Private Security Industry Regulatory Authority 3rd Quarter 2015/16 performance

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08 March 2016
Chairperson: Mr F Beukman (ANC)
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Meeting Summary

The Committee met with the Private Security Industry Regulatory Authority (PSIRA) to be briefed on its third quarter performance. The Authority, in the presence of its Council, presented an overview in the form of key highlights, areas of improvement and financial highlights in terms of revenue and total expenditure. PSIRA also took the Committee through the targets which were partially achieved or would still be achieved for its programmes:

  • finance and administration
  • law enforcement
  • communication, CRM and training

The Committee discussed varying areas of the report such as problems communicated by organised industry on the issue of refunds and the possibility of litigation from a risk perspective and plans for contingency, should this be the case, to cover all bases. Members questioned the concept, rationale and mandate behind the Pan-African Forum and whether there was cooperation with the Department of International Relations and Cooperation in this regard. Discussion was also had on the process behind acquiring a new building in Bloemfontein, criteria for acquiring property in that area and the status of the PSIRA head office. Members questioned the status of the Private Security Industry Regulatory Authority Amendment Bill, if the review of the IT governance was approved by the steering committee and the Council and if targets were too low especially in relation to investigation. Concerns were raised around the illegal activities regarding foreign-owned security companies especially in terms of taxi violence in KZN and what PSIRA was doing to counteract this. Members felt that more comprehensive information on the financials for the third quarter were needed and asked if everything was on track for the audit and if there was alignment between PSIRA and the Council in terms of corporate governance. The Committee also discussed the strategy for expanding the capacity of inspection and compliance, processes for appointing and costing independent service providers to conduct surveys, measures used to achieve turnaround with improved effectiveness around the issuing of certificates and ID cards and cost containment measures in relation to advertisements. Members raised the issue of recent and ongoing student protest and unrest at universities and the increasing role of private security – they asked if there were any complaints of excessive force by private security officers against students and if these officers were trained on crowd management.

The Committee remarked that PSIRA was on the right track but it would continue to monitor progress with the Annual Report due to be presented soon and if projections were on track. The Committee welcomed the interaction with universities and awaited the outcomes of this to ensure there was proper control and monitoring of training going forward. The Committee also awaited more details information on the financials for the third quarter. Going into the new financial year, it was advisable that PSIRA tried to meet the quarterly targets to prevent risk. 

Meeting report

Committee Programme
The Chairperson began by outlining the programme of the Committee for the coming weeks and next term – today the Committee would be briefed on the third quarter performance of the Private Security Industry Regulatory Authority (PSIRA) while the next day it would meet with the SA Police Service (SAPS) on its third quarter performance. The Committee was destined to also meet with National Treasury on programme six – the meeting had been on the table for some time but he was informed that the National Treasury DG was travelling with the Finance Minister and was unavailable so the meeting would have to be postponed until April. Next week Tuesday, the Committee was supposed to meet with SAPS and the Civilian Secretariat for Police (CSP) on their research programme but it was the re-launch of the Directorate for Priority Crime Investigations (DPCI) Judge in Parliament where Members were invited so there would not be a meeting. Next Wednesday was the Committee’s strategic planning for the new financial year. Thereafter would be recess.

When the Committee returned in the new term, it would consider the Annual Reports and budgets of the Department and all entities but the programme would be circulated to Members.  

Private Security Industry Regulatory Authority (PSIRA) Third Quarter Performance Report: Highlights

Mr Manabela (Sam) Chauke, PSIRA Director, began with an overview of the report noting that in terms of key highlights, area of improvement included:

  • governance review progress to date: draft charters of the Council and its sub-committees had been completed and were awaiting consideration by the Council
  • achievement against strategic objectives: 85% of planned year to date targets achieved – it was hoped that this would be 100% by the end of the financial year but this was good progress
  • cash flow position: over 85% of new fees were collected and over R122 million of annual fees were collected
  • Annual fees refund: R81 million was provided for over three years which was considerable progress
  • service delivery: over 217 000 new certificates issued (over 200% of current annual achieved) and the opening of new offices in Bloemfontein
  • new training regulations: draft training regulations with defined minimum standards to be published in March 2016
  • launch of Pan-African Forum: the launch of the inaugural Private Security Pan-African Forum on 30 March 2016
  • research and development: three year research project completed

Mr Chauke also made reference to financial highlights in terms of revenue and total expenditure.

The Chairperson asked, on the issue of refunds, whether organised industry relayed any problems especially from the side of smaller firms. Was than any such communication on the challenges experienced? If the process was too difficult, it would be impossible to ensure industry complied.

Mr Chauke responded that PSIRA received a complaint from one company that it had perhaps applied very stringent requirements to apply for a refund. The fees were supposed to be paid but then they were increased so PSIRA wanted to pay the balance for what they overcharged. The requirements were for companies to show that returns had been submitted and for PSIRA to be able to verify this it needed a point of reference. The requirements were very stringent. With smaller companies, those were immediately credited because it was a small amount but the Authority could not do blanket refunds without requirements being met. 

The Chairperson asked if this meant PSIRA was retaining the bulk of the fees.

Mr Chauke replied that the industry was not fully disclosing the amount of people they employed so this process was a way of verifying the truth. 

The Chairperson asked from a risk perspective if PSIRA was worried there could be any litigation against the requirements – was there a contingency if there was a dispute to cover the bases?

Mr Chauke responded that the company with the complaint intended to take PSIRA to court but this would be defended. Ultimately from a risk point of view, there was a possibility of litigation but currently PSIRA was not refusing to pay but there could not be a blanket refund. PSIRA intended to apply to have the funds recognised as revenue once the entire process was completed. Plans were in place for an adjudication committee of all the applications including a review of those who were not satisfied.

Ms A Molebatsi (ANC) noted that in the past, PSIRA had some funds it could not locate and asked if this was remedied.

Mr Chauke replied that this challenge was overcomed – PSIRA worked together with the banks in requesting deposit slips to identify the depositors from time to time.

Mr Z Mbhele (DA) questioned the concept, mandate and rationale behind the Pan-African Forum. He asked this because he was interested in finding innovative ways of expanding private security to poorer communities so that it did not remain the preserve of middle class suburbia. What was the process behind the new building in Bloemfontein – was it being done through Public Works? Was it leased or purchased? He sought assurance that the property process was well managed to ensure there were no challenges. 

Mr Chauke said that there were challenges in responses to the adverts and Public Works also noted that the majority of the offices in Bloemfontein were owned by a foreign national firm so it was very difficult to acquire a space that side.

Mr Mbhele sought clarity on why a new office was being opened in Bloemfontein – was this to cover a gap in representation in some provinces?  

Mr Chauke explained PSIRA did not have a profile in three provinces currently. These were Northern Cape, North West and Free State so the office in Bloemfontein would cater for the Free State and Northern Cape and would aid the gap in travelling long distances for certificates.

Ms Mpho Mofikoe, PSITA Deputy Director: Communication, CRM and Training, addressed the question about the Pan-African Forum. This structure aimed to tackle the regulatory issues on the continent with regards to the private security industry in countries where there was an interest and particularly where the industry had been growing. This included Namibia, Swaziland, Nigeria and Kenya while SA was the host. The Forum would address the opportunities and challenges the different regions were faced with in as far as regulating the private security industry. A wide audience was targeted from regulators of private security, policy makers, entrepreneurs and consumer activists. It was being launched in March to create hype before the actual event took place in May and to address the programme envisioned. The event was sponsored.     

The Chairperson asked if PSIRA was cooperating with the Department of International Relations and Cooperation (DIRCO) on the Forum to facilitate communication with other countries – he was interested in the country-to-country protocol followed.  

Mr Chauke clarified that PSIRA was not working with DIRCO at the moment but this could be done if so required.

Mr Joy Ratebe, Deputy Chairperson of the Council, added that it might be useful to go back and consider cooperating with DIRCO.   

Ms Molebatsi asked about the status of the PSIRA Head Office and where it was currently located. When mention was made of new training, did this include a new curriculum?  

Mr Chauke replied that the Head Office was still in Centurion – PSIRA was working with National Treasury to look at the feasibility of establishing its own offices. The lease in Centurion was renewed in the meantime.  

Ms Mabija asked what criteria were used to establish the office in Bloemfontein.  

Mr Chauke said it was a competitive process- adverts were made for bidders to come forward and offer offices much the same as was done with other leases.

Private Security Industry Regulatory Authority (PSIRA) Third Quarter Performance Report: Programmes
Ms Mmatlou Sebogodi, PSIRA Deputy Director: Finance and Administration, then took the Committee through the third quarter report for programme one: finance and administration – she noted that one challenging area was the review of annual fees in that the Council meeting was deferred to January 2016 and the unqualified audit opinion however the service provider was appointed in the third quarter and the project would be finalised at the end of the year. There was also a challenge with the annual review of IT governance but the IT steering committee had met on 29 January 2016 to review and approve. Achievements were seen in the restoration of the critical IT infrastructure on the business continuity policy, the percentage of IT user satisfaction and the annual review of IT governance

Mr Chauke then turned to the quarter three performance for programme two: law enforcement where the one target not achieved was the percentage of investigations finalised in respect of non-compliant Security Service Providers (SSP) – a high number of complaints were carried over the previous quarter which prevented the quarter target to be met. However, the combined performance for quarters one to three was 73% compared to the annual target of 65%. Another area of concern was the number of security businesses licensed to possess firearms inspected – vacant positions within the compliance department prevented the target being met and some newly appointed inspectors were still under training. In addition, some inspectors did not reach the target for the quarter which was being addressed. Appointments had since been made so the target would be met by the end of the financial year.

Ms Mofikoe then took the Committee through programme three: communications, CRM and training where the only challenging area was the percentage of new registration certificates rolled out on active security businesses – most businesses could not meet the requirements during this quarter mostly on tax clearance certificates and annual fees. However the annual target had already been achieved.

The Chairperson asked if copies of the research reports were forwarded to the Committee.

Mr Chauke indicated that this was done at the last meeting with the Committee.  

Ms Molebatsi asked if the review of the IT governance was approved by the steering committee and the Council. Would PSIRA meet its target on the number of security businesses licensed to possess firearms?

Ms Sebogodi said the IT governance was approved by the IT steering committee and would be approved by Council during a dedicated policy review meeting in March. 

The Chairperson asked if the targets were set too low especially with investigations.  

Mr Chauke responded that he did not think the targets were too low- achievement was due to increased capacity especially with inspectors. In terms of the staff establishment, PSIRA was supposed to be at around 280 but this figure was still far too low.  

Mr Mbhele wanted to get a sense of the strategy for expanding inspection compliance and capacity – it was heard that some of the security firms under-reported on the number of employees and other aspects of operation. If there was a bit of a shortfall in the compliance department and some inspectors were still under training, would the surplus building up going be diverted and put towards planning to boost that compliance capacity?

Mr Chauke said PSIRA was addressing issues of compliance – a campaign was launched, together with industry, to deal with non-compliance and under-declaring. PSIRA intended to take its entire database of security officers registered but not linked to any company and change the status to “not employed” – this would make matters clearer when doing inspections. PSIRA was doing very well in dealing with non-disclosure and numbers of disclosure were increasing. PSIRA was being very prudent in terms of appointments because they were costly so burden on the payroll had to be balanced. The pension fund was being converted and there would be a lot more movement in appointments after this conversion was done.    

The Chairperson noted that the presentation made reference to independent service providers conducting surveys and wanted to know how these providers were appointed and costed. The Minister of Finance, in his budget speech, made special mention of cost containment measures regarding advertisements – recently PSIRA took out a full page advert in the Sunday Times – was this in line with cost containment measures set out by government and National Treasury? Shouldn’t other instruments, such as websites, be considered to contain costs? For achievement of some targets there seemed to be delays in Council approvals – was there alignment between management and Council in this regard or how could this be improved?

Ms Sebogodi outlined that there was a corporate governance calendar developed to coordinate all processes.

Prof Fikile Mazibuko, Council Chairperson, added that the Council had all its meetings but realised that there were a few gaps in some very specific policies but there were dedicated Council meetings to attend to these policies – a meeting was scheduled for 17 March to look at the four policies under review because without a review, there might be financial implications. The Council calendar was also finalised – there were four standardised meetings for 2016 with two special meetings. The corporate governance framework was a work in progress and was expected to be finalised end March. 

Ms Mofikoe said PSIRA saved 63% of advertising costs through barter deals with the various media houses after they saw the value in the content being advertised.

Mr Chauke added that PSIRA would not contravene the cost containment measures put in place. On the surveys, a very competitive system was used. Because this was not a big amount, PSIRA did not advertise but looked at four companies which specialised in the work and obtained quotes.

Ms Molebatsi had a serious problem with foreign owned security companies – was PSIRA winning this battle?

Mr Chauke said that the current legislation allowed for foreign-owned companies to operate in SA – some time ago the numbers were presented to the previous Committee and the number of foreign-owned companies was not that large. Sometimes it was difficult to ascertain as foreign owners bought into a local company and there was previously no requirement to disclose this i.e. the numbers only displayed those companies which had disclosed. A challenge might be with the participation of foreign undocumented individuals in the industry – this was being dealt with and there was a link with Home Affairs in the roll-out of new certificates which meant undocumented foreign individuals could not come through the system.  

Mr Ratebe added that there was a government position on ownership and that was before the President in the form of the PSIRA Amendment Bill. It was a controversial issue and required greater discussion – this might be reason it had not been assented to yet.

The Chairperson asked if there was any indication of the current status of the Bill.  

Mr Chauke answered that there was no change in the status. PSIRA was invited to present to an investment committee on the challenges it might pose in terms of implementation but the meeting did not take place because the Minister was not available.

Mr Mbhele asked for elaboration on the measures used to achieve turnaround with the improved effectiveness with the issuing of certificates and ID cards – were these measures done in-house or through a contracted service provider?

Ms Mofikoe replied that PSIRA was once doing a turnaround time of 180 days working off internal operational efficiencies by ensuring staff were properly trained on internal processes. PSIRA also intensified awareness to the stakeholders as to the requirements before registering – this expedited the process of registration. Remote areas were also identified were PSIRA did not have offices so service were taken to the people which aided in also improving registration.

Ms Mabija said she could see the difference in the performance of PSIRA and was pleased with this

Mr P Mhlongo (EFF) suggested PSIRA present some sort of breakdown on the total number of security companies both locally and foreign-owned. It was clear some of these foreign-owned companies were running espionage operations especially where he was from in KZN. These were heavily armed individuals more so than law enforcement. Additionally, the conflict in the taxi industry in KZN was largely fuelled by these heavily armed companies. What mechanisms were used on the side of PSIRA to counteract this? The presentation, he found, was quite misleading as it reported everything as “holy” in the private security sector and he was not pleased about this.

Mr Chauke explained that PSIRA was involved in the issues pertaining to taxi violence in KZN and this involvement and participation was very elaborate and in-depth. A number of complaints of violence were received where security companies were involved. Research was also commissioned on the issue in terms of what happened and who was involved to try to curb what was occurring and this could be presented to Members again. PSIRA worked with SAPS, the intelligence sector, the SA Revenue Service (SARS) and other agencies because a lot of cash money was being peddled. PSIRA also worked with the provincial department of Transport in KZN – a number of imbizos were held in the province which he believed were very successful and a number of Memoranda of Understanding (MOU) were signed between the taxi associations and security companies to try to curb the violence. The Premier of KZN was also invited to prevail over some of the ceremonies in dealing with taxi violence. SAPS and PSIRA had an integrated action plan to conduct inspections in the area there was violence. He had not picked up on the involvement of foreign-owned companies. The same problem occurred in Gauteng and PSIRA was working with the MEC for Transport in the province on this same matter. The same challenge also cropped up in Free State but the issue was dealt with through the channels already outlined. 

The Chairperson thought the Committee needed a more comprehensive breakdown of financial statements at a later stage. He also wanted to get a sense of whether signs were good in terms of the audit of PSIRA. 

Ms Sebogodi responded that PSIRA had implemented internal control to constantly monitor progress. There was an action plan and an internal audit company to assist – the internal audit plan was designed to address deficiencies noted in the last audit findings. Thus far, the plan was on track to address issues raised by the Auditor-General. 

Mr Mhlongo asked if reference to IT was in terms of IT to be able to help PSIRA to ensure total oversight over private security entities or was it in reference to in-house IT development. He raised this because some private security were real military people as seen in places such as Iraq and Afghanistan – these individuals were highly equipped and could put the country under great subversion if their operations were not monitored on a daily basis. This was not necessarily spying but ensuring total control.    

Mr Chauke replied that PSIRA was part of the security cluster and various committees, such as the counter-intelligence structure, looking into these sorts of threats. PSIRA very actively monitored the activities of security companies together with SSA. The Authority also sat on the Security Managers Forum and the Governance Security Regulator. Comparatively, PSIRA was doing more work than was being done in other countries in terms of assessing threats. Members should rest assured that this was well taken care of.   

Mr Mbhele noted the recent and ongoing unrest on campuses with student protests and the role and seemingly increased and growing visible role of private security firms in containing and addressing protest violence. This was salient for him as his constituency was the student sector – had PSIRA received any complaints in regard to the excessive use of force by security guards in their role as contracted by universities? Could members of the public bring complaints around the conduct of private security officers directly to PSIRA?  

Mr Chauke said PSIRA was very involved in the matter – a meeting was held with stakeholders last week in addressing the conduct of security officers and how they should behave in dealing with student violence. A number of meetings were also held on the issue of in-sourcing. Complaints were noted in the media but there were no formal complaints received by any security companies. It was emphasised that if any officers used violence unnecessarily against the students, action would be taken against the specific security company. 

Mr P Groenewald (FF+) asked if the security companies involved had specific training on crowd control. 

Mr Chauke replied that there were events training as part of the training curriculum – there was one company which specifically had some sort of crowd control training – they were called the Red Ants.

Mr Mbhele, on a principled level, felt private security should never be involved in crowd management on its own without the partnership of SAPS. Crowd management and public order policing involved the use of force and coercion usually in the context of protest or unrest – it was a very particular and sensitive constitutional issue where he did not believe the private security sector should ever, in and of itself, act against people with force in those kinds of situations. Regulatory framework did not give the private security sector the space of coercive force against citizens in and of themselves – this was dangerous.

Mr Chauke agreed that this was the domain of the police.

Mr Mhlongo thought it would be proper for private security to receive some elementary level of training in terms of crowd control. Often, private security officers were the first respondents and if they were not properly trained, by the time the police came, damage would have happened so it was better that they were trained. Leaving the officers untrained would create bigger problems.

Mr Groenewald agreed.

Prof Mazibuko added that PSIRA would be meeting with the vice chancellors to not only discuss the current reaction but to look at possible models for institutions of higher education in terms of in-sourcing vs. out-sourcing. 

In closing, the Chairperson said PSIRA was on the right track but the Committee would continue to monitor progress with the Annual Report due to be presented soon and if projections were on track. Clarity was needed around the PSIRA Amendment Bill because the outstanding regulations affected the ability of PSIRA to regulate, enforce and monitor. The inspection programme was quite vital and if financials improved in terms of surplus, it would be important to increase the capacity to deal with inspections because it was a major issue. The Committee welcomed the interaction with universities and awaited the outcomes of this to ensure there was proper control and monitoring of training going forward. The Committee also awaited more details information on the financials for the third quarter. Going into the new financial year, it was advisable that PSIRA tried to meet the quarterly targets to prevent risk.

The meeting was adjourned. 


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