Unauthorised expenditure of Department of Sports and Recreation & Department of Public Service and Administration: National Treasury briefing

Meeting report

Briefing

Department of Public Service and Administration

Mr Mashwahle Diphofa, Director General (DG) Department of Public Service and Administration (DPSA) said that the DPSA had gone over budget because two advisory bodies had been established, comprising a total of nine members, and because the model of operation of the advisory bodies involved extensive travel between Cape Town and Pretoria. When he had re-assumed the position of DG in September, he had introduced measures so that the over-expenditure would not get worse. He asked the Committee to condone the amount, as his Department had already suffered big budget cuts and to start the year with a deficit item on the budget would be difficult and challenging.

Discussion

Mr T Brauteseth (DA) said that the DPSA's budgeting had been poor, and the point of a budget was to stick to it. What did the extra advisors do, and what special circumstances had prompted the need for them? The DPSA should have stuck to its scheduled travel arrangements. What was the function of the internal audit while the overspending was occurring?

Mr M Booi (ANC) asked what had created the huge increase in costs, and how had South Africans benefited from the expenditure?

Mr M Hlengwa (IFP) said the escalations should have been identified. What had been the response to the audit committee’s findings, if there had been one? Had the additional staff been budgeted for? Could the increase in staff costs be separated from the increased travel between Cape Town and Pretoria? Why had two advisory bodies been created?

Mr V Smith (ANC) said the DG had not indicated whether the Department disputed or agreed with what Treasury had said. If they agreed, then there was no need for further discussion -- the R8m would not be condoned, and the DPSA would start with an R8m deficit.

Mr Diphofa said the DPSA had looked at Treasury's recommendations and would ordinarily have agreed and said that the DPSA had erred, but given the circumstances in which the DPSA operated and the huge cuts to its budget, it would make starting off with a budget deficit difficult and a challenge, and he appealed for the condonement of the unauthorised expenditure.  

Mr Brauteseth said the questions the Committee asked related to the internal audit function. Whatever the decision of the Committee, he wanted the DPSA to learn a lesson on internal audit functions. He had a problem with the R8m overspending and the internal audit function, or the lack thereof, in the DPSA.

In terms of historical trends and the change in spending patterns of the DPSA, Mr  Diphofa said that there had been huge under-spending, which was now coming to an end.

Regarding the advisory boards, he said the public service regulations made provision for the establishment of advisory boards. The Minister had functions to fulfill which he had assigned and split between the two advisory boards. Each panel could have up to five members. Advisory boards had existed before and were the Minister's prerogative. The boards had been established because there had been major pieces of complex legislation, some of which had been sitting for five to six years.

He said the travel between Cape Town and Pretoria had been necessary because the Minister's working base had been Cape Town, and this had resulted in lots of travel.

The audit committee had raised the overspending issues. He had seen no evidence that their recommendations had been introduced. By September, when he had returned to the DPSA, he had started withdrawing the travel delegations and had held meetings to monitor the spending.

He said the amount of R8.8m was linked to the number of people involved. The breakdown of the costs were: R1.8m for accommodation, R1.7m for car rentals, R3.2m for air travel, R780 000 for road transport and R1.2m on transport for non employees. He said the R8.8m was not for compensation, it was for operational expenditure.

Mr Masilo Makhura, CFO, DPSA, said transport for non-employees was for people the Minister had invited to a meeting or a function. In September, interventions had taken place when the DG had returned to ensure that the overspending did not get worse. Overspending had been limited to Program 1 and virements had been done.

Mr E Kekana (ANC) wanted a breakdown of the services provided by the advisors.

Ms T Chiloane (ANC) said the salaries of the advisors would have affected the budget.

Mr Booi asked when the DG had intervened as accounting officer.

Ms E Louw (EFF) asked if all the trips had been planned. If not, it was a problem.

Mr D Ross (DA) asked what the audit status of the 2013/14 and 2014/15 financial reports were. How did the AG see improvements in the financial statements?

Ms N Mente-Nqweniso (EFF) asked how many people flew, and how many times had they flown. She said Treasury had said that the travel reflected that there had been no prior planning involved.

Mr Smith said that the DPSA had to understand that there would be consequences. 

Mr Hlengwa said the underspending did not justify a condonation. Underspending was a failure to deliver services.

Mr Brauteseth said section 39.1 (b) compelled the accounting officer to prevent any unauthorised spending. Were the R8m expenses for unforseeable and unavoidable reasons? He said it appeared that the money could have been budgeted for.

Ms Gillian Wilson, Chief Director: National Treasury, said the Committtee, through its questions, had raised the central issue. The Treasury's approach had been one of compliance and that therefore the monies could not be condoned and should come from the Department's budget.

Mr Godi said that the DG had only come in September and was carrying the can for those who had come before him.

Mr  Makhura said that in 2013/14, the DPSA had received an unqualified audit with no emphasis of matter and there had been no irregular expenditure. There had, however, been compliance with legislation issues around procurement and contract management. In 2015/16 there had been a clean audit.

Mr  Diphofa said that during that year, he had been the DG from March, but had then been assigned to a different function in Limpopo province between March and September.

Department of Sport and Recreation

Mr Alec Moemi, DG, Department of Sport and Recreation (SRSA), said the matters stemmed from 2007/8 to 2008/9 and had been recurring because the Department had not received a condonement of the unauthorised expenditure. He had joined the Department in 2011 and had asked the Treasury for clarification of the issues.

In the run-up to the World Cup in 2010, programmes had been initiated by Cabinet, one of which was that Southern African Development Community (SADC) countries would be beneficiaries of a legacy fund for football development because it had been an African World Cup. A conference of the Seventh Day Adventists church, where 3 000 youth from Southern Africa would participate, had been targeted. This had been captured in the annual performance plan (APP).

At that time, there had been an unhealthy working relationship between the Minister of Sport and his DG. The DG had not agreed that the conference should be in the APP. She had then decided not to recommend it for approval. The Minister, however, had gone went ahead and signed approval for funding of the conference. When financial statements were drawn up, the DG had said that the conference expenditure was unauthorised expenditure. The AG had picked up on this and decided it was unauthorised. 

At around this time, the DG had been moved out to another department. Treasury's response to the issue had been that it was unauthorised expenditure. It had written to the Standing Committee on Public Accounts (Scopa) in 2012 to clear the item from the Department's books. Since then, he had engaged in a number of correspondences to get the matter cleared.

Discussion

Mr Brauteseth said the report was confusing, as it talked of organising the Seventh Day Adventists’ conference, yet an official had been charged for spending R700 000 and the money had not been recovered. Had that motivation been valid? Who was the official involved and was the official a member of the said church?

Mr Booi said that at issue was that Parliament had not done its work, and the Department had been repeatedly appealing for the matter to be sorted out.

Mr Hlengwa said that in the correspondence of the former DG, the invitation had not meant that the Department owned the conference. The function could not be converted into a government function. He did acknowledge, however, that it was clearly a tit for tat case between the DG and the Minister.

Mr Smith said he agreed with Mr Booi and that the matter should be dealt with.

A Treasury official said that Treasury concurred with the decision in 2012, and had had subsequent deliberations with the Auditor General (AG). The AG had then also agreed with the Treasury's view.

Mr Godi said that it had been a matter of procedure that the Committee had not sorted out the matter. The Committee needed to write a report to Parliament that the spending be authorised.

Mr Brauteseth asked why a church function had been turned into a government function.

Mr Booi re-iterated that it was about Parliament not doing its work. The AG and Treasury had asked that the spending be cleared from the Department's books.

Mr Smith said that there had been a conference, and the Department had taken advantage of the conference to mobilise for the World Cup.

Mr Ross asked if the spending should have been classified as irregular spending.

Mr Godi said he had said that at worst it should be classified as irregular spending. He had not said it was irregular spending.

Mr Moemi said he did not view it as irregular spending, as supply chain management (SCM) processes had been followed. The Minister had not instructed -- he had asked that the conference be considered. The Department had considered it and made a presentation to the then DG, but the power was vested in the Minister to make the decision, and therefore it had not been irregular expenditure.

The departmental official had found herself in the crossfire in the spat between the DG and the Minister. He did not know her religious affiliation, which was irrelevant, as the decisions taken had not been based on religious affiliation. It was not the first time the Department had partnered with religious bodies to extend community participation.

He said that in September 2012, after discussions, the blemish on the official's personnel record had been expunged.

Mr Ross said he accepted the arguments of the DG and the Treasury, and would seek a consensus position on the matter.

The meeting was adjourned.