The management of and reforms to Third Party Funds was presented by the Department of Justice and Constitutional Development. Third Party Funds include maintenance monies, admission of guilt fines, bail, court fines, fines collected on behalf of government institutions (national, provincial, local and other authorities). Looking at volumes, in 2010/11 there were 5,9 million receipt transactions and 5,8 million payment transactions. On average 250 000 maintenance payments per month were made to beneficiaries. Third Party Funds had 496 bank accounts at four major banking institutions. Data was managed on 477 Justice Deposit Account System (JDAS) plus 11 State Attorney System (SAS) databases. Third Party Funds had not been able to produce complete, accurate and auditable financial statements since 1994/5. There was always a qualification due to Third Party Funds.
Financial statements had now been drawn up for 2010 and 2011. Total receipts for 2010 amounted to R3 098 339 188. Total receipts in 2011 amounted to R2 870 403 720. Divided up regionally, receipts varied from R242 005 439 in Mpumalanga (8%), to R488 061 159 in KwaZulu-Natal (17%) and R462 192 649 in Gauteng (16%) for 2012. Total cash payments for 2010 amounted to R2 768 673 533, in 2011 the total was R2 879 747 626. Unclassified money amounted to R167 446 451 in 2011, this was of concern to DoJCD, as it was difficult to trace what that money was intended for.
In 2010 R63 405 253 was listed as ‘shortages’ and was essentially missing. This concerned the Committee, Members asked how the money had gone missing, why the figure fluctuated year on year, what was being done to recover it and how successful those efforts were likely to be. TPF explained that these shortages were historical and had been inherited in 1994.
TPF was attempting to improve service delivery and turnaround time by decentralising the system Electronic Funds Transfer (EFT) payment system. The TPF roadmap for enhanced management had identified five steps to effect change: (1) getting the business case clear, (2) having credible baseline financial reporting, (3) capacitation, (4) a business process review and (5) a legislative review. These outputs were expected to result in increased accountability, transparency, and enhanced delivery of TPF services.
Members asked why the Auditor-General’s dashboard report from March 2012 had been ignored in the report, why the service provider had not been mentioned, and who made up the core team dealing with TPF. They asked why the Department was handling maintenance money, and why it could not be paid straight to the beneficiary. Members also questioned what was being done to educate beneficiaries about payment options. It was agreed that National Treasury should be present. And that the Department, Treasury and the Auditor-General should be brought together to discuss what could be done to resolve problems with TPF.
Third Party Funds: Purpose, Background, Performance, Reforms and Enhancements
Mr Johan Johnson, DoJCD Acting Chief Financial Officer and Chief Director: Third Party Funds, gave a briefing on Third Party Funds (TPF) reforms and enhancements being implemented. He explained that the purpose of the TPF was to manage maintenance beneficiary monies (both local and foreign); to collect fines on behalf of government institutions (national, provincial, local and other authorities); to safe-keep bail monies on behalf of depositors; to safe-keep payments to court; and to collect debts on behalf of government institutions through the State Attorney and deeds transfers on behalf of government.
These transactions were recorded on the Justice Deposit Account System (JDAS4) or the State Attorney System which were mainly administration systems with the main objective of delivering a service to the public. As JDAS and SAS were case management systems they did not have sufficient financial capabilities and internal controls to allow for proper accounting principles in accordance with the Public Finance Management Act (PFMA) on TPF. The administration part of the systems allowed for capturing of case details of parties and court orders, while the current financial part of the systems allowed for the recording of receipts, and payments, and provided for reports on these receipts and payments, although no reliable consolidated reporting functionality was available on JDAS or SAS.
Mr Johnson gave an overview of the TPF landscape. In 2010/11 there were 5,9 million receipt transactions and 5,8 million payment transactions. On average 250 000 maintenance payments were made to beneficiaries per month. TPF had 496 bank accounts at 4 major banking institutions. Data was managed on 477 JDAS plus 11 SAS databases.
Whatever was presented before was given a disclaimer by the Auditor-General. TPF had not been able to produce complete accurate and auditable financial statements since 1994/5. There was a qualification of the vote because of TPF. The possibility of detected and undetected fraud was being assessed.
Total receipts for 2010 amounted to R3 098 339 188. The majority of this was maintenance payments, amounting to R1 681 087 876. Other major contributions were bail payments, at R326 109 875, and fines, at 398 127 028. A point of concern was that R542 772 991 of this was unclassified, meaning it had been paid to TPF without a reference number or means of tracing what it was for. Referencing on the system needed to be improved.
In 2010/11 total receipts amounted to R2 870 403 720. Maintenance payments were R1 774 765 283, bail payments R349 443 717, and fines 377 539 712. Unclassified money amounted to R175 840 046.
Divided up regionally, receipts varied from R242 005 439 in Mpumalanga (8%), to R488 061 159 in KwaZulu-Natal (17%) and R462 192 649 in Gauteng (16%) for 2011/12.
Total cash payments for 2010 amounted to R2 768 673 533. Again the majority of this was related to maintenance payments, at R1 687 140 651. Bail was R289 074 180, fines 205 421 212, and unclassified money R233 873 432. In 2011 the total was R2 879 747 626, maintenance was R1 775 076 540, bail R311 249 640, fines R219 319 455 and unclassified money R167 446 451.
TPF avoided holding on to large sums of money for large periods. For this reason, money was transferred into the National Revenue Fund. In 2010 TPF paid R218 607 112 into the National Revenue Fund. The majority, R184 268 134, of this was from fines. R13 094 058 was from unclassified money. In 2011 the total was R225 408 969. R189 322 118 was from fines, R10 131 742 was from unclassified money.
In 2010 cumulative shortages amounted to R79 623 755. In 2011 it amounted to R79 904 762, of which R12 512 769 was from dishonoured cheques, R3 986 740 was from maintenance debtors (erroneous payments to beneficiaries before the money had been received), and R63 405 253 was listed as ‘shortages’.
This concerned the Members. The Chairperson asked what comprised ‘shortages’.
Mr van Harmelen, Chief Director: Third Party Funds, responded that these were mainly historical shortages, inherited in 1994/95. The transfer from a manual system to the electronic system had revealed huge shortages. Moving from a paymaster-general (PMG) account to commercial banks had also received some shortages. These had been accumulating over the years, and the Department was investigating. New shortages were addressed immediately, but these were historical.
Mr J Jeffery (ANC) clarified that this was ‘missing money’. He asked how the shortage had decreased by R300 000 last year, suggesting that this meant it was not just a historical problem.
The Chairperson said that the Committee did not mean to blame the presenters for anything, and understood that they came into the office and had found money missing.
Mr Swart said that the total would fluctuate because of the investigations, which were recovering money. He asked if it was possible to look at the backdated figures over the years, to see if the situation was improving. He asked if the money was stolen.
Mr van Harmelen responded that he would not like to venture a guess; it could have been stolen or could have been bookkeeping issues. It would be very difficult to provide backdated figures as TFP had only been moved onto an electronic system in 2007/8 and this was the first set of proper financial statements. There was a possibility that the amount could be recovered, but it had become more difficult over the years.
Mr S Swart (ACDP) suggested that the amount might have to be written off as bad debt to clear the audit and that if there was a possibility of recovering the amount that progress in this regard should be monitored.
Ms D Schafer (DA) asked why TPF could not discern where the missing money had come from if they had managed to ascertain what the total missing amount was. It was unacceptable that R63 million was missing and asked what was being done to try and find it.
Mr Johnson responded that their mandate was to look at all possible transactions and determine what the status of TPF was, which was then audited. Further analysis of the shortages needed to be done to determine where to go from there, but the initial purpose had been to get an assessment of where they stood.
Prof Ndabandaba asked how the Auditor-General viewed the shortages.
Mr Johnson responded that TPF had been given guidance by the Accounting Standards Board. On 19 March the Auditor-General had been given the financial statements and asked for an audit view, the opinion had not yet come back.
Ms Pilane-Majake (ANC) said that it was difficult to see where problems might lie when an audit had not taken place. She requested current figures for 2011/12 which were being submitted to the Auditor-General.
Mr Johnson responded that in the 18 months since they had been assigned to TPF, they had managed to establish figures for 2009/10 and 2010/11, which they had presented to the Committee as sense of what had been done. The figures for 2011/12 were being worked on but they were not presented because TPF first wanted to have them audited.
Mr Jeffery asked what was being done about dishonoured cheques and if criminal charges had been put forward. The money could not just be written off as it was owed. Liabilities were R698 million, this was money owed to third parties, and included receivables and cash or cash equivalents. He asked why the dishonoured cheques were recorded as received, and why money had been paid out when it had never been received. He asked if criminal charges had been brought against those whose cheques were dishonoured. He asked what a maintenance debtor was.
Mr Van Harmelen responded that dishonoured cheques were also an historical issue. Internal control measures had since been put in place so that that amount did not increase. In the past, most of the payments were paid by cheque, and courts had paid out before the cheque was cleared. This could not be reversed in their system. The issuer of the cheque then became TPF’s debtor.
Mr Jeffery asked how many criminal charges had been pressed. Mr Van Harmelen responded that he was not aware of any.
Mr Jeffery asked why not, and Mr van Harmelen responded that he would have to look into the issue and get back to the Committee.
Ms D Schafer asked what a maintenance debtor was and sought confirmation that the Department was paying out maintenance without knowing whether it had received it or not, showing a lack of financial control.
Mr van Harmelen responded that a maintenance debtor was overpayment to maintenance beneficiaries, mainly because of incorrect referencing.
Mr Swart was pleased that the Committee at least knew what the situation was, after many years of being unclear on how much money was missing. He noted on the balance sheet R70 million was indicated as a booked debt which in fact was an asset if the possibility of recovering it was there. If not, it would have to be written off.
Mr Harmelen responded that it was indicated as a receivable because if it could not be recovered, TPF could not write off money from itself, as it could not take money from maintenance beneficiaries or bail deposits.
Mr Johnson commented that their accounting policies clearly explain what a maintenance debtor was, and a dishonoured cheque. He reiterated that TPF would turn its attention forward to what could be done about recovering the money, but that in the 18 months which they had been working on it, they had only focused on assessing the situation.
Mr Jeffery commented that with dishonoured cheques some money had been found. The problem of maintenance beneficiaries being paid when cheques had not cleared was understandable in the past, but this had increased by R600 000 in 2010/11, showing that the problem continued and it was not just historical.
Ms Pilane-Majake commented that information on 2012 would help to show the extent of the problem, and requested current information. In terms of the financial control measures, she asked what policies were being followed in the Department in light of the missing money.
The Chairperson pointed out that the problem was inherited in 1994, and since then the TPF had been trying to establish where it had gone.
Ms Pilane-Majake pointed out that the financial year had ended on 31 March. The Public Finance Management Act specified that the balance sheet had to be submitted within three months after the end of the financial year. Therefore the 2012 balance sheet was supposed to be ready, and yet it was not being reported on to the Committee.
The Chairperson responded that this was the first time that the Committee had received a report on Third Party Funding, prior to this there was no knowledge of where the problem lay. At least now they had a sense of it.
Mr Johnson responded that for TPF was not sure how to report. The AG had told them how to do it. They had decided to put before the AG statements produced using general accounting practice. TPF would want the AG’s opinion to guide them for the future. With the capability to produce a balance sheet for each and every court, investigations into missing money could then be directed to a particular court. For this reason this money was listed as a receivable, as investigations would be attempting to recoup it.
Mr Sibanyoni (ANC) asked if the small claims court was included in TPF. Mr van Harmelen responded that small claims did not flow through TPF.
Ms D Schafer was concerned that if maintenance was not collected, TPF paid it to the National Revenue Fund. She asked what would happen if somebody had not known that the money was there and later wanted to collect it.
Mr van Harmelen responded that the pay-over to the National Revenue Fund took place after a rigorous process to try and trace the beneficiary. If the beneficiary could not be found, the first step was to pay the defendant, if that person could not be traced it was paid to the National Revenue Fund. If the beneficiary was later found, the money could be claimed back from the NRF.
Mr Johnson returned to the presentation, and TPF’s Statement of Financial Position. In 2010 their assets amounted to R739 004 668, of which R79 623 755 were receivables and R659 380 913 were cash and cash equivalents. In 2011 their assets amounted to R698 227 130, of which R79 904 762 were receivables and 618 322 368 were cash and cash equivalents. In 2010 TPF’s liabilities totalled R739 004 668, which were all TPF payables. In 2011 this totalled R698 227 130.
TPF received treasury guidance in 1999 suggesting that its money was spread across a number of banks. This was also a practical necessity as in rural areas there was often only one bank available. As a result TPF was with five Nedbank branches, 130 ABSA branches, 187 FNB branches and 174 Standard Bank branches. The charges and interest differed. With Nedbank the charges were R198 000 and the interest R113 000; with ABSA the charges were R12,4 million and the interest R12, 3 million; with FNB the charges were R8,1 million and the interest R8,5 million; and with Standard Bank the charges were R6,9 million and the interest R6,3 million.
Mr Jeffery observed that the only bank where the Department was making a profit was FNB, whereas there was a shortfall of R600 000 at Standard Bank. He asked why there was such a discrepancy between FNB and Standard Bank, and asked if efforts had been made to negotiate more preferable rates with the banks.
Mr Johnson agreed that this was being interrogated and that there should be negotiation with the banks. He said some services were being received for free, while they were being charged for others.
Mr van Harmelen added that the charges were a negotiation between the National Treasury and the banks, and so there was little that the Department could do. In terms of interest rates, the Department had approached the banks, and had experienced some sympathy from the banks, but this was also negotiated by the National Treasury, and so was largely out of the Department’s control. Low interest rates were also not helping to cover costs.
Mr Jeffery suggested that moving the money into those banks from which a profit was being made was worth looking into.
Mr van Harmelen reiterated that unfortunately in some rural areas there was no choice of bank. They were talking to the National Treasury about investing some of the money, as at the time all of the money was in current accounts. This was because the main aim was not to produce profit but to deliver a public service.
Ms Pilane-Majake asked for the interest rates to be investigated, as she was concerned that the money in some banks was producing almost no interest. She asked if post banks could not be utilised in rural areas.
The Chairperson asked if Treasury specified that these four banks be use; Mr van Harmelen confirmed this. The Chairperson suggested that they may need to engage with Treasury about this.
Mr Johnson continued with the presentation, relating the report of the Auditor-General in the UK which had found that the courts service risked losing around £1.4 billion in uncollected fines and other financial penalties by not being able to properly account for them, according to the National Audit Office, which laid part of the blame with the beleaguered £444 million Libra system. In a report to the UK parliament, NAO Auditor-General Amyas Morse said in December 2011 that HM Courts Service had been “unable to provide proper accounting records supporting fines, confiscation orders and penalties”. This meant he “could not give an audit opinion on whether transactions and balances were complete, proper and appropriately raised.” Morse said, “because of limitations in the underlying systems, HM Courts Service has not been able to provide me with proper accounting records relating to the collection of fines, confiscation orders and penalties. I have therefore disclaimed my audit opinion on its accounts.”
TPF was dedicated to reducing turn-around times. Service delivery was being enhanced through decentralising the Electronic Funds Transfer (EFT) payment channel. This had been piloted in Worcester in August 2012 and had been very successful. The system had a reduced turnaround time, with payments being received within 24-48 hours after identification had been concluded. It had allowed greater management oversight and control and reduced the need to queue for payouts. The system had been rolled out in 103 courts, and paid 89 287 beneficiaries in April 2012. TPF planned to roll out to a further 100 courts in 2012/13.
Thus the national office processed 107 000 payments in the month of April 2012, but the courts had processed 89 000 payments. Some people still preferred to collect their cash at the court.
North West was identified as the “star province” as 93% of its payments were utilising decentralised EFTs. The process took less than a minute. In contrast, Free State used decentralised EFTs for only 648 873 of its total 7 584 596, and Limpopo only 4 443 161 of its total 15 792 801.
Ms D Schafer pointed out that it depended how fast the ADSL line was. Mr Johnson responded that back-ups had been issued in the form of two 3G cards per court.
TPF had identified 22 courts throughout the country as priority courts for decentralisation. These included Mthatha, Pretoria, Giyani, and Seshego. This would take a lot of pressure off the national office.
TPF identified its main challenges as inadequate service delivery, disclaimed financial statements, no historical financial reporting, vote qualification, absence of a regulatory framework, weak financial administrative systems and internal control and operational oversight shortcomings. The three immediate priorities were unreferenced deposits; the 477 databases, which must all be worked through for credible information; and finally internal control and operational oversight, which would involve working with court managers to put systems in place to remove opportunities for fraud and corruption.
TPF roadmap for enhanced management
TPF had identified five steps that could be taken to effect change: (1) getting the business case clear, (2) having credible baseline financial reporting, (3) capacitation, (4) a business process review and (5) a legislative review. These outputs were expected to result in increased accountability, transparency, and enhanced delivery of TPF services.
(1) Getting the business case clear
The Compressive Business Case had been concluded. Three options for this were available: the maintenance of the status quo; outsourcing through a Public Private Partnership (PPP); or enhancing a Public Sector Managed TPF. The third option was selected, based on affordability and employment considerations. TPF had ensured communication of selection to stakeholders, such as the Executive Authority, Parliamentary Committees and the National Treasury.
(2) Having credible baseline financial reporting
As there was no financial reporting before, TPF received guidance from the Accounting Standards Board. The financial statement is based on the guidance that they had received. The first step was getting a reporting framework for TPF in place. The next step was to produce financial statements, and TPF had advanced towards concluding the financial statements for 2011/12. There was a service provider (PWC) assisting, but TPF envisaged graduating towards doing it without external help.
This included personnel training, which TPF had invested in extensively. Comprehensive training manuals had been developed. 31 Senior Financial Practitioners and Senior Managers, 116 Area Court Managers, Directors of Court Operations, National and Regional TPF staff, and Financial Operations Managers had been trained by SAIPA accredited accountants.
Personnel appointments funding had been secured for 45 finance practitioners at middle management and technical level. 25 contract appointments were concluded and the remainder where being advertised. Two database administrators and eight quality assurance and technical personnel had been appointed on six month contracts.
(4) Business process and systems review
In terms of the revised and standardised business process, the Department had concluded a review linking audit trails, daily reconciliations and operational performance. TPF processes had been standardised and process mapped. Financial operations managers and Area Court managers were orientated on the standardised operating procedures. The next steps were training all court managers and checking officers on standardised operating procedures.
The Department had introduced a new payment channel, which involved a decentralised EFT payment system at courts with reduced cycle times, a full audit trial and segregation of duty, which was a key requirement, and a reduction of payment time from 10 days to within 24 and 48 hours after a beneficiary had been identified.
(5) Legislative review
The Department recommended that amendments to legislation be considered, for example, an amendment to the Maintenance Act in relation to direct beneficiary payments, and amendment of the Criminal Procedure Act to redirect local authority admission of guilt fines to municipalities, the amendment of legislation for refunding of bail, and legislation governing TPF.
The Chairperson said that what Mr Johnson had presented was a good start, and pointed out that profit returns were not expected, as this was a service to the taxpayer. He expressed the hope that at the end of the day TPF would be running well.
Mr Jeffery thanked Mr Johnson for the presentation, but said that unfortunately it was not enough. The Committee had been seized with the matter since 2010. He ran through decisions taken with regard to third party funds since then, and said he felt that the Department had not made significant progress on these decisions.
The Auditor-General’s dashboard report from March 2012 noted that Third Party Funds had not submitted financial statements for the last three financial years. This went back to 2008/2009, but the report presented did not go back that far. The report did not state what the Department intended to do about that.
Mr Jeffery asked why 2008/2009 had not been mentioned, and why the service provider had not been mentioned. Who was dealing with this from the Justice Department? There was no sense of a dedicated team who were working on nothing else but Third Party Funds, and said that this would not be resolved without one. The report was helpful but not adequate, and he suspected that the problem was a lack of dedicated full-time staff. He asked for the names of the people who were dealing with this full-time.
Mr Jeffery noted that Mr Johnson was pleased with the progress being made by the payment of maintenance money, but Mr Jeffery asked why the Department was handling this money, and why could it not be paid straight to the beneficiary. Why was the Department involved at all? An amendment to the Maintenance Act was urgent, as it was creating too much delay.
Ms D Schafer asked what would happen if people did not pay maintenance under Mr Jeffery’s proposed system.
Mr Jeffery responded that it would be dealt with as a civil debt, the person would go back to court, which they would have to do anyway. He asked what happened under the current system.
Mr Jeffery asked why fines to municipalities could not be handled electronically.
Mr Swart commended Mr Jeffery on picking up the oversights and omissions in the report, and agreed that they should be addressed. However, it was very encouraging to know what the picture was, and he appreciated the hard work that had been put into the process.
Mr Swart noted that Mr Johnson had said that if TPF did not come right he would resign, so the dedication to the problem could not be questioned. Though asking if he had enough time to deal with it was valid.
Mr Swart was impressed with the training manuals and the capacitating. He noted a dramatic improvement in Botshabelo, where there had been demonstrations about the lack of maintenance payment, and now there were not even queues.
Mr Swart argued against removing the Maintenance Court’s role in processing funds. He felt that bail refunds could be done quicker through bank account payments, but that the Maintenance Courts played too important a role through its investigators and maintenance clerks to be done away with. He felt that Mr Jeffery’s proposal did not recognise the important role that maintenance payments played in the country.
There was a long way to go, but it was commendable that they now had a picture of where they were.
Ms Pilane-Majake commented that the whole system was cumbersome. The idea of decentralising was therefore important. The process of collection and distribution should be streamlined. She commended the Department on their training manuals. She hoped that it would be utilised effectively. This should be linked to performance, so that there was a way of encouraging personnel to act effectively. Legislative review was very important as problems could not be resolved while there were loopholes in the law. In terms of paying back beneficiaries, the issue of maintenance itself was contentious. Consultation was needed on this matter so that people receiving maintenance could have a say.
Ms D Schafer agreed with Mr Jeffery that the Department should not be involved in the paying and collecting of the money. The person had to come back to court if they had not received the money either way. She differentiated between the payment of maintenance and helping people in need of it. No one was saying that they should not be involved in other maintenance issues, and by making people pay directly into the beneficiaries’ accounts, this would free up time to deal with those issues. Investigators and clerks should still do their work. She seconded Mr Jeffery’s call for feedback on issues that were brought up in the Auditor-General’s dashboard report, but commended TPF on the work done so far.
The Chairperson said that he had received complaints that it was denigrating to stand in the queue to collect maintenance payments, and also it was often difficult to fit around work commitments. This was especially difficult when offices closed over lunch, as the Pretoria Magistrate’s Court apparently did. He said it was therefore important to stagger staff’s lunch breaks, and to make people aware that they could be paid by EFT.
The Chairperson agreed with Mr Jeffery about the need for a full-time team.
Mr Jeffery appealed for the Department to ensure that offices did not close over lunch breaks.
Mr Jeffery asked what benefit there was to the beneficiary of maintenance for the payment to go through the Department, as opposed to coming directly from the other parent.
Ms Pilane-Majake asked what the various options were for the payment of maintenance beneficiaries.
The Chairperson pointed out that these needed to be spelled out to the beneficiaries.
Mr Johnson responded that in the past, TPF had been finance driven, instead of focusing on service delivery. Initially Mr van Hermelen was the only Director, before Mr Johnson was assigned to TPF. There were now three Directors. TPF intended to make 45 positions permanent. This would address the financial management needs. However, the organisation may need to look at how they structured support functions such as the line functions, amendments to the Maintenance Act and the day-to-day operations.
Mr van Hermelen responded that direct payment was an option available to maintenance beneficiaries. There were some problems with direct payment. Some employers continued paying money to the courts instead of beneficiaries, as there was a level of mistrust with beneficiaries. A bank account charged between R5 – R10 a month, which was a problematic issue for those who were unemployed. There was a conservative element amongst magistrates who insist that money be paid at the court. There was a further problem with beneficiaries switching bank accounts.
Mr Jeffery asked for a report on what was being done to educate beneficiaries about the payment options, and requested a report about this. He asked what was being done about judicial officers, seeing as magistrates seem to be limiting people’s options.
Mr van Hermelen responded that the Department had made some efforts to advertise that EFTs were available, though he acknowledged that this had not been enough. Adverts had been taken out in newspapers, and community outreach projects had been contacted. In the Western Cape there had been a drive and imbizo on the topic. He clarified that if maintenance payments were not being received, whether it was a direct payment or a payment through court, the beneficiary would have to lay a complaint at the court.
Mr van Hermelen spoke to the admission of guilt fines issue. He had requested that the Criminal Procedure Act be changed. With summons and subpoenas, payment had to go through court, but with notices it did not. This would alleviate part of TPF’s workload. He undertook to investigate the issue of the Pretoria court reportedly closing at lunch.
Mr Johnson said that 80% of the payments they were making were done by EFT. The idea was to increase this percentage for better service delivery. He said that the law did not require TPF to present financial statements, but they did so because it was the responsible thing to do. In addition they were working towards amending the legislation, but they had prioritised training and financial statements.
Mr van Harmelen added that there was draft legislation, which had been sent to the National Treasury. The National Treasure had disagreed that there should be legislation, and suggested instead listing it as a trading entity. This was surprising as TPF was not about generating revenue. TPF submitted a request to National Treasury for establishing a trading entity and were still awaiting feedback.
Mr Jeffery suggested that the National Treasury should be present. The Department, the Treasury and the Auditor-General should be brought together to discuss what could be done to resolve problems with TPF. This may help to avoid qualifications on TPF’s audit.
Mr Johnson said that the AG had been very helpful in issuing guidance in the December 2010 Government Gazette on accounting guidelines. In the past, time had been wasted in doing accounts for certain years using the wrong framework. Mr Johnson felt that despite this TPF had now produced a financial statement covering enough to allow them to know what the situation was and look forward, rather than making statements from many years ago a priority. They wanted to invest their energy and time in going forward.
The Chairperson agreed with Mr Jeffery’s proposal that the Department, Treasury and the Auditor-General should present to the Committee, but suggested that they meet first to coordinate.
Ms D Schafer agreed that the Auditor-General should come and present, but suggested waiting until the year’s audit was complete, and then, if there were still qualifications, ask them to attend.
Mr Johnson said that they would not accept qualifications and intended to receive a clean audit. He was challenging the internal audit to stop auditing based on compliance
Ms Pilane-Majake asked, in terms of how the organisation was structured, who was the ‘anchor’ in management.
Mr Johnson responded that in terms of structure, he was the team director, and there were two others. An additional 45 people (five per region) were to be recruited. The key people were managers, which was why training them had been a priority.
Ms Pilane-Majake asked if TPF had an internal audit report.
Mr Johnson responded that the basic focus at the time was the internal control environment. Internal reports were being issued on basic operations, giving a good sense of risks and weaknesses.
Ms Pilane-Majake commented that TPF were aware of the risks but had not shared them in the presentation or discussed the action being taken around it.
Mr Johnson responded that the risks identified by the internal audit report included the data system, and the payment system at the national office and the risk of fraud.
The Chairperson thanked the presenters, and undertook to write to the Auditor-General to discuss the situation.
Committee Report on Prevention and Combating of Trafficking in Persons Bill
The Committee discussed the report. Comments included:
Ms Christine Silkstone, the content advisor, said that the reason why the report referred to an offence of trafficking was that the Bill did not have an offence of trafficking; one had to go and find out what it was.
Mr Jeffery said he took Ms Silkstone’s point, the offence was buried in the definitions, but it was in the Bill. The report should not be an explanation of the Bill. He said that if he was to give the speech in the National Assembly, he would mention that there was a lot of hype around the issue of trafficking which was not borne out by the statistics, both locally (especially during the Soccer World Cup) and internationally. The initial line from South Africa was that there were no accurate statistics because it was not defined as a crime, although there were figures provided from the National Prosecuting Agency. It was important to include that the Bill should be implemented as soon as possible.
The Committee approved the report as follows:
Report of the Portfolio Committee on Justice and Constitutional Development on the Prevention and Combating of Trafficking in Persons Bill [B7B – 2010], (National Assembly – section 75), dated 7 June 2012
The Portfolio Committee on Justice and Constitutional Development, having considered the subject of the Prevention and Combating of Trafficking in Persons Bill [B7 – 2010] (National Assembly – section 75), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, reports the Bill with amendments [B7B - 2010]:
The Committee wishes to report further:
The Committee would like to see the Bill implemented as soon as possible, especially the provisions relating to the establishment of offences and penalties. However, it is aware that preparations to ensure readiness to implement certain provisions may require more time. For this reason, the Committee has provided that different dates may be fixed in respect of different provisions of the Act.
Report to be considered.
The Chairperson adjourned the meeting.
[In the meeting of the 13 June, Mr Jeffery addressed the Committee and said that there was an issue as to whether the Committee should have adopted the A version of the Trafficking Bill. The Speaker was of the view that it would be safer to suspend the rule under which the Committee adopted the Bill. The support of all parties would be needed on this.]
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