Independent Development Trust on its 2014/15 Annual Report, with Deputy Minister present

Meeting report

Briefing by Independent Development Trust (IDT)

Mr Coceko Pakade, Chief Executive Officer (CEO), IDT, stated that the entity had been in a transitional phase for the past 5 years. The transformation process was aimed at maximising IDT’s contribution to the country’s development effort. Interactive engagements with key stakeholders point to the need for the IDT to be a critical vehicle that supported the government to deliver social infrastructure across the country. The IDT had experienced portfolio growth of approximately 500 % within the last 7 years, accompanied by operational challenges, chief being financial viability. The IDT had received a disclaimer audit opinion in 2014/15 financial year and this was after 11 consecutive unqualified opinions, spanning 2002/03 to 2012/13.

The basis of the disclaimer for 2014/15 included the following:

• Lack of sufficient appropriate audit evidence regarding balances relating to programme reserves and liabilities

• Lack of sufficient appropriate audit evidence regarding revenue and trade and other receivables

• Lack of sufficient appropriate audit evidence regarding impairment provision for trade and other receivables

• The material misstatement in financial statements amounting to R7.3 million in expenditure; other income; property, plant and equipment; and other trade and other payables

The root causes of the disclaimer audit opinion in the 2014/15 financial year ranged from a number of factors that were not dealt with adequately in the entity. The main factors comprised of inadequate investment in systems and business processes and inadequate human resource capacity in critical areas arising from staff recruitment moratorium induced by the transformation process. The exponential portfolio growth was also outstripping investments in systems and human resources and the change in funding model characterised by teething challenges relating to service billing, exacerbating the solvency risks. The Auditor-General (AG) had instituted in the 2014/15 audit period, stringent compliance with accounting standards relating to disclosure of programme funds managed on behalf of clients. The Board had already initiated a 2-pronged approach to remedy the situation, specifically focusing on leadership review and management accountability, the Turnaround Strategy and Plan; and a comprehensive audit action plan. The priority of the Board at the moment was to attain an unqualified report in the 2015/16 financial year and beyond and ensure that the officials are being held accountable. IDT should be developed into a leading public sector social infrastructure programme implementation and management agency by ensuring maximum returns to the shareholder.

Mr Pakade added that the objectives of the IDT Turnaround Strategy, covering the period 1 April 2015 to 31 March 2020, were to strategically position the entity as a premier social infrastructure programme delivery management organisation, regain confidence of the shareholder, client departments and stakeholders and ensure financial sustainability, prudent financial management and accountability for the IDT as well as for client funds. The other objectives of the Turnaround Strategy focused primarily on attracting and retaining appropriately qualified, committed and motivated personnel and develop and utilise effective and efficient business systems and processes to successfully implement programmes that contribute to the improvements in the quality of life of communities. There were 3 interlinked timelines that were utilised for measuring the implementation of the Turnaround Strategy. The short term implementation ran from 1 April 2015 to 31 March 2016, the medium term ran from 1 April 2015 to 31 March 2018 and the long term from 1 April 2015 to 31 March 2020.

There were a number of measures that had already been initiated to remedy the situation in the entity and these included the dismissal of the Chief Financial Officer (CFO) for dereliction of duty, among others. It must be highlighted that the dismissed CFO was due to retire in December 2015. An accounting firm had been engaged to provide comprehensive financial advisory and technical services to support the organisation in addressing the AG’s findings. The senior positions to take charge of tender management have been introduced in all the major regional offices in Eastern Cape, KwaZulu-Natal and Limpopo and advertised. The post of Executive: Programme Management Services had been advertised to strengthen programme delivery management. The appointment of the CFO was already completed and the individual was already present in the meeting.

Mr Pakade stated that IDT comprised of two programmes and these included Programme 1: Integrated Service Delivery and Programme 2: Administration. The strategic objective 1 for Programme 1 was to deliver quality social infrastructure on time, within budget and scope. IDT’s distinctive developmental approach to social infrastructure delivery empowers communities to receive, own, manage and sustain their own development. The strategic objective 2 was to ensure that IDT was a compliant, results-based, efficient and focused entity by maintaining a clean administration which is committed to the efficient application of resources, compliance with regulations and legislation. The overall performance of IDT showed that the entity supported 44 government departments out of the targeted 40, resulting in 110% achievement. The target for the value of total programme spend was R7 billion and the actual performance was R6.371 billion, resulting in a saving of R628 million. The targeted number of work opportunities to be created by IDT portfolio was 35 000 and the actual performance was 20 983, resulting in 60% achievement.

The targeted value of contracts awarded to women was R1.4 billion and the actual achievement was sitting at R1.72 billion (123%). The target for the approximate contracts awarded to young people was R1.5 billion and the actual achievement was R1.08 billion (103%). The targeted number of schools to be built and replaced was 50 and the actual performance was 42 (91%). The percentage of women contractors participating in the Contractors Development Programme (CDP) was targeted to be 75% and the actual achievement was 67%, resulting in 89% of the achievement. The target for the number of Expanded Public Works Programme (EPWP) to be created was 50 000 and the actual achievement was 52 268 (106%). The overview of performance for strategic objective 2 showed that the annual target for efficiency ratio was 6.5% and the actual performance was 6%, resulting in 108% achievement. The annual target for average management fee was 5% and the actual performance was 5.9% (118%). IDT managed to ensure the implementation of an effective communications and stakeholder management strategy. The annual target on the number of comprehensive strategic and operational research projects was 5 and the actual performance was also 5 (100% achievement).

Mr Pakade mentioned that the bulk of the spending by the portfolio was mainly on school building (53.9%), followed by justice systems (12.5%), poverty relief and EPWP (10.6%), healthcare and facilities (9.7%), welfare support and facilities (7.7%), sports, arts and culture (2.4%), water and sanitation (2.3%) and environmental interventions (0.7%). There were a number of measures in place that are aimed to address persistent underperformance in IDT and these included:

• Engage National Treasury to address the diversion, cutting and withdrawal of programme funds for building and upgrading of schools after contracting

• Engage client departments to commit to job creation objectives of the State so as to increase the number of people employed in EPWP and Non-State Sector Programme (NSS)

• Secure client departments’ support for the contractor development programme

• Devise a compréhensive Audit Action Plan developed by management to address the disclaimed audit opinion

• All new PIAAs are based on the rates of management fees approved by National Treasury to ensure viable and improved cost recovery from 2015/16 and beyond

The key Board priority issues that had already been implemented focused on contributing to the development of the IDT Business Case and confirmation of the IDT Mandate. There was also a priority to provide leadership towards the long-term financial sustainability of the Organisation and ensuring effective governance and compliance, and a culture of consequence management. The recruitment of a new CEO had already been completed and this was aimed at ensuring a smooth leadership transition. Securing operational stability of the organisation through: providing parameters for recruitment of new staff and extension of contracts of critical staff and enhancements of business processes, systems and approaches to ensure programme management efficiency. The number of personnel in the Organisation has decreased from 413 in the 2009/10 financial to 350 in 2014/15. The salary bill (including performance bonus provision) for the personnel was R211 million in 2009/10 financial and R212 million in 2014/15. IDT had recorded a total of 12 cases of misconduct, with insubordination (27%) dominating the cases, followed by financial misconduct (27%) while dereliction, absenteeism and insolence accounted for 13% each.

Mr Pakade pointed out that the cost containment strategy sought to balance the increasing demand for the IDT’s services and the resources required to meet that demand with the need to control and limit cost increases. Whilst the Efficiency ratios exceeded the targets set, there was the real risk that quality was being compromised and resources were being stretched to the limit. There was a need for IDT to improve on factors affecting measures for revenue management, particularly on programme reconciliation and reporting; management fee billing and collection; and programme/project execution monitoring. It was concerning that the consultancy fees are centrally monitored and actuals include three consultants whose costs were accrued after disputed values were resolved and costs finalised. The travel costs were within budget; there had been a focus on cost containment and programme related travel was recovered from programmes where applicable. However, it was still concerning that the number of claims arising from late payment remains unacceptably high.

The going concern principle was the assumption that an organisation would remain in business for the foreseeable future. The measurement was for a rolling period of 12 months. This implied that the entity would not be forced to halt its operations and liquidate its assets within this time frame. The IDT has, in the past, been able to rely on the capital fund to fund its operations, with the capital fund depleted, the organisation now must prioritise on generation of sufficient management fees from clients to fund the operating expenditure. There were a number of steps that had been taken to stabilise the situation in the Organisation and these included: The appointment of the CEO, CFO and closing of gaps in the staff establishment and the recruitment of professional accredited built environment personnel and the support by the Executive Authority particularly in matters relating to the long term sustainability of the IDT.

Mr Pakade concluded that long transformation processes causing uncertainty amongst client departments and IDT staff, delays by some client departments in transferring funds, withdrawal of business portfolio by some client departments and the continuing high staff turnover of critical skills in programme management. The Department and the IDT were nearing consensus on the annual allocation of portfolio to ensure that the entity concentrates on implementation, as well as to secure the financial viability of the organisation. The Board was still waiting for the impending confirmation of the IDT mandate, and conclusion of the IDT Business Case. The IDT Turnaround Strategy and Plan, was basically geared at addressing the organisational performance and integrity concerns.

Discussion

The Chairperson appreciated the presentation that had been made and then indicated that it was not enough for the Committee to accept that the previous CFO had been dismissed, without getting detailed information as to why this person was dismissed. It was also worrying that the organisation had moved from an unqualified audit opinion to a disclaimer, and this needed to be addressed with urgency. The Committee should also get more information on the reason why some people in the entity had resigned and the steps that had already been taken to deal decisively with the matter. In relation to the Turnaround Strategy, it was unacceptable to hear that IDT had been undergoing the Turnaround Strategy for the past seven years, especially when the current Turnaround Strategy was also likely to take another five years. Members would soon be going to the elections in the coming three years and it would be undesirable for most of the issues to be escalated to the next Parliament.

Ms D Kohler-Barnard (DA) also agreed with the remarks that had been made by the Chairperson and reiterated that the Committee needed to be provided with information on why the previous CFO was dismissed. The Committee could also not just pass the fact that the disclaimer audit opinion was the worst possible outcome in terms of the AG’s audit opinion. It was evident that the performance of IDT had been declining, moving from an unqualified audit opinion to a disclaimer. She believed that the performance of the entity had reached a stage where it would be recommended that the Special Investigation Unit (SIU) should be called in to intervene on the matter. The list of concerns that had been raised in the AG report around the functioning of the entity was rather catastrophic. The ultimate goal of any entity was to achieve an unqualified audit opinion and this was precisely what IDT should be striving for at the moment.

Ms Kohler-Barnard commended that the entity for dismissing the previous CFO, but wondered whether that same individual would not reemerge in another government department or entity. Who was being held to account for fruitless and wasteful expenditure? There should also be someone who is held into account for the number of claims from late payment to the clients. In relation to the issue of doubtful debts, the Committee should be provided for more information on the stringent action that had been taken against those who were responsible for an unrecoverable amount of R37.1 million. Who was behind the signing off of a contract, which landed the entity into those doubtful debts?

Mr M Filtane (UDM) appreciated the comprehensive presentation that had been made by IDT and the frankness from the Board on the matters that were of concern, as this would assist the Committee to get a critical appraisal of what had been going on and the recommendations going forward. The Integrated Service Delivery Programme remained critically important in the country, especially the building and the maintenance of schools in deep rural areas. It was a norm in some parts of Eastern Cape to find learners still schooling under the trees or dilapidated housing structures. He wanted to know if it was possible for IDT to reprioritise its budget to respond to where much of the resources were desperately needed. In relation to the Turnaround Strategy, it would perhaps be useful to specifically ask the Department if there was a specific date by which the issue of the transitional stage of IDT would be completed. This question should be juxtaposed with a significant decline in staff complement of IDT from 413 in 2009/10 financial year to 350 in 2014/15.

Mr Filtane added that the dismissal of the CFO needed to be investigated further as one of the reasons for getting a disclaimer audit opinion was related to issues of financial misconduct like fraud and corruption. The Committee should be provided with a detailed report on the dismissal of the CFO, and this would assist to ascertain if there are no other people within the entity that were part of the misconduct that was committed by the CFO. There should indeed be a policy in place that would prevent the situation where individuals that had committed financial misconduct would reemerge in other government departments or entities. He suggested that the Turnaround Strategy should put more emphasis on the importance of hiring individuals who were not only highly qualified but also vastly experienced in the construction industry. In essence, the focus should be on strengthening the appointment of appropriately qualified, committed and motivated personnel. The decline in the number of jobs that had been created by 40% was concerning, especially when one considers the high number of unemployment in the country.

In relation to organisational challenges, issues like insubordinations and financial misconducts were human-driven matters, and mostly premised around attitudinal base towards the prescripts of the Public Financial Management Act (PFMA). Governance and management within the IDT should be tightened and there was a general feeling that the entity had been lenient in punishing offences related to insubordinations and financial misconducts. The slow transfer of funds to the service providers was concerning as this was against development and operation of the private entrepreneurs. The departments that relied on the private entrepreneurs to do business for are extremely unhappy about the slow pace in the transfer of funds. What was clearly missing in the presentation was detailed information on the specific social impact that had been made by IDT through building and maintenance of schools, clinics and other infrastructure. It would be useful for the Committee to be provided with a complementary report on the jobs that had been created through the projects that are undertaken by IDT.

Mr K Sithole (IFP) expressed concern that some of the information that had been provided was the “cut and paste” of the information that was presented in the last gathering. There should be measures in place to deal with the decline in the approximate value of contracts awarded to women and percentage of women participating in CDP. Was there a system in place to accelerate skills transfer within the entity? It was unclear from the presentation as to whether the reference to “transformation” was for racial transformation or transformation of the operation of the entity. The Committee should be provided with specific timelines for the filling in of the 91 vacant posts. He wanted to know if IDT had achieved the targeted outcomes in the 10% investment on the operational expenditure. IDT should take action against the officials who were found to have private business interest in awarding tenders to contractors, as this was contravening section 50 of the PFMA. What had been causing delays in the renewal of expired contracts of contractors? It was unlikely that the entity would be able to move from a disclaimer audit opinion to unqualified audit in the current financial year.

Ms E Masehela (ANC) also welcomed the comprehensive presentation that had been made and then went on to complain that a relatively low number of women were employed in the entity. It was unacceptable to hear that 21% of the posts at IDT were vacant, especially when one considered the thorny issue of unemployment and poverty in the country. IDT should provide more information on why the entity had only created 20 983 work opportunities out of the targeted 35 000. What was the strategy in place to deal promptly with the late submission of invoices to contractors? IDT should also prioritise on ensuring that the information available on invoices was captured accurately and correctly and the payment is made on time to the contractors.

Ms P Adams (ANC) urged the Board to ensure that two women who were present in the meeting should also be given an opportunity to make their inputs on the discussions. The Committee should be provided with detailed information on why the entity had moved from an unqualified audit opinion to a disclaimer. IDT should consult the technical assistance unit under NT in order to request assistance on technical matters and human resources. The PFMA was quite clear that government departments and entities should pay the contractors within the period of 30 days. The EPWP should start having an impact in deep rural areas, as this was where unemployment was extremely high.

Mr Jeremy Cronin, Deputy Minister of Public Works, responded that it would be helpful for Members to be presented with a brief history of the IDT in order to locate the current challenges to historical events. The IDT was set up by an apartheid regime as an independent development trust and this was done with an initial trust fund of R2 billion. The idea was that the trust fund would lift-off the interest and the strategic objective of the apartheid regime then was that this would create black upper-middle class. There was a Cabinet decision in 2007 to change the entity to be more like a Non-Governmental Organisation (NGO) that would function as a public entity in some form. The transition period that was referred to in the presentation spoke of a period longer than the 5 years. It was then in the past five years that there were discussions on the sustainability of IDT and whether the entity should continue to exist and how it should continue to exist or operate going forward.

Deputy Minister Cronin added that what was becoming a main concern in the operation of the entity was that it was continuously dependent on the Treasury transfers so as to keep going. The debates around the business case of IDT went back and forth and the Department together with the Ministry should take some blame for the slow movement in the implementation of the Turnaround Strategy of IDT. The Department was looking at other possible options of developing another government component like the DMTE which would be responsible for project and programme management in the construction sector. However, the problem with doing that was on the kind of relationship this envisioned government component would have with government clients departments and even the private sector. IDT would explore the possibility of working together with the mining sector, with the main focus on building and refurbishment of houses for mineworkers. The Department together with the colleagues of IDT would come back and report more fully to the Committee on the way forward regarding the future of IDT.

Deputy Minister Cronin stated that the IDT was still lacking capacity in programme and project management. It was clear that a significant proportion of work was dedicated to the building and refurbishment of schools and the Department has already formulated a strong relationship with the Department of Basic Education (DBE) in this regard. The Department was trying to encourage the provincial departments of Public Works to follow the lead in dedicating more resources to building schools. However, the Department could not instruct this to provinces as some provincial departments were very keen to work with IDT while others were still skeptical, for a variety of reasons including the perennial problem of poor performance and other range of reasons. One of the priorities of the Turnaround Strategy would be to ensure that the national department of Public Works and the provincial departments are able to get into contract directly with other public sector and even with the private sector. The Department would like to apologise about the slow pace that has been taken in completing the transitional phase that was being undergone by IDT. The focus on transition was basically on the organisational institution legal form that should be taken by IDT. The plan of the Department was not to wait for the legal formality in order to move in the desired position and this was the kind of confidence that was being instilled to the Board at the current moment.

Deputy Minister Cronin agreed that it was indeed true that IDT was losing a lot of competent and qualified individuals, but it was also getting rid of a lot of “bad apples”. The new management was beginning to turnaround the operation and functioning of IDT and this was something that should be commended. There was a general suspicion that the main cause of a disclaimer audit opinion in 2014/15 financial year was on the fact that the AG had suddenly and meticulously drilled down on the root causes of underperformance at IDT. This was not to say that IDT should disregard all the main concerns that had been raised by the AG, particularly around financial misconducts and insubordinations.

Deputy Minister Cronin urged that Members should be critical where required and this should be done appropriately, also taking into consideration of other positives that had been achieved. It was already known that the main weakness across government was in programme and project management in construction and this was a capacity that should be developed and nurtured. There are a large number of things that IDT had delivered, using community involvement and participation capacity instead of programme and project management capacity. There was not even a single IDT infrastructure that had been destroyed in the township service delivery protests, unlike many other infrastructures and this showed the kind of social facilitation that was being inculcated by IDT. In essence, the Department together with IDT should all accept and respect the audit findings that had been presented, but there was also a need to accept the “popular audit”, which is primarily premised around community involvement.

Dr Somadoda Fikeni, Chairperson: Board of Trustees; appreciated that the Deputy Minister had already clarified some of the questions that had been asked by Members, especially those that were outside the mandate of IDT. The reconfiguration of IDT started in 2007 and this meant that the entity had been operating for about eight years without certainty. The Board was also equally outraged by the disclaimer audit opinion and this was also bruising the professional standards of Board members. There is a concerted effort to strengthen the internal controls and addressing other issues that had been flagged by the AG in order to get a qualified audit opinion in 2015/16 financial year. The Board was also taking full responsibility for receiving a disclaimer audit opinion and was hoping things would be slightly different in the current financial year. There are a number of measures that had been taken by the Board in order to take control and responsibility of the situation and these included cutting bonuses for senior executives and taking disciplinary measures against the previous CFO. The main concerns that were raised by the AG report was there was a lot of financial mismanagement at IDT and this was caused by lack of effective leadership.

Dr Fikeni indicated that he had spent two days testifying in the disciplinary committee around the need for the previous CFO to be dismissed and some of the money that had been lost to be recovered. IDT had approached the Accountant General and Treasury on the need to take over the matter of recovering funds from those that had committed financial misconducts, starting from the Executive to the low-level staff. The Treasury also promised to assist IDT in cases where a suspected individual would resign during the investigation of a case and this was one of the actions that have been taken to ensure that public resources are accounted for. The Board may not have all the responses to the questions that had been asked and this was precisely because some of the matters are still under investigation and people’s computers are being taken away for scoping and imaging.

IDT had no legislative mandate of ensuring that individuals that have committed financial misconducts are not able to reemerge in other government departments or entities. The Board would strongly support any policy that would prevent any individual who have committed financial misconduct from reemerging in another public sector in the future.

Deputy Minister Cronin suggested that the Committee should be given the name of the dismissed CFO.

Dr Fikeni responded that the name of the dismissed CFO was Mr Ian Ellis and the individual was given a period for an appeal but he had not done so as yet. IDT had called a staff meeting to brief everyone on the anti-corruption mission that had been instituted and the message was loud and clear that corruption would not be tolerated as the entity was holding large public resources. IDT has also done a workshop with the AG and this was to create a mutual relationship that would assist IDT towards achieving an unqualified audit opinion. The workshop was premised on the way forward in turning things around and there is a task-team that is assisting IDT on the Turnaround Strategy. There was indeed a suspicion that the disclaimer audit opinion emanated from a number of issues that dated back some years ago. There was an awareness of weaknesses that have been pointed out in the AG report but there is also appreciation of the deliverable of infrastructure to different schools, clinics and Early Childhood Centres (ECDs). In relation to the question around the reprioritisation of resources particularly in disaster relief programmes, this was an important area that needed to be prioritised but this was outside the remit of IDT as the task was assigned by DPW.

IDT was operating under a limited budget and therefore it was for this reason that the Knowledge and Research Unit was closed down so as to focus on the core business and mandate of IDT. The Unit used to assist the entity in conducting impact assessment. The funding for social facilitation programme was coming from the reserves of IDT instead of the Department, as most of the government departments seem to underestimate the importance of monitoring social facilitation. It would be tragic for any department or entity to undertake any social programme without the consultation of community members. Community members should have a sense of ownership to any social programme that is aimed at the developing community at large, so as to counteract cases of rampant vandalism during the service delivery protests. IDT has noted the complaint that has been flagged around the “copy and paste” in some parts of the presentation and this was caused by the fact that the bulk of the presentation was done prior to the dismissal of the previous CFO.

Dr Fikeni highlighted that the Board has taken a decision to freeze some of the vacant posts at IDT as there was still uncertainty around the mandate of IDT. However, IDT was now starting to open up most of the vacant posts as the Department was on the verge of providing certainty around the mandate of the entity. The freezing of some of the posts was in response to the new Companies Act, which stipulates that a company could be held reliable for appointing an individual without certainty on its sustainability or viability. The Board would also like to see more and women as part and parcel of IDT, particularly in higher positions. In conclusion, IDT decided to be brutally honest about the problem of underperformance and the disclaimer audit opinion as this was something that has rightfully outraged.

Ms Seipati Boulton, Chairperson: Audit and Risk Committee, replied that the Board had indicated in the previous gathering that there were a number of cases that had been referred to forensic investigation. IDT had also appointed the SIU to assist in the alleged irregularities around areas of contract management, governance of Supply Chain Management (SCM) for the period of 2013/14 financial year. The preliminary report on investigation was already released and there were 10 findings ranging from non-compliance with governance and conflict of interest at the Human Resource (HR) level. The report made a number of recommendations to be made and these have already been implemented by the Board. IDT was also doing a follow-up on a quarterly basis on the internal controls that needed to be implemented. It has already been indicated that the Board has already approached the Treasury to provide assistance on complex cases that required recovery of funds.

Ms Boulton added that there was a full-blown deployment of investigators to the various units within IDT on 08 February 2016 and there was a scoping and imaging of staff computers and laptops. The establishment of a hotline to report corruption was aimed at providing assistance on a number of investigations that are already underway. It was expected that all the investigations would be completed by 30 April 2016 and the findings would be immediately shared to the Committee.

Mr Pakade stated that the level of cooperation between the management and the Board had improved drastically and this was a favourable environment for any entity to succeed. The attitude on compliance to internal controls and prescripts of SCM and PFMA has also improved and the Board was trying to inculcate a culture of accountability and transparency. IDT needs to deal decisively with the problem of irregular expenditure as this was directly and negatively impacting on its clients. The Board had taken the stance to recover the funds from any individual that had been found to be responsible for irregular expenditure. There were legal processes that are being pursued to companies that are found to have been in collision with staff members in conducting corrupt activities.

Ms Nicky Mogorosi, CFO of IDT, replied that the amount on doubtful debts was around R53 million and this was caused by the fact that the entity had disputes that came as a result of the NT instructions and then started to charge the clients differently on a sliding scale. Some of the clients accepted the charges that have been introduced but some have also refused to comply with the new charges. IDT was currently engaging with all its clients and there was a possibility that about an amount of R3 million would be written-off in terms of substitutes. Another reason for the provision was that some of the programme records were not accepted in terms of the reporting style and also the issue of accuracy or precision in provided details. The focus at the moment was on working on ways to improve the data that is provided to AG, as it was noted that the auditors had qualified the entity on provision matters. IDT would issue communication before the end of the year to urge all the suppliers to submit all invoices directly to the head office so as to effect the necessary payment before the stipulated 30 days.

Mr Pakade mentioned that IDT was working hard to improve the lives of those in rural areas, especially those who were still schooling under trees, but this was essentially a government mandate as it required large resources to be reprioritised.

Mr Ayanda Wakaba, Chief Operating Officer (COO) of IDT, added that IDT was unable to reprioritise funding as the entity was acting as an agent and therefore it was only the clients who could be committed to a reprioritisation of resources. However, IDT had taken steps to educate the clients on the need to dedicate more resources to priority areas; mainly rural areas. IDT was spending much time on the prompt payment of service providers as per the payment of service provider regulation and the key to this is the fund flow between the client and the agencies. There were engagements between the Department and NT on ways to improve funds flow and encourage the payment of service providers before 30 days. In relation to the question on the participation of women on CPD, there were about 110 CPD participants and 72 of those were women. The programme was intended as a flagship programme but it has struggled because of difficulty to find work allocation and most of the provinces tend to focus on speedy delivery and less on the empowerment side.

Mr Wabaka responded that the IDT used to do more work on skills transfer but this had changed because of the limited budget and resource allocation. The business case that had been developed highlighted the importance of community empowerment through skills transfer. The same applies to job creation, there has been a reduction in budget and resources that are allocated to programmes that are aimed at creation of work opportunities. There has been an observation from the Board that a number of contract workers’ contracts were not renewed and this was caused by the balancing act of matching resources with the responsibilities of the organisation.

Mr Pakade concluded that there is a concerted effort to deal decisively with the behavior of staff members and the AG report has already highlighted a number of key areas that needed to be addressed with urgency. IDT was concerned about the allegations around the employees that are doing business with IDT and the officials whose associates are doing business with IDT. There are also measures in place to prevent the situation where companies fail to declare interest in terms of the prescripts of SCM. IDT would explore a variety of measures to companies that are found to have collided with IDT employees in order to further their interests and this included the possibility of being blacklisted.

The Chairperson appreciated everyone in the meeting and indicated that the Committee would be looking forward on Turnaround Strategy of IDT. It would be interesting to also hear more on the certainty and financial sustainability of the entity going forward.

The meeting was adjourned.