Unauthorised expenditure by Departments of Trade and Industry, Home Affairs, & Presidency: National Treasury briefing

Meeting report

The Chairperson said that it would be recalled that the first attempt to have this meeting had to be adjourned, because a key presenter, National Treasury had been absent. The process of the fifth Parliament trying to find its feet had meant that, despite optimally having the engagement sooner, it had to happen presently. The challenge of unauthorised expenditure was something that the Committee would like curbed, although it would make decisions only at its own later meetings. The Committee had to write a note to the House on any unauthorised expenditure. In order to do so, it gets a note from National Treasury analysing the unauthorised expenditure and advising the Committee, which leads to the present engagement. The presence of the relevant departments was to allow them to present alternative views to National Treasury, and to argue their own cases.

Briefing on the Department of Trade and Industry
Mr Owen Wilcox, Chief Director: Economic Services, National Treasury, said the Department of Trade and Industry (DTI) had incurred an amount of R37.3 million in unauthorised expenditure. This was based on individual events which went back to 2004 and 2005, with the actual starting point often being in the 1990s. Generally, the National Treasury was of the opinion that the DTI was not at fault.

The first instance was the Phumlani Lodge case, where a foreign company claimed to have lost money because of the action or inaction of the DTI, and the court had ruled against the state. The initial payment was R6.1 million, and the DTI had not budgeted for this expense.

Most of the unauthorised expenditure came from the General Export Incentive Scheme (GEIS), which started in 1990. GEIS operated by allowing companies to register for the scheme and once accepted on the database, these companies produced goods for export. When it was verfied that the goods were indeed exported, a subsidy would be paid. The controls had been “loose,” with verification only being done after payment had been made. The DTI had retained the right to inspect the companies for five years after the trade happened. In several cases, the Department had made an inspection and found that the companies could not back up the documents for the claim. Where this occurred, the Department would lodge a claim against the company. This produced varying results, including cases where the debtors could not be traced, or the companies had become insolvent, or where the Department’s interpretation of the regulations had been disputed, resulting in it being owed less money. Many cases went through a legal process, with the State Attorney recommending settlement in several of them. This unauthorised expenditure amounted to R31 million, which was the bulk of the unauthorised expenditure.

Mr Wilcox said that there was R125 000 in staff debt. Much of this was overpayments to staff which were subsequently not recovered. This was due to things such as the staff member being untraceable, or having died, or having insufficient assets to cover the debt. The DTI also had unauthorised expenditure of R25 000 based on costs related to a Commission for Conciliation, Mediation and Arbitration (CCMA) award. The actual back pay awarded to the employee was provided for, but this money had been paid to the union which had represented the employee at the CCMA. National Treasury did not hold the DTI at fault for the payment and therefore recommended a direct charge against the National Revenue Fund (NRF) for all the unauthorised expenditure.

Discussion
Mr R Lees (DA) said National Treasury had reported broadly and given some details on the nature of the unauthorised expenditure, but had made no indication of the consequences that had followed for the people involved. National Treasury had said in the Phumlani lodge case the DTI was not at fault. Was the DTI therefore paying on behalf of a third party, or was National Treasury indicating that the courts were wrong? On the export incentives, he assumed these amounts were written off, particularly in light of the high number of settlements. He therefore asked for more information, specifically the amounts initially owed against the settlement agreed to by the DTI. He said the way the legitimacy of the subsidy claim was determined was an after-the-fact audit of the claimant company. How could this possibly have been done, where the company had shut down and the owner was untraceable? In such cases, it would be impossible to determine whether a claim was indeed fraudulent. On the staff debts, he said he had raised a question about the debt being written off, where the payment thereof would cause undue hardship to the debtor. Lastly, on the unauthorised expenditure on the CCMA matter, he asked whether National Treasury had made any effort to identify who was involved or initiated a process for the recovery of the funds.
 
Mr A Shaik-Emam (NFP) was concerned about the tracing procedures relating to the GEIS, because the number of people who were untraceable showed that the procedure for determining who was entitled to these incentives was flawed. Reiterating Mr Lees’s point on the award made against the DTI, he said he could not understand how the DTI could not have been at fault if it was ordered to pay. He also raised a concern about there not being supporting documentation available after an incentive was paid, because he would expect that all relevant documentation was required for the initial payment. There was obviously a flaw in the way the viability and potential success of companies was not being looked at under GEIS, nor was regular monitoring being done, which had led to the current problem. He wanted to know how entities go about writing off debts, particularly as the money came from the fiscus, leading to the question as to whether the debt could simply be written off. He therefore asked whether the settlements agreed to were being honoured timeously.

Mr M Hlengwe (IFP) asked what process had to be undertaken before the DTI found itself in a position to say that a claim should be made against a relevant company. He noted that the issue of the Phumlani Lodge case had been well explained at the previous engagement.

The Chairperson asked for the Department to respond before questions were lost.
 
Mr Wilcox said in the Phumlani Lodge case, the DTI was not at fault and the finding by the court was that the destruction of the investment was due to criminal action, which led to the state being responsible. He was unsure exactly as to why the DTI was liable, but would get back to Committee.

On GEIS, he said he had data about how much the actual claim was, capital and interest, the amount written off and how much was recovered. In the Blue Continent Products matter, the company had claimed R154 000 more than could be proven at the audit, and the settlement was R25 000, as recommended by the state attorney. He could not answer the question about how audits could have been done where the company had closed down and the owner untraceable, aside from saying that the payment was made on a DA550 form from customs and excise. After the payment, the Department had retained the right to audit the subsidy for the next five years. In several cases the companies had no other documentation to support the claim, other than the DA550 form. He said that this was done far more rigorously today and the Department could speak to this.

Mr Shabeer Khan, Chief Financial Officer: Department of Trade and Industry, said that the unauthorised expenditure was not a classic case of overspending, but mostly arose from an accounting transaction where debts were written off in the budget. On the GEIS, he said this was an old scheme prior to 1994, and when Trevor Manuel became Minister of Finance he had requested an audit of all GEIS payments. The result was that many of the claims could not be substantiated with further documentation, and it was decided to raise debtors for all of these. The State Attorney recommended settling where possible, because in court actions it would be very difficult for the Department to succeed. National Treasury, through a review of the process and issuing of instruction notes, had made writing off a debt an onerous process, which had to follow due process, including investigation and follow up. In the letter to the Committee, the DTI had tried to indicate the steps taken before these debts were written off, including written notice with legal proceedings being instituted following non-payment, depending on the advice of the State Attorney. Therefore, all settlements were on the basis of the State Attorney’s advice.

Mr M Booi (ANC) wanted to know how the DTI was going to ensure that the problem did not recur.

Ms K Litchfield-Tshabalala (EFF) she said the figures had partly been run through by Mr Wilcox, but there were other amounts which were large, such as those relating to Nestle SA. She understood that when settlements were agreed upon, there was generally a party which feels it cannot succeed at court. She wanted to know if the DTI was this party. She was therefore interested in the original amounts owing and those settled upon, particularly with companies like Nestle SA, which was large and in a position to return undue funds.

The Chairperson said that Mr Wilcox had indicated he had these figures, and asked to have them sent to the Committee by the end of the week.

Ms Litchfield-Tshabala continued be saying that with the debts being more than 20 years old, it raised two issues. Firstly, it was understandable that the DTI could not be held wholly responsible for their existence. However, the continued existence of the debts for such a long period could be indicative of maladministration in itself.

Mr Lees said that there had been a mistake in the figures presented for the GEIS settlements with Blue Continent Products having owed R154 000, settled to pay R25 000 -- and yet the Department had written off R292 000. He hoped that the figures provided by Mr Wilcox would clarify the position. He reiterated his request for an explanation around the writing off debts for undue hardship. While he understood the scheme had arisen in the 1990s and the need to audit the products of “an illegal regime”, the amounts were reported in the Annual Report 2004/2005, and pre-1994 difficulties could not be blamed for the ten-year delay. This also indicated that the incentive had continued post-1994, otherwise it had to be explained why the Department took ten years to take action. As he understood it, the scheme had continued to operate post-1994 and therefore an explanation was required.

The Chairperson said the unauthorised expenditure was discovered immediately after 1994, when the then Minister had ordered an audit, and then the processes towards settlement had taken place. The ratification of the settlement process was submitted to Parliament in 2010, and the delay since then had been its fault. What the Committee was dealing with was what had been audited immediately post 1994, and the figures for the period after this were still to be discussed.

Mr Khan said the figures for the GEIS debts and settlements had been provided in the schedules provided to the Committee. On the Blue Continent Products, the original debt was R145 000; the settlement, as approved of by the State Attorney, was R25 000. The amount of R292 000 reflected the full debt, including interest. On the writings off because of undue hardship, according to the National Treasury regulations an accounting officer could write off a staff debt if it was going to cause undue hardship to the debtor or his dependants. The salary of the debtor, the amount of the debt and other relevant circumstances were taken into account.
 
The Chairperson said that he did not have that schedule and asked for it to be circulated.

Mr Shaik-Emam said on the in duplum rule in law should apply to the Blue Continent Products matter, as the interest could not exceed the principle debt. Further, was there a process to check whether the directors or companies which had been settled with, or could not be traced, were benefiting from doing business in South Africa.

Mr Khan replied that the Department had improved the processes for pre-payment auditing and hopefully this would not recur in the present DTI-controlled environment. The DTI would support any investment which would benefit the economy.

The Chairperson said Mr Shaik-Emam’s question had been more about whether the DTI knew whether the impugned companies were still doing business in South Africa.

Mr Kumaran Naidoo, Group Chief Financial Officer: Department of Trade and Industry, said a check had been done on most of the companies, and they generally did not exist. Where settlement had been agreed to with a company, no further action could be taken. If a new application for the incentive was made, this had to be viewed afresh.
 
The Chairperson said he had obtained the schedule spoken of earlier, and would circulate it to Members.

Mr Lees asked if a written recommendation would be provided, as well the verbal one given at the meeting.
 
The Chairperson replied that National Treasury had indicated in its submission that it recommended a direct charge against the National Revenue Fund (NRF). However, the Committee would not decide on its position at the present meeting.

Briefing on the Presidency
Ms Gillian Wilson, Chief Director: Public Finance, National Treasury, said National Treasury had received a letter from the Presidency in July 2010 explaining the unauthorised expenditure, and National Treasury had replied on 14 May 2012. The National Treasury’s recommendation was that the unauthorised expenditure should be taken as a direct charge against the NRF. This was because after analysis had been done, the expenses were deemed essential expenditure, being largely made up of the travel costs of the President. National Treasury had indicated that it would consider using roll-over funds from other departments to fund this expenditure. However, it could not do this as the Committee had not decided on condonement at that point.
 
Turning to the details of the unauthorised expenditure, Ms Wilson said it consisted of R8.1 million on compensation of employees, R20 million on goods and services, R200 000 on transfers to households and payments to municipalities of R3 000. The payments to households were gratuities and payments to municipalities were for car licensing. The Department would be best placed to fully explain the details of expenditure.

Recommendation          
Ms Wilson said the unauthorised expenditure was of an uncontrollable nature and it was recommended that it be approved, with additional funding to the Presidency.

Discussion
Mr T Brauteseth (DA) said as he understood it, departments should come before the Committee, seeking its assistance for the approval of their over-expenditure. To this end, they should provide good reasons in order to clear themselves of any wrongdoing. He found it “frankly insulting” that the Presidency had come to this forum and presented the Committee with a two-page document asking for R28 million.
 
The Chairperson interrupted, saying the presentation was from National Treasury and the reason the Presidency was present was to give the Committee further details on the presentation. He had thought when he gave Mr Brauteseth the platform he would be seeking further details, or clarity.

Mr Brauteseth continued, saying it had been a short preamble to his question. He then asked for full details on the expenditure relating to employees, reasons as to why the additional employee expenses had not been budgeted for, and a full explanation on what goods and services had been procured at the cost of nearly R20 million.

Ms N Khunou (ANC) agreed with the request, saying that the single line answers provided were really not enough. Further, that as National Treasury had reported, so should the Presidency, before the Committee brought its questions.

The Chairperson proposed allowing the Presidency to give further details, unless there were questions from the Members.

Mr Booi said although his preliminary statement would not be like the other one, he wanted to know what was meant by the National Treasury talking about roll-over funds being used, recovered from 20112/2013. He was unsure what the National Treasury was recommending be done. He wanted something of substance to be said about what was meant by “uncontrollable expenses”.
 
The Chairperson said that National Treasury had given a general sense of the over-expenditure and the Presidency should be allowed to give the details.

Mr Busani Ngcaweni, Deputy Director General in the Presidency, said it was important to emphasise that the Presidency was a complicated piece of machinery, with 20% of the programme being determined by factors outside of its direct control. On the compensation of employees, he said this arose during a period of transition, and Members would remember that new Ministries had been created. The National Treasury could not have foreseen the political decision to have an additional ministry in the Presidency, including the National Planning Commission. Once the addition had been made, support staff had to be hired. The Presidential Hotline call centre was also opened during this transition phase. On goods and services, he said current examples of generators of these costs would have been the President attending the G20 meeting in Australia and the Deputy President being in Zambia, attending funerals of a former head of state. When operations such as these were run there would be costs incurred by officials who supported the running of the Cabinet system.

It was a drain on the budget of the Presidency to have to split operations between Pretoria and Cape Town, because it was the back office of the Cabinet system. For example, if the sittings of Parliament did not end by the last week of November, Cabinet may have to meet in Cape Town, leading to associated expenses. During the 2010/11 financial year, an extra-ordinary cost had been incurred through mediation involvement in Libya and the Central African Republic. After 2009, South Africa had become a member of BRICS, and this had subsequent expenses for the Presidency. At present, unforeseen expenses were being incurred through the mediation efforts in Lesotho, which was due to an SADC resolution which required South Africa’s Deputy President to mediate. Therefore, the Presidency by its nature incurs costs, because decisions are taken and the country -- and therefore Presidency -- must act on these.

On transfers to households and municipalities, these were gratuities given to employees for long service or to the families of staff who had died. This had nothing to do with the actual running of staff’s household. The payment to municipalities was for licensing, caused by changing the government number plates of some cars to normal provincial plates, to avoid government vehicles being targeted.

The Presidency had written to National Treasury, as required by the Public Finance Management Act (PFMA), after consultations with top management within the Presidency. The communication was to inform National Treasury of the irregularities and seek its assistance, which had been done in several years subsequent to 2010.In the discussions over the years, National Treasury had impressed upon the Presidency that it should save more. After 2011, the Presidency had not seen a repetition of the problems, because it had capacitated itself and put better contingency measures in place.

Mr E Kekana (ANC) said he had a problem engaging with the report without detailed information. Although he heard what Mr Ngcaweni said, he would like the Department to provide detailed written information, particularly as Mr Ngcaweni had raised several issues and he would not like Members to engage with the report based on assumptions, correct or otherwise.

The Chairperson said that this should be handled in the same way as the schedule from DTI. He therefore, requested additional information on the four instances of unauthorised expenditure.

Ms Litchfield-Tshabalala asked the Presidency to clarify the examples given to the Committee about how the travel expenses fell under goods and services, while she would have assumed it would fall under travel and subsistence. She did not understand how gratuity expenses for retiring employees or the licensing of cars were uncontrollable expenses.

Mr Lees said that the Director General had given details about things which had happened long after 2010/11, and which had nothing to do with the events causing the unauthorised expenditure. He therefore would like the exact figures, and service providers, for goods procured and details on who received the gratuity payments. He was puzzled as to how the car licensing could be unauthorised expenditure. On the question of the 2009 transition, there had been a process of budget adjustment and this had been done to take into account the transition. If this was the case, then why would there be any unauthorised expenditure, when this was catered for specifically.

Mr Hlengwe repeated that details were required by the Committee. On the management of the transition between administrations, this had clearly been pre-empted by the events of 2008 and therefore National Treasury knew that it had to make provision. For the Presidency to now come back and say that there were changes was “very irresponsible”. The absence of a portfolio committee for the Presidency seemed to leave the Department in a vacuum and no space for things such as budget adjustments to be properly accounted for. He reiterated that although the Deputy Director General had made efforts to explain, he had not dealt with the year under review. He wanted specific details and a proper explanation on the compensation of staff.

The Chairperson said that the expenses related to staff compensation were more political than administrative decisions, as it was not possible to know what the Cabinet would look like.

Ms Khunou said she had hoped more information would be forthcoming from the Deputy Director General, particularly as the expenditure relating to households and municipalities still did not make sense. The explanation given by the Mr Ngcaweni was indicative of the Presidency being a poor planner, and she hoped the written details would afford a full explanation. With mediation processes, she understood that these events were not anticipated. However, the explanation on BRICS showed that the Department was not planning or budgeting properly. At present, the explanation provided raised more questions than it answered.

Mr Sheik-Emam said the Committee could accept the explanation on the adjustment budgets, understanding that National Treasury was part of the process, along with the explanation that Cabinet decided on things which were unforeseeable. On the unauthorised expenditure, which seemed to be the norm, he wanted to know if poor planning played a role, aside from what was uncontrollable. Further, had anyone ever been held responsible and made to account for the unauthorised expenditure, including criminal processes? Given that the unauthorised expenditure was a trend, he asked what measures the Presidency had put in place to deal with such expenses. On the written report he wanted a detailed breakdown of the individual expenses which formed the different heads of unauthorised expenditure.

Mr Booi said that the problem was that 20 years into democracy, it could not be said by either the Presidency or National Treasury, that there was no system to deal with such instances of unauthorised expenditure. Where the fiscus was concerned, the problem could not be allowed to recur. He asked whether the problem lay within the PFMA, and wanted an indication from Treasury on how the expenditure could become controllable and be properly accounted for. What was important for the Committee was that it did go back to individuals who were responsible within the Department.

Mr Brauteseth asked about the new ministry and the call centre, when these decisions were made, particularly whether it was before the budget adjustment at the beginning of the fourth parliament. On the gratuity payments, he would like to know how much was paid and to whom. Lastly, on the vehicle registrations, to his knowledge this would account for two or three vehicles, and if the changing of the number plates was due to security risks, why was the entire fleet’s number plates not changed. He would like specifics on whether this was the entire fleet, or selected vehicles, and the new registration numbers, to ensure “vanity plates” were not put on.

The Chairperson said his take was that the budget for the changing of the number plates could have been much greater, and the unauthorised portion over-expenditure.

Mr Ngcaweni he said that a detailed breakdown would be provided and as the numbers had been audited, it would not be difficult to provide the specific figures. Under goods and services, things like travel, legal fees and travel expenses were covered. For example, with legal fees there seemed to be a trend of increased litigation against the President, and therefore the Presidency was planning to compensate for this litigation. On the car licences and gratuities, the information was available and would be provided. On the Presidency’s failure to plan, things were truly unforeseen -- like having to mediate foreign problems -- although there was space for improved planning, as has been done with the litigation planning.

The Chairperson said that there was a question about two different amounts from separate years and whether this would be the last time the Presidency reported on unauthorised expenditure.
 
Mr Ngcaweni replied that in the complex environment in which the Presidency operated, it could not be totally ruled out because of unforeseen expenses, such as those arising from the Lesotho mediation. However, there were savings which were being made to cater for such events.
 
The Chairperson clarified his question in that he wanted to know whether, since the years under review, there had been more instances of unauthorised expenditure.

Mr Ngcaweni replied “no,” and said that there were savings which the Presidency had made, which would be indicated in the breakdown to be provided.

The Chief Financial Officer of the Presidency said the Presidency had submitted a breakdown of the goods and services expenses, indicating the trips taken and the related costs. If Members wanted more information, then details of the transactions would be provided. The submissions had been made by the accounting officer in 2012, and would be included in the detailed submission to the Committee.

The Chairperson, closing the matter, said the Committee would like the information by the end of the week.

He continued on National Treasury’s recommendations, as in the letter of 2012 it had recommended that the Department make savings to recover the unauthorised expenditure. This would be debated within the Committee when it made its decision.

Mr Kekane asked for the view of National Treasury on the direction which the Committee should take.
 
Mr Lees said that in the letter dated 14 May, from Mr Andrew Donaldson, it referred to taking savings from the 2012/13 appropriation, which had long since passed. In the letter dated 9 September, there had been no recommendation. Therefore, the Committee needed some form of guidance. In the 2012 letter, he was unsure why Mr Donaldson had indicated that the Select Committee’s decision had not been implemented and Mr Lees wanted to know if National Treasury wanted the Committee to make a decision about that unauthorised expenditure.

Mr Hlengwe wanted clarity, because the verbal recommendation was that additional funding should be made available to the Presidency. However, in the letters, the recommendation had been different. He therefore wanted the vagueness to be clarified.

Mr Booi said that systems should be put in place to cater for unforeseen events, because although it was not known where mediation will take place, it was likely that mediation would take place at some time and therefore there should be a guide from National Treasury to the Presidency.

The Chairperson said that Mr Ngcaweni had said that the Presidency had managed to identify trends and that there had been no unauthorised expenditure.

Ms Litchfield-Tshabalala requested that in the detailed breakdown to be provided, that under goods and service, which included travel and subsistence, it should include how much had been budgeted and how much was in fact spent.

Mr Ngcaweni said that details would be provided for Members, as requested.

Ms Wilson said that National Treasury had looked at the Presidency’s baseline in 2012, which had been adjusted by a small amount, and this adjustment would track inflation. Since this adjustment, it seemed as though the Presidency had been able to manage its budget. However, National Treasury did not want to create a situation where money was allocated to the Presidency without a specific purpose and therefore the option of a contingency had not been followed up. The final recommendation was that the unauthorised expenditure should be funded out of the NRF, while looking for unspent funds from other departments to fund the unauthorised expenditure as mechanism for the funding.

Mr Lees said the 2013 letter from Mr Donaldson did not indicate the above. Ms Wilson was not responding to the question about the 2008/09 expenditure and was not indicating which financial year the charge from the NRF would be done. He therefore repeated his request for a written recommendation.

Ms Wilson replied it would be made clearer through another letter. However, National Treasury could fund the unauthorised expenditure only upon a decision by the Committee. Therefore, it could not indicate what year the charge was to be made until the Committee had made a decision.

Mr Booi said the letter must give clarity on the point in the process which the Committee was engaged in and give clear solutions to the problems it faced. Therefore, National Treasury’s opinion on what ought be done was important, and this was why National Treasury had brought the people dealing with the specific departments before the Committee.

Mr Hlengwe said he understood a third letter was en route to the Committee and this letter could explain to the Committee the matters brought up by Mr Lees, especially as having a discussion on letters which National Treasury itself viewed as out-dated, was not helpful. He therefore asked for an all-encompassing communication, dealing with the questions and detailing its final recommendations.

The Chairperson said that the letter of 9 September was supposed to give further details on how the amounts had been incurred, as the letter dated 12 August 2012 gave figures only for the unauthorised expenditure. If the last paragraph of the September letter was looked at, the last paragraph explicitly stated the recommended action, but tied to timeframes. Had the letter been processed during the 2012/13 financial year, it would have been relevant. The principle remained that the over-expenditure would be funded through roll-overs. Therefore, he was unsure whether the Committee required a third letter and should rather decide whether it wanted to stick to this recommendation, following the additional information from the Presidency.

Mr Booi said that it remained unclear, because the recommendations were tied to specific budget years, and therefore he recommended that a third letter be received by the Committee.
The Chairperson agreed that a third letter should be requested from National Treasury and asked Mr Ngcaweni to ensure that the detailed information was received by the Committee before the end of the week.

Briefing on Department of Home Affairs
Ms Wilson said the Department of Home Affairs’ (DHA) unauthorised expenditure was complicated. She went back to the PFMA definition of unauthorised expenditure. In Chapter 1 of the PFMA, it included: “a) over expenditure of a vote or main division within a vote (total, programme, specific appropriation) and b) spent out of accord with the purpose of the vote or main division.” Both of these were demonstrated in the DHA’s unauthorised expenditure. She moved on to what the PFMA said about condoning unauthorised expenditure, specifically that section 24 of the PFMA indicated that unauthorised expenditure did not become a charge against the NRF unless it was an overspend on the vote ,and Parliament approved this direct charge. She said this was the process which the Committee was engaged with.

Ms Wilson turned to the specifics of the Department’s unauthorised expenditure from the years 2010/11. The DHA had given National Treasury a high level breakdown of the expenditure, which totalled R687.3 million. National Treasury had requested more detailed expenditure on how and when the unauthorised expenditure had occurred.
 
Mr Lees said that the documents he had before him dealt with unauthorised expenditure from the 2005/06 year.

Ms Wilson replied that she had not prepared on that year, because she was under the impression that it had been finalised.

The Chairperson said that Ms Wilson should continue with the presentation, although he also had documents for the 2005/06 financial year.

Ms Wilson continued, saying that the unauthorised expenditure from the 2010/11 financial year consisted of a R79.7 million debt to Fevertree and AT Corney consulting for the DHA’s turnaround project, legal fees of R12 million for litigation against the Department, R7.4 million for security services, R31.4 million for IT-related contractual obligations, and a R45.5 million debt owing for leases of office accommodation. There was a R160.7 million shortfall on the cost for printing of passports owing to the government printing works.

Members interrupted, asking for the document to which she was referring so that they could follow her properly.

The Chairperson said that the unauthorised expenditure of the Departments of Correctional Services and Defence had been removed from the agenda, as this had been dealt with in the previous Finance Bill. The documents which had been given to the Committee dealt with unauthorised expenditure and he would like to know if the DHA was on the same wavelength as to what was to be dealt with presently.

Mr Mkuseli Apleni, Director General: Department of Home Affairs, was under the impression that it was required to deal with the unauthorised expenditure of the 2004/05, 2010/11 and 2012/13 financial years. This was as the DHA’s unauthorised expenditure had been processed, but not up to the level of the Finance Bill.

The Chairperson said that regardless, the Committee was not in possession of the documents for the later years and had documents only for the 2005/06 financial year. He then asked the Committee to convene to determine a way forward.

The meeting reconvened, with Ms Khunou enquiring whether the Committee would be dealing with 2010/11 as per the document just received, and not the expenditure in 2005/06.

The Chairperson agreed and asked Ms Wilson to go through both 2010/11 and 2012/13.
 
Ms Wilson then continued giving the breakdown of the 2010/11 unauthorised expenditure of R687.3 million. Aside what had been mentioned earlier, this amount consisted of ID infrastructure and ID related contractual obligations.

Ms Khunou interrupted, saying she could not follow because the Committee did not have the document she was speaking to, and asked for her to slow down.

Mr Booi said it was a problem that the figures were not in front of the Committee and large sums relating to the fiscus were being dealt with. He therefore suggested that the meeting be postponed.

Ms Litchfield-Thsabalala seconded the suggestion to postpone, particularly with the large sums being discussed, as it would help if the Committee could engage with the information first. This would allow the discussion to be more fruitful than at present.

Mr Hlengwe also agreed with the suggestion, as it would give space for all stakeholders to do proper justice to their work.

Ms Khunou said that the one department which had come without details was the DTI, while the Presidency had been allowed to present, pending more detailed information. She therefore suggested that since the parties were present, the presentation continue. This would afford the DHA the opportunity to know exactly what should be prepared for the Committee.

Mr Kekane said that he disagreed and supported postponement, with the rider that detailed breakdowns were provided in anticipation of the next meeting, as was done with the Presidency.

Mr Brauteseth said that going forward, with this being the second time the problem had arisen, a full briefing should be given to the departments and National Treasury about what the departments should bring with them to these sorts of engagements. This would include that the author of a report should be present. If a document was going to be spoken to in the meeting, the document should be before the Members, and all the departments should bring everything possible to support their application for condonation.
 
Mr Booi disagreed and said that from the beginning, everyone has known what was expected and Ms Wilson had even been reading from the PFMA. It could not be said that parliamentarians did not know what was expected. The Committee needed to have a full break down of the amount, which was nearing a billion rand, as this was the “money of the poor” and the Committee could not simply agree to condone. The fifth term had been started with the aim of having no unauthorised expenditure, but this did not mean decisions could be rushed. To do this the Committee, as a collective unit, needed to obtain the facts before the debate in the House, where the Members would be representing their individual parties. This would also aid in dealing with the broader public, by allowing Members to explain why the expenditure was to be condoned, otherwise they would be saying that the fiscus of the country could simply be abused.

The Chairperson asked for it to be agreed that the Director General return the following week on Wednesday. However, he did understand that it was groups on that day, so if the meeting started at 9 am, then it should be complete by 10:30 am.

Mr Apleni said the problem was that Home Affairs was presenting at a Cabinet Meeting on 19 November and DHA was presenting on border management agencies. He accepted that a report should be prepared, explaining the amount, as the amount looked large without a proper background.

The Chairperson asked the Committee to agree, seeing that the Chief Financial Officer and Deputy Director General would be present; although Mr Apleni may be absent.

Mr Brauteseth suggested that as the plenary started only at 3 pm, if the Department had a problem with the morning, the meeting could be held at 1 pm.

Mr Sheik-Emam wanted to ensure that the reports were received before the meeting so that Members could interrogate them.

Mr Apleni said they would be sent by Monday.

The Chairperson declared the meeting adjourned.