Private Security Industry Regulatory Authority 2011/12 Annual Report: Questions, day 3

Meeting report

Chairperson’s opening remarks
The Chairperson congratulated the South African Police Service (SAPS) on recent arrests, despite the problems within the Crime Intelligence Division.

Private Security Industry Regulatory Authority (PSIRA) Annual Report 2011/12 : Presentation of responses to questions asked on 20 and 21 November
Mr Isaac Ralioma, Senior Manager: Human Capital, Private Security Industry Regulatory Authority, addressed the questions around staffing at the Private Security Industry Regulatory Authority (PSIRA)  A full job grading and evaluation had taken place. The main purpose was to address salary disparities. The evaluation had been undertaken by PriceWaterhouseCoopers (PWC), and presented to the PSIRA Council. It was important to note that a recognised grading system, the Paterson Grading System, had been used, which was easy to understand and more cost effective. The system defined six bands of decision-making. Each band was sub-divided into upper and lower grades. Directors fell within the top band. The Director was at E4, which corresponded to Level 16 in the Public Service. The Deputy Director: Finance and Administration fell into the E2 grading (Public Service Level 15), and the Deputy Directors for Law Enforcement and Training and Communication were in the E1 grading (Public Service Level 14).

Mr Ralioma said that salary grading were in accordance with Public Service equivalents. Executive posts had been advertised in the Sunday Times in 2010. The post of Director had been advertised on 6 June, and interviews were held on 27 July 2010. The Chairperson of the Council, Mr Thula Bopela, had chaired the panel. The post of Deputy Director: Finance and Administration had been advertised on 4 July, and interviews had been held on 27 August 2010, also chaired by Mr Bopela. The third position was that of Deputy Director of Law Enforcement. This had been advertised in the City Press on 4 July 2010. The candidate was finally head-hunted. The outcomes were communicated to the Human Capital Division to initiate commencement of employment.

Mr Ralioma said that the salary grade for the Director was at Paterson Grade E4, but due to financial constraints a salary equivalent to a Deputy Director-General was paid. No minutes were kept for this Council meeting. The Deputy Director Finance contract was awarded in September 2010 on Grade E2 (public service grade 15), but once again a lesser offer (E1, equivalent to Level 14) was made. This was corrected later. The salary package was signed off by the Council Chairperson, but no minutes were available. The Post of Deputy Director for Law Enforcement was awarded in December 2010 at an E1 level. Again no Council minutes were available.

Mr Ralioma said that adjustments had been made for cost of living. Salary structures were not linked to government salaries, but these were used as a benchmark.

Ms Zelda Holtzman, Deputy Chairperson, PSIRA Council, said that there were other factors to be considered in the salary adjustments. The reference to “the Council” in the review process should be removed from the submission made to the Committee.

Discussion
The Chairperson concluded that Council had not been involved.

Ms M Molebatsi (ANC) asked why there were no Council minutes regarding the appointments. She asked if this was deliberate.

Mr M George (COPE) asked if it was normal for minutes not to be kept. PWC had been used as consultants, and they had been paid for their services. He asked why a consultant had sat on the selection panel, and what this person had been paid.

The Chairperson was absolutely confused by the way salaries were reported in the Annual Report (AR). Completely different figures, almost doubled from the previous year, had been reported. The KPMG exercise had cost about R40 000. Akanani Consulting had then rendered very much the same services for R400 000. She asked why there was a Human Resource (HR) division. She was seriously concerned about the lack of involvement and by-passing of Council. National Treasury (NT) had serious reservations about the use of consultants in salary grading determinations. PSIRA Council seemed to have lost its oversight role over this public entity. She asked why PWC had been called in rather than using the internal HR resources. She asked why there had not been benchmarking against other public entities. There was a grading supplied by NT, and PSIRA could have benchmarked itself against comparable entities.

Ms Holtzman said that Council involvement in the appointment of the Director, Deputy Director Finance and Deputy Director Law Enforcement had covered some of the processes, but not in the determination of salary and other benefits. The involvement of the outside consultants preceded the appointment of the current Council. PSIRA had been in a chaotic state at the time. In some cases an administrator had made delegations to senior managers. The main task at hand, once the current Council was appointed, had been to restore governance and administration. There was confidence in the entity to do its work. A number of persons had been fired due to malpractices and had to be replaced. She reiterated that the Council was not involved in salary grading.

Ms Holtzman said minutes were kept for every meeting. The legitimacy of the process was questioned from the beginning. Salaries were proposed without any performance management system in place. The Council had great difficulties with this. The Minister of Police had told Council, at his first meeting with them, that a great deal of work was needed to restore trust, given the gravity of the issues involved.

Mr Ralioma explained that the process of comparing salaries to the public sector had been started before the appointment of Council. PSIRA understood that PWC had given the benchmarking which had been done in conjunction with the industry and private companies. PSIRA could not match these salaries, and therefore the decision was made to base salaries on the public service levels. Lower grades had been adopted because of the body's financial position. Akanani was appointed as a consultant in 2011. The staff complement of the HR Division was about six, servicing the whole national office. It was a priority to put a performance management system in place and to conduct evaluations. It would not have been possible to deliver on time, due to the staff constraints, and this was why consultants had been appointed.

The Chairperson said that the Annexure given to Members was for the wrong financial year (FY).

Mr Nick Ligege, Deputy Director: Finance and Administration, PSIRA, said that Annexure E to the submission set out the salary scales for 2011/12.

The Chairperson asked what the total cost was. The consultants had done work that PSIRA should have done internally. She asked members of the delegation to state when they had started with PSIRA.

Mr Howard Thwane, Senior Legal Officer, PSIRA, had joined the organisation in 2001.

Mr Stefan Badenhorst, Manager: Law Enforcement and Training, PSIRA, had been appointed in 1998.

Mr Philani Mthethwa, Deputy Director, PSIRA, had been appointed in December 2010.

Ms Ursula Mellet, Manager: Finance, PSIRA, had been appointed in May 2010.

Mr Ligege was appointed in September 2010.

Mr Manabela Chauke, Director, PSIRA, was appointed in October 2010.

Mr Hofney Moepi, Senior Manager: Business and Information Systems, was appointed in March 2010.

Mr Ligege said that the total paid, over the 2010/11 and 2011/12 financial years was R57 000.

Mr Ralioma said that the exercise was completed by May 2010.

The Chairperson said that the costs should be reflected somewhere. She was still waiting for clarity on Akanani. More than R1 million had been spent on job evaluations. She asked why Mr Chauke had made the decision.

Mr Chauke said that the decision had been taken due to staff constraints within the organisation.

Mr George asked if this decision was made by PSIRA or by Council.

Mr Chauke said the decision was made by PSIRA.

The Chairperson said that Department of Public Service and Administration (DPSA) and National Treasury (NT) had done job and salary evaluations in a number of cases. She asked why then PSIRA had used consultants, contrary to government policy.

Mr Chauke could not explain why government resources had not been used.

Mr George asked if Council was aware of this decision.

Ms Holtzman said that Council was not aware of it. She reiterated that in the last financial year, Council had met twice. The oversight procedure depended on a full-time Chairperson to manage the oversight functions. She ventured a personal opinion that it had emerged that PSIRA had been acting as an entity unto itself, and did not relate to government as other entities did. It generated its own funds and was not linked to other Departments. This issue needed to be addressed, and the present Council was attempting to do so.

The Chairperson said that those officials present had mostly been involved at the time these decisions had been taken. They had come from a government background, and knew what procedures were in place. Whether or not the perception did exist, PSIRA and Council had an obligation to address the situation. The levies that financed PSIRA were a form of taxation. This issue would have to be highlighted in the Committee's report. She directed that a proper answer be provided before the end of the meeting. She then requested clarification on salaries.

Mr Ligege said that when PSIRA reported on the Annual Financial Statements (AFS), it did not give the actual salary, but rather the amount paid to that individual during the year. The figures reflected in one year might only reflect six month's salary, if the appointment had been made mid-year, which could explain the apparently wide discrepancies from one year to the next.

The Chairperson had seen the appointment letters, which had also not been signed by Council. No dates were quoted in some. The contract clearly referred to a total package. She asked what hidden costs were included.

Mr Ligege referred Members to page 115 of the AR. He re-iterated that some of the figures referred to a partial year of employment rather than a full one.

Mr Ralioma said that the Director had been appointed on a salary of R976 000, The Deputy Director: Finance was paid R753 000, and the Deputy Director: Law Enforcement was paid R834 000. The latter two appointments had been at the same scale. However, the Deputy Director: Law Enforcement was appointed in 2010, after the 2010 salary increase of 7% had been made, and was thus appointed on a scale of R845 000. He had not brought the document reflecting changes to salary packages with him, but did have the information in his office.

Mr George asked if not even percentage increases could be reported. The salary of the Director was now over R1 million, and he asked if there was an explanation.

Mr Ralioma said the increases of 2010 were 7% across the board. The Director had already been appointed when this increase was made.

Mr George said that the Director had been appointed in November 2010, and he questioned how that could qualify for the 2010 increase.

The Chairperson did some calculations. In some cases, applying the logic put forward by Mr Ralioma, some salaries had decreased. The Director had an increase of 13%. Some persons had been awarded increases even before they were appointed.

Mr Chauke asked for an opportunity to make a presentation.

The Chairperson said that Mr Ralioma had been given the opportunity but was unable to provide the information.

Mr George asked if inflation affected members of PSIRA differently.

Mr Ralioma said that the salary increase for the Deputy Director would not be same as for other members. During 2011, the package for the Deputy Director: Finance had been reviewed to be on the same grading as advised by Parliament. All members had received an across-the-board increase of 7%.

The Chairperson noted that the Minister had already instigated an investigation into salaries. The original package offered for the Deputy Director was R790 000, but he was appointed at R845 000. This had subsequently increased to R1.035 million. She pointed out that this had happened within an organisation that claimed to be cash-strapped. The Chief Financial Officer (CFO) in SAPS dealt with a budget of R86 billion, and received the same salary. SAPS members had a slightly higher remuneration than the rest of the Public Service. She felt there was no purpose in continuing with this part of the meeting.

Mr George agreed, as it did not seem that the Committee would get proper answers. It was clear that something was wrong with the finances.

Ms Molebatsi agreed.

The Chairperson noted that Members were in agreement that this issue be highlighted in the Committee's Report.

Mr Ralioma said that he now had the required document available.

The Chairperson ruled that Members must be given a copy of this document before it could be discussed. All matters should be in the letters of appointment and AR, not in some document only provided to Members on demand.

Response on Question 2: Lease Agreement for PSIRA Head Office
Mr Chauke said that a report had been made on the current premises of PSIRA in Centurion. He explained that PSIRA had moved from the building that it owned, at Belvedere Street, when it became apparent that there was structural failure due to poor design. In particular there were problems with flooring and stairs, and the engineers could not conclude when a failure might occur. The opinion of the engineers was that there was a strong possibility of the building collapsing, and they had strongly recommended that the building be demolished. Council had resolved to obtain alternative office accommodation. A needs analysis had been conducted. It was decided to separate the corporate offices from the walk-in centre. There were different requirements for the two functions. Five property agents had been approached. A number of buildings had been considered in the Pretoria central business district, Centurion and Hatfield. The Eco Glades 2 site in Centurion was chosen. The cost over a five year period was R67 million, for the lease of the building and parking area, as well as operating costs. Council had approved this recommendation, had resolved that the owned premises be disposed of, and that alternative premises be found for the walk-in centre.

Discussion
Ms Molebatsi asked how far the building process was. She asked if affordability had been considered. The Eco Park option seemed to be the most expensive one.

Mr George noted that the required office space was approximately 5 000 square metres, but the chosen site was about double that. He asked how many opinions had been sought on the safety of the Belvedere St premises. It seemed that there had only been one evaluation. He asked if Council had been involved in the process.

The Chairperson asked what informed the AAA requirement, as this was the most expensive building. There was an opinion expressed that the urgency of the move was in fact in some doubt, and she wanted to know what had been done, in terms of legal requirements, once the building had been condemned. There were NT requirements regarding costs such as air conditioning. The total cost per square metre was R330. This included all hidden costs. She went through the detailed costing. Parking alone cost about R74 000 per month. Air conditioning costs were R10 000 per month.

Mr Chauke said that submissions had been made to the Minister on the disposal of the PSIRA building.

The Chairperson said that this response indicated that the round robin solution was flawed. The Public Finance Management Act (PFMA) clearly set out that when an entity intended to dispose of a major asset, the responsibility rested with the Minister and not with Council.

Mr Chauke admitted that the round robin decision was not in line with the PFMA. PSIRA had looked at other alternatives, and the decision was not based purely on costs. Other considerations included security. The new building size was in fact 5 070 square metres, which was more or less the required size. The assessment was procured from the procurement authority and forwarded to Council.

Ms Holtzman confirmed that Council had made the approval on the basis of a AAA rated building, but could not comment on the reasoning. The prelude was a discussion on the current offices and the image of PSIRA. The Belvedere Street image was unprofessional. Documents were not stored neatly and presented a fire hazard. PSIRA wanted to improve its image.

Mr Chauke understood that this was the way the lease agreement was structured. Operating costs were calculated separately from actual building rental costs.

The Chairperson said the lessor had not hidden any information from PSIRA.

Mr Ligege said that Renowned Technical Services had made the evaluation.

Mr Chauke said that since the building was condemned, PSIRA had acted on the advice given by the engineers. Fingerprint records had been moved, as the weight of these records would have contributed to any possible failure. No building renovations were possible. The lift could not be repaired. Removing and replacing the lift could have led to structural stress. The report had been tabled at Council. The requirement to refurbish the lift had been made before the building was condemned.

The Chairperson said that the City of Tshwane should have been advised so that hazard signs could be placed. There was also a pattern of homeless people occupying vacant buildings. She felt that nothing had been done to satisfy these requirements.

Mr Chauke said that the City of Tshwane had been informed. Security was in place to prevent unauthorised access.

Mr George said that the size of Eco Glade 2 was over 14 000 square metres. The other Eco Glades property was smaller. This would impact on the cost.

Mr Chauke said that Eco Glades 2 comprised buildings of various sizes. Various other entities, such as the Road Accident Fund and Film and Publications Board, occupied some of the other offices. He thought that the combined size of the complex was 14 000 square metres.

Mr George said that the Council was aware of the hidden costs, and had agreed on the costs.

The Chairperson agreed that Council had signed off on the agreement, and should be aware of this. The entity faced serious financial constraints. There were 116 people at the head office, which was a huge facility for so few people. She was told that 27 of these were inspectors, who were on the road full time and spent little time at the offices. That equated to each employee, including the inspectors, having office space larger than the room in which the meeting was being held. She did not think that PSIRA had acted in its best interests. The Auditor-General (AG) would be doing a performance audit on the building to calculate the value for money.

The Chairperson added that it often happened that furniture was upgraded when offices moved. There was a legal unit in PSIRA who should have dealt with the implications. The cost of the move was about R4.7 million. Furniture alone accounted for R3 million. She asked how this expense could be justified. She asked if Council had been involved with the decision to buy the furniture.

Ms Holtzman said Council was not.

The Chairperson said that it was clear that the accounting authority for PSIRA was not involved with the decision to move.

Mr George was worried that the officials from Council, who had both been senior members of SAPS, did not seem to be aware of relevant legislation. Council should have intervened to prevent PSIRA officials from acting like “a law unto themselves”. Their actions had cost the country a lot of money.

Mr Chauke said that the furniture in the old building was not suitable for the new building. It would not have suited the floor plans in the new building. Provision had to be made for future growth. An open plan structure had been followed, and this too made the old furniture unsuitable. The term 'furniture' also referred to cabling and partitions. A fuller breakdown could be given.

The Chairperson said that Parliamentary offices were also on an open plan basis, and Members understood the concept. She asked what the priorities were.

Mr George understood the definition used. There was now a budget request for office furniture.

The Chairperson said that this requirement was to standardise the walk-in centres around the country with head office.

Ms Holtzman said that the Council could not claim not to be responsible. The move had occurred during a time of transition. Members of the Council were not able to act full time. This hampered their oversight ability. Council members were not available at the time of the current building being condemned, and this was why a round robin had been held. She had experience of a similar situation with a building used by the United Nations, where charges had been laid after the building had collapsed causing injury. Council had, for reasons of safety, ordered the immediate evacuation. A full audit of what had happened might answer the questions of Members.

Ms Molebatsi asked if there was any benefit to the State in the original building.

Mr Chauke said that the building was vacant. Two nearby houses were being used for the walk-in centre.

Ms Molebatsi looked at the resolution. The Deputy Chairperson talked about taking responsibility. On the document before Members, two of the three signatories had not indicated whether the decision was approved or declined. Only General Anwar Dramat, Council Member, had deleted the word 'declined'.

The Chairperson expressed the Committee's strongest possible opposition to what had happened. At the Council meeting where the engineering report had been tabled, the minutes reflected several concerns over the income of PSIRA. The Deputy Director: Finance had presented a report stating the difficulties, but Council had still approved the budget. The Auditor-General had commented, in respect of the 2010/11 and the 2011/12 financial years, that the budget did not speak to the strategic plan. The Committee had asked the AG to investigate the circumstances of this lease, and if the AG called for the contract to be cancelled as a result of the performance audit, then that would be done.

Mr George said that some of these aspects would make it difficult for the Committee to support the PSIRA Amendment Bill. He too stated that whatever steps were needed must be taken.

The Chairperson said that the performance audit had already started. The Council should ensure that PSIRA gave its full support to the audit. Documents must be provided timeously, as this had not always happened in the past. She asked what was happening with the sale of the old furniture.

Mr Chauke said that an advertisement had been placed. The offers made were not acceptable. The offers had been presented to Council with a recommendation that they be rejected, and an alternative solution be devised.

The Chairperson said that furniture became a fixed asset in time, and any sale had to be signed off by the Minister.

Mr Chauke said that the morale of the staff had been low.

Mr George said that the AAA requirement had been part of the original decision.

Mr Chauke said that PSIRA wished to upgrade its image.

The Chairperson said that image was not determined by where an organisation was based or worked, but by its performance. An enormous amount of money was being spent on upgrading the image of the organisation, yet, at public hearings, many members of the industry said that there was no working relationship with PSIRA.

Mr George added that many companies felt that PSIRA was dysfunctional, no matter how smart the suits that its officials wore.

Further Discussion on Remuneration of Executives
Mr Ralioma had made copies of the document on salaries.

The Chairperson stopped Mr Ralioma at this point. The figures he was putting forward were completely different to those in the AR. There was an investigation under way.

Mr Ligege said that R603 146 had been paid to PWC. The first invoice was dated 1 June 2009, for R300 008, the second was dated 1 November 2009, for R235 626, the third for 9 November 2009 in the amount of R22 000, the fourth in July 2010, and the last in November 2010, for R23 610.

Mr George wanted a printout.

The Chairperson repeated that the calls to the ethics line were the most expensive call in the history of the country.

Mr Ligege said that the two big amounts were both in the 2009/10 FY.

Response on Question 3: Details of Debts Written Off
A written breakdown was provided to the Committee on debts that had been written off. The matter was not discussed.

Response on Question 4: Consultancy fees for 2011/12
Mr Ligege said that the consultancy fees for 2011/12 were set out in Annexure E.

Mr Ligege said the total spending on consultants in the fields of accounting and financial support systems was R1.5 million. This included payments to Altimax Training Academy for a technical review of the AFS (R36 480). CQS Technology Holdings provided support in the drafting of AFS (R26 283).  The software system used templates that could be modified, but this could only be done by consultants. Ntier Software Services provided software support to a value of R1.2 million. Their services included the design of ad hoc reports for management. Certain customisations had been done. There was a migration of the debtor base. A licensed Oracle system had been acquired. Phuthumani IT Solutions had developed reports for used in budgeting (R178 664). Sofline VIP had provided tax and payroll support (R84 591)

Mr Ligege said that the spending on ad hoc consultants had been R1.0 million. There had also been consultants used for specialised services. The KPMG monitoring ethics line had cost R43 890. Other major expenses in this category were Advance Transport (R55 176), Impact Communications and Printers for the AR (R34 500), Mellib Properties for property valuations (R22 450), Metropolitan Health Risk Management (R43 654, MMM Capital, for debt collection (R653 622), and Zest Media for consultation on corporate image issues (R104 641).

Mr Ligege said that Akanani Consulting had provided services on job creation and development. Training had been provided for officials. The total paid to them was R487 941.

Mr Ligege said that the contract for Information Technology services was R1.5 million. This contract with BCS Net had since expired. Dimension Data provided voice over internet protocol (VOIP) services, at a cost of R15 920.

Mr Ligege said that the bills for legal costs had amounted to R237 469. There had been legal costs in a case involving an interpretation of the law. Dr Sabelo Gumedze had been paid R19 000 for his services rendered regarding the PSIRA Amendment Bill. Other major items were for Exclaim Innovation & Solutions, for consultancy on legislation changes (R65 080), Facts Consulting (R30 643), Fundudzi Forensic Services (R98 229) and Sambi ICT Systems for a forensic investigation (R22 686).

Mr Ligege said that R330 920 had been spent on consultants for credit and background verification checks. The majority of this had gone to Experian Business Information Services (R307 188) for consultation on blacklisting.

Mr Ligege said that the final category was temporary staff placement at R250 610. The amounts spent were R9 576 with Accountants on Call for placement fees, R23 055 to Manyando HR Solutions, R152 133 to Mbaya Recruitment Consultants and R65 846 to PAG Pretoria, both for temporary staff.

Mr Ligege said that the total spent on consultants was thus R5.4 million.

Discussion
Mr George said that he was flabbergasted by these figures. There was a HR division, but it seemed that all HR related matters were being done by consultants. He asked if Council had approved these expenses.

Ms Molebatsi felt that in some cases it seemed different consultants had covered the same areas.

The Chairperson pointed out some other areas, which she could not understand. Two media companies were both paid for work done on the corporate image. She asked how many copies of the AR had been printed. There were various companies employed to prepare AFS, and yet the required documents had still not been sent to the Minister.

Mr Chauke said the reports had been submitted earlier on that day.

The Chairperson said that the finance section was the biggest in PSIRA, and yet the bulk of the consultancy fees had been incurred for this work. The figures seemed extremely skewed to her. She wanted an explanation on payments to KPMG. Monitoring of the ethics line had gone up from R3 900 to R43 000.

Mr Chauke said that it might appear that the same work was being done by different consultants. Dr Sabelo had assisted with the drafting of the Amendment Bill. QC Business Consultants had been involved with the facilitation of the consultations, and to clarify issues with KPMG. A small amount had been paid towards the end of the year. The larger amount reflected payments for a full year.

Mr Ligege said that Exclaim provided software to assist with risk management. There were other applications to assist with compliance to the PFMA. The audit committee used this software to do their oversight work, and their work had nothing to do with the Bill.

Mr George asked if the payment to Exclaim was a recurring expense.

Mr Chauke said that Sambi had been called in to recover information that had been deleted from a computer by an employee under investigation. Another employee was in the investigation unit itself, and it was better to bring in outside help.

The Chairperson asked if QC Business Consultants still existed. Nobody involved with the drafting of the Amendment Bill had previously admitted to using consultants. She was still concerned over the use of consultants in the financial division.

Mr Ligege said that most of the cost was involved in programming issues. In 2009/10, huge amounts had been paid to consultants to draft the AFS. There had been no errors in the AFS submitted to the AG.

The Chairperson wanted an explanation on the process in appointing each of the consultants.

Mr Ligege said that some consultants dated back to 2006. Some of the consultants had been appointed on a quotation basis. Some of them were recommended by the AG.

Mr Chauke said that it would be proper to revert to the documentation in order to ensure that Members were given the correct information.

The Chairperson directed that for each consultant appointed, PSIRA was to provide a list of all quotations accepted, the reason for the consultancy, the amounts involved, and quotations from competitors. This list was to be provided by the close of business on 30 November 2012. In some cases the quotation process was not appropriate, given the amounts involved, and there should have been a public bidding process. The list was far too long. She denied a request for an extension of time.

Mr George said that this seemed to indicate that PSIRA was being run by consultants. If he was a member of Council he would recommend that all the senior management be dismissed and replaced by consultants. He asked if those present were not ashamed of themselves when they drew their considerable monthly salaries.

The Chairperson said that work done by Akanani had been a repeat of previous work. She requested that an explanation be provided together with the information on consultants.

The Chairperson relented slightly and extended the deadline for the submission of the information on consultants to 5 December 2012.

Reply to Question 5: Travel Expenses of the Office of the Chairperson of the Council
Mr Ligege said that question 5 dealt with travel expenses. He gave a breakdown of the expenses.

Mr George noted that the Chairperson was not in good health, but still spent R47 000 travelling around the country during the FY. Something was amiss.

The Chairperson asked for the detail to be provided, but thought the amount was not overly concerning.

The meeting was adjourned for lunch.

Reply to Question 6: Cost Breakdown and Staff Complement at Regional Offices and Walk-in Centres
Mr Ralioma said that four persons were employed at the Mpumalanga Walk-in Centre, three of who were employed permanently, and one cleaner who was on a fixed contract. The total expenditure for the office in the 2011/12 FY was R616 722.

Mr Ralioma told Members that there were five permanent employees at the Mthatha Walk-In Centre and one cleaner on a permanent contract. The total expenditure for the FY was R2.3 million.

Mr Ralioma continued with the Port Elizabeth Regional Office, which employed eight persons permanently and one cleaner on a fixed contract. Expenditure was R3.8 million. At the corresponding office in Cape Town there were seventeen permanent employees. No cleaners were employed. Total expenditure for this office was R5.2 million.

Mr Ralioma said that there were 23 permanent employees at the Arcadia Walk-In Centre, including a cleaner. A para-legal administrative / walk-in consultant was employed on a fixed contract. The expenditure was not listed. At the Limpopo Walk-In Centre there were three permanent employees, including a team leader, and one cleaner on a fixed contract. The expenditure for the FY was R720 711. In Johannesburg, the Walk-In centre had fourteen permanent employees, including a cleaner. Expenditure for the FY was R5.0 million. At the Durban Regional Office, there were nineteen permanent staff, including a cleaner, and one business support staff / legal typist on a fixed contract. The expenditure at that office was R7.3 million.

Mr Ralioma said that there were a total of 92 permanently employed staff and six on fixed contracts. Total expenditure was R24.9 million.

Discussion
The Chairperson sensed a great discrepancy in terms of costs per centre. One particular area was the difference between cleaning costs. There seemed to be different approaches at the different centres. The Arcadia walk-in centre figures had not been included.

Ms Mellet replied that the Arcadia branch had only been created as a separate office in the new FY, and had been part of head office for the 2011/12 FY.

Mr George said that even if the Pretoria walk-in centre had been part of head office, it should still have had its own budget.

Mr Ralioma replied that the difference between Mthatha and Nelspruit was the provision of inspectors. There were none of these at Nelspruit, and this function was provided by members from head office.

The Chairperson was perturbed. Mpumalanga was reported to be the biggest area of growth in the industry. She asked what was being achieved by the regional offices. PSIRA should re-evaluate what its core business was. Cleaning services were sourced differently at each office. At some there were permanent employees, others used contracted personnel and others contracted service providers. She used this as an example to see that Gauteng was being favoured. She wanted to see salaries for these people.

Mr Ligege said that cost to company for the Office of the Director had been provided. For the other information, the deadline was Friday 30 November.

The Chairperson asked if PSIRA management ever visited the offices. There were discrepancies in maintenance costs.

Mr Chauke said that in some cases PSIRA owned the offices. There were also no inspectors in Polokwane.

Ms Holtzman said that Council would have to give direction over the overall development process. Staff levels and competencies would have to be assessed, and the growth in the area should influence the planning at regional level.

Mr George said the breakdown given would not help Members.

The Chairperson asked whom the team leader in Polokwane was leading.

Mr Ralioma said that the title of “walk-in consultant” did not mean that the person was a consultant in the normal sense.

Mr George cautioned that people would demand extra money for their titles.

The Chairperson reviewed the staff structure at the Arcadia centre.

Mr Chauke said that positions would be harmonised, and a determination made on what positions were permanent and which would be on contract.

The Chairperson said that PSIRA should follow the guidance of Council. A lot of money had been spent on job determinations.

Mr George said that R5.7 million had been spent on consultants, when this work could have been done by government agencies.

The Chairperson said that there was no consistency. The titles for the same functions were different at each centre. This did not make sense.

Mr Ralioma said that the old approach was to have specialised operations, such as identity document verification. The new approach was to use the term “walk-in consultant” to cover a more versatile job description.

The Chairperson said that Arcadia should be the role model, but even there, inconsistencies could be seen. The PWC study was not worth the paper it was written on. PSIRA needed to take itself seriously.

Reply to Question 7: Total Cost to Company of Senior Investigators and Personal Assistants
Mr Ralioma said that the total current package for Mr Chauke was R1.1 million. The package for senior investigator Mr LP Monama was R428 636. The Personal Assistant (PA) to the Chairperson of the Council, Ms Zanele Ngcobo, was paid R413 397. The investigator, JM Chima, was receiving R359 685.

The Chairperson said that the Event Management section had an output of zero. However, the cost to company for the Manager:  Events and Marketing, Mr M Makubalo, was listed at R586 809. She asked what justified this position. A whole line of consultants had been appointed to do the work of PSIRA, especially in terms of image management and marketing.

There was no response from PSIRA.

The Chairperson said that the salary shown for the Chairperson of the Council showed discrepancies between the figures now provided and those shown in the AR.

Mr Ligege said that the amounts reflected the total cost to company. This included salaries over a period. If there was an increase during the year, it would create a difference. The figures tabled in the AR included benefits such as cellphone allowances of R1 500 per month.

The Chairperson asked how cellphone allowances could not be regarded as cost to company, and why they were not included. She asked where this money came from. She was relieved to hear that at least tax was levied. She asked what other hidden costs to company were not being reported.

Mr Ligege said that company contributions to the Unemployment Insurance Fund (UIF) were not included.

The Chairperson again did the mathematics, and said she was now even more confused. One of the figures must be wrong.

Mr Ligege asked for a chance to provide the breakdown of the salary figures included in the AR. The challenge was that these were salary scales, and did not include cellphone and other benefits.

Ms Molebatsi asked what informed the increments.

Mr Ralioma said that annual salary adjustments were based on a number of factors, including inflation.

The Chairperson noted that performance was not taken into consideration.

Mr Chauke said that the calculations were not as simple.

The Chairperson said she had listened carefully to the numbers presented. Her questions had not been fully answered. The discrepancy now noted was in addition to the fact that increases of more than 20% had been granted without a Council resolution.

Mr Chauke asked for a chance to provide the information in writing. Using a desktop calculator would not give the full explanation. He did not want to waste the time of the Committee.

The Chairperson countered that PSIRA had already wasted two days of the Committee's time.

Mr Ligege explained that the extra components were cellphone allowance, UIF allowance, skills development levy, a group funeral package, and car insurance.

Mr Chauke explained that PSIRA had undertaken a group insurance scheme. This made it easier for members to pay for insurance. It was not a payment received, but a deduction from their salary.

Mr George hoped that the investigation would help clear up matters, and said that he was not satisfied that matters were in order.

The Chairperson directed that all the extra costs to company be provided to the Committee, in writing.

Mr Chauke asked if he could also provide feedback on the Event Management post, in writing.

The Chairperson refused to allow this. This question had been specially raised previously. The portfolio fell within his office. While the meeting continued, Mr Chauke must find the information.

Response to Question 8: Supplementary Information on Discrepancies in figures presented in the Annual Report
Ms Mellet gave a breakdown of Annexure H. The total revenue as reported in the AFS was R128.661 million, but on the slides presented to the Committee earlier, the revenue was reflected as R128.529 million. There was a difference of R132 332. Expenditure had been held back on certain items, due to financial constraints. PSIRA was busy cleaning up outstanding debts. Actual revenue was R100.2 million against a budget of R130.8 million, leading to a deficit for the year of R9.3 million.

The Chairperson said she had asked Parliament's financial advisers, all highly qualified individuals, to look at the income and expenditure statements. These experts could not understand the statements. It might be simpler if PSIRA acknowledged that it had made a R132 000 mistake. She asked if PSIRA accepted the statements made by the AG.

Mr Ligege admitted that the AG was correct.

The Chairperson quoted from the AG’s  report. There was a discrepancy of R132 000. Training fees could not be classified as assets. PSIRA must explain how this had happened. There were still discrepancies regarding “sundry” items.

Mr Ligege said that the PSIRA financial statements were true statements. The AG would not have issued an unqualified report if these errors had not been corrected. When the slides were presented to the Committee, a different format had been used to present the slides. In future, PSIRA would present on the AR in the same format as contained in that document. He apologised for the error.

The Chairperson asked why training fees had been included as assets.

Ms Mellet said that this had been a typing error. They should have been listed as expenses.

The Chairperson could not understand why PSIRA had come to this meeting with incorrect information.

Mr Ligege said that the mapping of items of revenue was different, in the model used by PSIRA, from that used elsewhere by government. The slides presented were an attempt to expand on information usually presented at a broad level.

The Chairperson said that Parliament would dictate on the format of the AFS in future. She disliked the intimation that Members did not understand the details, as it was the Members themselves who had pointed out the errors.

Response on Question 9 – Erratum on Personnel Expenditure
Mr Ralioma said that there had been discrepancies in expenses reported on personnel. The document had been revised. The figures for permanent staff and those on fixed-term contracts had been corrected. The document presented on the AR had been taken from the VIP system. Codes assigned to staff members might be read incorrectly by the system.

The Chairperson asked if this had been submitted to the Minister.

Mr Ralioma said that the document had been corrected.

The Chairperson said that the Minister had to present the document in Parliament, and he could not do so because of the errors. She asked for an explanation of the erratum of R3 million.

Mr Ralioma said that travel claims had been included. The VIP system pulled the figures from a different division. The total costs were different to those in the AR. Information should have been pulled from the General Ledger (GL) system.

The Chairperson asked what the PSIRA Members had been doing during the breaks and why they had not ensured that the information was correct.

Mr Ralioma could not explain the differences. He would have to go to the GL.

The Chairperson understood there were two different systems. One was for contract workers. She asked why there was now a lesser amount shown for Council.

Ms Mellet said that the cost shown on the GL was input per month. The VIP took monthly figures and converted these to annual amounts. The information was not immediately available.

The Chairperson was concerned, as there were differences of up to R800 000. In some cases there were decreases, whilst sharp increases were apparent in other areas.

Ms Mellet said that there was no permanent employee for the position of Internal Audit. Members of the Audit Committee were paid for attending meetings but were not employed by PSIRA. The discrepancy under asset management was due to one position being vacant.

The Chairperson said that the problems did not arise from the audited statement, but from the financial notes. These were not audited, and this was where the problems lay. She directed that PSIRA provide a line-by-line explanation of the errata listed under this question, by 30 November 2012.

The Chairperson told Members that the Committee essentially faced two options. They could either ask the AG to investigate, or refer the matter to the Standing Committee on Public Accounts (SCOPA).

All Members present were in agreement that referring the financial situation of PSIRA to SCOPA would be more appropriate.

Mr Chauke said that 300 copies of the AR had been printed.

The Chairperson suggested that the next AR should not be printed on such expensive paper.

Mr Chauke said that PSIRA had compiled the AR. A consultant had helped with the layout and printing. Any mistakes were factual mistakes made by PSIRA, or typographical errors. There had been no outcomes allocated under “Events” for the coming year. There was not a specific budget for events. The R1 million would be utilised for other purposes. The members allocated to Events Management would fulfil other duties.

The Chairperson noted, wryly, that these highly paid persons would be used to make bookings for the boardroom.

Mr Chauke read out a list of job descriptions for the events staff.

The Chairperson said that there were no key performance indicators. There had been no outcomes from this function, and enormous amounts had been paid to consultants to do the same jobs.

Mr George felt that a lot of the functions listed could be done by a PA. Members were disappointed to hear of these things.

The Chairperson compared the work done by the Committee support staff in arranging the Detective Dialogue earlier in the year.

The Chairperson summarised what was expected of PSIRA, as follows:
-She directed that there would be measurable objectives, including those for the Events Management unit, in their planning for the following FY. This should be done by March or April 2013.
- Details on the consultants must be provided on 5 December 2012.
- A copy of the letter to the Tshwane Municipality on the condemned building was required
- Allowances paid to senior management above their normal salaries, and a detailed breakdown of salary costs, and a complete organogram of PSIRA, including walk-in centres, and a list of vacancies must all be provided in writing.
- In the next AR, the Committee expected to see a foreword from the Minister, a detailed report by Council, a list of fees and fines issued which had not been paid, detailed outcomes of inspections, a complete organogram which could justify the costs, and how they would be aligned, the vacancies, a list of applications received and denied for training institutions and training accreditations.
- PSIRA must set a budget for court cases.
- A report must be included in the next AR on sick and incapacity leave.
- Achievement or partially achieved targets must be listed. Targets must meet the SMART requirements, which was part of the PFMA.
- The Committee expected an explanation on how the AG findings had been addressed, and on the usefulness of information provided.
- PSIRA must do proper quality control on its Annual Report. The notes on the AFS had to be correct.
- Any other matters would be communicated to PSIRA through the Council.

The Chairperson said that she was still not satisfied with the outcomes of the extended meeting. If PSIRA management did not take their responsibilities seriously, they should step aside for others who would. If Mr Chauke wanted to change the image of PSIRA, he should start doing this in Parliament. PSIRA was not about making money or lining the officials’ own pockets, but about improving the security situation in the country.

The Council needed to be honest and blunt about the challenges it saw. When the Committee met the following year, it would expect Council to account for the success of PSIRA.

Ms Holtzman thanked the Committee. This had been a painful but necessary process. She hoped that future Council members would improve the situation. The term of the current Council ended in December. She hoped that the new Council would act with vigilance.

Other business
The Chairperson announced that the planned oversight visit for the following week had been cancelled. She thanked Members and support staff for the work done in this year.

The meeting was adjourned.