The Chairperson said everybody should seize the opportunity to account to Parliament. It needed not be looked at in an adversarial manner; this was a platform provided so that clarity could be provided and challenges addressed collectively.
The hearing looked at the use of consultants by Correctional Services as detailed in the Performance Audit Report by the Auditor-General on Use of Consultants in Government Departments. The AG reported DCS had spent R2.36 billion on consultants in three years. Some of the contracts that were highlighted as suspect were the Information Technology services provided by the State Information Technology Agency; the Virtualisation Project, the Open View Project, the Image Turnaround Campaign, the Media Monitoring Services, the Management Development Training Programme and Training Interventions.
Findings were that a cost benefit analysis was not done on these projects which was required in terms of the Public Service Administration Act. A cost benefit analysis was a road map that determined value for money. DCS acknowledged the absence of a cost benefit analysis was an indictment, but subsequent to the AG’s performance audit, cost benefit analysis would be conducted.
Members said there was a need to do a comprehensive report on the use of consultants in the next Annual Report. Members sought clarity on the role KPMG played at the Department if after being awarded a R8 million to assist with internal audit control, the Department still scored a qualified audit. DCS replied the internal audit function was “juniorised” given the magnitude of the Department. In 2011 the function had been allocated a chief director, in the past it was led by a lowly director.
Members sought clarity on four payments amounting to R12 million made to SITA before the service level agreements were signed. This was an irregularity and flouting of the Public Finance Management Act. DCS replied officials involved in the transactions were being disciplined; some of the officials were consultants but legal opinion was being sought on how to recover the money used irregularly. Over and above the forensic report by PriceWaterHouse Coopers on the matter, DCS’s legal unit provided leadership on the matter.
Members said the Virtualisation project costing over R11 million and awarded to Stortech was a concern. Three members of the bid evaluation committee were IT consultants. Why was the Department not represented in the bid committee as required by law? Members sought clarity on the deadline for the project, progress and payments. The full contract amount of R11 million had been paid a while ago, and yet work had not been completed by January 2012. Who was responsible for making the payments, and what action had been taken against such a person? Had penalties been levied against the consultant?
DCS replied that names could be named. The project was not yet complete. A review of the project had been done to determine value for money on what had partly been delivered to DCS. It would be difficult for DCS to recover penalties, as there had to be a change in the terms and the specifications to address the current situation. Members wanted to know if there were ways that the money paid irregularly to consultants could be recouped.
It was found that the Management Development Training Programme contract gave the service provider who provided the venue, accommodation and meal costs, 267% more than the actual training cost. This was despite DCS having two training colleges in Kroonstad and Zonderwater for such activities. A number of senior officials were registered with an ongoing departmental executives development training programme. Many failed to attend and this was waste which was not overseen.
The National Commissioner was asked to provide the list of consultants involved in the contracts and the areas in which “maladministration was perceived”. It was suggested that perhaps these consultants should be brought to Parliament to answer questions.
It was proposed that SCOPA and all Portfolio Committees should ask departments to avail to Parliament current plans on consultants, their contractual conditions and past lessons learnt. The plans could perhaps detail how departments would avoid past mistakes in years to come.
The Chairperson said everybody should seize the opportunity to account to Parliament. It needed not be looked at in an adversarial manner; this was a platform provided so that clarity could be provided and challenges addressed collectively. The session would empower everyone as it was an exchange of information.
He noted that the Auditor-General (AG) had delivered the Consolidated General Report on national and provincial audit outcomes 2011-12 that refocused the minds of the nation on the annual regulatory audits. Today’s meeting would deal with the Performance Audit Report on Use of Consultants in Government Departments, specifically, in Correctional Services. The Committee had initially wanted to deal with the performance audit and Annual Report of Correctional Services at the same time, but it decided against that. It was felt that would cloud issues, and some matters relevant to the Annual Report might come up as the meeting went on because of the interrelatedness. If that happened it should not give the impression that the Committee might not, at a later stage, seek an engagement on the Annual Report.
The Committee engaged the Department, noting that some challenges had been there for a while. The challenge was whether the Department was making progress. If not, the Committee wanted to know the strategic bottlenecks that needed to be opened up so that reliance on consultants was reduced.
He extended a word of thanks to the Minister, Mr Sibusiso Ndebele, and said he would have an opportunity to address the meeting at the end of the session.
Failing IT system
Mr R Ainslie (ANC) commented there was nothing wrong in principle with using consultants as long as transfer of skills and proper management happened. The correct use of consultants could enhance the work of the Department. The AG’s performance audit on Correctional Services indicated that there was no value for money, little transfer of skills, and consultants were not effectively managed.
An observation made by the AG was that a cost benefit analysis was not done on the IT project rendered by the State Information Technology Agency (SITA), why? This exercise was required in terms of the Public Service Administration Act (PSAA). Why was comparative pricing, between appointing consultants and permanent staff, not done?
National Commissioner Tom Moyane, Director General of the Department of Correctional Services (DCS), replied that during the period under review, a cost benefit analysis was not done because the level of management at the Department was junior. A cost benefit analysis was a road map that determined value for money. It also provided one with an opportunity to be able to see whether resources at one’s disposal were capable of providing the envisaged end product. The AG’s performance audit provided the Department with an opportunity for turning things around.
Mr Moyane said SITA continued to fail to provide a service that Government departments needed. This was a challenge because DCS was an IT driven department. The absence of a cost benefit analysis was an indictment on the organisation, but subsequent to the AG’s performance audit, cost benefit had been conducted.
Mr Ainslie sought clarity on whether cost benefit analysis was done on all the 27 contracts that the AG looked at. Amongst the projects of concern were: the Virtualisation Project awarded to Stortech; Open View project awarded to Packard; and Compliance and IT Audit awarded to PriceWaterHouse Coopers. He noted that the Bosasa Operations had very large contracts with the Department. Could the official confirm if any cost benefit analysis was done for any of these contracts?
Mr Moyane replied cost benefit analysis was conducted in some of the projects especially the Bosasa nutrition contracts. The big five prisons – Pollsmoor, Johannesburg, Pretoria, St Albans, and Durban Westville – were the top maximum facilities in the country. There had been an ever increasing number of inmates at these facilities. Pollsmoor had more than tripled its capacity. There was a need for a cost benefit analysis in the manner offenders were fed.
Mr Ainslie submitted that cost benefit analysis had not been done in the contracts he had mentioned. It was recommended in the supply chain management guide that a retrospective analysis of the work done by consultants be undertaken. This would enable the Department to learn from consultants in the future especially when it came to the kind of clauses one put into a contract. He asked if retrospective analysis had been undertaken in respect of the SITA contract, or on any of the projects. And whether there had been any kind of investigations into the dependency on consultants?
Mr Moyane replied SITA had been engaged on the IT contract, but also subsequently DCS had done an analysis of projects under review. With the projects undertaken at the time, there was no value for money and there had not been a transfer of skills.
Mr Ainslie said consultants were appointed as a result of a high vacancy rate, which during the time of the report sat at about 14%. The last Annual Report indicated the vacancy rate was down to 3%, but despite the reduced vacancy rate, the use of consultants had not decreased. The latest Annual Report indicated a total of 115 consultants used during the financial year; the figure was an increase from 51 in 2007. He failed to understand how the use of consultants increased if the vacancy rate was curbed.
Skewed relationship with consultants
Mr Moyane replied that consultants in the IT sphere was the area in which DCS was most challenged. The use of consultants and the vacancy ratio needed to be contextualised in figures. When the matter was assessed by the previous leadership, it was agreed that there could never have been a transfer of skills and value for money. There was a skewed relationship between the number of consultants and officials. In 2010 a decision was taken to stop the use of consultants.
It needed to be borne in mind that IT had no prominence in the Department, and thus it was not given the attention and the leadership it deserved. It had since been agreed that IT be escalated to its proper level. A Deputy Director General was appointed to provide leadership. The officials were overwhelmingly junior in the unit, and this afforded consultants an opportunity to make decisions on behalf of the Department.
An investigation had been done following the AG’s performance audit. That process was led by the Office of the Accountant General (AccG), Mr Freeman Nomvalo, but also DCS had approached DeLoitte and Touche to prepare a detailed report on this contract. The Department undertook to reduce the number of consultants since the release of the AG’s performance audit. By 2010 the number of consultants had been reduced to 79; by 2010/11 the number was further reduced to 29 against 39 ‘fully fledged senior officials’ at the Department. There had been a turnaround.
Mr Ainslie commented that the latest Annual Report indicated an increase of consultants, and that the relationship between increased consultants, and the reduced vacancy rate was not explained.
The Chairperson sought clarity on the exact figure of consultants currently at the Department. DCS’s own Annual Report indicated the overall number of consultants employed was not known.
Mr Ainslie asked if the 29 that was bandied about by the Director General only referred to those consultants involved within the IT unit as opposed to the overall number.
Mr Moyane replied this was indeed correct. In the field of consultancy, some people were contracted for a short term and some for longer terms. During that audit period, there were discrepancies on the exact figure of consultants that were inexplicable. But consultants had since been reduced to a very insignificant figure.
Services not delivered but paid for
Mr Ainslie commented there was a need to do a comprehensive report on the use of consultants in the next DCS Annual Report, so as to clear the confusion. The National Commissioner mentioned the difficulty he had with the ICT field in the Department. The AG indicated R36 million was spent on a systems development directorate. He asked if this was an ICT field.
Mr Moyane replied yes.
Mr Ainslie commented that according to the report, ICT was still an area where the Department was challenged despite spending over R36 million rand on it. He asked what would be done with the challenges going forward.
Mr Moyane replied he had already indicated that IT was a platform for DCS to be able to execute its mandate. There was no value for money because the things required at the time were not delivered successfully to the Department. The challenge was SITA.
The Chairperson sought clarity on the statement that services required were not delivered. Could that be unpacked; what kind of services were not delivered that had already been paid for?
Mr Moyane replied that the goods were delivered, but the challenge was the skewness of the consultants against the officials. This was the reason DCS had to stop. No one was going to be able to deal with the projects in the manner that it was configured. The problem lay with the organisation of how consultants were used to reconfigure the IT system at DCS. He cited the example of the Remand Detainee and Offender Management System RDOMS that remained unused to this day. Money had been paid, but there was no value for money.
Mr Ainslie asked if the response was confirmation of the AG’s finding that the customer relations service level agreements did not include transfer of IT skills as a deliverable. Why was this the case? Transfer of skills was a requirement of the supply chain management (SCM) policy.
Mr Moyane replied that given the relationship between consultants and the officials, and the overwhelming number of consultants at DCS there was no way transfer of skill would have happened.
Mr Ainslie asked if transfer of skills was currently part of the Department’s policy. Policy was a document that guided the Department in what it sought to achieve but was sometimes not achieved. Without it, DCS would forever be dependent on consultants.
Mr Moyane replied DCS had prioritised value for money, and cost benefit was happening. It was critical that the Department have a SCM policy that took into account that on top of everything, skills transfer happened once consultants had been engaged. The ratio had changed and it was the mandate of the Department that there be transfer of skills and this was entrenched in the service level agreements.
Weak internal audit function
Mr Ainslie commented that the 2011 Annual Report indicated that a consultant – KPMG – was roped in to do an internal audit at a cost of R8 million. Despite spending this money on this function, the Department still received a qualified audit opinion from the AG and a long list of matters of emphasis. What was the money spent on?
Mr Moyane replied the function of internal audit was juniorised given the magnitude of the Department. A decision was taken that a senior official must lead that function. In 2011 the function had been allocated to a chief director – in the past it was led by a lowly director. The internal audit did not have the capacity to understand all the risks associated with dealing with a budget of about R16 billion. The appointment of a chief director provided stability. The R8.4 million paid to KPMG without achieving results indicated there was a need to heighten the level of leadership.
The Chairperson commented that the current Annual Report indicated that R14 million was spent on consultants to assist in the internal audit.
SITA paid without an agreement in place
Mr Ainslie said the report indicated four payments to the amount of R12 million were made to SITA before the service level agreements were signed. How was this possible? If there was to be a dispute with SITA on what was to be delivered, how would DCS have dealt with such a dispute? Somebody should be held accountable for paying before an agreement was signed. Was anyone held accountable for such financial transgressions?
Mr Moyane replied he personally would not have paid without a service level agreement. Officials involved in the transaction were being disciplined. Some of the officials were consultants but legal opinion was being sought on how to recover the money used irregularly. Over and above the forensic report on it by PriceWaterHouse Coopers, DCS’s legal unit provided leadership on the matter. This was an irregularity and flouting of the Public Finance Management Act (PFMA), and the Department would not sit back without giving due attention. National Treasury, Deloitte and Touche and PWC were all part and parcel of the forensic team that looked into the matter. Where money had to be recovered, that would be done.
Mr Ainslie asked if the official agreed the Department exercised poor control over contracts and payments. As per the legislation, any selling price exceeding 15% of the original amount had to be signed by the accounting officer. The AG found, on page 46 of the report, 19.5% more than the contract value was paid. Was there any proof that the accounting officer authorised the payments? There was no indication this was ever done. This was in contravention of the law.
Mr Moyane replied DCS was not in dispute with the AG. The point on poor contract management was a reality. Appointment of consultants was not done with a proper understanding of what necessitated their presence in the Department.
The Chairperson asked how these things happened.
Mr Moyane replied he could not be able to answer for that period, as it was around 2007.
Mr Ainslie asked if anyone had been held accountable.
Mr Moyane replied the PriceWaterHouse Coopers report would give direction, and said he would not be able to account for such omission. If any account required extensions that amounted to over 15% of original price, there had to be compelling reasons for such an extension. And the accounting officer had to provide the ultimate leadership and guidance on such a matter. In this instance, this was not the case.
Mr Ainslie wanted to know the accounting officer at the time.
Mr Moyane replied there were a number of them between 2004 and 2009. The list included Mr Linda Mti; Ms Jabulile Sishuba, Mr Vernie Petersen, Dr Xoliswa Sibeko. This irregularity coincided with Ms Sibeko’s time.
Mr Ainslie said it had been established that no cost benefit analysis was done for this project. There were a number of concerns with the project that cost over R11 million and was awarded to Stortech. It appeared three members of the bid evaluation committee were all IT consultants. Why was the Department not represented in the bid committee as required by law? Supply chain practitioners were required to be part of the bid evaluation committees. In the absence of the Department’s representative, who ensured that procurement processes were followed? Who looked after the interests of DCS in that bid committee?
Mr Moyane replied the Virtualisation project was software that DCS needed to migrate to a VPN approach. And that warranted an upgrade. Certainly, consultants had a field day; they ran the Department. It was lamentable that no cost benefit was done; money was spent and there was gross violation of the PFMA.
The seniority of the consultant on IT matters when compared to the departmental official again put DCS at a disadvantage. He personally could not account for this, but whoever was at the helm should have recognised the high value of IT, and how central it was to the Department. All this warranted representation of the Department in the bid committee.
Mr Ainslie commented that the Committee hoped the people involved were mentioned in the forensic report. If not, this project needed to be investigated.
Mr Moyane replied the person who gave the outcome was a consultant – Urombo.
Mr Ainslie commented that the deadline for the project was May 2009, and the full contract amount of R11 million was paid on 19 May 2009, and yet work had not been completed by January 2012. Who was responsible for making the payments, and what action had been taken against such a person? He asked for an update on the completion status of the project. Had penalties been levied against Stortech, especially if the contract contained a penalty clause?
Mr Moyane replied names could be named. The project was not yet complete. A review of the project had been done to determine value for money on what had partly been delivered to DCS. He indicated it would be difficult for DCS to recover penalties, as there had to be a change in the terms and the specifications to address the current situation. A project conceived in 2009 and a project conceived now would be totally different because technology changed. In order to fix the current situation, DCS would have to change the specifications. Resuscitating the project could be way too expensive.
R21 million Open View project
Mr Ainslie said a firm that had been engaged by the accounting officer to provide goods for the project, and any of its affiliates should be disqualified from providing consulting services on the same project. This section was disregarded in the Open View project, because Packard were the same consultants who drew the project’s needs assessment. And yet they were awarded the contract based on the needs assessment they had compiled.
This should have been taken to competitive bidding; this was a requirement for any project exceeding R500 000. Competitive bidding did not occur, why was that? A contract was awarded to the same people who did a needs assessment for the project. He would prefer to hear that someone had been held accountable for that.
Mr Moyane replied there was no cost benefit analysis done; principles of supply chain management were flouted. At the centre of all this was, once again, a consultant doing as it pleased. Implementation of the project would not occur as long as there were no officials from the Department. Money was allocated for training and yet training did not happen as per the project terms. The manner in which the project was awarded indicated a fraudulent process; all requisite legislation prescripts for a contract this huge were disregarded. There was no tendering process, except getting quotations. Open View was a transversal project that came from SITA. There was no oversight, and the lack of leadership also contributed. There was no evidence that approval was granted for the deviation on the basic test principles of governance. This was money wasted.
The Chairperson said there was a need to invite consultants to Parliament and engage them on the issues raised by departments. He commented that answers to questions appeared to be the same and enquired from Members on whether they wanted to follow through with more questioning.
It was indicated that the meeting had to continue.
Recouping the funds paid irregularly
Ms T Chiloane (ANC) asked if there were ways that the money paid irregularly to consultants could be recouped in all the contracts.
Mr Moyane replied that would be a matter that would be given attention by the deputy commissioner responsible for legal affairs, but where possible, money would be recovered, and the Department was seeking legal opinion. It was DCS responsibility to ensure money that had not been properly spent be returned to the coffers of the Department.
Ms Chiloane wanted to know how far was the implementation of the recommendations made by the Portfolio Committee on Correctional Services, particularly on PFMA and supply chain management non-compliance.
Mr Moyane replied issues raised had been looked at and were being implemented. Portfolio Committee recommendations about non-compliance and accountability were also being attended to. The current leadership at the Department agreed there had to be a clear transparent procurement process. Also emanating from the recommendations was the centrality of effective monitoring and evaluation. The Portfolio Committee also raised issue with the service level agreements. This was one instrument of accountability for both the Department and the consultants.
Ms Chiloane sought clarity on the Management Development Training Programme. A service provider in Gauteng was appointed to provide training venues, accommodation and meals. The tender was awarded in December 2007 at a value of R14 million. The AG reported that the Department did not conduct a cost benefit analysis. The cost for training venues, accommodation and meals per official was R20 185,81 while the training cost was R7 552,86 per person. The venue, accommodation and meal costs, which excluded other travelling costs and subsistence allowances, were 267% more than the actual training cost.
Mr Moyane replied the accounting officer and the Minister agreed that DCS had facilities to run these kinds of activities. He did not understand the rationale of hiring outside venues, but had since effected a moratorium on this aspect. These would have to be hosted at DCS facilities so as to reduce costs. The Department had two training colleges in Kroonstad and Zonderwater. Activities of this magnitude should have happened at the Department’s own facilities as they were designed for this purpose. It was difficult to go back in time as to the motivation of hiring a consultant to do this activity. R14 million was a huge amount of money, but the report would give an opportunity to address the maladministration that might have occurred.
Management development training was an essential tool of leadership being able to grapple with the issues. It was important that as DCS senior managers were taken for high level training but the value for money component must be taken into consideration.
Ms Chiloane commented that it was difficult to question the official as he admitted to every wrongdoing. The Committee should take note of the consultants that stole from Government and still did nothing to help Departments. It was sad that departments were thought of as wasting money while consultants functioned as a private sector force that took all the money. There was a need to take note of all the consultants, and make a recommendation that they also had to be called to Parliament and made to account. This would ensure that public funds were spent correctly.
She sought clarity on the 114 officials who failed to attend training while other officials did not submit portfolios as required and as a result 379 of 1 805 failed. This was an item the DG could not justify. The department did not ensure that the officials identified for training attended all courses and submitted their compulsory portfolios of evidence to ensure the successful completion of the courses. She asked that the DG comment on that.
Mr Moyane replied that all executives were expected to attend courses upon accepting positions. If an official was unable to attend, he or she had to give a notification of 48 hours; failure to attend without a notification would result in liability of any costs incurred. It appeared with the officials mentioned in the report, there was no accountability. Officials registered for expedient reasons only to fail to attend classes.
Mr Moyane said officials needed to know that there would be consequences. All officials attending the Executives Development Programme (EDP) and Management Development Programme (MDP) programmes received an sms, every time they had to submit an assignment. They could not claim ignorance. DCS had taken lessons from this and officials would be held accountable for not finishing the courses.
Mr D George (DA) wanted to know why there was an acting Chief Financial Officer (CFO)?
Mr Moyane replied that, as of December; the previous CFO had moved to Defence. The vacancy was advertised quickly and interviews would happen soon. DCS could not sit with a vacancy in such a strategic position.
Mr George wanted to know if there was a process to manage consultants and if DCS set the terms of engagement. It appeared departments were simply not ready to receive consultants, such that it was easy for them to influence the scope of work tendered to them. How was that process managed?
Mr Moyane replied managing consultants had been a challenge in the past, but systems were in place to ensure thorough management. There was a functional internal audit, and a competent audit committee. The terms of reference had to be very clear as to the outcomes that one had to get. DCS currently had clear terms of reference.
Mr George sought clarity on the word “juniorised”.
Mr Moyane explained this related to managerial positions of projects, especially those that were technical in nature. He cited the example of the Open View project and said this could not be handled at the Director level, but required technical knowledge at the highest level, in order to derive the outcomes required. If projects were juniorised, the outcomes would be such that they would not be aligned to the outcomes that DCS sought expect to get. Junior officials could be empowered by being involved with project terms of references, but could not provide leadership. One could not sub-delegate critical activity to junior officials; as much as one should be able to empower them, one had to be able to provide leadership.
Mr N Singh (IFP) commented that the AG reported DCS as spending R2.36 billion on consultants in three years. He asked if, subsequent to the report, the Department had drawn up a list of how the R2.36 billion was spent.
Mr Moyane replied he had met with the Deputy AG on the Use of Consultants Performance Audit. The meeting was fruitful, and after the meeting he sought a breakdown of the R2.36 billion. It was difficult to understand how the Department got that value. The Office of the AG supplied a body of evidence that had since been forwarded to other managers. A filtering process and categorisation of the expenditure had been done. The information had not been shared with the Portfolio Committee as the meeting with the Deputy AG had only been two weeks ago. The R2 billion was a true reflection. On most of the issues mentioned by the AG there was some value for money.
The Chairperson clarified that the mention of the R2 billion did not seek to suggest that this was money wasted. But beyond value for money, there was due process. This was the next phase of what the Department was supposed to do.
Mr Singh said the name that came to mind was Bosasa, especially since that company was not mentioned anywhere. The Portfolio Committee could pursue the matter. He sought clarity on why consultants were appointed to manage other consultants. Was this situation still pertaining in the Department?
Mr Moyane replied that for DCS to reach a milestone of having to do an investigation, it needed to engage the services of a consultant. The matter was far beyond the Department’s power; DCS did not want to have restrictions. He had to hire a consultant to audit all the other consultants. The Department did not have a situation where consultants ran other consultants.
Ms M Maluleke (ANC: Portfolio Committee on Correctional Services) commended the Department for putting in systems to ensure mistakes were not repeated. She asked if the particular officials sent to training who failed to attend, were disciplined. Even now, it was still time to subject them to disciplinary action.
Mr Moyane replied DCS had done all the work, and was able to account for the individual officials. In the absence of a mandatory clause on attendance, the Department awaited advice from the legal unit on measures that could be taken. Measures had to be put in place for the 21 who had failed to attend the course. A clause had been put in place to counter officials who were flouting procedures and not adhering to what had been requested.
Ms Maluleke commented that the figures on the absent officials were conflicting. The AG said 114 failed to attend and the DG was now saying 21. She asked that the Department investigate the number.
The Chairperson interjected and demanded the numbers be clarified right at the meeting.
Mr Tebogo Mokoena, DCS Chief Deputy Commissioner: Human Resources, explained that the figures submitted to the AG would not be in correspondence with the figures Members had. The ones that the Members had, indicated a far fewer number of people; the 114 needed to be broken down according to the kind of transgression of the officials. An example was that 13 of the total number submitted assignments that were not of the required level for them to be deemed competent. There was no contradiction in terms of the overall number.
Ms Maluleke sought details on the Image Turnaround Campaign contract that was conducted for the communications unit. Was there value for money?
Mr Moyane replied the Image Turnaround Campaign was never clear. He had not received an explanation on what was it that the Department sought to achieve. He was unable to provide answers on the matter, as image branding could have been done internally.
The Chairperson interjected and sarcastically asked if this was a way of giving out money.
Mr S Thobejane commented that for the first time an attempt to comply with Section 28 of the PFMA, was demonstrated. The attempt had to be elevated to evidence, especially that it had been stated that several officials were subjected to this. The Committee should be provided with a list of officials that were being disciplined, and if possible by next week.
Mr Moyane replied the list would be provided. The list of consultants involved in the contracts and the areas in which “maladministration was perceived” would also be provided.
The Chairperson commented that communicating with the Department was a challenge. The Committee should not have to bang on doors to get information.
Mr Thobejane asked what process was followed when deciding on consultants. The exercise of evaluating consultants had to happen upfront, particularly to ascertain delivery capability.
Mr Moyane replied, based on the report, there was internal capability for meeting own needs.
The Chairperson commented that on numerous occasions the Department had given an undertaking that it had internal capability. Always there was this assertion that things were under control, and yet the Department kept receiving qualified audits. This performance audit confirmed the worst.
Mr Thobejane said had the current management been that good, the Department would not be sitting with a qualified audit opinion.
Mr Moyane replied he accepted the points made, but there was proof that all efforts had been demonstrated that the issues, including consultants, were dealt with.
Ms W Ngwenya (ANC: Portfolio Committee on Correctional Services) sought clarity on the timeframes of the Virtualisation programme and details on who drafted the tender documents.
Mr Moyane replied Virtualisation was a software that was being acquired. It was not complete. The bid evaluation committee comprised of consultants. The tender documents were done by the consultants. The Department was “challenged for leadership at the time”, and the IT unit was being led by a chief director.
The Chairperson interjected and said there was leadership at the Department. The excuse of junior officials overseeing projects was no longer valid. It was not junior officials who conceived projects, and issued tenders. Even if this was so, there had to be a way in which reports were cascaded upwards to the National Commissioner. It was possible that the junior chief director could have been acting on a command chain. The Department surely did not operate any differently from the prevailing management?
Mr Moyane replied in Xitsonga and said he could not defend himself from the Chairperson’s observation, and could provide no other explanation on the matter. He was not privy to the structure and command that permeated over projects. On the Virtualisation project, indeed someone at the top ought to have known what was happening with such a strategic project as this one.
Ms Ngwenya commented that a lot of money had been wasted on the Media Monitoring project between 2006 and 2008. What was this project about, and was there a need for this? She asked if the Department achieved its objectives with this project.
Mr Moyane replied there was no need for a project on media monitoring [to provide media monitoring, analysis
and advisory services for the media services unit of the department]. The amount spent – R1.8 million a month for two years – was as a result of not having a vision. This was a superfluous process of using consultants. Had he be at the helm around this time he would have beefed up the communication unit within the Department. Communication could be best done internally; the only thing that needed consultants would have been image branding.
Mr J Selfe (DA: Portfolio Committee on Correctional Services) said he was happy that the DG was contemplating taking action against all the officials fingered in the report. The dilemma was that they were with other departments and some were in the private sector. He asked if it was possible to institute disciplinary processes against those who had left the employ of the department. What other measures were open to the Department to take?
Mr Moyane enquired if he could provide the names of those involved with the Department at the time.
The Chairperson replied they should be proud of the work they did for the Department and that they needed to be called by name.
Mr Moyane said the Head of IT at the time was Mr Shilobane. Just when the process of investigation had started, he resigned. He personally refused the resignation because Mr Shilobane had to be accountable for the alleged misdemeanours. Charges were pressed against him but he left nonetheless. Leaving the public service was no immunity against accounting for things one was alleged to have done. The figures quoted in the report was not small change. It was not fair that as DG he had to account on matters that could have been done better on oversight. It was important that accountability was taken to the highest level. The legal advice of the DCS legal unit was that it was possible to pursue. It was important that those who were involved should at one point be held accountable.
Mr Selfe commented that the problematic company not covered by the report was Sondolo IT [a division of the Bosasa group of companies], which constructed 72 control rooms, none of which worked. The Department had now appointed a consultant to advise on this consultant which had failed to provide a service. In turn, the consultant appointed a transactional advisor. He asked what steps were taken to act against the companies that had failed to deliver.
Mr Moyane replied DCS had clearly indicated at the Portfolio Committee, in a joint appearance with SITA, that it would not pay for services that it could not account for. It was easy to claim payments for something that was not possible to account for. DCS would only pay for things where accountability could be traced and evidence of services being provided, and where due process was followed. In the previous structure there were things that were not followed. Hence consultants sat in bid evaluation committees and took decisions on behalf of the Department. An assessment would be made on why the control rooms were not working. Officials were partly to blame for the non-functioning control rooms as they decommissioned them. Another challenge was that there was no suitably skilled staff to operate the control rooms. No consultant would run the project on the department’s behalf. Consultants were there to guide as to how project equipment functioned. In this instance, the Department did not have people being trained to sustain the project.
The Chairperson sought clarity on whether the DG was suggesting the construction of the control rooms was a wasteful expenditure.
Mr Moyane replied yes. For too long Sondolo ran the control rooms, and therefore could not be blamed. If anything, DCS should be blamed because it failed to provide personnel to run the control rooms. The Department failed to properly plan in order to sustain the project. In this instance, Sondolo delivered.
Mr Selfe wanted to know the official who failed to make the right management decision, with regards to training staff, that resulted in wasteful expenditure.
Mr Moyane replied due process would be followed and an assessment and audit would be done. He was not trying to be vague, but merely saying due process had to be followed. This failure was an indictment on leadership.
The Chairperson commented it was the DG. The accounting officer bared the ultimate responsibility in terms of the PFMA. The DG had the legal responsibility to ensure controls were in place.
Portfolio Committee Chairperson input
Mr Vincent Smith (ANC: PC Correctional Services Chairperson) agreed that the ultimate authority rested with the DG. He was not satisfied with a reply to a question about officials sent on training who had failed. The DG replied he had to seek legal opinion. In his understanding there was no need to seek legal opinion.
The PFMA mandated the DG to recover fruitless, wasteful, and irregular expenditure; if he failed to do that, he or she was liable. The DG should insist that those people pay. That did not need a legal opinion; onus was on those officials to provide reasons as to why they failed.
Mr Smith said he was bothered by the role of National Treasury in all of this – it had been sitting quietly through this hearing. What had been its role all along? They had to ensure effective management of expenditure and enforce transparency. What had National Treasury been doing when these things were happening? It was no use that these officials did not make a contribution. He would like a response.
Mr Velile Mbethe, National Treasury Chief Director: Public Finance, replied National Treasury supported the DCS attempts to try and correct the wrongs so that the Department’s finances would run smoothly.
The Chairperson interjected and asked where National Treasury was when the Department embezzled such large amounts. Did National Treasury play any proactive role, or was it just reactive?
Mr Mbethe replied that National Treasury only found out through the Annual Reports that something was not going right.
The Chairperson asked if there was no way National Treasury monitored in-year transactions and how departments had been performing in terms of projects.
Mr Mbethe replied the monthly reports that National Treasury got only indicated expenditure per programme, and that information did not indicate whether due process was followed. National Treasury did not have such a system. The monthly figures it got were just a global expenditure figure. The only system that the Department had was for monitoring deviations from procedure, and such information was relayed to the supply chain management unit.
Mr Smith wanted to know how the appointment of a Chief Procurement Officer, as proposed by National Treasury, would assist departments. DCS work necessitated outsourcing; how would the concept of the proposed Office of the Chief Procurement Officer benefit departments?
Mr Mbethe replied such information could be provided in writing – especially now the officer had just been appointed.
The Chairperson commented that such appointments were first conceptualised. There had to be a conceptual framework as to how this person would assist and cooperate with other departments.
Mr Mbethe replied he was not the competent person to answer such questions. He could get the information and forward it to the Committee. He apologised.
Mr Smith voiced anger and said the official could not come to Parliament and not be in a position to provide answers to probing. He would like the information also forwarded to the Portfolio Committee.
Mr Smith proposed that SCOPA and all Portfolio Committees should ask departments to avail to Parliament current plans on consultants, conditions and lessons learnt. Surely, there had to be criteria to appoint consultants. The lessons learnt should be the benefit of the AG’s performance audit. The plans could for example detail how departments would avoid such mistakes in years to come. The Portfolio Committee was prepared to have such a discussion with DCS.
The Chairperson commented that the proposal was very good and SCOPA supported it. But it could be discussed how it would be taken forward.
Mr Rabie asked if the DG had declared his financial interests to the Public Service Commission for the current year.
Mr Moyane replied yes, and that it was done on time.
Ms R Nyalungu (ANC) asked whether inmates cooked for themselves or were catered for. If the latter was the case, how much did a plate of food cost the Department?
Mr Moyane replied that in the general context of correctional services in all centres it was the inmates who cooked for other inmates, except for the big five. It was common practice that officials did not cook for offenders, rather other offenders. The correctional service had changed, and an increase in the number of inmates was noticeable. This needed to be understood within the ability to provide services adequately. Inmates had to be fed, and if they were not fed on time according to the schedule they were used to, there could be a riot. He was not trying to defend the concept of outsourcing.
The Chairperson interjected and pointed out that the question sought to establish the cheapest way of feeding inmates.
Mr Moyane replied he did not have figures, but having inmates cooking for themselves was sometimes viable. But such information was available and would be forwarded to the Committee.
Mr Ainslie said the Department needed to come back and engage the Committee on the Annual Report. He disputed that there had been a decrease in consultants in DCS. He said 15 pages of the Committee’s resolutions were not implemented by DCS, including one on officials doing work for the Department. DCS had to come and clarify the basis for the qualified audit opinion and other financial related matters. It was difficult understanding the DG, and that a second chance was needed with him.
The Minister said he shared the frustration of the Committee. It would have been ideal if accounting was done in the same year expenditure happened. The culture of accountability and following the money needed to be inculcated. This needed to be done within 15 months, and not five years – when the official had left the department. This would make the work of monitoring easy.
The Minister said it pained him that the Department had never had a clean audit in 20 years. This had to be changed – working together with the Auditor-General and National Treasury. One could not have a situation where a department could not achieve a clean audit for a period of 20 years.
The Chairperson agreed that the Department needed to be invited again. A number of contracts were undertaken and not adequately explained. There were a number of unclear issues. Why was the decision taken to freeze filling of posts and yet employ consultants? He suspected the decision to freeze was a strategic decision to open the way for consultants. The responsibility that the right things were done must not rest with the Office of the Auditor-General alone.
The Chairperson said there was an Special Investigating Unit report that spoke to a range of challenges in the Department. A former CFO, Patrick Gillingham, was accused in the presentation to the Committee by the SIU, of having benefitted from some of the contractors by well over R2 million. A case was supposed to have been opened. Why was he still not in jail because the case was taken to the National Prosecuting Authority (NPA)? Where was the process. An indication that the Department was serious about these things would be to press criminal charges against Mr Gillingham. Conviction would give the Committee an indication that the Department was serious about issues of corruption.
He failed to understand the reasoning of officials when they claimed they were not there when they had to give account. People, who needed to give reasons on why certain decisions were taken, were not present. “Short term” was the manifestation of the challenge. That habit impacted badly on oversight. He wondered aloud about the CFO who had joined the Department of Defence (DOD). Was this a promotion or demotion? Should the Committee expect to see the same things he had been doing at DCS in the defence portfolio?
In all the departments audited, monitoring and management of contracts was problematic. It could not be correct that because transgressions happened five years ago, they should be left untouched. Until all South Africans realised they had a responsibility to the country and its people, these problems would continue unabated.
The Chairperson said he failed to understand why, when people were paid to bring about change, they opted to do the worst, whilst a short while ago, people were not paid to bring about change and yet they did the right thing. Laws were there to assist officials to take action against people who were not doing the right things. The Chairperson said the Committee was interested in having consultants come to Parliament. They had to demonstrate that they were not only interested in the bottom-line. The Department wanted to see progress, and things going right.
The meeting was adjourned.
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