The Department of Military Veterans (DMV) reported having underspent by R284million for 2015/16. The key challenges the DMV faced were mainly related to the paying of invoices, the increase of recipients for education support, invoices not being systematically submitted for health and wellness support, issues with the data base affecting the pensions and social relief, burial and housing support, and general administrative issues. A number of mitigating strategies were adopted with particular focus on housing support.
AGSA gave the DMV a qualified audit with issues of movable tangible capital assets. AGSA found predetermined objectives targets were not specific, measurable or well defined. The DMV achieved 11 of its 20 Annual Performance Plan (APP) targets. It was reported that the DMV had 169 permanent posts of which 133 were filled. Yet there was overspending on staff due to hiring contract workers.
The Committee said the audit findings were serious and cannot be dismissed as an administrative error. They asked why 93 staff of 133 needed to be trained, raising questions as to the competency and reasons as to why people were hired. Members sought clarity as to why nearly 50% of the budget was going back to Treasury. Questions were also asked as to why nearly 50% of the budget spent was irregular as this was of grave concern. Another matter was the database, and how this was hindering the distribution of pensions and other service delivery. The Committee also voiced concern with the generally bad administration at the DMV, as well as the lack of consequence management.
The DMV acknowledged the concerns raised by the Committee and generally agreed that improvement was needed. The DMV responded that it would be requesting a budget roll-over and would be putting in place mitigating measures to ensure underspending does not occur in the future.
The DMV reported a panel was being put in place to deal with consequence management. APP indicators are being restructured properly while new ones are being developed to make sure evidence collected is in alignment with delivery at different milestones. The DMV acknowledged the database had been a problem and made it a priority issue.
The committee sought clarity on the communication of the DMV’s benefits and support systems especially to rural areas, and raised concern around the exceeding of the education budget. The need for a transport policy was also raised.
The DMV noted the needed for a transport policy, and confirmed that policy was being updated to deal with some of the causes of the exceeding of the education budget.
The Chairperson welcomed all those present and introduced the new Acting Director General (DG), Mr Max Ozinsky.
Thereafter, he requested committee members and those from the Department to introduce themselves.
Apologies were received on behalf of the Minister.
Briefing by Department of Military Veterans (DMV)
Mr Sibongiseni Ndlovu, CFO, DMV, outlined the appropriation statement of the DMV 2015/16 Annual Report, with the DMV having underspent by R284 million. The key challenges the DMV faced according to programmes were:
Administration (programme one: invoices were owing for office rental and computer services, while there were research projects that were never completed.
Support services (programme two): the DMV was 100% dependant on the Department of Human Settlements (DHS) for housing support. There was also an increase of recipients for Education Support in both private and public institutions, leading to some invoices not being paid. Most problems arose from beneficiaries from private institutions, with some not complying with tax laws. Health and wellness support had challenges with invoices not being systematically submitted to DMV, despite services being delivered, leading to underspending, is being addressed however. Pensions were not rolled out due to issues with the database. Social Relief of Distress (SRD) faced problems with its partnership with South African Social Security Agency (SASSA). New arrangement has been made with ABSA. Memorandum of Understanding (MoU) with regards to access to transport has not been signed.
Empowerment and stakeholder management (programme three): faced challenges and delays with skills development. The nature of these challenges and delays were mainly administrative, with service providers reluctant to provide Tax Clearance Certificates, and general tax details. Additionally incomplete forms were submitted by applicants, while some applicants were not registered on the database. Further challenges for programme three included the absence of a Business Empowerment Policy. The final set of challenges faced by programme three related to Heritage, Memorialisation, Burial Support and Honouring. These challenges included Azanian People’s Liberation Army (APLA) Veterans not being honoured due to factional disputes within APLA. There were also delays in payments for funerals caused by service providers not having proper documentation.
Mr Ndlovu said the mitigating strategies adopted by the DMV were the adoption of a Service Level Agreement (SLA) with ARMSCOR to: mitigate the risk of dependency on the DHS, and the renovation of Military Veterans houses. Additional mitigating strategies adopted include, the assistance of Military Veterans with bonds under distress, finalisation of SLA with Eduloan for payment of Education Support invoices, monitoring of Social Relief of Distress as its popularity increases, and the implementing the remaining skills development and memorialisation initiatives. The most crucial strategy is the implementation of a system to ensure invoices are paid on time.
Mr Ndlovu reported on the Auditor General of South Africa’s (AGSA) findings, with the DMV receiving a qualified audit opinion mainly a result of movable tangible capital assets, but this is an administrative problem on the DMV side. Reconciliation of asset register and the Annual Financial Statement (AFS) was done. When the AFS was submitted on 31 May 2016, the asset register was not attached due to the DMV not being comfortable in providing such a report, as the asset tagging process was incomplete. The report was submitted after 15 June, but remained a qualification error.
The AGSA in its audit of predetermined objectives found issues with targets not being specific or measurable and indicators not being well defined.
The non-compliance findings were: AFS not being prepared in accordance with MCS, strategic planning and performance reporting not being aligned, irregular expenditure, problems with procurement, leadership not being fully present during the year, and issues with financial performance and management.
Mr Ndlovu outlined the mitigation strategies the DMV was adopting to resolve the audit findings. This included the implementation of LOGIS, the training of Supply Chain Management (SCM) officials, reviewing of systems to ensure timeous payment to suppliers, establishment of a board of inquiry to look into issues relating to expenditure mismanagement, the modification and updating of policies, and the modification of the AFS procedure manual.
Mr Ndlovu outlined the performance against set targets as per the Annual Performance Plan (APP) 2015/16. The DMV’s APP had 20 targets, 11 of which were achieved and 9 which were not achieved. The APP had 10 targets for administration, six were achieved four were not. The APP had five targets for socio-economic support, three were achieved two were not. The APP had five targets for empowerment and stakeholder management, two were achieved three were not.
Mr Ndlovu unpacked the DMV’s performance against the executive authority’s priorities by first naming the priority and then explaining the progress made in addressing that priority as of March 31st 2016. Priority one was ensuring a fully functional DMV with an independent vote, systems and processes. Progress relating to priority one was the filling of 133 permanent posts from the 169 funded posts. Priority two was the strengthening of governance and oversight protocols to give effect to the provisions of the act. Progress in regard to priority two was the establishment of the Turnaround Strategic Initiative (TSI), and the establishment of the Military Veterans Advisory Council and Military Veterans Appeals Board Act. Priority three was the immediate provision of SRD to the most vulnerable military veterans. Progress in this regard was 1213 military veterans receiving SRD through SASSA. Priority four was the provision of comprehensive support services to military veterans, and where applicable their dependants. Progress with priority four, was the provision of health support, providing compensation for injuries, counselling benefits, education training and skills development, burial support and housing support. Priority five was the promotion of empowerment programmes for military veterans, progress with priority five has been the holding of roadshows and the awarding of farms to military veterans. Priority six was the promotion of heritage of military veterans and memorialising and honouring military veterans. Progress with regards to priority six was the DMV assisting in the exhumation and reburial of 15 veterans. Priority seven was maintaining a credible and secure national military veterans database. Progress for priority seven was DMV busy finalising the electronic system which will be used to register military veterans on the database, and 98% of military veterans on the database being verified military veterans with force numbers. The final priority was the implementation of a high impact communication and marketing strategy and plan. Progress with regards to this priority was the promotion of its benefits and programs through events, social media and media relations.
Mr Ndlovu explained that the TSI was a programme promoted by the Minister in order to address the audit finding of the AGSA and the concerns of military veterans, by creating a fully functional independent department, with strong governance and oversight, so that the DMV has the capacity to deliver on its mandate. To date, the TSI has conducted an exercise and produced a report identifying challenges and problem areas which was presented to the Minister. Some of the challenges identified included, a new data management system, a legislative review, a new structure that entails the operationalisation of provinces, and a Supply Chain Management (SCM) system.
Mr Ndlovu outlined the number of posts filled and vacancies available in the DMV. Overall there were 169 posts with 133 being filled. For administration there were 103 posts with 83 being filled. For socio-economic support there were 20 posts with 18 being filled. For empowerment and stakeholder management there were 46 posts with 32 being filled. He noted how the department is weighted towards administration over service delivery.As a result the DMV is using the services of interns.
The Chairperson wanted clarity on what the DMV’s mandate is in terms of good financial conduct. He also wanted to know why the Committee was not alerted when the DMV went on a roadshow as per a previous agreement.
Mr S Esau (DA) said the findings related to the audit report are serious, “you can not say you have good risk management yet everything is falling apart at the ground”. In terms of staff, 93 of 133 were trained, yet no skills audit was done before training to determine the area of focus for training, all that was done was a facelift. It was concerning that 59% of staff at the DMV were military veterans or the family of military veterans, were they competent or not, if not it undermines the service delivery to the very veterans the DMV is meant to be assisting. Looking at service delivery it is worrying. The Committee made recommendations regarding BRRR but there has been no progress, TSI is appreciated however.
Mr Esau said that there was concern with the budget in terms of overspending in some areas and underspending in others. Nearly 50% of the budget is going back to the revenue fund, which is a serious concern for all military veterans. Programmes one and two performed the worst, this is unacceptable. The issue of targets is that the targets were not good hence underspending. There has also been no relationship between salaries and productivity. The lack of filling critical positions and staff that is required leads to employing more people. There are meant to be 169 funded posts, the DMV has reached 280 posts, yet the DMV complains about a lack of staff.
Mr Esau said that the independent vote and systems was still elusive after three years. Even though the APP and Annual Report improved, sructures are not robust enough to have an independent vote.
Mr Esau asked that for performance information the DMV aligns targets, performance and information. Irregular expenditure was a serious concern, with almost half of the budget being irregular. This raised questions as to the effectiveness and oversight of the leadership. Immediate intervention is needed in this regard.
Mr Esau said that he was happy that they were now using the Certified Personnel Register (CPR), but was shocked to know that 98% were verified. The DMV says it could not roll out pensions because of the database. This raises a serious contradiction that needs to be verified. One can not have people trained in war being frustrated, because of issues such as databases. The SITA report was not positive, clarity was sought as to whether SITA assisted with the database.
Mr Esau requested a current list of all the MoU’s and SLA’s as well as their current status. Additionally, the istaff turn-over was too high and needs to be addressed. He asked if people who are employed are selected based on criteria, given the high number of staff (133) who had to be trained. Serious technical and professional vacancies need to be addressed.
Mr Esau said that in terms of the current Employment Equity set by the government the DMV is going against the policy of government. The net needs to be thrown wider, in order to employ the best people.
He also sought clarity on the progress of the skills audit. Clarity was sought about the disciplinary cases. Consequence management was not mentioned and this is a serious concern for the DMV.
Mr Esau sought clarity on the provincial offices - it was indicated that three were established, yet almost the entire budget has been used. What was the budget used for if only three have been established?.
He raised the suspension of the former CFO along with the DG and DDG, there were resignations and a case, yet no consequences. Clarity was also sought with regards to the status of the whistle blower. All people in senior positions must sign the agreed upon performance agreement. People can not be getting performance rewards when the DMV is doing so badly, reward must match performance.
Mr N Khoza (EFF), said that the mitigating actions presented by the DMV have been presented before, they need to be set-up and followed up. The issue of administration was an issue of major concern, it needs to fulfil its mandate as a lot depends on it.
Mr Ozinsky thanked the Committee for their questions as it gave the DMV an idea of the areas that need to be focused on. He noted that things had to change if the DMV was to move forward. He also invited members to send him emails if they had any other questions.
Mr Ndlovu, responded that as a result of the underspending the DMV decided that rather than embark on additional projects it would do the ‘honourable’ thing and return all remaining funds to Treasury, with the mitigating action that they would request a budget roll-over. Action is being taken to prevent underspending in the future. The relationship with SITA was not that sound, but management has taken over to ensure a better relationship with SITA. It was agreed that all ICT procurement and system support will be done through SITA.
Mr Ndlovu said that in order to ensure consequence management, related to fruitless wasteful and irregular expenditure, a panel is being established in order to deal with these problems. Consequence management and requirements will be covered in Q2. SCM is currently going through a complete overhaul.
Mr Honey Mathobela, Director for Human Resources (HR), DMV, responded that the skills audit was raised last year, and a plan was in place, but there were challenges within the turnaround team. So a resubmission was made by HR to get a service provider to assist. Next quarter a report will be given on the skills audit. The challenge in the department is that gaps are identified especially in areas addressing service delivery, shifts are therefore made to address service delivery. In terms of performance agreements, plans have been put in place to address challenges faced, and awareness has been raised.
Mr Ndlovu explained that contract worker numbers are particularly high especially in administration, many are not appointed against particular posts as many positions are top heavy. The current structure also does not account for the provincial structures. The former CFO did not resign but was dismissed, as the department won the case, but it has been appealed. Hence the process has not been completed.
There are a number of internships, the challenge the Department faces is that interns often have to carry out the function of permanent staff due to gaps. Issues of performance will be addressed.
Mr Vernon Jacobs, Director for Skills Development and Education:,DMV, responded that in terms of the Audit of Predetermined Objectives (AOPO) the misalignment of the AOPO to the Smart Principles was looked at. In the current draft of the 2017/18 APP it was worked on, while also ensuring alignment has been done by developing new indicators, technical indicator descriptions, data sheets and work was done with the Department of Defence’s audit unit to provide support to structure the performance indicators properly and make sure evidence collected is in alignment with delivery at different milestones. On skills development, there have been challenges. The DMV is helping veterans who submitted incomplete forms to get their updated details on the database so that Skills Development has an updated database. With regards to MoU’s, the 10 listed were from the new financial year.
Mr Mbulelo Musi, Chief Director: Communications, DMV, informed the Committee that there are two remaining roadshows and the Committee will be officially invited to attend the events. The turnaround team had helped in reviewing the DMV’s communication strategy. Many of the recommendations made have been taken into consideration and have been factored in. Some of the areas identified by the turnaround team relate to having capacity constraints, all the staff are based at the headquarter's, meaning the communication office is thin on the ground, so the structure is being reviewed to respond to this. The DMV is also currently looking at and factoring in the government framework on communication to improve.
Mr Musi acknowledged that the database has been a problem, and has been made a priority issue, as it affects a number of service delivery issues. With the new leadership there is a movement in the right direction. Challenges have arisen due to the increase in the number of military veterans. The most complex issue has been the emergence of other lists from other entities. A process has been put in place to verify lists. The DMV however can not solve this alone , military veterans also need to assist. The TSI had a special work group in order to give attention to the database.
Mr Ozinsky responded that the aim is to implement consequence management within the DMV. He noted that SLA’s and MoU’s with other implementing agents will be looked at as it affects delivery in key areas like education support and housing. The push for an independent vote, the need to strengthen systems and targets were all being looked at. The database must be at the centre of everything, and must be up to date, but the database can not become an area of abuse. He acknowledged comments made about the expenditure on staff. He added that the matter of the provincial offices was of serious concern, and he will be visiting the various provinces.
Mr Khoza noted that the APLA members being honoured was a positive development. He sought clarity on what was being done with other structures such as the Bophuthatswana Defence Force.
Mr Jacobs responded that the APLA matter needed intervention, and that no other requests for honouring have been made.
Mr Esau sought details on the footprint on the communication and marketing strategy. There was concern that military veterans do not get treated fairly and properly on the phone line provided by the DMV. He sought clarity on the money allocated for housing, and how it was spread over the five provinces. There was no mention about the subsidy provided by DHS and the top-up. The DMV needs to promote the idea of veterans building their own homes and getting support from the DMV.
Mr Esau highlighted that the education budget has been exceeded, with many more applying for support. He was worried that money was stilled parked with NSFAS. He sought clarity on private institutions and whether people were now applying to private schools. This would increase the costs, but decrease the number of people who can benefit, therefore certain criteria and exclusions need to be considered. SRD has seen a growth in beneficiaries but there are still people who are unable to benefit simply because they are not registered.
Mr Esau said that the transport policy needs to be concluded, as people have been excluded for too long. With healthcare there was improvement but objectives were not met, so targets were not met. Another area of concern is contingent liability, what happened to the Zeal contract that was cancelled as it lead to high legal costs for the DMV and uncertainty? Eight farms have been given to military veterans, what training did they receive and what was the criteria for receiving those farms? He also said burial support remained a problem with there being delays in payments to funeral services. He sought clarity on the budget for the pension for veterans and communication with Treasury as well as its roll-out plan. Lastly, he asked about the number and nature of calls to the presidential hot-line.
Mr Jacobs responded that burial support will be looked at.
Mr Ndlovu said that the DMV will be informing Treasury of its intentions regarding pensions for military veterans. The transport policy was long overdue. On the Zeal matter and the uncertainty around it, there are plans in place to try and close the gap, depending on the direction the matter takes. NSFAS has made the necessary payments to institutions. There has been a migration of military veterans and their dependants from public to private schools. The policy is being updated to do a means test. The DMV was working with the DHS to subsidise provinces according to projects. With military veterans building their own houses, DMV is not allowed to give money directly to military veterans so policy and regulations will have to be re-looked at.
Mr Musi said he will be having written communication with Mr Esau regarding communicating with military veterans in rural areas. He acknowledged that the call centre has been an issue for too long. When it was first designed calls went through SITA but this decision was revisited. A task team has been established to migrate that back to the DMV.
Mr Ozinsky said the presidential hotline is dealt with by the office of the DG and he will be looking at it. He said in terms of farms for military veterans, the Department of Rural Development and Land Reform added military veterans as one of the priority groups to be assisted with farms, with this year hopefully seeing an increase in farms allocated to military veterans. He said the issue of training military veterans to farm needs to be looked at.
The Chairperson noted the number of issues being repeated, meaning follow up capacity needed to be improved.
The Chairperson then adjourned the meeting.
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