Department of Rural Development & Land Reform: Annual Report 2009/10

Rural Development and Land Reform

12 October 2010
Chairperson: Mr S Sizani (ANC)
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Meeting Summary

The Department of Rural Development and Land Reform presented its Annual Report 2009/10, noting that the new Department had been set up in May 2009, and that the changes in the mandate resulted in the establishment of three new programmes. Achievements included the launch of the Comprehensive Rural Development Programme, and the fact that audit qualifications had been reduced over the years, because of the improved governance and control environment, and it was hoped that the problems around the Capital Assets register would be eliminated in the next period. The Department had been able to detect and deal with fraud, had carried out forensic investigations and recovered property in KwaZulu Natal, with the responsible officials being disciplined, with criminal charges being investigated. The Department achieved 92% spending, which was a drop from the previous financial year, largely due to the introduction of new programmes and the fact that money had not been allocated to one of the programmes until November 2009. The vacancy rate had dropped, and 17 senior management posts were filled. Specific achievements were noted in each of the programmes and the spending was set out. The progress made to resolving issues identified by the Auditor-General in previous audits was outlined. The Deeds and the Land Agricultural Holding Trading Accounts received unqualified audit reports, and controls had been put in place to address the identified weaknesses. Both fruitless and wasteful expenditure, and irregular expenditure, had been reduced, although not eliminated, but material losses through criminal conduct had increased, and forensic investigations had been launched, with the officials identified now being suspended pending disciplinary action. The department was working on improving its risk management and internal controls.

Members asked for clarification of figures given in respect of hectares and beneficiaries, and said it was important to measure the targets and what had been achieved. Members asked what actions had been taken in respect of fraud in KwaZulu Natal, and said that it seemed that the investigations had only started once the Committee had paid a visit to farms. Members wanted to know how many people benefited from the Muyeshe project, and from the Eastern Cape household gardens. They asked if databases were in place, and why the systems were not interfacing properly, as also why targets set under land reform were not met, whether the Call Centre was being used, and how much it had cost. Members questioned what was being done about the unsurveyed land programme, which had been outstanding since 2008. They also commented that despite the claims of shortage of funding, the Department had under-spent, and expressed concern that lack of action was resulting in farms not being maintained or used, and wondered if the Department was capable of reaching its targets. The delays in appointment of senior managers was questioned. Members specifically asked about fruitless and wasteful expenditure and material losses, a report on why the previous Director General had left, a list of farms purchased during his tenure and up to March 2010, and an update on the fraud prevention strategy and fraud register, and the final amount for restitution.  

Meeting report

Department of Rural Development and Land Reform (DRDLR): Annual Report 2009/10 briefing
Mr Mduduzi Shabane, Acting Director-General, Department of Rural Development and Land Reform, presented the Annual Report 2009/10 of that Department (the Department or DRDLR). He noted that the Annual Report was linked to the Department’s Interim Strategic Plan 2009/10 and regard should also be had to the progress in this year compared to the 2008/09 financial year.

Mr Shabane outlined the mandate of the new Department, noting that it was established in May 2009, and had formerly been the Department of Land Affairs. The changes in the mandate resulted in the establishment of three new programmes. In the Geo-Spatial Services Branch, a new programme was set up for  technology development and disaster management. In the Social Technical Branch, a new programme related to rural livelihoods and institutional facilitation, and in the Rural Branch, there was a programme for  infrastructural development.

One of the Department’s major achievements, three months after its inception, was the launch of its flagship programme, the Comprehensive Rural Development Programme (CRDP). Another major achievement was the elimination of audit qualifications from the previous years, because of the improved governance and control environment. The remaining problem, relating to the Tangible Capital Assets Register, would be eliminated in the next Medium Term Expenditure Framework (MTEF) period.

Mr Shabane indicated that, although the Auditor-General (AG) had identified inadequacies in the Department’s risk management strategy, it nonetheless continued to detect and deal with fraud and corruption decisively. Forensic investigations were done in KwaZulu Natal (KZN) and a Court Order was issued against the eight properties that had been fraudulently transferred to third parties who were not the correct land reform beneficiaries.

Mr Shabane noted that the Department had a final budget allocation of R6.391 billion in the 2009/10 financial year, of which R5.854 billion was spent, which was a 92% spending of the final allocation, compared to a 99% spending in the 2008/09 final year. The discrepancy was largely due to the changes in Department’s mandate and new introduction of new programmes. He noted that the Department’s vacancy rate reduced significantly, from 16.7% in the previous year, to 10.24%; with 17 senior management posts filled.

He noted that Programme 2 dealt with Surveys and Mapping, and the programme had exceeded some of its set targets. Programme 3 dealt with cadastral survey management, but was affected by scarce skills, as it was a highly specialised environment. However, its performance was noted to be improving. Programme 4 dealt with restitution. Here, the Department’s biggest challenge was budgetary constraints. A turnaround strategy would be developed and informed by the CRDP principles. Programme 5 dealt with land and tenure reform. Emphasis had shifted from number of hectares transferred, to sustainability of land reform projects, which accounted for the introduction of the recapitalisation and development programme. Although the programme delivered 240 000 hectares, it required improved monitoring and evaluation control, especially in light of the recent fraud and corruption cases that had been uncovered in some provinces such as KZN. He reiterated that eight properties had been recovered, and disciplinary action was taken against the officials in KZN and Western Cape Province. Criminal investigations were under way.

Programme 6 dealt with spatial planning and information. It was noted that the programme had implemented scarce skills retention programmes. The work of this programme had increased since the inception of CRDP. Programme 7 dealt with deeds registration. It was noted that the system required urgent overhaul following the recent discovery of fraudulent registration of properties. It was noted that properties in the Pretoria Deeds Office, which had been fraudulently registered and transferred to third parties, had been recovered, that the conveyancer was arrested and the Registrar of Deeds was suspended.

The financial performance of the Department was discussed. He reiterated that the Department had an allocation of R6.3 billion and spent R5.8 billion, which translated to 92% spending. The Department was organized into seven programmes, which were set out. The spending per programme was discussed in some detail. The Restitution programme spent 100% of its budget of R2,3 billion, and required more financial resources. Land Reform spent 93% of its allocated R2, 7 billion. Rural Development, a new programme in this year, spent R62,9 million of its allocated budget of R252 million. He explained that this was because funding had been received in November 2009 only.

Mr Protas Phili, Chief Financial Officer, Department of Rural Development and Land Reform, noted that the Department had made significant progress in resolving matters previously reported on by the Auditor-General. He noted that from 2007/08 the Department had five audit qualifications but these had been reduced to two qualifications in 2008/09, and that in the current year there was only one audit qualification, which showed that there had been significant work on the issues identified by the Auditor-General. The Deeds and the Land Agricultural Holding Trading Accounts received unqualified audit reports, and controls had been put in place to address the identified weaknesses.

Fruitless and Wasteful Expenditure had been reduced from R4.9 million in the previous financial year to R2.7 million in the year under review, and irregular expenditure had reduced from R74.9 million to R4.2 million. However, material losses through criminal conduct had increased from R6.1 million in 2008/9 financial year to R53.3 million in 2009/10. The Department had instituted forensic investigations, which had uncovered fraudulent activities by some officials. The officials implicated in the fraudulent activities had been suspended and disciplinary action was under way.

The audit report for 2008/09 had revealed that the report on pre-determined objectives was not reliable and the 2009/10 audit report noted that performance targets were not specific and measurable. The risk management and internal controls as set out in Section 38 of the Public Finance Management Act (PFMA) had not been fully complied with, for both the 2008/9 and 2009/10 financial years. This was being addressed. Although key positions had been filled in the Monitoring and Evaluation Unit, the Risk Management and Internal Controls still required improvement.

The Chairperson said the Committee Members must be satisfied on whether the Department had achieved its targets, and whether it had capacity to do so in future.

The Chairperson asked for clarification of the figures given for hectares and beneficiaries.

Mr Shabane responded that the 30% target for redistribution of agricultural land by 2014 was a Government target, which the DRDLR was responsible to implement. The Department had done the sums. It felt that it had to move from the simple premise that there was approximately 82 million hectares of agricultural land in South Africa, and that to achieve 30% distribution of this, it would need to distribute 24 million hectares. To date, seven million hectares had been transferred, so there was a huge amount still outstanding. These targets were originally based on the budget that Parliament had approved for the former department. However the new Department had come into being after all the processes for the old Department of Land Affairs had been completed and tabled. The targets would have to be revisited to take into account the new dispensation.

The Chairperson was not satisfied with the response. He thus again requested clarification on the number of hectares transferred, the beneficiaries and the size of land they held. It was important to measure the target itself and see how many hectares had been transferred.

Mr Shabane responded that in terms of the Interim Strategic Plan tabled by the Department at the beginning of the 2009/10 period,  a target of 656 000 hectares was set, which should reach 12 890 000 beneficiaries. However, this target was not fully achieved, as highlighted in the Annual Report. Instead, 239 000 hectares were acquired against that particular target. He explained that this was due to budgetary constraints following the restructuring of the Department from the former Ministry. As the Department was restructured, money had to be moved. He indicated that the high number of beneficiaries included the farm workers, labour tenants and people who historically lived there as labour tenants and labourers. In future reports, clear breakdowns would be given of hectares transferred, and the categories of people that benefited. He noted that this would not only be black commercial farmers, but would also include farm labourers and tenants.

Mr R Cebekhulu (IFP) asked whether criminal elements involved in material loses in KZN were brought to book.

Mr M Shabane responded that four officials had been suspended after evidence of their implication in fraudulent transactions, and that a Court Order had been issued to recover properties that had been illegally acquired by the officials. He added that the matter was being handled by criminal investigators. The Auditor-General’s report on fraudulent activities emanated from the Department’s forensic report.

Mr Cebekhulu asked how many people had benefited from the Muyeshe project

Ms A Steyn (DA) asked why the Minister had not attended the meeting.

Ms Steyn commented that, at face value, the Department’s report seemed to indicate that this Department had performed better than the previous year. However, the situation on the ground showed something different. She had visited farms, and spoken to beneficiaries, farmers and other people on the ground and expressed concern about programmes 4 and 5, and in particular the lack of targets, measures, planning and monitoring for restitution and land reform. She wondered whether the Department had a database.

Ms Steyn also expressed concern about fraud investigations, especially in KZN, where the Committee had visited the farms, as reported on by the media. She requested a report on the findings on fraud investigations in KZN and wondered whether the Department would have done anything about the fraudulent activities in this area had the Portfolio Committee not visited the farms. She had sent a letter to the Minister requesting a full investigation, yet this story only broke out after three months. She expressed concern about the Department’s poor reporting, indicating that there were gaps in sections of its report, and questioned how the Department could detect fraudulent activities when it did not have updated lists.

The Chairperson mentioned that Ms Steyn had said the forensic report was the result of the Committee’s visit to KZN.

Mr M Shabane said the Department welcomed factual information on activities that may be uncovered by the Committee as this enhanced their operation. The Department had demonstrated that if presented with factual information it decisively dealt with the issues. He denied that the Department’s investigation had been prompted by Ms Steyn’s visit to the farms, adding that the Department would not have investigated something that it had not known about. Mr Shabane said it helped if the Department had specific information and details to enable it to follow up and urged that members present concrete information to the Department.

Mr Shabane acknowledged that the Department’s data base was not up to date and concurred with the Auditor-General’s assertion that the Department did not have a system that could do the necessary interface to see whether a particular person was not also benefiting elsewhere. He agreed that the Department lacked adequate control measures.

Mr S Ntapane (UDM) asked why targets that had been set under the Land Reform had not been met and who was responsible for meeting them. He also asked what the Department was doing to overcome its short-term capacity problems, even though it had a bursary system in place for its long-term plans.

Mr Shabane responded that, following the restructuring of the old to the new Department, new branches had been established. This had resulted in employment of some people, and additional capacity for Land Reform had been identified and had already increased.

Mr Ntapane asked whether the Call Centre set up under the Land Reform programme was being utilised by members of the public, and how much had been spent to establish it.

Mr Shabane said the Call Centre was in use and a detailed report would be made available to Mr Ntapane.

Mr Ntapane asked what the Department was doing about the unsurveyed land programme, which had been outstanding since 2008.

Mr Ntapane asked whether the Department had reached the targets that it had set regarding the households to be reached and supported, and how many jobs had been created in Muyeshe. He also asked whether the household gardens set up in the Eastern Cape’s Mhlontlo had achieved their intended purpose, and what benefit they gave to people.

Mr Shabane said a significant number of people had benefited. 670 households had been profiled, to understand each as a unit of Comprehensive Rural Development Program (CDRP). He added that in Mhlontlo, 187 household gardens were supported by the Department of Agriculture. He requested that the Department be given time to compile a full report on the project.

Mr B Zulu (ANC) asked why the Department had under-spent its budget, and whether this would not jeopardise its next allocation. The land claims had not been paid for up to ten years, and farmers whose farms had been claimed by the Department were no longer developing these farms, which were thus being wasted. She noted that although the Department claimed not to have sufficient funding, there had in fact been under spending. She was also concerned that the Department had been sued by farmers, and she wondered whether it would be able to achieve its objectives.

Ms P Ngwenya-Mabila (ANC) commended the Department on its achievements, but noted that Land Reform targets had not been achieved.

Ms Ngwenya-Mabila queried the delay in appointing permanent senior managers.

Mr Shabane said that normal procedures were followed in employment of permanent senior managers, but he was unable to give timelines on the appointment decisions.

The Chairperson reminded him that the Committee required the Department to give answers to all processes, except those which were subject to Cabinet approval.

Mr Anton van Staden, Acting Deputy Director General, Department of Rural Development and Land Reform, reassured the Committee that all procedures were followed and that the Department was awaiting final approval.

Ms Ngwenya-Mabila commended the Department on the reduction of fruitless and wasteful expenditure but asked about the programmes where such expenditure was incurred, and what plans had been put in place to avoid its recurrence. She specifically asked which programme had incurred the irregular expenditure of R4.2 million, and who had been responsible for it.

Mr Phili responded that the fruitless and wasteful expenditure had been reduced for the year under review from R4.9 million in 2008/09, to R2.7 million in 2009/10. Material losses through criminal conduct of R6.1 million were uncovered in the 2008/09 financial year, compared to R53.3 million in the current financial year. He said that National Treasury was consulted for advice.

The Chairperson asked what implications this had.

Mr Phili noted that National Treasury had been asked to give an independent assessment.

The Chairperson asked what difference the discovery of irregularities of fruitless and wasteful expenditure and material losses made.

Mr Phili said material losses attracted criminal charges, whereas fruitless and wasteful expenditure attracted disciplinary action against the offenders.
Ms D Carter (COPE) sought clarification on the sudden departure of the previous Director General, Mr Gwanya. She requested a list of all farms bought during his tenure, as well as a detailed list of those 1 695 farms purchased up to March 2010, including the extent of the land, price paid, the beneficiary, the status of the farm. She also wanted a list of all the officials who benefited throughout all the Provinces.

Mr Shabane said the Minister had released a statement on Mr Gwanya’s departure and this would be made available to Ms Carter.

The Chairperson agreed with Mr Shabane that the Minister had given a report, but asked why Mr Shabane was reluctant to repeat this information.

Ms Carter asked whether the fraud prevention strategy had been fully implemented, how long the process would take, and why the fraud register had not been updated.

The Chairperson said while the information requested by Ms Carter had been submitted at some stage to the Committee, the Department should provide updated lists.

Mr Shabane reiterated that the Department would appreciate any information that was not at its disposal, especially the information that Ms Carter had around the 17 officials who allegedly benefited from the acquisition of farms.

Ms Carter was satisfied with the response and expressed hope that the same processes would be replicated in all the provinces, and that all the relevant paper work would not be destroyed to cover up illegal activities.

Ms Carter noted with concern that Section 31 PFMA had not been reported on, and questioned the authenticity of Quarterly reports. She further requested that report findings be tabled.

Mr Shabane indicated that the list had been handed over to an investigation unit, and he would therefore need verification before the information could be released to the Committee.

The Chairperson was not satisfied by this response and queried why the Department would not release the requested documents.

Mr Shabane said although the Department had the requested documents, it still needed to determine whether their release to the Committee would not jeopardise investigations currently under way.

The Chairperson noted that the Department had spent only 25% of R189 million in one quarter because the branch had been established only later in the year. He asked why the Department had not distributed R189 million to poor people.

Mr Shabane said rural development was a key mandate of the Department. Since May 2010, new programmes were established from scratch, although no budgetary allocations were made to them. The Department followed normal procedures and requested funds from National Treasury. CDRP, as a new concept in Muyeshe, underpinned the Department’s efforts to break the hunger chain. Although the Department received expressions of interest from other provinces it could not distribute funds, because it needed to ensure that the new programme was implemented properly. He said that the Department erred on the side of prudence.

Ms Irene Singo, Executive Director: Financial Management, Department of Rural Development and Land Reform, indicated that systems in provinces were not ready, but expressed confidence that the Department would be able to spend in the current financial year.

Ms A Steyn (DA) asked how the Department functioned without a database, especially in view of the farmers taking it to court. She also asked whether R12 billion was the final amount for restitution.

Mr Shabane requested that the Department be given time to prepare a proper response to this question.

Ms Steyn asked the Chairperson whether the Committee could ask the Special Investigations Unit (SIU) to intervene since there was no list of beneficiaries.

The Chairperson suggested that it would be proper to wait for the Land Commission submission before the SIU could be approached.

The meeting was adjourned.


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