.

Commissioner Hicks acknowledged that there were difficulties in that province around capacity and performance. A turnaround strategy was in place and the current Acting CEO had taken measures to address Limpopo’s non-delivery. There were other large provinces, such as Mpumalanga, the Eastern Cape and KwaZulu-Natal, and the Commission’s ability to reach the rural provinces was of great concern. CGE was concerned that, especially in KwaZulu-Natal, it was not sufficiently represented in the urban areas and was not addressing other race groups in the urban areas. There were extensive outreach interventions and the Commission collaborated with the Chapter Nines in the provinces and worked with the Independent Electoral Commission (IEC), which had an office in every municipality, to conduct joint interventions and legal clinics, so there was extensive work to reach into the rural communities. Despite the challenges and mismanagement, substantial work had been done and would continue to be done. The strengthening of mechanisms and systems would extend the institution’s reach and impact.

Ms Tseke also raised the issue of the acting positions in the CGE, the Acting Chairperson, Acting CEO, Acting CFO, and Acting Commissioners; the Commission would not progress until that matter was attended to.

Commissioner Shaboda responded to the question on the Acting Chairperson’s position, which appointment would be made by the President. Before members of the current team were appointed Commissioners in 2007, CGE had no commissioners and they were hoping that Parliament would ‘fast track’. There were vacancies for three commissioners, the former chairperson had resigned last year and there was still an Acting Chairperson. She appealed to the Portfolio Committee to see how that could be fast tracked. Interviews were taking place on 20 May for the position of CEO and it was hoped that by August the first task of the new CEO would be to interview for the positions of Heads of Departments, so that those acting positions would come to an end. She appealed to the Committee to apply pressure so CGE could have its leadership in place. The current commissioners’ contracts ended in 2011. The reason they were in that position was that for more than a year there had been only one commissioner operating in the CGE and there had been no oversight in the CGE during that period. When the current commissioners were appointed in 2007 they had to undo all that happened while there was no oversight. She pleaded that there would not be that gap again when their contracts ended in 2011, because things went wrong when there was no governance structure in an organisation.

The Chairperson agreed with the Commissioner. The Committee had received applications to fill the positions of the commissioners but because of the problems within the CGE had been instructed to wait. It was a problem for CGE, and for Parliament as well, to appoint when things were like this. The President appointed and that was done through another process of taking a resolution in the House and so forth. There were reasons for making institutions such as the CGE to be independent, but sometimes they were abused and it was unfortunate that because they were so independent the Committee’s hands were tied. An organisation could not be run on the assumption that it could not be touched because it was independent. Procedures were in place for intervention.

Ms Duncan added that it was mentioned in the Auditor-General’s report that on 25 March 2007 the President had appointed eleven commissioners. How long was the period until there was only one commissioner left?

Commissioner Shaboda replied a whole year.

Ms Duncan concluded that from 2007 to 2011 was for a five-year period.

Ms Duncan asked why thirteen employees left the organisation in the 2007/08 financial year?

Commissioner Shaboda clarified that that was also part of the management regime that was in place prior to the commissioners coming in place. One had to be careful of the systems put in place and the way in which staff were treated. The period when there was such a high turnover of staff was when people felt it was an oppressive organisation that did not look after its staff members.

Ms Duncan also asked whether the Commissioners were aware of the financial difficulties, and, if so, what they did to ensure intervention.

Commissioner Shaboda explained that because of the collapse of the governance systems, the financial reporting was not done in compliance with the PFMA, so that kind of reporting that showed difficulties arising was not made available, and that was why some of the staff members started writing to Parliament. Those things were now on the table and he assured the Committee that CGE would report on a monthly basis.

A Commissioner added that there was a paper trail from May 2008 to the final letter to the Deputy Speaker in June 2009 that CGE would be happy to submit to the Committee, stating exactly what was happening at the CGE.

Ms Malgas referred to the programmes for 2007/08, the private sector. According to that report everything had been done, but according to the other report, page 33, the gender analysis of economic power opportunities, was reported as not achieved because of a key implementation problem. She asked why the one report indicated completion while the annual report indicated failure to complete.

The Commissioner responded that the private sector research was completed in the financial year 2007/08. The other research referred to on page 43 had nothing to do with the private sector research. From January to March 2009 there was no money for programme activities in the CGE. There was no money for petrol for the car fleets or to reimburse for petrol; there was no catering and no money even to pay for parking in the parking garage. As a result the land research that should have been finished in that financial year was rolled over to the next financial year. That research had now been completed.

Ms Malgas asked why the strategic plans were not submitted to Parliament on time.

The Commissioner acknowledged that that was due to the total collapse of internal controls and the financial systems within the organisation. That also applied to why annual reports were late and why reporting deadlines were not met, He assured the Committee that CGE had strategic plans and a budget signed off at 1 April in compliance with the PFMA, which were submitted and recorded for the Auditor-General’s report.  He acknowledged that the Commission was addressing matters raised by the Committee on Public Accounts.

Ms Malgas asked how valid the report was as it was not signed. She believed it was illegal. She referred to non-compliance to the PFMA and the irregular expenditure that was not disclosed. Why was there non-compliance? Was the CGE aware of the PFMA?

The Commissioner explained that the PFMA was structured to provide checks and balances.  CGE was moving towards a compliant financial regime with regard to the PFMA and had brought in two companies to assist with the current financial audit. He assured the Committee that the Commission was trying to identify the people who had been the cause of the problems and would try to have a more engaged relationship with the Committee.

Ms Malgas asked what disciplinary actions were in place regarding the irregular expenditure of almost R15 million that was not reported, and irregular expenditure by the former CGE Chairperson to the value of R323 000?

The Commissioner responded that the legal processes put in place after the Auditor-General’s report and the forensic audit would be concluded very soon and progress reports would be submitted on a monthly basis. CGE was meeting with the Auditor-General later that day and decisions would be taken on actions to correct the various irregularities. The CGE would then report to the Committee. Processes were in place after the previous report of the Auditor-General to recover funds and correct other irregular expenditure. The Commissioner would provide the Committee with point-by-point progress of all the irregular expenditure that had taken place over the 2008/09 financial year. The Acting CEO was doing her best to recover those funds.

Ms Malgas asked for clarification on the litigation against the CGE by the then Chairperson of the Commission.

Ms Mgema clarified that it was true but not related to anything else bar the fact that she claimed that the CGE owed her money for leave, and the CGE had disagreed.

Ms Malgas also asked for clarification on the CGE’s litigation against the Four Rivers Consortium.

Commissioner Hicks responded that the CGE was in a situation where there was no CFO; the Commission had to take responsibility for that. A decision was taken to embark on an organisational diagnostic process to ascertain why there was such a high turnover of staff within the organisation, what interventions were needed to stabilise the institution, what corrective measures were put in place, and that was where the Four Rivers Team led an initial diagnostic process to reveal in detail where all the malfunctions were. However, that was an error. The CGE should have appointed a CFO. Instead, because there was no capacity within the Department to create an acting arrangement, finance specialists were brought in to assist in cleaning up the institution. The specialists did not deliver, and part of the difficulty was within the institution itself - disclaimers still occurred. The reason for the litigation was that CGE refused to pay funds claimed by the specialists because they had not been delivered and there were questions around delivery.

Ms Malgas asked for a progress report in terms of the litigation?

Ms Mgema explained that in terms of the contract, when there was litigation between the parties they had to appear before arbitration. A further subcontract was entered into, and Four Rivers summoned CGE for non-payment and it was agreed that the matter go through arbitration as stipulated in the contract.

Mr D Kekana (ANC) referred to the irregularities and said that these were public funds and Members were representatives of the public; no matter how autonomous the CGE was, ultimately the buck stopped with Parliament. Arbitration had gone on for too long, 2008/09; it was over a year now. That would mean that funds were frozen and performance of the Commission was also frozen because those consultants that CGE had taken to court had not delivered, so what they did not do still had to be done and the longer the delay the more the Commission would suffer. The organisation was supposed to deal with gender oppression but they were actually assisting gender oppression with all those irregularities. There should be deadlines for arbitration, since performance was bad while the outcome was awaited. There must also be deadlines for the senior appointments.

Ms Malgas referred to the strategic plan 2008 – 2013, which, although submitted to the Committee, was still not submitted to Parliament. There had been response as to the validity of the report having no signature.

The Chairperson added that the CGE also did not involve the Committee in the strategic plan. Had the Committee been a part of that strategic plan it would have been able to contribute to it; she was disappointed that it was done on their own.

The Commissioner clarified that the strategic plan was finalised in March 2008, which was before the existence of the Portfolio Committee. It was submitted to the Select Committee, but the Portfolio Committee on Justice and Constitutional Development did not call upon CGE for eighteen months and the five-year strategic plan was not presented to it, therefore it could not be submitted to the Speaker’s Office. The institution took full responsibility, but they could not run the CGE on their own, there were certain regulatory functions for which it required Parliament. She was not forfeiting responsibility, but stating what happened.
The unsigned annual report had been delivered.

Ms Malgas asked how executable was the current strategic plan and how flexible was it in order to deal with the serious challenges in the organisation?

The Acting Chairperson responded that the strategic plan was not rigid; it was reviewed annually and new areas submitted to the Committee as well, on problematic issues year in and year out.

Ms Malgas reminded the Department that it had not answered her concern about one of the Commissioners in the CGE. She repeated that an ex-Commissioner was within the Department as an advisor.

The Chairperson asked what was the reason for the big overdrafts – R17 000, R18 000 and R2.2 million.

Mr Putu said that the overdrafts were because of lack of financial management. At the time cash flow management was lacking in the CGE; also finances were used for unauthorised expenditure. Subsequently the R2.2 million was also in contravention of the PFMA because the PFMA did not allow any public institution to borrow without the authority of the Minister.

The Chairperson asked who was responsible for the increment of the former CEO.

Mr Putu replied that the increment was given at the time when there were no commissioners.

Ms Malgas added that even if it happened before their appointment they were still accountable. She asked if that increase still applied to the Acting CEO.

The Commissioner said that the former CEO must account for the 37% increase she had given herself, which had started the issue of her resignation. The Commissioners took full responsibility; it was part of their grievances with the previous CEO.

Mr Putu said that she was earning the correct salary for Chief Director level. The CGE was graded lower than other Chapter 9 institutions. The budget allocation was also lower.

The Chairperson asked why the budget allocation was less than that of other Chapter 9 Institutions. The CGE must make tangible improvements in the lives of the groups that it served in order for the Committee to lobby for more funds.

Ms P Maduna (ANC) asked what the CEO’s salary was.

Ms Mgema replied that the salary for the Chief Director level was R746 000 per annum.

The CGE Chairperson explained that the CGE operated within the Paris Principles, which were UN guidelines with regard to the independence of such organisations, and one of the major issues was that public legitimacy was the best protector of independence. The organisation had to work hard to gain public legitimacy and public trust; he hoped to find a basis to do that with the support of the Committee.

The Chairperson said that the Committee would have to find time to engage on what the CGE Chairperson had just said. What was the reason for this entity getting less than other Chapter 9 institutions? Gender issues were not prioritised. The Committee did appreciate some of the work done; it was a pity that the image was tarnished by the problems in the CGE.

Mr Kekana asked for a summary of what should happen in order for the CGE to operate properly, so that the Committee could intervene where necessary. In terms of finances, he asked what was recoverable, and what was not recoverable, in order to stabilise the organisation. The CEO should be accountable to the board, and the whole board should be accountable to Parliament. He did not understand why the CGE chair and board were separate; they should be one structure. He also wanted time frames.

CGE responded that it would be meeting with the Auditor-General that afternoon and would then receive the forensic audit. The CGE had begun litigation against the former Chair in respect of an amount of R340 000, and could reassure the Committee about the other sums after the meeting with the Auditor-General. CGE assured the Committee that everything owed to the taxpayer would be recovered.

The Asmal Review of 2007 had given a number of recommendations about the standardisation of chairpersons of Chapter 9 institutions. CGE would be happy to brief the Committee on the Asmal recommendations on the status of the chairperson, the appointment and qualifications and the interview process itself. The CGE fully supported those recommendations, and similarly with regard to the appointment and standardisation of commissioners. The Review had not yet been debated in Parliament and perhaps the Committee could assist in that regard.

Ms Ramodibe said the Committee was aware of the Asmal Report. Since the CGE was placed under the Portfolio Committee, she assured CGE that given the challenges and the problems in the report and beyond, the Committee would exercise its oversight over CGE. The CGE would have to report every three months, as required by the PFMA. The Committee would build a strong relationship with the Commission to ensure that it did not revert back to that highly problematic situation.

Ms Malgas said her question was still not answered.

The Chairperson replied that she would leave it unanswered because the Acting DG was very new and it was unfair to put some of the questions to him. The Department would be called again to engage on some of the issues raised.

It was unfortunate that the forensic audit report had not yet been received.

The Committee recommended that:

- There was a need to engage with the contents of the forensic audit report;
- It was important to amend the CGE Act;
- There was a need to engage with the substance of the turnaround strategy, and the Committee could amend it where necessary;
- The turnaround strategy should have clear time frames with clear lines of accountability;
- There was a need to monitor on an ongoing basis to ensure the targets in the turnaround strategy were being met, and to report to the Committee on a monthly basis;
- That all commissioners and senior staff underwent training in the PFMA.

The meeting was adjourned.