SOCPEN system rewrite tender award: complaint against Minister; Contingent liabilities, commitments and accruals of national departments

Meeting report

Opening Comments
The Chairperson opened the first meeting of 2017 saying it was important to clear all political road blocks so that people could understand what the Committee was trying to do. Engaging people helped a great deal and it was up to the Committee to do its work.  There were no political concerns, or they might be there and then could come up in the course of the Committee's work, but so far he felt that everyone appreciated that the Committee had a job to do.

It was up to the Committee to prioritise the hearings that would take the work of the Committee forward. There was a need to speed up the process of drafting the resolutions from the hearings that were held, because now it appeared that the National Treasury was reluctant to condone irregular expenditure. He wanted to get a sense of what the Committee felt about those matters. It might be a big leap for them or it might be a reformation in that financial expenditure management needed serious attention. It was up to the Committee to put itself at the centre of all the processes regarding financial expenditure management in the country. The fight for good governance should be correctly located within Parliament.

The Committee would decide on its programme today - what needed to be prioritised so as not to lose the momentum.

Mr T Brauteseth (DA) said that he wanted to thank the Chairperson very much for keeping the Committee on track. He wanted to encourage people to stay the course and get the obstacles out of the way.

Ms N Mente (EFF) thanked the Chairperson for the clear introduction. She emphasised the tabling of the cases being served right now to see which ones had been dealt with successfully, where some money had been recovered, and which ones had been criminally successfully executed. One needs to emphasise where one could not recover any money, people had to be arrested. Criminal cases had to be opened, people might have left departments, but if they were still alive, they had to account for their misdeeds. How should the Committee go about getting the provinces to account? In the Eastern Cape money matters had been carelessly dealt with.  People in departments were hiding behind implementing agents. She was pleased with the approach by National Treasury as it indicated that people could not sign away the public purse the way they felt like it.

Ms T Chiloane (ANC) raise the matter of Eskom because people were being seriously affected about electricity and asked how this was going to be integrated into the Committee programme.

The Chairperson asked about what angle to look at Eskom as Eskom was saying that it was owed and this had an impact on other processes. So there was a need to meet with Eskom and based on its explanation, SCOPA must look at the affected municipalities. Secondly the Committee had to look at the provincial departments such as education in the Eastern Cape and Limpopo; because he knew even the National Minister had given up as she did know what to do.

Mr M Booi (ANC) noted that some departments indeed had problems and outsourced work to private companies. If the Committee made recommendations, he was not sure whether they could be implemented given the manner in which the departments operated. Provinces should be called to account. Monitoring and evaluation methods and strategies should be used to be able to send a strong message that departments had to account to Parliament.

Mr E Kekana (ANC) agreed with Mr Booi. When one looked at the grants, and municipalities were getting a lot of grants, there was a lot of irregular expenditure related to those grants.

Committee Programme
The Chairperson said that the Draft Programme started on the 28 February with the South African Social Services Agency (SASSA) and on 1 March the South African Broadcasting Corporation (SABC). SASSA had provided responses to some of the items that had been raised but the Committee would speak with them later. The Department of Water Affairs had been asked by the Committee to do research on liabilities, commitments and accruals. If one looked at the Department of Water Affairs it could be seen that they owed contractors half a billion rand in accruals but they had only about R186 million to surrender, this meant that technically they had unauthorised expenditure.

Mr Brauteseth questioned whether the municipalities should be engaged first.

Mr Booi suggested that the Department of Education should be met with regarding the case that was based in the Eastern Cape.

The Chairperson replied that Eskom had to be engaged first and then based on their input, municipalities would be called to a meeting. He asked if Members wanted to deal with the Unemployment Insurance Fund (UIF) or the Compensation Fund on March 7. It would be good to have a definitive meeting by the end of the week so that the Department of Basic Education could be invited to a meeting on March 8.

Ms Chiloane felt the meeting with the Compensation Fund had to be held first.

Mr Booi suggested having a meeting on Friday then more could be accomplished.

Mr Brauteseth confirmed his availability for meetings on the 14 and 15 March.

The Chairperson asked the Committee Secretary to get confirmation about having a meeting on Friday.

Mr Brauteseth asked for clarity about the 15 March meeting scheduled for a progress report by Anti Corruption Task Team (ACTT) on the cases.

The Chairperson said that the first two Fridays there would definitely be Committee meetings and this would facilitate the planning process.

Commitments, contingent liabilities and accruals of national departments (2013/14-2015/16)
Committee Researcher Ms Gloria Shabalala, referred to Table 1 of her document which listed all departments in SCOPA’s Group 2. This showed the potential that departments had to demonstrate a contingent liability. The Department of Police had the highest potential for contingent liability followed by the Department of Water and Sanitation (DWS) with a contingent liability of R22 441 029.

Commitments referred to the cost of goods and services to be received in the next year for which the entity or department had already entered into an agreement to purchase. The Department of Home Affairs had the highest commitments. DWS had commitments of R9 407 716 (see document).

Mr Brauteseth asked if this was money that was owed.

Ms Shabalala said that this money was committed for goods and services, but the services had not been received as yet.

Mr Brauteseth asked if the Department of Water and Sanitation for example would this kind of expensive commitment.

The Chairperson said that in his understanding, this kind of commitment was not made in a single financial year.

Ms Shabalala said that accruals referred to a list of expenses that had been incurred and expensed but not paid or services rendered but not yet billed. Table 3 on page 3 showed what departments had to give back with what was left in their budgets at the end of the year. The Presidency had accruals of R30 4 million but it only had R6 million left. So they were so supposed to have incurred unauthorised expenditure. However what they did was they delayed payment so as not to incur unauthorised expenditure. All departments in the table with amounts highlighted were those who delayed payments so avoid incurring unauthorised expenditure. The department with the highest accrual was the Department of Police.

With regard to Group 1 and the document: National Government Departments’ Three Year Trends on Contingent Liabilities, Accruals, Commitments and Over/Under Expenditure on Voted Funds, this information was compiled by Mr Sifiso Magagula, Researcher, but reported on by Ms Shabalala because me Magagula was absent, the Department of Basic Education had an accruals of R551 421 million. They had to surrender R644 178 million to the National Treasury, so they would not have incurred unauthorised expenditure.

Table 2 on page 3 showed that the department with the highest commitment was the Department of Environmental Affairs followed by the Department of Rural Development and Land Reform. The third was the National Treasury with a commitment of R7.5 million.

Coming to contingent liabilities, Ms Shabalala said that the department with the highest contingent liabilities was the Department of Public Enterprises with a figure of R180 million, followed by the Department of Transport with contingent liabilities of R35 million.

The trend followed by departments was that in order to avoid unauthorised expenditure, they delayed payment of service providers.

Mr Brauteseth said that he just wanted to clarify if these amounts were millions or billions.

Ms Shabalala said that these amounts were millions.  The amounts in Group 1 (this document) were millions and the amounts in Group 2 were billions.

Mr Booi said that this seemed like a conscious shift of monies by departments to deal with non-payment.

Ms Shabalala replied that what this meant was if one only focussed on unauthorised expenditure, one would need important information because if departments were trying by all means not to incur unauthorised expenditure, and they did this by delaying payments, so one had to focus on unauthorised expenditure and also look at accruals.

Ms Chiloane asked what commitment actually meant.

Ms Shabalala replied that commitment actually meant that if a department got a budget, a certain portion of that budget had already been committed.

The Chairperson said that it was then important to look at commitments and accruals because this would indicate whether departments were financially healthy or not.  

Ms Chiloane and Mr Brauteseth said the Committee should ask departments to submit their data on commitments and accruals.

The Chairperson asked the Committee Secretary if it would be possible to look at the commitments, liabilities and accruals at SASSA and SASSA should be asked to send this information to the Committee before they came on Tuesday.

Ms Mente said that it was clear that departments were only looking at reducing the amounts for commitments and that was why they were overspending. She thanked the Researchers for exposing how departments were operating.

The Chairperson asked the Committee Secretary to confer with the Director-General of the Department of Social Development about commitments, accruals and contingent liabilities.

Tabling of Correspondence
The Chairperson noted the Committee had asked SASSA to submit a detailed listing of the cases involved:
Nature of transaction
Cost centre involved
Amount involved
Officials involved
List of cases that had been investigated; and
Action taken against the officials.

The document would have to be checked to see if these matters had been answered. He was a bit confused by the contents of the letter. The threat assessment for Ms Lumka Olipant was also contained in the pack with the confidential letter from SAPS at the end.

Mr Brauteseth asked where the body of evidence was.

The Chairperson said that it was found from the analysis from the police that they were unable to get any conclusive evidence. The issue was not whether SASSA had provided protection services to the Minister, but it was about whether it was really necessary to provide such services.

Ms Mente said she could not understand why SASSA was paying for things in the Department’s budget. The budget came from SASSA but the officials protected were from the Department.

Letter from Themba Langa Attorneys on Complaint Minister Bathabile Dlamini: tender award to rewrite the SOCPEN system – Parliamentary Portfolio Committee
Mr Brauteseth said it was problematic because it was about extending an illegal tender and saying it was going to cost money.

Mr Booi said that although the Department of Social Development should go to the Constitutional Court, they could not go there because they did not have anything. They were not saying the country was in a crisis and they were willing to help.

The Chairperson said Members would review the letter thoroughly and the Committee would draft something.

Study Tour
The Chairperson asked Members where they wanted to go to learn something.

Mr Brauteseth said that he felt this Committee would benefit from meeting with professionals involved in Forensic Investigations.

The Chairperson asked where these people could be found.

Mr Brauteseth said he would find out. But he felt the Committee should decide what it wanted to learn on a study tour and then take it from there.

The Chairperson said that Mr Brauteseth could find out where these people could be found and put together an agenda which the Committee could look at

Ms Chiloane felt that the study tour should take place around July and August.

The Chairperson said that included with Mr Brauteseth research about Forensic specialists and investigations Members should think about where they wanted to go.

The meeting was adjourned.