Council for Scientific and Industrial Research (CSIR), Human Sciences Research Council (HSRC), and South African Space Agency (SANSA) Annual Reports 2010/11

Science and Technology

17 October 2011
Chairperson: Ms M Dunjwa (ANC)(Acting)
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Meeting Summary

The Council for Scientific and Industrial Research presented its annual report 2010/11 and emphasised that it had once again received an unqualified audit. It was happy with the current staff composition although the nature and demands of research work was associated with long hours which were often problematic for women with children. It had registered some patents internationally. It also explained some of the technology and machinery that was being used internationally. It also added that some of the technology’s performance was also determined by the global economy and as such any major decisions by clients significantly affected it negatively. However, it stressed that a drop in sales figures or royalty income should not be taken as signifying a decline in the quality of the technology. It had worked with  Government departments during the year to assist them. It acknowledged that it was taking on too many activities and as such did not have an impact on society. It had resolved that it would in the future be more focused.  It had also managed to remain financially sustainable of which it was proud.

Members raised questions on whether its allocation was enough and, if not, how much more did the Council require They also wanted an indication of the number of patents that had been registered, the targets set and met, and the impact that the Council had on the community. The Committee was also impressed by all the technological innovations that were presented but complained that nobody, except the Council itself, knew of the Council's achievements. Members asked Council to communicate more. 

The Human Sciences Research Council had appointed a new board in 2009 and had gone through some restructuring. It had become more creative due to the global recession and had appointed two new deputy chief executive officers to help with the work load at the top. It  had met some of its targets but had missed some for a varying number of reasons - some due to inability to appoint staff as candidates were not willing to relocate to South Africa. The Council highlighted a decline in external flow of income due to the global economic environment but was quick to add that it had already met its target for the current year 2011/12.  The decline should not be attributed to a decline in quality or a lack of confidence. More than 50% of  income had come from Government.

The Council also said that a change in the audit team from the Auditor-General's office had changed the way in which it reported, though the Auditor-General had raised many questions and there was a possibility of fraud which required investigation.

Members were also concerned by the issues raised by the Auditor-General and noted that this was the third report which had been submitted with errors and needed amendment and asked the Council to improve.  The members would have wanted the Council to highlight the matters raised by the Auditor-General. The Members requested that the Council give them a notice from the Auditor-General which showed all the changes that the Council claimed to have made.  Members asked the Council to go and resolve all of these outstanding issues and them return to the Committee after all had been resolved. The Chairperson questioned why the Council was the only entity affected by the change in the Auditor-General's staff as this was the first time the Committee was hearing this.

The South African National Space Agency briefed the Committee on the progress made in the last year and added that its full establishment would take three years. It hoped that by 26 October 2011 it would have all its policies in place. It explained as to how it had implemented the necessary statutory and other financial requirements such as banking arrangements and registration with the South African Revenue Service. It  also showed how it had progressed in filling vacant positions and also resolving the salaries and benefits for staff members. It showed the demographic composition of the staff and noted challenges in hiring persons with disability, Coloured and Indian persons and pointed out that there were more males compared to females.

The Committee questioned if the Agency had implemented policies with regards to conflict of interest and suggested a meeting with the Technology Implementation Agency as they were both new and could share and exchange ideas with regards to the teething problems that they were facing.

Meeting report

Council for Scientific and Industrial Research Annual Report 2010/11 Presentation
Dr Sibusiso Sibisi, Chief Executive Officer (CEO), Council for Scientific and Industrial Research (CSIR), said that  performance for 2010/11 was measured against, very broadly, building and transforming human capital, where progress had been made with the best employer award for 2010, strengthening the science and technology base, and performing relevant research and development, transferring technology, and building skilled human capital. Lastly financial sustainability and good corporate governance was reflected in an unqualified audit, and solid financial performance in what had been a tough economic climate in the past year.

Dr Sibisi then moved on to some statistics starting with the staff complement which stood at 2 326. 64.5% of the staff were in Science, Engineering and Technology (SET).  Those figures were best shown graphically (see presentation document). Since 2006 the number of staff with Doctor of Philosophy degrees (PhD’s) had steadily increased and was about 300 in the year 2010/11. The percentage of staff who were female was constant at 33% and he highlighted that the female component of the SET base comprised largely young women of child-bearing age. The nature and demand of research was associated with long hours which were often problematic for women with children. There was a possibility to improve although statistics in other institutions made 33% an acceptable average. It was important to note that the percentage of SET staff who were black was well above the 50% mark but the challenge was that people left the organisation to join other organisations. There was also a restructuring of a unit in CSIR followed by a more focused recruitment drive aimed at reaching this Key Performance Indicator (KPI).

The number of studentships spoke for themselves as they stood at 246. He briefly discussed some of the awards. He mentioned Professor Suprakas Sinha Ray who ran the new Nano-Structured Materials Centre and was one of the top 50 Chemists in the world. He also mentioned the achievement of the Best Employer status as awarded by the  Corporate Research Foundation (CRF) in 2010. He then showed the cumulative patents since that was the Council's stock which it could exploit although it had 14 new national patents granted internationally and 29 new technology packages available for transfer.

The Chairperson asked for clarity on the slide as it showed patents registered in Japan and United States of America( (US).

Dr Sibisi  said that it meant the Council had registered a patent for one of the CSIR projects in Japan and in the US since each country had its own laws on the registering of patents. He moved on to Royalty and Licence income and 2008/09 was a good year and not so good in subsequent years and was quick to say that those numbers were small and a single royalty payment could make a huge difference to the profile. He showed some of their work like the Heavy Vehicle Simulator MKVI  now available for commercialisation and which had already gathered interest

Dr Hoffie Maree, Group Executive: Operations, CSIR, added that the Heavy Vehicle Simulator was developed in South Africa. 10 to 15 years ago the Council sold some to California in the US and had subsequently sold to Florida in the US, Finland, Sweden and fairly recently to India and at present to Puerto Rico was buying one. Mexico and China were interested in buying one and the CSIR obtained royalties from those sales. The Federal Aviation Association in the US wanted to buy a double sized one so they could test roads and structures under the big planes, so it was a case of South African technology being quiet over a period and then coming into demand a few years later.

Mr M Nonkonyana (ANC) wanted clarity before proceeding on the Royalty and Licence income graph as to what was causing the up and down trend and the quality levels?

Dr Sibisi clarified the pattern on the graph by saying the income was dependent on the performance of licensed products and also fluctuations could be because an item/product had come to the end of its economic life.  It did not in any way reflect on the quality of innovations. it was simply due to the market trends.

Mr Chris Sturdy, Chief Financial Officer (CFO), CSIR, added that the spike in 2008/09 was because of a particular technology it licensed in the US to a company which made armoured vehicles at the height of US involvement in Iraq, so the CSIR sold a lot of these vehicles to the US military and as a result increased the royalty payments to CSIR during that time. Now that the US was pulling out of Iraq it no longer needed as much  - thus the significant decline;  so again it was not a matter of quality but the market circumstances.

Dr Maree added that global financial crisis also had an influenced the results because where people had wanted to put up factories they had decided not to do so because of the economic climate which translated to a longer period to realise financial returns. In some instance some patents had been returned because those industries did not have the funds.

Ms M Dunjwa (ANC) requested that the CSIR be allowed to complete the presentation.

Council for Scientific and Industrial Research Annual Report 2010/11 Presentation continued
Dr Sibisi reported that publication equivalents showed continued increased growth and were an important output of scientific activity, intensity and quality.

The CSIR had been working on the design of hospitals to reduce the cross-infection between hospital wards for people who had Tuberculosis (TB) in one ward to those who had drug resistant TB in another ward. The CSIR would continue to work with the Department of Health in that regard.

He then moved to industry where the CSIR had done some work in finding cracks and breaks in railway lines; because of the tension, a railway line can break at a weak/welding point so that there was a gap and when a sound signal was sent it would not be transmitted across the gap and that way it was  possible to identify cracks in the railway line which could help avoid a train being derailed. It had saved a few such derailments that Transnet would have suffered on the Saldanha railway line and it was now receiving attention in the US, Japan and other countries.

On natural environment and the water resource monitoring programme, the Cradle of Humankind  was threatened by Acid Mine Drainage (AMD); it led a multi-disciplinary team to investigate and assess the vulnerability to understand the different pathways where AMD entered, impacted on and left the site.

The built environment received a lot of publicity on how to fix potholes. Information was published and made available on the internet for anyone to use following the strict guidelines in the fixing of potholes.

Broadband for all was a low cost infrastructure which was used and supported by local communities and was simple to maintain as it involved local communities therefore had direct ownership.

The finances put together from 2007 – 2011 showed a steady increase in total income received with an increase in South Africa’s Public Sector Contract Income. The CSIR received an unqualified audit and remained financially sustainable and it had a level 3 Broad-based Black Economic Empowerment (BBBEE) rating, good environmental stewards as it maintained its International Standards Organisation (ISO) 14001 compliance and had an exemplary safety record and achieved a 21.4% reduction in energy usage internally.

The CSIR acknowledged that it needs to focus more, needed to do fewer things and do them on a bigger scale and enhance its activities. It also took recommendations from the 2007 Organisation of Economic Cooperation and Development (OECD) review  which said the same thing but did not question the management of the organisation. The 2009 CSIR review also had similar recommendations. it decided to look at the Millennium Development Goals (MDG) and asked in what areas it could make a difference but acknowledged that it might not be able to in all of them.  Direct interventions were HIV/Aids, malaria and other diseases, environmental sustainability, global partnership for development, and eradication of poverty.   Intermediate interventions were improvement of maternal health and reduction of child mortality rates.  Promoting gender equality and achieving universal primary education were indirect interventions.

For the new growth path strategy the contribution from CSIR was infrastructure, energy transport, agriculture, mining, potential economies like the green economy. For the 12 Government Outcomes it could contribute to safety, sustainable human settlements, safety for South Africa, long and health life, and as a consequence of doing so a better South Africa, effective public service and improved basic education.

The CSIR would continue with its normal research and development work but would also want to have some flagship programmes looking at innovation and implementation and so  involving strong partnerships.

Dr Sibisi mentioned that water sustainability was going to be a major focus and would cover everything from enhancing to increasing the amount of drinkable water. Health and nutrition was the other focus. 

The Chairperson asked Dr Sibisi about the financial part of their annual report.  He also had expected to see financial statements and a review of the targets achieved and not achieved for whatever reason. He asked what challenges the Council might have faced during the year and how Parliament could help in the process of achieving its goals. He also added that in the past years CSIR had adopted a strategy with a business focus and he had wanted to see the results of that strategy as it was not clear in the presentation.

Dr Sibisi referred him to the slide that showed the total income received by CSIR and just added that the Council had presented its annual reports in a story-like form highlighting the successes of a particular financial year, what human capital development had been, and what the commercialization successes had been. He mentioned that CSIR had continued to operate profitably and also had received an unqualified audit; he then referred to the graph that showed total income received by CSIR and stated that 33% of total income was a parliamentary grant and the rest had come from royalty income, internationally and from South African public and private sectors.

Ms M Shinn (DA) referred to a graph on page 119 of the annual report and said the figures showed that income from the South Africa public sector had dropped by R20 million and wanted clarity on that; the operating expenses had also dropped significantly and she needed clarity on that as well; she also wanted to know in terms of financial sustainability if the parliamentary grant was enough or if the Council's business approach was going to make it less dependent on parliamentary grants. She also asked if the bad debts  were written off, what equipment had been lost or stolen, and how many of their international patents had been commercialized.

Dr Sibisi replied that income from the South Africa private sector had increased a little, yet income from the South Africa public sector had not changed and as such represented a shrinkage. He acknowledged that in future it would be best to show subsidiary graphs that analyzed each component individually rather than to try and read the information from a composite graph like the ones shown.

The CSIR sought to focus more to aim for a greater impact in fewer things. It hoped that it could put forward a more compelling case using those areas of flagships and then come and request for more funding. He mentioned that its approach was not to say it did not have enough money but to first say what they wanted to do and what they wanted to invest. He added that a lot of the profit generated had gone to the purchase and refurbishment of some of the equipment. The CSIR, however, did need more money.

Mr Chris Sturdy (CFO) said that the CSIR did not write off any bad debts casually and the bad debts were 0.04% of total revenue made up of three debtors in the past year. The first was a bursar of R 125 thousand. An arrangement had been made for that bursar to repay over a period of time. The other two related to companies which were declared insolvent or were in a position where they could not pay CSIR and those two amounts were R136 thousand and R262 thousand. He asked Members to look at the number just above the bad debts in the financial statements in the annual report which was the reversal of impairment of bad debts. This referred to bad debts that had been recovered and this totalled R31 thousand.

The loss and disposal of equipment was addressed in three categories - firstly lost or stolen equipment, where laptops were stolen from cars, copper cable theft, house breaking, bags and equipment stolen at OR Tambo airport, and lost wave riders. The second was damage to equipment which was a write-off due to lightning, water, and vehicle accidents. The third category was where the CSIR wrote down the net realizable value of the assets as it did an impairment test each year. The year in question related to fire upgrades to buildings, and carports that were last upgraded in the 1980s. It had presented this to the auditors. The CSIR  had also upgraded some buildings as well and when that happened the CSIR wrote off the current balance on the asset and capitalized the improvement costs to the buildings. There was a decrease in operating expenditure. It was affected by the recession after it had affected the private sector. Less was invested in property plant and equipment and the number of patents commercialized - he did not have the number on hand.  It could not be translated from royalty income as it could be misleading. Some licenses which the CSIR had issued had been returned as they were not financially viable. It was a difficult question to answer in terms of commercialization but he would be able to provide information on the number of licenses issued

Mr Nonkonyana said it would have been helpful if Members had been given information of the targets set and met from the last financial year, on the potholes, and asked if the research and documentation been shared with Government and municipalities. He wanted to know the impact of broadband to the rural communities and Government. He also asked what the Council was going to do looking at the New Growth Path in terms of Spatial development and Rural Development.

Dr Sibisi referred to table 2, page 113 of the annual report that gave key performance indicators (KPIs) in the area of building and transforming human capital; those were the targets and the last column showed what had been achieved. There were more tables that showed targets versus actual in 2010/11. Therefore all of that was in the annual report but the CSIR had adopted a presentation with a story-like approach rather than tables which could always be looked at afterwards.

Ms Dunjwa did not find in the MDGs how the eradication of hunger and poverty would be accomplished through assisting Government at a local level. She asked how CSIR assisted communities in empowering people. She also wanted to know if all the studies conducted were not meant to be made public. She added that people were not interested in annual reports but on what could be done and how they could be assisted.  She also asked if the CSIR numbers could be given to Mayors and Municipal Managers so that they could also go to see how or what kind of assistance they could obtain  from CSIR and then see as to how to form  partnerships going forward.

Dr Sibisi said these issues were much broader and he admitted that the CSIR had been struggling with that as an organization as to how it enhanced its impact. The way to deal with that would be to focus on fewer and more specific objectives since resources were finite. He suggested that the CSIR should also partner strongly with other institutions who would be responsible for the actual rolling out of these projects like the concrete tar and the low-cost Reconstruction and Development Programme (RDP) houses, so it was a matter of finding the interface. Concerning the potholes there was a training course conducted and over 800 people attended. There had been a lot of interest and the manual had been downloaded from the internet as it was available and awareness of it had been high.

The Chairperson added that the Committee had been shown  how plastic waste could be used to make door frames and bricks, also low-cost strong houses,  and was told of a project in the Western Cape where there were some prototypes already in place. He appreciated the work done but said that the CSIR did not have a communication strategy; it had not shared any of this information as it was not in the newspapers or on television. The CSIR had not done well in communication. He also asked about the progress of the project in the Western Cape for low-cost housing and what the attitude of Government was towards it. He added that CSIR was not meant to roll out roads or houses but was meant to show what could be done and what could be worked upon.  The relevant stakeholders were unaware of what CSIR could do. He rated the Department of Social Development in KwaZulu Natal (KZN) as the best communicator of all its activities.  He urged that the communication office of CSIR needed to be improved.

Human Sciences Research Council Annual Report 2010/11 Presentation
Dr Olive Shisana, CEO, HSRC, said that 2010/11 had been an exciting, interesting and challenging year. She highlighted the hosting of the World Cup by South Africa, and the global recession which had affected the funding of research in HSRC.

The Chairperson interjected to ask Dr Shisana why she did not mention the launching by the International Astronomical Union (IAU) of its Office for Astronomy Development at the South African Astronomical Observatory in Cape Town on 16 April 2011 - why just the World Cup?

Dr Shisana moved on to say because of the global economic crisis the HSRC had to become more creative and innovative in managing its limited resources and the Department of Science and Technology (DST)  had  come to its rescue. The HSRC had had new developments over the last year and the first was the appointment of the board towards the end of 2009. There was still one more board member to be appointed in the area of finance; another board member resigned to take up a position in Ghana after being appointed by the Ghanaian president. The HSRC was also restructured and that was why she was flanked by the two new deputy CEOs Dr Temba Masilela and Mr Peter Pedlar. It had reconfigured the research programmes in order to align the research units with the national priorities and also re-align existing units or create new units to support strategic imperatives.  It also created a new unit for research use and impact programme analysis. This fell under the Deputy CEO and it looked at data preservation since the Act required the CSIR to keep data for future use. Secondly it looked at the policy relevance side of communication and the Minister had always said that the HSRC should communicate:  it now focused on science communication. It also looked at research dissemination,  and supported the monitoring and evaluation programme of the Presidency. She added that the mandate of the organisation was to promote human science research of the highest quality so that it could improve social conditions and processes of social change and engage in collaborative research networks in South Africa, Africa and globally. It needed to focus on pressing social issues relevant to human welfare and prosperity. Therefore it had a very important strategic objective in its strategic plan which was to have addressed the key priorities facing South Africa through research and to have generated new knowledge to help understand the social and human environment. In the last year it undertook over 150 projects and also carried out several other initiatives in social sciences and humanities to provide evidence-based knowledge and data. It undertook research which was grouped into seven areas - democracy, governance and society; education and training; healthcare and health systems; poverty, food security and social exclusion; science for society; world of work; young people in focus.

Dr Shisana elaborated on meeting the mandate of HSRC. Its first requirement was to inform the effective formulation and monitoring of policy as well as evaluate the implementation thereof and as a result it published five policy briefs on energy security, development challenges, quality education, food security, and skills development.

The HSRC's researchers were closely involved with the work of the Presidency in informing a research-based approach towards Government-wide monitoring and evaluation. They were also involved in a survey funded by DST to inform the strategy and policy formulation in DST and monitor the progress against the targets set.

The HSRC was also required to stimulate public debate through the effective dissemination of fact-based research results and it used several approaches to do so such as publication of the HSRC review with more than 6 000 copies of each edition in printed or electronic format distributed to parliamentarians, heads of national and provincial government departments, donor agencies, embassies, academic institutions, schools, journalists and the HSRC staff members. It used free downloads where the readership for on-line HSRC publications covered more than 200 different countries.

It also held public seminars where it brought high profile scholars, policy makers, diplomats and intellectuals to come and share some of the societal issues. It also tried to meet the mandate in building research capacity and it has provided opportunities for 37 master’s, 28 PhD level interns and 18 post-doctoral fellows and they came to the HSRC to be trained so that they could become scientists, be absorbed into Parliament, Government or universities. Thus the HSRC grew its own timber and shared the timber with other institutions.

It signed a memorandum of understanding (MOU) with some universities and Government departments and shared the information that was in the library so that it could use its infrastructure as well. It  published research material which was made available to 50 universities in the rest of Africa via the e-Granary Digital Library.

HSRC researchers participated in training workshops with counterparts in South Africa and other parts of the world. It also had to meet the mandate of research collaboration internationally such as with the World Bank, UNAIDS and World Health Organisation (WHO), also with higher education institutions internationally, also with international research NGOs, with regional and international research networking organisations, also with the South African government departments at national and local levels, also with South African higher education institutions like University of Cape Town, University of Stellenbosch, Fort Hare, Tshwane and many more.

Another area for it which was required by the Act was to work with the vulnerable and marginalised groups and some of the work it did in that area was focusing on HIV and AIDS in rural communities. it also conducted research on sustainable and safe water provisioning to communities in the Eastern Cape. Another mandate was to make the data sets available to a broader public so they would be able to re-analyse the information or use the information for whatever purpose. Results from the national Research and Development (R&D) survey were available online at the HSRC website ( ). 

The work of HSRC was very much aligned to national priorities. The HSRC was involved in education, health, rural development and land reform, creating decent work and fighting crime, it also undertook research on humanities.

Dr Shisana then listed  the top 10 bestsellers from the HSRC. Inside Indian Indenture was a South African story that looked at the period 1860-1914. The book revised the contours of South African Indian history with the themes of cultural and religious expression, power relations weapons of resistance and forms of collaboration into the main stream of Southern African studies.

Education and Poverty Reduction Strategies interrogated the link between education and poverty reduction and highlighted the role of cross-sectoral co-ordination policy coherence in breaking the poverty gap.

Growing Up in the new South Africa with a subtitle of Childhood and Adolescence in Post Apartheid Cape Town  was a rich techno-graphic research of a part of Cape Town and used quantitative analysis and explored how the end of Apartheid affected the experiences of South African children in adolescence across historically divided communities in Cape Town.

Trade Unions and Party Politics – Labour Movements in Africa won the international labour history association book of the year award for 2010, and examined the political role of trade unions in seven African countries and the ways in which they influenced political powers.

Constructing a democratic developmental state in South Africa – Potentials and Challenges was edited by a staff member from HSRC as it was a really important collection of an inter-disciplinarian team of international scholars who came to HSRC and made presentations covering a lot of issues of how South Africa could develop a democratic state using conceptual models and case studies from other countries. The book was authoritative and comprehensive in its investigations on fundamental issues of economic and political development.

The Race to Transformation took stock of sports in South Africa and provided a pioneering exploration of how sports reflected on matters such as enduring inequality, racial transformation  and the making of a common national destiny.

The Struggle over Land in Africa looked at conflict politics and change. It looked at the role of land as a place and source of conflict especially with regards to policy development and crisis management and reconstruction. It offered important insights into land issues and the nature of policy making at national level across Africa.

The Zuma Administration was a collection of essays from different perspectives engaging the South African Government and focused on the micro-mechanics of governance and the current and future responsibilities that must be taken care of by the administration.

Development and Dreams focused on the legacy of the 2010 World Cup. It considered the effects of South Africa hosting the event and provided an inter-disciplinary perspective on the probable consequences and benefits, including the economy of South African cities and the projection of African culture and identity.

Gender Modernity and Indian Delights looked at the women's cultural group from Durban from 1954 to 2010 and revealed how a group of women who were excluded from political and customary power forged a vibrant citizenship. It looked at them as agents of their own community and in terms of making the South African modernity.

Dr Shisana reported that the HSRC had met some of its performance targets. It met the Peer Review target of 1.5. It managed to appoint only seven of the 10 African Research Fellows because some Africans were not willing to relocate to South Africa for long periods and would mean that the recruitment strategy would have to be reviewed There had been targets of 34 master’s interns and 22 PhD interns but It managed 37 master’s and 25 PhD interns and 18 of the 20 post-doctoral interns. It achieved 16 from a target of seven in terms of the preserved datasets. in terms of the Senior Researchers it was at 41% from a target of 48%. On extra parliamentary income it managed 47% out of 48%. In terms of multi-year grants It managed 34% from 46%. She then said that HSRC had to train its own scientists so that it could be staffed by people who were highly qualified and she was pleased to say that through the programme it had been able to ensure that the larger group had the PhD qualification. It also increased the number of Africans recruited into HSRC and almost all of them had a PhD. The HSRC had more females with PhDs than males.

Dr Shisana reported that for the year 2010/11, 53% of the income was a parliamentary grant, 39% was through external research and was less than what It had generated in other years and 8% was from other income such as rental, cafeteria and so on. The income statements showed that It had been increasing the external income and having very little surplus or deficit which meant that the absorption capacity was very high since It was hiring skilled people.

In 2010/11 it did not do well because of the global economic crisis and while the parliamentary grant and ring-fenced funding continued high on a long term basis but contract income was declining as a result of the international funding environment, but she was happy to say that in the new year the funding had improved.

In conclusion it had been a hectic year but also a good year. The HSRC had been able to implement the new strategic plan and new indicators. It had gone through the internal restructuring which lead to realignment, repositioning and the appointment of deputy CEO; there were some challenges in terms of performance reporting, and internal controls as shown in the annual report, but it had addressed them with the support of the Board and the Auditor General (AG). It had an unqualified audit, remained true and committed to the mandate and strategic objectives, supported the national continental and global priorities and had provided information to help understand the deeper issues affecting South Africa .

Ms Shinn started by saying one of the targets for the coming year should be to produce one annual report without error, as this was the third report which had been printed with errors. He wanted clarity as to what the factors were for missing the external funding targets and if it was not due to the quality of their work. The targets for several categories of researchers were missing. She wanted to know why there was nothing shown under travel for the CEO and the Board for the trips to China and the United States. She wanted clarity on the discontinued activities. The integration of four units to two was not mentioned. She wanted clarity on irregular expenditure of an amount of R 16.8 million, what the bad debts were and why they were written off, what had happened to the project on Kenya where the HSRC was trying to regain money which was not correctly spent,  and what legal bills it was facing from a software company. She added that the error on the annual report was a proof reading error and this meant that there was something wrong with the HSRC process as it had happened for the last 3years, wanted clarity on whether this was a matter of corruption and fraud, and then followed up to ask why the column on page 172 was blank and why there was no reflection of executive bonuses.

Dr Shisana said the annual report was not reprinted. There was an error on one of the pages and to resolve that the HSRC had reprinted that one page and pasted it in and there was no extra cost for the printing of the 70 pages. She agreed that some of the targets were missed. She explained the R 3.3million irregular expenditure which was as a result of a whistle blower indicating a group appointed irregularly and paid a higher amount of money than should have been paid. She instituted a forensic investigation which resulted in the then Chief Financial Officer (CFO) being charged and the results for the subsequent hearing concluded that the CFO did not follow the supply chain management procedures and was consequently dismissed. It was for this reason that the AG said there was no leadership. 

Dr Temba Masilela, Deputy CEO, HSRC, acknowledged that it was a problem and that the people who were responsible for the errors had been fired and no longer worked for HSRC because of the poor performance. The process of managing the annual report had been tightened.

Mr Peter Pedlar, Deputy CEO, HSRC, responded to the question on the R 16.8 million by saying that all of these costs related to the previous financial year and were never disclosed as irregular expenditure in the 2009/10 financial year. He added that the travel expenses were reflected at about R 3 million  on page 147 under administrative expenses and highlighted that travel expenses decreased from R 4.2 to R 3.8 million. That column was for people who were reimbursed for travel expenses and was blank since no one had been reimbursed. Bad debts were not written off. 

Ms Dunjwa wanted to know where the books that had been mentioned in the report could be found, wanted to know if there was a plan to address the challenges that had been highlighted by the AG in the annual report and added that it was a reflection of poor management, asked how the CFO was employed in the first place considering the graveness of the error that had been done and what measures had been put in place to ensure that there was no repeat of such an error, agreed to what Mr Nonkonyana was saying on the matter of clarity between what was being said by the management of HSRC and the AG, and requested that a notice be obtained from the AG to confirm the claims made.

Dr Shisana said that the HSRC had to revamp the way it did the strategic plan, in line with the new directives that had come from the National Treasury.  In terms of the annual performance plan, this was not a deterioration in performance but as a result of a change in the reporting format. It was clear that there was non-compliance with the new approach, so with the AG's agreement it was decided to redo the annual performance plan so that the same issues would not repeat themselves in the following year. The dismissed CFO had been with the organization for 16 years and in all the previous years HSRC had received an unqualified audit and this was an error of judgement which had cost her job. The note made by the AG read “possible fraud” and she added that there was an investigation done and the findings submitted to the AG.

Mr Nonkonyana suggested that Dr Shisana be allowed to respond as his questions would be determined by her response. He asked that the questions raised by Ms Shinn be answered fully including the issue of the misprints. The dismissal of the official related to fraud so he wanted to know the action being taken. He raised the inconsistencies in the statements made by the AG and the presiding officer of the matter relating to the CFO and asked that it be clarified.

Dr Masilela said the error in the annual report was on page 177 and it was one of the notes to the financials which related to irregular expenditure at the bottom of the page.

Mr Pedlar he directed him to the asterisk, at which point  the changes to the report were explained. He said that the two were amounts which were the same; the difference was because of the rounding off that had been done. He added that reliance had to be placed on the report of the AG, but said that that the HSRC had alerted the AG to that inconsistency and the AG had said it was too late to make the changes. The HSRC legal advisors told them that fraud had not been proved; it was a case of proper procedure not being followed which was a dismissable offence

The Chairperson said it would have been helpful if the HSRC would have identified some of the comments from the AG. It was unusual considering that there were two new appointments at top management level and one therefore expected that the HSRC would be more efficient. He wanted to know the reasons behind the comments from the AG, wanted to know if the CFO was paid anything after those revelations and secondly he wanted to know if the CFO had been ordered to pay back that money. He repeated what had been said that Members required a letter from the AG which said what they had told the Committee, recommended that in light of the many changes that the HSRC was still implementing that it was best that the HSRC go and first put them in place and then come back to present the report later after all the changes have been made. There was no way to draw a conclusion with the information that was available as the HSRC was in the process of responding to the AG. He also asked why HSRC was the only organization that was being affected by the change in the AG’s staff.

Dr Shisana said the two new deputy CEOs were appointed in November 2010 and that was already late into the year; she added that in the last five years the HSRC had worked with the same team from the AG and the way it did things was the way the previous AG had approved in terms of performance; the new AG came with a different approach and that started raising questions on matters that had been traditionally accepted in the past. She said that HSRC had insurance against such activities and was in the process of recovering the money from the insurance and was not confident if the CFO would be able to pay back that amount of money. The presiding officer required that HSRC give the CFO three months notice rather than not give it at all. The HSRC was also required by law to implement that decision therefore the former CFO had been dismissed but was also serving three months notice while not at work. She was not sure as to why the HSRC was the only organization affected by the change in the AG’s staff; she added that the way the HSRC had been audited in the past five years had been satisfactory. The new team from the AG had come with changes so the HSRC had to realign the way it did the strategic plan and annual performance plan.

Mr Pedlar added that National Treasury had required a new method of reporting by Government departments as well as by public entities on their performance in pursuance of the strategic plan. The instructions were issued in August 2010  and prior to that the HSRC had completed the strategic plan, then known as the Business Plan, and when it was audited it was told that the strategic plan and the business plan needed to be aligned to the new framework from National Treasury.

The Chairperson advised Members to write to the HSRC on any other matters where they needed clarity.

South African National Space Agency (SANSA) Establishment Report 2010/11 Presentation
Mr Maurice Magugumela, Chairperson, SANSA, thanked the Members for the opportunity to present.

Dr Sandile Malinga, CEO, SANSA, said the objectives were to provide concise information on the establishment of SANSA (phase 1), to highlight the key milestones achieved in terms of implementing governance structures, regulatory compliance, and the initial strategic planning process, and to appraise Parliament of the financial performance for the year under review.

The establishment of SANSA was put into three phases and for It to be established fully it would take three years. SANSA was present to report on the first phase which was  the Establishment Phase where It focused on setting up governance structures and regulatory compliance, the formulation and approval of policies, processes and procedures, the migration of certain entities to SANSA, the strategic and planning process and the operation structures within the company.

The second phase, in which it was at present, was referred to as the Foundational Operating Phase where the first milestone was the migration of the Hermanus Magnetic Observation Centre into SANSA; together with implementation and the refinement of the foundational policies, strategies and business plans; the implementation of strategic programmes; refinement of operational systems, processes and procedures; and establishing baseline performance data.

The third phase was the full implementation of refined policies, strategies, systems, processes and procedures.

The board was appointed and currently had 11 members. The SANSA Act was assented to in December 2008 and promulgated in December 2010; the Board was appointed on 1 June 2010 and inaugurated on the 15 July 2010; up to 31 March 2011 the board had met five times and held one strategy workshop; the attendance at board meetings was 88%; the board has appointed the executive including the CEO; CFO and Executive Director: Corporate Services; the board had approved institutional governance structures; and as at 31 March 2011 it had approved 38% of the policies. At the next board meeting on 25 October 2011 all the policies would be approved. The board had set contingencies in the interim where It had to utilize National Research Foundation (NRF) policies where It did not have any existing policies. It had complied with legislative registrations with Labour and SARS, etc.

In the structure of SANSA there was a corporate office where there was the CEO, Corporate Finance and Business and Corporate Services, a Board Secretary and Internal Audit and Risk function. There were currently two directorates - Space Operations and Space Science although Earth Observation and Space Engineering would be added.

The banking arrangements had been finalized in line with National Treasury directives. Insurance cover for assets and other liabilities had been secured, internal and external audit arrangements had been made in consultation with the AG’s office, and a finance system has been implemented.

In Human Resources it had developed and implemented a change management and migration plan. Key positions were filled at the Corporate Office with 25 positions filled. Employee transfer agreements with CSIR and NRF were concluded and implemented in line with going concern transfer prescripts; staff salary arrangements were audited and the SANSA salary and benefits structure was approved and implemented.  institutional values were consultatively developed and implemented, and human resource system had been implemented. As at 31 March 2011 the staff compliment stood at 132; 67 were at Space Operations, 44 were at Space Science and 21 at the Corporate Office, in terms of demographics there was a slightly higher population of male compared to female and SANSA was facing challenges of representation in terms of race and disabilities.

It had developed a corporate identity. Full enterprise resource planning system was implemented; there were a few challenges with regards to land transfer with the NRF; the ceding and acknowledgement of contracts by the CSIR and NRF were still under-way.

A strategic plan was tabled in Parliament on 09 March 2011, followed by the development of the Annual Performance Plan which was tabled to the Minister on 22 March 2011 and resubmitted on 31 March. The shareholder’s compact had been completed with the Minister of Science and Technology. In forming the development of the strategies there had been a number of documents such as the Government Outcomes Framework; the New Growth Path; Industrial Policy Action Plan; National skills Development strategy as well as the DST aligned strategies. It had five goals which were: to provide world-class and efficient services and societal benefits; provide cutting-edge research, development, innovation, technology and applications; effective development of human capital, transformation and science advancement; globally competitive national space industry and to make South Africa a recognized global space citizen.

The corporate office would ensure that there was corporate support throughout the directorates for the core functional programmes such as the Earth Observation directorate; Space Operations programme; Space Science and Space Engineering. 

To establish SANSA took R11.8 million which was the remaining balance from the SANSA Establishment Project Office. Additionally R16.175 million was ring fenced for programmes initiated by the DST. Expenditure on the ring-fenced projects started in April 2011; from the establishment fund R 9.6 million was spent during the period January – March 2011 with a surplus of R 4.7 million though some of that had already been committed, which was carried over to the 2011/12 financial year. All the funds had been accounted for and disclosed in the financial statements.
SANSA received an unqualified audit from the auditors. There was an establishment fund of R 9.5 million and interest received of R 48 000. Employee costs stood at R 1.4 million, and board members fees at R 1 million. Depreciation was R 17 000 and general operating expenditure was R 2.3 million. There was a surplus of R 4.7 million. In conclusion SANSA had been successfully established and had started operating on 1 April 2011. There had been teething problems and those were being attended too. SANSA remained committed to delivering as per the mandate.

Ms H Line (ANC) said it was important to have the names and the designations of the board members as the slide did not show that information. She wanted clarity on what delivery capacity was.

Mr Malinga acknowledged that in future the names and designations of the board members would be inserted. The delivery capacity referred to the appointment at corporate office as at 31 March 2011.

Ms Shinn wanted to know if a Conflict of Interest policy had been developed, asked where SANSPACE fitted in, wanted to know if Marcom Aeronautics & Space which had been funded by DST would fall under It, asked if SANSA had met with the Technology Innovation Agency (TIA) to share ideas on the teething problems faced.

Mr Malinga said they had met with TIA and had some discussions. SANSA had a Policy on Business Conduct and Ethics where issues of Conflict of Interest were addressed and in their supply chain management processes issues of Conflict of Interest were addressed and staff members would have to declare any conflicts where they applied.  Cabinet took a decision that Government should take a stake in SANSPACE and SANSA was tasked with the feasibility of that happening and had submitted to DST a report last week that was still under consideration as to the way forward and SANSA hoped for a resolution, Marcom was in a contract with DST which has been ceded to SANSA; the contract was meant to run to 31 December 2011 but had been extended to 31 March 2012 at no extra cost and SANSA was obliged to see the contract through,

Mr Nonkonyana wanted SANSA  in future to have the mandate as the very first item of presentation, noticed that there were few ladies and asked the CEO to convey that message to the relevant authorities, and requested that a copy of the AG’s report be made available

Mr Malinga took note that the mandate should be put up front as it was the guiding principle. He  acknowledged the gender imbalance in the board and said that there was something being done about it and added that there was a process to appoint a finance specialist to the board. The board had lost a Science specialist and that member had to be replaced. There were challenges in terms of lack of representation from stakeholder departments. He was not aware if the finance specialist would be sent to the Committee for approval, and added that a copy of the AG’s report would be sent as SANSA was still learning the required processes.

The Chairperson acknowledged that SANSA was still putting its systems in place.

The meeting was adjourned.


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