Department of Communications & Deputy Minister: clarification on Annual Report, Independent Communications Authority of SA Annual Report 2012

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Communications and Digital Technologies

16 October 2012
Chairperson: Mr S Kholwane(ANC)
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Meeting Summary

The Deputy Minister attended the meeting. The Department of Communications (DoC) began by giving further clarification on points arising from its Annual Report 2011/12. A correction was noted in the figures for radio and television stations, and it was stated that the receipts for the year totalled R2.329 billion, of which R899.569 million was derived from licensing fees collected by ICASA. It was also reported that in this year a total of R115.539 million was reported as irregular expenditure, but only 17% of it in fact related to the 2011/12 financial year, with past transactions relating to travel and accommodation services, dating back as far as 2006, accounted for the rest. The Legal Unit had been asked to advise on appropriate steps to be taken against transgressors. In this year, seven DOC employees had not signed performance agreements, and they were named by post, but it was noted that some were still under their probationary periods. Internal audits had been conducted in areas of Asset, Risk and Financial Management, and Performance Information and Corporate Governance. Currently there was no performance management policy in place within DOC. Corrective actions had been developed to implement recommendations and address deficiencies. DOC further reported that, in order to strengthen departmental oversight, a State Owned Entity (SOE) oversight branch had been created, and this would analyse expenditure patterns of SOEs, reporting back to the Minister and the entities. A detailed analysis was also given of the Management Performance Assessment Tool (MPAT), which covered four main areas. DOC had assessed itself as being compliant on strategic management, governance and accountability and financial management, and slightly under-compliant, with a scoring of 2.6 compared to a complaint score of 3, in relation to human resources and systems management.

Members questioned, at length, the signing of performance contracts, especially that of the Director General and it came to light that in fact the Director General had not signed a performance agreement in the 2011/12 financial year, despite stating earlier that she had. Members were deeply concerned at the fact that the Committee had been misled and demanded that the Minister must present an explanation and state what had been done, whilst the matter would also be reported to the Parliamentary legal unit. Later in the question session, Members again said that it was unfortunate that in relation to the SOE oversight unit, the wrong impression had been created that it was functional, and said that the fact that the Committee had to probe before getting proper answers created an atmosphere of distrust. DOC officials were also reminded of Parliamentary protocols in relation to approaches made to Members. Members questioned the internal audit unit functioning, thought that this unit needed to present an action plan, and were concerned that insufficient controls appeared to be exercised to prevent recurrent irregular expenditure. Members said that expenditure should be analysed against performance, noted that expenditure needed to happen in the earlier quarters of the year, and questioned the fruitless and wasteful expenditure, the action taken against transgressors. They asked why bonuses had been paid despite the DOC not reaching its targets, and also thought that the DOC on the MPAT targets had to be revised. They were also concerned about the recurring question of vacancies, although HR consultants had been appointed.

Independent Communications Authority of South Africa (ICASA) then presented its Annual Report for 2011/12. Details of performance in each of the programmes was presented, verbatim, from the presentation slides. The Auditor-General reported that only 32 of the planned targets were reached in this year, and 56% were not met. There had been underspending of budget in the divisions for markets and competition, engineering and technology, and consumer affairs. These divisions were later reprioritised. ICASA had received its third consecutive qualified audit report, with qualifications relating to incomplete financial statements by licensees, the necessity for recalculation on general licence fee regulations and inability to confirm the valuation, existence and completeness of National Revenue Fund debtors and related creditors. It was noted that, despite ICASA reaching 44% of its targets, it had spent 98% of the budget. Its employees were also given a performance bonus. In relation to staff, it was also reported that some staff members were directly transacting with suppliers without following the supply chain management structure, and the Complaints and Compliance Committee was taking long to resolve complaints.

Members were dissatisfied that ICASA had again received a qualified audit, and said that the position painted by the AG was very different from the positives stressed by the management. They were concerned at the mismatch between achievement of targets and spending and questioned why, in these circumstances, staff were paid bonuses. They commented on errors in the Annual Report, which called its accuracy and attention to detail into question, and asked why figures relating to employment of disabled employees and vacancies were not included. They expressed concern at the non-signature of the 2012/13 performance contract by the Chief Executive Officer, enquired about the disciplinary process, which was taking too long. Consumer outreach was also questioned, particularly whether ICASA was reaching rural areas. Members were also interested in how ICASA was dealing with SABC’s failure to meet licensing requirements around local content, and also questioned how the amendment of the regulations would address the bookkeeping problems. Finally, they questioned the litigation.

Meeting report

Department of Communications Annual Report 2011/12: Clarification of issues
Ms Rosey Seseke, Director General, Department of Communications, clarified some issues that were still outstanding from the presentation on the Department of Communications (DOC) Annual Report 2011/12. The receipts for the 2011/12 year totalled R2.329 billion, of which R899.569 million was derived from licensing fees collected by Independent Communications Authority of South Africa (ICASA). Although these totals were duly audited by the Auditor-General (AG), she noted an omission of R116.585 million for private radio stations, because this had been confused with R382.562 million for private television stations.

Irregular expenditure of R31 million over the years 2006-2009 was condoned by the Departmental Bid Adjudication Committee. A forensic investigation proved that DOC had received value for this money, as travel and accommodation services had been rendered. However, four officials were charged in a disciplinary hearing and dismissed from DOC. There was not, however, evidence of fraud or individual benefit from this money, so criminal proceedings were not initiated.

The total recorded in relation to irregular expenditure in the 2011/12 year was R115.539 million, of which 83% related to transactions dating to 2006. 17% occurred in the 2011/12 year, and the Legal Unit had been requested to advise on appropriate steps to be taken against transgressors. In relation to Fruitless and Wasteful expenditure, R13.478 million was reported in this year, although only 8% in fact related to the 2011/12 year. The Legal Unit was investigating how best to deduct and recover money from employees and suppliers who were responsible, and take relevant disciplinary action to prevent similar recurrences. An amount of R1.657million had been referred to law enforcement agencies.

During 2011/12, seven DOC employees had not signed performance agreements including the Head of the Ministry, the Private Secretary, the Media Liaison Officer, Assistant Media Liaison Officer, Director of ISAD, Chief Director of Multi-Lateral Planning and the Director of Planning and Foresight. However, many were new employees and it normal to delay signature until conclusion of the initial three-month probationary period.

Internal audits had been conducted in areas of Asset, Risk and Financial Management, and Performance Information and Corporate Governance. Currently, there was no performance management policy in place within DOC. Corrective actions had been developed to implement recommendations and address deficiencies. A performance assessment board was constituted to determine the merits of each employee and recommend appropriate performance bonuses against the standards of performance agreements. 146 non-SMS (senior management service level) were paid R2.779 million and 12 SMS were compensated to the amount of R670  000. Bonuses were not allocated where a performance agreement had not been signed.

DOC developed educational materials for various projects, which were distributed to provinces and relevant stakeholders through offices of state-owned enterprises (SOEs), ministerial imbizos, municipalities’ inter-governmental unit, collaboration with the Government Communication and Information System (GCIS), strategic partners such as universities and FET colleges, Intergovernmental Relations Forums and the DOC website.

In order to strengthen departmental oversight, an SOE oversight branch had been created, which would be led by a DDG and other senior management staff. The expenditure patterns of SOEs would be analysed quarterly, giving feedback to meetings with the Minister, along with Chief Executive Officers of the SOEs and departmental leadership. In recognition of the governance challenges faced by SOEs, a clean audit process had been initiated by the Minister, under the guidance of the AG, to ensure all entities and the DOC itself attain clean audits by 2014.

Ms Seseke noted that ICT hubs were established to facilitate the growth and development of ICT Small Medium and Micro Enterprises (SMMEs) in under-served provinces. The provinces and other players in the sector were required to donate premises, identify suitable locations and contribute funding for implementation.

The Management Performance Assessment Tool (MPAT) was used to benchmark good management practice, and it would assess quality of practices across a comprehensive range of management areas, from supply chain management to strategic planning. The MPAT framework was built around four management Key Performance Areas (KPAs) of strategic management, governance and accountability, human resources and systems management, and financial management. A scoring of Levels 1 and 2 was considered non-compliant with minimum prescripts in that area, whilst level 3 was fully compliant, and level 4 scoring was given when the department was fully compliant and working smartly.

Against this scoring, the DOC assessed itself as level 3 for strategic management, governance and accountability and financial management, and level 2.6 for HR and systems management.

Discussion
Mr A Steyn (DA) asked, in relation to page 2 of the presentation, and page 23 of the Annual Report, how the R116 million in licensing fees fitted in.

Ms Seseke said that the figure on page 2 of the presentation, of R382 million, actually related to television stations, not radio stations, and apologised for the error in the document.

Ms J Killian (COPE) said that this was an unfortunate error as it brought the accuracy and veracity of the whole Annual Report into question. Of further concern was how such an error could have escaped the attention of senior management.

Mr Steyn asked for the time line for finalising the performance agreements noted on page 6.

Ms M Shinn (DA) also referred to these and sought clarity on who had signed performance agreements, asking if Ms Seseke herself had signed. She also wanted to know if disciplinary action was taken against anyone who had not signed a performance agreement.

Ms W Newhoudt-Druchen (ANC) asked who ensured that performance agreements were signed.

Ms Seseke responded that all employees who received a performance bonus had signed their performance agreement. In the following year there would be a report-back on failure to sign performance agreements, and there was a need to promote a culture of accountability.

The Chairperson asked directly whether Ms Seseke had signed her own agreement.

Ms Seseke responded that in the past year she had submitted her signed agreement, but the former Minister, who had been replaced in October, had not signed it.

Ms Stella
Ndabeni, Deputy Minister of Communications, clarified that the performance agreement would not be binding until both parties had signed.

Ms Shinn noted the current Minister was appointed last October, and asked why that performance agreement had still not been signed despite six months having passed to the end of that financial year, and a year since it was submitted.

Ms J Kilian (COPE) asked for clarity on the difference between a performance agreement and an employment contract.

Ms Ndabeni explained that there were two different contracts. The employment contract referred to the role to be exercised, and the performance agreement dealt with performance against targets. The Director-General’s performance agreement had been rectified.

Ms Kilian asked if the employment contract spoke to the performance agreement, and whether the validity of the employment contract was affected by the lack of a signed performance agreement. 

Ms Shinn said that in the last week’s meeting it was intimated that there was no performance agreement.

Ms Seseke clarified that it was the agreement for the 2012/13 year that had been signed. The previous year’s agreement was not signed.

The Deputy Minister then noted that in fact Ms Seseke did not have a performance agreement for 2011/12, as she had not signed it. She apologised to the Committee for the incorrect information.

Mr D Kekana (ANC) asked for an explanation for this confusion.

Ms Kilian emphasised that this was a grave transgression and said that the Executive had been exposed in misrepresenting facts to Parliament.

Ms Shinn suggested that the Committee must deliberate on the matter and would advise on a course of action.

Ms R Morutoa (ANC) noted that it was exceedingly serious for the Director General not to sign her own performance agreement since she had to evaluate others.

Mr G Schneemann (ANC) agreed with other Members that this was a very serious matter and noted also that the rules of Parliament had to be borne in mind. He asked the Deputy Minister to convey the matter to the Minister, who must personally appear to advise the Committee what action would be taken.

The Chairperson also stated that anyone who was economical with the truth in front of a Parliamentary committee would face disciplinary action. He would also be contacting Parliamentary Legal Services in relation to the matter.

Mr Steyn questioned page 8 of the presentation, and noted that some reservations had been expressed about tabling a report. Whilst he was not calling for names, he did feel that the Committee had to be told of the targets that were mentioned in performance agreements, and to what extent they had been met, to determine whether the payment of a bonus was justified.

Mr Kekana wanted to know how the performance bonuses were calculated.

Ms Shinn asked how it was possible that 158 employees out of 309 received performance bonuses, despite the fact that DOC had not met half of its targets.

Ms Kilian made a similar point, and noted that page 190 of the Annual Report stated that bonuses would be paid out on the basis that standards were exceeded. In this case, they were not even met.

Mr Sam Vilakazi, Deputy Director-General: Administration, DOC, said that bonuses were paid to 158 employees, but the majority were not at senior management level, but in support functions. The performance review board considered individual targets and it was on the basis of that determination that bonuses were paid out.

Mr Steyn questioned whether DOC was actually performing oversight of the SOEs, particularly given the newness of this oversight branch.

Mr Steyn said that quarterly reports had been analysed against expenditure, on page 11 of the report, but there was no account taken of whether the targets were being reached. He suggested that expenditure and targets must be analysed together. He also believed that somebody must manage the particular targets. He questioned who was checking implementation of targets by provinces and municipalities, and asked if that person should be from the DOC, or from some other entity.

Ms Ndabeni responded that in fact expenditure was aligned to targets. The budget was based on targets. However, it could be improved still further during the following year.

Mr Kekana noted that a fuller picture was required around monitoring and evaluation. He pointed out that some individuals who were under-performing were affecting the whole organisation.

Mr Schneemann also expressed his concerns over SOE oversight and asked when it was put in place. It appeared that the Director General had signed off on the structure during this year but had not appointed anyone to the post. He asked specifically what work had been done, and what had been accomplished.

The Chairperson asked who exactly was in charge at the SOE oversight branch. He pointed out that SABC had problems and that brought into question what this oversight branch was doing. He noted also the need to increase the functioning of the Monitoring Task Teams (MTTs), as this had also been a problematic area.

The Deputy Minister said that there were some challenges around capacitating the SOE Oversight unit, and clear objectives were not yet in place.

Mr Vilakazi confirmed that the SOE oversight had been elevated to its own branch, but in this year the number of staff delegated to this function had increased. The ICT hub weakness was identified, and joint task teams had been assigned to deal with this, starting in the Free State. DOC was taking the lead to ensure delivery happened at the SOEs.

Mr Schneemann referred to pages 10 and 11 of the report and made the point that, despite appointment of a Deputy Director General, the branch had done limited work. He urged that a clear and frank report be presented on what was actually being done. The impression created from the presentation was that significant work was being done, but this was clearly not so, and it was of concern.

The Chairperson agreed saying that there was a distinction between merely having “warm bodies” in the posts and achieving their work. He commented that it was unfortunate that this Committee constantly needed to probe to get to the realities, as it created an atmosphere of distrust with the DOC.

Mr Schneemann said that the presentation by the AG had painted a gloomy picture. In particular, he noted the regression of financial controls. He said that if proper oversight was being conducted there should be a vast improvement this year in enhancing internal controls.

Ms Kilian said that there seemed to have been some serious problems with the internal audit unit and asked if this had now been remedied, or if the same problems were likely to recur in the next financial year.

Ms Morutoa believed that exactly the same questions on irregular expenditure would no doubt be raised again in the following year. She suggested that the whole internal audit unit should be asked to appear before the Committee and state exactly what actions were being taken to correct these issues. She insisted on explanations on the irregular expenditure.

The Deputy Minister conceded, in relation to the irregular expenditure listed on page 3 of the presentation, that the correct processes were not followed, and said that compliance across the whole of government needed to be strengthened.

Ms Seseke observed that, even with the most competent audit committee, there was a problem of repeat findings. DOC had an action plan to address critical areas of implementation, such as the payment of service providers, procurement processes, and the clean audit process that the Minister had started. Integrated strategic processes were aligned to the recent National Treasury framework, had been approved, and were being implemented.

Mr Vilikazi added that in relation to the irregular expenditure, there was an ongoing internal investigation into expenditure controls. Of the R115 million of wasteful and fruitless expenditure, DOC itself had identified R95 million and reported it to the AG. Internal controls had been improving since this investigation. It was very clear where irregular expenditure was due to negligence by officials, and in these cases disciplinary action would be followed. He noted that the four officials charged were subjected to a lengthy legal process.

Ms Kilian pointed to the expenditure report on page 11 of the presentation, and asked that rollout of expenditure be conducted in the second and third quarters, and not left until the fourth quarter.

The Deputy Minister agreed perhaps too short a time was allowed for the expenditure.

Ms Seseke agreed with suggestions that the expenditure should rather be done in the second and third quarter, since there should be focus on making future plans in the fourth quarter. However, in this year there was not sufficient time to create new action plans in the first quarter as well as begin the spending, and that was the reason for the delays in expenditure.

Mr Steyn noted that, despite everything negative that had come from the AG’s report, the MPAT scores on page 14 were indicating that DOC was compliant. He said the scores had to be revised, as DOC was

Mr Farhad Osman, Chief Director: Strategic Planning and Monitoring, DOC, said that the MPAT scores were a true reflection of the DOC, from what was in the Annual Report. Something not mentioned today was that the MPAT also included various sub-areas of performance, with scores and rating that were then averaged out in the scores mentioned on page 14 of the presentation. He noted that action plans related to each sub-level of performance and that was where the performance actually needed to be examined.

The Chairperson noted that R95 million had been paid to HR consultants, yet there were still many vacancies, and asked for a report. He also pointed out that this was an issue that had dated back to 2009/10, and this spoke volumes about the attitude of the DOC, as well as raising questions around its capacity. He wondered also how this linked to the SOE branch.

The Chairperson noted Members’ concerns that a DOC official had confronted a Member, outside of the meeting, about a matter discussed in the House. He asked that protocol be observed and suggested that perhaps the officials needed to be informed of the rules, so that the relationship between the Committee and DOC could be better managed.

Independent Communications Authority of South Africa (ICASA) Annual Report 2011/12
The Chairperson noted the presence of the Deputy Minister for the ICASA briefing.

Dr Stephen Mncube, Chairperson, ICASA, briefly introduced the vision, mission statement and value of ICASA (see slides 5 and 6). He noted that ICASA had focused on implementation of its eight strategic output-oriented goals (SOOGs), as set out on slides 8 and 9. These related to transformation of the ICT sector, ensuring the provision of broadband services, and optimising the use of the radio frequency and numbering resource to support the widest variety of services. ICASA also aimed to promote the protection of consumers and accessibility for persons with disabilities, as well as promote the development of public, community and commercial broadcasting services in the context of digital migration. It would ensure compliance with legislation, constantly strengthen and modernise ICASA and promote competition in the sector.

ICASA’s core programmes were described as Governance and Administration, Licensing and Compliance, Engineering and Technology, Markets and Competition, and Consumer Affairs.

He noted that the AG had found that only 32 of the planned targets were achieved during the year under review, which meant that 56% of total planned targets were not achieved. Under spending of the budget had been seen in the divisions of Markets and Competition, Engineering and Technology, and Consumer Affairs. These divisions were later reprioritised. ICASA was attempting to attain a clean audit by 2014, and felt it was about 66% along this pathway.

The Chairperson commented that there was a crisis in leadership with Monitoring Task Teams, as identified by the AG and the National Treasury, and this was sliding into a crisis in governance which had carried over from the past year. He asked that the presentation should focus on problem areas raised by the AG.

Mr Themba Dlamini, Chief Executive Officer, ICASA, proceeded with the presentation, which related to the core programmes, and read verbatim through slides 14 to 20, dealing with licensing and compliance requirements, slides 21 to 27 on engineering and technology, slides 28 to 30 on markets and competition, and slides 31 to 34 on consumer affairs. He also read verbatim slides 35 and 36, which related to human resources and IT

The meeting was adjourned for a lunch-break and only resumed after a special joint sitting of Parliament to honour South Africa’s Para-Olympians.

On resumption, Ms Clarinda Simpson, Chief Financial Officer, ICASA, noted that, for the third year in a row, ICASA had received a qualified audit report. This mainly related to the National Revenue Fund (NRF) payables and receivables. The AG was unable to confirm the valuation, existence and completeness of the NRF debtors and related NRF creditors. A Finance Turnaround Plan (FTP) was developed and implemented in February 2012 to address audit related issues. This also was looking to the corrective measures needed to address the shortcomings in Administered Revenue that had been identified internally.

Ms Simpson said that the audit team had been unable to independently recalculate the correct value paid and owed by the licencees, due to the subjectivity of the General License Fee Regulations. As a corrective measure, the Regulations had been amended to provide for calculation of the fee on the turnover generated from licensed activities instead of on gross profit. These had been tabled at the ICASA Council for approval and would be published for comment. They were expected to come into effect by 1 April 2013, ensuring accuracy and completeness of license fees collected.

Ms Simpson said that there was incomplete submission of financial statements by the licensees, which had also made it impossible for the AG to confirm the completeness of revenue. As a corrective measure, this had been left to the License and Compliance Division, who must henceforth enforce compliance in regard to the submission of annual financial statements by the licensees. Action had already been taken by this Division sending out letters to respective licensees, requesting their compliance on the outstanding annual statements.

Ms Simpson said ICASA had a lot of incorrect data balances relating to the spectrum management system. There was no interface between spectrum and the JDE accounting reporting system. ICASA had appointed a service provider to assist with the development of a programme to enable the uploading of data manually, on a monthly basis. As a long term solution, ICASA had procured a system to manage spectrum and interface with JDE. 

Ms Simpson reported on the budget and expenditure. She noted that in this financial year, ICASA had received an 8% increase in the government grant, from R291 million to R315 million. However, the expenditure had also increased, due to staff costs that rose from R170 million in 2010/11 to R186 million in 2011/12. The NRF administered assets had decreased from R898 million in 2010/11 to R792 million in 2011/12. This was attributed to the increase in the repayment of ICASA’s debtors. There were disputes concerning the regulations giving rise to the license fees, and the Legal Department was dealing with these. The cash and cash equivalent had increased from R41 million in 2010/11 to R45 million in 2011/12. The cash on account not spent related to the provision for performance bonuses because, by the end of the financial year, no decision had been taken to pay bonuses. In terms of liability, trade and other payables decreased and ICASA’s total liability at the end of the financial year stood at R946.48 million. ICASA had received R313 million from the Department of Communications and R986 million as cash received by administered revenue. There was an increase in payments made, especially cash paid by administered revenue and cash paid to employees (see attached presentation for details).

Ms Simpson said that out of the actual R320 348 716 million received, ICASA had a surplus of R15 489 645 (before depreciation and amortisation) which was for accounting purposes.  and not backed up by cash.

Ms Simpson then presented several slides detailing the areas of non-compliance reported upon by the auditors, and noting the corrective action that had been taken, and the steps to prevent a recurrence in future. In relation to the material misstatements that were identified in the financial statements submitted on 31 May 2012, it was noted that these had to be adjusted before the audit could be finalised, and that ICASA had, amongst other matters, appointed a service provider to deal with finance data-related issues. In relation to the irregular, fruitless and wasteful expenditure, she explained that this related to R400 000 for the purchase of laptops, where there was not compliance with supply chain management procedures that required amounts above R200 000 to be approved. Some staff members not in supply chain management were contracting with suppliers directly. ICASA was in the process of updating the supply chain management policy to comply with the Treasury Regulations. Timelines were also listed for the corrective action (see attached presentation for full details).

Discussion
Mr Schneemann was concerned that this was the third year running that ICASA had received a qualified audit report, which was unacceptable, and an indicator that drastic action was required. He referred to the report of the Accounting Officer on page 70, which appeared to paint a rosy picture, but said that the realities were very different from what the AG had reported on pages 68, 69 and 70.

Mr Dlamini replied that one of the ways of addressing the severity of the qualified report was to get a condonation on prior years’ issues from the Minister, failing which further reports would be qualified. ICASA had requested the Minister to grant the condonation for the prior years.

Mr Schneemann said that, according to the Audit Report, ICASA had not achieved 56% of its performance targets and yet employees were getting performance bonuses. This was unacceptable, and he would even suggest that those receiving those bonuses should repay them. It must be remembered that ICASA under-performed.

Mr Ranti Mahlabana, General Manager: Human Resources, ICASA, replied that before the new Performance Management Policy had been approved on 20 September 2012, the 2003 Policy applied. This had actually bound ICASA in relation to performance bonuses, and a breach of this policy would have led to legal disputes.

Mr Mahlabana added that the increase in staff costs was related to negotiations with the Union and a decrease of funds from the Department of Communications.

Mr Schneemann wondered if the Annual Report had been checked because the set up of page 28 was confusing and paragraphs had been misplaced.

Mr Jubie Matlou, Senior Manager: Communications and International Relations, ICASA, said that the preparation and production of the Annual Report was a tedious exercise. However, the point had been well taken. ICASA was developing an internal policy around the handling of documents that would apply both internally and externally.

Mr Schneemann said that Annual Report did not disclose if ICASA was employing people with disabilities, and there was also no information on vacant positions. The report on pages 46 to 59 highlighted targets that had not been achieved. He said that ICASA needed to do some introspection. He recommended that the performance bonuses be brought to a halt.

Mr Mahlabana apologised for the omission of figures for employees with disabilities in the Annual Report, but stated that ICASA was not doing well on reaching targets in this regard, as it had only four disabled employees. A survey would be carried out to determine if there were other employees who had not declared their disabilities. In regard to the vacant positions, he said that ICASA required a total of 404 employees, but due to a re-alignment exercise, during which it would be determined which posts were really necessary, temporary staff had to be taken on. This had increased the staff cost. This position would continue until the re-alignment had been concluded.

Mr Schneemann asked if ICASA had attendance records.

Mr Dlamini replied that ICASA kept records of attendance for staff.

Mr Schneemann asked whether performance contracts had been signed.

Ms M Shinn (DA) commented that the management ethics at ICASA were poor, even displaying insubordination, as seen at page 67 of the Annual Report.

Ms Shinn referred to pages 94 and 96 of the Annual Report, and wanted to know which of the Management personnel had achieved their targets, so that they would warrant getting performance bonuses. She said that a salary increase, in an entity that was not performing, was unacceptable.

The Chairperson asked ICASA to provide details of the procedures followed in giving people bonuses and if it turned out that it was a ‘one fits all’ approach then the Committee would have to consider serious action. He agreed with other Members that when only 44% of targets had been achieved, no proper basis existed for giving performance bonuses to employees.

The Chairperson also commented that the organisational structure, on page 2 of the Annual Report, was not in accordance with section 14 of the ICASA Act, in relation to staff and their responsibilities, and in particular the roles of the Council and the Chief Executive Officer.

The Chairperson also asked why the performance contract for the Chief Executive Officer had not been signed. ICASA needed decisive leadership and this simply created a vacuum.

Mr Dlamini said that the contract for the CEO for the 2011/12 was signed. There was a delay in the signing of the 2012/13 contract, but the issues were currently under discussion and it would be signed on 19 October 2012. The performance contracts for the managers for the previous year had all been signed.

Ms Shinn referred to page 99, pointing out that there were penal sanctions imposed against ICASA. She was also concerned about the high amounts of fruitless, wasteful and irregular expenditure. She asked who was involved in this. She also noted, from page 34 of the Annual Report, that complaints were taking a long time to be resolved and wanted to know what actions were in place to fast track the process. The Committee had been informed that the Complaints and Compliance Committee of ICASA was composed of part time members, and it did not sit regularly, which explained the back-log of cases. A recommendation had been made for a full time structure.

Ms Simpson responded that during 2005 to 2007, the penal functions of ICASA were outsourced. An investigation had been carried out by SAPS, and penal sanctions were given for the underpayments made. In the 2010/11 financial year, tax deducted from employees had been paid into incorrect accounts.  The person responsible was no longer working with ICASA but a refund was being made. She added that ICASA would get all the relevant information in this regard, in a full report back to the Committee. Penal functions were currently handled in-house.

Mr Schneemann asked how much was spent on consumer outreach.

Mr Dlamini said that records were available for inspection, and issues arising from outreach programmes had been analysed. A strategy was developed on how to make improvements. This was not limited to consumer issues, but also to stakeholders.

Ms L van der Merwe (IFP) referred to page 31 of the Annual Report, which listed the 119 outreach programmes conducted. Page 38 referred to complaints, and this indicated that most of the complaints were received from the metropolitan areas of Gauteng, Western Cape and KwaZulu Natal. These two pages together showed that ICASA was still not accessible at the grass-root levels. For this reason, she wanted to have details of the nature of education programmes and initiatives that were put in place, during this year, particularly those that that would make those in rural areas, and those with disabilities aware of the mandate and policies of ICASA. She also asked if consumer alerts on wrongful billing and fraudulent billing were being broadcast on community radio stations.

Mr Phosa Mashangoane, General Manager: Consumer Affairs, ICASA, replied that 75% of the programmes by ICASA were based in rural areas. He added that a number of radio stations had been used to broadcast in rural areas. These included Motel FM (Free State), Eden FM (Western Cape), Radio Bushbuckridge (Mpumalanga), Ukhozi FM, Lotus FM, SA FM and Lingwalagwala FM (Mpumalanga). In relation to the print media, advertisements had been placed in the Sowetan, the Daily Sun and New Age.

Ms Shinn referred to page 46, and in particular Strategic Objective 1.3. She wondered how a recommendation could be made to the Minister on the basis of an incomplete report.

Mr Peter Grootes, General Manager: Markets and Competition, ICASA, responded that the deliverables differed and the recommendation made to the Minister under Strategic Objective 1.3 was achieved, explaining the recommendation.

Ms van der Merwe commented on the transgression of supply chain management policy, and said that it was not sufficient for ICASA to claim that it was dealing with the matter “in terms of HR management policy”. The Committee required details of what actions were to be taken against individuals.

Ms Simpson said that in cases where staff members not in the supply chain management carried out transactions, invoices would be collected and additional information collated. The Chief Financial Officer would then submit the information to the Executive Committee, which would then take appropriate action.

Ms van der Merwe referred to page 20 of the Annual Report and asked what was being done by ICASA to ensure that SABC complied with its license obligations, in terms of local content.

A representative from the Licensing and Compliance Unit of ICASA answered that the SABC’s non-compliance with license regulations had been taken up with SAPS. ICASA was also considering referring licensees who had breached their obligations to the Complaints and Compliance Committee.

Ms van der Merwe asked how much the 24 hour psychological counselling service was costing.

Mr Mahlabana said that the counselling services were costing ICASA R17 000 per month.

Ms van der Merwe asked how many times, in the financial year, the Council met.

Dr Mncube replied that the Council met every Tuesday and that there were minutes to prove this.

Mr A Steyn (DA) was concerned that there was nothing in the Audit Report to address the issue of accessibility. He also said that amending the General Licence Fee Regulations would not solve ICASA’s problem of book-keeping. It was unclear how much was supposed to be collected and how much had been collected.

Mr Dlamini replied that there would be a difference, because the new regulations would actually provide for the licence fees to be based upon turnover and not gross profit. The rationale for using gross profit was to cast the net wide open and capture other license operators, but unfortunately this mechanism that did not work. However, even the amendment would not address the qualification, until the Minister had condoned the prior years’ uncertainty.

Mr Steyn referred to page 32 of the Annual Report, which dealt with litigation. He wondered how judgement in this particular case could be given in favour of the applicant, noting that Replying Affidavits were not even filed. This indicated that the legal team was not doing its work properly.

Mr Dlamini noted the concern and undertook to raise it with the Legal Department.

Mr Steyn also referred to the case of ICASA v Alpha Power (Pty) Ltd, and questioned how the accounting officer could pay money to a service provider up front.

Ms Simpson said that this matter involving Alpha Power (Pty) Ltd had happened during the term of the previous Chief Financial Officer. The service provider was refunding the money in instalments for the defective generator.

Mr Steyn commented in general on the performance and noted his concern that ICASA had spent 96% of the budget yet achieved far less. This would affect the allocation of funds in the next financial year. He said that the very least that was expected from ICASA was an unqualified audit report.

The meeting was adjourned.


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