Department of Correctional Services on its 2013/14 Annual Report: hearing with Minister and Deputy Minister present

Meeting report

Introductory remarks

The Chairperson commenced the meeting by welcoming everyone present. In attendance were the Minister and Deputy Minister of Correctional Services and their vast delegation, Members of Parliament and the Auditor General.

There had been an engagement with the Department on the 27th of May 2015 and it had then been agreed that there was need for further interaction as the issues were found to be quite multi-layered. Hopefully everything would be tied down today, and if not, then it would necessitate another engagement until everything was sorted out. It had been indicated that the Department of Correctional Services (DCS) had struggled to get things right and it was this Committee’s intention to assist it.

The Chairperson, after the conclusion of the introductions, said that congratulations were in order for the new National Commissioner of Correctional Services, Mr Zach Modise, upon attaining this post.

Adv Michael Masutha, Minister of Justice and Correctional Services, said a number of issues had been brought to the Ministry’s attention by the Committee and subsequently there had been an engagement with management to clarify them. Part of the engagement had been to confirm whether some of the interventions made directly on those issues had in fact been carried through. He raised this, because unless there were any other additional issues raised by the Committee, it would give an opportunity for him to sit and listen to matters that he had already been appraised of. He did not know whether the Department was expected to sit the whole day, as some of the executive functions had been halted, but it was Parliament and they were at the Committee’s disposal.

The Chairperson said that in the course of the meeting, issues might be raised which the Minister might feel inclined to respond to or take note of. The engagement would definitely be worthwhile. He was not happy with the information that had been requested previously at the meeting on 27 May, which was supposed to have been given on the following Tuesday, 2 June, which had been submitted only yesterday afternoon. The Committee had not even had time to peruse the information, and he had received the information only when he arrived at meeting this morning. The engagement would continue from where it had left off previously, but as for the information submitted, the Committee would like time to go through it and perhaps next week have another engagement in order to discuss it. The documents constituted 40 to 50 pages, and there was no way to process it timeously. It was totally unacceptable to sit with officials and agree on dates, and then require the Committee staff to chase after them. Postponements had been asked for and still the specific deadlines requested had not been met. Having this information now was useless for this meeting, and therefore later this afternoon it would be decided as to whether the next engagement would be on Tuesday or Wednesday next week so that the substance of the documents received could be meaningfully engaged upon. However, an engagement would continue today. There were different areas on which particular Members would focus.

Internal auditing

Ms T Chiloane (ANC) said that her area of focus was supply chain management (SCM). She would touch on aspects from the Internal Auditing Committee, as outline on pages 64 and 65 of the annual report (AR). The Auditor General (AG) had stated that the “internal control unit had a role to play with regard to focusing on movable and tangible assets,” but if one checked with the DCS, then the effectiveness of the internal control unit was of concern, as the AG had reported that “the internal audit (IA) function did not submit reports detailing the performance against the annual internal audit plan” . She asked why the Internal Control Unit had not functioned.

Mr Modise responded that at the time of the report and in the year the report was compiled, the internal audit unit had not been functional. There had been an acting director as the head of the unit, and the subsequent reports that should have been submitted after an audit had been done, were not submitted. That was a result of a unit that had gone completely down.

The Chairperson interrupted by asking why the unit had gone down.

Mr Modise responded that there was a time in the DCS where assurance units were not functional, mainly because of vacancies that could not be filled.

Ms Chiloane said that on the basis this response, it seemed that the unit most probably did not work for the entire year under review. If one looked at the AR, it showed that the unit never submitted those reports and that the people in the unit were “warm bodies”. She asked what had happened to these people in the unit after it had gone down.

Mr Modise responded that the vacancies had not been filled timeously. The unit had been headed by a director, with only a secretary, and the reports had not been submitted as required.

The Chairperson said that this was in the annual report, but the question was rather why things had happened that way. Quarterly reports were supposed to have been done, and none had been done for the first and second quarter.

Mr Modise responded that reports had been submitted by the branches, but what was important to note was the function and role of the IA unit to audit these reports to determine whether they complied with the standards. IA had not been able to submit the reports by the branches on performance information, as to whether they were reliable and correct.

The Chairperson interrupted, and asked what management had done about the situation. Had it just looked on till the end of the year? That was the essence of the question.

Mr Modise responded that with regard to IA, the position had been advertised and interviews had taken place. The Chief Audit Executive, who was going to responsible for internal audit, had then been appointed.

Ms Chiloane said that section 1(2) of the Public Finance Management Act (PFMA) stated that “the Accounting Officer (AO) was responsible for maintaining a system for internal audit and control and direction of the Audit Committee in complying with section 77.” She felt that raising this would provide the essence of what the question was asking.

Mr M Booi (ANC) said that he would like to congratulate the Commissioner on his appointment, but would also like to caution him that he had a fiduciary duty in terms of the PFMA to answer to the Committee. The Member had asked a simple question and a simple answer was needed. If one did not have an answer, then one should tell the Committee. As an Accounting Officer, the Committee expected answers from him and it was sensed that he was not being honest. He had to help the Committee to understand what was going on in the DCS. If help was required, then the truth needed to be told.

The Minister said that he was new to SCOPA, and would be guided by the Committee. He wanted to clarify the context, as the Member had correctly pointed out that the PFMA stipulated that the AO was ultimately accountable for what happened in the Department. This was notwithstanding the fact that whoever constituted the IA committee, complete or incomplete as it may have been, had direct responsibility. He asked whether it made a difference whether the current AO that was before the Committee was not the AO during the time under review. If so, he did not know how the Committee would want to deal with that particular aspect. Some guidance might be needed.

Mr V Smith (ANC) said his understanding was that the current AO was not the AO at the time, but there were a few things that needed to be brought to Parliament’s attention. Firstly, the person who appended their signature was the current AO who was before the Committee now, and he needed to take responsibility. Secondly, even though he sympathised with the National Commissioner (NC), the reality was that he was the AO and had been part of the senior management at the time. He had been in an acting position for half of the year under review. The point being made was that the Committee was dealing with the annual report, and not individuals. The responsibility of the Committee was to deal with the AR, and it did not matter if the AO had moved. He then put on record that the DCS had never had an AO that had served a full five-year term and if this logic was to be followed, then this Department would never be able to be held accountable at any point. The facts in the AR should be dealt with, and whoever was competent to respond to it should do so. Most of the senior managers seen here today had been the senior managers for the past five years, with the possible exception of the chief financial officer (CFO). He felt that on this basis, SCOPA could not accept the argument that an individual was not the AO at the time.

Mr Booi said that all government systems did not wait on a particular individual, but rather that that individual was part of the system. The Department of Correctional Services had been around for some time, and therefore it could not be said that there was no accounting officer. The NC had to take responsibility, as it was his signature on the AR. It was expected that he should answer to SCOPA.

The Chairperson said that Ms Chiloane had quoted the PFMA, so the Commissioner could now, as the Accounting Officer, accept that management had not done its work. IA had not done its work in the first, second, third and fourth quarters, but it was the management’s duty to ensure that it had done its work. Management had failed in its duty and responsibility to ensure that those things were corrected. That was the starting point, so that issues that were the result of poor management were not explained away. If that angle was taken, then it would assist the Committee on a whole range of issues, because if one admitted that things had been wrong then one would be in a position to correct them.

Mr Modise said that it was for management to admit that its work had not been at the level required and as a result, a number of assurance units had fallen down and management had done nothing about it. Management had now started to build its assurance units and took full responsibility for compliance and overall management of the DCS.

Ms Chiloane then referred to item 12 on page 64 of the AR, which stated that the audit committee had not performed its work as was required by the National Treasury regulations. Members of the audit committee had been with the DCS for a minimum of three years. When one looked at item 11, on the attendance of audit committee members at meetings, it showed that the committee’s chairperson had resigned as of 20 March 2014, leaving only two committee members in that financial year. She asked for an explanation.

Mr Modise responded that it was true that the chairperson had resigned, and only two members were left during that period. There were a number of challenges with regard to the work of the AC, as well as the DCS attitude towards the AC members, and as a result relationships had broken down. It was only the current chairperson and the member present today who had persisted and stayed on for the duration of that particular financial year. It was only after this issue had been raised with the Minister that the DCS now had a fully-fledged AC as prescribed by the PFMA.

The Chairperson said that it seemed as if the management had not wanted an IA unit, and that this was the reason why IA was allowed to collapse, as it would then have had oversight over management.

Ms Meta Maponya, a member of the Audit Committee, said there had been very challenging times at the DCS. This could be seen by the attendance at meetings, where four had been scheduled but only two held. There was a culture of setting up meetings and every time they got cancelled. That problem was still persisting from a reporting point of view. As one could see, the IA challenges with the DCS had even been elevated all the way to the Portfolio Committee. From a professional point of view, the AC had raised a lot of problems, and there had been many meetings with the AG to discuss items that were supposed to have been done but could not be done because there had been no reports submitted to be reviewed. It was also challenging from a secretarial point of view that even the minute-taking had not been recorded properly. These issues had been raised on numerous occasions and the secretariat had recently been beefed up a bit, but there was still a challenge with regard to the secretariat’s skills and expertise. Full-time appointments had been made, but the IA was still having a challenge as in the past there had been an outside consultant, but its performance had been sub-standard and no skills had been transferred, so there was a gap as had been seen in the 2014/15 report.

Mr Masutha said that he now wanted to come to every single SCOPA meeting, as it seemed like the best place to access information. He had been taken aback and shocked by the fact that no one from the IA committee at any point had ever sought to approach him to say, “Minister, we have problems -- could you please assist?” He then invited members of his Department who had such serious problems to come to either the Minister or Deputy Minister for assistance, and not just bring it up in the Committee.

The Chairperson added that this was why he had said that the engagement would be very useful and meaningful.

Ms Chiloane said that based on the response by the NC and the member of the IAC, she was interested in the meetings being cancelled. What was the cost of those meetings, and who was responsible for organising them? She linked this to the collapse of the IA unit, and said she believed that there were “warm bodies” there after it had collapsed. What had happened to those people in the office – were they still in the DCS, had any disciplinary action been taken, or had they been moved to another section or Department?

Mr Modise responded that at that time there had been a director acting as the chief executive responsible for IA.

The Chairperson interrupted by asking where that person was.

The NC said she was in the DCS but was not present at the meeting. What had happened was that the IA function of the DCS had been outsourced at the time and there had been no monitoring of the performance of the consultant firm. As a result, a number of reports had not been submitted, which had led to the cancellation of the consultants’ contract so that the DCS could appoint its own internal auditors.

Mr E Kekana (ANC) said it was very clear from the member of the IA committee that that particular function had been outsourced. The NC was saying that there had been no monitoring, which had led to the contract being cancelled. He asked whether these consultants had been paid and if so, on what basis. It was his understanding that when a consultant was brought in, there were either milestones or at least an agreement which set out what the consultants had to do. If the consultants did not do as was set out, then how were the consultants paid?

The Chairperson said that he wanted to park the IA issue, because he knew that it would take the Committee to the issue of consultants. However, he would allow the issue of IA to be discussed in the context of consultants.

Mr Smith said an earlier response was that the IA had collapsed, and therefore the DCS could not get reports, but page 88 of the report said that there were 57 consultants. Even if the IA had collapsed there were 57 other “warm bodies,” unless it was said that the collapse was because of the 57. He asked that if that was the case, then why had these consultants been paid a total of R7 million? In the DCS’s response to this, it needed to keep in mind that the consultants referred to were Price Waterhouse Cooper (PWC), which was one of the big four in South Africa. In the DCS’s response, it had to be cautious about implicating PWC, as if that were true then the DCS was duty-bound to go and blacklist them. The follow up question was, why did the state have to continue to use PWC? A hole was being dug if it was said that PWC had collapsed, as they were responsible for the IA unit.

Mr Modise responded that management had not been up to standard in their monitoring of the consultants.

The Chairperson interrupted, and said that the question posed by Mr Kekana and Mr Smith asked on what basis the consultants had nonetheless been paid the R7 million.

Mr Modise requested that he be given a minute to obtain the information on the issue from the then acting CFO, so that a comprehensive response could be given.

The Chairperson said that at the last meeting on 27 May, the DCS had been told to bring information on the consultants. It was expected that in their planning, the DCS would have been able to give responses on these issues. If there was no response to the question, then it meant that the briefing of the Minister had not been complete.

Mr Booi said that the DCS was not the only Department SCOPA had concerns about. This was the DCS’s tenth disclaimer as a department, and this mal-functionality served as a background to the DCS. Up until now, the facts showed that the DCS was not prepared and not ready to answer to the Committee. It was not that SCOPA did not like the DCS, but it was an obligation of the Committee to get the DCS to comply with the law. The DCS had better get its act together.

The Chairperson said that he would like to get to the bottom of the payment of R7 million to consultants that could not provide reports.

Ms Nandi Mareka, Acting CFO: DCS, responded that the consultants were a consortium of PWC and Sekela that had been used to assist the DCS’s internal audit unit in terms of system descriptions, preparing audit programmes and assisting in the preparation of reports, while imparting skills to the DCS’s own internal audit personnel. However, once those reports were prepared, the submission was to the Acting Chief Auditing Executive (CAE).

The Chairperson interrupted and said that this was the very person who was not present at today’s meeting.

Ms Mareka said that he was not present today. The original CAE had resigned and the Director of Internal Audit had been appointed as Acting CAE Executive, so in terms of the DCS’s own arrangement, the PWC-Sekela consortium would submit their reports to CAE, who would process them.

The Chairperson asked what she meant by “process.”

She responded that it would be executed with the DCS’s own internal auditors reports, and then the CAE would check whether the reports were up to what had been agreed upon in terms of the different auditors’ assignments in the various centres, as different components would be audited. Once the CAE was satisfied, then CAE would present those reports to the audit committee. In terms of what the consortium had been appointed for, did execute as in certain instances she had gone to the AC for assistance on asset management, and that had been provided by the Consortium in various centres. The consultants would be paid according to the work done.

The Chairperson said that in other words, what was being said was that the PWC and Sekela had done their job, but the then Acting CAE had failed to process those reports and submit them. All that the CAE had had to do was look at the reports, verify and then submit them.

Mr M Hlengwa(IFP) asked on what basis one made a payment on a report that had not been verified.

Ms Mareka responded that the IA would indeed submit reports to the CAE, and payment would be made on the satisfaction that the work had been done.

The Chairperson interrupted her and said he understood the follow-up question to be that yes, people were seen as going around but the satisfaction that was needed was that these people were doing the right thing, and that certification would happen when the CAE said that he had gone through the report, and these people had done exactly what they had been hired to do. He thought the issue was that this was what the Acting CAE was not doing. He asked for an explanation.

Ms Mareka said that the CAE was involved up to the point of processing to pay the consortium. The CAE was not an end user for the reports which were supposed to be submitted to the AC for further engagements.

The Chairperson again interrupted, and said that the CAE would make sure that payment would be paid for work done, but would not submit the report to the AC. That was where it failed essentially from a process point of view.

Ms Mareka responded that the shortcoming was with the AC on the administrative side, in saying that “I am satisfied with the work, services had been rendered,” which was under her signature. Other than that, payment would not have been done.

Mr Smith said that he felt that the point should not be belaboured any further. He referred to page 65, where the AC had said that on 15 October this matter had been raised with the Acting Commissioner and Financial Officer. His understanding of this was that the matter had been raised because the AC was not being serviced. This was halfway through the year, yet the consortium continued to be paid. Those who were at a superior level to the individual had been aware of the matter, but nothing had been done about it and R7 million had still been paid. It was not the individual, but rather the processes that had not been followed -- unless the AC, in its report, was misleading SCOPA. He asked whether the individuals that were in place on 15 October had been informed, and if they were informed, what had been done about it.

The Chairperson suggested that the question regarding the issue raised on 15 October be parked.

Mr Booi said that the only thing clear to him was that it seemed that there had been no compliance with the law and “thumb sucking” with regard to processes. The R7 million was gone, as there had been no compliance with IA processes, and the person who was satisfied was not present at today’s meeting. He asked how the internal process functioned, and who the “warm body” was that needed to be talked to in order to ascertain the reason for the IA unit’s collapse. The story that had been given did not make sense to SCOPA. There were too many delegates present and someone here had to be responsible.

Mr R Lees (DA) said that Mr Smith had asked the questions that he had intended to ask, but he would like to enlarge on them slightly because the Minister had been outraged that he had not been approached regarding the audit committee’s concerns. Clarity was needed in this regard, as it should not be left in the air that the Minister was appearing to accuse the AC of not trying to do something at the highest possible level. If that was true, then it was a serious indictment but if it was not true, then the facts should be provided.

The Chairperson said that the focus should be placed on what had been done subsequent to the AC raising the issue with the NC. Secondly, what was the IA process and what had been the stumbling block, as it was hard to believe that the acting CAE would satisfy himself that work had been done and then paid the consultants, but would not submit the report to the AC. Was it a result of “bad blood,” as management did not want the IA to function? It could be that management had collapsed the IA because it did not want any internal watchdog, and any reasonable person would come to the conclusion that it had been done deliberately.

Mr Modise responded that he had acted in the position of National Commissioner from 13 June 2014. What he knew was that the internal audit function in the DCS was not performing to the set standards and that was why it had been necessary at the end to sit down to take stock and make the necessary appointments to fill the vacancies that had arisen. In a nutshell, the DCS had been aware that the manner in which the IA was being handled was not correct, but this had also led to the attitude between the DCS and the AC.

The Chairperson asked for elaboration on the “attitude” that had been mentioned.

Mr Modise responded that it was not a healthy attitude when an oversight body came to put controls in place and assist with the work. As a result, members of the AC were not happy.

The Chairperson asked what the AC was not happy with.

Mr Modise said the AC was not happy with how management were doing their job and the fact that management was not attending the AC meetings in full force, as some people failed to pitch up and some meetings could not be conducted according to the meeting agenda.

The Chairperson asked what he meant -- whether the meeting would have an agenda and finish mid-way.

Mr Modise responded that the meetings would end mid-way because of frustrations the AC members experienced from management. At the few meetings that he had attended, instead of discussing the issues on the agenda, other matters would be discussed, such as the controls in the DCS which were not functional because of vacancies, positions taking too long to fill, and the appointments in regions. It was those basic day to day issues that kept the DCS busy.

The Chairperson reiterated the previous question raised on processes and asked who monitored the process -- what happened, or was it an attitudinal problem.

Mr Modise said it was his personal view was that there was no appreciation for the work of internal audit and the AC. As a result, the understanding and cooperation that was supposed to be there was absent. That was why at this time, the IA had been rebuilt and the AC still had challenges. However, those were being attended to.

Mr Hlengwa said that the issue was that there was obviously bad blood. He would like to find out whether those people in the AC meeting who had been derelict in their duties were present today, because they had been flouting processes and were not taking the advice of the AC. These people needed to explain why they were the stumbling blocks so that the root cause of the dereliction could be sought.

The Chairperson said that the National Commissioner had been one of the attendees, and asked him who of those in the delegation had been at the meetings.

Mr Modise responded that he had attended the meetings with the then Acting CFO, Ms Mareka and Mr Smallberger.

Mr Hlengwa asked why these individuals were not appreciating what the AC was saying.

The Chairperson asked the then Acting CFO what the problem was between management and the AC.

Ms Mareka responded that there had been a problem with the setting up of meetings, and issues with the secretariat which had been set up by the DCS through the IA component. Issues had been raised by the AC with regard to the beefing up of the AC itself, and there had been delays in getting the additional members.

Mr Booi said that the reality was that if there had been no AC, half of what was being told to SCOPA was “thumb-sucked” information, and was lies. This could be seen as misleading Parliament, and he hoped that the Executive understood that when one misled Parliament there were consequences. The Commissioner had a fiduciary duty to report to, and not mislead, Parliament. It seemed as if there was no correct correlation between the Commissioner himself and anyone else answering the questions, and in terms of the PFMA, that had consequences.

The Chairperson said that he would like to go back to the issues raised by Ms Chiloane, because surely the CFO should have a greater interest in the process of what was done, and that whenever payments were made, it was done appropriately as she was there. The DCS had engaged with SCOPA on numerous occasions and Ms Mareka had always had an answer for everything, but nothing seemed to have changed whenever AGSA brought out their report.

Mr Kekana said that SCOPA was barking up the wrong tree, because looking at the annual report on page 14, it stated that it was the report of the accounting officer -- the same accounting officer that was seated in this meeting -- and these issues had been raised with the accounting officer. In his response, he had acknowledged that there had been problems but he had not said what he had done about those problems. The accounting officer needed to indicate that he had authorised something that had not happened. SCOPA had heard what the Acting CFO was saying, but the buck stopped with the accounting officer, as in the end this was his report and he needed to take ownership of anything and everything that was happening in the DCS. He asked what the National Commissioner had done about the problems. Page 15 of the annual report stated that “in terms of the functions of the DCS, it enabled the DCS to ensure a professional, efficient and effective DCS”. There could be no professional, efficient and effective DCS if it was admitted that there were no systems.

Mr Lees said that the he wanted the record to reflect that the Minister’s outrage over the AC seemed not to be appropriate, in the sense that his senior executives were fully aware of the AC’s problems. It was not the case that the AC had not tried to make the senior management and others aware.

The Chairperson added that it was his understanding that the last part of what the Minister had said was that “if you have those problems again, please let me know”. Senior management could not be ignorant of what had transpired, but what had been said was said in a positive light.

Ms Chiloane referred to page 94, which dealt with procurement and contract management, and more specifically on the comments made by the AG in items 42, 43 and 44. With regard to item 42, “some employees of the Department did remunerative work outside of their employment in the Department without the relevant authority, as required by section 30 of the Public Service Act(PSA).” She asked who these employees were that did work outside of the DCS, and what it was that had been done.

Mr Modise responded that there was a list of 18 officials who had performed remunerative work outside of their employment. This list was in the package that had been given to the Chairperson this morning.

Ms Chiloane said that earlier, the Chairperson had spoken about the information being received late. It would be a benefit for everyone that for record purposes the Commissioner took SCOPA briefly through the list, with an explanation.

Mr Modise responded that the list he had for 2013/14 was of 18 officials who had not declared that they had interests in a company that supplied services to the DCS. The list did not state what had been performed, but had the amounts that had been paid out.

The Chairperson interrupted by asking why he did not have that information. The reason he asked this was so that SCOPA did not get suspicious that these people had been paid for not doing anything, because there was a paragraph in that regard by the AG. If the information was not in front of the Commissioner, that was fine but it was something that needed to be noted for the next time. The DCS would be engaged again next week and the information should be populated with what those employees performed, as paragraph 53 on page 95 showed that people had been paid without providing services. If there were only the names of companies and amounts, the question that would naturally arise was whether these people had been paid without doing anything. The Committee needed to know what had been done so that there could be a complete picture.

Ms Chiloane asked whether these mentioned employees were still in the employ of the DCS.

Mr Modise responded that he could not say for certain whether these people were still employed by the DCS, but the indication was that the investigations were still continuing.

The Chairperson asked the Commissioner why he did not know whether these people were employed by the DCS or not. That was not satisfactory, as these people might be in the Departments of Education or Agriculture by now. As a part of next week’s meeting, it must be shown where these people were, and when they had left.

Ms Chiloane said that when compiling the requested list, it should include where these people were, as these people could be in a private partnership making use of the skills that had been given to them by government. She referred to item 43 on page 94 with regard to employees in the service of the DCS, whose close family members or partners had had private business interests in contracts awarded by the DCS, and asked why these employees had failed to disclose those interests as required by the National Treasury regulations.

The Chairperson suggested that this specific issue be dealt with next week when the Committee and the Commissioner were better equipped to engage on it intelligently.

Ms Chiloane said that in terms of the findings of the AG for the 2012/13 financial year, the same findings had also been highlighted in the 2013/14 year under review. They showed that the DCS was failing to enforce compliance with rules and regulations. She asked how the Commissioner had allowed this to happen.

Mr Modise responded that the AG had found that a number of rules and regulations had not been complied with. This had been seen, for instance, in procurement where the DCS had failed to obtain the required three quotations. This was what the DCS was trying to rid itself of. It was true that a number of rules that had been set by the DCS itself had not been complied with, and that was why it had been said earlier that the commitment of the entire leadership was needed in order to root out this non-compliance in the DSC. That was why the DCS had been rebuilding all of its assurance units. Compliance with the DCS’s own rules and regulations was number one priority, and that was why a Chief Director of Internal Control and compliance had been appointed and structures put in place to ensure compliance with rules and regulations. The DCS was going to ensure that a full risk assessment was done of the DCS to ensure that there was improvement. It was true that there had not been improvement for a number of years, and that was why the DCS was present this morning to answer on the non-compliance issues that had had disastrous results for the DCS.

Mr Booi said that “coming back next week” should not be used as an excuse, as the AO had engaged with the AG and had signed the report, so he had known what was going on. This was the tenth year that the DCS had had a disclaimer and he did not know how many more times SCOPA could hear that. It would be a dereliction of duty if SCOPA did not receive answers, because it does not know what to assist the DCS with at the moment.

The Chairperson said that “coming back next week” was not an escape clause, but merely gave SCOPA time to look at documents that had been submitted late.

Ms N Khunou (ANC) said she had brought the National Treasury regulations with her, as this should be the Accounting Officer’s Bible. Everything that happened in the DCS was the Accounting Officer’s “baby” and responsibility. The Accounting Officer since the last engagement, and today, had not convinced her that he was taking his job seriously as an Accounting Officer. She read one of the financial misconduct regulations which stated that “if an official was alleged to have committed financial misconduct, the Accounting Officer of the institution must ensure that an investigation was conducted into the matter and if confirmed must ensure that a disciplinary hearing was held in accordance with the relevant prescripts applicable in the Public service and this should be done within 30days”. In the reporting, it seemed as if this had not been done and therefore people could get away with anything, as it had not been done properly. If the Accounting Officer did not take the Treasury regulations seriously then his subordinates would not take him seriously. If this was in the private sector, then someone would have been expelled by now. One could not pay someone for work not rendered, and there had been no attempt by the DCS to try and retrieve those monies, which in turn meant that someone was stealing from the government. If the management could not take stealing seriously, how could the inmates be expected to change.

Mr Lees said that Ms Khunou had raised the issue of investigations pending, and he had just flipped through the pages of the documents, and there was not a single investigation that had been finalised. A large proportion of the investigations into fruitless and wasteful expenditure were pending.

The Chairperson added that the former Acting Chief Audit Executive for IA must be present next week so that the full story could be told, as it felt as if it SCOPA was hearing only half the story.

Mr Lees continued that after studying the documents for next week, SCOPA would starting to ask individuals about line items, and to get a response that investigations were pending would not be very helpful.

Mr Modise responded that the DCS shared the concerns raised by SCOPA. When looking at the report before it had been submitted, a decision had been taken that a task team would be set up to deal with the cases that were forever pending because if they remained pending for a number of years, it meant that there had never been consequences for non-compliance. The challenge the DCS had been facing was the instability at the top, where there had not been a person who would “crack the whip” when necessary. Top management now had the opportunity to start taking action with people who did not comply with the DCS’s own laws and regulations. What was happening in the DCS was that matters were continually being deferred. Within a time frame that would be given to SCOPA, all these pending investigations would be concluded and action would be taken against those who had been found not to have complied with, or breached, the DCS’s own regulations.

Ms Khunou asked whether the NC was saying that he was not part of the DCS when these investigations had been conducted. It was believed that before the NC became the acting Commissioner, he was still in the DCS and would have noticed and known that these things were happening. What she was trying to say was that the NC should take responsibility, as it was not as if he was new in the DCS, despite the title change.

Mr Modise responded that he had said earlier that he took responsibility for the DCS, and fully agreed with SCOPA that there were a number of things that had not been going right in the DCS which called for a commitment by all in leadership to do things differently to what had been done in previous years.

Human Resource Management

The Chairperson then went to the second focus area, which was human resource management, where discussion would be led by Mr Hlengwa.

Mr Hlengwa said that Mr Teboho Mokoena, Chief Deputy Commissioner (CDC): Human Resources, had been in place full time for the duration of the year under review and could therefore take full responsibility for issues of HR non-compliance. He referred to Item 45 on page 94 of the annual report, which stated that “a written overtime policy was not in place as required by Public Service regulations”. The AG had raised the same issue on page 121 of the 2012/13 AR. He asked for an explanation on this, and why the policy was not in place.

Mr Modise responded that the AG was right, as the overtime policy that the DCS had had was in draft form, and there had never been a policy in place on overtime.

The Chairperson said that SCOPA should rather hear from Mr Mokoena.

Mr Mokoena said that the reason the policy was not in place was that it formed part of an on-going engagement with the departmental bargaining chamber for organised labour. Some time ago, the DCS had decided to introduce the seven-day establishment, which meant that payment for overtime was no longer automatically paid for employees who worked on Saturdays and Sundays, This had been the norm, with the result that costs were spiralling out of control. A task team had been established basically to put in place a policy to regulate overtime, but to get to that point, an agreement was needed over the average hours to be worked and the new shift pattern that was to be installed. Regrettably, discussions between the DCS and organised labour had collapsed at some point after the introduction of the seven-day establishment, which had been piloted in Johannesburg, and the parties had gone their separate ways and decided to resolve the matter through the litigation approach. The DCS had then put a draft policy in place, and overtime was paid in accordance with public service regulations, as these provided overarching guidelines as to how to pay employees overtime. This was not the ideal situation, as the DCS should preferably have had its own approved policy in place. There was a draft policy that could be put in motion that should be finalised by the end of July 2015 after the relevant consultations had taken place in the Department’s bargaining chamber.

The response to anyone who had raised this issue previously would have been to say that it was being worked on, and that was also the response now. He had little comfort in the July deadline, as the bargaining had collapsed. The term “collapsed” was being used a lot in the DCS, and it was worrying. The Department of Home Affairs had had a similar issue but had “bitten the bullet” and had come to a swift and logical outcome.

The Chairperson asked how certain Mr Mokoena was that the agreement on the overtime policy would be concluded in the light of the previous engagement having collapsed.

Mr Booi said that there was a tradition for people to be transferred when there were no results, and the Committee might not find Mr Mokoena being there next time, which was why he would like a commitment from the Accounting Officer.

Mr Mokoena responded by borrowing the words of Mr Hlengwa -- that he would “bite the bullet” -- and would draw comfort on the basis of the DCS having stabilised its relationship with organised labour. One could go into the previous annual reports of the previous organised labour, which was the Police and Prisons Civil Rights Union (Popcru) and the Public Servants’ Association (PSA), which had described their relations with the DCS as non-existent and dysfunctional. The CDC, in its report of Popcru last year, had described the relationship as healthy.

Mr Booi said on a point of order that the more Popcru was drawn in, the more it would be needed to be brought to the Committee to confirm this statement.

The Chairperson said that focus should rather be on the July deadline and its certainty.

Mr Mokoena responded that perhaps giving background did not help but the context was that there was now a healthy relationship, and a draft was in place. The DCS could call its organised labour partners around a table and say, “here is a policy, let’s deliberate on it.” The challenge previously was that the DCS had been trying to create a perfect policy, and one knew that there was no perfect policy as it was an ever evolving document. One could say that by the end of July there would be a policy signed off by the trade union partners, because in essence the bedrock of the relationship had improved.

Mr Modise confirmed that the policy should be in place by the end of July 2015 and said he had seen the draft and was comfortable that the milestone would be reached.

Mr Hlengwa said that that particular issue would be interrogated at the end of July. In the private sector one hardly had these negotiations, as a policy was put in place and a firm stance taken.

The Minister said to Mr Booi that as an Executive, one could never be assured that one would be in office oneself, but as long as Mr Mokoena was in the DCS, he would be head of Human Resources, and he was sure that SCOPA would still be dealing with the same person.

Mr Hlengwa continued by referring to item 46 on page 94 of the AR which stated that “funded vacant posts were not always filled within 12 months, as required by the Public Service Regulations”. If one went back to the previous year, one would find that the AG had highlighted it before. The issue of non-compliance was that someone who was put into a position to oversee a division should be well versed with the PFMA, public service regulations and other relevant legislation, and was employed on the basis that the particular person was competent in that field. This non-compliance with the 12-month period for filling funded vacancies caused instability, and he was grateful that at least there was now a permanently appointed commissioner who had been in an acting capacity for a long time. A department could not be converted into a soap opera in which people were acting all the time. Was it really that difficult to find competent persons, keeping in mind that the unemployment rate in the country was so high, or was there just a deliberate attempt to not to do it and to get it done as and when someone felt like it.  He said that 12 months was an entire year, and asked why there was a resistance to simply following the regulations, in terms of which individuals were employed on the basis of being competent.

Mr Modise responded that the findings of the AG had been correct. There had been positions that had been vacant for periods longer than 12 months – some for almost 24 months. The simple reason was that time had not been set aside for the selection processes. This meant that once a position had been advertised, a list that of candidates would be compiled. A panel would do the shortlisting, the interview, the writing of the memorandum and then the appointment to the delegated authority. There had been a number of challenges in that regard, which included the availability of panel members.

Mr Mokoena said that the NC was correct and in focusing on the problem, the challenge had been that there was no prioritisation of recruitment, and advertisements had been released.

Mr Hlengwa interrupted and asked why recruitment was not being prioritised while advertisements were being released. Surely there had to be a process afterwards? It could not be a half job, as this amounted to a dereliction of duty.

The Chairperson asked why things had not been done appropriately.

Mr Mokoena responded that the DCS had a situation whereby line managers did not prioritise the filling of positions. Positions were advertised and once applications were received, there was a delay in terms of setting up panels and people making themselves available.

The Chairperson asked who these line managers reported to.

Mr Mokoena responded that depending on where the position was allocated within the DCS, one could be dealing with an area commissioner, a head of section in a particular prison, a Chief Deputy Commissioner or a Regional Commissioner (RC) depending on the level of the position. These were the line personnel responsible.

The Chairperson asked what Mr Mokoena’s responsibility was as head of Human Resources.

Mr Mokoena responded that it was the responsibility of Human Resources to advertise positions, and that had been done. Secondly, the question had also been raised as to what could be done to assist HR to facilitate the filling of vacant positions. It had then proceeded to appoint HR practitioners and had assigned them to respective branch heads. The respective HR selection and recruitment practitioners would be responsible for handling applications, and therefore the capacity had been beefed up. Thirdly, a decision had been taken at the national management committee (NatManco) to consider decentralising the filling of positions to the regions, but before that was done there had been a two-day workshop with all the regional participants.

Mr Hlengwa interjected, and reiterated that the question was what Mr Mokoena’s responsibility was as head of HR. The reality was that advertising in the absence of due process gave the public and applicants false hope. What was the recruitment policy, because surely if one advertised then logic told one that something had to follow after advertising, and there had to be turnaround time? This particular aspect was linked to what had been raised on page 67 of the AR, which had stated that the turnaround time was slow in dealing with these matters. Therefore there was a situation whereby the public was being flooded with advertising which cost money -- and then nothing was being done afterwards. He asked what the due process was, and who was responsible. The line mangers could not be blamed, as someone needed to crack the whip on the person who was responsible and if there was a bottleneck in the system, then surely HR must have a keen interest in unblocking that blockage. It was a waste money when advertising took place in the absence of due process.

Mr Kekana said that SCOPA would not get correct answers because the Accounting Officer was democratising management and was always saying “we, we, we.” If one read the PFMA, it was very clear that he was responsible and could not delegate that responsibility to someone else. If one looked at what Mr Mokoena had said and then looked at what had been said in the last paragraph of page 67, there was a clear contradiction, because the function that was being referred to had been outsourced. Page 67 stated “embarking on a process of outsourcing recruitment process in order to improve the turnaround time in the filling of vacancies”.

Mr Booi said that he was not interested in what Mr Mokoena had to say, because he had been misleading SCOPA. He said to the Accounting Officer that in the report he had signed, it had stated that “efforts were under way to strengthen the HR capacity in the department”. Mr Booi emphasised the word “efforts,” and said that he had been talking to SCOPA as if this capacity existed, because his report was not telling the truth. He was interested in hearing what the Accounting Officer had to say, because this was a major contradiction. The challenge now was how misleading Parliament was to be dealt with.

Ms Khunou said that if one looked into the report of the Statistician General, it would show one the statistics as far an unemployment was concerned. She asked what had happened to the funds that had been allocated to the vacant posts that had not been filled. The Committee had not come to dramatise issues, but rather to find solutions to the issues, but there had to be honesty. Clear answers were needed.

Ms Chiloane asked how much the DCS had paid for the advertisements for these posts. It was not acceptable that with the unemployment rate in the country being so high that people did not even receive a notice that their application was being processed, and said that it only took a month to fill a vacancy.

Mr Hlengwa asked for clarity on the recruitment process that was being followed. He also requested that at next week’s meeting, SCOPA be told how many posts had been advertised, the cost of the advertisements, how many of the posts had been funded and not filled and what had happened to the money where posts were not filled. He was inclined to believe those posts had deliberately been left vacant and in his view, this amounted to wasteful expenditure. He then referred to a picture that had been circulated, and which he had mentioned at a previous meeting, where piles and piles of applications had been dumped in a room and two officials had been in a jovial mood, dancing. That spat in the face of the country’s people.

The Minister said one would notice from the reports provided that in the past year, 16 senior management and various strategic positions had been filled, including the position of National Commissioner. As difficult as the challenges were, this was not an accident and he wanted to submit to SCOPA that the executive itself, having realised that this was a clear challenge, had taken it upon itself to ensure that this had happened. It may not have happened as quickly in some instances as would have been ideal, but it had certainly been considered as a priority area.

Mr Booi cautioned that the executive was not the Accounting Officer, and the Accounting Officer was the National Commissioner, as he had signed off on the report.

The Chairperson said that the Minister would be given an opportunity at the end and said that what the Minister was trying to say was what had been done subsequently. This was all very well and good, but SCOPA’s main focus was on what had happened and why. People who were manning the posts should be able to explain logically how things had happened the way they did.

Mr Smith said that he would like to remind members of the Department that SCOPA’s task was to hold them accountable for what was put into a public report. He referred to page 54 of the Annual Report, which stated that “the Department would embark on a process of outsourcing recruitment,” and additionally, “the activities to be outsourced included the placing of adverts and the response of handling those adverts, the compilation of gross short listing and drafting of preliminary shortlisting”. The fact that it was being outsourced was worrying, but what was more worrying was that the most basic of HR management duties were going to be outsourced. He asked if this was still the DCS’s policy, and if it was their policy, it would definitely not be accepted by Parliament. There was no way that the placing of adverts could be outsourced when the DCS had a fully-fledged HR unit. He asked for an explanation about this -- would it be outsourced, and did the HR unit have the capacity -- as a response was needed so that the Committee could resolve it with its own resolutions.

Mr Modise responded that the DCS’s commitment to the process outlined was that it would not outsource recruitment, as the DCS would be doing it itself by placing its own adverts and doing its own gross lists.

The Chairperson asked when this had changed.

Before the Mr Modise could respond, Mr Kekana said that this was a contradiction from what the Accounting Officer had said, because it was in the report and even in page 67 it stated that this was what had been done.

The Chairperson said this was fine, but the question was rather when this change had happened subsequent to this report, and why.

Mr Modise said that when the mentioned paragraph had been inserted it was still a thinking process which at the end of the day the DCS did not agree with, and it had never undertaken any recruitment function.

The Chairperson asked which other elements in the report were still in the process of being decided upon.

Mr Smith said that the sentence reading that “the Department would embark” did not imply a thinking process. It was in an annual report that was in the public domain. The bottom line was how much reliance could be put on this annual report. That was why the question had been asked as to what the current process was. If an answer was given, then fine. However, the Committee prepared on the basis of what was in the annual report and if someone came and said that subsequently something else had been done, this then baffled them as to what was in the report. He asked how much it had cost to publish the report because if it was not reliable, it amounted to fruitless expenditure and the cost had to be recouped.

Mr Hlengwa said that this was why he had asked what the process was. He again referred to page 54, which stated that “going forward the Department was also considering an e-recruitment process whereby prospective employees could apply online for advertised vacancies.” He asked for a firm response on what the recruitment policy was.

The Chairperson read the last line of the paragraph on page 54 with regard to e-recruitment which stated that “furthermore the e-recruitment would help with the reduction of paper applications which was presently problematic in terms of the handling and storage thereof”. This went back to what had been raised earlier by Mr Hlengwa on the circulating picture of officials dancing on the applications. He asked the Commissioner to respond on when the decision to outsource recruitment had changed.

Mr Booi asked the Accounting Officer if the report was relevant or whether the meeting should be ended and the Committee wait until he could say what was happening in the DCS. The Committee had no issue with the Accounting Officer, but would like to know if this report should be used for posing questions about it, as the Committee was trying to be compliant with the law. The Committee did not want to become subjective and wanted to deal with what was in front of it in “black and white”.

Ms Khunou suggested that SCOPA should have two days with the DCS so that everything could be dealt with thoroughly. She referred to page 20 of the annual report, which included the signature of the National Commissioner, which meant that he took responsibility for the document. All that SCOPA was asking the National Commissioner to say was that he took responsibility for the wrongs that had been done and would provide a plan on how they would be corrected.

Mr Hlengwa said that he was still waiting for a response to the question he had raised on the process. He referred to page 70, table 321, on the employment and vacancies by programme. It illustrated an example as to why there was this problem. The administrative vacancy rate was at 11.7%, and if one had a vacancy rate that was as high as that, then surely the operations faced a problem. The vacancies for other programmes were in fact also as high, as rehabilitations were 11.9%. He asked whether the human resource unit was fully capacitated, what the vacancy rate was and whether the people there were not just “warm bodies.” There could be a situation where these people were in office, but in the true sense of the word were just occupying the office and the work was not being done. In other words, were the people in office fit for purpose, because if they were not, there was a problem?

Mr Modise responded that he would like to qualify his response. Most of the positions in Human Resources were being filled, but whether they were filled to the requisite level was another matter. He said that there were six regions and in each region there was a Regional head responsible for filling vacancies from level 2 to level 12. Regions were not performing at the same levels, as there were regions which were performing excellently by filling vacancies after they had been advertised, but there were others that were performing badly.

Mr Booi referred the National Commissioner to the table on page 71 and asked him to look at the reasons for vacancies when he responded to the questions. He asked if the truth was contained in the table, or whether if it had been written by someone else who was misleading Parliament. The report was clearly saying that the DCS did not have the required capacity.

Mr Modise responded that it was exactly as he had said -- that the positions were being filled, but not to the required level in some of the regions. What was important was the capacity of the staff to do their work and this differed from region to region. He gave the example of the Western Cape, where there had been challenge by Solidarity and a court case that had prevented the filling of positions in levels 2 to 12. This had been a serious challenge to the DCS. He was saying this, as it was important to indicate where the DCS had done well and not done well. With regard to the filling of vacancies, the Gauteng region had done better than any other region simply due to the fact that in that region the filling of vacancies had been prioritised.

He wanted to respond to the question raised as to whether the DCS was able to fulfil its functions as it was expected to do. He could say that at this point in time there was a human resources unit in the DCS that was being rebuilt. At the time of the report, the HR capacity available had not been able to perform all the functions as expected but importantly, where regions had not performed to expected levels there had been no consequences, and that was the root cause of all the challenges. Regions were expected to perform projects timeously, but would continually ask for postponements without valid reasons. He undertook full responsibility for the state of the human resources unit at this point and that was why he and his team were looking for solutions to all these challenges. In the report that had been submitted, and the paragraph that Members had referred to regarding recruitment, this was a strategy to see whether there were no better ways of turning around the time of filling the vacancies. This strategy had not been approved after writing this report for Members of Parliament and the public. That was why he had said that recruitment was now being done by the DCS itself, which included the advertising, gross listing, short listing and interviewing.

Mr Hlengwa said that the issue of consequences on the areas of dereliction of duty and disciplinary action concerned him. He referred to page 78 of the annual report under table 372, which provided reasons for not having concluded performance agreements for senior management service (SMS) members. He was referring to this to make an example of this particular aspect. The table stated that the three SMS members had been suspended and a total of eight SMS members had not submitted performance agreements for 2013/14, and when one went down to the reasons it said that no disciplinary action had been taken. It seemed as if it were a free for all -- the Commissioner had said that the issue was that there had been a lack of consequences and discipline. Until such time that people did what they were supposed to do when they were supposed to do it within the parameters of all the rules and regulations, these problems would persist. It boiled down to employing people that were fit for purpose. He added that the Commissioner had been the commissioner for Gauteng, a region that had been doing well, and on this basis he would like to believe that he would impart this type of performance to the other five regions. His final issue was on page 74, “reasons why staff left the Department” and the issue of the expiry of 1 201 contracts, which was a high number. He asked what contracts these were, their duration and what linkage they had with posts that were permanently filled and whether those contracts included consultants. He had an additional issue on the transfer to other service departments, as earlier there had been an issue about the Commissioner not knowing whether people were still in the DCS or not. He asked whether people that had been transferred were part of the shortcomings faced by the DCS.

Ms Khunou said that two years ago, legislation had been passed in Parliament from the Department of Labour, which had dealt with the outsourcing of recruitment, and said that the DCS should align itself with it. Next week, when the DCS returned, it should respond according to that legislation. She asked the Chairperson if SCOPA could also have the regional heads in attendance for next week’s engagement, to come and answer for themselves. She hoped that she was not out of order when requesting this but would like an organogram of the DCS as well when the Department came again next week.

Ms Chiloane asked whether the DCS had a performance management system in place and whether the DCS had paid performance bonuses. If so, how did the DCS arrive at the conclusion that someone deserved a performance bonus? She said that senior managers did not deserve performance bonuses.

Mr Modise responded that no performance bonuses had been paid to SMS members. The performance bonuses that were paid applied to employees in levels 2 till 12. He said that with regard to SMS members, there was a performance management system in place, and in levels 2 till 12 there was not.

The Chairperson said that this meant the ones that had been paid had no performance management system. He asked on what basis these employees had been paid if there was no performance management plan.

Mr Modise responded that there was an overarching public service regulation with regard to the performance management of officials. On top of that, there was also a resolution that had been signed by the Department of Labour which was based on the overarching performance management system in the public service regulations. This had been an area that the AG had been raising with the DCS over a period of time, and the understanding was that the public service policy was the one that was needed by the AG. It had been asked of the AG whether it wanted the DCS to have its own policy with regard to performance management systems, and that was why the DCS now had a draft policy that should be approved shortly. That policy was for levels 2 till 12.

Ms Chiloane referred to a statement made by one of the Committee Members as to whether the report should be considered as the truth. When one checked page 94 under Human Resources item 47, “ performance management systems were not in place for employees other than Senior management, as required by the Public Service Regulations” and yet employees had received performance bonuses from levels 2 till 12. How did one determine whether the bonuses had gone to the relevant people when there were no performance management systems in place. Again, this was a lack of compliance with the law.

Mr Booi said that he would like to highlight a few issues. On page 74, table 3.53, there had never been a dismissal based on inefficiency. This showed that the Accounting Officer believed that everyone was efficient and was doing a good job. He also referred to page 127, table 7.3, with regard to written off debt and overpaid salaries to the amount of R159 000. On page 130, on employee benefits, that particular account was growing. He did not know how correct the information was, as both the Commissioner and the AG were sceptical of the report. He was just trying to show how internally management looked after each other, but the head of human resources could not answer questions.

Ms Khunou referred to page 56 on the donor funds, and said that it was good to see that some employees were being recognised and were getting money from Capitec. She asked how this money received as donor funds was disposed of.

The NC responded that normally what happened was that on annual basis a donor such as Capitec donated money and all the money received was recorded in a donations register, and if it was a region, the region declared it to the National Office. The Commissioner himself then approved that the donation was being used for what it was intended, and regional commissioners would also approve these donations. He said that apart from himself, the Supply Chain Management and Chief Directorate would also approve those donations.

The Chairperson asked which region was applicable for the Capitec donation.

Mr Modise responded that this particular donation was for the whole DCS.

The Chairperson said that his subjective conclusion at this point was that no manager could say that he had been a good manager.

Facilities

Mr Smith said that he would be dealing with facilities and then information technology (IT), in that order. In order to contextualize the facilities discussion, he referred to page 15, which stated that “we continue to face challenges with overcrowding”. He said that the he, the Minister and almost everyone else would agree that one of the biggest challenges was overcrowding, and that was why it had been decided that facilities should be touched upon.

He referred to page 43 of the annual report under the sub-programme of facilities. He started with the achievements in the previous year of 2012/13 in Tzaneen, where 89% of the refurbishments had been completed. If one looked at the last paragraph, it read that “Tzaneen was delayed due to slow progress of construction” for a whole year, and Tzaneen for a fact was not finished. The reason for this was that the contract of Tzaneen had been given to a company without it having the required financial capacity in 2012. It had been said that the challenge of overcrowding needed to be addressed, but yet Tzaneen had not been completed. The same contractor that was given the Tzaneen contract had been given the C Max contract, and the column in the annual report stated that “C Max delayed due to slow progress,” and C Max had started in 2012 as well. The point that was being made was that contracts had been awarded in 2012 and it was 2014, and the work had not yet been done. Contracts had been given to contractors without the relevant vetting because in the DCS’s own report to the Committee, it was said that “these contractors were not financially capable”. Again on page 43, the budget stated that the actual expenditure was R1.8 billion, therefore R1.8 billion had been budgeted for all this work and R1.8 billion had been paid. The question was, what had that paid for, because in the actual achievements of 2013/14 it was stated that “no bed spaces had been created”. No bed spaces had been created, yet the target had been 471, and C Max, Tzaneen and Matatiele Prison had not been completed. Those contractors had basically been asked to leave and yet R1.8 billion had been paid. Did the DCS pay these contractors and later find out that they did not have the capacity and if so, what were the chances of recouping the money. This was especially in the case of the same contractor who was given two contracts.

Mr Modise responded that the intended 471 bed spaces was never achieved because the construction at Tzaneen and C Max had not been concluded. It was true that the contractor that got the contracts for Tzaneen and C Max was the same contractor. What was important was that the overall evaluation and adjudication of contracts for building purposes was done by the Department of Public Works. Any report submitted to SCOPA was a combined report with the Department of Public Works at the end of a quarter and the end of the year to indicate what had been paid for. It was true that the amount indicated had been paid over to the Department of Public Works, but the DCS still did not have the requested accommodation that was to be acquired. The Minister and Deputy Minister of the Department of Public Works had been engaged with regard to those three projects, especially the one in Tzaneen and C Max, as Matatiele was about to be operational. There was no work being taken place at those two mentioned prisons and together with the Department of Public Works, the DCS was trying to find out what could be done.

The Chairperson suggested to Mr Smith that when the next meeting took place next week, the Department of Public Works should be called in to give input on these two contracts as to how they had been awarded and processed, and to find out the name of the company that hadgot those contracts.

Mr Smith said that he agreed with the suggestion and proposed that the facilities aspect should be done in the same fashion because 99% of the facilities were done by the Department of Public Works. He said that SCOPA adjudicates and approves funds for the DCS, and it could not outsource its responsibility. If it chose to give work to the Department of Public Works, then the Accounting Officer should still be held accountable because he was the one that had been given the money. He then said to the Minister that in incarceration, there was a budget of R10 billion, which included accommodation among other things, and 30% thereof (R3 billion) had gone to just one contractor. He asked the Minister whether it was financially prudent to give 30% of the budget to one contractor. When the Department of Public Works came to SCOPA, then it would need to be asked about the fact that one contractor got 30% of the budget. He was sure that the other 70% went towards employee compensation, and so on.

Information Technology (IT)

Mr Smith said that there was a general agreement in the room that if IT did not get sorted out then there would be serious repercussions in the DCS. He referred to page 39, which stated that “the Integrated Correctional Management Systems (ICMS) was 99% complete” and “the endpoint to enable interoperability was 99% complete”. He asked for confirmation from the Commissioner that it was in fact 99% complete as of 31 March 2014, because almost R1 billion had been spent there as well.

Mr Modise responded that it was 100% complete and operational.

Mr Smith said that this matter should not be laughed at, and he would get back to the 99% issue. The AG in his briefing had said that “there was inadequate design and implementation of database security controls in the active directory of the Government Information Technology Office (GITO) because of inconsistencies and no security of access”. He added that there had been inadequate training and security, there was limited disk space and a lack of resources to allow audit trails. He asked why the AG had picked up on this and said he was asking this in light of the amount of money that had been spent on IT.

Ms Nthabiseng Mosopye, General Information Technology Officer, responded that R1 billion had not been spent on IT consultants.

Mr Smith said that he had not said that R1 billion had been spent on IT consultants, but rather on IT itself. Page 39 of the annual report stated that R908 million had been spent on IT services.

Ms Mosopye responded that R1 billion had not been spent on IT services in the year under review. The amount of money spent by the DCS in the year under review was almost R237 million, of which 72% had been paid over to the State Information Technology Agency (SITA) for the mandatory services it performed in terms of the SITA Act. Therefore the amount on page 39 was not related to IT.

Mr Smith asked what was meant by “enabling interoperability, the integrated justice System (IJS) and the Integrated Correctional Management Systems (ICMS),” as he believed that it was part of ITC. If it did not form part of ITC, then what did it form part of? From his knowledge, the Integrated Justice System was part of ITC.

Ms Mosopye responded that the integrated justice system services were IT related and were not paid for by the DCS, but rather by the Department of Justice and Constitutional Development. With the IJS, an endpoint was just developed and in this case, the business process was being done. This meant that if there was an offender who came from the courts to the DCS, then their information would be taken back electronically to the Department of Justice and Constitutional Development when it was taken back to court for any court-related services. The second element also related to IT, and R1 billion had not been paid. This was about the business processes that were performed by the DCS with the consultant’s services to draw up business processes that would be used to automate offender information management. Therefore, both elements related to IT but both did not amount to R1 billion being paid.

Mr Smith said that this worried him in even more. He then referred to the first bullet point under performance indicators which read, “percentage of cases brought against the DCS defended.” The last bullet point said “ensure that African Correctional Services Association (ACSA) was capacitated.” This was a group that the DCS was a part of. He asked if R1 billion was spent on the percentage of cases defended and on ACSA.

He said that when the AG had briefed the Committee he had stated that “the DCS had not yet developed a disaster recovery plan, the internal control deficiencies were categorised as leadership deficiencies and so on”. He asked whether there was a disaster recovery plan and work done in that regard.

Ms Mosopye said that a disaster recovery plan was not in place because of the decentralised environment that existed. Each and every centre had its own application system. Having it would be too expensive for the DCS in such a decentralised environment. One would first have to decentralise the environment.

The Chairperson asked why it was not centralised.

Ms Mosopye responded that it was because of the size of the DCS and the facilities. The system was also built in the 1999 era, where every centre was being run as an individual centre and not as a centralised environment. It was important for the DCS to have it though.

Ms Khunou said that Ms Mosopye was contradicting herself as on the one hand she had said that it would be very expensive because of the DCS being decentralised, and on the other hand she had said that it was important to have it.

The Chairperson said that SCOPA’s concern was that there was no Disaster Management Plan in place, and yet it was supposed to be there. It was good that something was being done about it, but it should have been there in the year under review, and this was totally unacceptable.

Mr Smith said that he agreed that it was not acceptable. The DCS was dealing with 100 000 inmates that were all decentralised, and if there was no disaster recovery plan then what would happen if something failed. If it was not centralised, could Ms Mosopye at least answer whether the individual ones were backed up. Was there a decentralised backup system until the time a centralised backup system came into place.

Ms Mosopye responded that the DCS did have a backup system which enabled the recovery of servers if sites went down. There was a recovery process for that.

The Chairperson asked what was it that the AG had found wrong, or rather what the deficiency was.

Ms Mosopye said that the deficiency that existed was that paperwork was needed that showed that there was a decentralised environment and how the decentralised environment was recovered.

The Chairperson asked what the initial expenses were.

Ms Mosopye said that the expenses involved were that if one replicated the centres as they were with the old structures, one would first have to upgrade the network, which was what had been done.

The Chairperson said he understood this but what she was saying was that the AG had found there was no paperwork explaining why there was no backup system.

Mr Smith requested that the figure be given on how much was spent on IT, as it had been said by the official that R1 billion had not been spent. The DCS had previously had a problem with SITA over an amount of about R34 million, and it had been negotiated down, and hopefully it had been resolved. He asked if SITA had been paid the R34 million and if so, was it part of the figure that the official had said was used on IT.

Ms Mosopye responded that in the year under review, R162 million had been spent on IT. The amount in that figure that had been paid to SITA would be under computer services. She referred to page 123, item 5.2, which provided the amount paid to SITA. There was also an outstanding amount paid to SITA, and the reason for the outstanding amount was for mandatory services, which had been paid, and for consultant services used in the prior year of 2012/13 where it could not be verified whether or not those services had been rendered. SITA had been asked for proof of presence of those consultants and the DCS was still waiting on SITA to submit that proof.

Ms Khunou asked whether those consultants had been outsourced to SITA.

Ms Mosopye responded that the consultants had been outsourced to SITA.

Mr Smith said the AG had also raised the issue that “change management procedures were still in draft, furthermore changes to the admission and release application was not appropriately managed.” He asked for an update on the admission and release date applications.

Ms Mosopye responded that when changes had been made to the offenders’ admission system, they had not been properly documented. The business unit was not taking the requests and signing them off. There was a process and that process was still in draft. There had been meetings headed by the Deputy Commissioner where he had signed off, together with the relevant business unit, on any changes related to the system or business processes.

Mr Smith said the change management committee had been dissolved. He asked what the change management committee was, who headed it and what its task was. This was asked because the change management committee was part of the AG’s finding and part of the problem.

Ms Mosopye responded that the change management committee’s task was to sign off on the changes that were to be made to the system. That committee was not in function, and was headed more by the Deputy Director. What had been done since then was to make sure that the Deputy Commissioner and applications management did certain things in the committee, and he was the final signatory to that. This had been elevated to a senior management level to ensure that the changes made on the system were correct and were related to the requests made by the related business unit.

Mr Smith said that in the year 2012/13 it had been indicated that 31 consultants had been used and that those consultants were paid a total of R29 million for the year. This on average was R900 000 per consultant. He asked what those consultants’ roles and functions were.

Ms Mosopye responded that the roles and functions were land planning and design, land support services, service management services, security and environmental control services, technical management services, business solution maintenance services, business intelligence services, ICT governance and compliance services, business support and architecture support services, business and system analysis and internet and intranet development support.

Mr Smith asked how much of those skills had been transferred to the employees in the DCS. He also asked how many of those 31 consultants were still there, as the intention was for those consultants to be worked out of the Department. Consultants could not be there for ever. Consultants had to be managed by someone. He asked who managed those consultants. Lastly, he asked when those consultants would exit the system.

Ms Mosopye responded that as part of her team, there was the Chief Deputy Commissioner, the Director -- who was also an acting Chief Deputy Commissioner -- and there were also two managers who managed the work of the consultants. The consulting firms had been given a three-year contract which had started in November/December 2012, so the contract would end this year. The strategy now was to build the capacity. A business plan had been developed which was on the skills capacity that was sought to be built in the DCS. This was seen as a long term process, and there was a need to make sure that the posts were funded by the DCS to create capacity. The business proposal had been submitted. It was awaiting approval, and then funding would be sought for those positions.

The Chairperson said that it was almost at the end of the three-year contract with the consultants, and there were still problems in that area.

Mr Smith added that this was the point he wanted to make. It was almost at the end of the three years, and who would transfer those skills when the consultants were out of the system.

Ms Khunou said that it had been said that five different managers were there to supervise the consultants, but they were supervising on things that the managers did not even understand. She asked what it was that those supervisors were overseeing if they did not even know the work that the consultants were doing.

Ms Mosopye responded that it was not true that the supervisors did not understand, as the supervisors did have the required skills level. The five supervisors, including herself, had between ten and 20 years’ experience in IT. The work done required that skills level. The young ones in the DCS had been trained, but unfortunately there had been resignations.

The Chairperson said that the fundamental question was that when the contracts ended at the end of the year in November/December, were the people in the DCS able to run the system on their own. From what was being said, the DCS was still in the process of developing a business plan and needed to get funding. He asked what the implications would be in November/December -- would the consultants’ contracts be extended or would the consultants exit the system, as it was now June.

Ms Mosopye responded that realistically the DCS did not have the resources and structure to take over those skills.

The Chairperson asked what had then been happening over the past three years while the consultants had been there, to prepare for the end of the contract.

Ms Mosopye responded that there had been training over the three years, but unfortunately as everyone know, when a skill was imparted to someone they often moved on.

The Chairperson said that it should not be taken in that context that when someone was trained then they just left. A business plan was being processed and funds were being sought, which showed that nothing was in place. He asked what the Commissioner’s knowledge and awareness of this was, as he did not want manufactured answers in meetings. In his past experience with the DCS, it had always had all the answers to any question that had been raised, but when the time came for auditing, nothing would be changed.

Ms Khunou suggested that the Commissioner touch on this at the end of the meeting when he was set to speak. She said that she had been listening to Ms Mosopye as she was telling SCOPA what the consultants were doing, such as “business intelligence services.” The DCS dealt with serious problems in South Africa. Those who were employed by state would be compelled to follow the regulations of the state. Consultants were brought in to do things that were crucial and sensitive, and after that the consultant left. Therefore, were we really safe as a country?

Mr Modise responded that the concern by SCOPA was also shared by the DCS. The GITO was being built in the DCS, but it was not where the Department would like it to be at this point.

The Chairperson stopped him from going further.

Mr Smith said that he had indicated earlier on, that R28 million had been spent in 2013/14 and the same amount of money had been spent in 2014/15. Listening to what Ms Mosopye had said, the same amount of money would most likely be spent in 2015/16 just for capacitating people. That was almost R30 Million that was being spent on consultants in the IT environment, and the reality was that in six months the DCS would not have those skills. If the framework had not yet been built and there was only six months left and people had not been hired, then chances were that the same amount of money would be spent in the next financial year.

The Chairperson added that this went back to the issue Mr Smith had raised on the recruitment in the Human Resources Unit.

Mr Smith said that Ms Mosopye had indicated earlier that there was no work to be done on the Integrated Justice System, and it was just “paperwork”. His understanding was that a system was needed where, if an inmate walked in today, his information was captured so that even if he was somewhere else tomorrow the system would be able to pick it up. He asked what the DCS’s role was in contributing to the Integrated Justice System and whether there was any IT component to it.

The Chairperson made a suggestion that as Ms Khunou had indicated, the engagement was at halftime and the second half would come next week. Some of the layers had been dealt with today but there were still some outstanding layers. He suggested the meeting should stop right now and continue next week from where the meeting had been stopped and then deal with issues such as infrastructure and the documents before the Committee that had been submitted late. If the suggestion was accepted, then the Minister could be given an opportunity to touch on some of the issues that had been raised. Members agreed with this suggestion.

Minister’s summation

Mr Masutha said that with the limited time available and given that the full range of areas had not been covered, it would be unrealistic from his side to comment in broad terms on all the areas that had been discussed. He wanted to highlight a few areas that he considered to be critical.

He had earlier started to comment on the Department’s human resources and capacity. The DCS had declared that for a correctional services system, burdened with its level of responsibility, the required staffing levels would be in the region of 60 000. However, the approved establishment was at about 42 000, but in practical terms was in the region of 39 000 “warm bodies” to run a full range of services. That also touched on the issue of under-spending in the human resources component of the DCS’s budget.

One of the explanations that had been given was that it was due to the high level of attrition that far outstripped the Department’s ability to absorb and rejuvenate the human resources capacity. He felt that this issue was too critical to be put on the backburner -- and that excluded the 16 positions in management that he had previously spoken about, to say that it was not an accident that the DCS had moved as much as it had over the past 12 months in addressing the prioritisation of filling vacancies at the senior level. Management was inclined to believe that much of the dysfunctionality that had been demonstrated at the meeting had to do with some of the challenges at senior management level.

The adverts which had been seen all over the country over the past few weeks had resulted in a flood of applications, which had put the DCS on the back foot. A million applications had been received for the filling of 3 000 vacancies. This was because this issue had focused on, and it could not continue to be said that the DCS had a challenge of a shortage of staff in the face of high levels of employment, especially among young people, and not taking drastic measures to respond to it. In seeking to understand the problem, it had been discovered that the DCS had only one intake per year because of the three month-training that resulted in absorption. The fact that a year constituted 12 months and only one intake was done per year, culminated in the DCS deciding that whatever was done, “we want those positions filled yesterday and how you do it, you go and find a way.” The DCS could not continue to complain about a shortage of staff and return money to Treasury every year, and even divert the money to other programmes. This was a labour intensive department, and the human resources unit was critical.

The second area which the DCS sought to confront was related to irregularities and complying with prescripts. When he was appointed, he had immediately encountered a situation where there were questions around a particular tender in respect of electronic monitoring. After discussions with the Acting Commissioner, who was now Commissioner, it was decided that he must initiate a forensic investigation. It had been made clear in the DCS that any smoke anywhere must trigger an investigation. There had been issues about the construction projects and the numerous challenges associated with them, the difficulty of the interface between the DCS and the Department of Public Works. The Deputy Minister was in a position to explain the interventions that he had made with the Deputy Minister of Public Works to address those issues.

One area he had identified on his appointment was internal audit, and it had been decided that there was no way in which the DCS could go on without a proper internal audit unit. Eventually an audit committee of four experts had been constituted. He, as the executive, had not done enough follow up to establish for himself how the newly constituted audit committee was doing. He personally assumed that if he was not hearing anything, then it meant that everything was fine and that was why he had expressed the shock that he had expressed earlier, that even with the new intervention the old problems had not gone away. Every time there had been a meeting with management, the executive had said that “we were only politicians and not experts on these matters, so bring them to our attention so that we can assist you”. It did not help to have these matters popping up when the AG was raising them in front of SCOPA or the media. He could assure SCOPA that at no point had he been given the impression that the internal audit system was still not fully functional.

He said that it was the first time he had appeared before SCOPA but could only express his most sincere appreciation that the DCS was being shown specifically and in detail where the problems were, and this was a great resource for the DCS to have. He would engage on the issues raised with the DCS and demand further answers, and would persist and pursue them. This included instances where consequences were required, with appropriate action and institutions put in place.

He concluded by saying that when one was the incumbent, it was not a good thing to be critical of the status quo that one had inherited, but the reality was that this Department had had serious challenges for far too long. It was not only in terms of audit compliance, but even in the service environment. The executive had had to intervene, for example, to ensure that the parole system was compliant with the law and that the inmates’ profiles were properly constructed, and that from the day the inmate was incarcerated till the day he finished his sentence proper records were kept of programmes and rehabilitations. He would not embarrass himself by indicating how many parole applications had not been processed due to administrative issues. A team had been established to develop the systems, but also to ensure that there was monitoring even before the profiles were evaluated, and that administrative systems ensured that they were proper in terms of content, and so on.

He would like to indicate to SCOPA that from his perspective, there was still a huge task facing the Department. He could not assure SCOPA that in a year’s time the DCS would have reached a point where it could be put on a pedestal and say that it was an “A class” government institution, as it would take time. However, SCOPA’s guidance was appreciated, as it had picked up on matters that the DCS itself had not identified.

Chairperson’s closing remarks

The Chairperson said that he believed that the presence of the Minister and Deputy Minister at the meeting would be of assistance to the Department. He told the Commissioner that he wanted the then Acting Chief Audit Executive to be present at the next week’s meeting. Secondly, he reminded the Department that SCOPA required information on the adverts in the year under review, and they could be sent before next week’s meeting. In addition, details were required of the 18 employees, and whether these people were still in the DCS, and if they people had left, then where they were now. The regional heads must also be in attendance. The DPW and IDT would also be contacted. The issues raised by the audit committee member on the challenges being faced, needed to be tied down.

Next week, specifics would be dealt with, such as when meetings were cancelled and who was responsible for organising the meetings so that it could be determined who that person was reporting to. The audit committee had been frustrated by the leadership present here today. Next week the delegation size needed to be cut down, as people needed to be brought in who could make a contribution, otherwise it was a waste of money. There was a strong possibility that next week’s meeting would take place on Wednesday, but this would be confirmed later in the day.

The meeting was adjourned.