Military Veterans Department & Castle Control Board on their Annual Reports 2011/12

Meeting report

Castle of Good Hope: Castle Control Board (CCB) presentation
Major General Justice Nkonyane, Castle Control Board Chairperson, said the Board was governed by the Castle Management Act which had three strategic objectives: to preserve the military heritage of the Castle; optimise tourism potential; and to make the Castle accessible to the public.

The priorities for the year under review were: the delivery of the Castle as a heritage site; governance and oversight (review by KPMG of management processes; reconfiguration of the Board and training; strategic planning process; supply chain management policy); and sustainability (generation of revenue).

The operational management report addressed four areas: events; military museum; visitors; and maintenance and preservation. Progress was made on events, in line with programme three and four, to maximise tourism potential of the Castle and improve the public perception.

The Castle hosted high profile officials including the Speaker of the National Assembly from the People's Republic of China; South Africa's President (Mr Jacob Zuma); and the former Defence Minister (Ms Lindiwe Sisulu). Other events included the Cape Town Highlanders, exhibitions such as the World Press Photo Foundation, and three different parades.

The venue hire generated income to the Castle and this year R2.6 million was raised. There was an increase of 17% compared to the previous year. The operation of the Military Castle museum formed another important dimension. Exhibitions were done this year, and one of those was a Xhosa village for the Eastern Cape frontier war display. The visitor numbers had picked up - from 120 000 to 182 000 - leading to better revenue streams. This increase was attributable to schools.

Maintenance work, which largely constituted phase one of the work, had been undertaken in the Castle with initial focus on roof repairs. The work was done in conjunction with the Department of Public Works (DPW). Phase two of the work would begin soon.

The National Heritage Resources Act enhanced the strategic objectives of the Act as it detailed the promotion of the Castle as a place of learning, but also pointed to such objectives such as promoting reconciliation and nation building. CCB strived for the castle to be a centre of global significance.

The Board aimed to add value by continually improving its service. Partnerships and collaborative relationships with relevant stakeholders were maintained. The Board ensured that the Castle was aligned with communities. The Castle was opened to all community organisations. Whatever was planned had to reflect fiscal responsibility driven by such values as accountability, transparency and sustainability.

Gen Nkonyane said the Board wanted to ensure that it delivered the Castle as a heritage site, and that there was effective governance and oversight within. The former Minister of Defence had indicated that the Castle had to be self-sustainable and the management and maintenance of the Castle as a defence force property needed to be cardinal. The former Minister advised the Board to heed National Treasury reforms in asset management, but also to comply with legislation. The Board needed to ensure the image of the Castle maintained vigorous facilities and management plan. She encouraged the adoption of sound acquisition and procurement principles; a sound human resource development; and financial management. The Board strengthened its relationship with government but also strived to ensure there was stakeholder participation.

Gen Nkonyane indicated that the audit committee was in place and functioning at the Castle. The Castle got an unqualified report for the third consecutive year. The Auditor General pointed out that the annual performance report was not prepared as required. The Board agreed with this assessment, because previously when it prepared plans it did not align with the Public Finance Management Act (PFMA). This was not an issue with the previous AG requirements.

Since then reports were prepared and submitted, together with the performance and strategic plans, to Treasury. These would be reflected in the next reporting period. Quarterly reports had now been submitted as required; in 2012/13 the Board was in line to complying with the PFMA. As indicated by the AG, the audit committee was not appointed during the period under review, but that had since been corrected and the committee was functioning.

Accumulation of surplus funds without the approval from Treasury was in contravention of the PFMA. There had been an interaction with Treasury in addressing surplus funds, but also this was reported to the Minister. That process was stalled by changes that occurred in the Ministry. The Board was determined to engage further with Treasury in trying to get authority to utilise the surplus funds that amounted to R11.2 million.

The AG indicated that goods and services with a transaction value below R500 000 were procured without obtaining the required price quotations. It was also pointed out that contracts were awarded to non-deserving bidders. These transactions were as a result of poor planning, and urgent activities that required attention. The Board had developed a supply chain management policy intended to address issues of procurement.

The Board was also found to not have complied with expenditure. It was discovered that the accounting officer did not take the necessary steps to prevent irregular expenditure as required by law. This would be addressed by the Board's policy on supply chain management. Up to the point where the policy had been applicable there had not been an instance where a transaction could be deemed irregular.

It was discovered that financial statements were not prepared in all material respects in accordance with requirements of the PFMA. All the material statements had been addressed, and the Board hoped to move from the unqualified audit report to a clean audit.

The AG also found that the accounting officer did not ensure effective and efficient internal controls as required. The AG indicated that oversight was not exercised regarding finance reporting in compliance with laws and regulations. And that the supply chain management principles were not implemented as required by legislation and Treasury guidelines.

These were the responsibilities of the Board, and had all been addressed in the strategic plan and the processes that had been developed to ensure information submitted were credible. The Board was now monitoring effectively, and sub-committees within had been established.

Discussion
The Chairperson sought clarity on which department, between Arts and Culture and the Defence Force, should have custodianship of the Castle. He noted the confusion around the Castle being a cultural heritage site and Defence property; the Department of Arts and Culture (DAC) claimed the Castle was within its jurisdiction. DAC even claimed that if the Castle was a Defence Force property, then Robben Island Museum should belong to the Department of Correctional Services (DCS). The Board could indicate if it was not in a position to answer the question.

Gen Nkonyane replied that some of the questions did not fall under the mandate of the CCB. The reason the presentation focused on legislative framework was precisely to counter such questions. CCB operations were guided by legislation. He said the reason for the Castle custodianship could best be answered by Parliament and Government. At a certain stage there was a bill that was supposed to transfer the Castle from Defence to Arts and Culture. But the Portfolio Committee on Defence took a decision to withdraw the Bill, and that the Castle needed to reside within the Department of Defence (DoD). He said it was up to the Committee to review its decision.

The Chairperson requested that programme three of the strategic objectives - maximising the potential of the Castle as a tourist attraction site - be related to the responsibilities of Defence Force as a department. These questions were always asked.

The Chairperson wanted to know the kind of events that the Castle hosted, and if there was a criteria used in determining who could use the Castle.

Gen Nkonyane replied the KPMG report addressed the issue of criteria to be used on the kind of events the Castle could host. It said the Board had to ensure the dignity and the image of the Castle at all times. CCB would therefore not want events that would compromise the Defence Force. Political events could not be promoted and hosted by the Castle. The Act specified that the events needed to foster and promote those cultural activities that would positively influence SA communities.

Mr E Mlambo (ANC) commented that his belief was that the Castle should be administered by DAC. He wanted to know why was the Western Cape Provincial Legislature (WCPL) represented on the Board. What kind of a role did the person play?

Gen Nkonyane replied that the issue of the representative from the WCPL was prescribed by the Act, and those who drafted it could answer the question.

Mr Mlambo asked if the Castle attracted foreign visitors especially that the presentation noted an increase in the number of people visiting the Castle.

Captain Francois Morkel, Castle Manager, replied the Castle had a good year when it came to school visits. Although the Western Cape booked most of the visits; provinces like the Eastern Cape and the Free State followed it, but also schools from the United States and Ukraine were hosted. The Castle hosted the launch of the stamp celebrating the 75^th anniversary of the Post Office. And it hosted events such as weddings - mostly Muslim - mainly for photographs.

Mr S Essau (DA) raised a concern about the Annual Report, especially that on page 8 it indicated that the DoD, provided technical guidance throughout the development of the CCB strategic and performance plans for the year under review. For the year under review in all the presentations, and all the notes, there was no such thing, and the AG expressed no opinion on the matter.

Mr Essau commented the Annual Report did not reflect the investigations by the AG. The financial report was done on statements that were corrected because the CCB did not follow the proper procedures. He questioned the issue of the report being declared unqualified. The fundamentals of the National Treasury, the PFMA and the legislation were not met. This was very serious; although corrective measures were being taken, this should be a disclaimer.

Gen Nkonyane replied he could not speak on behalf of the AG on issues of validity of the report. The AG could make a determination on whether the report was credible or not. The Board was focussed on all the areas that the AG had raised as matters of emphasis.

Mr Essau wanted to know if the vice-chair played his role and the necessary duties that were supposed to be performed such as looking at the financial statements. He was interested in finding out more information on an executive director who stayed at his job for only three months. He also sought clarity on the duties of the executive director whose duties overlapped with the Castle Manager. Who set up these duties; who wrote the job description; why this conflation of duties?

Gen Nkonyane replied that the vice chair had just been appointed. There were problems with some stakeholders in the past, especially those required by the Act to deploy members to the Board. At one stage CCB operated at almost 60%. The Board was now full operational. The challenge of getting stakeholders to appoint representatives was outside the capacity of the Board.

He said the functions of the vice-chairperson had not been defined. The Board was in the process of finalising that, as per the recommendation in the KPMG report. CCB had made significant strides in ensuring that the board functioned well and accomplished its duties. There were challenges in meeting all the governance issues, but it was working on that.

Mr Essau wanted to know details about the position of Chief Executive Officer (CEO) that was to be advertised with the help of an outside company. This was done despite the Board functioning directly under DoD that had a fully fitted human resource unit that attended to all HR related issues at no cost. There were too many CEOs and that it could have been an easy exercise to find one. He queried if it was not supposed to be the job of the Board to find a new CEO.

Mr Essau wanted to know whether there were no annual performance plans (APPs), or strategic plans in the years preceding the period under review. It would have been easy if there was a template to copy to provide all the plans and ensure a clean audit opinion. He was not happy with those matters.

Gen Nkonyane replied there were strategic and annual plans but they were not prepared according to Treasury guidelines. Reports were being prepared on a quarterly basis and submitted to the Board; the issue was compliance with guidelines. It was only when interaction happened with DoD on the matter of strategic plans. The issue with the previous strategic plan was that the deliverables were not measurable according to Treasury. He said the current plan was the same as the old, but had been reconfigured to satisfy the requirements by Treasury.

Mr Essau commented that although there was only one irregular instance around procurement highlighted in the report, there were other cases in other years. He said he doubted the corrective measures the Board was promising, as there could have already been corrections last year.

Mr Essau queried the performance of the accounting authority, relating to finances, given that there was no Chief Financial Officer (CFO) last year at the Board. He pointed out that the information on the audit report contradicted that which was in the Annual Report. The only time when there was compliance was when the audit committee was in place. The Board had operated without an audit committee, such an important component for governance of any institution. During the period when there was no audit committee there was no compliance; why was that allowed to happen for such a long time. It was the responsibility of the board to ensure the audit committee was in place.

Mr Essau sought clarity on the surplus, especially that in the previous year a surplus was accumulated. Treasury required a formal letter to be submitted as a matter of formality. He asked why was this not built into the regulations that the Board needed to execute on time.

Mr Essau noted the increase in fees paid to consultants and wanted to know the kind of work KPMG was doing for the Board. The Committee would like a report on what KPMG did, and the impact of that on the role of organising the functions at the Castle. He said KPMG carried out work also on behalf of the AG, and wanted to know why KPMG was mentioned in the report, as the tradition had been not to name companies that conducted external audits on behalf of the AG.

Gen Nkonyane replied the Board was busy with the KPMG review report. A plan had been drawn in addressing some of the issue indicated that they would enhance CCB's operational capacity.

Ms N Mabedla (ANC) commented that the sight of the old South African flag flying next to the new flag during the budget vote disturbed her. She said the old flag needed to be stored somewhere in the museum together with other artefacts that related to that era. That flag ought to be in the museum and not fly high with the South African flag. It should not be that after so many years the flag was still seen.

Gen Nkonyane replied that the Chief of the National Defence Force had raised the issue of the old flag, and it was indicated to him that most flags hoisted at the Castle reflected regimes in history during which the Castle functioned. There was an instruction; and a decision was taken that there should be only one flag outside, all others had to be taken to a museum. He would check what had happened to the instruction he gave to management.

Ms Mabedla asked what systems were there at the Castle to attract more school children. She asked if there was a social investment plan to fund students by way of bursaries, in an attempt to get them to work at the Castle.

Gen Nkonyane replied that the Castle had a website and it accepted visitors from foreign countries. CCB operated on a shoestring budget and it had to generate own revenue for its sustenance. The Board was looking to come up with an aggressive strategic plan and also appoint an executive director. The Board did not want to be consumed in management issues. There would be gaps, but the intention was to make the Castle a financially viable entity.

He said much focus had been around Cape Town and her surroundings. A plan had been developed to attract schools from all over. The history of the Castle was something that had to be shared. Bursaries was something to ponder but there was limited funding. There were plans, but with too many financial constraints.

Ms Mabedla commented that the Board deliberately left out the graph on organisational structure and human resources. The Committee was interested in the organisational structure. It wanted to see if transformation was happening or not. She sought clarity on why the nine contract workers were not made permanent. She noted that the gender balance was bad; this was not the first time the Committee had dealt with this. Why had not there been a change?

Gen Nkonyane replied that the Board had to be cautious with vacancies due to financial constraints. Activities at the Castle were seasonal and that necessitated a situation where contract employees would be relied upon. Of course there were capabilities the Board would like to have so that it could sustain any kind of operations, but the option of contract workers was viable.

Ms Mabedla voiced her displeasure at the answer, especially since the Budget Vote was in May. There had to be a follow-up and steps taken about the person who failed to remove the flag when an instruction had been given. CCB needed to do a follow up and update the Committee in writing on what had been done with the old flag.

The Chairperson commented that he too was not satisfied with the answer that the General had given an instruction but he was not sure if it was complied with.

Ms Mabedla asked why there was an under-spending of R897 million. What was the reason for that?

Mr L Mphahlele (PAC) pointed that the report made a reference to an occasion of the Khoisan; he wanted to know what occasion was that. He asked would it not be prudent to have a representative of Khoisan descent on the Board, especially since the Castle was built because of Khoisan resistance.

The Chairperson said as much as he would not like to answer for the Board, but the question of having a Khoisan representative was beyond the Board's mandate. That would have to be written somewhere as a policy so that when Board members were nominated, a specific nomination for a person of Khoisan descent would be made.

The Chairperson wanted to know if the Castle received any funding from government. He asked how was the self generated revenue handled, and if any of it went to Treasury. Why should it be given to Treasury if the Castle received nothing from government?

Ms H Mgabadeli commented that the Castle needed to be marketed, as very little was known about the Castle. The perception was that this was a Western Cape asset; the Castle needed to be nationalised.

Mr A Maziya (ANC) proposed that the Committee visit the Castle, where all the outstanding questions could be answered.

The Chairperson agreed.

Department of Military Veterans (DMV) presentation
Mr Tsepe Motumi, DMV Director General said R45.4 million was appropriated for the Department, but that was adjusted to R36.5 million. He said R7.6 million of that amount was under-spent. The organisational structure comprised of 169 posts at a cost of R63.3 million. There was slow progress in filling the vacant posts and that impacted on service delivery.

DMV provided financial assistance to Military Veterans and their dependents for education. A portion of money was set aside for this purpose, and had been earmarked as well in the current financial year. On Outcome 2: Long and happy life for all, about 2500 accessed health care and had been uploaded on the SA Military Health Services health system. The number was increasing. DMV collaborated with DoD, specifically the SA Military Health Services, and provided access at all military health facilities.

Mr Motumi said DMV was engaged with government departments - specifically Social Development (DSD), Water Affairs (DWA) and Environmental Affairs (DEA) - to source employment opportunities for military veterans. In the period under review, 87 military veterans had been employed through the DSD, and its agencies.

He said it was important to highlight the 11 executive authority priorities such as the provision of immediate social relief to the most vulnerable of the military veterans. The priorities were finalised and promulgated late in the financial year. This was given in February 2012, and DMV started with the roll out only last month. Each priority was noted and achievements for 2011/12 described. Linked to that was the database clean up exercise. The Department was party to the inter-departmental project that unveiled a heritage site in Kampala, Uganda; and also in Mozambique.

Mr Motumi said DMV had engaged DoD, with a view to revive the Centre for Advanced Training (CATS). The vision was for the Centre to provide technical skills to military veterans. In previous years that facility was used to provide training to military veterans as service corps. Empowerment programmes were not going as planned but a process had been initiated to assist military veterans to set up cooperatives.

In accordance with the Act, DMV was in the process of establishing the two national structures required - the Advisory Board and the Military Veterans Appeals Board. The Department also looked to regularise Section 7 of the Act so as to be in compliance with it. DMV had been unable to fulfil the priority for deepening the skills base of the military veterans, but that was being looked at and hopefully would be finalised during this financial year.

He said DMV did not own any immovable assets as the Department currently shared offices with Denel. The Department was hoping to have its own building and facilities. That process was ongoing, and the Department had hoped by now to have its own building where it would set up its Information Technology (IT) infrastructure. Movable assets and equipment - furniture, vehicles, kitchen and office equipment - had been included in the DoD asset register. DMV would conclude its supply chain processes during this year. The idea was to capacitate DMV, and to that end critical posts were filled during this financial year.

The Department had an internal audit directorate although it was not fully staffed; but DMV belonged to a shared audit committee with DoD. Regulations had been developed although not promulgated. The database and benefits management was an ongoing project. The Department had embarked on a campaign to drive the benefits and database update late last year. The database was open and ongoing, as there were those that had to be captured on a continual basis.

Mr Motumi said provincial offices had not yet been established as they appeared in the organisational structure. The recruitment drive was continuing and DMV tried to fill the posts that were there, especially in trying to meet the objectives of the year.

Discussion
The Chairperson asked whether the heritage sites included graves of South Africans. Some countries claimed those graves as part of their own heritage, and therefore refused exhumation. Those South Africans were held in high regard in those villages; they were regarded as heroes to the extent that the villages looked after those graves. He asked how such scenarios, of having to exhume the remains of South Africans against the will of communities where they fell, were handled.

Mr Motumi replied it was difficult to strike a balance between family interests and those of the countries that buried those South Africans. Grave restoration was also done on the understanding that there would never be exhumation, repatriation and reburial. This was particularly the reason the Government of Uganda took the steps it did; this applied to other countries like Tanzania and Angola. Engagements were happening on such matters.

The Chairperson sought clarity on provincial offices, and the kind of format those would take.

Mr Mlambo commented that decentralisation of offices need not end with provinces but rather with regions. A lot of military veterans would be passed by if the administering process was only carried out at provincial level. He said there was a rumour, since the registration of military veterans started, that Namibians who used to belong to Koevoet also registered, because they still had force numbers. How true was that? He asked if an indication could be given as to whether the capturing process managed to pick up such instances.

The Chairperson wanted to know how those who had slipped through into the register were dealt with.

Mr Motumi replied there was provision for provincial offices in the structure of the Department, but they were not currently in place. DMV was busy with the appointment of provincial coordinators. In terms of access, a provision was made in the next financial year that once provincial offices were established, then regional offices would also be established. The issue of format would be addressed as the process went along. One model was that the offices would be attached to the provincial government, but such discussions had not been concluded.

Mr Motumi replied that the Department had not registered any foreigners; registration was based on the South African Identity book as issued by the Department of Home Affairs. If it so happened that foreigners were in possession of an ID, that was the most difficult part for DMV. The database was a concern, hence the two campaigns that the Department had engaged on.

Ms Mgabadeli said the Committee was informed that DMV was visible in the Eastern Cape and the Western Cape. She requested that for the next period of reporting, DMV include specific details of its programmes and that they be broken down per province. This kind of information would assist the Committee with its oversight work.

Ms Nonkonzo Molai, Deputy Director General, Empowerment and Stakeholder Management, DMV, replied that breakdown of statistics would be provided in writing. The information was there and there was a spread throughout the provinces.

The Chairperson commented that people always asked Members about the things that government was doing. Members needed to be able to explain to people lest they be declared useless.

Mr Essau sought clarity on the 10 000 military veterans that deserved to receive benefits as per the Annual Report. He asked what criteria was used for these. Also on page 83, it made reference to regulations that were approved. Where were those regulations as they were never submitted to Parliament?

Mr Essau commented that under expenditure was a problem for the Department. DMV needed every cent of its money to make it work effectively. He also sought clarity on the differing figures for vacancies that were given in the same report.

Mr Motumi replied that reconciliation of numbers would be done. He pointed out that staff at DMV included not only the permanently appointed members but also seconded people.

Mr Essau sought clarity on the 2 500 number that was bandied about and said this was too low a number given the number of military veterans that were there. He commented that heritage and memorialisation appeared to be done only for former Umkhonto we Sizwe (MK) cadres. When would the plan that had been communicated start to accommodate all other liberation movements that made their contribution? What was this plan about?

Mr D Maynier (DA) said he was concerned about the Department allocating benefits to military veterans and their dependants in the absence of regulations. The Committee needed to get an indication as to when those regulations would be submitted to Parliament for consideration. It seemed that the Department had to verify three things prior to benefits being awarded. The first one being whether the benefactor was a de facto military veteran. Secondly, was that military veteran eligible? That was still an area of contention, as regulations had not been signed off by Parliament. Thirdly, were the benefits equitably distributed among the military organisations that military veterans belonged to? What mechanism had DMV put in place to ensure that benefits were equitable distributed? He asked for a breakdown of the 87 jobs, per military organisation, that the military veterans got allocated through DSD agencies.

Mr Motumi replied that regulations had been taken to the Minister and were awaiting approval. As soon as that happened those regulations would be taken to Parliament. DMV was anxious that Parliament proceeded and signed off the regulations so as to cover the legislative requirements.

Mr Motumi added that the Department distributed equitably. The 87 jobs for DSD were decided based on the information that was there in the database and not the military organisation one belonged to. The requirement as per the specifications of those jobs was a matric certificate, but the Department could go back and profile which association those members belonged to. The most satisfying aspect was that those employed were indeed military veterans.

Ms Mabel Rantla, DDG, Socio Economic Support Services, DMV, replied that the Department looked to distribute benefits to the most needy military veterans. The Department could not do a blanket approach. Much focus was on those who did not access salaries during the liberation struggle, as those would be the most destitute. This was an important place to start in terms of distributing socio economic support services.

Mr Maynier commented that DMV allocated a large amount of resources to medal parades meant to honour former Umkhonto we Sizwe members. Two parades had already been done for the MK soldiers. He asked what these medal parades were and at what cost were they hosted.

Mr Motumi replied that the issue of parades did not fall within the reporting period, but undertook to reply in writing.

The Chairperson said there was no need to specify which organisations military veterans had belonged to as that would be an exhaustive process. There was no need to answer such questions as giving breakdowns of members per military organisation. This would cause problems; the army dealt with individuals.

Mr Maynier said the Department needed to respond because the equitable distribution of resources was vitally important. If the Department did not respond it would be perceived as though it was allocating benefits to certain military veterans. DMV should be given an opportunity to deny that, and furnish the Committee with real facts.

The Chairperson ruled him out of order, and said the roll call did not indicate the organisation a military veteran belonged to.

Ms Rantla replied that there was not any educational support provided to any military veteran or their dependants. But on health care, over 2000 military veterans were loaded onto the system for health care. In the year under review the target was to give 300 in addition to that number, and the Department had done a bit more.

Mr Maziya said the Military Veterans Act as amended, was not a new Act but had been in existence since 1982. Although the budget was a challenge, military veterans had always benefited without question. He said the suggestion by the Member would require that the list of beneficiaries be availed since 1982. The Act instructed the DG to establish a military veterans association that was inclusive of all organisations. Once the association was in place some of the questions would be done away with.

Mr Mphahlele requested that once questions were asked, the department be allowed to answer. He said it was true that some military veterans received favourable treatment. He cited an example of the Department assisting Azanian People's Liberation Army (APLA) with only buses and a hall for its 50-year celebrations, whilst it hired big stadiums for others. He commented that the role of the South African Military Veterans Association (SAMVA) be clarified.

Ms Molai replied that the Department had started with analysing the constitution of SAMVA to ensure that it was aligned with the intentions of the Act if it were to become an umbrella association. Secondly, military veterans could not enter into political debates which was in line with what the Act required.

The meeting was adjourned.