Department of Communications 2011/12 Annual Report

NCOP Public Enterprises and Communication

14 November 2012
Chairperson: Ms M Themba (ANC, Mpumalanga)
Share this page:

Meeting Summary

The Department of Communications briefed the Committee on the key achievements of the Department during the 2011/12 financial year.  The briefing included an overview of the flagship programmes of the Department (i.e. Broadband services, Digital Migration, e-Skills, rural connectivity, the Postbank and job creation) and the key achievements under each of the Department’s six programmes.  108 targets had been set for the year but only 69 (70%) were achieved.  Total revenue during 2011/12 amounted to R4.33 billion.  Total expenditure was R1.79 billion.  An amount of R2.54 billion was transferred to the National Treasury, including R211 million in unspent voted funds.  The under-spending occurred when the Department suspended the broadband and 911 emergency call centre projects.

Members found that the reasons given for the failure to achieve certain targets that had been set were inadequate and asked for more information.  Members asked for details of the contingency liability totaling R400.6 million for possible legal claims against the Department; the appointment of an external service provider to conduct a forensic investigation at a cost of R1.9 million and the out-of-court settlement payment to two officials implicated in irregular activities.

Other questions concerned the high vacancy rate and the length of time the positions had remained vacant; the reason for the regression in the performance of the State-owned entities noted by the Auditor-General; the poor performance of the Universal Access and Service Agency of South Africa and the South African Broadcasting Corporation; the status of the 2010 FIFA World Cup legacy projects; the progress made in the leadership development programme included in the Department’s turnaround strategy; Inter-Governmental Relations Forum meetings; the status of the e-Government services project; the status of the information centres at post offices and Government offices; the hacking of the South African Post Office IT system; the status of the SAPO Board; the recent resignation of the Telkom Chief Executive Officer; the Department’s strategy to improve stakeholder relationships; allegations concerning the prior interests in the Department of the person who was awarded a tender in Limpopo; rural connectivity and broadcasting coverage for rural areas.

The Committee requested the names of the officials who had not signed performance agreements and whether or not these officials had received bonuses.  The Committee requested detailed information on the schools and health centres in each province that would be provided with connectivity services; the areas in each province that had been earmarked for rural development projects and the benefits of ICT projects for women and the youth.  The information had to be provided within 14 days.

Members were not satisfied with the responses provided by the Department.  The Department was reminded of the need to provide the Committee with complete and accurate information.  The Committee would recall the Department to provide a more detailed briefing.

Meeting report

The Chairperson noted the apologies of the Minister.  Members of the Committee, the delegates from the Department of Communications and other attendees introduced themselves.

2011/12 Annual Report of the Department of Communications (DOC)
Ms Rosey Sekese, Director-General, DOC presented the briefing to the Committee (see attached document).

The briefing included a summary of the vision, mission and mandate of the Department.  The Department had identified 99 targets for the 2011/12 fiscal year, of which 70% were achieved.  Key challenges were delays in funding certain key projects as a result of budget cuts; legal challenges against the provision of community radio equipment by the incumbent service provider; a lack of skills capacity and human resources for the broadband and Digital Terrestrial Television (DTT) projects; delays in finalising the revised organisational structure of the DOC; delays in implementing the revised mandate of the Presidential National Commission (PNC) unit and a lack of resources to support the development of small, medium and micro enterprises (SMME’s) in the communications sector.

Information was provided on the Department’s six flagship programmes, i.e. broadband, broadcasting digital migration, e-Skills, rural connectivity, the Postbank and job creation.  Data on the impact of e-Skills projects in the provinces was provided.  Details were given of the achievements under each of the Department’s six programmes, i.e. ICT Policy Development (Programme 3); ICT Infrastructure Development (Programme 5), the Presidential National Commission (Programme 6); ICT International Affairs and Trade (Programme 2); ICT Enterprise Development (Programme 4) and Governance and Administration (Programme 1).

Mr Sam Vilakazi, Deputy Director-General: Administration, DOC presented the briefing on the financial performance of the Department during the 2011/12 financial year.  Total revenue was R4.33 billion.  Total expenditure was R1.79 billion.  The Department had transferred an amount of R2.54 billion to the National Treasury.  The amount transferred to the Treasury included R211 million in unspent voted funds.  The under-spending occurred because the Department had suspended the broadband and 911 emergency call centre projects pending a review of the policy framework.  The appropriation statement, the summary of economic classification and details of the transfer payments to the subordinate State-owned entities (SOE’s) were included in the briefing document.

The annexure attached to the briefing document (pages 58 to 111) provided detailed information on the targets, achievements, status and reasons for variances for each programme but this section was omitted from the verbal briefing because of insufficient time.

The Chairperson had interrupted the presentation by the Director-General to point out that the Select Committee required information on the activities of the Department in each province.

Mr Z Mlenzana (COPE, Eastern Cape) referred to the annexure attached to the briefing document.  The target concerning the development of a comprehensive report on the creative industry in South Africa had not been achieved because of a lack of human resource capacity and responsibility for the report was transferred to “an alternative branch” (see page 65).  More information on the delays and challenges experienced was required.  The target concerning the development of an e-Government services repository portal was not achieved but no reasons were provided (see page 80).  The target concerning the Information Society and Development (ISAD) Council was not achieved but the challenges experienced were not specified (see page 84).  The target concerning digital content for the National Digital Repository (NDR) was not achieved but the reasons for the ‘internal delays’ experienced were not provided (see page 85).  An ‘internal delay’ indicated that there were problems with the operations of the Department.

Referring to the 2011/12 Annual Report of the DOC, Mr Mlenzana asked for details of the contingent liabilities totaling R400.6 million for potential legal claims against the DOC (see page 172).  The Committee was generally concerned over the utilisation of external consultancy services (see page 198).  He asked why it had been necessary to appoint a consultant to undertake a forensic investigation at a cost of R1.9 million, what the outcome of the investigation had been and if the Department had adequate internal risk management processes in place.  The Auditor-General had found that senior managers had not signed performance agreements during the year (see page 102).  He wanted to know why the agreements were not signed and asked for a list of the officials concerned.  He asked if bonuses were paid to any of the officials who had failed to sign performance agreements.

Mr H Groenewald (DA, North West) observed that vacant posts had existed for inordinately lengthy periods.  Out of 100 posts, 30 were vacant.  Almost 40% of senior management posts were vacant.  He wanted to know what action had been taken by the Department to ensure that vacancies were filled with suitably qualified persons.  He noted that the Department had only achieved 69 of the 108 targets that had been set and that none of the subordinate entities had achieved more than 75% of the targets that had been set.  The performance of the Universal Service and Access Agency of South Africa (USAASA) and the South African Broadcasting Corporation (SABC) in particular were unsatisfactory.  The Auditor-General had reported that there had been a regression in the overall performance of the SOE’s reporting to the DOC.  He asked why the Department had allowed the regression.  He also wanted details of the possible legal claims against the Department.

Mr M Jacobs (ANC, Free State) asked the Department to provide detailed responses to Members’ questions.  He noted that the briefing had not included much information on the projects in the provinces (the Free State in particular).  He asked what the basis was for the selection of schools and health centres to be provided with connectivity services.  He asked which schools and health centres had been selected in each province.  He wanted to know what the status was of the legal challenge brought by e TV.  He asked for details of the 2010 FIFA World Cup legacy projects.  He asked what progress had been made in the projects that were funded by Telkom.  He asked if the DOC had a service delivery plan in place and for a copy would be made available to the Committee.  He asked how much funding had been made available to the DOC from the Rural Development Fund.  He asked for information on the allegation that a person with previous interests in the DOC had been awarded a tender for a contract in Limpopo province.

The Chairperson referred to table 11.7 on page 196 in the 2011/12 Annual Report.  Two persons were suspended for longer than 30 days.  She asked what the reasons for the suspensions were.  The average number of days on suspension was 2,778 and the total cost of suspensions was R3.7 million.  She asked how many personnel had been suspended, why the period of suspension was so long, why the cost of suspensions was so high and what action had been taken by the DOC to address the issue.  Leadership development interventions were listed in the turnaround strategy for the Department.  She asked if workshops had been held, what the outcomes of the workshops had been, how management skills gaps were identified and if management trainees were accommodated in the structure of the Department.  She asked if Inter-Governmental Relations Forum (IGRF) meetings had been held in all the provinces.  She asked for a list of all the projects in each of the provinces to be provided to the Committee, including information on skills development and the number of jobs that would be created.  She asked who had mandated a certain agency to provide services to Government and who had approved the subsequent closure of the agency.  She asked who was responsible for the monitoring of information centres in Post Offices and Government offices and what the current status of the centres was.  She asked what the situation was regarding the hacking of the South African Post Office (SAPO) information system.  She asked what the situation was concerning the SAPO Board.  She asked for details of the resignation of the Chief Executive Officer of Telkom.  She asked what progress had been made with the development of an integrated connectivity plan for health centres and schools.  The Committee needed to be kept informed of developments by the Department rather than hearing about problems from reports in the media.  She asked what the strategy and plans were to improve stakeholder relations.  She asked how the engagements with the private sector, other Government Departments and SOE’s were monitored.

Ms Sekese responded that the leadership development programme included in the turnaround strategy in 2006 had been successful.  She had been one of the officials who had attended an executive course at the University of Pretoria.  However the high turnover rate for senior officials was problematic and it was necessary to continue the programme and to send officials on refresher courses.  After discussion with the Minister, the decision was made to integrate the various training programmes offered by the e-Skills Institute, the National Electronic Media Institute of South Africa (NEMISA) and the Institute for Software and Satellite Applications (ISSA) under a single entity.  The reason for the high number of vacant posts was that it had taken longer than anticipated to finalise the revised organisational structure of the Department.  The Department would have incurred irregular expenditure if personnel were appointed to fill vacant posts in an organisational structure that had not been approved.  Information on the progress made by Sentech and Telkom with the 2010 FIFA World Cup legacy projects was included in the report that was issued on the programme.

Mr Farhad Osman, Chief Director: Strategic Planning and Monitoring referred the Committee to page 101 in the Annual Report where the Auditor-General reported that the DOC had achieved 69 out of the 108 targets that had been set.

Mr Mlenzana observed that the response from Mr Osman did not explain the reason for the poor performance.

Mr Groenewald wanted to know what the reasons were for the failure of the SOE’s to meet their targets and for the overall regression noted by the Auditor-General.

The Chairperson said that the Committee wished to assist the Department in improving its performance.  The Committee required comprehensive and pertinent responses to the questions asked by Members.

Ms Sekese explained that Mr Osman had limited his response to the achievement rate of the Department only.

Mr Vilakazi explained that the reason for the lack of performance by USAASA was the suspension of most of the senior executives following instances of fruitless and irregular expenditure.  The Minister had also dissolved the USAASA Board and appointed executive caretakers to address the problems at the Agency.  The executive caretakers had found that substantial losses had been incurred through fraudulent transactions.  The executive caretakers had immediately introduced measures to halt any further transactions.  A forensic investigation was commissioned.  The investigation had been completed and the Department was currently engaged in considering the report on the matter.  USAASA had only achieved 9% of the targets that had been set.  The Department had experienced major problems with some of the other SOE’s where the Chief Executive Officer (CEO) and other senior positions were vacant.  Minister Pule had prioritised the filling of vacant senior executive positions after her appointment in October 2011.  The vacant CEO and CFO positions at the SABC had been filled.  A Chief Operations Officer (COO) was appointed at the SABC but the appointment had been challenged.  At SAPO, one person had acted as both CEO and CFO, in contravention of good governance principles.  An Acting CEO was appointed and the process to recruit a new CEO was started.  The main reason for the lack of performance and the overall regression was a lack of leadership.

The legal contingency provision was made up of Court cases where service providers claimed compensation from the Department.  The largest amount (R375.5 million) concerned the matter between the SABC and the Public Investment Corporation (PIC).  The matter had originated prior to 1994.  The Department would be liable for the settlement of the claim brought by PIC if the Court case was lost.

The Auditor-General had issued findings of irregular expenditure at the DOC since 2006.  A consultant was appointed at a cost of R1.9 million to conduct a forensic investigation into irregular expenditure. It was found that proper procurement processes were not followed in the appointment of service providers (two travel agencies).  The Department had derived some benefit from the transactions.  The recommendation in the forensic audit report was that it would not be beneficial to attempt to recover the funds from the two officials implicated in the irregular transactions as the cost of the legal action would exceed the amount involved.  The implicated officials had subsequently left the Department.  The investigation had resulted in uncovering items of irregular expenditure to the value of R95 million and had allowed the Department to put effective counter-measures in place.  The Chief Director: Finance and the Deputy Director-General: Governance and Administration were implicated in certain instances of irregular expenditure and were suspended.  The lengthy period of suspension was caused by a lack of cooperation from the officials concerned.

Mr M Sibande (ANC, Mpumalanga) understood that the response from Mr Vilakazi referred to the finding of the Auditor-General concerning the irregular expenditure of R95 million incurred in the prior year but only declared in the 2011/12 financial year (see page 103 of the Annual Report).  He asked if the out-of-court settlement referred to in the report of the Director-General referred to the same matter (see page 99).  He asked what the amount involved was.  He was concerned that the officials concerned would be allowed to apply for positions at other Government Departments because no criminal action had been taken against them.

Mr Themba Phiri, Deputy Director-General: ICT Policy, DOC explained that the Department of Public Service and Administration was responsible for the e-Government project.  It had been necessary to review the 2001 policy framework for the project as it was outdated.  Once the new policy framework was in place, the DOC would provide support for the project.  A previous Minister of Communications had a different approach towards the international advisory panel of experts.  The current policy for the ISAD Council was based on broadband.  The advisory panel assisted with benchmarking.  The NDR portal was initiated in 2006 with the intention to gather a cultural history in digital format.  An evaluation of the project had found that few trainees were interested in developing content.  Most of the trainees were young people from the rural areas.  The project was transferred to NEMISA and was proceeding well, albeit on a small scale.  The Department’s rural connectivity strategy was aligned with the rural development strategy of the Department of Rural Development and Land Affairs.  61 rural nodes across the country had been earmarked for development.  USAASA, SAPO, SABC and Sentech were involved in the rural connectivity programme.  Projects had been put out to tender.  He was not aware of any irregularities or particular interest by the party that had been awarded the tender in Limpopo.

Mr Jacobs wanted to know where the areas earmarked for development were situated.

The Chairperson asked that the information was provided to the Committee within 14 days.  Members of the Committee would visit the sites during oversight visits.

Mr Phiri agreed to provide the details.  The IGRF had met in the Western Cape in 2011.  The next meeting of the forum would be held in the Free State.  The Minister would be visiting the other provinces as well.  The e-Skills Council was established to develop a framework for e-skills.  Models in the United Kingdom and Australia were considered.  Dr Harold Wesso was responsible for the programme.

Mr Gift Buthelezi, Deputy Director-General: International Affairs and Trade, DOC advised that the matter between the SABC and PIC arose more than 18 years earlier.  Mr Vilakazi added that the DOC had approached PIC with the request that the case was dropped and the amount claimed from the SABC was written off.  PIC had refused the request as the funds involved belonged to the Government Pension Scheme.  PIC had insisted on pursuing the matter through the Court.  The Minister of Finance was reluctant to agree to the claim being written off.  The DOC had exhausted all possible avenues to resolve the matter, which would now be settled in Court.  The SABC was not in a financial position to settle the claim.  Provision had been made by the DOC as the authority responsible for the SABC.

Mr Jabu Radebe, Acting DDG ICT Infrastructure advised that the policy to integrate connectivity services to schools and health centres was in place.  Implementation of the policy was cumbersome.  One of the problems was that Telkom only recognised private or business customers, which excluded schools.  The DOC planned to provide 27,000 schools with connections.  The pilot project involved 1650 schools and was funded by the 2010 FIFA World Cup legacy programme.  To date, approximately 600 schools had been provided with connections.  The Department of Basic Education had identified which schools should be included in the programme.  However, the DOC had found that some of the schools already had connections.  A list of the schools in each province would be made available to the Committee.

The Chairperson again reminded the Department of the need to provide the Committee with complete and accurate information.

Mr Radebe apologised for the omission.  With regard to DTT coverage, Sentech had changed its approach to increase the percentage of population coverage by concentrating on urban areas.  Ms Sekese added that the Minister had requested that the focus was changed to provide increased coverage to rural areas.

The Chairperson remarked that the Committee had been instrumental in ensuring that rural areas were not neglected.

Ms Sekese advised that a forensic investigation into the hacking of the SAPO system had been initiated.  Criminal charges had been laid against the SAPO employees involved in the matter.  Telkom faced many challenges, particularly from mobile phone operators such as Vodacom and MTM.  The DOC and the Minister were considering how Telkom could be better supported.  Telkom played a major role in ICT development in South Africa and it was essential that the entity remained viable.  The resignation of the CEO was regrettable.

Mr Phiri advised that USAASA was responsible for the information centres in Government offices.  The information centres in post offices were maintained by SAPO.  The DOC had established an SOE Committee to consider progress reports from the entities.  The committee used the reports to assess what progress had been made.  Reports on the SOE’s were submitted to the Minister.

The Chairperson said that the Committee awaited the detailed information requested by the Members.  The Committee also required information on the benefits of ICT to women and the youth.  She noted that the Department had not responded to all the questions asked by the Members and again stressed the necessity of providing Parliament with complete and accurate information.

Mr Vilakazi explained that the out-of-court settlement was paid to the two officials implicated in irregular activities on the advice of the State Law Adviser.  The matter had already dragged on for two years and the cost of further legal action against the officials was not justified.  Several senior officials had not signed performance agreements during the tenure of the previous Minister.  However, Minister Pule insisted that performance agreements were in place.  Disciplinary action would be taken against any official that refused to sign a performance agreement.

Mr Mzelana insisted that the Committee was provided with a list of the names of the officials who had not signed performance agreements and who had received bonuses.

Mr Sibande wanted to know the amount of the out-of-court settlement.

Mr Jacobs was of the opinion that the DOC was in crisis.  There had been several instances of fraudulent and irregular expenditure at the SOE’s but no effort was being made to recover the losses.  It was necessary to recall the DOC to provide the Committee with more detailed information.  He was not satisfied with the responses provided by the Department.

The Chairperson advised the Director-General that another appearance before the Committee would be scheduled.  The Committee wanted responses that indicated what work was being done.  The strategic plan submitted to the Committee had included specific objectives but the responses to Members’ questions indicated that there was uncertainty over what was actually happening at the DOC.  She suggested that the representatives from the Department were thoroughly prepared for the subsequent engagement with the Committee.

he meeting was adjourned.


  • We don't have attendance info for this committee meeting

Download as PDF

You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.

See detailed instructions for your browser here.

Share this page: