It was noted that the intended meeting with a delegation from
The Committee considered its draft Report on Third Quarter expenditure for 2011/12. The majority of the corrections were of a technical nature. However, it did debate the findings and the recommendations, in particular. The Committee wanted its grave concerns to be noted that the Department of Rural Affairs and Land Reform did not apparently know the value of the outstanding land claims, as disparate figures had been given. There were also concerns that the Department of Water Affairs only spent 46.8% over the first nine months of the financial year, and then spent 99% by the end of the last quarter. This seemed to indicate that there were problems in planning that had to be followed up. A Member pointed out that the differences and spikes in expenditure were often accounted for by transfers being done in the last quarter, which made the financial position look good on paper, but in fact resulted in no real spending. There was particular concern that the Department of Water Affairs gave money to the municipalities, who either sat with the money, not spending it, or, as had happened in the previous year, built a structure that resulted in good reports on spending, but was in fact unable to obtain water licences to put the structure to any use. For this reason, Members were adamant that not only should the departments be asked to account for transfers in monetary terms, but also provide reports on where the money had been sent, so that the Committee could, if necessary, follow up with the recipients also. It was noted that there had been no expenditure on disaster recovery, despite rehabilitation that was needed since 2009.
Concerns were also expressed that the Working for Water and Working for Fire programmes had been transferred to the Department of Environmental Affairs, despite the fact that they were supposed to be core programmes of the Department of Water Affairs and were intended for Expanded Public Works Programme job creation. Both showed 0% spending. The concerns about lack of spending, and the principles around the transfer, must be noted in the report.
In the Findings section, the Committee added a finding on the inconsistencies with regard to the reported number of land claims outstanding at the Department of Rural Development and Land Reform. It also noted that irregular expenditure and non-compliance with the Supply Chain Management processes and legislation had an effect on the work of this Committee. Finally, the concerns in relation to the Department of Water Affairs were set out. Underspending on CAPEX was noted as having a serious effect on this year’s budget, since investing in infrastructure was the main thrust of creating jobs. Members discussed whether they would require detailed reports from every department, or merely progress reports, and decided that the Committee must call for reports on specific issues that should be detailed enough to answer the Committee’s particular concerns. The Committee should pick up the wrongdoing committed and be informed of the result of the investigation. The Minister of Correctional Services was asked to ensure that the Department of Correctional Services submit a report on the state of investigations by the Special Investigating Unit, in respect of fraud committed by officials. This report should be inclusive of the amount of money involved and how it would be recovered in terms of the prescripts of the PFMA’. The Minister of Cooperative Governance and Traditional Affairs was asked to ensure that the Department of Cooperative Governance and Traditional Affairs (COGTA) submit a report to the National Assembly on the Community Works Programme. This report should be inclusive of a breakdown of how much funding was transferred to municipalities, how much went to service providers, and how much went to the beneficiaries as far as it relates to the distribution of funds in the Community Works Programme. Finally, Members noted that reports were needed from National Treasury, to allow for comparisons. In relation to “Working for Water”, National Treasury was to ensure that the monies that were earmarked for job creation were utilised for that purpose.
The Chairperson noted that this meeting was scheduled to meet with a delegation from
Draft Committee Report on third quarter expenditure for the 2011/12 financial year
Members of the Committee went through the draft Report and made corrections. The majority of these were grammatical or typographical corrections, or related to sentence construction.
It was noted that the words ‘fraud, crime and corruption’ were to be added to the list of government priorities, in the last sentence on page 1.
It was also requested that the figures in table 1 on page 2 must be tidied up, as they were presently misleading.
In relation to the second last paragraph on page 4, under the heading ‘Restitution’, Members noted that the fact that the Department of Rural Development and Land Reform did not know the value of the outstanding land claims was a cause for grave concern, and this point had to be added to the findings.
Mr L Ramatlakane (COPE) noted that the number of outstanding land claims had increased by 100% since the last report, and was at odds with the figure that the Minister for Rural Development and Land Reform had given in the House. The reliability of the figures was questionable, and this went to the heart of the quality of the work done by that Department and its portfolio committee. Mr Ramatlakane would like to see a cautionary sentence inserted to demonstrate this Committee’s concerns. The fact that monetary terms had not been quantified had been raised in the past, and the Committee should express concerns about the “moving targets”.
The Chairperson recalled that much time had been spent on this issue, and the Committee requested a report, but it was never received. There were inconsistencies and they should be qualified.
Mr Ramatlakane accepted that point, but said the Committee was not obliged to reach its conclusions together with that department. The Committee was an independent body that would consider the facts and come to its own conclusion, and should also make its own statement because there was a variance from what the department had told he committee. This also raised the question of how much the claims would cost the taxpayer, and what burden this would put on the fiscus. The Department of Rural Development and Land Reform (DRDLR) must be pressurised to produce the figures, and already in 2010 the Minister had said that an actuary had been employed to quantify them.
Mr M Swart (DA) supported Mr Ramatlakane, saying the DRDLR had essentially been hiding the figures for two years. This matter must be added to the findings, which should state that there were considerable concerns about the inconsistencies reported by the department to the Committee.
The Chairperson agreed that this issue must be flagged under the findings. The Department had said that since the actuary was employed, the figures would be clear.
Mr Ramatlakane also noted that the Constitution provided that the claims would be completed by 31 December 1998, so the increase applied to December 1998.
Mr Swart recalled that in discussion with the DRDLR, the current Director General had said that the previous Director General had given permission to junior officials to sign contracts, but the number of those contracts was not known.
Ms R Mashigo (ANC) pointed out that 8 770 outstanding land claims were registered before the cut-off date of 24 April.
Mr J Gelderblom (ANC) submitted that the Committee must accept that figure, but must get the monetary figures now, in order to work towards a programme for the next five years, and to assess how much should be budgeted.
The Chairperson agreed that the Committee needed clarity, and confirmed that this would be raised under the Findings section.
The Chairperson noted that on page 5, in the first paragraph under 3.2.1, a correction was needed, since the Department had seven programmes, not five.
The Chairperson referred to item 3.3.1. This stated that the Department of Cooperative Governance and Traditional Affairs had regressed from an unqualified audit opinion in the 2009/10 financial year to a qualified audit in the 2010/11 financial year. There were about five investigations relating to supply chain management and to fraud.
The Chairperson noted that the Department of Water Affairs only spent 46.8% over the nine months, but at the end of the year had spent 99%. That was an indication that something was wrong, and needed a follow up.
Mr Swart recalled that in the previous year, the Department of Communications spent less than 50% of its budget at the end of the third quarter, and 97% by the end of the year. The difference related to transfers, since it had transferred all the money in the last quarter. The work that should have been done with the transferred funds was not done. The Department of Water Affairs gave money to the municipalities, who hen sat with the money, not knowing how to spend it. In the previous year, there were also spending spikes in the last quarter. The Department had provided money for building a weir in a river to the
Mr Gelderblom emphasised that the last quarter spending trends were extremely important for this Committee. The Committee must look at the transfers and ask the departments to give a full breakdown of the transfers, and where they were going.
The Chairperson agreed that the Committee needed to know to whom the transfers were being paid, because of the concern that the money was not being utilised properly. The Committee must also get a report from the entities to whom the money was transferred.
The Chairperson noted that under the section of the report dealing with Infrastructure and Economic Development, concern was expressed that 0% of an amount of R775 million had been transferred to municipalities at the end of the period under review, despite the fact that areas still needed rehabilitation from disasters since 2009.
He noted that the “Working for Water” and “Working for Fire” programmes had been transferred to the Department of Environmental Affairs. The 0% spending was because those programmes had been shifted to that department. The Committee was concerned at how “Working for Water”, a core function of that department, could be shifted.
The Chairperson summarised that the main principles of concern, in relation to the Department of Water Affairs, were therefore, firstly, that there was no spending. Secondly, that Working for Water was an Expanded Public Works Programme intended to create work, but the tendency simply seemed to be to transfer the monies elsewhere. Thirdly, there were questions why this programme was transferred to the Department of Environmental Affairs. All these issues must be flagged in the Findings.
It was noted that the last line under paragraph 3.4, referring to fruitless and wasteful expenditure, should reflect a figure of R8.2 million.
The Committee noted that in paragraph 3.5.1, the budget was divided into four, not seven, programmes, and raised a correction of the allocated amount in the last line on page 11.
The Committee wanted to insert a sentence, in the section of the report dealing with Children’s Rights and Responsibilities, saying that the Committee had concerns ‘even though the matter was under investigation by the Department’.
The Committee turned to the Summary of Findings. Point 4.2 was reworded. The Committee then added three findings, as follows:
-4.8: In respect of the Department of Rural Development and Land Affairs, the Committee found that there were inconsistencies with regard to the reported number of land claims outstanding.
-4.9: The Committee Researcher indicated that in all the departments identified there were issues in the Auditor General’s reports, most in relation to irregular expenditure, or non-compliance with the Supply Chain Management processes and legislation. Those irregular expenditures or unlawful expenditures had a direct effect on the work of this Committee, and the necessary finding on that must be crafted.
-4.10: Concern must be expressed, in terms, about the Department of Water Affairs’ tendency to disregard the job creation programmes Working for Water and Working for Fire, to shift them around, and the lack of clarity on the budgets for these from the beginning. The Department was also underspending on CAPEX, which would have a serious effect in relation to this year’s budget, since investing in infrastructure was the main thrust of creating jobs.
Mr Swart said the departments were going to get money for infrastructure development, and if they were not going to do that there would not be job creation.
The Committee turned to the Recommendations section.
In point 5.1, the words ‘how it would be recovered in line with the prescripts of the PFMA’ were to be added at the end of the last sentence.
Some discussion ensued as the Chairperson did not want a detailed report, he preferred a progress report.
Mr Ramatlakane said the investigation was completed, the forensic audit was done, and the matter was at the level of whether to recover or to lay charges against the officials. He felt that a proper report was required as a lot of money was involved.
Ms L Yengeni (ANC) recalled that when the Department of Correctional Services (DCS) gave a presentation, the Committee had asked questions about the investigations into employees who were involved in tenders. The DCS was unable to answer, since there seemed to be a lacuna in its policies around tendering, but it had come up with some mechanism to deal with the employees. The DCS must write to the Committee and reply to the questions asked, and this recommendation must set out very clearly what the Committee wanted. She noted that if the Committee wanted something specific, and if it had a particular interest in getting a report, it should say so.
Mr Ramatlakane was happy with the recommendation’s referral to a detailed report. The investigation had to do not only with the tendering by personnel, but was broader and included a special investigation of irregular tenders not necessarily following the tender prescripts. It also looked at how much money would need to be recovered in terms of the PFMA.
The Chairperson said the main point was that the Committee should pick up the wrongdoing committed and be informed of the result of the investigation. The Committee dealt with all departments, and the question was whether it wanted to call for detailed reports from every department, or merely to ensure that action was taken, and, if necessary, call the departments to account.
Mr Ramatlakane was happy with the recommendation and felt it was specific enough.
The Committee agreed that recommendation 5.1 should read: ‘That the Minister of Correctional Services ensures that the Department of Correctional Services submit a report on the state of investigations by the Special Investigating Unit, in respect of fraud committed by officials. This report should be inclusive of the amount of money involved and how it would be recovered in terms of the prescripts of the PFMA’.
The Committee agreed that recommendation 5.2 should read: ‘That the Minister of Cooperative Governance and Traditional Affairs ensure that the Department of Cooperative Governance and Traditional Affairs (COGTA) submit a report to the National Assembly on the Community Works Programme. This report should be inclusive of a breakdown of how much funding was transferred to municipalities, how much went to service providers, and how much went to the beneficiaries as far as it relates to the distribution of funds in the Community Works Programme’.
In reply to a question by Ms Yengeni as to why this was worded in this way, the Chairperson explained that there was underspending on the Committee Works Programme. A lot of that money went to consultants, but the Committee had felt that the money was intended for job creation, and asked for a report.
Ms Yengeni wanted the report from National Treasury as well, saying that this body could not continue to give money for the programmes without getting an passing on reports.
Mr Ramatlakane said National Treasury needed to give quarterly reports on expenditure of all departments. The Committee, when receiving these reports, must compare them with reports from COGTA to see where the differences were.
The Committee agreed that recommendation 5.5 should read that in relation to “Working for Water”, National Treasury was to ensure that the monies that were earmarked for job creation were utilised for that purpose.
Members agreed to adopt the Report, with corrections.
The Chairperson reminded Members that the draft report of the Appropriation Bill would be considered on Tuesday and adopted on the following day. The minutes would also be adopted at the next meeting.
The meeting was adjourned.
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