Department of Correctional Services 2013/14 Annual Report & 3rd Party Funds; with Deputy Minister of Justice & Constitutional Development in attendance

Public Accounts (SCOPA)

27 May 2015
Chairperson: Mr T Godi (APC)
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Meeting Summary

The Department of Justice and Correctional Services came before the Committee to answer questions on the 2013/2014 annual report and the issue of Third Party Funds.

The meeting was initially delayed following Members’ objections to the fact that senior Department officials were not present to engage with them on the presentations. It transpired that invitations had been misdirected and there had been a clash of meetings. Eventually, the Director General was able to join the meeting and give details of the Third Party Funds situation.

Initiating discussion, a Member said the concern about third party funds was that it was essentially a bookkeeping function. It was money in, money out and despite it being a relatively simple function, it seemed to be in complete disarray. After reviewing all the research done and reports, it had been noted that the Justice Deposit Account System (JDAS) was a massive problem. It appeared that the management of the poor system by the Department was incomplete and as a result there had been very little accountability. If one had a pot of cash in the middle of a room and no one was watching over it, then anyone could take it without anyone knowing who had taken it. After oversight visits, the issues raised were that JDAS needed to change. There needed to be implementation of another system.

The Director provided details of a wide range of steps that had been taken to eliminate losses from the third party funds. She assured them that in due time, the system would be changed. The JDAS system had at one stage fulfilled the requirements of the Department, but she admitted that the system had outlived its existence.

Correctional Services was taken to task over several issues in the areas of human resources, expenditure management, procurement and information technology. Members asked why there were 1 762 vacancies in funded posts, and what had become of the unspent funds. Why were salaries still being paid to “ghost” employees? Why was the audit committee ineffective? Why was the Department doing business with black-listed suppliers?  What was being done about the R16m irregular expenditure and R35m in fruitless and wasteful expenditure? There were many inconsistencies in the report, such as referring to the number of inmates as 157 000 in one section, and 148 000 in another. Such inconsistencies provided opportunities for corruption.

In seeking answers, the Committee was not satisfied by the responses it received from the Acting National Commissioner. It was decided that the Minister and the Deputy Minister should come before the Committee, together with the relevant officials and the IT team, to engage thoroughly with the report. The problems with Correctional Services needed to be solved once and for all.  

Meeting report

Mr John Jeffery, Deputy Minister of Justice, indicated that without pointing fingers, there were problems of co-ordination between the Standing Committee on Public Accounts (Scopa) and the two Departments, Justice and Correctional Services. For example, in the letter which was sent to the Minister on 19 May 2015, the Deputy Minister of Correctional Services had been sent a copy of the email, not the Deputy Minister of Justice. Essentially the invitation had been was extended to the one Deputy Minister and not the other. The Deputy Minister of Justice had therefore not been aware of this meeting until a day before it was supposed to take place. Other commitments concerning appointments with the National Council of Provinces to engage on the implementation of the Child Justice Act had been made, and therefore he would have to leave before the end of the meeting. It appeared no invitation had been sent to the Director General of Justice, who was also involved with the Child Justice seminar, as she chaired the interdepartmental steering committee. The only invitation sent had been to the Acting Commissioner of Correctional Services, asking him to speak on third-party funds in the Justice Budget Vote.

The Chairperson requested Correctional Services to introduce themselves, and this was done.  

The Chairperson then confirmed what the Deputy Minister of Justice had stated, that the letters of invitation sent had indeed been directed to the Acting National Commissioner and the Deputy Minister of Correctional Services. That was a mistake that had happened from the side of the Committee. This was to clear the Department of any blame for what had happened.

The Deputy Minister was not going to be at the meeting for long because he had other engagements and had to leave early.

Mr M Booi (ANC) said that after listening to what the Deputy Minister and Chairperson had said it was clear that it was the Accounting Officer who had to be engaged with, more than anyone else.   The Committee needed the Director General (who was the Accounting Officer). It would be difficult to proceed, engaging with juniors. The Accounting Officer was the one responsible for what was going on and the Public Funds Management Act (PFMA) directed the Committee to engage with the Accounting Officer.   She was needed to account for why there were problems in the Department.

Mr T Brauteseth (DA) said that he agreed with Mr Booi but an opportunity to make headway should not be missed. It was possible to make headway. The Chief Financial Officer(CFO) was present in the Meeting. However, disapproval of the Director General not being present was noted. It was rather unusual that there was a host of other officials in the meeting, but the Director General was not there. Perhaps a formal invitation had not reached the Director General.

Mr   E Kekana (ANC) said that if the Director General was not in the meeting and someone else took her responsibility, it might be a problem because the Accounting Officer’s responsibility could not be delegated to someone else. He strongly recommended that the Chairperson and Deputy Minister try and arrange to get the Accounting Officer to the meeting. The issues that the Committee wanted to address had to be addressed with the Accounting Officer, and on one else.

Mr M Hlengwa (IFP) said that it would be desirable for the Committee to make headway, but headway should be made with the relevant person and that person was the Director General. The Committee was going to find itself in a quandary if it were to delegate accountability to someone else. As unfortunate as it was that there had been a communication breakdown, it would not assist the process to continue with persons who were not relevant. An opportunity to engage with the Director General had to be found. In the absence of the Director General, the Committee would run the risk of short-changing itself in what it wanted to do.     

Ms N Khunou (ANC) agreed with her colleagues. If this were allowed, it would set the wrong precedents. The Committee needed to be consistent with everything that it did. If a certain department could be sent back because the accounting officer was not there, it should not be different with any other department. Apologies were in order for those who were in the meeting, but the person the Committee needed to engage with was the Accounting Officer (DG).

Ms T Chiloane (ANC) said that executive authority should have been present in the Meeting. It was indeed appreciated that the Deputy Minister of Justice was present, but the Committee was aware that the Department had two Deputy Ministers who were supposed to be present in the absence of the Minister. The Deputy Minister of Justice had said that he would be leaving shortly, which meant that there would be no other political head to take political decisions in terms of what would be discussed in the meeting. Procedures laid before had to be followed. The Committee should not divert from what had been done previously.

Mr Brauteseth said it appeared that the Committee would not proceed. He registered strong concern and disapproval towards the officials who should have invited the Director General. One of the primary functions of the Committee was to guard against wasteful expenditure. This was a prime example. If there was no headway in this meeting, measures should be put in place to ensure that what had happened never happens again.

Mr Booi said it seemed as though the Director General was not far from where the meeting was taking place, as she was in Cape Town. The Director General should be found and the Committee was quite willing to wait so that the expenditure that the Member had been talking about could be dealt with at that stage. The Director General had to be aware of the Committee’s concerns.

The Deputy Minister said that the Director General was indeed in Cape Town, but the problem was with the invitation. There had been a clash of meetings. There had been a problem around the invitation, and the Chief Financial Officer who would be the person answering most of the questions.   It was obvious, as Members had said, that the Director General was the Accounting Officer, but it was more of a clash of issues because the National Council of Provinces was having a workshop on the implementation of the Child Justice Act. He said messages had been sent to the Director General and she was on her way to the meeting venue. She was coming from another building in Parliament.

Concerning the issue of executive authority, the problem was that the Deputy Minister of Justice had not even received a formal invitation to the meeting. The Minister was not available. It was understood that in the past, the Chairperson had allowed Ministers and Deputy Ministers to attend meetings and then leave before the meetings ended. Hopefully, when the DG had arrived, there would be no restriction to the proceedings on Department of Justice matters.

Mr Booi responded to the Deputy Minister by stating that the Committee had had visits from the executive authorities and when they had been under time pressure, they would be allowed to leave and proceed to other meetings. The Committee had been consistent with that. The Deputy Minister would not be put under pressure regarding the issue of staying until the meeting ended -- his apologies would be accepted by the Committee. If the Director General was present, the Committee would be able to interact with her.

The Chairperson said that this arrangement was fine and that the Committee should proceed. He then pleaded to the Secretary that if the Committee was to have matched departments, the Secretary should not rely on the officials but instead take responsibility. Officials should be relied upon less. The Chairperson then said that the Committee should proceed with the business of the day.

Ms Chiloane asked the Chairperson whether there had been an apology sent by the Deputy Minister of Correctional Services, as the Committee understood that there were two Deputy Ministers. Had the Deputy Minister of Correctional Services sent an apology, or an indication that he would not be available for the meeting?

The Chairperson said that this had not been done on the side of the Committee, and there had been no communication.

The Chairperson said that they would start with Correctional Services, and welcomed the Acting Commissioner.

Ms Chiloane indicated that they had copies of the programme and it was known that the Department had submitted copies of the annual report, but it seemed as though there were no copies available in the meeting, just scribbles of information from the previous briefing. Between Scopa and Parliament, arrangements should be made that when departments tabled reports, there must be extra copies for the Committee. It was difficult to engage without an annual report.

The Chairperson agreed with Ms Chiloane.

The Deputy Minister indicated that the DG was on her way and asked if it was possible for the Chairperson start with the Justice presentation as soon at as she arrived, because she also had responsibilities with the NCOP.

The Committee then took a short break to wait for the DG.

Meeting Reconvened


The Chairperson asked the Committee to proceed because the Director General of Justice had arrived. He welcomed her and indicated that the Committee had already expressed its apologies concerning the invitation sent out, but they would also express them the in Director General’s presence. The invitation had not been specifically addressed and sent to the Director General and Deputy Minister of Justice, but all was well that ended well. Now that the Director General was present, the Committee could quickly start with the matter of third party funds, because it was understood that the Director General had also to go to the NCOP side.


The Chairperson said that as the Director General might recall, there had been extensive discussions concerning third party funds. A tour had been taken to witness the processes at first hand in the previous Parliament in order to appreciate the magnitude of the challenges in the courts -- from Bushbuckridge, to Johannesburg and Limpopo. As big as the problems were, they seemingly persisted. It would have been useful in this engagement to get a sense of where the Department was before, and where it was currently. How were the long-standing challenges being dealt with so that it could finally be said that a desirable position had been achieved. Members felt that the presence of the Director General would assist the process of interaction. The fact that other officials were present was appreciated. The Chairperson said that he would then hand over to Mr Brauteseth to indicate the areas of concern about third party funds.

Areas of concern: Third party funds

Mr Brauteseth said that when one had been involved with forensic work for financials for a number of years, if one wanted anything to run properly one would need three basic things -- systems, management of those systems, and that should lead to accountability. The concern about third party funds was that it was essentially a bookkeeping function. It was money in, money out and despite it being a relatively simple function, it seemed to be in complete disarray. After reviewing all the research done and reports, it had been noted that Justice Deposit Account System (JDAS) was a massive problem. It appeared that the management of the poor system by the Department was incomplete and as a result there had been very little accountability. If one had a pot of cash in the middle of a room and no one was watching over it, then anyone could take it without anyone knowing who had taken it. He requested the Director General to respond on whether there had been any improvements to the system. After the oversight visits, the issues raised were that JDAS needed to change. There needed to be implementation of another system.

Reponses by Director General

The Director General said that in 2011/2012, the Department had come to Parliament to indicate the processes that they were going to undertake at that time, stating that they were going to take up certain processes and introduce certain systems to assist. At that time, the Department had indicated that they were very mindful of the problems which were associated with JDAS. The Department had felt that the system which they had wanted to introduce at that point in time was too big and expensive. It was not going to be able to afford such a system under the economic conditions. A cheaper system was opted for. That process had started, and a tender had been issued. The responses had been evaluated and that the Department was now working on the actual development of the system.


The Department had always viewed JDAS as a problematic system, precisely because in each court there would be a different version of JDAS, despite there being an overall JDAS. As a result, one was unable to make one change in the system. If one had found a problem in Court A with a particular aspect, one could not make corrections in that area and expect them to be corrected automatically country wide. That was a problem and it remained a problem to date.


There were a few things which needed to be tidied up in JDAS. Although it was an imperfect system at the time, because it was understood that it takes a long time to procure a system, imperfections in JDAS were tidied up and they were able to work with the system for the past two or three years. She acknowledged that there were shortcomings with JDAS, and it would be replaced over a period of time.

Secondly, the issue of accountability -- the Committee would recall that the Department had come to Parliament and had said it was worried about its capacity. The Director General had said specifically then that for as long as Third-Party Funds (TPF) had existed, the Department had never paid serious attention to them, and now wanted to pay attention. Even though the Department had accounted for TPF in its own internal ways, it had never submitted an annual report to Parliament on TPF and that was because in part, there were no human resources to do so. That function had been completely outsourced by the Department, and what it wanted to do was to build internal capacity to be able to attend to that issue. The Department had started building that capacity, and when it appeared before Parliament, it had said that it had appointed one person, and the Director General still remembered the Chairperson’s response -- he had asked how one person was going to address the issue of capacity. The Department had responded by stating that it had only just started with the appointment of the Chief Director. Since then, the Department had had to face a bigger problem because the it had no Chief Fiancial Officer (CFO) and the person appointed to do the TFP work had had to act as the CFO and then only dealt with the TFP almost part-time. In the interim, the Department had made several improvements in the TPF, both in terms of bringing in capacity, training and developing some management processes to ensure that the Department improved on the issues of management. The Department had 44 people who had already been appointed to deal with the TPF, under the leadership of Mr Johan Johnson. The Director General indicated that Mr Johnson had started working on TPF only when the new CFO had been appointed, which was in September 2014. As a result of that, there had been improvement, but it was obvious that they were far from where they should have been.

In terms of accountability, the Director General said that there had been a significant improvement. One of the things which the Department was going to prioritise was to ensure the Department reverted responsibility to the regional heads where these funds were located. The Department would revert them to court managers where these funds were located, because prior to this they were working only with the CFO’s office. There was nobody who was on the ground, ensuring that funds were accounted for in the manner in which they should have been accounted for. What the Department had done in improving governance around accountability was that it had said that this responsibility should be taken by the regional heads and the court managers, and that had started happening. To ensure that this was indeed happening, the Department had said that each court should generate its own financial statement on a year on year basis, just so that the Department could see where the problems were at court level, rather than at the consolidation level, which was what had been happening all along. When the Department had been consolidating previously, it had not known what was happening at court level.

The Director General said that in the past three years, the Department had been seeing a loss of funds, but considering the past year alone, it had lost only about R1 million out of the R2.7 billion which had come in and gone out. In this regard, the Department had improved quite considerably. The Committee should remember that when the Director General came in, there had been a shortfall of about R80 million. The Department had worked on that shortfall and it had tried to recover the money from those who were thought to have contributed to the losses. In addition to all the corrections that had been done, there were people who had been disciplined for being errant in their responsibilities. There were also people who the Department had parted with. There had been progressive discipline in some instances, and recoveries in others. Currently the shortage was sitting at R49.9 million, compared to the R80 million which had been reported. This was because the Department had been working behind the scenes.  

The Department had ensured that it reported on a regular basis. It met quarterly, and on a monthly basis it discussed the issues of monthly reports with the CFO and the Chief Directors concerned, and with the regional heads. The Department met with the regional heads at least once a month, where one of the agenda items would be what was currently happening in the TPF space in their individual environments. Secondly, the Department looked at where it was in terms of systems development as part of the monthly meetings and thirdly, it looked at how much it was collecting and how much it was paying out. There was one court in the Free State where, because of management issues which had arisen, the Department was quite considerably behind in paying people. When this had been discovered, however, the Director General had allocated a lot of people to that court. They had addressed the issues within that month and were back to paying on a normal basis.

One of the things the Department had said it was going to do was to limit the money coming into the Department and being paid out by the Department. They were going to be talking to the judiciary to assist them in doing direct court orders, where a plaintiff is paid directly. The Committee would see that in the past year specifically, the Department had received a lot less money into its TPF coffers and had paid out a lot more. But also, those who were supposed to pay out had been ordered by the courts, and they were paying directly to the plaintiff. The risk of that money coming into the Department’s fold had been somewhat reduced. That was where the Department wanted to intensify its work while finalising and using the system going forward. 

Mr Brauteseth said that the DG’s response had been a good one, and as they had discussed systems, they should now move on to management. What was the current state of the internal audit?   How many people were involved in it, and how many were qualified staff? Was it a committee of two or three people, and were there any backup staff members? What was the capacity? Mr Brauteseth said that the trouble always started with the internal audit. If one did not have sufficient internal audit capacity, one would eventually have problems.

Mr Brauteseth said that the next question was in terms of management. Were the courts reconciling on a daily basis? Was that information provided on a monthly basis and reported on a quarterly basis, or more frequently? He needed specific responses on reconciliations of amounts collected and issued out.

The Director General said that perhaps one of the things she should have mentioned was that her Department had never had a stronger audit committee than it had at the moment, both in terms of its technical skills as well as the rigour and robustness to which the Department was held to account, and assisting in giving it direction. It had been very useful in terms of their hard-core financial and auditing skills. They had brought out issues which had been on the “blind side” of management. The Department had a full strength audit committee, and if there were any shortcomings, they would purely be the shortcomings of management rather than of the audit committee, because the Department was receiving a lot of guidance from them. The Department had good quality internal audits. The Department now had an internal audit structure -- there was the Chief of Internal Audit, and the audit team had auditing experience and background.

The difficulty in previous years had been the fact that internal audit had not been made a centre of management in the same way as it was being done currently. Internal audit now formed part of the Executive Committee. They advised the Department, sent reports directly to the Director General and convened meetings to deal with those areas where people needed to make corrections. Internal audit had been doing a lot of audits during site visits, bringing reports to the Director General, and internal audit also would convene on those issues. However, because the internal audit did this work, there was sometimes lack of capacity on the ground, where the courts were. Sometimes internal auditors would give repeat, and not first time, findings. These were issues the Department was now beginning to focus on, in order to limit repeat findings.

The Director General said that not all courts had high-end technical skills financial management and bookkeeping. When a gap was identified, the Department deployed resources from other regions and courts to try and address the isituation until such a time that there was full strength capacity in those courts. There were some courts where the auditors had come back without specific or strong findings and the Department was comforted by that, because it was beginning to realise that it was quite possible, regardless of the system used, to have courts that did not have findings.

Concerning the issue of reconciliation, the Director General said that they did reconcile. The courts were reconciling on a daily basis, but sometimes some of the reconciliations could be problematic if the skills were not there. In her own visits, she ensured that specific areas were checked. The Department was reconciling on a monthly basis. Where there was a weakness in the reconciliations, the Director General would deploy the CFO’s team to go and assist, and also ensure that those courts were taken step by step through the process of doing the reconciliations. The quality of reconciliations varied from weak to strong endings. What the Department was focussing on was to ensure that where there was a strong ending, the Department infused that experience into areas where, particularly in rural courts, where were significant weaknesses in the quality of the reconciliations.  

Mr Brauteseth said that before moving on, the Director General had referred to high-end technical skills. Bookkeeping was not a high-end technical skill -- it was a matter of in and out. It was a matter of keeping basic books. He was not saying that bookkeeping was not a valued skill, but it was not a scarce resource. The issue of management had been discussed.

Mr Brauteseth requested that the Director General tell him what regional plan or resource she had to make sure that there was monthly accounting going on in the multiple courts, because there were so many courts in South Africa. When it came to accountability, research showed that it had been possible to make payments without authorisation in the past system. He asked the Director General to give the Committee an idea of how many cases of fraud had been opened and prosecuted by her?

The Director General, on the issue of bookkeeping being a high-end skill, said she agreed but she had meant people who may have a broad knowledge of bookkeeping and could also understand and interpret what happened in the JDAS system, because its configuration was such that a normal average bookkeeper would really have to understand the system to be able to give you the results that you wanted. That was one aspect. The other was that the Department had deployed, at least at the financial level, one Deputy Director per region. That person then consolidated all the court reconciliations. Even though the Department had these people -- and perhaps they were sitting at the same level -- their personal expertise might not be the same across the board. Where the Department had just brought in skills, it did not expect to see an immediate turnaround -- that was why there was a huge difference between, for instance, Cape Town and the Free State. The Director General said that she just wanted to clarify that.

Regarding fraud cases, there were two ways in which the Department dealt with issues of fraud and corruption. The Department had its own forensic investigation team whose the biggest problem was the number of cases which were being investigated that had been outstanding since 2001. She had said in Parliament, probably in 2011, that the Department did not have capacity for forensic investigations at that time. It had had only one person at that time. Forensic investigations had since proceeded at quite a reasonable rate, and she was very comforted by that. The Department had been doing a lot of investigations which had resulted in some people being fired, others being arrested, and others being disciplined either progressively or in terms of the provisions of the Public Service Act. There were quite a number of fraud cases which had been reported to the police and there were people who had been arrested in the Department, but she would have to confirm numbers before answering that question in specific terms. She said that she was comforted by one thing specifically. In 2010, if one could compare 2010 to 2015, the Department had no idea what was happening in each court, except when someone had been caught. In 2015, the Department received information from the colleagues about what was happening in the courts. People were now reporting because they were becoming competitive at a court to court level. They did not want to be held responsible in cases where there were shortages. The Department had in the past held people accountable for shortages of money and as a result, the Department was now seeing a lot of people coming forward and reporting problems here and there. Concerning the issue of numbers, she would get back to Mr Brauteseth shortly.

Mr Brauteseth said that with regard to accountability, he had the answer for the DG because he had asked the Minister the question. In terms of investigations, it appeared that the Department had found only seven officials guilty in the last three years. The Department had had 103 dismissals, and seven people had been found guilty by the South African Police Services (SAPS). He said the Director General had explained to the Committee that her Department was fixing the system, that they were going out to tender and that their internal audit committee was much better, close to top notch. She had said that it had regional managers and a lot of DDGs, and that it was taking action against people. If the Committee came back next year and there was still a disclaimer on this, would the Director General be expected to resign?

The DG said that the question was appropriate, particularly at this time of her life. She said that if she was in her current position next year and had signed a disclaimer, she probably would resign because she had invested her life and soul in ensuring that the Department turned the situation around. She would not want to speak to the Auditor General’s issues, however. She did meet with the AG’s representatives quite often. Their meetings were directed at giving her insight, other than her own music, or the music of her department, in order to understand how they saw the problems and how they thought the Director General could intervene. The Auditor General’s guidance to her and her management had been quite invaluable. The Department had not moved as quickly as it should have, not because people did not move physically, but because the issues they were dealing with had been embedded for over so many years that it was not possible to wake up resolve them, especially if there was no capacity at hand.

She hoped that for the 2014/2015 financial year, her Department would not be disclaimed, but she was not saying that it would not. She honestly believed in her heart her Department was not likely to be disclaimed. There were drills the Department had been doing and engagements, both internally and externally. Even with the Department’s external stakeholders, they had engaged them and asked what they thought needed to be done, in addition to all that had been done at the system, people and accountability levels. With all those interventions and the ongoing drills that the Department was doing on a regular basis, the Director General did not think they would be disclaimed but maybe they might be qualified, and she was hoping that they would get themselves outside of the qualification zone in the following year. The reason she said this was that when they came to Parliament, they had disclaimed on performance information, but on financial information they had been qualified. The Department had to work on the disclaimer in performance information to where they were currently., She could say that their unaudited performance was very good -- it was excellent. In terms of moving with the financial information, the Department was unqualified and she was comfortable with that. She said that if Mr Brauteseth was looking for a resignation this time next year because of a disclaimer, he might have to wait a little longer.

Mr Brauteseth thanked the DG for her candid responses and said the whole purpose of having her was to get the Department working perfectly. He hoped that they would not have to ask for the Direcetor General’s resignation.

Mr R Lees (DA) said that it was refreshing to have someone who quite clearly accepted the difficulties and the problems, and who was clearly trying to do something about them. However, the question of the JDAS system had been a problem for years and the Department had still not even reached the point of designing a new system.   The risks were high and he understood the difficulties, but he did not know if there was anything left for him to say, as he was not familiar with how the court system worked.

He was curious about the Third Party Fund. Did it operate only in magistrates’ courts, and not in traditional or high courts? He said that he was getting a nod, so that was fine – it was just a technical question. He knew the DG was working very hard, but for her to come before the Committee and say that she did now know what was going on at court level because she only saw the consolidated report, could not be understood. A consolidation could not be done unless one had an individual court report.  Did the amount of detail make it difficult for the DG? He asked the Chairperson that if he, as Member of the Committee, wanted to do oversight at his local court concerning the TPF, who would he ask to see upon his visit?

Ms Chiloane said that she was really glad that the Director General would not resign in the coming years. She had been a Member of this Committee in the previous term, and when they undertook oversight visits, especially on the financial side of it, they recommended that the documents, as required by the Director General, should be made available to them so they could assist the entity to improve its financial management system. It looked as if that recommendation had fallen away.

She asked what the situation was in regard to security measures. Last year the DG had promised that security measures would be put in place, such as cameras in all courts, and systems to check progress. The adjustments were unexplainable, and were not even backed by the audit.

Ms Khunou said she might not have heard the DG properly, but when it came to internal auditors, she thought the DG had spoken about bookkeepers. What were the requirements for internal auditors as per government regulations? To her, the qualifications were quite clear - you needed to have a Certified Internal Auditor (CIA) certificate -- so she was worried about the manner in which the DG had referred to the qualifications as though they were a “by the way kind of thing.” When she looked at the DG’s report to the Auditor General about audit committee members and their attendance, it was as if those people were not based in the Department. It seemed as though they came and left as permitted. Others had attended five meetings, one person had attended only one meeting, and there had been reappointments. She wanted to understand all of this, because if one looked into the problems that the entity had, they were due to audit queries. There was no clear record-keeping, and no one was accounting for the money received. If auditing were taken seriously by the entity, she did not think that the problems would exist. She had been listening to the DG very clearly when she said that she did not think that next year they would sign a disclaimer for an audit report. The honesty was appreciated, but the Department could not keep on postponing doing the right thing. The Committee did not want to see a qualified report, but rather an unqualified report. That was what they, as Committee Members, were there for.

The Director General said that she agreed that the Department had indeed been talking about JDAS    changes for a while. She said that procurement processes, especially those involving Information Technology (IT) systems, usually took time. It was not that the Department had not done anything. The Department had concluded a process of procurement, but the difficulty had been that this had been done at a time when the economy was really bad. As a result, the Department could not commit to procuring that system because it was very expensive, and big in size. The Department had then decided on a smaller system from an affordability point of view, and as a result had had to re-do the entire process, because to undo the process would take about a year to a year and a half. After undoing it, the Department then had to start with the procurement process. The Department wanted to be piloting the first newly developed system by around September 2015. After that, it would extend the band of piloting and finally commission the system. It was hoped that the system could be commissioned in the middle of the 2016/2017 financial year. The Department would be using the results of each pilot to see whether progress was made or not.

The DG said that the other issue that she had not mentioned was that at the end of 2011, they had brought in an external auditing company to assist the Department in ensuring that they configured some elements of JDAS, so that the Department could be able to report. Although the Department did not get the results they were looking, for because of the magnitude of problems that were in JDAS, the company had been able to assist the Department with the reporting and other elements of the report. There had been delays, and she took full responsibility for them, but they had been unavoidable under the circumstances.

The DG said that the second question was whether TPF monies were only in magistrate courts. This was the case. There were no TPF monies in traditional courts or any other courts. TPF monies came in a variety of forms. There were elements sitting in state attorneys’ offices countrywide, because those were bonds and those types of things.

Regarding the lack of audit evidence, in the current audit, evidence was being generated which the Department was able to give the auditors and there had been no difficulties there. It was areas of outstanding or long term work that created problems, like transactions that had happened many years ago for which there was no evidence, where they were unfortunately unable to recreate evidence. But in areas where the Department had been able to recreate the files, they had been able to provide that evidence to the Auditor General. However, there was quite a vast number of files that had old transactions which had became auditable for one reason or another in the current year. The DG said that she was not aware of people refusing to provide information to the Auditor General, but there had been instances where the evidence was not there, either because it had been destroyed or lost. She had told the Auditor General that if there was a difficulty of that nature they must let her know so that she could assist them in securing information.

Regarding security measures, not all courts had security systems such as cameras, because there were insufficient resources to do that. There were courts where all the resources were working, and some where they were not working as efficiently as they should. The Department attended to these problems as a normal maintenance of court infrastructure issue on a month on month, or per period basis.

There had been a question about unexplained adjustments and indeed, in certain areas of the Department’s business, it was likely that that would happen. The reason for that was because the skills were not at the same level nationally, and people may make adjustments which could not be explained. What the Department had done under the leadership of Mr Johnson, was to ask him to go back and unpack whatever big numbers that were not understood. He was requested to find evidence for the “unexplainable” numbers, so that the Department could to explain them. As a result, they had found that the unexplained numbers had been decreasing quite significantly. She could assure the Committee about the capacity and skills of the audit committee, particularly the Chief Internal Auditor. In internal audit, they had vibrant young colleagues who were doing a very good job. She met them occasionally and they had scheduled visits to courts where she would bring in the internal auditors, managers and bookkeepers so that they could speak to them and understand from where they sat what their problems were, so that the internal audit team could tell people what they were looking for and what the people on the ground were not doing correctly.

The annual Audit Action Plan was reviewed after the audits and reported to the Auditor General. The AG did not always comment positively about it but at least they acknowledged that it was there and that they would like the Department to do carry it out a little more quickly.

Was it possible to have an unqualified audit opinion next year? The DG said that the Department was very conservative and realistic. It would be close to a miracle to pull that off, but the Department was working towards that. In her opinion, they were doing a lot of work but until the system was in place and they had at least given it a year to work, it was not possible for the DG to say that they would have an unqualified audit opinion. They were not going to have a disclaimer because of the reasons she had already indicated.   The Member had asked, what were the drastic steps that the Department was going to going to take? Her response was that:

  • The Department would improve on the daily reconciliations and the monthly reconciliations. They were already doing that but the quality was still an issue.
  • They would then try to improve the quality of reconciliations.
  • The Department would ensure that it continued to hold regional courts and managers to take responsibility. The issue of discipline would come in.
  • The issue of fast tracking the system. By September 2015, the Department should be doing the first phase of testing and implementation of the system at a pilot level.
  • Regular department-wide communication, with inter-assistance between regions, particularly where there were distressed regions. The Free State was a very distressed region, but the rest of the regions were coping doing quite well.

Mr Hlengwa said that if one looked at the age analysis of the TPF, he found very little comfort in what had being said. He was concerned about the centralized manner in which it was being managed. It was rather a top level approach, but the problems were not taking place at the top, and practical financial management should be in place to deal with the day-to-day activities. The JDAS system appeared to be very complicated and causing problems, and it was about to go under review, but why had so much money been wasted in the first place on a complicated system when it was known that the capacities of those courts had not been sufficient to cope with the complications. They had shot themselves in the foot. They were not as technologically advanced as needed to be. Why would they then go for such a system? This in itself bordered on wasteful expenditure. He was under the impression that the people present at the meeting understood that the problem was at the grass-roots level.

The DG had said that the Department was doing year-on-year financials, but he did not think that this would assist in the midst of a crisis because the Department would be getting a new system which would require all sorts of training. What was needed was a turnaround strategy which focused on grass root interventions, and not a mega approach. Rural and semi-urban areas would, by and large, be where there were difficulties, because people who were skilled in high-end bookkeeping would not even want to go to those areas. That was where the Department had the challenge. They could come to a conclusion only once they had received the financials. The age analysis over the past five years, underpinned by niceties, had not produced any results. The Department was not doing itself any justice with this, because there was nothing to show for it. The audit committee was speaking about processes had been historically inadequate, so it was a historic thing. There was a laissez-faire approach to it. The intervention should be transcended to the bottom, where the problem was, and ensure that there was capacitation and the skills necessary where they mattered. Court visits were not sufficient, because once the DG had come and left, it was most likely that things would go back to normal. Her interventions of taking the trouble to go there were appreciated but a once-off visit, and systems remaining the same in the absence of capacity at grass-roots level, was going to be a problem.

Mr Booi said that the Committee was very impressed with the honesty of the DG, but they had a political responsibility and unfortunately for the DG, she was working for government; and that was where they were coming from. They had to deal with reality. The 2013/2014 report dealt with issues of leadership. The auditor had said that the information systems employed were inadequate to show reliable financial reporting in order to assist the leadership to adequately manage and exercise effective oversight regarding the financial operations of the fund. The bottom line was that the courts were dealing with poor women, and this was like saying that if they behaved in this particular way, these women must continue being punished by the system for them to continue getting their maintenance payments. This government was very gender sensitive. His conscience found it very difficult to deal with that, because these were women who were being led by them.

He referred to another section of the report, which was about financial management. It read as follows: “Management did not adequately implement proper record-keeping in a timely manner to ensure that complete, relevant and accurate information was accessible and available to support financial reporting.” Between the honesty of what the DG was reflecting and what the AG was telling Parliament, how much did the DG want the Committee to believe? There was a problem, written in black and white by the Auditor General -- an institution that carried responsibility. The DG could not confirm her honesty. Reading further, the report stated: “Management did not adequately implement controls over daily and monthly processes in the reconciling of transactions.” This was what the AG had said -- that in a department carrying around cash and picking up receipts, there had been no reconciliation. What did the DG want the Committee, as Parliament, to do because the buck stopped with the DG and nobody else? The Committee had been very clear in asking the DG to come and account. What did the DG expect the Committee to do, because that was what the AG was saying? Further on, the report stated that “management did not prepare regular, accurate and complete financial reports that were supported and evidenced by reliable information.” The DG and her Department did not have information, and it was not reliable. Those were the words used by the AG. What did the DG expect from the Committee and Parliament, after 21 years in government dealing with women and the poorest of the poor, who were being abandoned by their husbands?   If they claimed to be a caring government, how did the DG explain what had been written in the report about them? Various investigations were in progress at different stages to probe cash shortages within the environment of the courts where cash was received and paid out. Such shortages, identified by management, were disclosed but that did not give the Committee much confidence after the DG had stated that systems were in place, or that she was able to adequately convince the Committee that things were moving forward. It was clear that the Committee had gone out of its way to assist the DG by looking at the Scopa report, but there had been no turnaround. He was not convinced that the system was in place. What was the DG going to do to take them forward? The AG was not happy at all and when he was not happy, the Committee also was not happy.

The Chairperson said that he wanted the Committee to round off so that the remaining two hours could be equally dedicated to Correctional Services.  

Ms Khunoa said she agreed with her colleagues, Mr Hlengwa and Mr Booi. Maybe people did not understand the pain that Members of Parliament went through in their own constituencies, such as when someone said that they had gone to a maintenance court up to four times, paying from their own pockets, to go get money that was not enough to sustain the family. This was making the situation worse instead of comforting our people. If the DG did not show her employees decisiveness, they would play around, which was why they sometimes took money and it was not accounted for. Mr Booi had substantiated everything with the facts found in the Auditor General’s report. She hoped the DG would give them a progress report on a quarterly basis to show them where they were as a Department. She agreed with Mr Hlengwa, that if they were waiting on a system which was going to start but there were still the same people feeding the system, the system would not feed itself.  

The lack of security measures was a problem of inequality that needed to be solved. After 21 years of democracy, there was really no excuse for having some courts which had security measures and others that did not. Why could the Department not budget for them? If they had been budgeted for, why was it not done?  She was assuming that the courts concerned were in the rural and peri-urban areas, but the bigger places would always be taken care of. They needed to see equality in all the courts in South Africa.

Ms Chiloane said the DG had spoken about evidence that could be traced and that which could not.   She was confused, because what the DG had been talking about was in the report, which had resulted in the opinion that the Auditor General had expressed in terms of the Third Party Fund. She wanted to find out, perhaps with the AG’s assistance, about how information could become lost.

The Chairperson said that his understanding from the DG was that that sometimes they had not prepared financial statements. They had then gone back and started compiling annual financial statements. Some of the files, because the old transactions were paper based, did not have some of the information. Perhaps the Auditor General could clarify if that was the common understanding.

The Chairperson said that out of the five things the DG had said were a priority, three were probably important, and he was trying to put them in the order of importance. The information that had to be given to the Auditor General was generated at court level, so if the court “heads” were just legal people with no financial information, they would have problems. Head office people would not get this right until each court was able to run the process appropriately, because that was where the evidence was generated. It was possible, maybe not at the time of the meeting but later on, to look at how many courts were able to do their daily reconciliations. When the Committee did their tour and went to Johannesburg, they had found a court which had everything in order. How many were getting things right so that, for example, they could say that out of 200 courts, 25 were getting things right. This would help them to measure progress.

Lastly, concerning the case of discipline, there was a need to take action against officials who did not do the right thing as a deterrent, or to apply consequence management -- the word used now for discipline.   The system was still operated by human beings and if human beings had their heads in the clouds, they would continue doing the wrong things. Mr Hlengwa had been right -- a system was needed which functioned outside the occasional visits. He supposed that a visit from head office from time to time could possibly have a positive impact on the outlook on lower level staff, as the DG was not going to be there every day. The five elements were key for the Committee as a basis for follow up and for the DG to come back to the Committee.

Mr Booi said that he wanted to be told by the Auditor General what had been said by the DG.   How had they come to the conclusion that they would not use certain information? Human beings were involved, so what was the magnitude of the problem involving people dealing with information?

The Chairperson said that the Auditor General would get time to respond, but the DG had to respond first.

The DG said that she would try to be extremely quick and would not answer the question on the information system because she had already answered it. She said that no woman, mother or beneficiary of maintenance had not been paid their money just because the system had a problem. It should not happen. If their money had been receipted, it would have been received by them, whether manually or by any other means. She had specified Bloemfontein, because there had been a problem in that area, as an example. The Department had gone there and paid people their money. She wanted it put on record that if for some reason a person’s money had been stolen in the court, the Department used its own funds to pay that money back. In the recent past, there had been sentences ranging from four to 15 years for offenders. There had also been a few other shorter sentences in courts of law, where people had stolen money. Investigations took time, but people had been sentenced. Concurrent with that, the Department would conduct its internal disciplinary actions and people were exited out of the system. Where the Department could recover stolen money from pensions, this could be done, although they could not always do this, as some people may be new in the system and therefore might have insufficient, or no pension. Where they could recover, they did, and information concerning this could be provided going forward.

A new system and old people -- that point had a lot of merit, said the DG. What the Department had done in the past two to three years was to train about 80% of its staff on how they must conduct themselves, and this would also be done when the system started unfolding.  

Regarding the inequality of security infrastructure and budgets, there was an element of truth in the observation and concern, but it was not always rural courts that did not have security infrastructure. The problem was varied across the board. There were also city and peri-urban courts that did not have the infrastructure. The Department did not discriminate on that basis.  

The last issue the DG wanted to raise was that the interventions they were doing were intended to remove money from the “daily handling of the money.” They were currently sitting at 98% of money that was no longer kept at their courts/offices, which is being done through an Electronic Financial Transaction (EFT) process. This was mostly maintenance money. In term of bail money, there were people who still wanted to be paid in cash. The Department had appealed to people and they had responded positively by opening bank accounts. The Judiciary had assisted the Department in ensuring that people were paid directly -- from the father to the mother.

One last question: had the TPF management been centralised? There had been a point in time when the TPF management was centralised, but it had since been decentralised in 2011, and each area was now dealt with at court level. That was the decentralisation, but obviously consolidation had to happen at an organisational level.

Whether JDAS had been a waste of money or not, the DG said that it had been useful at the time. It had not been a waste of money -- it had just become irrelevant as the years progressed. She would not say that JDAS had necessarily been wasteful expenditure, but what could be said was it had outlived its existence.

The Chairperson asked to hear about the issue of the Department’s records from the viewpoint of the Auditor General, and any other issues that had been raised.

Auditor General’s Office responded that the DG had given the history. In 2011/12, there had been about three years of financial statements which were outstanding. At that time, there had been a practice within the Department to dispose of records within a very short space of time -- within the first year or so. The DG was correct in saying that over the years there had been a decreased rate of transactions where they could not find documentation. The challenge remained, however, as the Members had pointed out. Controls were needed at court level and this was what the Department was now doing differently. In the past, the Department had relied on the courts for information and figures, and the office would then do the consolidation. This year, the Department had done something different in that it had gone specifically to the courts to verify that if they were stating that the balance of a beneficiary was R1 000, they were able to show that they had the R1 000 payable to the beneficiary.  What they had picked up in the past was that people might show a liability of R1 000 that they owed the beneficiary, but the records indicated that the money had been paid out already, so the closing balance showing them sitting as a creditor was problematic. There was a whole long story they could go into but in summary, if one got one’s closing balance right as payables to the beneficiaries, a lot of the problems would be fixed in that manner.

Mr Booi asked the Auditor General who had the authority to say that this type of information should be destroyed. How had that happened? There should have been controls by the Treasury and others. Was it just the decision of the DG, or the person working with the information? That is what he was not clear about.

Auditor General’s office responded that the keeping of documents was covered by the empirical documents legislation, where each department had a specific arrangement with the national archives in terms of its record keeping.  When it came to financial records -- things like receipts and cheques – these were generally fixed and standardised across government departments. The problem came when one looked at other records. Each department had its own arrangements with the department of archives. Historically, the view was to destroy documents relatively quickly, within the court system. That may need to be reviewed, but that would be up to the Accountant General, together with the national archives, to make that decision. There should not be any deficiencies in accounting records required for auditing purposes. It was the responsibility of the accounting officer, through the DG, to try and recreate the necessary documentation to give probity to the required documentation for revenue which was being received. That needed to be evidenced through some proper authentification. This responsibility again lay with the accounting officer of the department concerned.

The Chairperson thanked the DG and wished her luck with Third Party Funds.

Department of Correctional Services

The Chairperson then welcomed Mr Zachariah Modise, Acting Commissioner: Department of Correctional Services (DCS).


Mr V Smith (ANC) said that he was going to deal with four issues, which were human resources (HR), expenditure management, procurement and IT. He said that the concerns over matters related to HR in this annual report and in the previous report -- which members did not have -- were exactly the same. He wanted to make the point that there had been no progress on HR matters, according to the report. The first question he wanted to put forward concerned the Auditor General’s annual report. Under the cooperative services sub-programme, as at 31 March 2014 Correctional Services had 48 149 employees and funded posts were 49 911, so there were 1 762 vacancies. What happened to the money for those 1 762 vacancies, because it said these were funded posts, but there were vacancies?  

The Acting Commissioner said that the question was double-sided. Firstly it was related to officials who had been remunerated for work which was outside their own jobs. Apart from the Auditor General and National Treasury informing the Department about officials who had been performing work which was outside their own jobs, and families being involved, the Department did not have a system to identity such officials. They relied on the Auditor General. The DCS had approached the Director General and National Treasury to assist them in this regard so that they would be able to clean their records and ensure that their officials were not performing any remunerative work outside of their employment. They had not been successful in obtaining a system, and were still requesting help from the Auditor General in this regard. Concerning the budget which had been provided for the vacancies, he requested that he be allowed to ask the other officials, especially the former acting CFO, to respond to some of the questions.

Mr Booi asked if the Commissioner, as the accounting officer, did not know what he was talking about. If he did not know what was going on, he should let the Members of the Committee know before telling them to expect answers from others.

The Acting Commissioner responded that he did in fact know what was going on, and he was not trying to shift the responsibility. What he was doing rather was to ensure that the Members got clear responses. What normally happened was that twice a month, there was a budget committee that sat and looked at their expenditure trends. Where the expenditure trends indicated that there was under-expenditure in one aspect and over-expenditure in another, the budget committee then took a decision to do a virement of funds. He thought that was what was happening in that regard.

The Chairperson responded that what the Acting Commissioner had said was fine but a specific question needed to the answered, one that dealt with the money and the vacancies that had not been filled. He then asked Ms Nandi Mareka, Deputy Commissioner for Financial and Management Accounting, to respond to that question, as the Acting Commissioner had passed it on to her.

Ms Mareke said the under-expenditure was due to the Department not filling all the funded vacancies, and during the year 2014/ 2015 the funding had been reprioritized to other programmes, mainly to care for nutrition services, medical care for inmates and a large amount of money for fuel.

The Chairperson said that the response was fine, and that it was clear where the money had been spent.

Mr Smith said that he had heard the response, but there was difficulty if one looked at page 42 of the report, which dealt with how the money was spent. It spoke about money appropriated. When one read the report as a layman, without the explanation which had been given at the meeting, what it suggested was that when Parliament approved the budget, it approved the amount appropriated -- it did not indicate any movement of money, unless he was reading it wrongly. The document should have stated that money had been moved from here to there, for traceability purposes. This was a public document and this would be expected.

Ms Mareka said that on page 104, the question was answered. In the appropriations listed on that page, it showed that money was moved around. The breakdown of the movement was shown in detail on that page, and the subsequent ones. Explanations were given in the details.

Mr Smith said that he believed what they were saying, but was not satisfied with the presentation, which showed a global virement. The annual reports should be changed. He said that the AG’s report stated that there had been payment for overtime. He thought they had done away with overtime because it was a problem, and had moved to a new system. On what basis did people receive overtime pay, and who were the people who got it?

The Acting Commissioner said that the Department had done away with general overtime. In the past, they had had a five-day working week. The weekend was considered as overtime. This had changed and now the Department had a seven-day working week. In this seven-day working week, however, each official could work only for a specified number of hours and anything which was beyond that was considered as overtime. From time to there, the Department had incidents at correctional centres which made it necessary forpeople be put on overtime, but otherwise there was no general overtime.

Mr Smith said that the Auditor General’s report indicated that personnel in charge of pay points did not always certify that the people who got paid, were entitled to get paid. This meant there was a possibility of ghost workers, otherwise how had the Auditor General picked up that the Department had not verified who they had paid? Did the accounting officer agree with this, and why was it happening?

The Acting Commissioner said that the DCS had a challenge in terms of its footprint. The head office was in Pretoria and the regional offices in the provinces. The payroll then was distributed to very far and remote areas at a very late stage, after which it would have been certified by the responsible officials. What they had put in place, with the advice of the Auditor General, was an arrangement that their payroll be distributed to Sector Education and Training Authority (Seta) offices, because there were Seta offices throughout the country. This was to ensure that payrolls were received and certified on time, and to ensure that there were no ghost workers in the Department of Correctional Services.

Mr Smith said that if the HR problem had been picked up for two consecutive years, why had it taken such a long time to address it.   The Auditor General had picked this problem up in 2012/ 2013 and again in 2013/2014. The Accounting Officer then comes and says that they have put systems in place. What must the Committee believe? Was he saying that the systems had been put in place after the report, because that would be fine? If it happened that this mistake was picked up again in the next report, then they would have misled the Committee. Was the Accounting Officer prepared to take that risk?

The Acting Commissioner said that it was quite true that the Auditor General had picked up this recurrence in two consecutive financial years, and the arrangement with Seta had been decided on only in the previous month (April), and therefore there was a possibility of a recurrence in the next report. Going forward, however, he assured the Committee that the problem would not persist.

The Chairperson wanted to know whether they had done nothing for the past two years to try to deal with the problem.

The Acting Commissioner said that as a Department, they had tried to create their own arrangements by taking payrolls by regions at the head office and distributing them, which was a lengthy and time-consuming process.

Mr Smith referred to page 54 of the annual report, and said there was an HR manager who was paid by the state, and now the Department was saying it was going to outsource the payroll and the recruitment of HR. It further said that the employment of the HR would be decentralised. The question therefore was whether the Department was outsourcing or decentralising. Were they doing both? Why was the Department decentralising HR? Why was there a policy to outsource HR? How could the Department decentralise and outsource at the same time?

The Acting Commissioner said that on page 54, it indicated that the Department was considering outsourcing and decentralisation of those vacancies, primarily to look at the turnaround time. There is no outsourcing which had been finally concluded as a strategy.

The Chairperson then looked at the paragraph concerned, and said that it read so as to indicate that they would outsource, but the Acting Commissioner was saying that they would not.

Mr Smith referred to expenditure management on page 64.   He asked the Commissioner if he thought the audit committee was adding value to the Department.

Mr Modise said that the audit committee had indeed added a lot of value to the Department. There had been times, however, when the audit committee did not have enough members and as a result of that, the chairperson and the one other member could not cover all the responsibilities which were expected to be performed by them.

Mr Smith moved on to page 64 and 65, and said the audit committee had given nothing but a damning report of the Department. The report indicated that internal audit was not functional. It stated that the audit unit did not adhere to the annual internal audit plan, so it was not known why it was being paid. Further on, the report stated that internal audit did not submit any reports to the audit committee. It also said that the audit committee had not been provided with any documentation. The audit committee was also not satisfied with the content and quality of quarterly performance. That was what the audit committee was saying. They could not come and tell the Committee that the audit committee was not doing anything, and yet say that they were adding value. They could not do that, because the chairperson of the internal audit might as well resign today. He asked the Commissioner if there was an internal audit, and what it was doing.

Mr Modise said that he thought he had qualified his statement concerning the value add of the audit team by stating that in the past, the committee had only had two members. The Department now had a fully fledged audit committee. They had appointed a chief audit executive who was responsible for internal audits in the Department. The person had been appointed some time last year after the audits. This meant that at the national office, they had an internal component. What they had also decided as part of their turnaround strategy was that they needed their own internal auditors in regions. They had since advertised the positions and shortly they would start with the selection process.

Mr Smith said that page 40 of the annual report spoke about the finance programme, and a planned target was a zero number of audit qualifications. When one looked at the next paragraph, which spoke about deviations from those targets, it said that some correctional centres did not account properly, and in some instances the existence of assets could not be found, etc. Under the comment section, it said “none.” When the Commissioner does not make a comment on deviations, was it because he did not care? Was it because the Commissioner felt they were doing a great job as Correctional Services? Could there be an explanation for why that column was blank?

The Commissioner said that the indication there spoke about zero audit qualifications. The performance of the Department was that there were a number of deficiencies which made the realisation of that objective impossible. That was why it had been indicated where the problem was. At particular correctional centres, no accounting could be done, and no records were possible. The response by the Department in that regard was to say that there had been no progress in them trying to achieve the non-qualification target at that point in time.

The Chairperson asked what was going through the mind of the Commissioner when he had decided on the comment on the issue at hand, because to a person looking at it, one might think that maybe it was not a serious issue.

The Commissioner said the comments in the other column explained what had happened with the issue at hand.

Mr Smith asked the Committee to look at procurement on page 94. Among other things, the report said that awards had been made to service providers who had been blacklisted. Certain paragraphs contained information which was exactly the same as that of the previous year. How long had the person from supply chain management been in his or her post?

Mr Manqoba Ngubo, Deputy Commissioner of Supply Chain Management, said that he had been in this post since the year 2005.

Mr Smith asked him who the blacklisted companies were that he did business with, and why he did business with them.

Mr Ngubo said that there were two companies which the Department had been doing business with for the last two years, which had been picked up by the Auditor General. Their contention was that the people involved were doctors who were employed by public hospitals. The Department’s inmates were taken into those public hospitals to be treated, and Auditor General picked up that the doctors working in public hospitals, who happened to be directors of their own private companies, had been blacklisted.

Mr Smith said that the Department was stating that there was contention with the Auditor General. There could not be such a contention, because this was a Treasury regulation and going against it was a contravention of such a regulation.

The Commissioner said concerning this matter, offenders were taken to public hospitals. Doctors contracted to public hospitals who happened to belong to private companies, were not known to be blacklisted at the time of contact. At the time of referring an offender to a public hospital, the Department did not get time to look at who the doctor was who would be treating the offender.

Mr Smith asked National Treasury which criteria they used to blacklist people, because if there were strong criteria, the state could not work with blacklisted people. Could this be explained to the Committee?

National Treasury said that if a person was blacklisted, no organ of state was allowed to do business with that person.

Mr Smith said that the Department of Correctional Services had been doing business with blacklisted people since 2012, and it was now 2015. Someone in government was not doing their job properly. It was the task of the legislature to hold the Department accountable. Now that the Commissioner had heard what the National Treasury had said, how was he going to ensure that his Department did not work with blacklisted doctors again? He requested that they deal with the one example made, of a doctor who was known to be blacklisted, and worked in Baragwanath Hospital.

The Commissioner said that he and his Department had discussed the issue with the Auditor General. What would happen was that offenders would be taken to public hospitals where doctors had not been blacklisted.

Mr Smith referred members to page 131 of the annual report, where it stated that R16 million worth of irregular expenditure had been incurred simply because the correct procurement processes had not been followed. The supply chain manager had been in his position for ten years. There had been R16 million in irregular expenditure, and no service level agreement, which meant there was no contract.   So R16 million had been paid with no contract, and procurement processes were not followed. This was what the Auditor General had picked up. It was also said that investigations were pending -- where were these investigations?

The Commissioner said that at the time of submission of the report, he was not in his current position. He was not trying to shift responsibility, but he wanted to get his facts right.

The Chairperson asked if it was not the Commissioner’s face on the Annual Report.

The Commissioner said that as he assumed the role of Acting Commissioner, the report needed to be signed off and he had done just that. The person who was there before him was Mr Jolingana, who had left the Department.

Mr Smith re-stated the issue at hand. At the time of the report, investigations were pending -- what had happened since then? The procurement manager must also answer the question of how he allowed procurement to happen without following procurement policies.

The Commissioner said that they were trying to get their facts right, so they needed a bit of more time.

Mr Smith responded that he did not know how they would get their facts right, because he had more questions. He said page 132 indicated that fruitless and wasteful expenditure from the previous year was R35 million. The last line said that “amount resolved R28 million.” Mr Smith asked how this fruitless and wasteful expenditure had been resolved.

The Commissioner said that the R28 million was a tender. The tenders had been cancelled since May 2009 due to a tender operational review which had resulted in changes in the Department.

Mr Smith asked if the Commissioner was stating that he had cancelled the tender. He said that was one thing. Did the Department get the money back?

Mr Ngubo said that the amount of about R28 million was incurred in the process of finalising the “PPP.” It was used to resolve that amount.

Mr Smith said that he now understood. It was the one that the Minister Nosiviwe Nqakula had reversed. The question was then, why had the Department taken two years to reverse this money, because the decision had been taken over one year ago.

Ms Mareka said that that the R28 million was for the PPP change and the R38 million was in reference to the audit findings that there had been no service level agreement (SLA) between the Department and the Department of Public Works (DPW).

Mr Smith then asked the question of why the Department had repeated the same mistake of having no SLA, with a loss of another R15 million. Did it not matter to them that the Auditor General had picked it up?

The Commissioner said that the Member was correct in saying that there had been a recurrence of non-compliance in the Department. The leadership they had now had taken a conscious decision that between the Department and the Auditor General, they had to work on relationship building so that there would be a common understanding of what the Auditor General expected from the Department and what was that needed to be done to improve the situation in the Department. This was why the Department has started to make changes. For example they now had a Chief Audit Executive. They had approached the executive to approve and increase the strengthening of the audit committee. All these things that they were now putting in place would not have the desired results now – these would come at a later stage. They had taken a decision that all non-compliance in the Department would stop immediately.

Mr Smith said that there was an IT section he wanted the Committee to look at but he was now looking at the time and he wanted to give Members time to respond. He said that IT would either make or break the Department.

The Chairperson said that there was still a bit of time left.

Mr Smith asked the Committee Members to move on to the last section on page 93.   He said that paragraph 28 and 29 had inconsistencies. One figures stated that there were 148 000 inmates and another one stated that there were a 157 000 inmates in South African prisons. All this was in the same report. How many inmates were there in South Africa if there were two different figures? The inconsistencies were due to the fact that this had been done manually -- there was no IT system. The Department had spent R900 million on IT. Could the Department explain what the correct figure was and why were there such inconsistencies.   He said that there needed to be a debate with IT on this issue. Unless the Departs got its IT right, there was nothing that the Committee would be able to agree on with the Department.   Mr Smith proposed that the IT team from the Department should   come to Parliament.

The Commissioner said that they wanted to do justice to the Department. He said that they would like the former Accounting Officer to come before them, because clearly they were not getting answers. There were too many irregularities and there were no answers.  

Mr Hlengwa said that he was in agreement with getting the former Accounting Officer, but the current Accounting Officer would still have responsibility for that report, because by putting his signature to it, he had taken full responsibility and should account for it. He was not convinced by the answers the Committee had been receiving. On the issues of IT, he thought that they did need the entire IT team and the consultants, because the discrepancy of the figures meant that the Department had lost about 9 000 inmates. If the numbers of inmates, as a start, were inconsistent that opened up an entire scope for corruption. Acquisitions would be made on the basis of 152 000 inmates, whereas the Department did not have that number of inmates. He said that the IT team needed to come to Parliament, with the Minister and the Deputy Minister. This was one department where they could not be accepting apologies from the executive authorities. The Department was in crisis in terms of financial management.

Ms Khunou said that township societies were run better that this Department. People were not serious -- they were not taking their jobs or even themselves seriously. She agreed with what Mr Hlengwa had said. The Committee was not as ignorant as the Department was. They were reading and comparing figures. Let the Committee have the executive authority in Parliament. No one should be absent at that meeting so that the report could be processed. This was a disgrace to South Africans and to members of the ANC. A meeting with this Department would need either two consecutive days or the whole day.

Mr Kekana agreed that the executive authority and the person responsible previously should actually come and stand before the Committee. He proposed that they needed to have the Department look at the Auditor General’s report and from there, prepare an action plan for the Committee, stating how they would deal with all the issues listed in the report. When the Department met with the Committee, together with the executive authority, the Department should clearly indicate which direction it would take, because it was clear that the Department was in “intensive care.”

Mr Lees said that Mr Kekane had said exactly what he wanted to say, except he wanted to take it one step further. The question that Mr Smith had asked about investigations had not been touched on. This applied to irregular as well as wasteful expenditure. There were a lot of investigations going on. Mr Lees requested that within 14 days, a full report on all those investigations be tabled before the Committee.

The Chairperson said that he thought Members were in agreement, and that he just wanted to put the terms to the Department. The Minister and the Deputy Minister should come before the Committee. Ms Mareka was the acting CFO, and the head of supply chain management had been in that position for the past ten years. The head of HR should also appear before the Committee. The IT team should   also appear. The Committee should have only the Department of Correctional Services on that day, so it could then do much more focussed preparations. The problems with Correctional Services needed to be solved once and for all.

The Chairperson said that for the whole time he had been in the Committee -- almost ten years -- the Department had never received an unqualified audit opinion, yet they came before the Committee, they had been good at explaining things, and at the end of the year nothing happened. They would not go through the motions again. Instead they would deal with the issues and be conclusive about what happened. In the meantime, the Acting National Commissioner should get a full list of what constituted fruitless and wasteful expenditure by 2-3 June, and what constituted the amounts in the report.   What issues had been resolved? What had happened? What were the amounts?  Who did what, when? A list of investigations should also be given.

Mr Booi said that the Chairperson had summed up everything very well. However, could the Committee get letters confirming what the Auditor General had said and what the National Treasurer had said, and what the Executive had said, because the Committee could not rely on the Department to tell the truth.

The Chairperson said that he had left one issue out, the one concerning the Department’s employees who were involved in remunerative work elsewhere. The Acting Commissioner should give the names of such people to the Committee. A list of blacklisted doctors who were working for public hospitals and did business with the Department should also be given to the Committee so that the Department of Health could also be held to account over blacklisted doctors. The names of the doctors’ companies should also be listed and this should be submitted by next week Tuesday, 2 June. The condition of inmates must also be stated, and what these inmates were being treated for. Did they need specialist treatment or were they suffering from ordinary flu, so that it could be established whether these were specialist doctors or general practitioners.  

Ms Khunuo said that the addition she wanted to make concerned “ghost employees” who were paid but were not there. It must be established how much they were paid and who got that money on their behalf.

Mr Smith interjected by stating that the Auditor General would not be able to answer that question, but could perhaps be asked to substantiate why they had made the statement. It was not about how many -- even if only one could be found, it would still be fine because it was about fixing the system. It was not about retribution, but about fixing up a system of Correctional Services.

Mr Hlengwa said he wanted to make an addition on the issue of IT because in the annual report, the Department indicated that they were looking into e-recruiting. They wanted to expand their IT jurisdictions. He requested that on the day that they came to Parliament with the entire IT team that the Committee must get a full presentation of the scope of the IT work they wanted to undertake. There was a picture on Facebook which was circulating, showing thousands and thousands of applications which had been dumped somewhere, with two officials from the Department standing on top of them. It they wanted to expand their scope of work to e-recruiting, the Department’s capabilities needed to be understood in this entire area. On that day, could the Committee get assurance that it would get answers across the spectrum on this issue?

The Chairperson said that all the IT people would be present that day, and that was their domain.

The Chairperson then concluded. He thanked the National Acting Commissioner and said that the session had helped the Committee in realising the areas it needed to focus on. The problem in Correctional Services needed to be sorted out -- it could not wait any longer. It had to be resolved once and for all so that the Committee could focus on other things.

Ms Khunou also said that the office of the Chairperson needed to speed up so that Committee Members could get copies of the annual reports.

The meeting was adjourned.

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