Road Traffic Management Corporation (RTMC) challenges: briefing by Minister

Meeting report

The Chairperson said that RTMC challenges had been identified at a workshop in February 2009 and the Minister of Transport would present on how the Shareholders Committee had responded and what intervention strategies had been put in place.

Minister on challenges facing the Road Traffic Management Corporation (RTMC)
The Minister of Transport,  Mr Sibusiso Ndebele, thanked the Committee for giving himself and the Deputy Minister of Transport, as well as the Acting CEO and RTMC Task Team the opportunity to address them. Their arrival at the meeting was delayed due to media correspondence regarding the strike by SATAWU members in protest against legislation of the Administrative Adjudication of Road Traffic Offenses (AARTO) in Gauteng that day.

AARTO legislation had been passed in 1999 and the DOT had engaged extensively in the past with SATAWU, as well as the previous Friday. AARTO was due to be implemented on 1 October 2010 but since some officials at two Metros were not familiar enough with the legislation to enforce and adjudicate AARTO, time was granted and implementation delayed until they were ready. The SATAWU strike action had baffled the DOT, as AARTO had not been implemented and the announcement of the date for implementation of AARTO had not been announced.

The level of development of a country which adopted democratic norms was visible through adherence to the rules of roads and the death rate on roads. South Africa’s economy was negatively impacted by the high rate of 14 000 road deaths per year and according to international norms, had committed to halving the number of road fatalities by 2015.

The RTMC had been established in 1995 to bring under one umbrella all road safety programmes.  A Shareholders Agency was established at a national level to incorporate the Minister, Transport MECs from the nine provinces and two Members from the South Africa Local Government Association.

Over the past year, complaints from staff, whistleblowers and other sources relating to allegations of mismanagement at the RTMC under the former CEO, Mr Ranthoko Rakgoale, had been brought to the attention of the RTMC Board. The Ministry of Transport took action by appointing an independent Task Team, under the chairpersonship of Ms Piah Phiyega, to investigate the allegations of mismanagement and issues relating to leadership, governance, business and finances of the RTMC.

On 29 July 2010, key findings of the Task Team Report were outlined at a media briefing in Pretoria and subsequently presented twice to the RTMC Shareholders Committee. The key findings of the report were: irregular expenditure; inappropriate procurement procedures; and unauthorised use of eNatis transaction fees. The main finding of irregular spending was an irregular lease agreement of R658 million over a 10 year period. Intervention and cancellation of the lease resulted in an actual loss of R11 million.  The total value of irregular expenditure incurred by the RTMC was R144 million.  Based on recommendations of the report, several staff had subsequently been suspended and additional enquiry was being finalised. The Forensic Audit process was still underway, the result of which would be actioned by the Acting CEO of the RTMC, Mr Collins Letsoalo.  Matters still subject to due legal process and internal HR procedures could not be publicly disclosed at the meeting.

The Public Finance Management Act clearly stated that an accounting authority for a public entity that willfully or negligently committed or permitted an act of financial misconduct was liable on conviction to a fine, dismissal or imprisonment. The DOT had adopted a zero-tolerance stance toward fraud, corruption and mismanagement and any person found guilty of such offences would face the consequences of their action. With the appointment of the new Acting CEO, the functioning of the RTMC had subsequently stabilised and was on track to deliver on its mandate. Issues raised in the Task Team Report were being dealt with and some of the recommendations had already been implemented. The RTMC had established co-operative and coordinated strategic planning in respect of road traffic matters across the national, provincial and local spheres of government and thus it was of paramount importance that the RTMC fulfilled its mandate.

The Act that gave birth to AARTO was not new legislation and law enforcement officers had all the necessary powers to enforce proper traffic law, with or without the introduction of AARTO. As part of the new National Rolling Enforcement Plan which was announced in September 2010, 1 053 000 drivers had been stopped and checked for various traffic offences between the 1^st and 31^st October 2010. There were more than 17 000 traffic enforcement officers to tend to the seven million vehicles on the road. Checking 35 000 vehicles per day enabled 250 000 drivers to be checked per week. This would continue each month until the culture on the roads reflected the DOT’s commitment to reduce road carnage in South Africa by half. This plan, together with education and support from outside such as businesses, hotels, bars and schools would ensure multi-level commitment to safe roads. Of the seven million drivers in South Africa, only a tiny minority were deadly drivers.

The most significant factor introduced by AARTO was 12-point Demerit System. Under the current Road Traffic Act these 12 chances did not exist. With AARTO, distinction was made between a traffic infringement and a traffic offence. A traffic offence committed could result in a criminal record for five years. At any stage, a driving offender may choose to subject themselves to normal criminal procedures rather than AARTO. The Demerit System of AARTO was not currently implemented but a massive education campaign on infringement was being driven.

The RTMC Board had been dissolved and at present the Shareholders Committee acted as the Board to allow time to select and recruit suitable Board Members. The Turnaround Strategy initiatives currently being implemented had resulted in better monitoring services, better control over supplies, reduction in fruitless and wasteful expenditure, accurate and time-managed control over finances, reduction in irregular expenditure, decrease in audit queries, automated financial procedures and independence from the DOT, as envisaged by the RTMC Act.

Discussion
Mr S Farrow (DA) asked when the Forensic Report of July 2009 would be made available to the Committee. As Committee oversight it was important to be able to monitor the expenditures of the organisation and also to know that corrupt individuals responsible for irregular spending were dealt with in the appropriate manner. He understood from the presentation that there had been a number of suspensions as a result of the Forensic Audit. However, since the matter regarding the former CEO had not been finalised, he understood that R109 000 per month salary would continue to be paid. He was concerned that since basic principles of discharge in terms of Labour legislation had not been applied, the CEO may be reinstated, despite wasteful and fruitless expenditure of R314 million brought to the DOT’s attention as far back as July 2009. He asked if according to the Act, all suspensions did not follow proper procedure. According to correspondence received from the organisation, irregular spending continued to occur and it appeared that the RTMC was operating as a headless monster with no Board and possible implication for illegal appointment of an Acting CEO. He questioned whether the Shareholders Agency would be able to monitor the daily running of RTMC, when reckless expenditure and trips overseas continued. He appealed for action to be taken to ensure that the situation was monitored and that the expense for lawsuits on suspensions be brought to a halt.

Mr Farrow also asked for feedback to the Committee on the Demerit System Pilot Project, so that when it was rolled out, the Committee would be satisfied that it was fully functional and administratively fair.

Mr M De Freitas (DA) echoed Mr Farrow’s concerns and said that he believed that the problems were not only historic, but getting worse. According to unofficial sources, the Pilot Project had not worked and AARTO was not nearly ready to be implemented. Talented human resources were required for the RTMC to function effectively.

Ms P Ngwenya- Mabila (ANC) said that it was improper for new information to be channeled in the way it was being done, where only certain individual Members received information from the DOT while the country was anxiously counting on Parliament for delivery. With the report, the Committee could assist the DOT entities to execute their mandate. She encouraged disciplinary processes to be fostered during the ensuing time during which suspension issues continued and officials continued to be paid. She asked when the Board was expected to be appointed as the Committee wished to assist with fast-tracking appointment of people who would take the RTMC forward.

The Member also commented that there was lack of monitoring of entities by DOT as gaps had not been identified and challenges had been realised too late. The employees of the entities required support and understanding of their mandate. She also asked for a report on the findings of the Pilot Project in Gauteng and Tshwane so that the merits and disadvantages could be discussed.

The Chairperson said that the DOT had the responsibility of monitoring as well as providing back-up support to the Transport entities it had established to the point at which the entity had developed to a mature enough stage to gain independence. DOT was supposed to play the role of ensuring that training by the service provider resulted in full capacity within the RTMC for take over of the responsibility by the end of the contract time. The activities performed by the service provider in relation to e-Natis were supposed to be transferred to the RTMC. DOT was responsible for determining such a framework. It was not in the interest of the service provider to do so.

The Deputy Minister of Transport, Mr Jeremy Cronin, added that while debating the issues robustly going forward, the united priority of government was to serve the public by reducing the number of bad drivers on the road. This was not a political issue. He encouraged the Committee not to lose sight of the country’s priority and be encouraged by the success of the RTMC across provinces in October 2010. The Committee, DOT and Shareholders Committee could apply themselves to the lessons learned since the RTMC Act was established and from how previous Committees had applied themselves to the existing legislation. The Task Team was effectively investigating immediate problems of the RTMC to rescue it and move it forward within the established legislation. While dealing with issues, questions would be revealed as to what needed to change to deal with those matters.

Existence of the Board was not required by legislation, but was an option which could be decided upon by the Shareholders. The entities were regulatory entities, unlike big state owned enterprises (SOEs) such as Transnet and Eskom which did require Boards. Whether a Board for RTMC was indeed necessary was a serious question.

It would be useful if the Committee could have sight of the findings of the AARTO Pilot Project and open a public discussion to collectively address the practical implications of AARTO amidst the lessons learned and ultimately to gain support for the Demerit System.

Mr Robert Carlisle, MEC: Western Cape Transport and Public Works and Member of the Task Team Portfolio, said there were serious concerns on the provincial and local levels as to whether AARTO was a durable, complex, administrative system; how the cost and revenue would be split; and how the gross-fine revenue would be collected.

He was concerned that the row around AARTO would have a negative effect on road safety. These were separate issues. It was important to adjust AARTO until it was accurate and this would take time. A MOU with all users should be the ultimate goal of AARTO while at the same time the National road safety campaign to reduce deaths on the road should be pursued with utmost vigour.

Ministerial Task Team on the RTMC
Ms Piah Phiyega, Chairperson: RTMC Ministerial Task Team, said that the Task Team was appointed on the 8 February 2010 following the report in the media on issues of governance of the RTMC. In terms of the founding Act, the DOT did not load all functions to the RTMC and the Task Team was also asked to access the readiness of the RTMC to assume the remaining functions.  Upon commencement of the six-week oversight investigation, it was clear that issues were more complex than expected; a form of Forensic Audit was required; there were interruptions for legal procedures; and interviews were extensive. The time frame was extended by a further 16 weeks.

The Task Team concluded that there were chronic governance problems in RTMC; weak leadership from the Board and management; operational confusion within the organisation; financial mismanagement; gross procurement irregularities; lack of capacity to deliver on the mandate - mismatch of skills for output requirements by the shareholders; strategic lethargy; and the staff morale was deficient.  There was irregular spending, including travel abroad; irregular purchases; wasteful and fruitless spending; irregular awarding of contracts; non-compliance with the legal tender process for audit assistance; overpayment of Board members; abuse of HR procedures; and illegal removal of files (see document for more detail).

The Task Team endorsed the critical role of the RTMC and recommended: disciplinary action be taken on senior executives regarding procurement allegations; criminal charges be considered against suppliers where processes involved internal links; civil action be taken for recuperation of funds from suppliers; in some instances audits should be extended; procurement policy should be revisited and enhanced; enforcement controls should be enhanced; disciplinary action should be considered against the relevant employees for non-compliance and contravention of eNatis fees; issue of potential insolvency should be considered; a skills audit should be conducted; interim optimisation of management should consider the Shareholders Agency; appointment of the CEO as well as a CFO; re-examination of the governance aspect; and have the Minister as Chairperson of the Shareholder Committee to delegate power to act.

Short and medium term finance actions proposed by the Task Team involved dealing with insolvency; increasing the grant; introduction of a control system; income for the RTMC from AARTO and alternate sources; and funding opportunities for the RTMC to ensure that it achieved its mandate. Proposed adaptation of legislation would be presented to the Committee at a future meeting.

The DOT would strengthen its function of oversight on its public entities and develop a comprehensive plan and strategy for the RTMC moving forward.

Discussion
Mr Farrow said that he was concerned that the RTMC had reached such a state. Good governance came from a Board on a day-to-day basis and foresaw that the Shareholders had enough on their plate to oversee PFMA compliance, labour relations, and so on. He proposed that judicial management or a type of administration process for monitoring should be instated, as was normal procedure for any business which was technically insolvent, with DOT applying more stringent oversight. He asked how the current management would be held accountable and how DOT would ensure that irregularities would not continue. He asked for the Task Team Report, the RTMC Annual Report and the AARTO Pilot Project Report to be made available to the Committee, without which the Committee could not conduct its obligatory work.

Mr De Freitas asked if the Minister had a plan on how to go forward with RTMC based on the recommendations of the Task Team Report and if there was a reason for the delay in providing the Annual Report to the Committee. He added that information furnished to him was shared with the Committee and that there was no secret agenda and no time for politics. The goal was to passionately solve transport issues of the country and corruption, theft and mismanagement had to be routed out immediately, unequivocally, and without embarrassment.

The Minister said that all information given to the DOT was taken seriously. Legislation incorporated all spheres of government and the outcome of the Task Team Report would be through trouble shooting and engagement on all levels. All proposals were welcome and the DOT wanted to expedite the process of appointment to eliminate the uncertainty of leadership.

Mr Ismail Vadi, MEC: Gauteng Roads and Transport and Member of the Task Team Portfolio, said he was concerned that there was a lack of corporate governance without a Board and decisions by RTMC may therefore be legally invalid. He asked what the role and responsibility of the Shareholders had been and if their responsibilities had been abdicated. It appeared that either the Minister had to appoint an administration to take over the administration of RTMC and delegate responsibilities to enable lawful decisions to be made, or as a matter of urgency a highly competent Board should be appointed to reestablish a legitimate corporate governance structure. It was the legal obligation for the Shareholders Committee to meet at least four times per year, and as a matter of urgency this Committee had to commit time and energy to rebuilding the RTMC.

The Minister highlighted the fact that the Shareholders Committee was acting as the Board and that the forward process for RTMC should be expedited with the commitment of the Members of that Committee so that decisions could be made regarding the regularisation of RTMC. A priority was the appointment of the CEO.

Mr Farrow asked how legislation amendments could be fast-tracked so that the Minister could delegate power and if a meeting to discuss in detail how this could enhance regulation could be held as a matter of urgency even though Parliament was at the point of going into recess.
He also asked whether assistance from the Hawks should be considered to bring to the Criminal Justice System all staff and Members of the Board who were responsible for wasting public money.

Mr Collins Letsoalo, Acting CEO of the RTMC, said that there was currently no crisis at RTMC and judgment on the RTMC progress should be made at the end of the financial year, 31 March 2011.

The Chairperson concluded that the way forward was for DOT’s intermediary action to move the process forwards and where intervention required change in legislation or funding, the Committee would offer support.

The meeting was adjourned.