International Relations and Co-operation Budget Review and Recommendations Report

Meeting report

The Chairperson said that what was important for the purpose of the meeting was to go through the findings and to check if these had been properly reflected and indeed informed the recommendations. He directed Members to the findings of the Committee on page 34 of the Draft Budgetary Recommendation and Review Report (BRRR).

Mr B Radebe (ANC) requested that the Committee begin with the findings of the Auditor General, because as the Committee was dealing with the BRRR it should consider these findings first and then continue to its own findings and recommendations.

The Chairperson then went through the findings of the Auditor General (AG) concerning the African Renaissance Fund (the Fund or ARF):

• Strategic Planning and Performance Management: The Strategic Plan for 2013/14 was not submitted timeously for approval by the executive authority.
• Non-compliance with quarterly reporting requirements: The entity failed to report timeously to the executive authority.
• Ineffective system of financial and risk management and control: The entity did not provide a framework on how these operational activities should be carried out. The Secretariat of the Fund did not have terms of reference. The accounting officer failed to ensure that the risk management strategy was implemented. Contracts between the entity and project’s implementing agencies were not concluded and funds were spent in excess of the amount concurred with by the Minister of Finance.
• No approved delegation of authority: The Fund did not have a documented and approved delegation of authority indicating the responsibility of officials delegated to monitor the Activities of the ARF.
• Internal Audit: No internal audits were conducted on the ARF during the reporting year.
• Procurement and contract management: supply chain management prescripts were not followed and deviations were not properly motivated.
• Investigations: External firm performed an investigation into irregular expenditure, reported in the 2012/2013 Annual Report. The outcome of the investigation showed that no financial loss to the state and the irregular expenditure was condoned.

The Chairperson then gave the findings of the Audit Committee on the Department of International Relations and Cooperation (DIRCO or the Department). The Audit Committee noted that the Department’s audit plan adequately resolved findings in the audit report of 2012/13 except for the following: no policies and procedures, no terms of reference for secretariat and advisory committee and no organisational structure.

Mr L Lekota (COPE) asked if the above related to the African Renaissance Fund.

The Chairperson indicated that it did and continued that the Department had informed the Audit Committee that the ARF had undergone a self-assessment and review as a consequence of the Auditor General’s finding of irregular expenditure in 2012/13. It had been reported that the Department instituted an investigation into the circumstances of the irregular expenditure and measures were taken in that regard. The Audit Committee was informed of the critical challenges with regard to the ARF. With regard to other challenges the Department undertook to enhance performance where needed, regularly conduct asset verifications, pursue the investigations into non-compliance matters, and implement proper oversight mechanisms over the ARF. It was reported that the appointment of the Chief Audit Officer had been finalised. The Audit Committee also undertook to assist and guide the Department with a possible governance framework for the ARF.

The Chairperson asked Members to read through the findings of the Auditor General on the Department of International Relations, indicating any problems they picked up.

Mr L Mpumlwana (ANC) agreed with this approach and suggested moving directly to the Committee’s findings.

The Chairperson then handed over to Ms Lineo Mosala, Committee Content Advisor, to take the Committee through its own findings relating to the Department.

Ms Mosala said that these were the findings emanating from the observations and questions of the Committee in respect of DIRCO’s Annual Report for 2013/14.

Finding 1: “The Department continued to function under a tight budget in the year under review. Its mandate continued to grow and it had to respond to global drivers and trends; that influenced both the international system and the pursuit of South Africa’s domestic priorities”.

Ms Mosala said this finding reflected the Committee, noting the Department’s financial burden and the fact that that was due to external factors.

Finding 2: “During the reporting year the Department recorded irregular expenditure of R116.7 million. Circumstances beyond its control, such as the protocol expenses as a result of the funeral of former President Nelson Mandela, contributed to the situation. Follow up with treasury was needed in order to obtain confirmation of the condoning of the expenditure”.

Mr Lekota said that he had said in the meeting where the above issue was raised, that a certain amount of money was left to provincial or municipal leadership in the Eastern Cape by DIRCO to deal with the expenses of the funeral. It came to light that that money was not used for that purpose. He recalled drawing the Committee’s attention to the fact that the three municipal officials who had received that money had declared the millions that they had put in their own accounts. These officials admitted the act and returned the money to government. His point then was that DIRCO must be very stringent in the management of the funds. He also felt that the Committee must follow up on whether the money came back to the Department and how much was in fact returned. Further, that the Department must report on how it was going to avoid such loose management of funds in future. As for the circumstances beyond DIRCO’s control, that was valid, but the same could not be said for the above mismanagement and these should not be lumped together.

Mr Mpumplwana said Mr Lekota’s concerns would be better placed under recommendations. It would be unwise to follow what the newspapers said happened to the money, particularly since people were in court concerning the matter. The final court decision should be awaited. The report that was before the Committee was that the amount was unauthorised and the reason for the allocation of the money was for, among others, the funeral of former President Nelson Mandela. That was the finding before the Committee and what in fact happened to the money could not be spoken of as yet, because the reason for the initial movement of the funds was the funeral expenses.

Mr Radebe said that the finding was correct as it stood, but Mr Lekota’s sentiments could not be ignored and ought to be captured in the recommendations of the Committee. Where money was given to any entity, this must be done in line with regulations and procedure. Therefore, as the Committee was unsure about the money given to municipalities the Department must verify that any money transferred was used for the appropriate purpose, and if not corrective action must be taken. He was proud that in the budget adjustment estimates, National Treasury had already provided more than R300 million to cater for currency fluctuations. This was evidence that the Committee’s observation was correct.

The Chairperson asked whether the funeral had been in 2013 and the expense would not appear in the 2014/15 Annual Report.

Mr Lekota replied that because one of the explanations given for the irregular expenditure was the funeral related expenses, the Department was accounting in the present 2013/14 Annual Report. He reiterated his point that money was given out for the purpose of the funeral, but this was not done. Therefore, the Department must track and recover the funds to regularise the situation.

The Chairperson said Members had indicated that this should rather be captured under recommendations of the Committee.

Finding 3: “The Department has commenced implementing the National Development Plan’s vision of organisational transformation aimed at making the Department more efficient and effective. The process was commissioned in conjunction with the Department of Public Works”.

Finding 4: “The Auditor General’s audit findings for 2013/14 have expressed a qualified audit opinion, with regard to the Department’s performance. The Auditor General has recommended steps to be taken to rectify the situation in areas reported on such as internal control, governance, leadership and compliance with laws and regulations”.

Finding 5: “It will be useful for the Department to consult with the Office of Statistics South Africa, when considering establishing trading partners in Africa”.

The Chairperson said that was not exactly a finding, but rather a recommendation of the Committee.

Mr Radebe concurred that this should be placed under recommendations. Further, that the consultation should not be limited to trading partners in Africa and that the data used by the Department should be correlated with that of Statistics South Africa.

Mr Lekota said the finding should reflect information received by the Committee that the Department was not making use of Statistics South Africa to inform its planning. The recommendation should reflect Mr Radebe’s suggestion, in order to ensure that the recommendation was predicated upon the finding.

The Chairperson said the recommendation should read along the lines of: DIRCO and other sister departments did not use Statistics South Africa for their planning.

Mr Lekota said the finding should not be limited to Statistics South Africa, but rather state that research by a number of departments or entities were ignored when planning. This information was needed and the Department should interrogate this information and use it as a tool, particularly for regional development.

The Chairperson asked whether Members supported the expansion of the finding as proposed.

Mr Mpumlwana agreed, however Statistics South Africa had given this information to the Committee, but the Department was not given an opportunity to answer. He was unsure if this needed to be spoken about, because the Committee was not being objective. The Department had a research component and the Committee could not be sure if the information was used or not.

Mr Radebe agreed with Mr Mpumlwana that it was only fair that where an allegation was made that a right of reply to be given. Although that had not been done he agreed that the recommendation should stand because he did not believe that Statistics South Africa would mislead the Committee. As for Mr Lekota’s suggestion, he felt the recommendation should be limited to Statistics South Africa, because the Committee had interacted with this entity. Further, other entities’ information should not be recommended, because unlike Statistics South Africa they did not receive public funds. The Department had its own research capacity, but those people must go beyond what they were currently doing. Perhaps the recommendation should be left out, the Department given a chance to respond and the finding pushed forward to the Quarterly Report.

Mr Mpumlwana said perhaps the recommendation could be posited as information received form Statistics South Africa, but as the other side of the story was not interrogated it could not be the Committee’s findings. He supported limiting the recommendation to Statistics South Africa.

Mr Lekota said that the attitude should not be taken that when Statistics South Africa presented the information, that this was an accusation. He understood it was stated that Departments working in sectors which Statistics South Africa collected statistics ought to make use of those statistics so that they could be more efficient, particularly in areas such as crime, and even more so when considering regional integration. It was important that political strategists involved with regional integration and the like, used the information that depicted trends to further the cause. The Statistician General was not attacking the Department, but rather asking the Committee to make the recommendation in its feedback to the Department, because the work was being done.

Ms Mosala reminded the Committee of what had transpired on the day the Annual Report was considered. One of the first questions asked by Members was whether the Department consulted with Statistics South Africa when considering trade partners in Africa. The Director General responded that it did consult with Statistics South Africa and other organisations. Therefore, as an observation that the Committee made, that must appear under the findings. Perhaps it could be couched as an observation that the Committee noted the need for consultation. The issue was discussed and the Department responded.

Mr Lekota said that the Statistician General had taken the blame for not being forthright enough in recommending the use of their work and that was a constructive approach.

The Chairperson asked if the Committee was happy with the finding and perhaps the only formulation that needed to be worked on.

Mr Mpumlwana raised a concern saying Statistics South Africa stated that DIRCO did not use its work, but the Department replied that it had used the statistics; the Committee could not make the finding suggested. How could the Committee decide that DIRCO did not use the statistics, contrary to its assertion? He suggested leaving out the finding and continuing.

The Chairperson said it must be remembered that the Committee invited Statistics South Africa to give it information and that could not simply be ignored because of difficulties in formulation.

Mr Mpumlwana said it was because of the conflicting indications and the absence of any reason to think either party was lying that he suggested leaving out the finding as unnecessary. The accusation was made and the Department denied it, therefore how can it be said that the accusation must stand.

Mr Radebe said that was why he had suggested changing the wording of the finding to world, rather than Africa.  Statistics South Africa had stated it had information on countries including Turkey and Colombia indicating a gross domestic product of over R3 trillion and a fast growing middle class, therefore South Africa’s trade strategy should be aligned to exploiting that. He felt the problem with the finding could be remedied by removing the negative aspects and stating that the information was available from statistics South Africa and the Department was making use of it.

The Chairperson proposed that the issue be passed and the formulation of the finding be revisited.

Finding 6: ”The Department’s ICT policy and infrastructure no longer met modern requirements”.

Ms T Kenye (ANC) said that this finding should be retained, especially regarding the modernisation of the ICT infrastructure.

Finding 7: “Asset management remained a challenging task for the Department which has to deal with around 270000 pieces of assets, spread over 160 missions”.

Finding 8: “Suppliers were not paid within the 30 day requirement. In response the Department undertook to implement a tracking system to streamline the payment of invoices”.

The Chairperson asked if what had been undertaken to be done was a finding.

Ms Kenye did not feel that this should be retained, because if the Department had implemented a tracking system then there was no space for recommendation.

The Chairperson said that the fact that suppliers were not paid within 30 days ought to stay, but the response of the Department taken out.

Ms Kenye agreed.

Mr Lekota said that as the Department had undertaken to take the remedial steps themselves that this could not be posed as a recommendation and was properly placed as a finding.

The Chairperson agreed.

Finding 9: “There could well be need for the Department to consider creating the position of a Chief Operations Officer (COO). This could help with the operational challenges, which tend to derail focus from the normal work that was characteristic of the Department in the conduct of international relations. There could also be space for considering engaging a private manager to deal with asset management.”

Mr Mpumlwana said that was not a finding and was more of a recommendation.

Ms Kenye agreed and said that perhaps it could be made more concise.

Mr Radebe said that Ms M Moonsamy (EFF) had been very insistent about this point, but agreed that it should be put into the recommendation level. This was particularly as entities like the ARF were involved.

Ms Mosala said that as the Committee had discussed the matter at length, she advised that a finding was retained to have a basis for the recommendation.

The Chairperson recalled that the Committee had said that the Director General was not able to delegate authority and therefore a COO would be able to have this authority delegated to them. He then asked Ms Mosala to formulate a finding around that topic.

Finding 10: “A number of municipalities and departments owed the Department an amount of R400 million. The Department was slow in collecting or debtors were slow in paying back the money”.

Mr Radebe commented that the amount was R450 million and asked for Ms Mosala to check.

The Chairperson asked where the fault lay, with the Department or the debtors who owed the money.

Ms Mosala said that the Auditor General had determined that it was on both sides.

Finding 11: “There was overall limited capacity in the Department, despite the growing mandate. The slow pace in filling vacancies was noted as a concern. Some senior management personnel have left the Department”.

Finding 12: “Consequent management was not effectively applied. Wrongdoers were not immediately subject to requisite measures”.

The Chairperson noted that it was consequence management, rather than consequent management.

Finding 13: “The number of bi-lateral commissions in pursuit of economic diplomacy has grown. And should bring about commensurate economic benefit for South Africa”

Mr Radebe said that perhaps the sentence stop after has grown, because some of the benefit may be political, rather than economic.

Finding 14: “The Committee should be made aware of the successes of the African Capacity to Respond to Immediate Crises in the reporting year”

Mr M Maila (ANC) said that he felt that this was not a finding and perhaps it should be shifted to the recommendations.

Ms Mosala said the Committee discussed this and she would endeavour to couch it as a finding leading to a subsequent recommendation

The Chairperson said there were efforts towards peace building on the Continent and the negative forces came from political actors who lost elections and reorganised themselves as rebel groups. There was interference by non-African countries and this led to the African Union (AU) saying that Africa needed to find African solutions to African problems and the African Standby Force. He asked Ms Mosala to reflect that in the finding.

Finding 15: “It will be useful to consider whether South Africa will be able to influence democratisation of Africa, towards the era for implementation of African Union Agenda 2063”

Ms Mosala said that this had come from a question from the Chairperson asking the Department if South Africa was able to influence democratisation.

Ms Kenye said that the finding was premature, because the AU agenda 2063 was still to be debated.

The Chairperson agreed. The agenda was going to deal with a wide range of issues aside from just democratisation, including beneficiation, skills development and infrastructure. In line with the AU directive a joint sitting was planned to debate agenda 2063 and therefore the finding was premature and should be deleted.

Finding 16: “The Register of South Africans Abroad (ROSA) was slowly gaining momentum”.

Ms Kenye said that this finding should be kept, because people were not aware of the ROSA and the Committee needed to recommend awareness efforts.

The Chairperson asked for Members to think about the formulation.

Mr Maila said that the finding ought to be that ROSA was not properly publicised, in the sense that ordinary people who travelled abroad did not use the service.

The Chairperson said the formulation should run along the lines of ROSA was not properly publicised and consequently not used.

Finding 17: “The Department did not meet its target for the operationalisation of South African Council of International Relations, South African Development Partnership Agency and finalisation of the foreign service Bill. The Department has been asked to keep the Committee informed of the governance structures for the new agency SACIR”.

Ms Kenye said that this should be kept, but the requests to the Department should be left out.

The Chairperson said that, as the structure of the SACIR would come to Parliament in the form of Bills this could safely be removed.

Finding 18: “There are soft diplomacy measures which the Committee and Parliament could be made use of for a particular objecting. Parliamentary diplomacy was seen as important in the conduct of international relations. Involvement within BRICS processes, trade negotiations and climate change were cited as examples”.

Mr Mpumlwana said that he did not understand.

The Chairperson replied that usually where a country went to a negotiation forum, parliamentarians would accompany the delegation, to have an authoritative stance from parliament about those issues. The crux was that Parliament must be open to use soft diplomacy, to engage with other countries parliamentarians.

Mr Mpumlwana asked what was being observed in the finding.

The Chairperson explained that it was being observed that Parliament had not done enough and parliamentarians were not involved in processes at the United Nations or World Trade Organisation. That also implied that the Department must train Members on diplomacy.

Finding 19: “There were still challenges with the coordination of para-diplomacy activities, with some municipalities and provinces still conducting foreign policy activities without the requisite coordination with the Department. There could be many messengers but one message”.

Mr Lekota asked what municipalities and provinces were doing usurping the role of DIRCO. He therefore suggested that the Committee say there was simply no budget for municipalities and provinces to do international work and this was not their function. There must be a way for inter-governmental relations to say that unless such an entity had received a budget for those kinds of things, they must not be done. When municipalities and provinces went abroad that must be strictly restricted to the benchmarking or other work at hand, lest they demanded funding for trips from the Department. The Committee should therefore not say that there may be many messengers with one message, because the messenger was DIRCO.

The Chairperson asked for suggestions on formulations.

Mr Mpumlwana said it could be phrased to state that the lack of coordination caused many messengers with divergent messages.

Ms Mosala said that municipalities could engage in international business, but the issue was coordination. It must be done with a proper sanction. Therefore, there could be many messengers who ought to carry the same level.

The Chairperson asked where the problem with the formulation lay. There was an absence of coordination with municipalities, resulting in many messages being given about South Africa. Some even concluded trade agreements, unaware that they are writing off the strategic interests of the country.

Mr Lekota said that the point being made by Ms Mosala was that even if municipalities went abroad on an issue specific to their level of government, what they did while there must be coordinated by DIRCO. So that what was done abroad at a local level did not undo what was done by DIRCO at the national. He therefore revoked his earlier suggestions and finding 19 ought to be left as was.

Mr Maila said that the finding was the absence of coordination, however the recommendation would be that the Committee would like many messengers and one message.

Finding 20: “There could be some issues around transformation, in terms of recruitment.  When it comes to the recurrent challenges relating to supply chain management. There could be a lack of understanding of the Department’s vision”

Mr Radebe felt that this was a serious adverse finding against the Department and therefore it should be taken out. What the Committee should be concerned about was the performance of the Department and the audit findings.

Mr Mpumlwana agreed.

Finding 21: “It was regarded as of great importance to keep the citizens of the country informed of notable strides made in emerging economies of the South, mainly BRICS, especially with regard to the establishment of the BRICS Development Bank. There would be a need for the Department and relevant departments to commence with ratification processes for agreement establishing the BRICS Bank.
           
Finding 22: “South Africa’s contribution to peace, security and stability on the continent continued to grow considerably. The country has been supporting the African Union, United Nations and SADC efforts aimed at peace and security”.

Finding 23: “Public diplomacy programmes still faces challenges as a tool for communicating South Africa’s foreign policy both internally and internationally.

Finding 24: “In the likely event of generational relationships diminishing the ARF should be placed as a tool for leverage as a tool in South Africa’s foreign policy”.

Mr Radebe said that this should be deleted, because of entities like SACIR.

Finding 25: “Increased research capacity within the Department was welcomed, for the purpose of early warning of threats to South Africa’s foreign policy”.

Updated Findings

Ms Mosala proceeded to take the Committee through the amended findings.

Finding 5: “There was a need for greater collaboration, with regard to research and statistical information, to assist the Department in identifying potential trading partners in Africa and the world”.

Finding 8: “Suppliers were not paid within the 30 days requirement”.

Finding 9: “The Department was facing challenges with operational matters, which have been recurring in previous financial years”.

Mr Mpumlwana said that this formulation was too broad, and it ought to be said that the cause was the busy schedule of the Director General.

Ms Mosala re-read the finding.

The Chairperson disagreed with Mr Mpumlwana’s suggestion.

Finding 10: The finding was corrected to R450 million.

Ms Mosala said that the amount would be double-checked, but for the interim was left at R450 million.

The Chairperson said if there was uncertainty it could be put as around R450 million or in excess of R400 million.

Finding 12: Consequent management was changed to consequence management.

Finding 13: “The number of bilateral commissions in pursuit of economic diplomacy has grown”.

Finding 14: “The initiative by the AU in establishing the African Capacity to Respond to Immediate Crises as a mechanism for immediate response to crises was a commendable step”.

Finding 15: This finding was deleted.

Finding 16: “Registration of South Africans Abroad as a programme was not being adequately marketed”.

The Chairperson said that he had a problem with the word marketed and in fact it was not properly publicised or communicated perhaps.

Mr Mpumlwana said that the service was not marketed, it was publicised.

The Chairperson said that a service from government was not marketed, it was publicised. That was different from a commodity that was being sold.

Ms Mosala said that this was a voluntary mechanism.

Ms Kenye agreed that publicise for information purposes was a better phrase, because the point was creating awareness.

Finding 17: “The Department did not meet targets regarding the operationalisation of SACIR and SADPA and finalisation of the Foreign Service Bill”.

Finding 19: Divergent messages was  inserted.

Finding 20: This finding was deleted.

Finding 24: This finding was deleted.

The Chairperson thanked Ms Mosala and her team for the work done.

Recommendations

The Chairperson opened the floor for Members to bring forward representations, which as far as possible were linked to the findings.

Mr Radebe spoke to the Audit Committee’s finding, on page 33, and asked for “and SADPA” to be removed as it has not yet become operational. Further, the last paragraph on page 33 for SADPA to also be removed. 

Mr Mpumlwana recommended, based on finding number 6 on the Department’s ICT policy, that the upgrading of the ICT infrastructure should enjoy priority, as well as training in ICT. The new ICT policy should be implemented, including modernisation of the infrastructure and the systems of the Department.

Mr Radebe said that the reason DIRCO had received a qualified audit was because of finding number 7 relating to asset management. The Committee made the finding, but could not ignore the response by the Department in delegating the management of assets to the various delegations around the world. He suggested that seeing as the Department had begun implementation, before November a progress report should be given to the Committee verifying the assets. If this were not done now, then the financial year would be over and another qualified audit opinion may be received.

The Chairperson asked for clarity on the implications of saying before the end of November or by the end of November.

Mr Mpumlwana said that if by the end of November was used then the Department could bring the report on the last day of the month, but if before the end was used the report must be with the Committee by the end.

The Chairperson asked what he would advise.

Mr Mpumlwana said he would recommend before the end.

Mr Lekota said that he had an audience waiting to be addressed by him and he had hoped that the Committee would have worked faster than it was.

The Chairperson asked for advice on whether having started the meeting with a quorum and dealt with the bulk with a quorum, Mr Lekota had to be physically present when the Committee moved and seconded the adoption of the Draft Report. Particularly, as he had signed the attendance register and participated.

Mr Lekota said that in fact a number of recommendations were debated while going through the findings and the only problem now was determining the wording thereof.

Mr Mpumlwana replied that the Committee would retain quorum.

The Chairperson then excused Mr Lekota from the meeting and asked for further recommendations.

Mr Maila said regarding ROSA, that as it was not properly publicised, the Department should enhance its marketing strategy regarding the registration of South Africans abroad and that the information should be submitted to the relevant mission and be available locally; so that citizens were aware before they travelled.

Mr Radebe said that the Department should give regular updates on missions abroad, so that the Committee could monitor the alignment of the mandates to domestic priorities. Particularly as there had been issues around manpower and the like. It was important for the Committee to know, for each individual mission, what the mission had done in a particular quarter so that the Committee could determine if the mission was performing up to standard.

Ms Kenye said that a recommendation should be made towards the appointment of the COO to help ease the operational challenges.

Mr Maila said that the Department should be required to attend to all concerns raised by the Auditor General, so there was not a repetition of the non-compliance observed.

The Chairperson recommended specifying that it was the concerns raised by the Auditor regarding the Department, as opposed to the ARF.

Mr Radebe recommended on the reform of multilateral institutions, including the UN and WTO and related institutions. The agenda for their transformation should be expedited and widely publicised.

The Chairperson asked if Members were satisfied that their findings and recommendations were exhaustively captured; and if so asked for a mover and a seconder for adoption of the Draft Report, with amendments.

Mr B Joseph (EFF) said that on behalf of the regular Member of the Committee Ms Moonsamy, that it be noted that the EFF was not in support of the Draft Report, in general. 

The report was adopted with amendments.

Mr Maila reminded the Committee that Mr Lekota had indicated his support for the report before he had left.

The Chairperson declared the meeting adjourned.