Private Security Industry Regulatory Agency on its 2011 strategic and costed operational plans: briefing

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30 May 2011
Chairperson: Ms L Chikunga (ANC)
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Meeting Summary

The main focus of the meeting was to allow the Private Security Industry Regulatory Agency to present its strategic plan. The Chairperson highlighted that after their meeting on 03 March the Committee was cautiously optimistic about the Agency. In addition she highlighted that for the year 2011 the Agency would be one of the Committee’s main focus.

In their presentation the Agency identified the challenges that it faced both external and internal. It was also brought to the attention of the Committee that the Agency intended to change its vision since the old one was contradictory and far fetched. The presentation also identified the priorities that the Agency would focus on such matters as stakeholder and customer relationship management, industry stewardship, excellent service delivery and financial management and funding.

The financial side of the presentation revealed that the Agency was self funded and its operating expenditure had grown by 40% from R112 million to R157 million. The Agency’s revenue also grew by 70%.

Committee Members were concerned that the strategic plan had not gone into much detail. The Agency was also asked to clarify whether there were 25 000 or 7 500 companies on its database and how many employees it had, since its operating expenditure was very high. The Agency was also asked how it intended to deal with the issue of unfair labour practices and criminals infiltrating the industry. At one stage the meeting became tense when the Agency could not satisfactorily answer whether it had taken cognisance of the fact that the new legislation could have an impact on its strategic plan. The Agency accused an African National Congress Member of using inappropriate language. The meeting was brought to order and the Agency continued answering questions that had been raised by Members.

Meeting report

The Chairperson began by saying that the meeting would allow the Private Security Industry Regulatory Agency (PSIRA) to present its strategic plan. The Committee had met with PSIRA on 02 November 2010 for the presentation of the annual report and the Committee had commended PSIRA. However the report that the Committee had received reflected that PSIRA had a number of problems. PSIRA was given time to resolve the problems. On 03 March PSIRA presented its turnaround strategy and the Committee Members were cautiously optimistic of PSIRA. The Chairperson highlighted the fact that during 2011 PSIRA would be one of the Committee's priorities. In addition she requested that PSIRA submit names of companies that had been suspended so that the Committee could follow up and see whether the companies were complying.

Private Security Industry Regulatory Agency (PSIRA). Presentation
Mr Manabela Chauke, Director: Chief Executive Officer, PSIRA, gave an overview of the presentation. Part A was the strategic context which contained the mandate, situational analysis and strategic focus and Part B was the strategic overview and contained the new vision and mission, the new core values and the strategic priorities. Part C contained the annual performance plan and Part D contained the medium term budget. The mandate of PSIRA was to ensure compliance within the industry with national laws and with fair labour practices. Furthermore it sought to promote the Black Economic Empowerment (BEE) and Employment Equity (
EE) in the industry and to protect users' interests. A situational analysis presented both external and internal challenges such as the ever increasing risk to the safety and security of South Africa and its citizens through the infiltration of the security industry by sophisticated criminal syndicates. Secondly there was a rapid growth and expansion of the security industry, requiring both a broader regulatory geographic footprint as well as more resources to ensure effective coverage and enforcement. There was also the increased number of illegal operators, foreign involvement in the private security industry, unfair labour practices and the damaged reputation of PSIRA. The internal challenges were that the scope and footprint of the regulation were too wide, funding model and governance, leadership and management.

The key areas were to strengthen the relationships with all stakeholders especially other entities of the Justice, Constitutional Development, Police and Security (JCPS) cluster by integrating databases with the Department of Home Affairs and the central firearms registry. The other key areas were to weed out corruption and criminality from the authority, focusing on performance and implementing a new law enforcement or compliance strategy. The vision of PSIRA had been changed since the old one was contradictory and far fetched. The new vision would be "to be recognised as an excellent regulator of private security in South Africa by all our stakeholders" instead of "to be a world-class regulator of the private security industry in South Africa". PSIRA would also strive for industry stewardship which would ensure the full understanding of the industry, stakeholder and customer relationship management in order to ensure a meaningful and fruitful engagement with all stakeholders, financial management and funding, excellent service delivery, efficient and effective processes and systems, effective learning and development and enabling environment or organisational culture.

PSIRA required the implementation of several key initiatives over the three year planning timeframe. Some of the initiatives were already underway or were planned for completion before the beginning of the new fiscal year. Furthermore accountabilities for implementation were assigned to selected PSIRA executives and senior managers. In terms of industry stewardship targets were set such as research capability industry research, active participation in key industry forums and developing marketing and communication strategies and plans. In terms of financial management and funding, PSIRA sought to clean up its debtors’ books and implement regional and debt collection processes and analyse operating costs. In attempting to create effective and efficient processes and systems PSIRA sought to develop information technology (IT) strategies, IT governance work, and IT policies and implement business continuity plans. Lastly Mr Chauke summarised performance management.

Mr Nick Ligege, Deputy Director: Finance, PSIRA, began by stating that PSIRA was self funded. Levies were paid by security officers, security businesses and fines paid by companies that failed to comply funded PSIRA. The budget was prepared on an accrual basis of accounting and it supported the 2011/12 strategic plan. In 2011/12 salaries would rise by 5.5% and in 2012/13 they would rise by 5.5%. There were surpluses from 2004-2006 in PSIRA but from 2007 there were deficits at PSIRA. Operational expenditure grew by 40% from R112 million to R157 million because of unforeseen rental expenses at the head office, upgrading the IT infrastructure and the corporate identity logo. PSIRA's revenue grew by 70% from R94 million to R159 million. Business contributed 62% and security officers contributed 38%. The growth was attributed to the increase in annual fees, introduction of new tariffs and the increase in service fees such as registration fees.

Ms A van Wyk (ANC) pointed out that PSIRA had to submit a copy of the parts that had not been included in the presentation.

Mr G Schneeman (ANC) stressed that the strategic plan had not gone into a lot of detail and this would make monitoring difficult such as the issue of inspections. He asked PSIRA to clarify on how many inspections it intended to do and whether there were 7 500 or 25 000 companies on its database and how many inspections it planed to do. He also noted that according to the presentation a number of strategic priorities were supposed to have been realised. The Member asked whether the priorities had been met. In terms of operational expenditure Mr Schneeman asked how many employees were employed by PSIRA since its expenditure on staff was very high. Operational growth was also said to be very high. He asked whether PSIRA could not have planned for such growth. Lastly he questioned how PSIRA, an organisation that had been established in 2002, had laptops from 1995.

Mr M Swathe (DA) asked how PSIRA intended to deal with unfair labour practices such as late payment of security officers. In addition he stressed that PSIRA's vision was supposed to reinforce the concept of world class regulation. He asked why this had been changed and why was world class regulation far-fetched for PSIRA. The Member asked what the registration time frame would be. Furthermore he asked whether PSIRA had considered that people would not be able to register if registration fees were increased.

Mr G Lekgotho (ANC) asked whether the job organisational structure would be completed by June 2011. In addition he asked whether PSIRA interacted with unions of representatives. Furthermore he asked whether the introduction of the new fee had been done correctly. Lastly he stressed that he failed to understand why Government was not playing any role in funding the organisation.

Mr M George (COPE) pointed out that PSIRA was spot on in outlining its challenges. However, nothing much had been said about its challenges in the strategic objectives such as the number of illegal operators. He went on to ask how PSIRA intended to prevent criminals from infiltrating the industry. Furthermore the way PSIRA had presented its targets was very vague and the targets had been mentioned in passing. In addition he also noted that the number of unaccounted officers was very high. The Member also asked what was meant by South African Police Service (SAPS) integration and unforeseen rental expenses.

Ms Van Wyk pointed out that Government had been correct in regulating the industry because the industry could not regulate itself. She asked what was meant by the term ‘types of additional resources’. In addition it was highlighted that intelligence gathering was not part of private security and companies that were doing so were supposed to be closed down. Intelligence gathering was part of State Security and Crime Intelligence. Furthermore she stressed that the Minister of Police had made it clear that the Private Security Industry would be reviewed but none of the documents before the Committee reflected the possibility and adjustability of the model. She asked how PSIRA would adjust and whether it had taken into account other models. This was a big concern because the turnaround strategy would be turned around again. Lastly the Member asked what access to the Department of Home Affairs database entailed.

The Chairperson asked what happened to the staff members from PSIRA who had been suspended for disciplinary hearings including the Human Resources Director. In addition she asked how SAPS integration came into the picture. Furthermore she requested an update on the amounts that were supposed to have been collected by PSIRA and the inspectors who were supposed to have been appointed.

Mr Chauke responded that the strategic document represented the priorities that were looked into. The activities of PSIRA would not be abandoned and focus would be on turning around the organisation given the challenges that had been alluded to. After the strategic plan was done, a departmental plan would also be done. In addition he stressed that the number of inspections would increase in 2011.

The Chairperson highlighted the fact that if no targets had been set it would be difficult for the Committee to hold PSIRA accountable and ask questions. She asked what PSIRA intended to achieve. She reminded PSIRA that it was presenting both its strategic plan and the annual performance plan.

Mr Schneeman highlighted that both the annual performance plan and the strategic plan was supposed to have been submitted to the Committee.

Mr Chauke responded that there were two documents. The performance framework was outlined on page 26 of the strategic plan document.

Mr Schneeman asked Mr Chauke to show the Committee where the document referred to inspections.

Mr Chauke pointed out that the target referred to by Mr Schneeman was an operational one. Only strategic targets had been put in place.

Ms Van Wyk noted that what was on page 27 and 28 of the strategic plan did not reflect the core business of PSIRA which was to regulate the private security industry.

Mr Chauke responded that page 27 talked to the core business of PSIRA. All the strategic priorities talked to the core business of PSIRA. He stressed that the manner in which it had done so might not have been clear.

Mr Thula Bopela, Chairman, PSIRA admitted that PSIRA was familiar with making presentations of a particular kind which was very different from what the Committee wanted, because the Committee wanted comprehensive detail; hence PSIRA would change. In addition he apologised on behalf of PSIRA.

Mr Chauke pointed out that some information had been omitted because PSIRA wanted to change the model of regulation by adopting a risk based mode which treated compliance as compliance and enforcement as enforcement.

Mr Bophela added that the Director had the information because he was briefed on a daily basis.

Mr Schneeman stressed that it was not correct to say that PSIRA was supposed to have known what Members wanted, since Mr Bopela had signed off the document; hence he was part of having approved the document.

The Chairperson stated that the reason why questions were being asked was because the document was supposed to have been a strategic plan and an annual performance plan. If the document was too abstract it would not be useful. An annual performance plan was something that the managers could be held accountable to.

Mr Chauke responded to other questions that had been raised. PSIRA had plus or minus 40 inspectors. In addition 25 000 was the total number of companies that were registered on PSIRA's database but only 7 500 were active. Furthermore some targets that had been set in the strategic plan had been achieved but the other targets would be reviewed. In terms of the operational expenditure, there were some structural cracks that were noticed at the old PSIRA head office. It was only then that PSIRA consulted engineers who briefed PSIRA that the building had been structurally compromised and the building had to be evacuated hence PSIRA had to change its head office. With regards to using laptops from 1995 Mr Chauke pointed out that before the establishment of PSIRA there was the security offices board and then the security offices interim board, and hence PSIRA got the laptops from them. PSIRA attempted to bring stakeholders closer in order to address the issue of unfair labour practices. PSIRA was also in the process of establishing a compliance committee. Furthermore PSIRA did not have restitution rights, hence, if PSIRA found unfair labour practices, PSIRA could not order a company to address the issue; hence there was need to get closer with the Department of Labour. The old vision was not realistic taking into account the current situation that PSIRA faced.

Mr Bopela stressed that it was difficult to compare PSIRA with private security in other countries because private security in one country was different from private security in another country.

Mr Chauke responded that the time frame for registrations would be reduced to one month from six months. In addition fees would not be increased but they were reviewed and there was no actual increase since it was a fee that was passed on. PSIRA was interacting with unions such as the South African Transport and Allied Workers Union (SAWATU) and in the future PSIRA would be having forums with it. The new training fee was introduced correctly. There were two ways in which fees were introduced namely service fees and levies. PSIRA had consulted with the industry before the fees were introduced. In addition he pointed out that the state was not contributing a single cent to the revenue of PSIRA. The new law proposed that PSIRA be funded by the Government. In terms of infiltration by criminals the model which was going to be used to regulate the industry would be changed. A compliance and enforcement team would be established in order to get closer to stakeholders. If criminals were identified PSIRA would approach the Crime Intelligence Unit of SAPS and they would conduct sting operations together; they had already started this in other provinces. PSIRA had had several meetings and workshops with the central firearms registry (CFR) in relation to their integration with SAPS. PSIRA would only get the number of firearms a company had from CFR. The integration was more of Information Technology (IT) integration. Mr Chauke stated that ‘additional resources’ was a reference to service fees that could be introduced without amending the law such as training fees. Security companies were not gathering intelligence but the companies had the capabilities of doing so. The Department of State Security had made a submission that intelligence gathering provisions were not supposed to be part of PSIRA. In addition PSIRA was not aware of any security companies that were gathering intelligence with the exception of companies that were in possession of intelligence gathering equipment.

Mr George noted that there were a number of foreign owned security companies that gathered intelligence and this was supposed to be changed in the new legislation. In addition they also interfered with the security of the country.

Mr Bophela noted that the Minister had mentioned that one of the concerns was the foreign companies. Mr Bophela had suggested to the Minister that the foreign owned security companies be shut down but South Africans would lose their jobs in the process. State Security had the competence to deal with the issue of intelligence gathering. PSIRA people were aware of this but because of their training they could not identify such listening devices.

Mr Chauke stated that In terms of the funding model, the amendment that would be tabled later during the year did address the issue of funding. Comments were received from all over the industry and most were in favour of PSIRA being funded by the Government.

Ms Van Wyk clarified the question that she had raised on the funding model that the three year plan was not taking into consideration the legal intervention that could come.

Mr Chauke responded that it had been taken into account and PSIRA was aware of this. When levy increases were done PSIRA was aware of this. If state funding was to be received PSIRA would need to change the way PSIRA collected its fees.

Ms Van Wyk stressed that the strategic plan had not taken into consideration that legislation would be enacted.

Mr Chauke brought to the attention of the Committee that the Director's statement in the strategic plan had taken cognisance that legislation would be enacted. Most of the external challenges would be changed in the legislations such as the issue of foreigners and criminal syndicates.

Ms Van Wyk pointed out that she did not agree with what had been said. Reading a paragraph from the director's remarks was not taking anything into consideration. Her concern was that the programme for the next three years did not take into consideration what the new Act could bring. In addition the Member pointed out that PSIRA could not say that the new legislation had been taken into consideration when Committee Members had not yet seen the legislation.

Mr Bopela responded that it was unfair to expect PSIRA to make provision for a law that PSIRA did not know anything about. In addition he accused Ms Van Wyk of using a word which he said was inappropriate language that Members of Parliament were not supposed to use.

Ms Van Wyk denied the accusation and stated that she had never used such inappropriate language.

The Chairperson asked Mr Bopela to withdraw his statement.

Mr Bophela withdrew the statement that he had made earlier.

Mr Chauke went on to state that in the past PSIRA had direct access to the Criminal Records Centre but things changed and PSIRA had to go through an intermediary, namely, Ideco, a biometrics identity management company. The kind of integration was the digital integration since fingerprints were sent manually to Ideco, which would then scan the fingerprints and send them to SAPS, hence PSIRA wanted to do the scanning at its offices. The access was to verify information and not amend any information. Some of the staff that had been suspended pending investigations had been dismissed. PSIRA found itself dealing with the issue of discipline. The human resources director had been arrested in February and had appeared in the Pretoria commercial crimes court and had been released on bail.

Mr George noted that the last board of the securities board had the exact same problem of ill-disciplined staff. He hoped that the current PSIRA board would not collapse like the previous board.

Mr Chauke responded that the issue of Ideco was an issue of how PSIRA could continue to have access through Ideco. PSIRA met with SAPS and they were told that there was a contractual obligation between SAPS and Ideco.

Mr Ligege responded that out of R200 million that was outstanding R18 million was as a result of security officers who had been mistakenly billed hence R18 million would be written off. There were 14 560 accounts which amounted to R145 million. The accounts were handed over to debt collectors and 5 500 accounts were considered dead wood because the companies could not be traced, or they were liquidated and this amounted to R62 million. R2 million had been recovered which amounted to 656 accounts. There were also some 700 accounts which amounted to R7 million and PSIRA had already received R2 million out of the R7 million and other companies were paying regularly. Other accounts were still being traced but the majority of the accounts could not be traced.

Ms Van Wyk asked whether companies that could not be traced would be de-registered.

Mr Ligege responded that PSIRA flagged the accounts but the names of the companies went to the regulatory committee and this happened on a weekly basis.

The Chairperson asked, whether as a citizen, she was assured that people who installed a security system at her house were not criminals.

Mr Chauke responded that citizens could verify the identity of the people who were supposed to install the security system in their homes from the security company and also with PSIRA via PSIRA's website. The people were supposed to produce PSIRA identity cards when they came to the house. He however stated that PSIRA could not guarantee the criminal minds of the individuals.

Mr Bophela asked Mr Chauke whether PSIRA had communicated to end users that they were supposed to verify the identity of security officers.

Mr Chauke responded that PSIRA had done so and as part of its advocacy PSIRA would be going out to members of the public to teach them about PSIRA and how to verify the identity of security officer.

Ms Van Wyk asked whether there was a process to make sure that those who were no longer in good standing would return their PSIRA identification cards.

Mr Chauke responded that it was for that same reason that PSIRA reviewed the enforcement strategy. In the past the enforcement of PSIRA legislation was aimed at companies. PSIRA would be vigorously enforcing the issue of identity cards amongst security officers. Officers were supposed to show their identity cards and if they did not have them they would be contravening the code of conduct.

The Chairperson pointed out that Members were asking the questions because they were also ordinary citizens. Documents from PSIRA had arrived late on Friday hence the Committee had not read the documents. The Committee would be interacting with PSIRA frequently. A new law would come before the Committee because PSIRA needed to be strengthened. She hoped and believed that the leadership was on its way to correct certain problems and if the leadership did not monitor PSIRA it would be absorbed. Furthermore the Committee would also monitor the things PSIRA had said it would do. PSIRA was to expect an oversight visit from the Committee since PSIRA was the Committee's main focus priority. PSIRA was supposed to be on top of the situation and PSIRA could do it.

The meeting was adjourned.


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