Meeting SummaryThe South African Heritage Resources Agency (SAHRA) presentation covered the challenges that had become manifest after the various crises. These included a vast South African Heritage Resources Agency obligatory mandate and failure to properly cost the implementation of the mandate, the absence of oversight (council and audit committee) over a long time, an oversight and policy vacuum, the challenge of getting provincial representatives into the SAHRA Council, an opaque nature of CEO recruitment processes and contract and existential crisis, devolution process, closure of provincial offices, and unprecedented retrenchments underway when the new Council was appointed. These also included non-remuneration of Council Members, the poor personnel quality, conditions and institutional culture of poor performance, lack of accountability and anarchy, and the illusion of unqualified audit of previous years versus organizational crisis and dysfunction. The presentation also outlined the nature of the crises.
SAHRA reported that a number of positions had resigned recently including the Head of Corporate Services, Supply Chain Manager and Human Resources (HR) manager. With the Chief Executive Officer there had been the absence of a valid contract; however, she had insisted that there had been oral undertakings to have a five year contract. A legal opinion was being sought on the matter. The presentation also outlined the turnaround strategy and the various interventions suggested by the Auditor-General and those undertaken by the Council. It also covered the successes, despite the challenges, which included the acceleration of assessment and accreditation of Provincial Heritage Resources Authorities (PHRAs). The Centre for Heritage Education, Training and Research had been opened in March 2012.
It was revealed that management had long been aware of the failings and the pending crisis and that at one point PricewaterhouseCoopers (PwC) had been released as the Agency’s auditors and a one-man firm appointed instead.
Members' questions focused on the issue of the various resignations and the need to investigate these persons, funding received from entities abroad, matters pertaining to the appointment and contract of the Chief Executive Officer, who was to take responsibility for the problems within SAHRA, the legislative measures for stopping fraud, and the channels for reporting issues. Members also called for an forensic investigation. The Chairperson expressed disappointment with the Department for not handling the ongoing situation as to the CEO. It emerged that the CEO had used her power to exclude the Council and the Department from her activities. There had been much that had been hidden from the Council, the Department and the Committee. This was only coming to light now. The Chairperson gave the Minister and Mr Sibusiso Xaba, DAC Director-General, two weeks to produce a report on what was happening and what was being done.
The Chairperson said one of the issues was that there had been no contract for the CEO as it had expired. There had also been many dismissals and there needed to be a response. There had also been complaints from provincial bodies and there was still a report pending from the South African Heritage Resources Agency. There was also the issue that funding from external countries needed to be accounted for as SAHRA was a Government body. SAHRA was not to be used for personal reasons such as friendship or as a place to employ family.
Ms L Moss (ANC) said that it had not done the Committee justice to receive the presentation so late, it did not allow the Committee to engage with the presentation properly.
The Chairperson requested that the presentation begin and that all those present remain civil. The Committee did want to engage with the issues faced by SAHRA and be able to report to the media. SAHRA was important and was looking after the nation’s heritage.
Dr Somadoda Fikeni, SAHARA Chairperson, said that the CEO had booked off sick for the last three weeks and apologised for her absence. Other than SAHRA there was no other entity charged with such a mandate within the country. SAHRA was unable to discharge its mandate because of the challenges it faced. The cumulative of operational and governance crises over the years had finally taken its toll and manifested themselves in various challenges. The observation of the Council and adverse audit opinion confirmed a range of systemic weaknesses. This in turn meant that incremental conventional intervention methods would not rescue the situation but only bold innovative steps would revitalize SAHRA.
Dr Fikeni covered the evolution of SAHRA challenges which were as follows:
Vast SAHRA obligatory mandate and failure to properly cost the implementation of the mandate.
Absence of oversight (Council and audit committee) over a long time. Oversight & policy vacuum.
Challenge of getting provincial representatives into SAHRA Council.
Opaque nature of CEO recruitment processes and contract.
Existential crisis, devolution process, closure of provincial offices and unprecedented retrenchments underway when new Council was appointed.
Non-remuneration of Council Members
Poor personnel quality, conditions, and institutional culture of poor performance, lack of accountability and anarchy.
Illusion of unqualified audit of previous years versus organizational crisis and dysfunction.
The nature of the crisis faced by SAHRA included:
Retrenchments and resignations without immediate replacement especially in critical positions. Lack of succession planning: CFO, Company Secretary and Legal Advisor, Head of Corporate Services, Supply Chain Manager and now HR Manager.
Poor planning on closure of SAHRA (devolution) operations in provinces.
Non-adherence to policies thus weakening control measures as reflected in the Auditor-General's report.
Hostile Environment for staff and council
Crisis around CEO contract and general uncertainty
Dr Fikeni stated that the Head of Corporate Services, Supply Chain Manager and HR manager had all resigned recently (within the last few weeks). On the issue of the CEO appointment, Dr Fikeni said the problem had been not just an absence of a valid contract but the fact that the advert for the position had been for three years only. The CEO insisted there had been oral undertakings for her to occupy the position for five years. One Council member had gone to the Public Protector to ask why there was a legal opinion being sought when it needed to be deciphered if there was a valid contract.
Highlights of the 2011/12 Auditor-General's report included:
Disclaimer of audit opinion, in all areas
Prior year shortcomings not addressed
No Audit Committee, appointment of internal auditor was irregular
Procurement & Supply Chain management
Control over Fixed assets
Control over Human Resources & payroll
Financial management & control
Financial accounting & presentation
Inadequate supporting evidence for key transactions/ journal adjustments not explained
Performance management & performance reporting poor
Organisational culture & behaviour contrary to accepted norms of good corporate governance
Dr Fikeni stated that the turn around strategy would include:
Tightening of expense management with proper financial control
Revision of all procurement & Supply Chain Management procedures
Banking structures were to be revised and signatories reviewed
Fixed asset verification/reconstruction of Fixed Asset Register
Payroll controls – oversight & leave pay
Regular financial & performance reporting
Internal auditors to be appointed
Various interventions had been required by the Auditor-General and included:
Forensic enquiry into:
Retrenchment & severance “benefits”
Expenditure & procurement practices
Fixed asset disposals
Control & utilisation of special project grant monies
Staff debtors & recoverables
Disciplinary and other proceedings to follow, should these be warranted
Irregular, unauthorised, fruitless & wasteful expenditure to be recovered from any parties responsible
Council interventions had included:
Unprecedented number of policies, control measures, procedures put in place but challenge of implementation at an operational level.
Establishment of the audit committee
Management capacity building on corporate governance.
New Strategic Plan in place.
Approached Department to cost SAHRA Act and Department had embarked on this process already.
Approached Department of Arts and Culture (DAC) for assistance on Council remuneration or honoraria.
Bigger challenges had been exposed and radical intervention that were to be adopted included:
Auditor-General's Report & forensic investigation
Investigation of CEO for Misconduct
Invitation of DAC for a turnaround Task Team.
An invitation of was to be extended to the Artscape & Iziko CFOs to help with the workload of the current Acting CFO
Legal Opinion was to be sought on the CEO’s contract.
Dr Fikeni did explain that there had been some achievement despite the challenges faced and these included the acceleration of the assessment and accreditation of Provincial Heritage Resources Authorities (PHRAs). The Centre for Heritage Education, Training and Research had been opened in March 2012.
The Council had also decided to investigate misconduct of serious nature as on many occasions what Council had been given as information was misleading, and at times information had been suppressed. This was taken in a serious light. The Council had written to the CEO in terms of steps to investigate serious misconduct.
Dr Fikeni stated that the SAHRA Council and staff, working with DAC, were committed to a turnaround and the avoidance of a meltdown. They planned to always welcome engagement and guidance of the Portfolio Committee. In six months concrete changes were to be visible for the Council to report on the turnaround and have a plan to effect changes proposed by the Auditor-General. Some changes had already started being implemented.
Adv Dave Mitchell, Chairperson of the SAHRA Audit Committee, said that the work the Auditor-General had done this year had been competent and thorough and he supported his findings. In 2011 a local firm of chartered accountants provided support in producing the Annual Report, more specifically the Annual Financial Statements. Their findings bore a strong correlation with what the Auditor-General had presented in his findings. Management had been aware of the failings from the year before and chose not to inform the Audit Committee or the Council. The Auditor-General had looked into the way the internal audit had been carried out. The service had been outsourced; there had also been irregularities within this appointment. What had been found was that PricewaterhouseCoopers (PwC) had discharged audit services to SAHRA and for some reason was eventually terminated and a small one-man firm (which was not properly appointed or equipped) took over the task. This was despite Council’s instructions to the contrary. There was now an Audit Committee in place that was strong and effective.
Issues of resignations and other matters
The Chairperson stated that to lie to the Committee was a criminal offence. SAHRA had been given a ‘long rope’ and allowed to conduct its matters. She suggested that the CEO should be suspended and even those who had resigned needed to be investigated. She was disappointed with the current state of events. The resignations were all of strategic positions and this was evidence of corruption.
Mr S Ntapane (UDM) said that it was clear that the Council was being sabotaged. There was a need to stress the forensic investigation. There had been a lot that had happened within the institution. He commended the Council on the good work it had done so far.
Ms Sandi Baker, Acting CFO of SAHRA, replied that she had done a great deal of forensic work over the last 20 years. When she arrived she had been interviewed by the CEO and the HR executive who alleged she had been ‘terrorised’. At the interview there had been non-disclosure as to the problems or the irregularities and the Annual Reports were not on the website. Most copies of documents could not be located. She had realised quickly that there were serious underlying problems, at which point she approached Adv Mitchell on the Audit Committee. What she had seen was that there had been, by the CEO and previous HR executive, deliberate concealment. Nothing had been disclosed despite repeated requests. There had been deliberate misrepresentation, omissions and non-disclosure, in particular by those two executives. When she had realised that she could not do the work for which she had been appointed due to the situation she had approached them stating that things did not ‘stack up’ and they proceeded to attempt to remove her from the organisation. She then attended a Council meeting and the disclosure of one irregularity allowed for her to tell the Council everything. She was given the opportunity to speak despite the CEO's requesting that she be removed from the meeting. This had been overruled and she had been allowed to stay. There had been allegations of incompetence with the previous CFO and there had been a settlement of R100 000. This had not been disclosed and had been orchestrated by the HR executive and the CEO on the 23 May 2012. This had not been disclosed to Council till July. Council had not been aware of what had been going on in SAHRA and when it had been made aware it responded quickly. There had been a culture of not going past the CEO or HR executive.
The Chairperson wanted clarity over the money that had allegedly come from the Dutch.
Issues concerning the CEO
The Chairperson said that if there was no contract for the CEO then the person was not employed. The Board had been corrupt.
Mr Ntapane said a contract that stipulated the CEO was to be appointed for three years could not be extended through an oral agreement but only by another written agreement. The person was thus not appointed.
Ms Siyasanga Tetyana, SAHRA Acting HR Executive, replied that the previous CEO did have a contract but the current one did not. There had been an appointment letter which came in the form of offer letter.
Ms H van Schalkwyk (DA) asked who misled the Council regarding the number of applications. She understood that the previous Council had been in charge of appointing the CEO.
Mr Vuslthemba Ndlma, DAC Acting Deputy Director-General: Cultural Heritage and Preservation and Chief Director: Heritage, said that the responsibility of the appointment of the CEO rested with the Council. This was a gap that needed to be addressed. If one looked at other legislative frameworks there was a provision that the CEO was appointed by the Council in consultation with the Minister. The National Heritage Resources Act was silent on this matter and this was the gap that needed to be looked at. This had been an oversight. The costing of the Act had also been an oversight but this was being addressed. There had already been bids received to cost the legislation.
Ms Berri Samuels, SAHRA Public Relations Officer, replied that the issue about the contract was not a new one. There was a need to remember that this particular CEO had used her iron fist to protect herself and used a policy of non-interference in her management style. She had used her power over the day-to-day running to protect herself. When she had said that she had a five year contract and that there was to be no discussion, she had used the card that she was in charge operationally as an excuse for not consulting the Department and Council. This meant there was no interference. Employees had been instructed not to speak to Council.
The Chairperson said that she was disappointed in the Director-General and the Deputy Director-General. She saw that the Deputy Director-General did not often act. The Department needed to find a new way to relate to the entities. There was also a need for Council members to relate to staff on issues such as staff bullying as experienced with the CEO. The Director-General needed to intervene in these issues. There was a need for an in-depth forensic investigation. There was also a need to bring unions on board as they often supplied information of these issues. She said the Council needed to report to the Committee after a decision was made on the CEO.
Ms Moss said that the CEO needed to go because there was no contract.
Mr David Nkaiseng, Human resources and Committee Chair of SAHRA, replied that a letter of appointment was a contract by labour standards. This needed to be followed by a performance contract which needed to be entered into annually. This contract was poorly drafted and did not offer an alternative to the provisions of the advertisement which specified three years and the contract should have also stipulated a time period. The question of whether the CEO had complied with the advertisement was a matter to be handled in the forensic investigation. There had been more than ten applicants who could have been short listed but only one was short listed. This puzzled the Council.
The Chairperson asked if the CEO had really met the requirements for the job.
Mr Nkaiseng replied that a report by consultants had painted a bleak picture of the short listed candidate and suggested that maybe SAHRA needed to search for other candidates. This was because the candidate had not met corporate skills requirements, financial skills requirements, turnaround skills requirements and so forth. The CEO was still however appointed with a poorly drafted contract. He also wanted to clarify that the Council was not divided despite some members stating the contrary in various forums such as emails. There may be a need to look into a way to constrain members who went astray.
Mr L Khoarai (ANC) asked who had approved the three weeks leave given to the CEO.
SAHRA Chairperson’s involvement in issues faced by SAHRA
Mr N Van der Berg (DA) asked what was Dr Fikeni’s role in the entire matter. He seemed to have been fighting all the time with every one.
Ms F Mushwana (ANC) said she failed to understand how Dr Fikeni had presented so calmly; she agreed with Mr Van Der Berg that maybe Dr Fikeni was the problem. It seemed that he was the person that needed to be replaced or the challenge might remain. Culture was very important in this country. Dr Fikeni was failing this country; he needed to assess himself and be fair as he might be the challenge.
The Chairperson said that Members were missing the point that this was a new Council whichhad identified the challenges and was exposing the corruption.
Ms Mushwana said she wanted to thus withdraw her accusations. Mr Van der Berg did the same.
Incompetency within SAHRA
Mr Ntapane said there had been a great deal of incompetency that had been discovered. What was to be done?
Responsibility for problems within SAHRA
Ms Van Schalkwyk said it was clear that SAHRA was dysfunctional and management had been non-existent. She asked with whom did the ‘buck stop’? Was it with the Director General or Minister or maybe the CEO. Who was to be responsible for implementing the turnaround strategy?
Mr Sibusiso Xaba, DAC Director-General, replied that ‘the buck’ stopped with the Minister as he was the executing authority whilst the Director-General was the accounting authority for SAHRA. The Department shared the responsibility with Council even though they had different roles. But there was also a need to respect the integrity of the processes of Council. The Department had a number of institutions and tried to engage with them in a way that did not interfere with their roles. When the Department felt there was a need to intervene it did so in manner that respected their integrity.
Mr P Ntshiqela (COPE) said he felt that the Council was on track but needed to take the blame for what had gone wrong. He wondered if the Department had captured what had gone wrong and what would have happened if they had. He asked for the Department to respond.
Mr Xaba replied that a great deal of the information presented today was new information that had been concealed from the Department and the Council. This information had been concealed via omission. Now that the information had come to light it would be dealt with. One plan of action was to use the capacity in the Department and in some of the institutions in order to assist and support SAHRA in its turnaround whilst the investigations were on going.
Ms Moss said that the Council was no longer new as its members had come into their positions in November 2011. They needed to correct the problems they had encountered when taking office to allow the entity to move forward. The Chairperson had asked last year what the Department had done to help with the challenges. It was now 10 months later and the Committee needed to be told what had been done as there could not be a repeat.
The Chairperson blameed the Department as well because it had known about these things and had not done anything. She requested that SAHRA return in two weeks with the acting CEO. The Council also needed to be paid.
Legislative measures against fraud
Ms Moss said that if there was no proper procurement system then fraud would remain. There was complete fraud in terms of the finances. The Government had put measure in place and one of these measures was the Public Finance Management Act (No.1 of 1999) (PFMA). There was labour legislation that could fulfil that gap even in terms of the appointment of the CEO. There was no space for fraud.
Mr D Mavunda (ANC) said that Dr Fikeni would have to check the reporting lines of his institution. There was a need to find out what the pieces of legislation were in terms of the establishment of SAHRA. Dr Fikeni needed to know whom to contact if there were irregularities and whom to contact if issues arose.
Mr Van der Berg said that the previous HR manager had been terrorised by the Council who had made it impossible to stay. These had been the allegations - were they true?
Ms Baker replied that the HR executive had been the one who had terrorised people not the other way around.
Ms Moss proposed that the Council met and produced a progress report. There was also a need for a total forensic investigation, from the previous council to now. The Department and the Minister needed to look at the CEO. She was disappointed by the Department. She called for a progress report from it as well.
Intervention by the Department
The Chairperson said that, much as the Department tried to distance itself, the role of the Department was to oversee as the money was given from the Department. There were issues that were happening right under the Department’s nose and the Committee had to intervene as it was the last port of call.
Dr Fikeni replied that, in terms of the forensic report, he asked for patience. He said that the current Council had dedicated men and women who had taken a stand after years of irregularity. Some of the information had only come to light two weeks ago. The Council’s conscience was clear on the matter as it had not been involved in misgivings and was attempting to solve the crisis.
The Chairperson said that the Minister and Department must act on the matter and produce a progress report. She gave the Minister and Mr Xaba two weeks. She worried as this was a very important institution. She thanked Council members for the work they were doing. She advised SAHRA Council members to engage with lower level employees in order to garner information. She also recommended that there was a meeting with the unions.
The meeting was adjourned.
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