The Department of Telecommunications and Postal Services (DTPS) and its entities made presentations on their third quarter performance for the 2014/15 financial year.
The Department reported that there had been significant achievements in the third quarter, including development of the position paper on Brazil, Russia, India, China and South Africa (BRICS). This had been presented to the sixth BRICS Summit, which had subsequently adopted it. The Department had successfully lobbied the RSA position on the Regional Integrated Broadband Infrastructure Network at the Southern African Development Community (SADC) ICT ministers’ meeting in Malawi, in November 2014. The outcome had been a decision on the development of a framework for open access to ICT broadband infrastructure and the SADC model broadband plan, in alignment with SA Connect. The Department had participated in the annual session of the Council of Administration in Berne in November, and had chaired the Committee 3 on strategy. It had taken part in key debates and lobbying among developing countries on dot Post, Extraterritorial Offices of Exchanges (ETOES), quality of service, terminal dues and budgetary issues. An internal control framework had been developed and was currently being implemented so as to address the optimal implementation of internal controls across multiple functional areas.
The Department’s entities focused on the challenges they faced and the strategies they had put in place to address them. The Committee was provided with detailed information on the financial performance and audit findings at the Universal Service and Access Agency of South Africa (USAASA), the State Information Technology Agency (SITA), Sentech, Broadband Infraco (BBI), the ZA Domain Name Authority (ZADNA), and the National Electronic Media and Institute of South Africa (NEMISA). The audit committees highlighted several common challenges they had identified, such as the late collection of obligations, lack of proper monitoring systems to report on a monthly basis, and a lack of enough funding and capacity. Other challenges involved non-adherence to the performance information policy and standard operating procedures, and there were gaps in the standard operating procedures in terms of holding branches accountable and responsible for their performance.
The Members expressed concern about the current fractious nature in the Department, as there were many disciplinary hearings. How healthy was this for the functioning of the Department? Questions were raised about the manner in which a Deputy Director-General had been fired. Were there any inquiries going on within the Department? How many resignations had taken place in the Department?
The Chairperson was strongly critical of the misleading and contradictory information in the presentations of the Department and its entities, pointing out that this limited the ability of the Members to perform oversight duties. One Member wondered whether the State Owned Entities Unit was really fulfilling its responsibilities, as the contradictions should have been picked up in the analysis of the quarterly reports and rectified before coming to the Committee.
Several Members expressed disappointment that the presentation by the Department was particularly silent on the big projects, like SA Connect and broadband connectivity, as the main focus seemed to be on a couple of events and overseas trips, but not on the core activities of the Department. Had all the senior managers signed the performance agreements and performance assessments? What was the relationship between the Department and the Independent Communications Authority of South Africa (ICASA?). The Chairperson said the presentations indicated that there might be a possibility of “fiscal dumping” in the Department and most of the entities.
Chairperson’s opening remarks
The Chairperson welcomed everyone to the Committee and indicated that the purpose of the meeting was to hear a briefing by the Department of Telecommunications and Postal Services (DTPS) and its entities, including the Universal Service and Access Agency of South Africa (USAASA), the State Information Technology Service Agency (SITA), and Sentech, Broadband Infraco (BBI), ZA Domain Name Authority (ZADNA) and the National Electronic Media Institute of South Africa (NEMISA) regarding their third quarterly performance. She urged both the Department and the entities to provide accurate and honest information and not to mislead the Committee with inaccurate information, as this was a criminal offence. There had been apologies from Mr P Mabe (ANC), Mr C Mackenzie (DA), Ms L Maseko (ANC) and Ms J Kilian (ANC).
The Chairperson requested Members to adopt the oversight visit programme for 2015.
Ms N Ndongeni (ANC) moved the adoption of the programme, and Ms D Tsotetsi (ANC) seconded.
The programme was adopted.
Briefing: Department of Telecommunications and Postal Services (DTPS)
Dr Siyabonga Cwele, Minister of the DTPS, said that public hearings on the National Integrated Information and Communication Technology (ICT) Policy Green Paper had been held in all nine provinces, following which the draft White Paper on the National Integrated ICT Policy had been developed and gazetted in December 2014. A feasibility study had been conducted on the Wholesale Open Access Network which was being covered under the broader ICT market structure study. Three research reports, including recommendations and options related to the roles of ICT state owned entities (SOEs) in the implementation of digital future strategy, had been developed. The ICT Information repository architecture and prototype had been designed and the ICT data had been updated against the ICT indicator list. The governance practices of SOEs had been monitored through analysis of the King III compliance matrix. The draft baseline report had been developed on small, medium and micro enterprises (SMMEs) in the telecommunications and information technology sub-sectors.
Dr Cwele mentioned that there had been significant achievements in the third quarter, including development of the position paper on Brazil, Russia, India, China and South Africa (BRICS). This had been presented to the sixth BRICS Summit, which had subsequently adopted it. The Department had successfully lobbied the RSA position on the Regional Integrated Broadband Infrastructure Network at the Southern African Development Community (SADC) ICT ministers’ meeting in Malawi, in November 2014. The outcome had been the decision on the development of a framework for open access to ICT broadband infrastructure and the SADC model broadband plan, in alignment with SA Connect.
The Department had participated in the annual session of the Council of Administration in Berne in November, and had chaired Committee 3 on strategy. It had taken part in key debates and lobbying among developing countries on dot Post, Extraterritorial Offices of Exchanges (ETOES), quality of service, terminal dues and budgetary issues. An internal control framework had been developed and was currently being implemented so as to address the optimal implementation of internal controls across multiple functional areas.
Ms Rosey Sekese, Director-General (DG), DTPS, stated that the Department had been allocated R2.2 billion and had already spent 51% of the allocated budget as at 31 December 2014. The Department had five programmes: Administration; International Affairs; Policy, Research and Capacity Development; ICT Enterprise Development and SOE oversight; and ICT Infrastructure Support. The performance recorded over the period under review was compared against the targets that had been set in the 2014/15 Annual Performance Plan (APP).
The target for Administration focused on supporting systems developed and implemented which were aimed at achieving clean administration. The Department had managed to review about 95% of its internal policies and all new service providers and new employees were screened and reports received prior to their appointments. 99% of the vacant funded positions had been filled. The compliance levels in the Department were at more than 85%.The challenge in compliance emanated from the resignation of critical supply chain management staff, compounded by the fact that the Chief Financial Officer (CFO) had yet to be appointed.
Ms Sekese said the target for International Affairs in the third quarter was focused on South Africa’s position on the SADC Regional Integrated Broadband Infrastructure Network, to be lobbied at the SADC ICT ministerial meeting. The Department had successfully lobbied South Africa’s position at the SADC ICT ministers meeting in November 2014.The outcome was the decision on the development of a framework for open access to ICT broadband infrastructure and the SADC model broadband plan, in alignment with SA Connect. The Department had also participated at the 8th SADC Digital Terrestrial Television (DTT) forum in November 2014. The Department had targeted to have a round table discussion on world postal strategy facilitated as Chair of the Universal Postal Union (UPU) global strategy, and a national assessment report developed on outcomes for the future of the postal sector. However, this target had not been achieved as the round table discussion had been postponed indefinitely.
Ms Sekese said that the target for Policy, Research and Capacity Development was to draft a White Paper on national integrated ICT policy. This target had been achieved, as the draft White Paper had been developed and gazetted in December 2014.The Department had targeted to establish an ICT Broad-Based Black Economic Empowerment (B-BBEE) Council. The target had been delayed, as the call for nomination of Charter Council members had been gazetted and closed on 3 December 2014. The reason for the delay was that fewer nominations had been received from stakeholders than had been expected, requiring a re-call for nominations.
The target for ICT Enterprise Development and SOE oversight was to develop two baseline reports on SMMEs in the telecommunications and IT sub-sector. The target had been achieved, as the draft baseline report had been developed.
The target on ICT Infrastructure Support (5) focused on the monitoring and development of a progress report on overall implementation of SA Connect. The target had been achieved, as the overall implementation of SA Connect was periodically monitored and reported to the Accounting Officer. For the period under review, a SA Connect progress report had been submitted in November 2014.
Ms Sekese emphasised that following the reconfiguration of the Department, which had resulted in a revision of its legislative mandate and related functions, the Department had had to put several targets/projects on hold. Some of these had been transferred to the Department of Communications (DOC). The dependency on the finalisation of the reconfiguration process had had a knock-on effect into quarter 3. The dependency on both the external stakeholders/processes and on other departmental projects and processes had also had a knock-on effect into quarter 3. The Department viewed targets where there had been little to no progress in a very serious light, and had several measures in place to address them accordingly.
Ms Sekese said the Department had in place a fully functional Organisational Performance Assessment Board, which met at the end of every quarter to evaluate performance. Specific attention was given to addressing quarterly targets, where specific recommendations were made for urgent action by the relevant DDG. Such targets informed the agenda of management meetings and were specifically focused on performance reporting. Evidence supporting all reported achievements were collected and analysed on a quarterly basis and submitted accordingly to the Auditor-General (AG) during the audit of performance information. Furthermore, the Department submitted all quarterly reports to the National Treasury and the Department of Performance Monitoring and Evaluation (DPME) for noting. Over and above project-specific challenges, cross-cutting issues such as human resource (HR) capacity constraints were being addressed.
Briefing: Universal Service and Access Agency of South Africa (USAASA)
Mr Zami Nkosi, Chief Executive Officer, USAASA, said that the target for USAASA and the Universal Service Access Fund (USAF) board was to have an audit and risk committee, business development services (BDS) committee, and a social and ethics committee. The target had been partially achieved, as the social and ethics committee had been convened on 17 February 2015. The target of a minimum of EXCO meetings conducted throughout the year had been achieved, as EXCO was convened frequently to look at management functions. The target of reviewing of the “Smart” criteria for the 2015/16 targets had not been achieved as the audit conducted after the strategic plans and APP had been finalised in January 2015. The target for updates on priority changes in the distribution of the funds, based on the Fund manual, had not been achieved. The reason for the variance was that no updates had been done on the priority changes, as the manual had not been fully implemented.
Mr Nkosi said the target of coordinating with HR to develop legal compliance training had not been achieved as no training had been developed. The targets of investigating disputes within 30 days and then to mediate on disputes and recommend suitable interventions, had not been achieved as there were no grievances in the current quarter. The entity had also targeted to have a timeous submission of performance agreements and performance assessments by business units. This target was not achieved in the quarter, and measures were put in place to ensure that all performance reviews were completed at the end of the financial year.
The summary of USAASA performance showed that 29 targets (71%) had been achieved in quarter 3, three targets (7%) had been partially achieved, and nine (22%) were not achieved. The summary of the cumulative performance showed that 109 of the 127 planned targets (86%) were achieved, eight were partially achieved, and ten were not achieved.
Mr Linda Nene, Chairperson of Board Audit and Risk Committee, USAASA, said that the Auditor General (AG) had highlighted some of the issues that still needed to be addressed. These issues included incorrect classification of expenditure and depreciation on the asset register, non-disclosure of fruitless and wasteful expenditure and receivables written off, and a lack of supporting information to journals passed. Other concerns raised by the AG focused on the over-statement of actual performance in the report, non-alignment between planned and reported targets and an inadequate back-up process in place.
Mr Nene took the Committee through the mitigation action plans that had been put in place since the inception of the Board Audit and Risk Management Committee (BARC):
- Detailed non-compliance register, with consequence management actions against transgressors, as an agenda item in the BARC meetings;
- Implementation of the combined assurance providers services, to be facilitated by the Chief Audit Executive;
- The combined assurance providers services, at a minimum, to be composed of CEO (first line of defence), CFO (first line of defence), CEA (third line of defence), Senior Manager IT (first line of defence), AG (third line of defence), Legal Services (second line of defence) and DPTS (third line of defence).
Briefing: ZA Domain Name Authority (ZADNA)
Mr Vika Mpisane, CEO, ZADNA, said the target of the revision of the ac.za, edu.za, gov.za, law.za, nom.za and school.za charters had not been achieved, as the charter release had been put on hold until the general policy (GP) was finalised. Charters had been drafted and were yet to be tabled for Board approval. The GP was an overriding document on which charters should be built. The Board working group had advised that priority be placed on the GP so that it informed the charters. A second level domain (SLD) charter was effectively a constitution/founding document defining such things as the SLD’s purpose, eligibility criteria and domain name registration processes. The target may be carried over to the 2015/16 financial year. There had been no target for the implementation of .ZA General Policies & Procedures (code of good practice). Although no target had been set for quarter 3, this work was behind schedule. The quarter 1 target had been to release the draft GP for public consultation, but this had not been done due to extended GP iterations within ZADNA. The GP had eventually been released for public consultation in November 2014.
There was also no target in quarter 3 for consolidation of the dotCities policy framework for general availability. The annual target had been achieved well on time, as dotCities had launched sunrise and land rush phases in 1 July 2014. The general (public) availability phase should have started in early November 2014. The entity had failed to achieve the quarter 3 target of having public consultation, as the project had been shelved because it was dependent on discussions with the DTPS, and was meant to prepare for the next round of Internet Corporation for Assigned Names and Numbers (ICANN) new domain applications, which had been announced would be in 2017 at the earliest. ICANN was the entity that decided if new Top Level Domains (TLDs) should be added in the internet root zone database. Applications for new TLDs (such as dotCities) were submitted to ICANN. Benchmarking would be continued in quarter 4 to 2015/16, with a view of recommending a strategy to the DTPS.
Mr Mpisane mentioned that the entity had been able to achieve the target of having an engagement with the DTPS. ZADNA depended on the DTPS to succeed in this goal, and a key gap existed in that there was no specified national agenda towards internet governance. However, the ICT Policy Review Panel’s discussion paper sought to address this challenge. The target of implementing dotCities' champions’ project had not been achieved. This was a joint ZADNA-ZACR (ZA Central Registry) project. Its roll-out had been put on hold, but targeted potential dotCities’ champions’ domain names had already been reserved. The purpose of the project was to allocate certain premium/relevant names to entities and personalities that could be sponsored to run flagship websites as a measure of advertising dotCities. The project would be revisited in quarter 4 to determine its feasibility.
ZADNA remained in a healthy financial state and some surplus had been accrued. This was largely due to savings in salaries (due to delayed staff appointments), fees allocated to new director travel and accommodation (to attend ICANN meetings as part of their orientation), and other outstanding projects.
Briefing: State Information Technology Service Agency (SITA)
Mr Jerry Vilakazi, Board Chairman, SITA, said that SITA had developed a transformation strategy to make the agency work, and accountability and good governance were at the core of SITA’s operations. The organisation continued to align its objectives with the priorities of the DTPS as well as the National Development Plan (NDP) agenda. SITA continued to strive to improve the service delivered to customers so that the business grew and ultimately delivered value for the government. The continued transforming, updating, and modernisation of its procurement process was the key. SITA’s performance measures were crafted from the fundamental pillars of the SITA strategy, namely customer centricity, improved core IT services with a strong focus on e-Government and security, and improved organisational health.
The entity had 126 quarterly targets on its corporate balance scorecard and 54 targets had been achieved, 40 were partially achieved and 32 were not achieved. Numerous interventions and corrective actions had been identified and were implemented to ensure a favourable performance in the current financial year. The strategic objectives were unchanged and the measures had been reduced from 40 to 14, and the organisation was now focused on impactful measures. The implementation was taking place during the last quarter of 2014/15, and the fourth quarter report 2014/15 would be informed by these changes.
Mr Zukile Nomvete, Chairman of the Audit Committee, SITA, stated that the resolution of findings raised by the AG covered a total of 55 audit findings in his 2013/2014 report. Upon receipt of the AG’s report in August 2014, the Audit, Risk and Compliance Committee chairperson had convened a workshop with all executives to discuss the resolution of the findings. During the meeting, the root causes for the findings, as well action plans and implementation dates, were identified with the view of addressing and preventing a repeat of the findings. Monitoring and verification of the resolution of the findings was carried out by internal audit, which reported functionally to the Audit, Risk and Compliance Committee. The monitoring of the status of the findings was automated and all lines of business had access to the system.
Mr Nomvete said the organisation had managed to develop an action plan from the issues that had been highlighted in the AG’s report, and for the 2014/15 financial year, the Corporate Performance, Monitoring and Evaluation division had put in place monitoring and verification measures, to ensure that all reported performance information was supported by valid, accurate and complete evidence. The AG had raised the issue of transactions above the value of R500 000 that had been procured without inviting competitive bids. The Supply Chain Management (SCM) managers and adjudication committees would monitor and reject transactions in violation of the relevant governance policy.
In conclusion, SITA’s key priority remained on retaining customers and rebuilding trust among them, improving core services and the renewal of infrastructure to ensure that government data was securely stored. SITA was addressing procurement processes and segmenting procurement in a way that allowed the agency to respond better, faster and with transparency. Of the 1 127 employees previously reported as displaced, only 16 have not been placed and their matters would be resolved by the end of March 2015. There was now more focus on a condensed balance scorecard to ensure that SITA’s focus on improving performance was more achievable.
Briefing: Broadband Infraco
Ms Puleng Kwele, CFO, Broadband Infraco (BBI), said that the entity had resolved 71% of the external audit findings for 2013/14, and 29% of the findings were still in progress. The AG had noted that assets (laptops) had been capitalised and depreciated before delivery. Full asset verification and useful life assessments would be conducted. The action plan was still in progress and the project had commenced to classify assets into different categories -- revenue generating assets, network support assets, and office and IT equipment. The AG had also noted that during the testing of payments, credit cards had been used outside of the regulations, hence they were not cancelled at year end 31 March 2014. A meeting had been held with National Treasury (NT) to request approval for deviation. The action plan was still in progress, as the application for exemption had not been approved by NT and the entity was exploring an alternative solution of using a debit card system that would be linked to the head office account, and all transactions would be visible from the main account on a daily basis.
The error on accruals had been rectified at year-end, and the employees had been trained on the differences between accruals and provisions. The contract agreement with Council for Scientific and Industrial Research (CSIR) had subsequently been signed on 12 August 2014. The AG had noted that BBI smoothing of an operating lease had been calculated incorrectly. The issue had been resolved as the calculation would be performed and reviewed in a timely manner in future. During the testing of revenue recognised in the current year under review for CISR, it had been noted that revenue recognised had been overstated by R1 461 988. The issue would be finalised at the year-end and no further action was required.
Ms Meta Maponya, Chairperson of the Audit and Risk Committee, BBI, said that in respect of SCM, the AG had noted that construction contracts were awarded during the financial year under review which were not in compliance with the Construction Industry Development Board (CIDB) regulations. The tender invitation for construction works contracts had not stipulated the minimum category at which the bidders must be registered with the CIDB in order to qualify for evaluation. There had been no evidence that could be provided to show that the invitation to tender or calls of expression had been advertised on the CIDB website. The findings had been disputed by the BBI, as the general scope of work and services that BBI was engaged with had been deemed to fall within the exclusion clauses of the CIDB regulations. The CIDB had also confirmed that BBI was not a construction company.
It was noted that the memorandum of incorporation had not been finalised and lodged, as there were outstanding issues yet to be resolved prior to approval by the members and lodging with the Companies and Intellectual Property Commission (CIPC). The entity had raised the issue as a risk in the quarter 1 report ending June 2014, and had discussed it again on 7 August 2014 at a shareholders meeting. The shareholders undertook to resolve their outstanding issues and revert at the annual general meeting (AGM) which was held on 14 October 2014. The action plan was still in progress, as both representatives had undertaken to resolve all the outstanding issues as a matter of urgency so as to minimise the impact on the company.
Briefing: National Electronic Media Institute of SA (NEMISA)
Ms Moira Malakalaka Acting CEO, NEMISA, said that the entity had five programmes: Administration; Multi-Stakeholder Collaboration and e-Astuteness; Development and Knowledge Innovation; and Aggregation. NEMISA achieved the target of responding to the percentage of audit issues received within the prescribed time. There was still a challenge in the filling of critical posts, as the appointment of the CEO had not been finalised. A submission had already been made to the DTPS to finalise the appointment of the CEO. The target on Multi-Stakeholder Collaboration was to have more advocacy, awareness and visibility. The target had been achieved, as the entity had conducted campaigns and a number of new institute brand visibility platforms had been leveraged. However, the formalisation of new partnerships had been only partially achieved owing to a lack of capacity and a delay in the transfer of funds.
The entity had managed to achieve the target on Development and Knowledge Innovation in respect of curriculum development, as the new targeted courses were available and customised. The target on e-competence development was to train 10 000 learners, 5 000 sector users and 1 000 ICT practitioners. The target had been partially achieved, and the institute had been requested to scale down its annual target. The target on the allocated number of research chairs had not been achieved owing to delays in funds transfer and the scaling down of the APP for 2014/15. The target on Aggregation, based on the number of national e-skills summits hosted, had been partially achieved, as there had been delays in the transfer of funds and the entity had scaled down its APP of 2014/15. The entity had hosted an e-skills conference and the e-skills summit would be revisited in 2015/16, depending on the availability of funds.
Ms Malakalaka mentioned that other income of the entity had shown a positive variance -- an actual year-to-date income of R2 million against a budgeted R 830 000. Projects due to be undertaken included the Moses Kotane Institute graphic design project and the broadcasting engineering project with H&P and South African Broadcasting Corporation (SABC). Direct expenditure showed a negative variance of 17% due to an increase in direct project expenses and the e-skills conference. The overheads showed a positive variance of 2% due to vacant funded positions. There was a surplus of R 2.7 million for the year to date.
Mr Gaitsewe Lenepa, Audit Committee Chairman, NEMISA, said the institution had action plans resulting from both AGSA and internal audit findings. These had already been tabled and monitored by the Board audit and risk management committee (BARC). Reviews had been conducted by internal audit before year end. The Board, through the BARC, promoted “no repeat findings” and clean audit mechanisms.
Dr Setumo Mohapi, CEO, Sentech, said that the entity had managed to achieve 60% of its targets in the third quarter. The entity had planned to install 135 Very-Small Aperture Terminals (VSAT), but had achieved only 39. The reason for the variance was that one of the key solutions driving this target was the roll out of the Ka Band frequency, which was currently not yet completed. A process to provide VSAT terminals to community broadcasters was currently underway and was expected to be completed by March 2015. The entity had installed nine of the targeted 14 ICT infrastructure services. The reason for the variance was that a listing of additional schools had been received from the DTPS and an implementation plan was in place to install VSAT at the remaining schools.
In Television (TV), there had been a positive growth of 2% above budget. This had been due to the establishment revenue of two low power sites -- Makgaung and Ga Mafefe -- and the successful Digital Terrestrial Television (DTT) rate card negotiations with MNET, e.tv and Trinity Broadcasting Network (TBN). In radio, FM, MW and SW had realised revenues above budget for the year to date. However, as reported in previous quarters, FM was experiencing challenges in third party site acquisition, and this had impacted on the delivery schedules for community broadcasters. There had been an improvement in Direct-To Home (DTH) satellites with the following customers launched in Q3: Multichoice (contracted 70 Mbs); Teach Every Nation (TEN); and the Enlightened Christian Gathering (ECG) TV. Rental revenue was currently 22% below budget on a year to date basis, and a new facility rentals’ tariff had been approved and discussed with Cell C, Vodacom, Comsol and Netstar. VSAT was slightly above budget, with losses less than budgeted for.
Sentech’s staff turnover rate for the third quarter was 1.9%, comprising 0.9% resignations and 1% involuntary terminations (death/retirement). Only one black female resigned during the 3rd quarter. Skills development showed a cumulative achievement of 50.5% of the annual target of 1 664 planned interventions, compared to the 38% achievement in the previous quarter. 17 appointments were made (internally and externally), of which 88% were black and 41% were black females.
Ms Ntombizodwa Mbele, Chairperson of the Sentech Audit Committee, highlighted that there had been progress on administrative matters in the 2014/15 financial year as management had developed an audit action plan aimed at addressing all administrative issues. The Executive Council (EXCO) monitored the audit action plans on a monthly basis and the Audit Committee monitored progress on a quarterly basis.
Ms M Shinn (DA) said that the folly of splitting the former Department of Communication (DOC) was quite evident in the dismal track record, as the Department seemed to be going backwards and this was quite sad. She expressed concern about the current fractious nature in the Department, as there were lot of disciplinary hearings and she wondered whether this was part of the disruptive environment that was going on at the moment. How healthy was this to the functioning of the Department? Had the DDG of international relations been fired through the Short Message Service (SMS) as had been reported in the media? Were there any inquiries going on within the Department?
Ms Shinn said it was shocking and disappointing that the presentation by the Department was particularly silent on the big projects, like SA Connect and broadband, as the main focus seemed to be on a couple of events and overseas trips, but not on the core activities of the Department. The country was already behind in the worldwide ICT rankings, and this was all thanks to some strange whim of the President to separate the departments.
Ms Tsotetsi also wanted to know about the number of resignations that had taken place in the Department, as this had not been covered in the presentation. What could be done to discourage the resignation of people within the Department? What were the common reasons for the resignations? The presentation by SITA had referred to other methods to enforce collection from the Department. What were those methods? What were the financial implications of poor planning from SITA? What was the time-frame for the appointment of a CFO by SITA? She asked ZADNA to provide the gender, racial and provincial breakdown of the training that had been provided by the entity, as this was important for the purpose of oversight.
Ms Ndongeni asked NEMISA about the status of the allocated funds by the Department in terms of any improvements. It was disappointing that NEMISA had been without a CEO for the past two financial years. What was the main problem in this regard?
Ms M Mafolo (ANC) asked whether all the senior managers had signed the performance agreements and performance assessments. She was also interested to know whether the DGGs who were present in the Committee were familiar with the information that had been presented by the entities. Was the Chairperson of the Audit Committee in the Department happy with the performance of the Department? What was the relationship between the Department and the Independent Communications Authority of South Africa (ICASA)? How would some of the entities address the issue of the delays of funds?
The Chairperson expressed disappointment that the presentations made by the Department and the entities on third quarter performance were different to the annual plans, as there were gaps and contradictory statements. For example, the development of two baseline reports on SMMEs in the Telecommunications and Information Technology sub-sector was not reflected in the annual plan of the Department. It was really problematic to note that presentations that had been made by the Department were contradictory to the signed statement in the annual report, that there was capacity within the entities. The fact that the Department and its entities had failed to pick up these discrepancies showed a lack of preparedness to present to the Committee.
The Chairperson highlighted that the presentation of misleading and contradictory information was limiting the ability of the Members to perform their oversight duties. She wondered whether the SOE unit was really exercising its responsibility, as these contradictions should have been picked up in the analysis of the quarterly report and rectified before coming to the Committee. She suggested that in the next term, there should be a meeting with the Treasury to deal with these discrepancies of information and the verification of finances, as the Department had stated that the vacancy rate was one figure, while the AG had said it was another. The DG of the Department was supposed to take the responsibility and accountability for this persistent internal problem. The Chairperson disputed the information that had been provided by both the Department and its entities, and doubted if it was a true reflection of the real work that had been produced in the APP. It was totally unacceptable for the Department and its entities to have presentations that looked like a “rushed job,” as this was the government’s money and it had a responsibility to the general public.
She asked USAASA about what had happened with the rapid deployment of the telecentre programmes, as the presentation had been particularly silent on the issue. She was extremely unhappy about the current situation, as it was putting her in a very precarious position and she would hate a situation where she would be pushed to establish a hearing because someone had misled the Parliament. There was an issue around the possibility of “fiscal dumping,” considering the targets that had been met in relation to the budget that had already been spent. It was unacceptable to have cases where about 38% of the targets had been achieved with 70% of the budget. Performance needed to be related to the allocated budget, and if there were gaps in terms of what had been allocated, then there was a problem. She urged the Department to be honest and truthful in a situation where there were genuine challenges, instead of “covering up” matters. She wondered whether there was a mechanism in each entity and the Department, to sit and look at the issues that had been raised by the Committee in the Budgetary Review and Recommendations Report (BRRR).
The Chairperson reiterated that the Members had previously highlighted the importance of signing performance agreements on time, as this was an important tool to hold people accountable. The NT requirement was that 25% should be spent in each quarter and there were already glaring trends of under-expenditure, and this was related to the possibility of “fiscal dumping”. The Members had been asked questions on where the Board was when the South African Post Office (SAPO) was in a state of dysfunctionality, as there had to be a sub-committee that dealt with risks and audits in order to pick up these challenges in time. Why was the loan that had been made by SAPO not declared in the financial statement of the Department, as it had been incurring interest? All these weaknesses that had just been raised should have been picked up by the SOE Unit.
The Chairperson asked the Minister if there was a way to regularise the number of Board meetings, as this was adding to the financial instability of many entities. It was strange that although the Department had been capacitated and had all the people with right skills, it still had major weaknesses. The Audit Committee was expected to be independent from the Executive, and therefore should provide an objective view on the current progress in the Department. She stated that in future the Committee would probably need to engage thoroughly with one entity in the morning and another in the afternoon, so as to have clear information on the APP and the Strategic Plan.
Dr Cwele welcomed all the questions and criticisms from the Members, and appreciated the call to have a coordinated approach between the Department and its entities as this was important when trying to achieve the same objectives. He disputed the assertion that the separation of the DOC had anything to do with the current underperformance in the Department, as the splitting was supposed to have done the opposite. It was correct that the Department had been mandated to ensure that affordable broadband had been achieved and secured an effective e-Governance programme as the mechanism for delivering government services.
The current on-going disciplinary measures were of concern to the Department and might potentially disrupt its functioning. The Department had decided that the disciplinary measures should continue, as they were not initiated by the Department. There had been measures in place to ensure that the disciplinary hearings did not disrupt the functioning of the Department. The Department had met the Audit Committee last year and had raised the issue of consequence management, and the Department had highlighted that there should be action taken against maladministration and other issues. It was also important for the Members to know that allegations were not in any way presumption of guilt and there were proper channels to be followed to verify the allegations.
Dr Cwele said that the CEO of NEMISA had left in 2012 and the process of trying to appoint a new CEO had started after the resignation of the Acting CEO. The Board had made decisions and identified who was the best candidate, but the same candidate was working in one of the entities that had to report to the Department. Therefore, at the moment the position was still vacant. The Department had stipulated that the person to fill the position had to have enough capacity in e-skills and broadcasting.
The Presidential Review Committee (PRC) had produced a report which focused on the need to improve SOE policy and strengthen the role that these entities played in the economy. This was a very useful report; very extensive and about 99% of the recommendations that had been made had been accepted by government. The report also provided more information on the challenges in the SOEs, the role of SOEs and the type of people who must lead these entities administratively and how these entities could play a coordinated role in achieving the same objectives.
Dr Cwele said that it was indeed costly for the Board members to be meeting on a weekly basis, as this would not serve any purpose. The Department needed to take an action against this persistent problem. If a Board finished the budget for the whole year in the first quarter of the financial year, then it meant there was something terribly wrong with the supervision. The Department was still waiting on the Department of Public Enterprise (DPE) to lead the process of refining the PRC report so as to start with the implementation. The Department had encouraged the Board to look into the PRC report in order to be familiar with the contents that had been extensively covered. The Board members were aware that they were supposed to meet at least once a quarter, unless there were urgent issues arising.
Prof Hlengiwe Buhle, Deputy Minister of DTPS, said there had been discussions when the two departments were separated. There had been a joint committee meeting between the DTPS and the DOC, and it was interesting that the issue kept coming back from the Members. There were examples that were looked at from different countries, where the splitting of the departments had brought about good benefits in term of overall performance and the general development of the ICT sector. She urged the Members to approach the splitting of the departments in a positive manner so as to achieve the desired outcomes. The Department was also concerned about its performance in the third quarter, as it was not a performance to be proud of. There were some developments that had taken place since the Department came on board, and these included the capacitation of both the oversight division and the Department.
Prof Buhle agreed that the Department needed to prioritise on compliance, and this was the kind of capacity that should be explored in the same way as had been done in the oversight division. The issue of disjuncture of information provided by the Department and its entities was not a matter of dishonesty and misleading the Committee, but spoke to the issue of lack capacity in compliance. There was a need for skilled people that would be able to oversee the annual reports to ensure that there was an alignment between all the stated objectives and targets. Maybe the Department had acted wisely in regard to the delays in the appointment of a CEO for NEMISA, as the position demanded a highly skilled individual, but she hoped that a competent individual would be identified soon. It was important for the country to be globally competitive in the ICT sector, especially at the skills levels. The “ICT revolution” was clearly evident, where information technology and electronics were becoming entwined with our everyday lives in industry, the service sector and education.
Ms Sekese said that the challenge in the budget allocation of NEMISA was the fact that the Department had not been negotiating properly with the NT, and even though the Department had envisioned a big mandate for the entity, the budget constraint remained a key challenge. The Department would require a massive budget allocation for the new entity in order to achieve all the objectives and mandates. The Department was still waiting for concurrence from the Minister of Public Service Administration and the Minister of Finance with regard to business skills, and the legal establishment of the new entity was under way. This process would assist in lobbying for a higher budget allocation from the NT.
The Department had gone through the process of appointing the CFO and had identified the potential candidate for the position. However, the candidate had been confirmed in the position where he was acting as CFO in one of the entities reporting to a government department. The Department was now looking for a short-term contract to get an acting CFO, and BBI was also battling with the same challenge.
There were matters that had been investigated by the Special Investigating Unit (SIU) and the Department was cautious about getting into the details of the investigations, as some of the matters were still under way. The disciplinary measures against Mr Gift Buthelezi, DDG of International Relations, had been concluded and a proper process had been followed.
The Chairperson asked whether Mr Buthelezi had been dismissed, as this was not quite clear from the response provided.
Ms Sekese responded that Mr Buthelezi had indeed been dismissed from the Department with immediate effect, and an acting DDG had already been appointed. The Department and entities would need to go back and address all the existing discrepancies, contradictions and gaps in the third quarter performance. The Department was already finalising the third quarter performance of the entities, and there were areas of concern that had been picked up from each and every entity.
She said the Department had been dealing with the fact that ZADNA did not have to comply with the Public Finance Management Act (PFMA) and the Department had been giving the entity about R1.5 billion. ZADNA was at a point where it was financially sustainable, and she had requested the legal team to scrutinise the matter, as this still needed to be finalised properly with the Minister. She believed that since ZADNA was collecting revenue from managing the domain space of government, it meant there was a need to perform an oversight on the entity.
Ms Tsotetsi indicated that there were still outstanding questions on the number of resignations, the common cause of resignations and ways to discouraged resignations in the Department.
Ms Shinn said according to the SIU report, there were DDGs that had been named in the SIU report but who were still present. It was concerning that the DG and Mr Sam Vilakazi, DDG Administration, had also been named in the SIU report. She wondered whether the DG had the power to dismiss a DDG, as she assumed that this was the responsibility of the Minister.
Ms Sekese responded that according to the Public Service Act (PSA), which dealt with the matter of disciplinary action, the Act was quite clear on the role of the Accounting Officer in terms of taking disciplinary measures, including against the DDG. She was not aware of any disciplinary measures that had been taken against her, including being named in the SIU report, but reminded the Members that the SIU report had to go straight to the President. There were DDGs who had been going through the disciplinary hearings, but were still present in the Committee. She could not recall exactly the total number of resignations that had taken place in the Department.
Mr Willy Huma, Chairperson of the Audit Committee, DTPS, responded that he was also extremely unhappy about the current performance of the Department, and when the Audit Committee had discovered that the Department was underperforming it had decided to conduct an in-depth analysis of the performance of the Department for the last four years. The Audit Committee had then asked internal audit to assist with further analysis to ascertain exactly where the problems were and the root causes of the challenges that had been identified. The Audit Committee had met with the management again to further discuss the declining performance in the Department, and four issues had been identified as causing the poor performance. The Audit Committee had discovered that there was non-adherence to the performance information policy and standard operating procedures, and there were gaps in the standard operating procedures in terms of holding branches accountable and responsible for their performance.
Mr Huma added that there was also a lack of a proper monitoring system on a monthly basis so as to ensure that the Department reported on its monthly performance. The Audit Committee had raised the matter of action to be taken for underperformance in the Department. The Committee had recommended that the DG needed to introduce the performance information policy to the rest of senior management so as to be familiar with the changes that been proposed by the Committee, and that this policy needed to be implemented immediately. The Committee had then realised that the issue was not just about policy and system, as it was dealing with people, and had called for the implementation of an organisational culture change programme to deal with leadership cohesion and other issues, to motivate the Board to perform better.
Mr Huma emphasised that the Members should be aware that the role of the Audit Committee was only to advise, and not to implement policies for the Department. It was quite clear that there were specific branches that had underperformed in the third quarter, and these included ICT infrastructure support and the Chief Directorate of SMMEs within the SOEs. The under-performance of these specific branches was linked to the changing of the mandate, lack of capacity and funding issues.
Adv Collen Weapond, Chairman of the Risk Committee, DTPS, said that the Risk Committee had identified ineffective SOE oversight as a strategic risk and under this risk, the Committee had indicated that despite the controls that had been put in place the residual risk remained at 16.25%. The Committee had consulted the Minister regarding the risks in the Department and had raised the issue of SOE oversight and other related aspects.
Mr Mpisane said that ZADNA currently had 12 students – eight males and four females -- and all of them were black Africans, and due to budget constraints, most of them were from the Gauteng area.
Mr Nkosi said that USAASA had not abandoned the rapid deployment of the telecentre programme, as it had resuscitated 94 telecentres that had been opened prior to 2010, in the current financial year.
Ms Maponya agreed that the Audit Committee needed to be independent of the Department or its entities. She believed that the additional appointment of an executive in the Treasury function would greatly help to resolve the gaps identified previously with regard to funding and financial management. The finance division, including the supply division structure, would be reviewed in the next financial year to ensure that the competencies would be matched with the company’s operating requirements.
Mr Vilakazi said Treasury regulations stipulated that all entities had to pay their obligations within 30 days. The collection approach of SITA had failed to bring this to the attention of the accounting officer, but it had now introduced systems in place to notify the accounting officers of debts and the PFMA implications of failing to pay them. The failure to spend more on capital expenditure (CAPEX) meant it would be difficult for the entity to accommodate more and more government data that needed to be catered for, or to address the risk issues at the government entities. The interviews for the CFO and Chief Audit Executive would be taking place next week.
The Chairperson indicated that it was clear that the meeting needed more time, as there were many issues that were still to be discussed and responded to by the Department. She said the Committee would allow the Department enough time to deal appropriately with all the pending investigations and then report to the Committee when they were concluded. It was true that the Audit Committee could only advise the Department and was not responsible for the implementation of advice and policies. There were number of challenges that needed to be addressed as highlighted earlier, especially the discrepancies in the APP and in the third quarter performance.
The meeting was adjourned.
- .ZA Domain Name Authority (ZADNA) presentation
- Sentech presentation
- Broadband Infraco presentation
- State Information Technology Agency presentation
- National Electronic Media Institute of South Africa presentation
- USAASA & USAF Quarter 3 Peformance Report presentation
- Department of Telecommunications and Postal Services Third Quarter Performance2014/15 Financial Year presentation
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