Service delivery challenges by MEC for Co-operative Governance and Traditional Affairs Mpumalanga on; Housing Subsidy investigations by Special Investigation Unit

NCOP Public Services

25 May 2010
Chairperson: Mr M Sibande (ANC, Mpumalanga)
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Meeting Summary

The Committee had requested the MEC for Co-operative Governance and Traditional Affairs in Mpumalanga and the District Executive Mayor of Ehlanzeni Municipality to brief members on service delivery challenges. Members had undertaken an oversight visit to Mpumalanga and had been disappointed when neither the MEC nor the Executive Mayor of Ehlanzeni had met with them to discuss service delivery issues in the area. Thus the present meeting was called to discuss service delivery issues. Members were also provided with an update of the 2010 FIFA World Cup progress in Mpumalanga. The Committee agreed to obtain a written response from the presenters on observations that members had made during the oversight visit.

The Department of Human Settlements briefed the Committee on investigations that had been undertaken by the Special Investigation Unit. Irregularities in housing had been identified by the Auditor General in reports in 2006 and 2008 relating to government employees and municipal employees respectively which necessitated the investigation. The Special Investigating Unit was mandated to investigate fraud, corruption and maladministration in the housing programme from 11 January 1994 – 25 April 2007.The SIU conducted an in-depth technical analysis on 9 548 projects to determine a list of priority contracts for possible investigation. Of this, 22 contracts had been selected for forensic investigation during 2010/11 – this was not a closed list. There was still a great deal of cases that needed investigation. The task was very labour intensive and was overwhelming but the Department was committed. Members were glad that action was being taken to address the problems that were prevalent in housing delivery.

Meeting report

The Chairperson explained that the meeting had been called as part of the Committee’s function of oversight. It would have been ideal for the Committee to have met with the MEC and the Executive Mayor whilst on the oversight visit to Mpumalanga but it did not happen. The Committee noticed the prevalence of many problems in the province and was disappointed that neither the MEC nor the Mayor had been available to discuss issues during the oversight visit. The Committee should be taken seriously. Hence the present briefing had been called to discuss issues.

Mr M Jacobs (ANC, Free State) called for an apology from the Mayor of Ehlanzeni Municipality for not meeting up with the Committee.

Mr Z Mlenzana (COPE, EC) said that he understood Mr Jacob’s feelings but suggested that perhaps an explanation would be better.

MEC for Co-operative Governance and Traditional Affairs in Mpumalanga: briefing
The delegation included Mr Norman Mokoena, MEC Co-operative Governance and Traditional Affairs (COGTA) Mpumalanga, Mr David Mahlobo, HOD: COGTA Mpumalanga, Ms Constance Mkhonto, Executive Mayor Ehlanzeni District, and Mr Selby Khumalo, Deputy Mayor Ehlanzeni District.

Mr Mokoena noted the comments of members and accepted that the Committee wished to be taken seriously. An explanation for what had happened during the oversight visit would be given but he felt it not appropriate to do it in the current meeting. There was no deliberate intention not to meet up with Members of Parliament during the visit. The problem was about co-ordination between the Executive Mayor’s Office and the MEC’s Office.

Mr Mokoena began the briefing by stating that the Minister of COGTA had undertaken an assessment of the state of municipalities in SA. All 18 local and the three district municipalities in Mpumalanga had participated in the assessment. The assessment was conducted due to protests by communities about the slow progress in service delivery and also due to allegations of fraud and corruption. The assessment focussed on governance, financial management, service delivery, infrastructure and local economic development. The assessment identified shortcomings within these areas. This was followed by a breakdown of the status of various municipalities as far as their capacity to deliver services. Figures on the vacancy rates within municipalities, the functionality of ward committees and training were provided. Members were also provided with an overview of the financial viability and management of various municipalities in terms of their grant dependency, the Municipal Systems Improvement Grant, audit outcomes and outstanding debtors. Basic services and infrastructure was looked at in terms of Integrated Development Plans (IDPs), Local Economic Development (LEDs), Municipal Infrastructure Grant, free basic services and backlogs per municipality priority services.

In February 2010 a Local Government Summit had been convened. It developed and adopted a municipal turnaround strategy in line with the Local Government 10 Point Plan. Regular reports on progress would be submitted to IGR structures and Cabinet. The Committee was provided with an update on the progress to date on 2010 FIFA World Cup arrangements. Stadia, roads and fanparks were complete. Health, disaster management and safety and security measures had been put in place. Training venues and Public Viewing Areas (PVAs) had also been provided for.

For greater detail please refer to the attached document.

Mr Jacobs said that the discussion should be more on what members saw during the oversight visit rather than what was presented during the briefing. Water shortages, electricity supply and lack of proper roads were amongst the problems encountered.

Ms L Mabija (ANC, Limpopo) asked if there were mechanisms in place to train ward committees.

Ms M Themba (ANC, Mpumalanga) asked whether there were gender focal points in municipalities. At what level were the units lead? Was it at chief director or director level? She also asked how far the process was in addressing the findings of the assessment that had been done. Concerns had been raised over the quality of electricity that was being provided in certain areas.

Prince M Zulu (IFP, KZN) was glad that better working relationships were being fostered between amakozi and municipalities.

Mr H Groenewald (DA, NW) asked what measures were being put in place to prevent persons from undermining processes in municipalities. Greater co-operation between traditional leaders and municipalities were needed in order to ensure that proper houses with accompanying services could be built. He also asked what the total cost to the province was in preparing for the 2010 FIFA World Cup. What did the construction of the stadia cost?

Mr David Mahlobo, HOD: COGTA Mpumalanga, said that traditional leaders were part of municipal processes. Traditional leaders were included in IDPs and in municipal budgets. Traditional leaders even attended IDP meetings. It was an ongoing good and healthy relationship.

Mr R Tau (ANC, NC) asked if there was any district or local municipality that had been accredited to build houses.

Mr Mlenzana suggested that perhaps the presenters should not be expected to answer all the questions asked in the present meeting as much of what had been questioned was about what had been seen during the oversight visits.The delegation could submit a written response to the Committee on some of the questions asked.

The Chairperson asked for a breakdown of those companies who had not completed the construction of houses as they were supposed to. Particulars of who they were and what steps had been taken against them should be provided to the Committee.
The Committee agreed that a written response to questions asked could be forwarded to the Committee.

Mr Tau stated that perhaps the Committee could compile a report of its oversight findings to which the presenters could respond. He asked to what extent the Public Works Department assisted municipalities in its work. How did the Department of Transport assist municipalities with roads?

The Chair reiterated that the Committee should be taken seriously and said that it would be best for the presenters to respond in writing as the Committee was limited by time constraints in the present meeting.

Special Investiging Unit investigations into the Housing Programme
The delegation comprised of Mr Martin Maphisa, Deputy Director General: Policy Research and Monitoring and Ms Khumoetsile Gaesale, Chief Director: Internal Audit, Risk Management and Special Investigations from the Department of Human Settlements and Ms Vanessa Somiah National Head Investigator of the Housing Programme: Special Investigating Unit.

Ms Khumoetsile Gaesale said that the Auditor General’s 2006 Report highlighted irregularities by government employees relating to the Housing Subsidy Scheme. A 2008 Auditor General’s Audit Report highlighted irregularities by municipal employees to do with the housing subsidy.  There was a comprehensive approach to dealing with the issues raised in the report with the establishment of the relationship between the Department of Human Settlements and the Special Investigating Unit (SIU). Presidential Proclamation R7 of 2007 was gazetted and it mandated the SIU to conduct national investigations into the matters raised in the reports. The Proclamation mandated the SIU to investigate fraud, corruption and maladministration from the 11 January 1994 – 25 April 2007. It included investigating the administration of low income housing subsidies and the administration and implementation of the low income housing scheme. Investigations emanated from various sources. A total of 23 referrals had been received from the Minister’s hotline. Seven syndicate matters were currently under investigation in Gauteng. Contracts undertaken by the Department were also being reviewed by the SIU. The SIU conducted walk-throughs in all nine provinces. It also conducted an indepth technical analysis on 9 548 projects to determine a list of priority contracts for possible investigation. Of these, 22 contracts had been selected requiring a forensic solution for 2010/11. An SIU team of at least three investigators, managers and specialists were required in each province. It was a very labour intensive exercise. Investigations into certain procurement irregularities were also currently under way. Sixteen officials were identified as conducting business with the Department. The SIU had identified 14 service providers that were using the same VAT number. [For greater detail please refer to the attached document.]

Mr Tau asked how many investigations the SIU was undertaking in the Northern Cape. He referred to the Soul City Project and asked what was being done about it. Another case was where an individual was paid millions of rands without having laid a single brick. Later the individual claimed to be insolvent. What happened to investigations that had been initiated by the Scorpions? He asked what was being done to protect witnesses who wished to come forward. Was there a witness protection programme?

Ms Vanessa Somiah National Head Investigator: Department of Human Settlements explained that there was a list of 100 contracts of which a selection had to be made. The issue was about monies paid out versus actual delivery. An all-encompassing approach was used. The task was huge and eventually 22 cases were selected. The focus was more on recent cases but older cases were still being considered. The Soul City case was also included on the list. The 22 cases were not a closed list. There was still a great deal of cases that needed investigation.

She explained that the Specialised Crime Unit placed persons under witness protection. It was a reality that witness protection was required. A case in point was the killing of two officials in Newcastle.

Mr Mlenzane asked how long each investigation took. What happened when persons under investigation left institutions? How was follow-up done. He asked for specific figures on investigations in the Eastern Cape. One investigation was of particular interest to him.

Ms Somiah said that investigations were a labour intensive exercise. It was hoped that investigations into the 22 cases would be completed by March 2011. There were four investigations in the Eastern Cape. SAPS and housing experts were also being brought on board.

Mr Groenewald noted that many houses remained half built. As a result these houses were vandalised and materials were stolen. Huge contracts were often granted. For example in Vryberg a huge contract had been granted but after two years only two houses had been built. Was the matter being investigated? Was there a system in place to trace persons? In some instances the same person had houses in different areas under different names.

Ms Somiah explained that houses were sometimes not completed for legitimate reasons. It was not always the contractor or the developer’s fault. Funds often run out and in certain instances the blame even lay with municipalities.

Ms Gaesale said that the allocation of houses was based on a person’s identity number being used and not only a name. The system had been tightened up.
Ms Themba asked whether municipal employees who were found guilty were dismissed. Was the 990 disciplinary cases a national figure? 

Ms Somiah said that the Minister was speaking to the Minister of Local Government about the dismissal or suspension of municipal employees. The Department expected feedback on this soon. The 990 disciplinary actions were civil actions. Sometimes there were overpayments or negligence on the part of employees.  

Ms Mabija stated that government employees found guilty should be dismissed and not be allowed to continue working. Punishment should be meted out to these persons.

Ms Somiah explained that if all guilty persons were removed from their jobs, the public service would literally come to a standstill. She noted that different departments took different forms of disciplinary actions. For example SAPS would dismiss members whereas the Department of Health would be more lenient and retain a guilty individual. Many of the guilty were in any case persons earning just above the breadline. It was normal-earning persons and not rich people. Circumstances of individuals had to be taken into account.

The Chairperson appreciated the efforts by the Department. What measures were in place to prevent similar incidents from happening in the future? Did the systems of departments speak to each other? The Committee needed a breakdown of specific cases. The insolvency trick was an old one. What was being done to address it? A contributory factor to the problem was the fact that the monitoring systems of the Department were poor. There were too many loopholes. He asked what measures had been put in place to ensure that South African citizens were given preference over foreign nationals when houses were allocated. The issue was a contentious one. Did the Department have systems in place to ensure that enough land was acquired for the purpose of erecting houses?

Ms Gaesale stated that cases were monitored on a monthly basis. Whistleblower information needed to be verified. She reiterated that recent cases were given more priority than older cases. Provinces were also not so forthcoming with their cases. Provinces in many instances lacked capacity to do proper project management and hence contractors got away with breaches.

Ms Somiah said that the Department was aware of the issues raised by the Chairperson. The SIU tried to identify gaps. The deterrent effect of these investigations were considered huge. The systems and processes to be put in place were going to be important. The workload was huge and overwhelming but commitment was there. It was true that many individuals hid behind the insolvency banner but the SIU had engaged the help of the Asset Forfeiture Unit to prevent it from happening. The money trail would be found. Family and friends of guilty individuals were scrutinised.

Ms Gaesale said that when houses were allocated the SA identity document was used. The problem lay with the Department of Home Affairs. She said that the Housing Development Agency acquired pockets of land to be used for housing developments

Mr Tau asked for specifics on cases in the Northern Cape. This question was not answered.
Due to time constraints, the Department was not able to do its second briefing.

The Chairperson echoed his previous comments that the Committee needed to be taken seriously.

The meeting was adjourned.

Appendix 1
List of Municipalities in Mpumalanga
Ehlanzeni District Municipality
Mbombela Local Municipality
Bushbuckridge Local Municipality
Nkomazi Local Municipality
Thaba Chweu Local Municipality
Umjindi Local Municipality
Gert Sibande District Municipality
Albert Luthuli Local Municipality
Dipaleseng Local Municipality
Govan Mbeki Local Municipality
Local Municipality of Lekwa
Mkhondo Local Municipality
Msukaligwa Local Municipality
Pixley Ka Seme Local Municipality
Nkangala District Municipality
Delmas Local Municipality
Dr. J.S. Moroka Local Municipality
Emakhazeni Local Municipality
Emalahleni Local Municipality
Steve Tshwete Local Municipality
Thembisile Local Municipality


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