Minister of Public Service and Administration, Public Service Commission & Auditor-General of South Africa on anti-corruption

Meeting report

Introduction
The Chairperson welcomed the Hon. Masenyani Richard Baloyi, Minister of Public Service and Administration, Dr Ralph Mgijima, Chairperson, Public Service Commission (PSC), Mr Mashwahle Diphofa, Director-General, PSC, and Mr Kevish Lachman, Business Executive, Auditor-General of South Africa (AGSA). She also acknowledged a delegation of lecturers from the University of Cape Town who attended as observers.

The Chairperson said that part of the oversight function of the Portfolio Committee (PC) within Parliament was to see that the state‘s resources were used to achieve the overall objectives that Government had committed itself to. This was essential if Government wanted to arrive at a point where it would be able to appropriately provide the population with the goods and services it needed, and in this way nurture democracy. 36 practices of corruption had been reported to Parliament.  This meeting was a continuation of a process started on 03 November 2010, in which the Portfolio Committee (PC) on Public Service and Administration, together with other stakeholder bodies in Parliament focused on corruption within the public service in the broad sense.

This particular meeting was called to focus in-depth on two aspects of corruption in the public sector, namely , in the first instance, non-compliance to the Public Finance Management Act ( PFMA) in terms of the Financial Disclosures Framework Act  and secondly,  irregular expenditure as it was reported by state departments for the financial year 2009-10.

The Chairperson said that the Minister would outline the anti-corruption strategy of Government as it was implemented and what more had been planned to that end. The Public Service Commission (PSC) would then report on non-compliance of officials to the law that required public officials to declare their financial assets and interests. There would also be a presentation by a representative from the Office of the Auditor-General (AGSA) on irregular expenditure by state departments.

Minister for the Public Service and Administration
The Minister for the Public Service and Administration,  said that he would give an overview of the different initiatives and strategies the Government was in the process of instituting in order to combat the scourge of corruption.

The Government was committed to clean governance, but there were challenges of which one was corruption. When studying corruption, one observed that it manifested as a triangle. It consisted of a corruptor or instigator, an accomplice, and an environment conducive to corruption.

The resistance to corruption in the Government was also organized as a triangle. The PSC was the custodian of good governance, the Ministry for PSA was the facilitator and the Presidency was the political backbone of the process.
There were several bodies as well as legislative tools that existed specifically to discourage, identify and prevent corruption within the private sector, public sector and government. Each one of them had to be understood within the context of the triangle model.
The Public Finance Management Act 1999 (Act No. 1 of 1999) set out the framework for accountable management of public funds and provided for criminal prosecution of Heads of Department if found guilty of financial negligence, unauthorized and fruitless or wasteful expenditure. 

The Promotion of Access to Information Act 2000 (Act No. 2 of 2000), which promoted transparency in Government as well as the private sector, strived to move away from a regime of secrecy by making available, through prescribed processes, publicly held information
The Promotion of Administrative Justice Act 2000 (Act No. 3 of 2000) which promoted fair administrative procedures and redress for citizens also required Government to follow fair procedures when taking decisions that affected the public or an individual.
The Prevention and Combating of Corrupt Activities Act 2004 (Act No. 12 of 2004) which provided effective legislation to combat corruption in all its forms reintroduced the common law act of bribery. Under the Act merely offering to bribe someone, whether he or she accepted it or not, was corruption.
The Protected Disclosures Act 2000 (Act No. 26 of 2000) which promoted whistle-blowing as a preventative corruption measure protected whistleblowers from being victimised as a result of blowing the whistle in good faith.

There was also the National Anti-Corruption Strategy and Forum, where Government partnered with civil society and business. The chairperson duties rotated amongst the partners.

Through experience Government learnt that legislation, policies, strategies and forums did not resolve corruption. It needed people who were committed to the cause. The laws that were passed had to be implemented and enforced by the law enforcement agencies. That was why Business Unity South Africa (BUSA) held its own sector-based anti–corruption conference recently.

There was a realization that the organs that existed could function, but their implementation needed to be strengthened. The President then decided to establish the Inter-Ministerial Committee (IMC) on corruption to coordinate and fast-track anti-corruption action across ministries and departments. This IMC had to visibly act on corruption where it was discovered in the Government and the public service.

In its efforts towards achieving good governance, the PSA recently announced the establishment of a unit to deal with anti-corruption. As corruption started at the level of ethics, an Ethics and Integrity Framework was developed which would deal with this aspect. The Office of the Ethics Officer would operate like a registrar of Members’ interests. There would be a database where this information would be made available to the public. This Ethics Officer would have to research Members' interests to in order to discover whether there were any undisclosed interests. The Ethics and Integrity Officer would then pick up where ethical rules were contravened. This officer would work closely with the PSC.

The PSA modelled its structures for whistle blowing on what Parliament was doing in that regard. This Office of the Ethics and Integrity Officer would be the executive arm of the whistle blowing mechanism.

When one wanted to nip corruption in the bud, one needed to deal with it on a psychological level. The PSA also planned to unveil a Charter. Public Officials had to take pledge and make a formal promise to commit to ethical service. The conduct of officials had to be factored into the performance assessment of officials. The conduct of public servants had to be closely scrutinized because many public servants proved to be wolves in sheep’s clothing. Public servants had to internalize integrity as a value and had to adhere to Batho Pele Principles.

The PSA also had to look at how it dealt with disciplinary measures. It took way too long and most often than not officials were suspended with full pay. There was thus no urgency to finalise the case. The laws that governed this situation had to be studied, and if necessary amended to stop the occurrences of suspension on full pay.

The PSA, in its quest for good governance, would remove all obstacles to good governance where they were encountered. Government had partners and allies in the fight against corruption in the form of business and civil society. The country was engaging on the issue of corruption beyond its borders. South Africa subjected itself to a Peer Review process in 2007. The report on that review mentioned 13 issues that the country had to address and one of those was corruption. It was sited as an obstacle to good governance.

The government of the Democratic Republic of the Congo (DRC) had approached the South African Government to assist it in formulating a national anti-corruption strategy for the DRC. South Africa had agreed and proceeded to facilitate the first summit in the DRC which produced a national strategy, roughly modelled on South Africa’s anti-corruption strategy. The country would not sell anything to anybody else that did not work at home. The Minister was anticipating a Parliamentary question in this regard.

The country was engaging internationally on the issue of corruption as well. The Government had acceded to the convention of the Organisation for Economic Cooperation and Development (OECD) - countries. South Africa had acceded to the OECD Convention on bribery by officials in international business transactions. South Africa allowed itself to be peer reviewed by this body was well. This happened twice already, the last time having been February 2010, when South Africa was reviewed by the USA and Slovenia.

When the fight against corruption had been won, the environment that bred corruption had to be turned around. Society had to close spaces for corruption to flourish. Children had to see that corruption did not pay.

The Public Service Commission
Dr Mgijima said that the PSC’s commitment to fight corruption, stemmed from its mandate to promote transparency, accountability and integrity in the public sector. The presentation today was an excerpt from the presentation delivered on 03 November 2010 and focused specifically on the Financial Disclosures Framework. The presentation would be delivered by Mr Diphofa.

Mr Diphofa outlined the background to the presentation. He said that the current presentation would focus on trends as it appeared amongst senior managers broadly, and then focused specifically on Directors-General (DGs) in terms of their submissions of financial disclosures to the PSC.

The slide showed a table that tracked the percentages of submissions since 2000/01 till 2009/10. It increased from 62% in 2000/01 to 83% in 2009/10. This was an overall compliance rate not necessarily based on the due date. The submission rate by the due date was still less than 50%.

The next slide showed a table giving the numbers for the national situation as well as a break down by province as it stood on 31 May 2010. Nationally only 42% of forms were submitted. Only 19% was submitted in the Free State and 21% in Gauteng. The Western Cape was the only province where 100% of submissions had been received by the due date.

At the end of October 2010 the overall national percentage had changed to 83%. The Northern Cape’s submissions had changed to 98%. By the due date of 31 May 2010, only 15 out of 41 Directors-General had submitted their financial disclosures by the due date.

At provincial level, seven out of the nine Directors–General submitted their financial disclosures at the due date.

The PSC would soon report to Parliament on the scrutiny of the disclosure forms. A 60% sample of just under 3 000 forms would be scrutinized. The PSC would look at what they disclosed and compare it to what was registered in their name at the deeds office and on the Company and Intellectual Property Registration Office (CIPRO) data base. The PSC would also look at the nature of the work that they do and compare it with the interests they had and would identify potential conflicts of interests. These potential conflicts of interests would then be managed pro-actively in order to not become an actual conflict of interest. This was the reason for financial disclosures in the first place.

Discussion
The Chairperson said that when doing oversight work, Members discovered many instances of corruption. She referred to a list of corrupt practices that occurred in Government departments. They included fraud, overstatement of curricula vitae, taking bribes, fire-arm theft from police stations, failure to respect the law when procuring goods and services for Government departments, collusion between doctors and officials to defraud medical schemes and many others. All of these issues would form part of the anti–corruption plan for Parliament. The PC would zoom in and focus on particular areas. One of these was non-compliance to the Financial Disclosure Framework Act and irregular expenditure.

Mr L Suka (ANC) said that he appreciated the presentation. The PC needed to find ways to deal with the departments that were always lagging behind. Not submitting their documentation on time was a challenge for government. The PC needed to commend provinces that heeded to the prescript. The performance of Provinces was judged according to whether they could respond to their mandates in time. According to the presentation, the PSC received financial disclosures from 15 out of a total of 41 DGs. If DGs did not comply, what could the PC do to put pressure on them to comply? The PC could possibly monitor compliance through the quarterly reports that departments were supposed submit to it. 

Ms A Dreyer (DA) said that she could not but receive the statements of the Minister with a degree of cynicism. He had talked about a Charter, a Ministerial Task Team and a Code of Conduct. There was already a Code of Conduct for public servants; there was a Senior Management Service (SMS) handbook, an anti–corruption coordinating committee, an anti-corruption inter-ministerial committee, a national anti-corruption forum and a provincial anti-corruption forum. All these structures existed already in some form. The problem was not with structures and strategies. It was with implementation and enforcement.

During the presentation of the PSC, some worrying facts had emerged. The due date for financial disclosure was May. If it was submitted after May it was non-compliance. Only 46% complied, which was less that half, and this figure was on the decline. Some provinces had a 100% submission by the due date which proved that it could be done. There was a precedent. There was no need for more structures. What happened to the DGs who did not submit their financial disclosure forms by due date? Surely compliance to administrative procedures was written into their performance contracts? There had to be disciplinary measures to hold the DGs accountable. The culture of honesty would follow if people knew that there would be consequences. She asked the Minister why were no action taken against defaulting DGs?

Mr L Ramatlakane (COPE) wanted to ask a question regarding the progress in the government’s anti-corruption program. This programme was emphasised all the time in the budget process. These were senior state officials. They had to lead from the front. Has there ever been a consequence for failure to comply, driven by the national executive? The handbook was very clear about instances where officials failed to comply. Cabinet also had to have a look at this. All these Ministers and accounting executive authorities were members of Cabinet. Did Cabinet ever hold them accountable and what was done? A signal had to be sent and the whip had to be cracked.

Mr A Williams (ANC) asked when this report would show 100% compliance.

Mr Suka said that the report marked improvement. The Minister would make further clarity on the report in due time. He was satisfied by the response by the Minister.

The Chairperson said that compliance was needed in order for all theses organs to function. Improvement was not enough.

Ms H van Schalkwyk (DA) asked what the reasons were for not submitting the disclosure documentation by the due date. Just carelessness and laziness?

Dr Mgijima replied that there were a variety of reasons for non-compliance. It was due to a lack of supervision and accountability, and passing the buck. When everything was running smoothly and there was 100% compliance, attention would be drawn to the conflict of interests in order to ensure that they did not translate into corruption.

The Minister added to what the Chairperson of the PSC had said and again modelled it around disclosure management in Parliament. Ethics and integrity officers would be in a position to make follow-up just before deadline, similar to the process followed in Parliament. Each one would receive a reminder. The PSC did not do it at the moment. Each department would have an Ethics officer to strengthen what was there already, in order to ensure compliance.

Despite the existing structures, there was still corruption. The structures added now would enforce what was already there. The Batho Pele principles would be brought to the fore.  What the new code of conduct sought to do was to align the code of conduct for public servants with the code of conduct for Parliamentary office bearers. Codes of conduct as well as policies were always subject to review in order to align them with contemporary needs. To use an allegory, not sharpening your tools was a recipe for failure. The planned changes could be looked at as sharpening the tools.

There was no consistency in applying penalties across departments. The new structure sought to equalise it, making sure that the same offence earned the same penalty in all departments. It would facilitate the handling of cases. There would be a public service prosecutorial team to make sure that the decentralized practice of enforcing discipline was coordinated. The new structures were coordination mechanisms. It was necessary that an inter-ministerial committee had to be established at the level of the executive in order to deal with the issues of non-compliance and corruption in a coordinated manner.

When was asked why he had apparently not done anything, the Minister replied that 100% compliance was possible as had been proven by the Western and the Northern Cape, but it would take management and political authority to enforce it. He would ask the PSC to break the provincial figures up into departments in order to show the levels of compliance of the different departments within the provinces. He could ask if he had the authority to do something, but it would be considered arrogance. These new structures were steps in the right direction. Everybody had to rally around it. The IMC would enable action in cases like these.

Mr Williams said that the Minister talked about the environment as one of the legs of the triangle. The current environment tolerated corruption He suggested that lifestyle audits had to be done on all Members of Parliament, all DGs, all chief executive officers (CEOs) of entities and all heads of department (HODs). The corrupt elements had to be identified, isolated and removed. They were acting in their own best interest to the detriment of the country. He said that the ANC was against corruption, but unless it was prepared to act decisively against corrupt elements, the corruption would continue.

The Minister replied that the question needed to be asked: What were the indicators of the environment that tolerated corruption? What should be addressed? These were questions that were being asked and addressed by the current anti-corruption campaign. The new measures sought to find answers to these questions.

Regarding life style audits, the Minister said that he was not sure what it meant. He was not familiar with the concept. Would it be done for everybody? He was not sure. If it was done to determine whether an official was placed in a position of influence which might benefit businesses owned by that the same person, close family or friends, there was already a mechanism to do that. This was the Financial Disclosures Framework.

The Government was putting mechanisms in place to make sure that the three legs of corruption were broken.

Ms M Mohale (ANC) said that if this report was not taken seriously, there would always be corruption. If DGs did not take compliance to laws and procedures seriously, how could it be expected that procurement staff should take compliance seriously? She asked the Minister what his Department was going to do with this report and what consequences there would be for the defaulting DGs.

The Minister replied that he would use the triangle model again. The triangle was a triangle of the organs of the state of South Africa and the role they had in fighting corruption - Parliament, the executive, and the judiciary. Whose instrument was the PSC? Did it belong to the DPSA? The PSC was an independent institution created in terms of Chapter 10 of the Constitution to deal with issues of public administration. Parliament, the executive as well as the judiciary had roles to play in public administration.

For issues relating to the questions of today, he would answer the question and invite the partners to join him in answering the question. The DPSA, as a facilitator of good governance, would submit a report to Cabinet according to a new arrangement. The Deputy Minister would be directly involved in tracking the report of the PSC, working closely with it, reporting to the Minister and the Minister reporting to Cabinet. That was what would happen from the side of the Minister and DPSA.

At the executive level, who should do what? Parliament had a responsibility and the PSC was an instrument of Parliament. This PC had a right to address anyone that it found wanting when it came to performance. He was not suggesting that Parliament did not do its job. The PSC had no teeth – it only investigated. The power to act on the findings of the PSC rested within the PC and the Cabinet.

Performance agreement and intergovernmental protocols – how effective were they? The outcomes based performance was the approach decided upon by current administration under President Zuma. It was meant to assist in boosting performance.  There were performance and delivery agreements as well as inter-governmental protocols to bring aboard the provincial level of government. The Minister of PSA was the custodian of Outcome 12, which dealt with efficient, effective and development orientated public service and empowered citizenship.

The delivery agreement had been signed with eight departments and eight other Ministers and all nine Premiers. When talking about effective and efficient governance, it was monitored across the board, up to the provinces.

The Minister committed himself and his partners do a presentation to the PC on an instrument called the Performance Management Watch. According to 17 principles, it gave a national and provincial picture in terms of how departments were performing. It would have to happen in 2011.

The Minister asked himself if there had ever been any person where one could see the consequence of failure and if he could provide a report in that regard. With the introduction of the Unit, one would be able to know what sanction was meted out in which department for what transgression, because this information would be centralized. This coordinated system would ensure that Batho Pele principles were integrated on the provincial and national levels of Government, which was the jurisdiction of the PSA. It did not necessarily penetrate down into local government, but ideally the values of the public administration, referred to in Chapter 10 of the Constitution, Section 195, applied to all levels of Government, including state owned enterprises.

Ms F Bikane (ANC) said that the PSC report on principles and values talked about an effective accountability system. The President made performance agreements with Ministers. The same was supposed to happen with the Premiers. From the top going down, there had to be equal accountability by all members of state. In provinces and in departments, there were supposed to be offices for performance management systems. If properly implemented, their importance would become apparent.

The percentages of disclosures were going down. What processes were in place to ensure that the submissions were done in time? The performance of the performance managers also had to be assessed, but nothing was heard about them.

In the Free State only 19% had disclosed by May 2010. Was it a true reflection? If true, what was applied to improve it? What was done correctly to ensure that next year was better and that compliance was 100%?

Were the induction and education processes of new public servants effective? The PC had to make sure that people were properly inducted, before instituting sanctions. Sometimes public servants were ignorant of protocols. As this was the public service it had to be cognisant of fairness from a labour law perspective.

Mr Ramatlakane asked the PSC if it investigated whether things not disclosed had something to do with corruption. He asked the PSC to look at the sample cases it was busy scrutinising. He did not have a problem with lifestyle audits, but why did the PSC have to look elsewhere when a mechanism already existed to force compliance. The President had to ask himself whether his senior management were fit to hold their leadership positions if they could not comply with administrative procedures. This problem had to be escalated to the level of the executive. Was it done and what was the action associated with the escalation of the problem.

Dr Mgijima replied that it was an important question, because it pointed to the Framework. The purpose of the Financial Disclosures Framework was to prevent and manage conflicts of interest. The DG said all of them should be scrutinized for potential conflicts of interest. Measures then had to be taken to ensure that potential conflicts did not become actual conflicts of interest.

Ms Bikane said that Batho Pele principles were mainly applied in the national and provincial spheres of Government. She asked what was done to integrate them into the sphere of local government so that there was a homogeneous approach across all three spheres of Government.

Mr Ramathlakane asked the Minister what role was played by Minister of Performance Monitoring, Evaluation and Administration in the Presidency to make sure that everybody complied with the rules that had been set, assisting the Ministry for PSA.

Ms Bikane told the Minister that she felt the issue of corruption was treated in a too relaxed fashion. It was not the first time that the PC heard a report like this. The Minister and the DPSA needed to act with urgency and with speed. This report needed a follow-up.

The Minister said that the PC had to be specific in what it wanted him to do. He felt that the report needed a follow-up meeting with the PC.

The Minister put on record that the introduction of the anti-corruption measures, the review of the ethics and integrity management was meant to deal with the issue of non-compliance. Next year, through the work that the ethics officers would do through the year, they would be able to answer the question of the reasons for non-compliance.

The Chairperson said that non-compliance in terms of the Financial Disclosure Framework was at 17% for the country for the 2009-10 financial year. There were late submissions due to ill discipline. The framework was there and available. It was a matter of concern to the PC that basic requirements like compliance could not be met by DGs.  The PC wanted to make clear to the Minister that it was a matter of serious concern.
The PC wanted a response. Why 17% for the whole country and 23% for the national departments? As Parliament, the PC needed a thorough response. It had to be cleared up and it was possible, as the Western Cape had shown.

Auditor-General of South Africa. Irregular expenditure patterns Presentation
Mr Lachman acknowledged the leadership accountability in this process. The Minister was driving the process and was present in both the meeting of 03 November as well as the current one and he commended the Minister for it. For matters like these to be solved, the leadership had to take accountability. The office of the AG acknowledged the fact that the Minister was prioritising this matter in order to resolve it.

The production and review of financial information were key factors in rooting out corruption. Three attributes of that information was crucial - the relevance, the timeliness, and the quality, because these three factors drove the decision-making. In the previous presentation the AG pressed for the production of financial information on a monthly basis.

This meant that the production of the information had to be such that it could inform proper decision-making, by the executives and the leadership of those entities.

The Minister had made reference to a pillar of the triangle being the environment. The Minister had been referring to the internal control environment. It was critical that the internal control environment was addressed. It was important to identify the weaknesses in the internal control environment, to assess the risk, and then to put measures in place to mitigate the risk. It was critical to get this process right.

There was also a need to focus on knowledge sharing and skills development within the public sector. When looking at the different audits that the AG did, it became clear that a lot of skills and knowledge existed in the public sector, but they needed to be shared and spread around and transferred in an appropriate manner.

Often, while doing an audit, an auditor would ask for a specific set of information, only to be told that the person who worked with that set of information was on leave or just unavailable. This could never be a reason for information to be unavailable, because the information had to be available to everybody else. This needed to be facilitated in this process, the transfer of skills and knowledge. This transparency would assist in routing out corruption, because everybody would know what everybody else was doing.

Active visibility of leadership was another deterrent to corrupt behaviour. Governance structures and the quality of information were crucial. In the current process he noted the active involvement of the PC as well as the Minister, which were crucial factors in discouraging corruption. He said that the focus for the moment was on the national level of government, but structures had to be put in place on the provincial level as well, to support clean government and thwart corruption.

The information provided by the DPSA, the PC and other institutions had to be of the highest quality in order to facilitate the decision making and the policy decision making that was done by the AG.

Why was it important to the AG? The AG had to express an opinion on performance objectives, which had direct bearing on service delivery. The ability of an entity to deliver on its mandate was directly linked to the resources available to it. This was part of the process of ensuring that those resources were not abused. That was why it became critical that the resources of those entities and of the country had to be protected.

The Departments found guilty of non-compliance to prescribed procurement procedures were the Departments of Arts and Culture, Communication, Cooperative Government and Traditional Affairs, Correctional Services, Defence and military Veterans, Health, Human Settlements, Justice and Constitutional Development., Public Works, the Presidency, Water Affairs, Mineral Resources and Sports and Recreation.

Departments that were found guilty of not applying the preference points system during the procurement processes were the Departments of Communications, Defence and Military Veterans, Correctional Services, Justice, Labour, Public Service and Administration (PSA), Public Works and Water Affairs.

Departments that were found guilty of deviating from the procurement procedures, but provided no justifiable reason for doing so were the Departments of Cooperative Government, Health, PSA, Public Works, the Presidency and Water Affairs.

Departments which awarded tenders to suppliers which failed to supply valid tax clearance certificates were the Departments of Cooperative Government and Traditional Affairs, Defence and Military Veterans, Justice and Constitutional Development, Public Works, the Presidency and Sport and Recreation.

The following Departments did not invite the required three quotations and did not provide any justifiable reason for not doing so - Defence and Military Veterans, Justice and Constitutional Development, the Presidency, Cooperative Government and Traditional Affairs, Home Affairs and Mineral Resources.

There followed a breakdown per department as well as the category it emanated from and the amount. This was additional information to the slide presentation.

The Department of Defence and Military Veterans incurred R141 845 000 in supply chain related issues. It incurred R858 872 000 in the compensation of employees. In addition it had other irregular expenditure of R157 000, giving a total of R1 000 874 000. This represented 43% of the irregular spending for the 2009/10 financial year.

The Department of Justice and Constitutional Development incurred R778 971 777 in supply chain management related issues and R 26 415 534 in other irregular expenditure, giving a total of R805 387 311 which represented 35% of total irregular expenditure.

The Department of Home Affairs incurred R321 640 000 which represented 14% of total irregular expenditure.

The Department of Arts and Culture incurred R60 771 000 which represented 3% of total irregular expenditure.

The Department of Public Works incurred R27 402 000 which represented 1% of total irregular expenditure.

The other 19 departments remaining incurred R82 215 825 which represented 4% of the total irregular expenditure.

The irregular expenditure of the Public Entities was as followed:

The Road Traffic Management Corporation incurred R360 879 704 which represented 23% of total irregular expenditure.

The National Prosecuting Authority incurred 273 245 000 which represented 17% of total irregular expenditure.

The Property Management Trading Entity incurred R264 180 000 which represented 17% of total irregular expenditure.

The State Information Technology Agency (SITA) incurred R214 906 769 which represented 14% of total irregular expenditure.

Companies and Intellectual Property registration Office (CIPRO) incurred R95 830 616 which represented 6% of total irregular expenditure.

The other 56 entities were responsible for irregular expenditure amounting to R301 440 576 which represented 24% of irregular expenditure.

Irregular expenditure due to non-adherence to supply chain processes amounted to R2.3 billion. (In the financial year 2008/09 it was R 529.8 million.). It was incurred by 24 departments.

R 1.6 billion worth of irregular expenditure (In 2008/09 it was R 756 million) was incurred by 61 public entities.

Discussion
The Chairperson thanked the AGSA for the report. She appreciated the focus and the detail of the presentation, because this was what was needed for the purpose of the issues on the table. She said that it would be followed up with all the departments mentioned.

Mr Williams asked how big the budget was that was allocated to the anti-corruption measures. Even if it was R1 billion, the state would still save R 2.9 billion.

Prof C Msimang (IFP) said that the figures were frightening. Were the punitive measures hard enough? The Minister talked about disciplinary procedures were protracted. Suspension without pay was no deterrent. It was not harsh enough. The Minister talked about The PSC as the custodian, the DPSA as the facilitator and the President as the political authority. The Minister said that if there was labour legislation that needed to be amended in order for people to be suspended without pay, it would be done. Unless punitive measured become a lot harsher that they were now, this country would be run to the ground. How punitive were the measures to combat what was reported?

Mr Lachman said he was not the appropriate person to answer these questions.

Mr Ramatlakane agreed that the figures were shocking. The AG’s office used words like unjustifiable reason. He wanted to know what was the weight of those words. What then followed as a consequence of findings? He wanted to know whether there had been other recommendations. Would the AG recommend a process of condonation to regularize it? He was asking in terms of the existing PFMA, what kicked in? The provision of the PFMA or other provisions? Did another arm of Government take over? He wanted to understand the weight of the words and the consequences that would follow.

Mr Lachman replied that the question applied to Treasury Regulation16 (a) 6.4 which stated that an Accounting Officer could procure by other means provided that it was an emergency or there was only one supplier available. The reasons had to be well documented and these had to be justifiable. In these cases there was no indication of the reasons for the deviation from the required procedures.

Mr Lachman could not elaborate on the condonation of the irregular expenditure. He knew that there were specific requirements for the condonation. There had to be, for example, an investigation by the authorities to gather reasons for the deviations.

Ms Dreyer said that the report was depressing. It confirmed the extent of mismanagement. Looking at the public coffers, and what was happening to them, South Africa was at the precipice of becoming a failed state. This was as a result of a lack of respect for laws and regulations. The answer was political will and strict management. There was no other solution. It worked in provinces where there was alternative government.

Ms F Mbikane said that in terms of strategy, the PC had its own triangle consisting of the PC, the AG and the PSC. Want to endorse some form of oversight another approach of coming closer to remedy to institute oversight. The PC had to examine legislative processes in terms of what could be done by the Committee. PC was now concerned with issues cutting across departments. It was forcing the PC to make plans based on report in terms of oversight. When planning ahead for 2011, the PC had to plan to meet with all the Departments that had been mentioned as irregular spenders.

Mr Suka appreciated the report. The report was transparent and accountable. The ANC was upholding principles. It was not trying to hide something. The AG was doing his work. There was a need to find the thin line between the PC and the Standing Committee on Public Accounts (SCOPA). Each organ had to play its role in the process. Quarterly reports were important in the process to remedy the irregularities which have been reported. The DGs had to be held accountable.

Mr E Nyekembe (ANC) was new to the PC. He experienced it as a sign of disrespect to the Chairperson when a DA member interrupted a presentation with comments.

The Chairperson said that she had heard the interruption, but she had ignored it and moved on.

Ms Dreyer said that she meant no disrespect. Interjections were a normal form of communication in Parliament.

Mr Nyekembe said he wanted to know exactly what Parliament and its organs had to do to play its role in ending corruption.

Ms Mbikane asked Mr Lachman to elaborate on the slide about the information technology (IT) facilities in departments and how they related to the anti-corruption campaign.

Mr Lachman explained that the slide talked about the findings of the Information Systems audit. He had earlier mentioned three factors that determined whether one could control the internal control environment. He mentioned the leadership and the financial management systems. The IT systems formed part of that internal control environment.

The weaknesses identified were a lack of IT governance frameworks to direct the positioning of IT. 23 departments had a lack if it. It was a key issue because secure IT systems were needed for good internal controls management. It represented 85% of departments.

With the public entities, the number was 28, which represented 56%.

The second weakness was inadequate security management controls to prevent unauthorized access to the operating systems that granted access to the application systems. This was the situation in 26 departments which represented 93%.

In the public entities, it was 42, which represented 84%.

IT security was a crucial area to gain control over, because it was impossible to exercise proper financial control while the information on those subsystems was not secured. It created opportunities for fraud and error in the internal control environment.

Inadequate user access controls to detect and prevent unauthorized access, capturing and approval on the application systems that were used to prepare the financial statements like the Personnel Salary System (PERSAL) and Logistics Information System (LOGIS). 26% of departments had this weakness, representing 93%.

For the public entities the number was 43, representing 86%.

Another weakness was a lack of a business continuity and disaster recovery plan that would ensure the availability of financial and performance information in cases of data loss or disasters. 23 departments representing 85% of departments had this weakness. 

29 public entities, representing 58%, had this weakness.

With the exemption of the last statistic, they were all above 75% which did not bode well for the internal control environment. It needed to be addressed as a matter of urgency.

The Minister, in his closing remarks, said that when AG presented this report to the Executive and the Ministers of PSA and of Performance Monitoring and Evaluation, the Ministers had asked him to ask him to brief the departments. It was important that the Departments had to understand the severity of the problem. The Ministers then felt that when they needed to act, they would have the cooperation of the departments, because they understood. This process was public accountability in action. It was true that the huge figures had to be acted on, but something more had to be done. The introduction of new measures was to address the current situation.

The Minister said that Mr Msimang was right. Harsher coordinated action was needed. The President’s decision was to introduce an interdepartmental program. Treatment was needed. The Minister wanted to do things differently. Suspension with full pay had to be addressed. The IMC was instituted to arrest this situation.

The Minister said that the AG had submitted the report to the Executive. These matters needed to be addressed. They had to be dealt with internally. Part of this was to electronically record all procurements electronically and centrally. This was an intervention that had never been done before. This issue needed to be put in the past.

There was an agreement with the AG. There were violations that were being addressed. There were areas of financial misconduct. There was a need for political will, which he agreed with. The Government had demonstrated political will in the many structures and strategies it instituted to address corruption.

The Minister said that there was a need to explain and clarify the roles of the different role-players in the fight against corruption. There was a conflation of roles. When doing the legislative mandate review, these issues needed to guide the discussion.

The Minister said to Mr Nyekembe that the three triangle model explained the roles of all stakeholders.

The Chairperson agreed with the Minister about a time set aside to discuss thoroughly and clarify the roles and powers of all stakeholders. She thought that Parliament had to come up with a seminar to explain the roles of the different bodies. In fact, ongoing education was needed in all these respects. The PC was beginning to utilise the available supporting organs in order to fulfil its role more effectively. It had to learn as much as possible about this matter of corruption. The anti-corruption campaign was a mammoth task. The NCOP and the provinces would be approached as well. If not, all the good work already done might be lost.

She thanked all participants.

The meeting was adjourned.