The Department briefed the Committee on its Annual Report, focussing on the defence mandate, financial performance, priorities, selected performance indicators, programme output detail, enterprise risks and mitigation actions, and Auditor-General report. Some members felt that the brief should have been made in the presence of the Minister Mapisa-Nqakula who was accountable whereas other felt that the absence of the Minister was not an impediment to the presentation. According to the Auditor-General report, the Department made substantial progress in dealing with tangible capital asserts, however, it remained a challenge as there was insufficient appropriate audit evidence for intangible capital assets and DOD received a qualified audit opinion. Although the Department did not achieve all planned targets, certain Members thought it had performed well. Clarity was sought on unclear issues including under-spending, irregular and fruitless expenditure, labour cases, corruption cases, force employment in respect of landward programme, disciplinary actions, submarine tender, acquisition project, transportation aircraft, substandard equipment, non-performance in respect of internal audit, unfunded and/or vacant critical posts, nature of crimes committed by soldiers, investigation related to the Gulfstream jet, international missions, health facilities, and protection of South African porous borders.
The Chairperson welcomed the Department of Defence’s delegation team and accepted the apologies of Dr Sam Gulube, Secretary of Defence, on behalf of the Minister for her absence due to a Cabinet sitting.
Mr D Maynier (DA) objected to the proceedings and remarked that the meeting could not take place in the absence of the Minister. In the Minister’s absence the Annual Report could not be dealt with effectively.
The Chairperson asked Mr Maynier how he knew that Department’s team would not be able to deal with the report before its briefing.
Mr Maynier replied that consensus was reached in a previous meeting that a department could not brief the Committee on the Annual Report in the absence of the Minister.
Mr J Skosana (ANC) expressed his concern about objecting to the brief before the Committee was briefed. The Committee should not subject the Annual Report briefing to the presence of the Minister. If the Minister was present it was a blessing. Her presence should not be compulsory in all meetings with the Department.
Mr D Gamede (ANC) reminded the Committee that when the Minister was invited to brief the Committee she said that she would not be available because she will be in the Democratic Republic of Congo. Her apology was featured in the Committee’s previous meeting. The issue raised by Mr Maynier was discussed.
The Chairperson said it was discussed and the Committee agreed that the Department could still brief the Committee in her absence. Can we accept or reject the apology?
Mr Skosana accepted.
Mr Maynier rejected it. A briefing on the Annual Report could not be provided in the absence of the Minister, who was accountable. Although she could not attend all the meetings, she could not miss that one.
Mr Gamede seconded the apology.
The Chairperson recorded Mr Maynier’s objection and asked the Department to present.
Department of Defence (DOD) Annual Report 2013/14 presentation
Dr Sam Gulube, Secretary of Defence, gave an overview of the 2013/14 Annual Report, focussing on the defence mandate, financial performance, priorities, selected performance indicators, programme output detail, enterprise risks and mitigation actions, and the Auditor-General report.
Dr Gulube stated that the Department’s mandate was drawn from section 200(2) of the Constitution, which was given substance by the Defence Act No 42 of 2002 and delegated legislation. He noted that the 2013/14 Annual Report accounted for the performance against the approved defence performance plans tabled on 13 March 2013. As regards defence outcomes and outputs, he stated that South Africa had been defended and protected and the civil control of defence was enhanced. Defence commitments were ordered in accordance with government policy and strategy. Mission ready defence capabilities were provided, including sound defence direction and ensuring defence compliance with the regulatory framework.
Dr Gulube highlighted the strategic goals achieved and not achieved. The Department had a budget of R40 658 184 000 but spent R40 447 521 000 on its strategic and planned targets. Money was spent mainly on compensation of employees, procurement of critical ammunition for force preparation, maintenance and repair of operational vehicles, replacement of tactical radios, and procurement of deployable medical posts and field hospitals. The South African National Defence Force (SANDF) priorities included:
• Enhancement of the SANDF’s landward defence capabilities
• Maritime security
• Force rejuvenation or job creation
• Enhancement of SANDF’s peacekeeping capabilities
• National youth services
• Revitalisation of the services
• Restructuring and support of the defence industry
• Department of Defence work capability.
He proceeded to brief the Committee on the Department achievement in terms of its programmes concerning administration, force employment, landward defence, air defence, maritime defence, military health support, defence intelligence and general support. Overall, the Department achieved 72% of the planned targets and 32% of planned targets were not achieved.
According to the Auditor-General report, the Department made substantial progress in dealing with tangible capital asserts during the year in review, however, intangible capital assets remain a challenge. The AG was unable to obtain sufficient appropriate audit evidence for intangible capital assets (ICA). As a result, the Department received a qualified audit opinion.
In conclusion, the Secretary of Defence stated that the Department would continue to be addressed through effective implementation of the Annual Performance Plan (APP) of 2014/15 and by means of policy interventions once the Defence Review begins to be implemented.
Mr Gamede sought clarity on why planned targets were not achieved in force employment, air defence and maritime security. Referring to audit report, the AG had noted that a VIP jet contract had been concluded, cancelled and then reinstated. He sought clarity on the reinstatement. Referring to pages 21 and 210 of the Annual Report, he sought clarity on the expenditure irregularities and on the list of the matters that were under investigation, and asked the Department to give a blow by blow account.
Mr Skosana welcomed the presentation. He was happy with the achievements even though not all planned targets were achieved. With regards to turning around strategy, he asked why there were so many legal cases, including corruption cases. Was any mechanism put in place to prevent those cases and corruption?
Mr Maynier also thanked the presenter for being frank on achieved and non-achieved planned targets. He said that he had a couple of questions. He began with the underspending. It was a mystery to him how much the DoD had and how much it actually spent. As it was reflected on p28 of Annual Report, the DOD underspent approximately R210 million, a proportion which was relatively minor compared to the budget. However, the question is what the total reserve is and what proportion of reserve is committed and what proportion is uncommitted. In July 2014, the balance was R340 billion. If one adds the underspending amount to the total reserve, one would have a total picture of underspending. This is more significant than in the annual financial report. The second question is about force employment in respect of the landward programme. Dr Gulube mentioned that what DOD requires to guard our borders is 22 sub-units and not 13 sub-units. Could he quantify that? How many soldiers do we require? How many soldiers do we have? And, what is the variance between the two? The third question dealt with maritime programme, referring to p11 of Annual Report. He sought clarity on the budget that was spent on the South African navy. Why, in August 2014, was the tender for submarine withdrawn? Based on statistics and the Armscor tender bulletin, it appeared that the South African navy was alongside. On the issue of acquisition, the Committee traversed the question of acquisition with Armscor and there was a number of acquisition projects that were discussed with Armscor and which Armscor suggested that the Department would be in a better position to answer those questions. The first project was a VIP jet. Armscor could not provide information related to the VIP jet project name, its progress status and its budget and asked the Department to provide detail on that.
Referring to the Bangui mission, he stated that, according to Armscor, there was no acquisition project for transportation aircraft. It said that project resided with the DOD and therefore the Department should provide particulars in that respect.
Referring to the deployment of soldiers in the Democratic Republic of Congo, he remarked that soldiers were deployed with substandard equipment, including boots, specs, armour, helmet, and asked whether there was a project in the Department to assess and review materials used by our ordinary soldiers in international missions. He said that ordinary soldiers in DRC were left with no choice but to buy their own equipment.
Mr Maynier sought clarity on why the Department was, according to the AG report, not cooperating in terms of a forensic investigation about the Gulfstream jet which was approved by Ms Lindiwe Sisulu, when she was Minister of Defence. He raised concern about that investigation seven months ago. The AG Report stated that the Department had been resisting handing out some documents relevant to that investigation. He asked Dr Gulube to explain why the DOD was not cooperating with AG to conduct an audit. He remarked that the Department was not cooperating with investigating team because it feared that the findings would be negative and embarrassing to the Minister. Finally, he sought clarity on irregular expenditure of R160 million in respect of “sourcing a jet” without indication of which company the Department concluded a contract with. He asked the Department to provide particulars of that irregular expenditure. He said that the Auditor General had requested the Department to respond to issues raised in the Audit Report in writing, and asked the Chairperson whether he had received such responses.
Mr S Esau (DA) drew the Department’s attention on areas of concerns as they pertain to the financial report in respect of air defence, legal matters, lack of achieving the planned targets, and the reduction of the defence force, and two people who were appointed at the beginning of financial year. They include the Head of Internal Audit Division.
Mr Esau, referring to p38 of the Annual Report, commented that it was clear that the army was unfit on the ground. The DOD needed 22 companies. Looking at the figures, he said that the air force had not enough staff. The legal practitioners were less. When you look at internal audit division, the planned targets were zero. The Audit Report findings raised issues concerning non-performance in terms of internal auditing, including internal controls. He said that when one looked at the staff complement, the Department was facing serious problems because of critical positions that could not be filled and most critical positions were unfunded.
Mr Esau stated that there was an instruction given by AG that the SANDF should reduce its force by 10 000 and that had not yet been done and that was a natural attrition. He remarked that the Department was at risk of incapacity and incompetence in running effectively its divisions due to lacking of human resources. He said that the issues he was raising should have been directed to the Minister. The Minister was needed in this meeting. He expressed concern that these issues were overlooked and not responded to. The Department would be facing a huge challenge in the future. With regards to competence, capacity issues, and post upgrades, he remarked that there was no post that was under-graded: Was it a salary upgrade or a vacancy upgrade. With regard to the issue of leave policy, he sought clarity on non-utilisation or non-payout, discounting of leave, and termination of service. He also sought clarity on HIV/AIDS. How many soldiers were suffering from HIV/AIDS and how their performances were?
Referring to dismissals, he said that 20% of disciplinary hearings were dismissed and sought clarity on what were the actual causes and what did they actually do to deserve to be dismissed. With regards to 368 grievances, a number of grievances were resolved whereas others were not. Precautionary suspension, suspension, and dismissal came with a huge cost to the Department. He remarked that the Department could make a huge saving by appointing more people to actually do the job rather than paying people on suspension. The sooner these legal issues are resolved, the sooner the Department would save money. Finally, he asked the Department to explain the contingent liability and irrecoverable debts and an unauthorised expenditure (i.e the budget that was not approved by the Parliament), claims against the state, R20 million that were written off, and issue of fraud and corruption. What were the nature of the cases of fraud and corruption?
Mr Esau sought clarity on whether there was any discussion between the Department and the Department of Public Works to improve roads in ensuring the protection of the country: Was there any effort from the Minister to improve the relationship between these two departments?
He raised the issue of medical care. The achieved target in terms of medication was 50%. What was the Department doing for our soldiers who needed medication? The footprint of medical facilities which accommodated 3 200 patients was not sufficient compared to the number of soldiers that needed to use these facilities. What was in place to expand these facilities?
He said that the Committee would like to have an idea of the crimes committed by soldiers and the nature of these crimes.
The Chairperson gave an opportunity to the Department to respond to the Members’ concerns.
Dr Gulube remarked that questions were longer than presentation. He replied that the reduction in the number of targets was due to budget allocation, based on the outcome of the DOD engagement with Parliament and National Treasury. When the Department was given a budget, it was asked to cut down on the annual performance plan that it had already presented to them. For example, the Department was requested to cut down one billion rand on the annual performance of 2014/15. The Department had no option but to cut down on planned targets.
On the security of the borders, Dr Gulube said that the Department was doing well but the security was not at the level at which the Department had targetted it to be. The issue was how many companies that the Department wanted to deploy compared to how many it could manage to deploy. With insufficient budget, the Department was not able to deploy all companies. A company had 410 soldiers.
Referring to environmental matters, Dr Gulube indicated that the SANDF’s storage of fuels was very old and it had not yet been renovated. Supply of fuels was being supplied through the office of the National Treasury contract. The Department has expressed its concerns and has indicated that it would not participate in the next tender because it does not include upgrade and repairs of storage facilities countrywide. The supply that the Department was receiving was inadequate and there were therefore concerns around those environmental issues. The fires coming from military training exercises have become a major concern. These concerns also affected the Department of Health because they also create medical complications.
Dr Gulube accepted that the Department had been taken to court for various labour related issues. The Department had established a team in the military justice division to deal with these matters. Actually, the Department had its own military justice system, which had various divisions dealing with, for example, military cases, discipline complaints and civil litigation. However a team was established to deal with the current backlog of internal complaints. It would be led by a qualified legal expert called Chief Director of Legal Services and it would be comprised of people who had obtained LLB degrees.
Most of the grievances had to deal with promotions, especially in accordance with their period of military service. This matter would be looked at in depth in the upcoming departmental meeting. He explained that the SANDF had adopted a pyramid approach that allowed the South African army division to have one person with a rank of “General”. It would be at odds with pyramid approach if another individual is promoted to the rank of “General”. This system caused a lot of stress to those who feel that they have been sitting at certain ranks for the long period of time and could not get another “star”. As the Department had established military Ombudsman, these problems were being addressed. In the SANDF, they had military police whose mandate included dealing with issues of fraud and corruption. The military police collaborated with military intelligence. These two bodies assist in investigating a number of cases which are not limited to military matters. There was a lot of improvement in dealing with the backlog cases, particularly criminal cases such as theft, rape, and assault. The majority of cases were theft or fraud/corruption related.
As regards dismissal and disciplinary measures, Dr Gulube said that the Committee would need to assist the Department on how disciplinary measures should be taken. He remarked that he was not aware of any other country in the world that allowed the military to join labour unions. South Africa is amongst the few if there were. Soldiers going on strike (because a labour union says so) was a major issue. The Department was told that to strike is guaranteed by the Constitution. The Department would therefore appeal to Parliament to look at that provision: If the Head of SANDF says deploy, and the labour union says go on strike, all these begs the question: how safe are South Africans as a country? We all know that there are a large number of the people sitting at home on suspension and that they are paid whilst on suspension. That problem would be resolved by the team that had been established.
On the issue of human resources, the Department had trained its own engineers and had to terminate the contract it had with engineers. It was relying on internal engineers. It was developing a strategy on how it could absorb its own engineers within a cost effective programme.
With regard to preventing irregular expenditure, the Department have developed strategy in what he could call “AMT”, meaning Audit Management Team, which cut across all divisions and services. It was chaired by Dr Gulube. It met with the DOD every month to discuss the manner in which irregularities and fruitless expenditure should be dealt with. It named and shamed those divisions that were not doing well. The Department gave training to the divisions to improve their financial management. It had established a list of what could be condoned and what could not be condoned.
On irregular and fruitless expenditure, Dr Gulube stated that the fruitless expenditure was where an officer of a division authorises a budget beyond the delegated budget. In some cases Dr Gulube, as accounting officer could condone such expenditure and thus ensure that that irregularity would not happen again, e.g. sourcing of aircraft. DOD had a number of reserve force in the defence force. It was found to be cost-effective to use them. DOD had a policy stating that if an individual was in the reserve force and participates in some operations, including transporting VIP, the cost could amount to irregular. Reserve force was used in the transportation and joint operations. The DOD was still engaging National Treasury on how to use aircraft in joint and sensitive operations. On the VIP jet contract that was cancelled and then reinstated, it was a classified operation. It was for military satellite. The contract was revised to meet the military requirements. Most of irregular expenditure was still under investigation. On the R210 million, that was one of the cases that lawmakers could scrutinise carefully and look at it again. The SANDF was a division that needed to be transformed and meet the affirmative measure policies. In this respect, Armscor developed internal policy that the tenders would be issued to BEE companies as the defence force was not yet transformed after 20 years of democracy. DOD had an onerous duty to promote government policies that promote transformation. However, the Auditor General said that Armscor policies were not conforming to the Preferential Procurement Policy Framework Act which stated that the chain supply management had to be 10 preference points and not 25 preference points as required by Armscor. He had instructed the Armscor to stop as from November. On the chartered aircraft of the President, the presidential jet was usually hired through a National Treasury tender. It was hired by the air force. On the investigation, he was not aware of the concerns raised by Mr Maynier and DOD was conforming to National Treasury requirements, the Public Finance Management Act, and the Defence Act and nothing could embarrass the DOD.
Mr Maynier said that the DOD objected that there was no audit query but his question was to conduct an audit on Gulfstream jet, used by the Minister. When he contacted the AG, the AG replied that the DOD did not provide relevant document to the AG: did the AG asked the documents? When the documents were handed to AG?
Dr Gulube replied that he had to consult his Chief Financial Officer (CFO). All the remaining questions would be answered in writing. The CFO replied that he was aware of the AG’s request but the AG’s letter was handed to the Minister.
Meeting was adjourned.
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