Convention on Cluster Munitions recommendation to ratify; Department of Defence & Military Veterans 3rd Quarter 2013/14 Performance Report: Defence Secretariat briefing, Audit outcomes and recommendations: Auditor-General briefing

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Defence and Military Veterans

18 February 2014
Chairperson: Mr M Motimele (ANC)
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Meeting Summary

The Defence Secretariat tabled and explained the Convention on Cluster Munitions, which Parliament was required to ratify. This presentation contextualised the use of cluster munitions in international humanitarian law, the status of various countries in relation to the weapon, its use or stockpiles, and whether they were signatories, and the implications of the treaty for South Africa. It was explained that cluster munitions comprised a projectile container filled with smaller sub-munitions and fired at the target. They were initially regarded as cheap and efficient, but they tended to be inaccurate, and when sub-munitions did not explode, this posed dangers to civilians and difficulties in clearing operations. Norway led the adoption of the treaty, which aimed to ban explosive sub-munitions up to 20kg, excluding smart munitions, ensure the fair treatment and assistance to victims of cluster munitions, the destruction of stockpiles within eight years, and reporting requirements. South Africa had already stopped using these munitions, and whilst it could still cooperate with other states who were not signatories, it would not be able to call for or promote the use of cluster bomb strikes. South Africa would need to destroy stockpiles, and stop all trade as well. Victim assistance provisions would not apply in South Africa as they implied special and arbitrary treatment, which was against the Constitution. The costs of implementing were likely to be R2 million. Discussion centred on the reasoning behind the refusal by various countries to ban cluster munitions, and the technicalities of destroying South Africa’s stockpiles. The Committee agreed to recommend ratification.

The Defence Secretariat presented the 3rd Quarter 2013/14 Performance Report, concentrating on areas of underspending and under-performance against targets. Particular areas of under-performance included completion of the HR strategy, recruitment of staff for approved and funded posts, and completion of targets on flight and sea hours. By 31 December 2013, the Department of Defence (DoD) spent 69.6%, or R28.2 billion of its total budget of R40.6 billion. The reasons for the underspending in the Air Defence Programme were given as protracted delays in procurement processes with Armscor, and delays connected to the termination of the AMG contract. The target for spending on the use of reserve forces may need to be revised, because of budgetary constraints. 37 out of 40 defence attaché offices were established, and five of the six planned external operations were engaged in, because of the withdrawal from the Central African Republic. Nine joint military exercises were planned, but only five were undertaken, due to cancellations by the core partners in the joint military exercises. The research division and organisational structure was halted, although there was still research capacity. The foreign relations strategy was to be informed by the Defence Policy, still being adopted. Although the retention strategy was not in place, there were attempts to retain staff. Disciplinary process targets were not met. Only 88% of Senior Management Service agreements had been signed, and not all financial disclosures were submitted. In general, it was noted that the Department suffered from budgetary restrictions. Members asked when the Defence Review would be brought to Cabinet and Parliament. They questioned the various areas of under-spending and under-performance and the reduced flight and sea hours, and Members also questioned how the targets had been calculated. Several questions were asked about human resources problems. They questioned whether force design and structure was settled, and when adjustments would be made to correct the lack of correlation between the annual plans and the budget. Members asked why the Military Ombud was not mentioned, what the problem was with the assets exactly, and it was suggested that a separate presentation would address the latter point.  They questioned the lack of progress in filling posts, and reimbursement in relation to joint operations. They were concerned that senior management staff, even if seconded elsewhere, must be required to sign the agreements, asked about compliance with information technology systems requirements.

The Auditor-General South Africa gave a brief presentation summarising the problems identified in the latest audit. Various irregularities around the recording of tangible and intangible assets formed the basis of the qualification, and various recommendations were made as to how to correct the procedures in future. There were concerns on the reliability of targets for the Force Employment Programme, which could not be presented for audit and it was recommended that the DoD must address the performance information aspects. Non-compliance with laws and regulations was indicated. It was recommended that skilled staff and structures must be put in place, the audit function must be capacitated, and proper support given for gathering of financial information. Members commented that the problem lay in the absence of proper controls, and it was suggested that the Department, when presenting on its assets, must report also how the recommendations were to be implemented.

Meeting report

Convention on Cluster Munitions: Defence Secretariat briefing and request for ratification
Dr Sam Gumede, Secretary for Defence, Defence Secretariat, led the presentation to the Portfolio Committee on the Convention on Cluster Munitions (CCM or the Convention). He firstly outlined government’s  position, focusing on the humanitarian motivations and compliance with constitutional procedures relating to the ratification of treaties. The key principles of international humanitarian law were outlined, leading to an explanation on the inhumane nature of cluster munitions.

The physical make up of cluster munitions was then described, demonstrating how a projectile container could be filled with smaller sub-munitions and fired at the target. The reasons for the use of such weapons in the past included their cost and military efficiency. However, the use of cluster munitions became stigmatised because they were inaccurate, and because sub-munitions may not explode, leading to danger to civilians and increased challenges to countries involved in clearing unexploded sub-munitions. Cluster munitions were no longer part of the operational requirements for the Department of Defence (DoD or the Department).

The specifics of the Convention were then outlined. This was a breakaway treaty led by Norway. The treaty’s key tenets were the banning of explosive sub-munitions up to 20kg, excluding smart munitions, ensuring the fair treatment and assistance to victims of cluster munitions, the destruction of stockpiles within the prescribed eight year period, and reporting on compliance with the treaty. Dr Gumede noted that the treaty would not stop South Africa from cooperating with non-signatory states in military operations, but may not call for cluster bomb strikes or otherwise promote their use.

The international context surrounding the treaty and the status of countries involved in the use of cluster munitions was then detailed. This detailed the states which had been affected by cluster munitions strikes in the past, states which had produced and stockpiled cluster munitions, the number of states who were party to the treaty and their progress on ratification, and the states who had not joined the treaty (see attached presentation for full details).

The implications that would follow upon ratification were dealt with. Firstly, there would need to be destruction of stockpiles of the 179 aircraft-delivered cluster bombs (Type 225Kg Cluster HE A/Tk No2) and 1 306 artillery delivered cluster shells (Type 155mm HEHC M1A1 & M2A1). This would require a budget of R2 million. As the development and production of cluster munitions had already stopped, but now the South African defence industry also had to stop all trade in cluster munitions and the South African National Defence Force would not be allowed to call for the use of cluster munitions in joint operations.

The victim assistance provisions would not apply in South Africa, firstly because there had been no cluster munitions strike in South Africa, but also because sections 9(3) and 27 would not allow such victims to receive special treatment arbitrarily.

Ms P Daniels (ANC) sought clarity on slides relating to international humanitarian law. She asked what was meant by the handling on international and non-international armed conflict and what the reference to the regulation meant, in the slide “Instruments on Means of War”. She then wanted to know what reasons were cited by the countries who opposed inclusion of cluster munitions in the UN Certain Conventional Weapons Convention in 2008. Finally, she asked for an outline on the phases through which the destruction of the stockpiles must move.

Dr Gumede firstly responded to the question about the states who had opposed the ban on cluster munitions in 2008, saying that these countries had raised issues, including protecting countries’ sovereignty and the fact that although a ban would be imposed, it would not be universally complied with.

Mr S Dumisani Dladla, Chief Director: Strategy, Department of Defence, clarified that the slides headed “Instruments on Means of War” merely spoke to basic tenets of international humanitarian warfare and the restrictions placed by various instruments on what was lawful warfare. He then said that there were two main reasons why states opposed the ban on cluster munitions, relating to their cost, and the fact that they were easy to deploy. This raised the issue of balancing military efficiency against humanitarian concerns, which was a policy decision.

Mr A Mlangeni (ANC) spoke to the slide entitled “Status of other countries” and wanted to know which countries had used cluster munitions against the 37 affected countries, and whether these countries, which he assumed included large countries such as the United States, were themselves signatories to this convention.

Mr Dladla replied that the 37 affected countries had indeed been attacked by powerful countries like the USA, but so had South Africa, and that in fact any country could do this in the past because of the cheapness of the weapon. Therefore, the humanitarian impact of the use of the weapons should be the paramount concern.

Ms H Mgabadeli (ANC) wanted to know about Armscor’s role in the Government’s foreign policy interests in this area. She also wanted to know where the stockpiles were located in South Africa and how this Committee would be assured that they had indeed been destroyed.

Mr Dladla replied that foreign policy aimed to protect and advance the interests of South Africa and as a result all institutions of government were required to support the policy decisions made. ARMSCOR, as an agency of the Department of Defence, must support the policy decisions of the Department and must align its approach with the Department.

Col C Ferreira, Explosives Manager, Department of Defence, then explained that there were two depots where cluster munitions were currently being stockpiled, the Department of Defence Ammunition Depot in De Aar and the 93 Ammunition Depot in Jakendorp. The destruction would be carried out at the depots, at accredited demolition ranges using conventional demolition methods. This was also relevant to Ms Daniel’s question on phases of stockpile destruction.

Ms Daniels then asked for clarity on how sections 9(3) and 27 of the Constitution would apply in relation to victim assistance, with reference to the slide headed “Implications for the RSA”.

Mr Dladla replied that countries that were signatories and had victims of cluster munitions attacks must make a special effort to assist such victims. In the South African context this could not apply, because of sections 9(3) and 27 of the Constitution which made it unlawful to treat victims differently or arbitrarily. This would prevent South Africa from complying with that specific provision.

Mr E Mlambo (ANC) felt that Mr Mlangeni’s earlier question had not been properly answered, saying that the question really spoke to developed countries seeking disarmament, while still using such weapons themselves. There was therefore a need to properly explain why South Africa must refrain from using such weapons itself.

Dr Gumede replied that the reality was that some powerful countries still continued to oppose the ban, yet acted as universal peacekeepers. He then stated that the values which informed South Africa’s decisions were drawn from its own Constitution and not from the actions or principles of other countries.

Mr Mlangeni then stated that he was in favour of having a strong army and that the South African National Defence Force (SANDF) ought to acquire all the lawful weapons it could. Whether or not war actually happened was immaterial as South Africa must be prepared for any occurrence.

Ms N Mabedla (ANC) wanted to know when last the Department had visited the depots at De Aar and Jankensdorp, stating that there had been incidents of people being killed by South African National Defence Force (SANDF) ammunition at Prieska, and reports that some ammunition is missing from the depots.

Col Ferreira replied that the two ammunition depots in the Northern Cape were being visited on a regular basis by the Department and annual stock-takes were being conducted. Through these processes the Department knew exactly what was in their depots and ammunition stores. He added that there was certainly no ammunition lying around on their bases. Project Mtombu aimed to clear training areas previously used by the SANDF of unexploded ordinances, and two pilot sites had been cleared so far because of land claims. A further 33 areas were being assessed for the risk of unexploded ordinances. There were also 28 training areas currently in use by the SANDF, which are under similar inspection.

Ms Daniels then commented that the disappearance of arms from depots was a topic that needed to be cleared up in the future, because an efficient and strong defence force was crucial to curing the social ills of South Africa.

The Chairperson closed this discussion by saying that the Committee’s understanding was that the focus was on the humanitarian aspects, and that a good army would make use of effective and reliable weapons, rather than those which killed and maimed indiscriminately. The Committee would therefore note its recommendation to ratify the Convention, and would await the necessary further documentation from the Department.

Department of Defence and Military Veterans 3rd Quarter Performance Report: Defence Secretariat Briefing
Dr Gumede then presented the report which covered the performance of the Department of Defence, from September to December 2013, making some relevance also to the period April to December 2013. He limited his presentation to a summary of the more detailed analysis produced under the legislative and financial sections of the report, and said his focus was on the performance targets in terms of Ministry of Defence priorities and DoD performance indicators.

Dr Gumede started with the Department’s financial performance. The DoD had, by 31 December 2013, spent 69.6% (R28.2 billion) of its total budget of R40.6 billion, as against its planned expenditure of 70.9%. The Administration and Landward Defence Programmes had spent 101% of their targets. The Air Defence Programme had 8.3% less expenditure than planned which amounted to R353.6 million, due to protected procurement processes with Armscor and the delays connected to the contract with AMG being terminated. A new service level agreement had now been signed with Denel for aircraft maintenance, and spending had started in this regard. Based on the government financial services classification of expenditure, the DoD had spent 156.6% of its planned budget on Payment for Capital Assets. This expenditure was largely used in paying the Department of Public Works (DPW) for the construction of a pharmaceutical depot for the Military Health Services.

Looking at the Ministry of Defence priorities, the spending on the use of reserve forces was at approximately R14 000 of the targeted R24 243. Dr Gumede commented that this target may need to be revised and that the reason it had not been met was because of budgetary constraints. Of the 70 planned staffing funded posts, only 56 were filled, but this should be completed by the end of the financial year.

Dr Gumede then turned to the selected DoD performance indicators. Speaking to the numbers of Defence Attaché offices, he said that 37 of the targeted 40 had been established. Five out of the planned six planned external operations were engaged in, because of the withdrawal from the Central African Republic. Nine joint military exercises were planned, but only five were undertaken, due to cancellations by the core partners in the joint military exercises. The number of flight and sea hours were far lower than the targeted number, and this was ascribed to the budgetary restrictions.

He then presented a summary of the quarterly performance targets. The first failing was that the planned research division and organisational structure was halted, because the staff dedicated to this project were reassigned to Defence Review. However, the DoD did have research capabilities, in partnership with other bodies including the army, navy, air force and Medical Research Council, although this remained uncoordinated. The performance indicators and targets relating to financial services were ill defined, especially in regard to the Defence Physical Framework status and this was being reworked in terms of the specific allocations with the financial services and Chief Financial Officer. The DoD foreign relations strategy was to be informed by the Defence Policy, which was in the process of being adopted by the Department, which was delayed by working with Department of International Relations and Cooperation (DIRCO).

The percentage of disciplinary cases which were dealt with within 90 days was at 29%, rather than the 80% targeted, because of the country-wide scope of the DoD, and the need for many of these cases to come to the central Human Resources unit for resolution. Only 88% of the service level agreements had been signed by senior management, which was due in part to these employees being seconded to other departments and bodies such the UN in a variety of places. The DoD Human Resources retention strategy had not been finalised, but in the interim a number of initiatives were in place to try to retain staff, including retraining and military exit mechanisms.

The compliance with annual submissions and financial disclosure was at 92%. The main challenge here was similar to that of the service level agreements.

The percentage of collective grievances and disputes resolved was below par, and this was because of the nature of the disputes, which ranged from salaries through to promotions. The number of litigation cases resolved in favour of the DoD was at 25% of the 65 cases lodged against the DoD. There was still an issue with the level of the target, because of the uncertain nature of litigation and the willingness of parties to settle.

Dr Gumede said that he would concentrate on problem areas under the specific SANDF Programmes. The target for external commitments was four, but only three were conducted because of withdrawal from the Central African Republic. Only five of the nine joint inter-departmental and international military exercises were completed. The target for compliance with formal training targets was 5 700, but only 3 700 people had been trained. The target for education, training and development of personnel was 2 700 but only 1 600 were trained. The target for training of maritime human resources  was 2 900 and 1 800 were trained.

The reason given by the DoD for its failure to reach any of these targets was budgetary reductions and resultant restrictions.

Finally, Dr Gumede highlighted the percentage of compliance with DoD codification requirements by the Joint Logistics Service, noting that 58 of the 80 categories were covered, with several of these categories not meeting the codification target as set out in the report.

Mr D Maynier (DA) asked for an idea of the process relating to the Defence Review, when it would be brought to Cabinet, and when it would be tabled in Parliament.

Dr Gumede replied that the first draft of the Defence Review had been tabled with Cabinet and that the final draft was with the Minister, but that it may have to wait until the next Cabinet for final approval.

Mr Maynier asked about the R353.6 million worth of under spending in the Air Defence Programme and what exact procurement issues are causing this problem. He also referred to the past complaint by the Air Force that its helicopter capability was under-funded, leading to the effective grounding of the Augusta-109 helicopters. Despite this, it now showed an under-spend on helicopter capability of R195.5 million and he wanted to know the specific reasons for the under-spend.

Mr Maynier asked why, in the Maritime Defence Programme, only 7 557 of the budgeted 22 000 hours had been used to date, at an average of 2 519 hours per quarter, which would leave a shortage of roughly 12 000 sea hours. He wanted to know why the South African Navy had not been able to utilise these hours, and he encouraged the Department to explain beyond the under-funding argument.

Air Force General Cedric Masters, Chief Director: Air Policy and Plans, Department of Defence, responded that the under-spending could be better characterised as “slow spending”. This slow spending was due to the Scarce Skills Agreement and the procurement processes with Armscor. The flow stoppers within the procurement processes included the time it took to conclude State to State contracts, for example the Gripen maintenance contract, because of the inadequacy of funds, resulting in greater lag times. There were further issues with the overall lag times in the procurement process and the fact that the differences between the Department’s systems and Armscor’s system caused delays in the reflection of payments which tend to carry over month ends. In summary, the main problem remained the difficulty the Department faced in concluding the contracts in relation to its largest equipment, because the aviation companies were not willing to conclude these contracts unless the Department could demonstrate a volume of business. To cure this, a medium term assurance of the availability of funds was required. With regard to the A-109, he explained that the Department was required to make a decision between the high demand operational aircraft such as the Oryx and Rooivalk, and training aircraft such as the A-109.

Mr Maynier finally addressed defence acquisition, referring to the acquisition plan for project Hoofyster being signed in the previous quarter, and so he had expected to be implemented in this quarter. He wanted to know how many Badger vehicles were being procured, what the unit price was per vehicle and what the ceiling price was for the project. He also wished to know whether there had been any projects within Defence Acquisition where there had been significant cost overruns or schedule slips, and if there had been, then he wanted to know why.

Dr Gumede noted that the information relating to the questions raised on Defence Acquisition was with the Department, but that it was classified and would be presented in a properly constituted closed session of the Joint Standing Committee on Defence.

Ms Daniels agreed with the need to have the Defence Review explained. She wanted to know whether the issues of force design and force structure had been dealt with and what percentage of the Gross Domestic Product (GDP) should be ideally allocated to the defence budget, or whether the main issue was rather the Department’s ability to employ the funds allocated. Secondly, she wanted to know at what point adjustments would be made if the Department had realised that its annual performance plan (APP) did not correlate with the budget that it had been allocated, in order to counter under or overspending and a lack of performance.

Mr Gumede said, in relation to the adjustments, that the DoD was reducing some of the targets in the upcoming APP, in order to ensure that the APP matched the spending and budget of the Department.

Ms Daniels also commented that the codification requirements need to be finalised, because of differences between what was said in the year-end report of the last financial year and the Auditor-General’s present report, so that the inventory of the DoD could be properly tracked.

Ms Daniels noted that the Human Resources Strategy and policy was the major bone of contention that sparked much of the litigation against the Department. She asked why there was no mention of the Military Ombud in this area in the Quarterly Report.

Ms Daniels wanted to know what exactly the problem with the assets was, and what results had been seen from interaction between the Department and Auditor-General.

Ms Mabedla also wanted to reiterate the point made by Ms Daniels about the lack of information on involvement of the Military Ombudsman, especially since the DoD was involved in 64 legal disputes. She also commented that perhaps the Committee should call the Ombud itself to address the Committee on its role, and whether it had sufficient capacity to carry out its mandate.

Dr Gumede said that the reason that the Military Ombud activities were not recorded in this report was that it was a stand alone organisation, in terms of its legislative framework, and that it was not covered by the DoD’s APP.

Ms Mgabadeli asked about the formal training targets, specifically how these targets are set. She wanted to know about transformation, especially within the South African Navy, and if there were any recruitment processes in place.

Dr Gumede replied that the military doctrine or strategy of the Department took into account how many soldiers were required for its various operations and made an assessment of how many people would leave the SANDF every year, to reach a calculation on how many people the Department needed to train. He stressed that when the training targets had not been met, the SANDF would feel that lack of capacity in the future, because it took time for people to be processed by the system up to the point where they were ready for effective deployment. Therefore it was important to ensure the DoD was properly funded, and he repeated that there were many approved yet unfunded posts.

Ms Mabedla referred to a comment that the Defence Secretariat felt that the Department was operating within an acceptable deviation from the planned budget. She was worried about the minimal progress that had been achieved in filling vacant posts within the Department, with only 1 420 of 2 515 posts filled, and 2% progress achieved over the quarter. She then said that although the Department had indicated that it was unlikely to meet its annual target in this area, it had not outlined how it planned to remedy the situation, and the end of the financial year was fast approaching. She asked if the DoD’s Human Resources Relation Strategy was in the process of development, because this was important for the transfer of skills, as part of the exit mechanism which was soon to be implemented.

Dr Gumede concurred with the concerns raised on human resources, and apologised for the absence of the Human Resources representative. He said that he had been informed that having a target for an HR Retention Strategy required an overarching response involving all aspects of the military experience, from training and operational involvement to incentives given.

Mr S Esau (DA) asked for clarity on who dealt with the Department of Military Veterans quarterly report, because what would be covered in that report fell within the same budget presently under discussion.

Dr Gumede clarified that the Department of Military Veterans was separate and had its own Director General.

Mr Esau was concerned about the serious over and under spending that occurred in relation to the Special Defence Account, echoing Ms Daniels’ similar question but also focusing on spending on items not budgeted for in the APP and Strategic Plan. He asked for the Committee to be timeously appraised of such spending in a report on adjustments made.

Mr Esau referred to external operations and wanted to know the exact losses suffered by the SANDF through it not fully being reimbursed, and costs of maintenance on the equipment.

Dr Gumede explained that the United Nations reimbursed the state for equipment that was running and met the standards, but that once the equipment stopped working, the UN would stop covering the costs of having that equipment abroad. The DoD was constantly negotiating with the UN on the rate of reimbursement, which the DoD felt was too low.

Mr Esau wanted to know about the administrative glitch which led to recruits at Blomvlei being refused access to the training base and sent home.

Mr Esau commented that it was unacceptable that not all of senior management had signed the service level agreements. Even despite seconding, the other department would have to provide a job description with attached targets. This was a requirement under the Public Service Act (PSA). He also wanted to know what implications the precedent set in the case that Solidarity had won against the Department of Correctional Services would have for the DoD.

Dr Gumede concurred with Mr Esau’s position on the service level agreements and the need for these to be signed before the staff were seconded. He explained that the precedent set by the litigation involving the Department of Correctional Services was unlikely to affect the DoD, because the majority of its labour force operated under military justice, which was different to civil labour law.

Mr Esau wanted to know what was being done about compliance with information technology systems requirements under Defence Enterprise Information Systems Master Plan, pointing out that the compliance was only at 54%.

Dr Gumede said that the reason the Department was not compliant with the information technology requirements was that this Department had been a pilot site for the Integrated Financial Management System, which had its roll out delayed.

The Chairperson then commented that maybe a separate presentation was required from the Defence Secretariat on the findings of the Auditor-General on the asset registry and management, as well as the DoD’s overall asset management plan.

Dr Gumede agreed with the Chairperson that this would be useful, because the DoD needed to explain why the military assets was the only item on which the Department received a qualification from the Auditor-General, to explain what was being done to remedy the situation and to determine what was an asset and what was an inventory item.

The Chairperson said that this discussion would have to conclude now, to allow for the Auditor-General to present, and said that any outstanding questions could be answered at a future sitting.

Audit outcomes and recommendations (including on internal audit procedures) for Department of Defence: Briefing by Auditor-General South Africa
Mr Musa Hlongwa, Business Executive, Auditor-General South Africa, presented a report which focused on how the Department should go about remedying the issues raised in the findings presented to the Committee in October 2013. His report centred on the four problem areas the Committee had identified through the last audit report.

The first set of recommendations related to tangible and intangible assets, which was the basis for the audit qualification. The Auditor-General South Africa (AGSA) had noted that assets could not be found in the asset register, as well as the fact that ground support equipment was not found, the assets purchased throughout the year were not recorded in the asset register, documentation supporting the values of assets did not match values entered in the asset register and assets acquired through the Special Defence Acquisition were not recorded at the proper value in the asset register.

AGSA’s recommendation on tangible assets were that the contracts relating to aircraft bought through the SDP should be analysed to identify the relevant ground support equipment, and these should be barcoded and recorded. It recommended also that all technical publications should be identified, barcoded and recorded in the asset registry. Proper asset counts must be performed to ensure the accuracy of the asset registry. All assets must be supported with valid valuation documents. Intangible assets were mainly found to have not been registered in the asset registry, and it was therefore recommended that these be identified and recorded. All divisions submitting information to the Register should receive proper accounting support from the Finance division. Proper training and proper controls should be applied to ensure the submissions were properly completed and submitted to the asset register.

Moving to concerns about the predetermined objectives, he said that the finding was around the reliability of significantly important targets for the Force Employment Programme, which could not be presented for audit. Here, AGSA recommended that DoD should look at the findings and address the matters as far as the performance information was concerned.

There were a number of instances of non-compliance with laws and regulations uncovered by the audit in the areas of human resources, supply chain management, the Public Finance Management Act (PFMA) and Treasury regulations. These were detailed in the report.

Internal controls related to the area of leadership, governance and financial and performance management. Under leadership, it was recommended that skilled staff and structures required to complete the policy making and financial and other reporting tasks required must be put in place. Under governance, it was noted that the Department was capacitating itself to perform the internal audit function. Under financial and performance management, it was recommended that the Department should ensure that it had proper support for information gathering for financial statements, as well as proper systems and reconciliations for the verification of this information.

Mr Esau commented that the issue was not specifically to do with the assets, whether tangible or intangible, and rather that the problem lay in the absence of proper controls for recording assets. The Department had to respond to these issues.

Ms Daniels commented that it was obvious that compliance with law and regulations should not pose any problems because the necessity to do this was clearly spelt out in the relevant legislation.

The Chairperson referred to his earlier invitation to the Department to present on the asset issue and asked that that presentation should include an action plan on how these recommendations were to be implemented.

Mr Mlangeni commented that the fact that so many categories of assets could not be found or were not recorded was serious, because nobody seemed to know what has happened to such assets, which may well have been stolen. He urged DoD to remedy this.

The meeting was adjourned.


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