Department of Health
The Chairperson said that when the Department of Health (DoH) had appeared before the Standing Committee on Public Accounts (SCOPA) for its 2010/11 Annual Report, it left the Committee with a good impression. The Committee was satisfied with the DoH response and wished all other departments could emulate DoH. However, following the performance audit by the Auditor General on use of consultants by departments, SCOPA felt it needed to engage the DoH on points the AG performance audit had highlighted.
Members sought clarity on the vacancy rate at public sector nursing colleges. Could the Committee be given progress on the 22 positions that had not been filled; and what was DoH’s turnaround time in filling vacancies. Members voiced concerns about how DoH handled the World Health Organisation (WHO) request to audit 10% of the laboratories for polio virus cases. How this exercise was dealt with gave an impression that the DoH did not know how many laboratories the country had. The Department's response was it had information on all its labs, but there was confusion about the number of labs that might have polio virus cases. The vacancy rate at all health institutions was addressed in the strategy plan, and the Department had about 37 000 nurses were undergoing training.
In response to the Committee seeking clarity on why government funded three non-governmental organisations, DoH said the three were central to its objectives and work, although the department wanted to scale down on two of them. The question was whether their functions could be handed over to health promotion officers, as 800 officers had been trained. The Minister had introduced ward-based primary health care committees. The
The Deputy Minister of Health commented that during the time of the audit there were two high-level ministerial task teams assessing not only reasons for people not getting required services, but also why the system in the country appeared to be betraying its democratic ideals. It was found that the national department was not capacitated to ensure proactive and pre-emptive support oversight to provinces; that skills capacity were that of policy development and not implementation. Many of the interactions with provinces were limited to MinMec meetings, reporting and crisis management. The audit coincided with the restructuring of DoH and that resulted in an increased use of consultants. But DoH had since conducted an audit of all the facilities, and their status was known. The audits were conducted by departmental staff comprising senior managers; DoH was changing how it worked. With the health system maturing, everyone had now to focus on the front line, as well as on efficiency and competency.
Department of Transport (DoT)
The vacancy conundrum was also raised with the Committee seeking clarity on the whereabouts of both the DoT's Director General and the Chief Finance Officer. The response was DG Mahlalela's contract had expired while the CFO had taken up employment at the Road Traffic Management Corporation (RTMC).
Members voiced unhappiness with the e-Natis programme whose contract had been extended twice, and which was currently paid on a month-to-month basis. Members were unhappy with officials who sought to revoke the sub judice rule in Parliament as a measure to evade questions.
It appeared the DoT had taken the contractor working on e-Natis to court, when it appeared there were irregularities with the 2010 extension of the contract. It was revealed the contract, initially costing about R590 million, had cost the state over a billion rand in extensions. The contract was first awarded in 2002, extended indefinitely after the five-year period and fixed for another five years in May 2010. The former DG had acted unlawfully when extending the contract. When the contract expired in 2007, it provided for the transfer management period. The DG at the time invoked the transfer management plan. He wrote a letter to the supplier who in turn responded by saying it accepted the provisions made about the transfer, but until the transfer management plan had been implemented it would continue to render the service. Additional services were added, and were agreed by a steering committee chaired by the Department and represented by all the provinces. Agreements were reached about the enhancement that had to be made to the system.
Members sought clarity on the officials who oversaw the period coinciding with the e-Natis contracts.
It was revealed that the DG at the time was Mr George Mahlalela; the DDG for Financial Services was Mr Collins Letsoalo and Line Manager for e-Natis was Mr Zakhele Thwala. The names mentioned were not an indication of any involvement in irregularity.
Members also voiced concerns at the Taxi Recapitalisation programme, and that targets were not met despite the contract coming to an end in December.
The Chairperson said that when the Department of Health (DoH) had appeared before the Standing Committee on Public Accounts (SCOPA) for its 2010/11 Annual Report, it left the Committee with a good impression. The Committee was satisfied with the DoH response and wished all other departments could emulate DoH. However, following the performance audit by the Auditor General on use of consultants by departments, SCOPA felt it needed to engage the DoH on points the AG performance audit had highlighted.
Departments of Health hearing
Ms F Muthambi (ANC) commented it was concerning that the vacancy rate at public sector nursing colleges stood at 39%. She said the DoH report indicated that as of 31 March, up to 22 vacancies were not filled. Could the Committee be given progress on these 22 unfilled positions; and what was DoH’s turnaround time for filling vacancies?
Ms Precious Matsoso, DoH Director General (DG), said since the audit, the Minister, Mr Aaron Motsoaledi, had convened a summit attended by 2 500 nurses. The idea was to present the findings of the audit to the stakeholders of the nursing profession. She was taking the Committee through the sequence of events so it could understand how DoH was implementing the outcome. The outcome was that DoH needed to have the Chief Nursing Officer (CNO) oversee the affairs of the profession and ensure delivery with regards to South Africa meeting its Millennium Development Goal (MDG) obligations. The CNO had been appointed and would start work on 15 March.
Ms Matsoso said the Department had established a branch for the revitalisation of nursing colleges. There also was a report that provided updated information on educator numbers in colleges; and the status of each educator. SA was faced with the dilemma of ageing educators, most of whom were above 50. DoH would implement what it had developed, and the Ministers would launch the Nursing Strategy on 11 March.
The Nursing Strategy sought to outline numbers; ages; and institutions that would train. It would address the current model of training. DoH was reversing the training model where it was only focussed on universities. The Department had data available for every institution on number of trainers; capacities and so on. In 2012, the country had an intake of 37 000 nurses for training at various levels. On completion of training, nurses would be placed at various hospitals as part of community service.
At the time of the audit the national staff establishment was 1 700. DoH conducted a Persal clean-up as there were too many unfunded posts. Currently the staff establishment was at 1 497, and the filled posts were 1 372. The vacancy rate was currently sitting at 8% but hiring was continuing.
Ms Muthambi sought clarity about the delay in the infection materials containment project. She believed this was due to DoH human resource challenges. She wanted to know where the project manager for the project was. What had happened to the official? A situation where a project was delayed for a period of seven months should not be tolerated.
10% audit of laboratories
Dr Yogan Pillay, DoH Deputy Director General (DDG) Facilities, replied that the World Health Organisation (WHO) had requested the Department conduct an audit of all laboratories in the country that might have detected polio virus cases. This was a requirement for WHO to certify the polio status of the country. The Department did not know what the number of labs were that might have detected polio virus cases. WHO was called in to come and assess whether the threshold was reached. This was what had led to the delay.
Dr Pillay replied there was a project manager who was responsible for the entire programme on immunisation for containment. There needed to be periodic audits to check for containment. He said 106 labs were audited and it only needed to be 10%, but this information was not clearly communicated.
The Chairperson commented the official sounded as if he was excusing the project manager for not executing the job properly. The question was why the project manager had failed, and the explanation was that he was managing a much bigger scope. The implication was this was it made it understandable that he failed in executing his responsibilities. That was not an acceptable explanation.
Dr Pillay replied this was harsh. DoH had subsequently appointed an Epidemiology Surveillance Manager (EPI) to complement that responsibility.
Ms Muthambi asked if this was to say DoH did not know the number of labs the country had. The Department managed the labs and needed to know the number of labs it administered. She sought clarity on the status of the project manager post, as the report indicated that it was vacant, and the turnaround time. She commented that issuing tenders without ascertaining the need on the ground was problematic. Who was responsible for the tender and what action had been taken against such a person. This was a cost to the Department and Government.
Dr Pillay only heard from WHO later that there was a 10% threshold.
The Chairperson interjected and wanted to know how was it possible that the Department could be told by WHO about the number of labs the country had.
Ms Matsoso replied that there was a global vision to eradicate polio. As part of that process there were countries that were “polio risk” such as Afghanistan and Pakistan. SA was not one of those, and WHO proposed that for countries at less risk, there had to be a mechanism of certification. This involved conducting spot checks. At the time of the audit, it was decided that WHO would visit every laboratory. The reason was if any one lab had a polio virus case, it could spread. So as a safeguard the overall audits were to ensure that SA labs reported no polio cases and SA was free of polio. And this fitted well with the international campaign to eradicate polio.
Ms Matsoso said the National Institute of Communicable Disease (NICD) which was established by statute was supposed to do oversight of laboratories, and from time to time the Department referred to it. This consultation also happened when there had been outbreaks of such diseases as ebola and malaria.
The Chairperson wanted to know if it was the NICD that did not have the figures. Why did the country not do only 10%; could it be because it did not know the number of labs it had.
Dr Pillay replied there were two reasons. Firstly, WHO did not inform the Department that the threshold was 10%; secondly, there were a number of private labs in the country that were not registered. This was where the number of labs that could have detected the polio virus had to be ascertained. Happily none of the labs had detected the polio virus. This was the conclusion of the audit.
Ms Muthambi commented that public hospitals were vulnerable, and none of the officials used them, as they were all on medical aid schemes. Failure to fill vacancies meant services would not be delivered to the public at large. She sought clarity on the development of a controlling manual. She asked if DoH had printed the target number of copies it had hoped to. She noted a specialist candidate was still in the process of being found. Had that person been found?
Ms Matsoso replied six core standards had been developed and one of these was infection control. A Bill that sought to establish an office of health standards compliance was before Parliament. DoH had appointed inspectors and they had been sent to the UK for training nurses. About 171 facilities were inspected. DoH appointed 14 new inspectors; seven had already started, and others would start in April. When the Bill was passed, the inspectors would have been already trained and would have tools, and the manual would form part of that. This manual was not only for the health workers, but it had also been developed as a document for ordinary members of the public that used the services.
Dr Carol Marshall, Cluster Manager: Office of the Standards Compliance, replied the person required was highly specialised, and interviews had been conducted. A person had not yet been found.
Non-governmental organisations (NGOs)
Ms Muthambi asked about the R291 million spent on NGOs, whereas the department lacked formal structures to verify their performance. How did it happen that such huge amounts of money could not be monitored upon being disbursed to the NGOs?
Ms Matsoso replied the funding of three NGOs – Lifeline, Soul City, and Lovelife - had historically come via direct transfer. There were smaller NGOs as well. National Treasury (NT) had been engaged on these three, specifically with a view to scale down their role. Lifeline did counselling for HIV positive people via telephone. The country needed not to take such a function away, rather it needed to be strengthened. This was a needed service; this NGO was not funded internationally and its service had to be kept.
Ms Matsoso said the second NGO was Soul City, and it performed advocacy work about alcohol and substance abuse. The question was whether this function could be handed over to health promotion officers, because quite a lot of them (800) had been trained. The Minister had introduced ward-based primary health care committees.
The Soul City function would not be needed in future as they would be replaced by permanently employed health promotion officers. Most NGOs used funding from the Department to pay employees, and some did not. DoH believed it had to scale down some functions of NGOs so as to avoid a situation where the Department was milked dry by NGOs. To this end, DoH had developed an NGO Funding Framework.
Ms Matsoso said the third NGO was Lovelife, who was involved in doing work also for other departments such as Basic Education, Social Development, and Sport and Recreation. The three departments had met and sought to understand the exact nature of the campaigns Lovelife conducted on behalf of Government. For Health it was decided that Lovelife would help with the HIV/Aids testing campaign, and that had helped because 20 million people were tested since the campaign was launched. Secondly, Lovelife was also used to ensure that people adhered to their treatment. The functions were changed so as to ensure that Lovelife was not paid twice for the same kind of work it had done on behalf of other departments.
Ms Matsoso said these were the primary reasons why the three NGOs were being funded.
The Chairperson commented that NGOs needed to be looked at especially as it pertained to employing and paying poor people. Most of these NGOs conducted work that was linked to the Department. DoH was efficient and could employ people. Especially since some people volunteered for the NGOs for a number of years without a salary. This needed to be looked at because what it meant was that some labour broker was making money.
Ms Muthambi sought an assurance from DoH that the use of consultants was on the decrease.
Ms Matsoso replied indeed this was the case.
Mr Kimi Makwethu, Deputy Auditor General, commented the Department had very strong systems when compared to other departments AGSA audited. Of all areas examined in the performance audits, DoH stood out and others could learn a lesson from the Department.
Ms M Mangena (ANC) commented public hospitals were not satisfactory when it came to hygiene. It appeared no one cared; everyone did as they pleased. She asked if nurses trained at fly-by-night colleges were effective at all. It was puzzling that money was pumped into nurses not trained by the department. She asked if DoH considered emulating the Department of Higher Education and Training (DHET) on closing down fly-by-night colleges.
Ms Matsoso replied DoH worked with the National Health Council to regulate qualifications in the profession. The Department was not happy with the provisions of the regulations; it was not only about the fly-by-nights but also how nurses were trained. DoH did not accept qualifications from the fly-by-night colleges. Students spent money on such a qualification, and when they completed it, they could not find employment anywhere.
Ms Matsoso replied DoH had conducted an audit of all health facilities in the country, and therefore knew which facilities required hygienic assistance and why they were dirty. Facility improvement teams were sent to facilities to improve things, with or without consent of the provinces. DoH would like to get the provinces to take responsibility for this.
Ms T Chiloane (ANC) asked if there were any other privately operated laboratories. It was concerning that senior management did not know the number of labs, given that everything in the health sector had to be registered.
Mr R Ainslie (ANC) sought clarity on whether there were any labs doing medical research without being registered. If so, this was concerning as there appeared to be a lack of control.
Ms Matsoso replied there different kinds of laboratories. Some labs were used for regulatory processes. When a vaccine had been produced, there had to be batch to batch consistency tests. These labs were validated by the Medical Research Council. Information on these labs was available, but the WHO study only concerned polio. The other lab was the one that had oversight over any vaccine in the country. This was a regulatory laboratory and its functions were performed by the University of the Free State. And also there was the NICD, in an event there was outbreak in the country.
Mr D George (DA) asked if there were rules, when engaging services of consultants, at the start of the process. How this was monitored by DoH? If this approach worked for DoH, why was it working? He said good practice could be adopted by other departments.
Ms Matsoso replied DoH had tried to put systems in place. Firstly, systems were put in place in terms of Treasury regulations. At the moment DoH had been working with contract lawyers and the WHO. The Minister had put in a task team to look at procurement services including within provinces. The Department wanted to establish whether it was still necessary to keep medicines in depots.
Deputy Minister comments
Dr Gwen Ramokgopa commented that government had earlier given too much focus on national competency, that was developing regulations and doing away with the previous backlogs. There was a need for national government to take national responsibility when it came to support and ensuring compliance in the country.
During the time of the audit there were two high-level ministerial task teams that assessed reasons not only why people were not getting the services they required, but also why the system in the country appeared to be betraying its democratic ideals. It was found that the national department was not capacitated to ensure proactive and pre-emptive support oversight to provinces. It was found that skills capacity was that of policy development not implementation and oversight. Many of the interactions with provinces consisted only of MinMec meetings, reporting and crisis management.
The audit coincided with the restructuring of DoH and that resulted in an increased use of consultants. As alluded earlier, DoH had conducted an audit of all its facilities, as their status was known. The audits were conducted by departmental staff comprising senior managers; DoH was changing how it worked. With the health system maturing, everyone had now to focus on the front line, as well as on efficiency and competency. The Department had matured in terms of the role it had to play in the country.
Department of Transport (DoT) hearing with Minister
The Chairperson commented that he had expected the Minister would be accompanied by the DG, but he was not present. Even when the Committee met the Road Traffic Management Corporation, the DG was not present.
The Minister replied the DG’s contract expired at the end of February. Interviews for a new DG were ongoing. He explained that Dr Maria Du Toit would be acting until the new DG was found.
The Chairperson sought clarity as to when the process would be completed, and also if it was not possible for the Department to be proactive, given that it had known as far back as 2010 that the contract of the DG would be coming to an end this year. The fact was that in three weeks time it would be the end of the financial year and the beginning of the audit. The man in charge was not there.
The Minister replied DoT had started the process of interviews and was at the stage of vetting the candidate.
Mr George commented that the Committee should be forceful about political accountability even if personnel changed departments. Often, when departments appeared before SVOPA, they claimed those who signed contracts were no longer with them. This had to stop, and the Committee needed to demand accountability from officials to the people whose money got squandered in huge sums. If something happened at a Department and personalities changed, somebody should remain accountable. At some point the Committee needed to draw a line and say it was not good enough for anyone to claim as an excuse that everyone responsible had left.
Mr Ainslie commented that Mr George was jumping the gun. The Committee was blessed with the Minister and his entire delegation’s presence. They had all come to account. Mr George was assuming they would say they did not know what had gone on. The Minister and his delegation should be allowed to answer questions.
Dr Rabie supported Mr George's view, and said there was a need for continuity and that the turnover rate of senior officials was too high in government. The taxpayer paid a heavy price as a result of this.
Mr Martins commented that he was the Minister of Transport and that he was responsible for operations at DoT, and would thus not claim to have started only six months ago when required to account. He inherited all the good the department had done, plus its failures. It was the Minister’s responsibility to address any challenges that were there.
Mr N Singh (IFP) sought clarity on the whereabouts of the Chief Financial Officer (CFO), and why there was an acting CFO.
The Minister replied the Department was responsible for 12 entities and therefore seconded a number of personnel to entities. This was a problematic approach because it meant the Department was left without expertise. Although he not sure what happened in this particular case, Mr Collins Letsoalo (former CFO) had been deployed to the RTMC, and Mr Dan Pretorius was acting CFO. He commented that the Department should, where possible, have a full complement of permanent employees. It should rarely happen that consultants were used, as consultants often created a need for themselves to be entrenched in the department. To that end DoT was auditing those areas of the Department where consultants were engaged.
Mr Singh said the Auditor General performance audit indicated lack of planning, management, monitoring and evaluation in all seven areas that the Committee took an interest on. He sought clarity on the increasing vacancy rate that currently stood at 33%. What was being done to ensure that the establishment posts were filled in the Department?
Dr du Toit replied planning had been a priority for the last six months at the Department. Measures were introduced to not only link the planning capacity with the budgetary cycle, but also ensure procurement plans were aligned with the strategic plan. At the time of the audit, there was a lack of controls with regards to planning, monitoring and risk management. DoT had introduced a robust approach with regards to planning and strategies - including the public entities - in the planning cycle. The Department had undertaken a restructuring process where a number of positions were created. The Department had set a target which was to have the staff establishment completely filled by the end of the financial year 2014. Existing vacant posts were not all funded, but the process of filling the funded positions was in the final phase. Restructuring was about to be concluded; discussions had been held with the unions. People had been assigned to positions, and a particular development programme had been created. Filling posts would receive priority and the leadership had been requested to immediately make appointments. The Executive had put down particular target dates to fast track appointments.
Mr Singh said it was concerning that people, although with skilsl, had been deployed to head portfolios not in alignment with their skills. This fact was alluded to by the Transport Portfolio Committee Chairperson (Ms Ruth Bengu). This meant there were warm bodies but they were not being used correctly. He asked if the official agreed with the statement and whether anything had been done to address the matter.
Dr du Toit replied it was true there were capacity constraints. As a result the Department had implemented programmes to ensure staff who lacked capacity could be equipped. There was an internal support and skills development programme to address this challenge. There was a general capacity constraint in the modes of transport. The policy change that was driving all modes of transport within the Department still had to be conducted. The Department would ensure the change also filtered well within entities as well. The reference to skills development was not limited to administrative skills but all areas registering shortages at DoT.
eNatis (Electronic National Administration Traffic Information System)
Mr Singh sought clarity on the continued contract renewal for the consultants used for eNatis. He clarified that the questions would focus on the period the AG had identified. It was not wrong to outsource certain specialised services. Although eNatis was working, the contract had ended in 2007, and there were certain legal requirement with regards to extending the contract. There needed to have been a development of a transfer management plan of all the functions of eNatis except software development. This transfer did not take place, why?
Dr du Toit replied the eNatis contract and the service provider (Tasima) had been a concern previously. The matter was addressed from a high-level managerial point of view, but the matter that had to be responded to was the extension. The intention was for eNatis to be transferred and this was still the view of the Department. When one transferred an information system such as this one, there were strict government obligations as set out by National Treasury and the ICT Information Systems Entity of SA. The Department was ready to take over and have all services transferred at the time, but the contract got extended. The extension was perceived to be irregular and as a result, DoT had referred the matter to court.
She requested the protection of the Chairperson not to divulge information that would be seen as sub judice with regards to the particular matter.
Mr Singh sought confirmation if his understanding of the reply was that DoT had been ready to run eNatis on its own since 2007.
Dr du Toit replied transfer would have meant a "process" and not an immediate "dumping" of the programme onto DoT - but when the Department was ready. The transfer management plan would have stipulated how and when the integration process of the eNatis function happened. Members needed to be careful when looking at the methods of implementation.
Mr Singh commented since 2002 up until 2007 nobody bothered to monitor the transfer function to DoT and how it would be carried out. It was not clear whether this was due to reluctance on the part of the consultant, or apathy on part of the Department. After 2007 DoT went onto a month-month contract amounting to a billion rand, in four years. The contract included additional services that were initially not there. He asked who was responsible for the contract, against the background that four legal people gave four different legal opinions.
Mr Singh asked why a month-to-month contract was entered into given that DoT was only obliged to pay for software development.
Dr du Toit replied both of the matters were part of the court case that DoT was involved in with Tasima, and that both were sub judice. She requested the DDG for eNatis to provide answers where possible.
Mr Rajesh Jock, DDG Information Transport Systems, DoT, replied that the month-to-month extension, started in June 2007; this was the end of the build operating transfer period. The contract made provision for a transfer period to be linked to the term of the initial contract. The Natis system that was operated before it was automated was an intense development that included building a data centre, and ensuring there was capacity to do online transactions.
The Chairperson commented that the impression was that the Department realised only a month before the contract expired, that there was still much to be done. Departments entered into contracts that were not beneficial to the state. He sought clarity if the month-to-month renewal [R33 million per month] was part of the initial contract.
Mr Jock replied that after DoT involved the management transfer process, the contract became a ten year contract ending on 20 May 2012. This included the period of the initial build, plus the five year transfer period. This was all legal in terms of the contract; and the legal tussle only involved the period after May 2012 and those issues were sub judice.
Mr Singh commented he had difficulty with the sub judice rule. He said in his understanding Parliament could ask anything and this was confirmed by the Constitutional Court. Parliament did not want people hiding behind the sub judice rule unless it would compromise DoT’s case, in which instance the Committee would have to be told how. The rule did not apply here; many officials tried to invoke the sub judice rule in trying to evade questions. Despite being told that the Department only had to pay for software, DoT went on to make three payments amounting to a billion rands. The last payment was given to third party suppliers; the AG did not get answers as to who the suppliers were. Could the Committee be informed who the suppliers were?
Mr Pretorius replied he did not have the breakdown but that information could be forwarded to the Committee.
Mr Jock replied besides software development, DoT worked on maintenance and enhancement of the system. The software related to upgrades that were necessary. Upgrades related to software upgrades where new modules were a necessity.
The Chairperson interjected and asked why new modules were needed at such a huge cost just when the function was about to be transferred to government.
Mr Werner Koekemoer, DDG eNatis, DoT, replied the eNatis is a dynamic environment. One could not develop a system to a point and then it became static. There were generally three areas that impacted on the additional requirement - new legislation; anti-fraud and prevention; and service delivery initiatives. He cited an example of the point demerit system that had to be supported by the information system. A module where all the fines were kept had to be developed. One should have the contractual issues in place to support this and not the other way around. From the software development perspective, the three items would forever impact on the eNatis.
Like any other system of this kind, eNatis would have to be enhanced into the future; there would have to be internal capacity to do it or outsource it on a continual basis. He said the hardware of this nature was operated all the time, and that necessitated that the system be available 100% of the time. In the last seven years the system had never failed, and had never been down for one moment. This was not by chance, one had to make sure that there were two data centres and that equipment was up to date. eNatis would continue to cost going into the future; this was how a system of this nature was supported. All that needed to be in place were the contractual issues to support data.
Mr Singh commented that it appeared that Tasima was the only company that could do this. He said there was a legal opinion that DoT not pay for anything other than the software development; who and where was that person?
Mr Pretorius replied when the contract expired in 2007, it provided for the management period. The DG at the time invoked the transfer management plan. He wrote a letter to the supplier who in turn responded by saying it accepted the provisions made about the transfer, but until the transfer management plan had been implemented it would continue to render the service. Additional services were added, and were agreed to by a steering committee chaired by the Department and represented by all the provinces. Agreements were reached about the enhancements that had to be made to the system.
The Chairperson interjected and sought clarity on whether the CFO was suggesting that the supplier insisted that it would manage the transfer management plan, and that DoT would have to renew month-to-month.
Mr Pretorius replied, yes.
Dr du Toit commented that similar concerns were raised by the Executive and forensic investigations had also raised these. A report was received on Friday and actions would be taken against any form of misconduct. A response would be forwarded to SCOPA on the progress and how this matter was being handled.
Mr Singh said the Hawks and other agencies should be involved. The sums quoted were mind boggling, even worse in light of the fact that it was the consultant that requested an extension of five years against what the RTMC had suggested that the contract be re-advertised.
The Minister said DoT would go through the forensic audit but also would forward the matter to the Hawks. Any officials who might have colluded with people from outside; those people belonged to prison. This was DoT’s responsibility.
Mr Singh asked for the names of officials who managed the contract at that time. He clarified that this was not making any allegations against the officials concerned.
Dr du Toit asked for the protection of the Chairperson, and said the names would be made public quite soon.
The Chairperson said rules stipulated that anyone in Parliament should reveal any information required. All the Committee wanted to establish was who managed the contract at the time.
Dr du Toit replied the management structure of the Department at the time was complex. The names mentioned were not an indication of any involvement in irregularity. The DG at the time was Mr George Mahlalela; DDG: Financial Services was Mr Collins Letsoalo; and Line Manager: eNatis was Mr Zakhele Thwala.
Mr Singh asked if it was normal to just write five lines when extending a contract of that magnitude. He requested a written comment from Treasury about the contract.
Dr du Toit replied if the five-line letter had been regular, DoT would not have been in the middle of court case. The Department was refuting the legitimacy and the correctness of that letter.
Mr Singh asked if there were any measures in place, by way of seeking legal opinion, to re-look at the service provider and the terms of the contract.
Dr du Toit replied the Department was focussed on managing the contract, and that the performance monitoring received the highest priority. There also was the building of capacity to ensure the transfer. DoT was in a process of establishing a trading entity that would manage the eNatis system within the Department. Internal controls were being put in place to ensure a smooth transfer of eNatis, but also building maximum capacity within the Department.
Mr I Ollis (DA: Portfolio Committee on Transport) commented the date as when the contract was given was different to what the Transport Portfolio Committee had been given. He sought clarity on why the contract was extended twice with the same company without a consultation process. For a contract that was initially worth R594 million, how could it be that the cost for additional modules amounted to over a billion rands. He commented that there were no controls in place for extra spending. The extra spending was not in keeping with the original contract.
Mr Ollis sought clarity on whether it was correct that one of the shareholders of Tasima was Thompson CFS. He described the company as questionable, and said Government should not deal with stained companies. He asked who signed the letter to renew the final contract.
Mr Jock replied the contract was in three periods. The contract ran from the period 2002-2007; the contract made provision for a transfer period equivalent to the initial term of the contract. The transfer was invoked in 2007 and would therefore have to run to 2012. In that period, around 2010, the DG renewed the contract and this was the irregularity; this was the period that was being disputed in court and DoT was challenging the validity of that contract.
Mr Koekemoer replied the contract was awarded to a consortium consisting of Arivia.com, that was a state entity, Webcom Consulting and Thuthukani. In 2010, when Eskom sold off its assets, Arrivia.com exited the consortium. And since then, Webcom and Thuthukani were the only shareholders left with 50% of the shareholding. There had never been an indication that Thompson CFS was a shareholder.
The amounts paid to the consortium needed to be broken down into different areas. For instance a certain amount would be paid for a service as it was outsourced. The companies would in turn pay third parties for the services provided such as Telkom for the network or the Post Office for sending out of licence renewal notices. It was important that there was a breakdown of the payments to see how much went to the consortium per month. The amounts quoted included the actual amount for operations, and were not only for the new modules. It was difficult to just say the actual amount had doubled.
The Chairperson wondered aloud how payments to the third parties concerned DoT.
Ms Chiloane commented that in terms of the law, it was the State Information Technology Agency (SITA) that should provide the goods for information technology. DoT’s monthly extension meant the money that should go to SITA went elsewhere. The Department continued to be non-compliant, despite the findings by the AG.
Mr Jock replied that at the time eNatis was to be developed in 2002, it was envisaged as a build operating transfer. DoT involved a consortium that would do that. In the plans currently, SITA had been involved and had thus supported the IT master plan. In the project, DoT had prepared to receive the system in June 2012, and was supported by SITA to receive it. Unfortunately because of the irregular extension not all of the system was received. There was a fundamental difference in what SITA could offer. DoT was building integrated transport solutions.
Mr Ainslie commented the Committee noted with approval the statement in the report that there had been a steady decline of the use of consultants by DoT. He asked if the transfer management plan existed, especially in light of the fact that the AG asked for the plan, and this was not availed. Would the Committee be furnished with the plan if it wanted to read it before finalising resolutions on these matters?
Mr Koekemoer replied that there was a plan that the Department drafted relating to all the services.
The Chairperson asked if the consultant had developed the plan.
Mr Koekemoer replied the physical plan was available and the consultant gave input into the plan. The actual implementation of the plan required the consultant to release some of the services. This was the matter that was currently in court. Once DoT had crossed the hurdle of releasing the service, it could implement the plan.
Ms R Bhengu (ANC: Chairperson Portfolio Committee on Transport) commented that the Transport Portfolio Committee had raised the question with DoT about planning and skills transfer. If addressed, the question would have resulted in a reduced number of personnel from the consultant's side, and internal capacity being developed. Questions around the breakdown of the payments were also asked. Had the Department prepared the information requested by the Portfolio Committee on the breakdown of finances?
Mr Koekemoer replied, yes, the finances on eNatis had been prepared on each component. Figures were readily available per category on a spreadsheet for the entire contract period.
The Chairperson requested that this information be availed to the Committee as early as in a week’s time.
Dr du Toit replied the information would be availed to both Committees – SCOPA and the Portfolio Committee.
Mr Rabie sought clarity as to when the findings on the forensic investigation would be made available.
Dr du Toit replied DoT would have to decide on the type and the nature of the disciplinary actions to be taken once the forensic report had been received. There was a process to be followed. There was a pending involvement of the Hawks. The moment such a decision had been made, the Department would release the report, but in a manner that would not jeopardise the disciplinary process. She could not say with certainty as to when, but it would be soon.
Ms Muthambi sought clarity on why the DG was allowed to sign off the extension if other officials were aware that he acted beyond his authority. Was this brought to the attention of the Minister? She asked if Mr Letsoalo was the CFO who had overseen all these irregularities. She pleaded with the Minister that action be taken against the officials who disregarded their duties, especially in light of the Public Finance Management Act (PFMA).
Dr du Toit replied she understood the frustration. She would love to protect her team, as the names reflected on the executives involved at eNatis. At the time there was no indication of irregularities. The matter was brought to the attention of the executive that something irregular might have been happening.
Mr Pretorius replied that when a contract over R1 million was awarded without a competitive process, it had to be reported to National Treasury. This was done, and was report to the AG. During the past audit, auditors were aware of the extension; this particular query was raised with them. At the time the Department made a commitment to negotiate itself out of the contract and that did not happen because of the legal dispute.
Mr George sought clarity on whether the Minister of Finance was informed of this irregularity. He asked if there was a list of all those companies that had been paid. It was critical that the lists indicate who the shareholders were, because this was where the truth could be established.
Mr Pretorius replied that this was reported National Treasury’s national supply chain management office and not the Minister. The list of companies could be received from the payment advices.
Mr Singh commented that National Treasury’s supply chain management office had to reply. He sought clarity on whether both Ministers – Finance and DoT – were not informed. He asked what contingency plans were there, in case consultants decided to pull out of the contract tomorrow, to ensure there was no collapse of the vehicle registration system in the country.
Mr Pretorius replied neither of the Ministers was informed.
Mr Koekemoer replied that although eNatis was a complicated system, there were a number of competent IT consultants including SITA. But the Department had developed internal capacity. There was no rule that said Tasima was the only one who could provide the service.
Taxi Recapitalisation Programme (TRP)
Mr Singh commented there was a view out there that taxi recapitalisation was “not the right thing”. The AG claimed there was a contract of about R640 million given to a Scrapping Administration Agency. The AG had also claimed that inflation had not been taken into consideration in the R50 000 scrapping allowance. He requested a comment, and asked if the programme would continue. If so, how many taxis would be involved? He said this would allow the Department to budget appropriately. It would seem DoT’s budget had increased dramatically as a result of underestimating the number of taxis. He asked if the number provided to the AG was correct. Why did the consultant not provide the information?
Mr Mathabatha Mokonyama, DDG: Public Transport, DoT, replied the taxi recapitalisation programme resulted from a needs assessment as part of a capital subsidy provided to the taxi industry, mainly to remove unsafe vehicles from the road. This was how the information on the eNatis came about. Two years into the contract, the performance of the contract was assessed. This resulted in the acknowledgement that there were 35 000 other taxis that were also out there as the taxi industry was unregulated at the time.
It went back to Cabinet to indicate that there were 35 000 extra taxis. The fixed rate was agreed on with the taxi industry as a scrapping allowance. This did not take into consideration increases in the Consumer Price Index (CPI). The Department went back to Cabinet to indicate the financial implications.
Cabinet approved two things: firstly, the allocation from Treasury at the time would not allow the programme to finish in seven years as the money did not match the estimated budget. DoT wanted an increase, and Cabinet refused but said the Department would have to scrap all the vehicles even if it took longer than the seven years. DoT approved CPI linked increases each year. From 2009 inflation was factored in, but the 35 000 semi-illegal vehicles came to the fore.
The Department proceeded with the taxi recapitalisation on the new figure that was CPI related. Today, DoT had scrapped 53 800 vehicles. Although half of the total number to be scrapped, the budget was nowhere near the budget for the programme which was just over R7 billion. Just over R2 billion had now been spent.
Mr Singh asked if there was a need for consultants for this kind of work. DoT did not get the kind of performance it expected from this consultant. He asked how long would the consultant be in place. What was the Department doing to develop capacity internally, especially if the programme was going to stay?
Mr Mokonyama replied that it was a consortium that was awarded the contract. The consortium comprised Neo-Solutions IT (32%); Siyazi Holdings (36%); Derime Group of Auctioneers (32%); constituting 70% of the contract and 30% was for the taxi industry. This was supposed to be a once-off programme for seven years, unfortunately this was not supported by the monetary allocation.
Taxi recapitalisation was not envisaged to be long term. But too there was an issue with machinery and equipment that could not be used post recapitalisation. This necessitated a scrapping yard in all provinces. The specialised part of the work would have resulted in redundancy in terms of resources post scrapping. This was the main reason it was not feasible to create capacity internally.
DoT was in the seventh year of the seven years. The contract was expiring at the end of the year and there were a number of issues around that.
Mr Singh commented that he wished the Minister would comment on taxi recapitalisation especially as less than half of the objectives were achieved in seven years. He said a trust fund should have been set up so that the money that the Department would have received after paying the contractor would go into the trust. The money that was received as a result of scrapping the vehicles was not given; no report was given, why was that so? This money should have accrued to some of the taxi owners. There was no accountability for the money.
Mr Mokonyama replied the contract provided for the creation of a development trust. Its function was to keep money accruing from scrap metal as well as the 30% shareholding of the taxi owners. DoT did not have representation in the trust fund, but that had since been addressed. DoT at the time relied on reporting from the consortium in terms of the contract performance. The Department had since enhanced oversight.
The Chairperson interjected and asked if the performance reports were submitted.
Mr Mokonyama replied yes.
The Chairperson commented that the AG’s performance audit said something different.
Mr Mokonyama replied the issue was the adequacy of the information and not whether reports were submitted. The information provided did not satisfy the AG.
The Chairperson sought comment from the AG on whether it was inadequacy of information or that the performance information was simply not there.
Mr Jacques Boshoff, Manager: Department of Transport Portfolio, AGSA, replied that quarterly reports were requested but by the conclusion of the audit they had not been provided.
Mr Singh asked if there was any other report submitted to the Office of the AG subsequently.
Mr Mokonyama replied that officials who were there at the time had informed him that it was provided.
The Chairperson disputed this and said the report did not indicate that. If the Department had submitted the report it should have indicated in its comments on the report that it had provided the information but it was inadequate.
Mr Singh asked if payments were ever withheld due to non-performance in providing quarterly reports.
Mr Mokonyama replied not to his knowledge.
The Chairperson asked if there had been challenges about quarterly report submission.
Mr Mokonyama replied no.
The Chairperson sought clarity on the claim in the Auditor General report that submission of reports did not happen.
Mr Mokonyama replied at the completion of the audit, the AG indicated that the information was inadequate. The response was on the issue of the trust fund only.
The Chairperson commented that he did not know what the Department discussed with the AG, but the report submitted to Parliament said something different from what the official was saying. He requested comment from the AG.
Mr Boshoff replied that a significant amount of information regarding the scrap metal was not received during the audit. Subsequent to the audit, on 27 November 2012, a one page sheet was received and it detailed the process about the scrap metal. That document had not been subjected to audit. But during the stage of the audit, very limited information was availed about the scrap metal.
The Deputy Auditor General, Mr Kimi Makwethu, commented that at the time of requesting the management information pertaining to the Trust, the AG wanted to establish if any records were kept. This set of information was supplied on an Excel spreadsheet and this was not a management’s account for accountability; this was merely a summary of a record of transactions. It was fair to conclude that the information requested was not received at the time of the audit. Steps had been taken to find out whether management accounts were in place but that too was not satisfactorily answered.
Mr Singh requested the figures from the spreadsheet on how much was accrued on scrapping.
Mr Makwethu replied the schedule covered proceeds from Year One to Year Seven. The total proceeds was R45 million for the period outlined.
Mr Singh commented that was a lot of money, and that a Trust was a legal entity that had roles and worked according to law. The operation of the Trust should be looked at closely, if the Minister could take that forward.
Ms Chiloane commented that the matter of the Trust took seven years for DoT to look into, and only after the AG had raised this as an issue. When the Trust was introduced the idea was to assist taxi owners. DoT failed to monitor and evaluate the Trust and ensure that the money generated went back to communities. This was disappointing and needed to be recorded, especially since the DoT was about to finalise the project and yet numbers were shockingly low. The Department needed to do what it should be doing.
Mr Mokonyama replied that a programme of this magnitude required regular assessments.
The Chairperson interjected and said this was only done after two years.
Mr Mokonyama replied no, in two years DoT responded on a number of observations taken over a number of years.
The Chairperson sought clarity on this statement and on what the Department had been doing.
Mr Mokonyama replied DoT went back to Cabinet, hence the issue around fixed and flat rate was reviewed. The Department was now receiving monthly reports. There was a registered trustee to take care of the Department’s interests within the Trust.
Mr Ollis commented that DoT had for seven years handed over taxis to be scrapped by a contractor without checking what the contractor did with the money. It could have been given to anyone; was this true? The R45 million where was it, and who audited it now? He commented that no one knew if this was the correct value for the scrap metal.
Mr Mokonyama replied it was not true that monitoring did not happen; receipts and disbursements could be supported by bank records. DoT did not have control of the scrap value, plus the dividends received from the industry. It should be easy to audit the Trust account.
Ms Muthambi sought clarity on who owned the scrapping administration agency. She wanted assurance that there was no government official who was a member of the Agency. She asked if the Trust was registered with the Master of the High Court. If this was so it would be pretty easy to get financial statements for the Trust. She would prefer to hear whether taxi owners benefitted from the Trust and if there were specific examples of how taxi owners were assisted.
Mr Mokonyama replied the scrapping agency was managed by a consortium comprising Siyazi Holdings; Neo Solutions, the Tirani group and the taxi industry through the South African National Taxi Council (SANTACO). Information on directors was not available but could be sourced. The Trust was duly registered and had its own set of financials that could be audited. He said the money benefitted the taxi industry. The money was spent on matters such as the national conference, provincial offices for Gauteng, Limpopo, North West and Eastern Cape, Operation Hlokomela (a road safety campaign by the industry), and computer equipment for the Mamelodi Taxi Association.
The Chairperson commented that he had thought not all taxi groupings fell under SANTACO. How did the Department got around that technicality.
Mr Mokonyama replied the history behind SANTACO and the National Taxi Alliance (NTA) would require another day. At the time when the contract was awarded, SANTACO was the only recognised council as it was a government creation. The NTA was formed by members who were disgruntled by the elective conference of the whole formalisation of the taxi industry in 2005.
The Chairperson commented that five years later DoT could look at discussions leading up to the formation of splinter groupings as taxis that were scrapped were not only those belonging to SANTACO members. He got a sense that this was not considered at all.
Mr Mokonyama replied this was indeed the case. This was the matter DoT was seized with - that it could no longer disregard NTA. But the approach was for the NTA to come to the government-created council (SANTACO). Even today, there could be a call for unity, but one would always have disgruntled members who would march out and organise separately. The Department still hoped to unify the taxi industry, because it was aware of the problems before the formation of SANTACO.
The Chairperson commented that it was not realistic that the country could just have one body.
The Minister of Transport commented that this was an issue he had addressed with the Department. Only one body was recognised and as a result, the group derived a benefit from the Department. The reality was there were similar entities demanding the same recognition and benefits.
Mr Singh commented that this was more food for thought for the Minister. Not only were routes a source of conflict but money and benefits as well. This was unthinkable that the Department could not read the situation on the ground, especially that people were killed daily at ranks.
Maritime Pollution Prevention Response and Services
Mr Singh said there was no proper planning at the Department. This was a contract amounting to R235 million that expired in 2008, and then there were three extensions for over 21 months costing R98 million. Were there people working within the contracts division at the Department; why was it that three months before contracts expired, the Department did not source new terms of reference and new service providers. He said if the report had not been written by the AG, he would have believed he was reading a comic book.
Ms Hamida Fakira, DDG: Maritime, DoT, replied it was unfortunate situation that the contract was extended for a period of 21 months. The original contract made provision for an extension up to a maximum of three years. In terms of the contractual arrangement, there was nothing irregular about that.
The Chairperson interjected and said it was problematic that conditions were created and lopsided in favour of the contractor. This made contractors believe they were residential contractors. Contracts were designed in such a way that there would be these perpetual extensions.
Mr Singh commented this was unacceptable. This happened in every situation where a contractor had been engaged. He pointed out that this was only sample auditing; if a thorough audit were to be carried out, one would find these things happening much more. The other day, Parliament was told about the country spending a trillion rands, and yet half of this amount was wasted or simply put in people’s pockets.
Mr S Thobejane (ANC) said the provision for the contract extension was irregular particularly because no one bothered to verify if deliverables were met. Blanket extensions could not be given for no valid reason.
Ms Fakira replied the Department did not just want to extend; DoT went through an exercise during that time of an open bid process which was explained in the report.
Mr Singh sought clarity on the two people responsible for evaluation. Could the Committee be furnished with the names, and what conflict of interests arose for a legal opinion to suggest that objectivity was brought into question. This was the third extension.
The reply to this was that the chairperson who chaired the session was a member of the board for the Port Regulator. Unfortunately he had been appointed as part of the bid evaluation committee. He was with a consortium with another company and this was realised later after the appointment, but it was reversed.
The Chairperson interjected and enquired if no vetting happened when people were appointed.
The response was that members had to declare when they were appointed, but in this case it was discovered late that he did not declare.
The Chairperson asked why the Department required a legal opinion when it discovered the person lied. Should it not be common cause that such a person should be removed?
The reply was the matter was raised by the chairperson of the evaluation committee. Unfortunately the bidding committee of the Department simply said the process had to be restarted.
Mr Singh sought confirmation on whether the tender was awarded to the same people awarded before.
The tender expired with Smith Marine International, they then formed a BEE company – Smith Amandla Marine, who won the contract again.
The Chairperson interjected that the contract was given to the same company.
Mr Singh quipped it was the same company with only “amandla” in between.
The Chairperson commented this was obvious fronting. Who were the shareholders of Smith Marine and the Amandla part? This was just graft.
The response was that the company was black owned, with a minority shareholder being Smith International.
Events management project
Mr Singh commented the Committee needed to pursue value for money for event management projects. The department appointed a consultant for an amount of R45 million to manage the 2007 October Transport Month, two conferences, and promotions for the 2007 and 2008 Arrive Alive campaigns. He had once attended a function hosted by DoT, and people were made to pay R1200 for a plate of food simply because it went out to tender. This needed to be looked at seriously.
Mr Singh said the scope of the project was changed internally by a staff member without approval. Two more events were added to the scope of the consultant’s work. The two additional events cost R4.3 million. He asked who this person was. The report indicated the person was dismissed and a summons amounting to R2.9 million issued. Had the summons been issued; who was the consultant; was he still on the database, because according to the report the consultant charged the Department wrong fee.
Mr Pretorius replied on the value-for-money issue that the contract went to open tender. Additional services had been added to the communication tender, but those had been declared irregular and the official had since been fired. The additional services to the contract were approved by the bid adjudication committee. The value of the contract was never exceeded; this was a two-year contract to render a conglomeration of services.
The Chairperson asked if additional scope given to a contract was the responsibility of the adjudication committee or management at the Department.
Mr Pretorius replied that this was a responsibility of the Department but that there were certain delegations of power.
The Chairperson asked if this included the bid adjudication committee.
Mr Pretorius replied yes.
The Chairperson asked if the bid adjudication committee was delegated the duties.
Mr Pretorius replied what normally happened was additional services were to be added with a motivation.
The Chairperson interjected and asked from whom would the motivation normally come.
Mr Pretorius replied the originator, and in this instance it was the communications unit that prepared the memorandum to the bid adjudication committee requesting additional services be added and motivating why those services could not go out to tender. The bid committee had to take that decision bearing in mind that the decision, not to call for tender, had to be able to be defended in court.
The Chairperson asked where the irregularity lay if the bid committee had approved it.
Mr Pretorius replied when the bid committee approved it there was none. The irregularity was that the person in charge of the contract added additional services.
The Chairperson asked what was it that the bid committee approved.
Mr Pretorius replied there were two events that were covered within the original contract of R45 million.
The Chairperson said this was all fine but the Committee was only concerned with the additional services that cost over R4 million. Who approved this; were these approved irregularly?
Mr Singh insisted on the name of the official who had been dismissed. He bet his bottom dollar the official was at another Government department. This was what officials did. They moved from one department to another when found to have contravened the law. He asked about the recovery summons.
Mr Pretorius replied the Department took legal action against the consultant, and in turn the consultant took the DoT to court. Within the tender, certain services were tendered for at certain prices. The Department withdrew from the events company; this was what should have happened. In every event the communications unit requested quotes from the tenderers from the consultant, but the unit failed to ascertain the actual prices on the quotes. The discrepancy was picked up, although not higher, it was inconsistent with the prices tendered, and there was no management team included in the tender. Legal action was taken to recover the money.
Mr Jock said the official concerned was suspended days before the October Month kicked off, when the irregularities were discovered. Charges were developed and proper disciplinary processes were followed. He said the code for leaving the public service, as reflected in Persal, was Dismissal and should that person seek employment in the public service it would be reflected. He said there was nothing stopping the person from contracting with the state.
Mr Thobejane commented that departments should not just outsource without defining exactly the scope of work, and have the project manager inside the department. This would allow for effective monitoring and that a particular consultant had the requisite expertise. The first thing that departments needed to do was ensure they had monitoring capability over consultants. It appeared that the services offered by consultants were not being properly looked into, and departments were happy to just pay. This was an area that departments needed to improve on.
The Chairperson commented when Members questioned and raised issue, often they knew well what they were talking about as they could have been exposed to those areas of function.
Mr Singh commented that the corruption surrounding the contracts for the October Transport Month was alarming. He said the consultant “doctored” the contract to suit his own needs. This needed to be dealt with and the responsible officials should be sent to jail. He said this was the sentiment of all Committee Members.
The Minister commented that corruption had to be dealt with severely. Anybody who abused a position of trust for personal benefit should be given a sanction that was higher than normal.
Mr Singh commented he was happy that the Minister shared the view of the Committee about severely sanctioning officials involved in graft. He with the rest of the contracts fingered by the AG, something needed to be done, particularly the Airports renewal contracts that was still incomplete 18 months after the contract had expired. It was encouraging that the Minister was promising action, and that the Department would have to appear before the Committee on the same issues next year.
The Chairperson commented it was important that the point that this was a sample audit be reiterated. If a thorough audit were to be done, results would be very scary in relation to how contractors were managed. How the contractors were managed was crucial for compliance with laws. The Acting DG needed to think long and hard about this issue.
Ms Muthambi commented that the names of the officials dismissed should be forwarded to the Committee. What transpired at the meeting was only part of the problem; a lot could be at stake. The eNatis should be followed closely and criminal charges should be preferred on all fingered in the report. The Department should not wait for the forensic investigation. There were instances that it was clear that fraud had been committed.
Ms Bhengu commented that issues picked up by the AG had already been dealt with at the Portfolio Committee. The Committee was concerned about value for money, not only for this department but across government spheres. There would be a follow up on the matters raised. The Committee was concerned by the over usage of consultants and lack of internal capacity. The Committee would want to see a plan in place with regards to skills development that would ensure internal capacity.
The Minister of Transport commented that he would ensure the DoT did not appear before SCOPA again otherwise there would be something materially wrong. Issues raised by the AG were serious, and it was abundantly clear that the challenge was much greater than the issues dealt with at the meeting. It was important to maintain a good relationship with the AG, so that when standards slackened the Department could address them. Where criminality was involved, this issue would be dealt with. DoT wanted to deliver on a scale that was in the best interest of the people. Public servants had to carry this mandate on behalf of ordinary people.
The Chairperson commented departments needed to give room space to the internal audit function. This was the tool that should assist management. If one operated with corrupt senior officials, it was the entity that got suppressed.
The meeting was adjourned.
Business Day Live article: Taxi project busts budget by R12.9bn
by Paul Vecchiatto, 27 February 2013
FINANCIAL mismanagement at the Department of Transport led to the taxi recapitalisation programme spending R12.9bn — 74% more than its budget — and the eNatis vehicle registration system going R1bn over budget.
Department director-general George Mahlalela’s contract expired on Sunday and is not being renewed.
Of the thousands of taxis bought from their owners by the department and sold for scrap since May 2006, not one cent could be accounted for, officials from the auditor-general’s office told Parliament’s portfolio committee on transport on Tuesday.
The officials said the Siyazi Corporation was paid R639.9m by the department to manage the taxi recapitalisation programme.
The original aim of the programme was to incentivise minibus taxi owners to sell their old and unroadworthy vehicles and purchase new ones to improve the safety of their passengers.
However, the auditor-general’s report to the committee said the project was not properly planned and its budget rose by R2.1bn.
The department’s briefing document to the committee stated that it had "underestimated the extent" of the recapitalisation programme, resulting in the additional R5.5bn being spent.
It also said that the proceeds of the scrap metal sales could not be accounted for as the consultant did not send the department any progress reports.
Democratic Alliance MP Ian Ollis was "totally outraged" by the financial mismanagement. He said Transport Minister Ben Martins had to come to Parliament urgently to explain the situation.
Mr Ollis estimated that 150,000-200,000 taxis were bought during the seven years of the programme’s existence, for each of which the government paid about R60,000.
"It is totally outrageous that taxpayer money was used to buy these vehicles and they were supposedly sold for scrapping without any money coming back to the fiscus."
Mr Ollis said he feared that a large number of those taxis had not been scrapped and were back on the roads transporting passengers.
"Each taxi that was earmarked for scrapping was worth something. The tyre rims could have been sold, the engines sent for rebuilding and whatever was left sold for use as scrap metal. There is no way that no money was paid for them," he said.
The auditor-general’s report on the eNatis project said it was originally awarded to the Tasima consortium in June 2002 and was due to end in May 2007 at a cost of R594m. However, the department did not devise a transfer management plan after the five years had elapsed and paid an extra R936.2m for additional services that did not form part of the original contract.
The auditor-general said the extensions to the contract were not subjected to a competitive procurement process and were illegal.
"Spending R1bn more than the contract value is unacceptable and falls outside the scope of the contract," said Mr Ollis.
"This means that the department has let this contract run away without controls and has now illegally awarded another five-year contract to the same company."
The department has still to deliver its responses.
Transport committee chairwoman Ruth Bhengu asked the department for a presentation on the status of the eNatis contract, but made no comment on the taxi recapitalisation issue.
Last year, Parliament’s ethics committee referred a potential conflict of interest case involving Ms Bhengu to National Assembly Speaker Max Sisulu. She is connected to a company, Riblore 22, which sells fuel to the taxi industry.
Business Day Live article: Ministry denies taxi scheme overspending
Mar 7, 2013 | Paul Vecchiatto
Department of Transport says it is only halfway through the number of vehicles earmarked for purchase and scrapping
THE Department of Transport has disputed the auditor-general’s findings that it had overspent on the taxi recapitalisation programme, saying it is only halfway through the number of vehicles earmarked for purchase and scrapping.
However, on Wednesday it battled to justify other allegations about irregular contracts being awarded.
The fear of a systematic breakdown in the department resulted in Transport Minister Ben Martins appearing at Parliament’s transport committee hearings, whereas this committee usually only interacts with the departmental accounting officers and directors-general.
Mr Martins was at pains to assure the committee that corruption and maladministration would be rooted out in the department and that the first steps had been taken.
Last week, the committee heard that financial mismanagement in the department led to the taxi recapitalisation programme spending R12.9bn — 74% more than its budget — and the eNatis vehicle registration system going R1bn over budget.
Of the thousands of taxis bought from their owners by the department and sold for scrap since May 2006, not one cent could be accounted for, officials from the auditor-general’s office told the portfolio committee on transport last week.
The officials said the Siyazi Consortium was paid R639.9m by the department to manage the taxi recapitalisation programme.
The auditor-general’s report to the committee said the project was not properly planned and its budget rose by R2.1bn.
Department deputy director-general for public transport Mathabatha Mokonyama told the committee on Wednesday that only about R2.9bn of the taxi recapitalisation budget of R7.7bn had been spent over the seven-year period since the programme had begun.
Answering questions from Inkatha Freedom Party MP Narend Singh, Mr Mokonyama said the total number of taxis earmarked for scrapping had grown to 135,000 from 100,000 and that the increased price to pay for each taxi was now R60,000 from R53,000 due to inflation-linked mark-ups.
Mr Mokonyama disputed the auditor-general’s statement that no information had been received about the trust set up to manage the proceeds from the sale of the taxis for scrap. He said all of the R45m received could be accounted for.
Deputy auditor-general Kimi Makwetu denied this, saying he had received only a computer spreadsheet with line items marked down and no supporting documents. "That was not sufficient for audit purposes and so it was marked as no information received," he said.
Mr Mokonyama also said that Siyazi had submitted progress reports, although the auditor-general had not seen them.
The irregular extension for another five years of the electronic vehicle registration system, eNatis, was also questioned. The contract was extended even though the auditor-general had said it was R1bn over its original budget of R594m.
Department acting chief financial officer Dan Pretorius said neither the minister of transport nor the minister of finance had been informed of this irregular awarding of the eNatis extension, as required by the Public Finance Management Act.
However, he said that the Treasury had been informed.
Mr Singh said the department should lay criminal charges against those who signed off the eNatis contract and call in the South African Police Service’s priority crimes investigation directorate, the Hawks, for further investigations.
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