Department of Rural Development & Land Reform & its entities on 4th quarter expenditure trends & outcomes against 2014/15 Strategic Plans & APP

Meeting report

Chairperson’s welcome
The Chairperson officially opened the meeting and welcomed Ms Mashego Dlamini, Deputy Minister, Department of Rural Development and Land Reform (DRDLR), the officials from the Ingonyama Trust Board (ITB), led by Judge Jerome Ngwenya, the officials from the Department, led by Mr Eugene Southgate, Deputy Director General (DDG), and Members of the Committee. She announced that one of the Members, Mr T Walters (DA) had been elected as deputy chairperson of the DA’s Federal Council, and congratulated him.

Department’s 4th Quarter Preliminary Performance Report 2014-2015
Mr Southgate said the Department had basically achieved 55% of the targets it had set out to achieve and cumulatively over the period, it had achieved 59%. The DRDLR had set a few more targets for the 2014 year, and he highlighted some key figures of comparison of the Department’s performance during the 4th quarters in the past three financial years. Mr Southgate then indicated that there were five programmes currently running in the department and went on to present the key figures in each programme and described to what extent each target had been achieved to date. A summary of the performance of all the programmes could be found on slide 62 of the document that was presented for the 2014/15 year.

Department’s 4th Quarter Financial Performance Report: 2014-2015
Mr Thapelo Motsoeneng, Acting Chief Financial Officer (CFO), DRDLR, said that the Department had spent R9.4 billion for the year which represented 99.4% of the amount allocated, leaving unspent funds of R59.5 million. The biggest contributor to the unspent funds was the programme on goods and services, as well as projects that could not be finalised. Issues of efficiencies around transportation and accommodation contributed to some of the money that had been unspent.

He presented the specific budgets of each of the different programmes, highlighting how much of it had been allocated and spent. For example, the administration programme which housed the compensation of staff, had been allocated R1.3 billion and of it had been spent. Transfers and subsidies were where the core of the Department’s work was being carried out, which helped to explain some of the figures. Support services had not received as much money as had been allocated, which was worth noting.

Mr Motsoeneng then referred the Members to the executive summary where they could find a detailed report and figures corresponding to the outcomes of the quarter.

Discussion
The Chairperson said she had realised that in some of the programmes there had been a need to allocate an appropriate budget in order to appoint enough personnel. She added that it was important for the promises made to match the actions that followed.

Mr T Mhlongo (DA) requested consistency in the reports from the Department saying that if percentages were used, they must be used throughout. In line with this he asked why in some of the programmes the level of achievement was labelled as “partially-achieved” and why there were no details to explain this further. He wanted to know why the Department did not fulfil what they promised. Promises had been made for completion of projects by February, but nothing had happened. He also wanted to know what had happened to the so-called “Mega Co-ops,” and why the Department was quiet on that issue. Regarding jobs that were being created, he asked how sustainable these job opportunities were. In terms of Restitution, he was curious as to whether or not the government was under-targeting. Lastly, the Department had made another promise that the district committees would be implemented, but there had not been an update on the progress, which he wanted to know about.

Ms N Magadla (ANC) said she appreciated the professional opinions in Programme 1, but that there had been an expectation of an increase in the filling of vacant posts, as this had been raised before. She asked what had happened to the other provinces in Programme 2, which were not appearing in the report except for the four or five that had been added. Mr Mhlongo had raised the issue of Mega Co-ops, and she asked if it was possible to get a list of them for oversight purposes.

Mr M Filtane (UDM) thanked the presenters for their transparency in reporting things as they were, saying that it helped the Committee to help the Department in return with issues that they may struggle with. However, on the progress report, he said that to fail was quite devastating and catastrophic because those core functions defined what the Department was and what they did. He suggested that introducing severe penalties could be a possible solution if it was necessary to ensure successful outcomes. Failure in those cases had a direct impact on the very people they were serving and because that was the Department’s core business, it was simply not acceptable. In terms of land reform, he asked what the complexity was in appointing a capable land valuing employee. Lastly, with regards to all the budget issues raised in the report, he said when the Committee allocated a budget it assumed that the Department would have calculated an accurate amount of money needed for their needs. Therefore, this was not an acceptable excuse.

Mr P Mnguni (ANC) said there were particular issues in the presentation that had not been fleshed out, which made it very difficult to pin down issues. Since they were dealing with only the 4th quarter and not the annual report, he did not expect there to be jumping and juggling of issues between the financial and performance report. He had an issue with the format of the presentation, as the lack of projections versus actuals did not allow the Members the precision they needed to critique accurately. A successful outcome of 75% may look good on student scripts, but not in the Department’s work, which should rather be between 98% and 100%. Only a 2% variance was acceptable -- nothing more, nothing less.

Mr Walters) was concerned mainly with the calculation of targets and successes, and said that they were being calculated in a very misleading way. It was important to understand the relationship between the targets and outcomes properly. The way in which the calculations for the reports were carried out could yield misleading representations of over-performance or under-performance. In line with this criticism, he suggested that there be an institutional setting that provided a qualitative element to the calculations. The target setting should correspond with national policy. Lastly, he asked if the target reports addressed what was trying to be achieved.

Mr A Madella (ANC) was concerned that only 50% of the targets had been achieved, while 90% of the budget had been spent. This was something that made him wonder what exactly was going on, if no one was doing the work. He said he wanted to commend the Department, however, on the number of jobs that had been created, but he was also concerned about their sustainability. Seasonal work was relevant for only a very short period of time and then the rest of the year one had no work. He wanted to know if there were linkages between training and development and these types of part-time jobs. He was also not sure if there were dedicated personnel within the Department that had the requisite knowledge and experience of dealing with Sector Education and Training Authorities (SETAs), which were another possible source of resources which were in abundance. He did not get a sense that the Department was utilizing their resources effectively currently. He wanted to know how many of the people that had completed their training and development successfully had been absorbed into the Department. It did not make sense to put so much effort into helping people to graduate when those same people ended up unemployed.

Department’s response
Mr Mduduzi Shabane, Director General, DRDLR, said that Mr Madella’s point about SETAs was very valid. The Department agreed with his views on the matter, and they could do a lot more. However, they did have quite a number of youths who had been successfully absorbed. This could be extended to other areas, but that at the moment that capability was limited. Furthermore, there was provision for taking on these young people, with different programmes targeted at catering for them. Last year alone, about 200 young graduates had been trained but it was not always possible to take them on each year. These young people have been kept in the Department for two years, which was the condition, but there just was no money to cover for all of them, and that was a fact. The quality of jobs would inevitably vary from short-term or seasonal, to even long-term in specific circumstances.

Addressing the issue of the format of the report, he said that the projected targets versus the actuals were definitely included in the report, and he needed clarity on the specific issue, if possible. In terms of the programme expenditure versus the outcomes, he said this was again a valid enquiry but that money was also being spent on other things that did not appear in the APP. Last year, the Department had received about R10 billion, and R1 billion of that had gone into compensation of employees, another R1 billion into goods and services, and the remainder into operations. The variance that existed was owing to the spending of money on other things that were not reflected in the APP.

On the issue of targets being partially achieved it was important to say how much had been spent in specific areas to rectify these issues. This was something the DRDLR needed to get right over a period of time. On the reasons for stopping the Cadastral programme, he said the programme was not on course because there were issues between the government and the service provider. There had been no sense of moving towards achieving the objectives of the programme, so the idea was to stop it and carry out a full audit and forensic investigation on the advice of the Auditor General. This meant the programme had had to be re-scoped from November 2014 to May 2015, but irregularities in the granting of the tender had resulted in it being stopped completely and the matter was now in court, which accounted for the under-expenditure.

Mr Motsoeneng responded to Mr Mhlongo’s questions about the 8% being too high and the challenges of paying within 30 days. He said that the Department agreed that it was high and that their target was to pay every single invoice within 30 days. There were plans in place that had been implemented over time to assist with these issues, such as an invoice tracking system that would be installed soon. This system would drastically improve and help with transparency and holding the correct people accountable at every step.

In terms of the challenges they faced in paying within 30 days, he said there were often irregularities where, if a process followed to pay a service provider was irregular, questions had to be asked and therefore the payment was delayed. A second challenge was that of bank account details which, for some reason, service providers were in the habit of changing constantly. These changes resulted in tremendous administrative delays and constraints through a lengthy registration process that had to be carried out again. The Department had explained some of these issues to service providers but the response had not been inspiring. For example, the Department had asked service providers to submit invoices to certain branches for efficiency purposes, but the response had not been good. Regarding a move from unqualified to clean audits, he said that this was a target the Department was working towards -- and that they were getting there.

Mr Southgate said the issue of the format would certainly be addressed so that the reports were easier to read -- he also found it difficult. On the calculation of targets, he said the Department did actually link it to national policy, but that perhaps the actual question was on how they were presented. In terms of the vacancies that needed to be filled, he said that the comments had been noted, but as their budget had been significantly reduced by R142 million, this would be a stumbling block towards achieving this goal. However, the Department was working as fast as possible to fill the positions by next week. If that did not happen, the Department was open to losing the money allocated to be better used elsewhere.

On the issue of Mega Co-ops, Mr Southgate admitted that it was an ambitious target but that as a Department, they had discovered what they needed to do. The DTI was still in the process of amending the legislation and there was a basis that was necessary. In respect of budgets that had been allocated, he attributed the failure to meet the targets to internal issues.

Mr Shabane added that in terms of restitution he did not believe there had been under-targeting, saying that concerted efforts had been made to push the Commission to improve from 2009/10, where it had under-achieved, resulting in where they were now. The Department had been pushing quite a lot in the last financial year to get the Commission to allocate resources and enter into partnerships with institutions of higher learning to focus on research. He believed the Commission could do a lot more with the resources at their disposal, but there had been quite good progress thus far. On other issues of capacity, there was a Land Tenure and Administration group that had been established to help the vacant posts to be filled. However, the Department had advertised the vacant post for a land valuing agent but could not find a suitable candidate with the required qualifications. Only recently had one been found, and it took time to complete the necessary screening procedures.

Mr Mhlongo asked how long the amendment to the relevant Act would take, since it was not working out because there was a fear of “losing one’s own.”

The Chairperson asked if after the amendment, the challenges that had been mentioned would be addressed.

The Deputy Minister said they were waiting for the Committee’s input, and that would take them forward. The Department felt that the amendment would indeed sort out most the challenges faced. On the issue of the calculations, and the need to do them differently, she said the Department could not report them in such a manner because the way they were assessed was based on the portfolio of evidence.

The Chairperson thanked the Department for the responses and said the Committee would not tolerate any under-spending, especially on the employees, because that was where permanent jobs were provided. The vacant posts must be filled. She did not understand the under-spending on rural development, which was the core business of the Department, and said there was no reason for this. There was a need for more money because of demand, but the money could be used to drill boreholes and provide market-gardens. In future, the Department must have the DGs responsible for under-spending to be in attendance to tell the Committee what the reasons were, because it was unacceptable to under-spend while people waited for service delivery. Therefore people must be accountable. She asked if there was any money the Department would surrender. She thanked them for the responses, but asked that there be improvements in the report.

Riemvasmaak Community Claim – Status Report
The Chairperson said there were challenges with the beneficiaries of Riemvasmaak, as had been highlighted, which was why the Department had been invited to provide a briefing. After the presentation, the Parliamentary legal advisor would brief the Committee on how it could assist.

Mr Southgate said the Department had not prepared a presentation, but a status report had been circulated beforehand. He would not be going into the whole report, but would rather highlight the key outcomes at that time.

On the first three pages of the report was the background on how the community claim had been established. It should be noted that an administrator had been appointed to facilitate the programme because of corruption -- the persons appointed at the time had been found guilty with regards to the management of the trust. The court had therefore appointed an administrator to run it in the meantime. The problem was that the community was not very happy with the administrator that had been appointed. There had been all kinds of allegations and not enough communication on the business being conducted. The Department had tried to facilitate discussions between the community and the administrator, but the administrator had not turned up for the meeting, so it had been fruitless. The Minister had also appointed several committees to deal with various issues, but one of the issues that had emerged was whether they should continue as a trust or be converted into a Communal Property Association (CPA). However, for as long as they were a trust, the Department had a limited ability to assist. The other issue was that voter education could take place only in one community but could not happen in others, because there were persons against turning it into a CPA so they disrupted proceedings. A comprehensive report could be made available to the Committee. He said that page 6 had ideas on the way forward.

Mr Shabane said that serious power struggles within the community were involved. There were people who wanted to control the resources in the area, and the Department wanted to give options to the Committee. The Department had told the community they should make a decision as a CPA to hold the land so that they could rid themselves of the administrator, but even that was being contested. He had gone there himself, with the Minister in attendance, and had met with the committee, but the administrator was not assisting. Administrators refused to be accountable to the people whose assets they were administering, and simply refused. The matter had been escalated to the DG of the Justice Department and the Chief Master of the High Court. The DG had promised to intervene, so they were waiting for their assistance -- unless the communities agreed among themselves, which was not happening.

Dr Barbara Loots, Parliamentary Legal Advisor, said an assessment had been made in March, based on a general analysis of trusts and CPAs, but this new report meant that they had to reconsider. She said the fact that it was not a trust by choice but by legislation also changed the context and requested that the Committee grant her an opportunity to interrogate the actual report and do a follow-up opinion. She had just quickly scanned the new report and with the involvement of judges and the courts, it had become quite intricate. Trusts had been criticised by specialists and academics as not always the best option for management when considering a transfer to a CPA. Therefore, the move from a trust to CPAs may sound like a good idea, but that was just from a glance and almost a gut feeling. However, if she was granted time to interrogate the document properly she could come up with a proper analysis.

Mr Walters wanted to know why a CPA would be better than a trust, as a matter of interest. What factors of a CPA would improve the situation?

Mr Filtane asked under whose authority a trust functioned and who it accounted to. He also wanted to know if it was true that the administrator had been appointed on a one-year contract of R4.2 million and if so, what functions they were supposed to be performing.

Mr Mhlongo wanted to know who appointed the administrator of the trust, and also what agreement the community and administrator had in place. He wanted to have a copy of the agreement. He asked what had taken so long, because the Minister was always available and he did not see that any interventions had been made. The Committee had even done oversight there, and this was news to him -- they had not even been notified. Worst of all, there was no knowledge of the existence of advisory committees. He asked why there were not updates on all projects, because that was a shock when the Committee visited. Were there other things they had not mentioned? He said there was no openness for them to redress the imbalances of the past – a lack of transparency. Apparently these administrators did not even respect the Minister.

Mr Mnguni said he was sensitive to the request to go back with the documents for a more informed view, and said the Committee should support that. He added that putting aside the ITB which was a Trust, he did not think it was appropriate to use public money to establish a trust model. It became very difficult for the Department to regulate, because they were accountable to the Master of the High Court. Once they were a trust, they were no longer accountable via the Public Finance Management Act (PFMA), for instance, which made it very complicated. He therefore suggested CPAs, which the Department would be amending and which the Department had control of.

Mr Madella wanted to know whether the same route, through the Master of High Court, would be followed to review the policy while the changeover was awaited. What immediate interventions could be implemented?

The Chairperson said the request by Dr Loots had been accepted.

Dr Loots said when one looked at the Act, there were more management clauses than in a normal Act, and that it had been drafted in an assistance manner. She was aware that there had been problems with implementation and of the whole idea that the CPA act had been assisting to fix the issues. Scanning through the Act she did not get a sense of depth or a model of management. In general she did not see monitoring provisions, but reserved comment until she could interrogate it properly. She said the model of a CPA was designed to assist a community like this, whereas a trust was set up to manage individually.

Ms Dlamini said this programme was not the only one, and that the Department educated people on the forms of governance they could opt for. There were highly educated people who made choices to register a trust, and as time went by, they neglected their duties. The people of the community were entitled to go the Master of the High Court, which made it very difficult to intervene because they would say there had been interference, resulting in the formulation of a temporary trust. A trust made the whole entity become a private governance item. Therefore it was a very difficult matter, and the Master of the High Court appoints the administrator. She said they understood that the High Court did not have enough time to monitor, but the trust had also not allowed the Department to intervene. All the people that had been appointed by the Master of the High Court were lawyers, and they were staying there building their businesses.

Mr Walters asked whether this was not the kind of thing one should get regular feedback on, because it was not something that one could get a report and solve the problem instantly. His concern was that the trusts were probably not working because the average member did not have quick access to the court to deal with whatever the issue was, or it might be a court capacity issue. He was really concerned that the Department was replacing one problem with another, and he said it went back to what business model worked and which ones did not. A broader discussion was needed on what business models worked, or on what vehicles created independent agricultural rural entrepreneurs that did not rely on the state.

The Chairperson said that if the trust was changed into a CPA, the Department would be able to intervene and assist. However, she made reference to another CPA that had been established in 2008 that was already failing and had not been accounting to beneficiaries. The executive was just doing its own thing. Therefore, if there was such a push for a conversion from a trust to CPAs, why was the Department struggling to intervene with the existing CPAs? Furthermore, she asked what progress has been mad,e because the report spoke of establishing committees that still had not been established.

Mr Filtane said the Committee would be in a much better position to help the Department on how to go about matters if it had access to the trust deed. This was because if someone had tampered with the terms of the deed, one could point this out easily. He was of the opinion that this was the reason an administrator had been appointed to begin with, and this decision could be challenged in a court of law. This was why he needed to see the deed -- so that the matter could be pursued in court. Furthermore, it was important to see the terms of the appointment. He did not think an administrator would have been appointed with the expectation of him not attending meetings. Thus in reality there was a legal way of solving the problem.

Ms Magadla said that there were no timeframes to be able to make a follow-up on what was happening.

Mr Mhlongo said before the Committee thought of adopting a way forward, it had to know the model being used. He referred to the MalaMala CPA from last year, where R1 billion had already been spent. He said he wanted the report first before taking a young man’s decision.

The Deputy Minister said this trust was not the only one that had been problematic -- there were many of them. The Department agreed that the CPAs were not properly functional and finished, but there was always room for improvement. She said people complained about the money in terms of the MalaMala CPA and not the actual problem, but the DRDLR would answer that at a later stage.

Mr Mhlongo said one of the things that was lacking for the Committee was not being able to know about the issues at the present time, and only finding out later. It was not about the money. He wanted to see a report so that the Committee could realise the development of the people.

Ms Dlamini) suggested that the Committee do an oversight visit to MalaMala and provide a report that the Department could then refer to, and answers could be found.

Mr E Nchabeleng (ANC) said the Committee should visit both Mala Mala and Makuleke, which seemed like a success story. Reports on both would form a good comparison and the process could then be taken forward.

The Chairperson said the Committee agreed that the Department was expected to submit the annual reports of all the CPAs. Secondly, there was also an expectation of the submission of reports on all the trusts, not just the problematic ones. There were still outstanding oversight reports for MalaMala, and a date would be decided on when a visit could be arranged. A comparison could then be made between what had been recorded in the report and what was seen at the site. A decision could then be made on whether or not Parliament had a role and if so, what kind of role could be played to assist the beneficiaries. This would ensure that the Department was taken seriously and were not simply big government officials who came and went but did nothing.

Ingonyama Trust Board (ITB) 4th Quarter Performance & Expenditure Report 2014-2015
Judge Jerome Ngwenya, Acting Chairperson, ITB, said that there were three board members in attendance, including himself, the vice-chairperson and Advocate VZ Mngwengwe. As a board, they were not clear what the ultimate directive of this Committee was in terms of who should attend. He drew attention to page 31 of the ITB presentation, which related to human resources and the vacancies that still existed, despite the Committee advising against this previously. The issue with the CEO had taken longer than expected and an agreement had eventually been finalised. The real estate manager position had been advertised, but without success. The other positions remained on hold until the CEO position was finalised. He was hopeful that when the 2015/16 report was drafted and presented they could report on the progress made.

Mr Amin Mia, Acting CEO and CFO, ITB, said the total amount spent for the 4th quarter amounted to R39.5 million, and this accounted for 63% of the total budget for the year. He broke down the numbers and figures further on how exactly this money had been spent, and provided a detailed breakdown of the goods and services expenditure, as requested by the Committee, as it accounted for R32.3 million of the total spent in the 4th quarter.

Mr Duncan Pakkies, Deputy Manager of Real Estate, ITB, said the actual target achieved in the first performance indicator out of 300 was 289 for the 4th quarter, indicating a shortfall of 11. In the next indicator, both targets had been met. The third indicator target was on land holding had also been met. The number of total workshops aimed for was 12, and they had managed to achieve eight.

The Chairperson thanked the ITB for the presentation and interrogated the figures represented in the budget, with the outcomes presented in the report, and requested clarity on specific programmes. She then invited Members to engage with the issues at hand.

Discussion
Mr Mhlongo asked if the Committee could get more details of the written-off programmes and targets. He asked why there had been serious overspending, indicating that 7.5% was way too much. He also wanted to know what the specific challenges were to paying within a 30-day period. What challenges could the Committee assist in addressing, especially with regard to policies. Lastly, he wanted to know if 43 targets was a good number for the entire year – could that be reduced or not?

Mr Nchabeleng asked if there was conditionality to the funding. If so, he wanted to know what the conditions were and if this money was used for policies contrary to those of the ITB. He said there was over-expenditure, and he wanted to find out where this was coming from.

Mr Filtane commended the ITB for including the socio-economic benefits which had finally been reflected in the presentation. He criticised the progress report for being too general, and wanted to know why the Committee was being updated on new jobs created in 2013-2014 when what they were talking about was 2015. He asked what the ITB meant when they said ‘employees’ – where they permanent or temporary? Additionally, he could not find any amount of money that was spent on wages in the report, even after trying to do simple maths, to come to the R52 million that had been mentioned. He also wanted to know why there had been an emphasis on certain offices and their outcomes when there were other offices as well. What was the reason for picking and choosing?

The Chairperson said she was worried about the vacancies for contract workers. She wanted to know what the requirements or qualifications were exactly. The DG was in attendance, and the ITB had said they had consulted him on the vacancy issue. She asked the DG to respond to this. Had the traditional council workshop been facilitated by an internal officer, or had it been outsourced? She wanted to know if the 4th quarter allocation figures were because they received their allocation once off, or not. Where did the ITB get the money to top up for over-expenditure? She asked the ITB to assist the Committee on the issue of capital expenditure.

Judge Ngwenya said he would start by responding to the few policy issues. He said there were 252 traditional councils which were responsible for the day-to-day land management registered in the name of the trust. He said slide 4 of the presentation sets out the annual income of the ITB, in response to Mr Nchabeleng’s question. Mr Ngwenya said this was self-generated income and the idea was to split the money and not keep it in one institution. There were administrative and financial regulations. Because the income coming from all the traditional authorities were not equal, the formula the board had decided on was that money would be dispersed back to the communities where it had originally been generated. Therefore, to answer the question on criteria, the money must first have been generated from that community, and secondly, the business plan submitted must demonstrate a community benefit element.

On the issue of specificity of offices, the original offices of the ITB had been accommodated in the premises as the regional offices of the Department of Rural and Land Reform. Both however had needed more space. The reality was that moving out would still mean the preference was for offices where everyone could be accommodated. By chance they had been able to identify an office in Pietermaritzburg which could be purchased via two phases, because it was built in 1884 and fell under the national heritage regulations. The second phase was to build additional offices, and this had been reported as costing R30 million in total.

He pointed out that the report on page 26 to 28 had been badly written and it would require to be properly written, because it was wrong. When they talked about wages, those were the people on the ground, and not the employees of the ITB. The issue of policies was perennial, but they had held over on that because the goal was to at least fill the position of the CEO. It was important that whatever policies were to be finalised needed the proper leadership in place to avoid other difficulties. The staffing capacity constraints were due to the need to find a suitable candidate for the position.

The Chairperson asked for clarity on the specific bursaries that had been provided by the ITB for the 4th quarter, requesting clarity as to whether or not it was for the whole year and how much had been paid.

The ITB responded that the way it allocated bursaries was through the traditional councils, which had a list of students, the area of study and the institutions they attended, with a request that ITB paid for them. This process was done at the community level.

The Chairperson said that looking at the report, there were no amounts shown for the bursaries, only the number of students and the field of study. There were no specific amounts reflected which was why she asked where it fells within the categories they had mentioned. Was it goods and services, or what? The problem was that the Committee did not know how much the ITB was paying for academic awards, which was a problem. The page the ITB was referring to just referred to the number of students assisted, but did not mention the total amount being paid, because it was nowhere in the budget.

Mr Mia said educational awards had been highlighted. The total was R967 000 and the details could be made available to the Committee. Students were from three communities, and it had been recorded under goods and services on page 9. He said it was not necessary that they paid the amount in physical cash, because they had made a provision for it. To date, they had spent R939 000 on educational awards.

Mr Mhlongo was worried, and said that in accounting principles this surely did not add up. He asked if they paid directly to the traditional leaders, or to students, or to sponsors? He wanted a better explanation.

Mr Mia said that in the financial statements, 90% of the income was reflected as provisions. The payments reflected there were payments against those provisions. He said they were reflected in the report more for management purposes, or as a management tool. The payment made was made against the provision in the balance sheet.

Mr Mhlongo said it should be easy for the Committee to do oversight work on the quarterly report. He said the CFO must be clear on these issues to write a report. Deductions and expenses must be reflected clearly.

Mr Mia referred to the question raised on the bad debts, and said that these were as a result of debtors that were owing the ITB and were unable to pay. A full legal process had been undertaken, but the legal costs incurred had been increasing, so the debts had been written off.

Mr Mhlongo asked how many months the board waited before they wrote off a bad debt. This information was missing in the report. What was it based on? The policy issues needed to be included.

Mr Mia said the issue was not usually about months, but about whether or not the debtor could actually pay, as well as what steps could be taken to ensure that the debt had been recovered. In the event that all legal proceedings had been exhausted and the debtor was unable to pay, it became more costly to keep the debtor in the system. There was a credit control system in place.

Mr Nchabeleng said it would help if the Committee could see the debtors’ book. The first thing they could check was if people had other assets to recover the money from. He said people owned other properties and would wait until that debt was cancelled before opening another business. Therefore, to satisfy the Committee, there had to be clearer reports that allowed easy oversight.

Mr Mia said the process of filling the vacant CEO position was already under way, and that this position would be filled soon.

The meeting was adjourned.