Minister of Finance update on Termination of Limpopo Province Section 100(1)(b) Intervention

NCOP Finance

22 April 2015
Chairperson: Mr C De Beer (ANC, Northern Cape)
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Meeting Summary

The Minister of Finance and the Chief Administrator briefed the Committee on issues contained in the Select Committee Report on the Section 100(1) Intervention in Limpopo Province. The purpose of the briefing was to provide feedback about the Committee’s observations. The importance of making the distinction between section 100(1)(b) and 100(1)(a) of the Constitution was highlighted. There was a cabinet resolution on 9 July 2014 which spoke to the transitioning from Section 100(1)(b) to Section 100(1)(a) for the five departments under administration in Limpopo Province. Section 100(1)(b) stated that the national executive assumed responsibility for the relevant obligation in the province. Section 100(1)(a) on the other hand provided that the national executive could issue a directive to the provincial executive describing where they had failed and what steps needed to be taken to meet its obligations. On 31 January 2015 the Minister of Finance released the administrators from their appointments as accounting officers of the provincial departments. Since then the authority of accounting officers had reverted back to provincial officials. The team of administrators had been reconstituted into a Monitoring and Evaluation (M&E) Committee, notwithstanding resuming their previous duties with national government structures.

A provincial task team had been set up by the Office of the Premier to work together with the M&E Committee to ensure that the directives of the Memorandum of Agreement (MOA) were achieved. Specifics on the implementation of the cabinet directives as contained in the MOA were provided. Details were also provided on the progress thus far on the implementation of the transition phase in terms of section 100(1)(a). General observations were that there was good cooperation and intergovernmental relations between senior officials and that the Office of the Premier had honoured all engagements and meetings with the national team. Challenges experienced in the first quarter was the narrow interpretation of directives by departmental officials in respect of the intended outcomes of directives. Reports from some departments arrived late and had quality and accuracy shortcomings which made it difficult to provide feedback to political principals. In addition the criminal and disciplinary processes of government were slow which meant that legal technicalities, procedural issues and management issues made it difficult to reach finality on accountability matters. Further, amongst the five departments there were some variances in the levels of senior management capacity due to the slow progress in disciplinary cases of senior officials who had been suspended. Consequently, critical departments such as Education and Public Works as well as others such as COGHSTA and the Office of the Premier had acting officials in place. Reference was made to an annexure accompanying the presentation which provided the Committee with a comprehensive outline of how the MOA addressed the recommendations of the Committee which it had made in its report and what the relevant progress was.

The Premier of Limpopo Province confirmed that the situation in the Province had been turned around. The Province had made inroads to improve on cooperative governance which was important in financial management. The R1.7bn overdraft of the Province had been eliminated. There had also been an amount of R2.7bn in unauthorised expenditure. The Limpopo Province was back on a sound financial footing. The assurance was given that disciplinary and criminal cases were moving ahead. The Intervention had helped the Province but there were some challenges as well. There had been delays in the processing of disciplinary cases. It was a relief that the disciplinary cases of three of the five heads of department had been finalised. The remaining two cases would be finalised by the end of the quarter. There was a lack of policy guidelines between the section 100 line officers and accounting officers. On 15 December 2014 the Province had signed the MOA with national government which essentially marked the end of the section 100(1)(b) phase to the transition into the section 100(1)(a) phase. The Province was committed to work with national government to conclude all outstanding issues. The belief was there that the Province had turned the corner on corporate governance. The Province had built the necessary capacity and had acquired skills.

The Chairperson stressed the importance of meeting with the nine provincial treasuries on a quarterly basis in order for the Committee to be kept abreast of the fiscal position of provinces.

Concerns were raised by Members that there were conflicting viewpoints coming from National Treasury and the Premier’s Office on the progress on criminal and disciplinary cases. National Treasury was of the view that progress was at a snail’s pace whilst the Premier’s Office said progress was being made. Members asked if it was true that heads of departments in the Province and Members of Executive Committees were reluctant to take actions against offending officials. It was further concerning that there seemed to be a lack of communication between the Premier and his administrative head, the Acting Director General. The Acting Director General seemed to be privy to the presentation document of National Treasury and what its contents were whereas the Premier was not. The Premier had only laid eyes on the document at the start of the meeting. Given that the role of the team of administrators in the Province had changed to that of a monitoring and evaluation team, did they have the required skills to do monitoring and evaluation? Timeframes had been set for the setting up of the Monitoring and Evaluation Committee. The Committee had been informed that three out of five disciplinary cases had been concluded, but no detail about the cases had been presented. There was a feeling that Members were not getting a full report. Another concern raised was that critical posts in departments had not been filled and that acting persons were “holding things together”. These vacant critical posts had to be filled. The Chairperson stated that the termination of the section 100(1) Intervention in the Limpopo Province did not mean that the book was being closed on the National Council of Provinces doing oversight in the Province.

Meeting report

Update on Termination of the Limpopo Province Section 100(1)(b) Intervention
In attendance was the Minister of Finance Nhlanhla Nene, Deputy Finance Minister Mcebisi Jonas, Premier of the Limpopo Province Mr Stanley Mathabatha, Mr Mondi Tom Chief Administrator, Mr Phuti Pheme Acting Director General in the Premier’s Office and Mr Edgar Sishi Chief Director: Provincial Budget Analysis, National Treasury.

Minister Nene said the purpose of the meeting was to provide feedback on the Committee’s observations. He provided a brief background and context. On the 30 July 2014 the Committee had been briefed on the Limpopo Section 100 (1)(b) Intervention. One of the issues discussed at the briefing was the detailed progress of the Intervention, the challenges, as well as the way forward for the five departments under administration. He noted the importance of making the distinction between section 100(1)(b) and 100(1)(a) of the Constitution. There was a cabinet resolution on 9 July 2014 which spoke to the transitioning from Section 100(1)(b) to Section 100(1)(a) for the five departments under administration in Limpopo Province. Section 100(1)(b) essentially stated that the national executive assumed responsibility for the relevant obligation in the province. Section 100(1)(a) on the other hand provided that the national executive could issue a directive to the provincial executive describing where they had failed and what steps needed to be taken to meet its obligations.

Mr Mondi Tom, Chief Administrator, continued with detail on feedback and an update on what had transpired. The Committee had in its report recommended the approval of transition from section 100(1)(b) to section 100(1)(a). On the 15 December 2014 the Inter-Ministerial Committee (IMC) and the Premier of Limpopo signed a Memorandum of Agreement (MOA). The Agreement set out the directives or deliverables that had to be met by the Province to sustain the gains of the Intervention. On the 31 January 2015 the Minister of Finance released administrators from their appointments as accounting officers of the provincial departments. Since then the authority of accounting officers had reverted back to provincial officials. The team of administrators had been reconstituted into a Monitoring and Evaluation (M&E) Committee, notwithstanding resuming their previous duties with national government structures. A provincial task team had been set up by the Office of the Premier to work together with the M&E Committee to ensure that the directives of the MOA were achieved. He elaborated on the implementation of the cabinet directives as contained in the MOA. Details were also provided on the progress thus far on the implementation of the transition phase in terms of section 100(1)(a). General observations were that there was good cooperation and intergovernmental relations between senior officials and that the Office of the Premier had honoured all engagements and meetings with the national team. Challenges experienced in the first quarter was the narrow interpretation of directives by departmental officials in respect of the intended outcomes of directives and reports from some departments arrived late and had quality and accuracy shortcomings which made it difficult to provide feedback to political principals. In addition criminal and disciplinary processes of government were slow which meant that legal technicalities, procedural issues and management issues made it difficult to reach finality on the issue of accountability. Furthermore amongst the five departments there were some variances in the levels of senior management capacity due to slow progress in disciplinary cases of senior officials who had been suspended. Consequently, critical departments such as Education and Public Works as well as others such as COGHSTA (Department of Cooperative Governance, Human Settlements & Traditional Affairs) and the Office of the Premier had acting officials in place. Reference was made to an annexure accompanying the presentation which provided the Committee with a comprehensive outline of how the MOA addressed the recommendations of the Committee which it had made in its report and what the relevant progress was. For instance the Committee had recommended that the transition process from the Administrator’s team to provincial officials should be clear and systematic for the purposes of accountability and continuity. The recommendation applied to all departments. The MOA directive in relation to the recommendation was that the transition process had been managed clearly and systematically at political and official levels. Progress to date was that the MOA had been signed by political principals, a handover workshop and M&E meetings had been held, letters of transition from the Minister of Finance to other Ministers and administrators had been written and secretarial arrangements had been provided by the Department of Public Service and Administration (DPSA).

On oversight and reporting in terms of section 100(1)(a), amongst other terms within the Agreement, the directives would be reviewed three months after the end of section 100(1)(b) and the Office of the Premier was required to provide a comprehensive report to the Minister. In conclusion it was recommended that the Committee noted a few matters, one of which was that a full close-out report had been completed and pending an editorial process, would be submitted to cabinet and the Provincial Executive Committee (EXCO)

The Chairperson explained that after the day’s proceedings the Committee would compile a report which would go to the NCOP for adoption. The Committee was closing the book on the Intervention in the Limpopo Province; it did not mean that the book was closing on the NCOP doing oversight.

Premier Stanley Mathabatha proceeded with his input. He noted that the NCOP played an important oversight role in the Limpopo Province. The Province was grateful to the Committee and the NCOP. When the Province had last appeared before the Committee on 30 July 2014, the Province was in the process of signing the MOA with national government which meant moving from section 100(1)(b) to section 100(1)(a). Today he could confirm that the situation in the Province had been turned around. The Province had made inroads to improve on cooperative governance which was important in financial management. The R1.7bn overdraft of the Province had been eliminated. There had also been an amount of R2.7bn in unauthorised expenditure. The Limpopo Province was back on a sound financial footing. He stated that disciplinary and criminal cases were moving ahead. The Intervention had helped the Province but there were some challenges as well. There had been delays in the processes of disciplinary cases. He was glad that three of the five head of departments’ disciplinary cases had been finalised. The remaining two cases would be finalised by the end of the quarter. There was a lack of policy guidelines between the section 100 line officers and accounting officers. He pointed out that on the National School Nutrition Programme he had instructed his Member of the Executive Committee (MEC) to review the current model and to ensure that there was a supply of food to schools. On the 15 December 2014 the Province had signed the MOA with national government which essentially marked the end of the section 100(1)(b) phase to the transition into the section 100(1)(a) phase. The Province was committed to work with national government to conclude all outstanding issues. In conclusion, he believed that the Province had turned the corner on corporate governance. The Province had built the necessary capacity and had acquired skills.

Mr Phuti Pheme, Acting Director General in the Premier’s Office, noted that he had nothing to add as the issues had been covered comprehensively and that he had been privy to the presentation document presented earlier.

Discussion
The Chairperson commented that in order to have good governance one had to do the basics right. He pointed out that part of the Committee’s programme was to meet with the nine provincial treasuries on a quarterly basis. This would allow the Committee to do oversight on the fiscal position of provinces. It was parliamentary oversight which was different to the oversight by National Treasury.

Mr T Motlashuping (ANC, North West) was concerned about Mr Tom stating that criminal and disciplinary cases were at a snail’s pace. It seemed as if Premier Mathabatha was saying that there was progress made on cases. His own recollection of facts was that the Auditor General’s Office had said that MECs and heads of departments (HODs) were reluctant to take action against officials alleged to have done wrong. Was this part of the reason why cases were moving slowly? He asked why the pace of cases was slow when persons had admitted wrongdoing. He noted that media reports stated that two HODs had been reinstated. Were the reports correct?

Minister Nene replied that criminal cases were progressing at a slow pace because people were abusing the justice system by using delaying tactics. The same delaying tactics were also being used in disciplinary matters. It was a tricky situation. Perhaps a political decision could be made which would allow these matters to be heard by special courts. A report on the cases could be provided to the Committee.

Premier Mathabatha pointed out that there was a 50/50 percentage chance of success with the case of the HOD of Education. Experience had shown him that 80% of the time when a case went to court, it ended in a loss. It was decided that it was best to negotiate with the officials in question and to come to some sort of settlement. The issues had been referred to the Minister and the Minister had said that these were critical posts. Cases would not be pursued if there was no prima facie case. He added that none of the three HODs had been reinstated. The Province had entered into settlement agreements with them. They were either demoted or redeployed. On reluctance of MECs to take action, he said that if he was given particulars of specific cases he would intervene immediately. Some MECs had informed him that persons whom action had been taken against, had won their cases. Administrators had suggested that the Province appeal the cases but it was felt that an appeal would be a futile exercise given that the outcome could be the same. There were four chief directors that had been dismissed because the cases against them had been strong and the matters were dealt with swiftly.

Mr Rudolph Phala, Limpopo MEC on Finance, noted that Premier Mathabatha had covered all the issues. On MECs being reluctant to take action against officials, he explained that it was for this very reason that in July 2013 the Premier and his Executive Council had been removed. Since then the new Premier and his MECs had taken action.

Mr Edgar Sishi, Chief Director: Provincial Budget Analysis, National Treasury, stated that in managing disciplinary and criminal cases there were many difficulties that were not contemplated. Managing the process had to be done carefully. Delays were worsened when people who were dealing with the matters changed. It was something that National Treasury had to deal with not only in the Limpopo Province.

Ms L Dlamini (ANC, Mpumalanga) said that it seemed that Premier Mathabatha and Mr Pheme were not on the same page. Mr Pheme had worked with the administrators on the presentation document hence he had nothing to add whereas the Premier had not been privy to the presentation document prior to the meeting. She wished to confirm that it was correct that the team of administrators were now a team of monitors. Did the team have the required capacity to perform monitoring and evaluation? It was a specific skill that was used by monitoring and evaluation practitioners. It would have assisted the Committee to have a professional report or a dashboard template on how many things had been addressed and how many things were outstanding. It would have also helped if the Limpopo Provincial Government could have added to the report provided to members. She asked whether the Monitoring and Evaluation Department in the Presidency (DPME) could assist with the monitoring and evaluation in the Province. She added that provinces also had monitoring and evaluation departments. How would the different monitoring and evaluation teams work together? All the Committee knew was that three out of five cases were concluded. No details about them had been provided.
           
Premier Mathabatha noted that he had only received the National Treasury presentation once he arrived at the meeting. His Chief of Staff had only received it the night before. He believed that Mr Pheme also did not have it prior to the day before. He stated that for the time that he had taken up Office as Premier, he had done his own assessment and he was convinced that for the period that the Intervention had been in place in Limpopo Province it had done what it had aimed to achieve. He was certain that the Intervention if it had to continue would not achieve anything more. A good job had been done. The Province was reaching the stage where the so to say peacekeeping force was starting to be seen as the enemy. There were parallel structures in place which meant that conflicts and contradictions were inevitable. He pointed out that at some stage the pace of disciplinary cases were slow. The problem was that role clarification was not clear. In October 2013 he had been invited to the Inter-Ministerial Committee where he was told that 386 cases were being investigated. He was required to sign off on the cases so that the DPSA could run its disciplinary cases. The delay was caused by the previous Premier refusing to sign off on the cases. It was only when he had listened to the presentation made earlier that he heard that cases were not progressing. He asked how the Province could be asked why the cases were not progressing when it was not handling them. The Province had requested that they deal with the cases themselves.

Mr Pheme stated that 50 cases had been dealt with.

Mr Tom said that there was a dashboard template which showed where progress had been made.

Minister Nene responded that the monitoring and evaluation by administrators was only going to be on the MOA. It was not the normal process of monitoring and evaluation.

The Chairperson noted that a report that had been tabled on the cases handled by the task team. Reporting was now directly to the Minister.

He addressed Mr Pheme and said that as the head of administration in the Province he should keep the Premier who was his political head informed.

Dr H Mateme, NCOP Chief Whip, said that it seemed that there was a disjuncture between officials who should be making information available to the Office of the Premier. It was concerning that the Premier only received the presentation in the meeting. She appealed to officials to desist from playing the hide and seek game and to cooperate. It was the people of Limpopo who were suffering.
 
Ms E van Lingen (DA, Eastern Cape) was concerned about things that still needed to happen or were in the process of happening. From what was presented she did not see definite progress. She agreed that the Committee would be doing oversight on the Province. She pointed out that the Province’s audit report was not on its website. She felt that the Committee was not getting a full report. The Education Department in the Province still had a disclaimer. What was the process? Was it a good idea to lift the section 100 intervention when there was still a disclaimer and three of the directors general were back at their posts? Why were criminal and disciplinary cases progressing slowly?

Minister Nene, on the issue of the Limpopo Department of Education having a disclaimer, noted that the intervention could not stay in Limpopo forever. The disclaimer would be addressed when all other issues were addressed. The intervention was not put in place to resolve all disclaimers.
 
The Chairperson noted that the oversight role of the Limpopo Provincial Legislature was ongoing. There would be joint oversight by the Committee and its counterpart in the Province.

Minister Nene stated that the Committee in its oversight would pick up that challenges in the Limpopo Province were also present in other provinces. The current intervention could be used as a case study to deal with the problems in other provinces. Supportive legislatures together with the section 100 interventions contained in the Constitution were needed to deal with issues.

The Chairperson suggested that all the reports pertaining to the Intervention in the Limpopo Province should be bound into a book and placed in the parliamentary library for reference purposes.

Mr Motlashuping asked whether timeframes had been set for the setting up of the Monitoring and Evaluation Committee.

Mr Gaehler (UDM, Eastern Cape) noted that the presentation had alluded to the fact that critical posts had acting persons filling them. Some of the vacant posts were in critical departments. When were they to be filled?

Mr S Mohai (ANC, Free State) conceded that there would be challenges but the Committee must be given a good basis to take the process forward.

Ms Dlamini recommended a further meeting between the Committee, the Premier and the department seeing that the monitoring team being in the Province could become a problem. The Premier had alluded that monitoring could become a problem with the Province.

Deputy Minister Jonas said that if one looked at the substantive issues in the presentation there was no disagreement. The Limpopo Province moving forward was driving the Intervention. There was no team. The Inter-Ministerial Committee was doing the monitoring. Perhaps the frequency of Inter-Ministerial Committee meetings needed to be increased. One of the major lessons learnt was that if one did not define roles upfront one was likely to experience difficulties midstream. The roles of all players needed to be taken into consideration. Healthy tensions were important. At present the Limpopo Province had the authority and was driving the process. HODs were to be appointed.

The Chairperson agreed that defining roles was important. He noted that all the NCOP Committees would be doing oversight. Essentially the end of the financial year, 31 March 2015, was when the section 100 Intervention had ended. The Committee needed to come to the conclusion that the Intervention had ended as far as the parliamentary process was concerned. He made the statement that the section 100 Intervention in Limpopo Province had ended.

The meeting was adjourned.

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