SASSA court decision implementation; SASSA irregular, fruitless and wasteful expenditure: hearing

Public Accounts

16 May 2017
Chairperson: Mr T Godi (ANC)
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Meeting Summary

The Standing Committee on Public Accounts (SCOPA) had called for a report from SASSA on the status of implementation of the Constitutional Court decision about Cash Paymaster Services (CPS). The SASSA Manager for Special Projects went through the progress made on the court orders. SASSA was compiling the first quarterly report to the Court due on 17 June 2017. SASSA was holding a workshop with the South African Post Office (SAPO) the following day to determine to what extent SAPO could take over the payment of beneficiaries in April 2018.

The Committee was displeased by the slow movement in getting ready for the phase-out from CPS and the seeming lack of commitment of officials. The SASSA CEO estimated that SASSA could take over payments in three to five years but costing was not complete and so he was unable to confirm that it would be at a cost of R6 billion, as stated by the Minister the previous day. Critically, the data concerning beneficiary information would be migrated from CPS to SASSA from October 2017 to January 2018. Members of the Committee were frustrated by a perceived lack of readiness or willingness to share information on the part of SASSA executive. The CEO indicated that SASSA was working with National Treasury but certain issues had not been reported back to the Minister yet and they therefore could not discuss those but he assured the Committee that the Executive team was working well together and was committed to the process.

The second part of the meeting was a hearing on SASSA’s R1.1bn irregular and fruitless and wasteful expenditure based on its 2015/16 audit. The Committee was informed that efforts had been made to locate the previous CEO of SASSA, Virginia Petersen, as she had to account for serious irregular and fruitless and wasteful expenditure. However, all attempts to locate her had failed.

The irregular expenditure included security services (R414m), CPS registration of grant beneficiaries (R316m), lease payments involving Trifecta (R223m) and SAB&T forensic investigation into fraudulent social grants declared unlawfully awarded (R74m). There was R10.9m in fruitless and wasteful expenditure. R1.2m was due to the cancellation of the Mikondzo Project event. Questions of who had authorised these and who was to pay for the irregular and fruitless and wasteful expenditure were discussed.

The Committee repeatedly expressed annoyance at the lack of detail in the financial report to the Committee and the incomplete responses to questions.

Concern was raised about SASSA opposing the Corruption Watch court case about the R316 million paid irregularly by the former CEO to CPS on its erroneous claim for enrolling grant recipients. Why had SASSA opposed the Corruption Watch court case for two years and yet SASSA had now dropped its opposition to the case the previous week? SASSA had conceded the case, resulting in fruitless expenditure in initially defending the case.

The matter of security protection by a private company costing R3.6 million, and which included the cost of providing security for the Minister’s children, was hotly debated, with the Minister defending the decision to provide her children with private security. The Minister also provided strong support for the previous CEO, whom she believed had performed an excellent job.

The Committee indicated that the CFO and the CEO had to apply themselves more diligently to the task of financial management and consequence management. They asked that the requested documents be submitted so the Committee could finalise its report on the R1.1 billion irregular and fruitless and wasteful expenditure. Once the Minister and the CEO had the timelines around the implementation of the Constitutional Court decision, they would consider that report.
 

Meeting report

The Chairperson welcomed the Minister for Social Development, Bathabile Dlamini. He explained that SCOPA needed to find out how SASSA was going to comply with the court judgement so that in 12 months’ time, there would not be a struggle to find a way forward. He noted that the Minister was to leave early to discuss nutritional issues in Cabinet but would then return to the Committee meeting.

SASSA presentation on status of court judgement
SASSA CEO, Mr Thokozani Magwaza, asked the Committee to note that on 1 April SASSA had paid beneficiaries as promised.

SASSA Special Projects Manager, Ms Zodwa Mvulane, presented on behalf of SASSA. On progress in implementing the court order, the court had re-instated it supervisory role and directed that SASSA and CPS were under a constitutional obligation to ensure payment of grants from 1 April 2017. She said that 8.7 million grants were paid in April.

Ms Mvulane referred to the various court orders and how SASSA intended to fulfil the requirements. Court Orders 4 – 6 talked to the payment and procurement. SASSA received permission for a deviation from procurement rules from National Treasury. A new contract was signed on 31 March 2017. There were no pay-out problems.

Orders 7 – 9 dealt with the quarterly reports to be submitted to the Court by SASSA and the Minister on affidavit. The first report was due in mid-June and had to include a detailed plan to ensure the payment of social grants after the expiry of the 12-month contract.

Court Order 10 dealt with the safeguard of beneficiaries’ personal data, which had to be in the sole possession of SASSA.

Order 11 was about the appointment of independent experts, i.e. legal practitioners and technical experts. SASSA and all respondents were requested to submit names of experts which had been done. SASSA was waiting for the Constitutional Court to determinate who should be appointed.

Order 12 directed SASSA to draw up a plan for the phase out, operationalising and phase-in of the in-house payment of grants. SASSA needed look into ICT systems in order to become a paymaster and participate in the payment clearing space. Staff and organised labour had to be consulted and SASSA had to consider budget availability.

Looking at 2018, SASSA was considering procurement, and the phasing out of CPS. SASSA had been in contact with the South African Post Office (SAPO) and there were ongoing discussions as to whether SAPO could alone take on the responsibility.

SASSA was working with Home Affairs on biometrics. They were also talking to CSIR and SAPO about the need to store biometrics, which SASSA took from all people from three months old. This was used for verification purposes before paying out benefits. The plan had to be submitted on or before 17 June 2017 so it would be given to the Minister by the end of the following week. The budget was being drawn up.

Mr Magwaza informed the Committee of the SASSA meeting with SAPO the following day. They were looking to SAPO to take over the system of building, operating and transferring. Whoever came into the system would have to help SASSA to take over in five years’ time.

Discussion
The Chairperson said that SASSA had presented in tentative terms. Something did not sit well.

Mr E Kekana (ANC) stated that it seemed as if the court hearing were only yesterday. SASSA seemed to have accomplished so little in the interim. Were they confident that they would be ready after 12 months? It did not sound like it. What about the filing on 17 June? Were the implications that because other bodies had not complied with the requirements, SASSA did not need to meet the deadline?

Mr Magwaza responded that they were confident about what they had done to date. They were confident that they would be able to file on 17 June. It was in their timelines. They were developing a business plan, which would be clearer following the meeting with SAPO. All the participants in the legal process had filed names of technical and legal experts and the Constitutional Court would come back to SASSA with the names that they had selected. On the appointment of the experts, SASSA had nominated various names and had engaged with CSIR and received names. They had also nominated legal representatives.

Ms N Mente (EFF) asked precisely what SASSA would be filing in court. She did not want to hear that “it would be done” as SASSA had previously said that before and nothing had happened. SASSA had to look into five aspects; one aspect was ICT which had been one of the work streams. Where was that process? She asked the CEO about his position in SASSA. He had cited problems with the Minister and he had gone to court over it. Had the hiccups been resolved?

Ms Mvulane replied that SASSA did know what was required. What was not ready was the procurement. SASSA did not have a payment system. They needed to work on a server and a fraud system.

The Chairperson stated that the Committee needed to know what measures they had taken to take over payments or, should it not be ready in 12 months, they needed to know that SASSA would be taking on a service provider. Would SASSA have a legal contract within 12 months? A specific answer was required. What was the process? Secondly, the Committee wanted to know about SASSA relationships.

The CEO replied that SASSA would take over in three to five years. At the end of 12 months CPS would not be managing the payment system. It would either be SAPO or someone else. A workshop was being held with SAPO the next day, after which they could report on progress with SAPO. As CEO, he had a cordial employer - employee relationship with the Minister. He went to court against the Minister because he believed that he could not be held accountable for what happened prior to his arrival.

Mr M Hlengwa (IFP) said that he could not find anything tangible in the SASSA report. “Failing to plan was planning to fail” and the country had landed with a bunch of crooks who took over SASSA. He did not get a sense of urgency. The laissez-faire attitude was a concern. He was getting a sense that all was starting afresh. There did not seem to be anything happening. They had already met with the Post Office but they still said that they needed a meeting with SAPO before they could take decisions. He was not buying the whole workshop thing. What was going to be discussed the following day? They were dragging their feet and not taking action. He asked the Chairperson that the SAPO CEO be requested to explain. CPS was still in place and wanted to stay there.

The Chairperson stated he had expected SASSA to say that they would not be ready to take over in April 2018 so SASSA had to explain that they would need a service provider to take over.

The CEO confirmed that SASSA had decided that they would use SAPO, but they had to know whether SAPO could do everything that was required or whether they would require additional services.

Ms N Khunou (ANC) wanted to simplify it to get an answer. What was SASSA doing? The report was well-written but did not make sense as it was partially the report that they had received while the whole matter was before the court. If SASSA did not have programmes with clear timelines, they could not make progress. She had a sense that the CEO was not committing himself to it. The database was still in the hands of CPS which was not even a South African company. It was sinister. Why could SASSA not have its own database? If they were going to employ other people, where was the money coming from? This report actually said nothing. SASSA should put the report aside and talk about what they are doing on a daily basis.

Mr Booi said that SASSA could not postpone the work and would be called frequently, until they delivered. The people would not be held to ransom by SASSA and CPS. In the Portfolio Committee the previous week, the Minister had spoken of a cost of R6 billion to achieve in-house payments. The CEO had to break it down and tell the Committee exactly what the R6 billion was going to pay for. There was no reference to the R6 billion in the report just presented. When was the tender process starting? SASSA was not telling the truth and was making things difficult for SCOPA. The plan did not show when they were meeting the Auditor-General. SCOPA was not going to allow them to run around. Was there a problem?

The Chairperson noted that everyone was circling around the key issue.

Ms T Chiloane (ANC) asked about the SAPO workshop on the next day. How many meetings had they had with SAPO? SASSA said they had sent a communiqué to National Treasury on tender processes. What was the response? The Minister had said that 50% of the data (about 9 million beneficiaries) was still with CPS. At what percentage was the data collection at present? What was going to happen when the new service provider took over?

The CEO explained that SASSA had formed a technical team with SAPO and the SASSA Chief Information Officer (CIO), Abraham Mahlangu, was a member of the team so he would report on the data transfer. The CEO was unable to answer the question on whether the transfer would cost R6 million as they had not yet come to the nitty-gritty of the budget.

The Chief Information Officer (CIO), Mr Abraham Mahlangu, provided an explanation on the datasets. The 17 million grants paid are from the SOCPEN database and SASSA had that data. The data that CPS had was the Customer Master data or beneficiary data. This dataset had always been the property of SASSA but had been held/hosted by CPS. They had created infrastructure to migrate the data to SASSA within eight months. Around October they would start migrating the data and the process would be completed in eight months.

The Chairperson confirmed that data migration would start in October and would be completely migrated by January 2018.

Mr C Ross (DA) said that his sense was that there was not a clear plan. The Minister was not there to accept her responsibility. She was supposed to give a strategic plan but she had left early. There could not be a briefing when the Minister was absent and, secondly, the CFO was scrambling around to give information. The Committee had no idea of its reaction to the court case and how SASSA was responding to the matters. They were only talking about changing the service provider in the next 12 months. There was no long term planning or response to other issues.

The Chairperson asked the Committee to note that he had agreed to the Minister leaving for Cabinet.

Mr Tsakeriwa Chauke, SASSA CFO, explained that since 1 April 2017 they had focussed on paying benefits and they paid them from the 1 April up until 15 April. The entity had not expected that the Standing Committee would have called them so quickly. It was not ready for SCOPA. It had met SAPO but it was not clear whether SAPO could do everything or whether there had to be sharing of the functions. The entity had been working with SAPO but did not have funding yet. It needed to get details ready, but needed to prepare the report for court.

Mr T Brauteseth (DA) commented that two months ago the court had made an order. He was concerned about the fact that the Minister had said that the SASSA team did not have enough skills. Had there been any skills transfer or a skills audit? He asked the CEO to confirm that it was not official policy that it was going to take five to six years and cost R6 billion. Who was correct, the CEO or the Minister? The CEO had to give a commitment. He wanted a commitment of honour from the CEO. Then there were the work streams and the people who led the work streams had been given the work without any tender processes. Did the CEO give his word that he would not allow a non-competitive tender process?

The Chairperson noted that the CEO had requested two weeks to get things in writing. He would prefer the CEO not be put in an untenable position. Early in the year, he had not done the work as it was done by the work streams. Were the work streams dealing with the work at the current time and not SASSA staff? Whose report was it? The CEOs or that of the work streams? SASSA had to sort out the internal issues so that they could move forward.

Mr Booi agreed with the Chairperson. Had the CEO’s working relationship improved so that he could report on what was happening in his agency? What would the CEO say differently in two weeks’ time? The Minister had said it would cost R6 billion but he was refusing to give a figure. He was solely responsible and should have sorted out the mess. SCOPA wanted to know daily what was going on. It should be embarrassing that SASSA had been taken to court. Did Parliament have to take them to court? They had to sort themselves out.

Mr E Kekana (ANC) complained that SASSA was not ready for the meeting. Why had SASSA not informed SCOPA that they were not ready? Why did they waste money flying from Johannesburg when they were not ready? The letter from the Committee to SCOPA had stated exactly what was required. Why had a full response not been prepared?

Ms Chiloane said she would reserve her follow-up questions as SASSA was not ready. The Committee had said that it seemed that the CEO was thumb-sucking. He could not answer outside of the report presented. She was interested in National Treasury as SASSA had said they had written to National Treasury but the CEO had said that he could not talk about costs. Perhaps the responses were coming in writing.

Ms Khunou said that the Committee should push the CEO further. The members could not just leave it and end the meeting. The CIO had showed that not everyone was on board. Those officials who had not been part of the discussion, needed to admit it. Why was the data migration only starting in October? What about the budgetary requirements for it?

Ms Mente would reserve her follow-up questions for two weeks. If the CEO had contradicted the statement of the Minister, the Committee needed to know about the relationship between the CEO and the Minister because he was going to have to take accountability. He could not go to court and say that he was not involved.

Mr Hlengwa said that he did not want a two-week delay. The meeting was not a junket to Cape Town. SASSA officials had worked hard according to plan, but what was the plan? How could they indicate what they wanted to achieve if there was no vision? SCOPA needed to know to know what was happening - not a kneejerk reaction. The details of the migration in three to five years as well as a costing must be presented in two weeks’ time. What would the migration cost? The Committee would want to know what had happened in relation to SAPO. There had to be a hands-on approach. CPS was a crook and there had to be plans to get out. At a meeting in March, they were told that they were not going to court but that same afternoon, they went to court. That was why he could not trust SASSA. It was a question of honesty.

The Chairperson wanted the CEO to assure them that they would not have a repeat of the CPS debacle. The Minister was absent. There had been a fraught relationship between the Minister and the CEO that led to court. The Minister may have made a decision about court that was contradictory to what the CEO knew and understood about the court decision. He reminded the Committee that SASSA had gone through a difficult period. Was the CEO in charge of the day-to-day running of processes in SASSA or were the work streams still in charge? Was the CEO able to guarantee that he would have a detailed plan with a budget within two weeks. Was he the CEO in practice, or in name alone? The work at SASSA needed to be done. In the report the CEO said that he had complied with the court order about the protection of data but he had not talked about the agreement that they had with CPS about the data. It would have been relevant to have taken the Committee into his confidence. Could SASSA also present a detailed, costed plan up till the time when SASSA would be fully in charge of its own processes? What were the implications of the court case around SOCPEN and how would the resolution thereof impact on SASSA?

The CFO replied that they were working with two separate units in Treasury – the Office of the Chief Procurement Officer plus the Unit dealing with Public Funds. They were working on a request for proposal (RFP) together with SAPO. The proposal was a work in progress. The model was to build, operate and transfer which would mean that they could develop timelines for SAPO to build, operate and transfer payments but they did not yet know whether SAPO could do everything. If it could, it would be an easy RTP. SAPO would give costs and then they would know whether they could utilise money from the outer years to get the process moving that year. When they gave the first report to court, they would indicate which portion would be going to SAPO and whether there were various service providers. Once SASSA had plans, it would present the plans to the Minister and there would be in concurrence. The Committee would then be able to monitor the report.

Mr Booi said that the CEO did have the details but he had not done the work himself. It appeared that the CEO did not know what was going on, including budgeting. Everything that the Committee had wanted to know was given by the CFO. Ms Mvulane’s report did not make sense but the plan seemed to be with the CFO and it appeared that the CEO only came in as a rubber stamp. The Committee wanted to know from the CEO who was doing what in SASSA? The CFO seemed to imply that that there was action and there were plans.

The CEO indicated that they would be reporting things that had not yet been reported to the Minister so they wanted to wait until the plan was costed and given to the Minister.

The Chairperson asked whether the CEO could vouch that he would provide a report in two weeks’ time.

The CEO stated that he could vouch for what the CFO was reporting because it was what the Executive Committee (Exco) was working on. The CEO and Exco were in charge. They had called the work streams to report to SASSA and not to the Minister. He believed that the work streams would be working with Exco as they had talked to them about work in progress. National Treasury had written a letter stating that the appointment of the work streams was irregular. There were other issues in the letter that SASSA did not agree with. He had not terminated the work of the work streams as he had wanted to clear matters with National Treasury first. The tentative date of termination was 31 May 2017. The current process in SASSA was driven by the SASSA Exco. Even the meeting with SAPO was with the Exco. At the moment the work streams were continuing to work on their brief so that SASSA could get value for money.

Mr Brauteseth asked the CEO to confirm that he would not allow a closed, irregular process for the tender, nor would he allow irregular contracts.

The CEO replied that there were various options for tender process such as open or closed tenders or deviation from tenders but the CEO committed himself to ensure that the tender was legitimate and according to the relevant tender processes.

Mr Booi asked what it was that they wanted to submit to National Treasury. He said that the Committee would babysit the CEO and his team, if necessary. They would be on their case because they were not going to let things slip.

The Chairperson asked what was it that he had to deal with in respect of National Treasury.

The CEO replied that they were concluding the matter. If Treasury condoned it, the work streams would be allowed to stay but if not, their services had to be terminated. He liked the fact that SASSA had set itself a deadline for finalising the work stream process. 31 May was the last date for the department to hand over annual financials to National Treasury so both SASSA and National Treasury wanted the matter resolved by that time.

The Chairperson requested a written submission in two weeks’ time and when Exco terminated the work of work streams, the Committee had to be informed. Then they could begin to monitor. The SASSA input had to be sent in writing.

The CEO explained that he wanted the matter clarified by 31 May so that they did not get a qualified audit.

The Chairperson asked the CEO to clarify the 9 May Pretoria High Court judgement permitting deductions to continue to be taken from social grant beneficiaries.

The CEO responded that the court judgement was a concern to SASSA. They had discussed it with the Minister and they were going to appeal it as they felt that the judge had made certain omissions and there were certain things that the judge had not considered. The deductions should not have been happening and the judge should have worked with what the Constitutional Court had pronounced. They were surprised and shocked and there was a feeling that the judgment should have been different. They had already begun the appeal process.

Hearing on SASSA irregular fruitless and wasteful expenditure
Mr Booi asked where the previous SASSA CEO, Ms Virginia Petersen, was.

The Chairperson informed him that they had instructed the legal department to try to find her and had even asked SASSA for her contact details, to no avail. SASSA was being given an opportunity to give a response to these matters about the individuals directly responsible for irregular or wasteful expenditure. The SCOPA report was to be finalised the following week and the Committee would be submitting the report to Parliament, along with the names of those responsible. The SASSA CFO, Mr Chauke, had to present his views as SCOPA would make their report next week as they saw fit.

Irregular expenditure
Mr Brauteseth led the questioning. He noted that the Committee had begun this process in November 2016 with the R1.1 billion irregular expenditure. Unfortunately the wrong person was in the room to answer the questions, as explained by the Chairperson and Mr Booi. However, the current CEO was now accountable. Politicians could be removed by the President but officials, especially the Accounting Officer, could go to jail.

Looking at the major irregular items, the Committee could concede that SASSA had got value for money from the Trifecta lease payments. The SAB&T forensic investigation payment was effectively irregular expenditure. The lease agreement was irregular and someone should have resigned but was still there, as was the security issue. R316 million had been paid irregularly by the former CEO to CPS on its erroneous claim for enrolling grant recipients. Why had SASSA opposed the Corruption Watch court case for two years and yet SASSA dropped their opposition to the case the previous week?

The CEO admitted that the R316 million was a thorn in their side. The previous time that they were in the Committee they put forward reasons for objecting to Corruption Watch’s claim of corruption. However after the questions put by SCOPA and the documents made available, he had second thoughts and had requested a legal opinion. The counsel’s response was that he had already written to SASSA advising that the entity should not to go forward with the case in the light of certain written statements in the CPS contract and other issues. He had told the Minister that he was withdrawing opposition to the case as opposing it was irrational. They would abide by the verdict of the court and would take action when they received the verdict.

The CEO stated that Corruption Watch had been afforded the opportunity to attend the meeting but had not shown up.

Mr Brauteseth commended the sensible action of the Department and asked whether the CEO would support a court ruling for the guilty party to pay back the money?

The CEO responded that he would abide by any court decision.

Mr Brauteseth requested information on the cost of the court process as the business had been going on for a number of years.

The SASSA legal officer replied that she had not received all the invoices as the matter had not been finalised. To date she had received an invoice from the Department of Justice for plus-minus R100 000.

Mr Booi asked for the specific amount SASSA had been charged.

The SASSA legal officer could not remember and did not have the information available but would submit the information in writing.

Mr Brauteseth noted that SASSA was agreeing that they should not have opposed the matter which meant that any funds spent in defending “an indefensible act” had to be deemed fruitless expenditure. From whom was the CFO going to get the money back? Was there going to be a civil case against Ms Petersen, the previous CEO?

The SASSA CEO replied that he would get legal opinion on how they were going to recoup the funds.

The Chairperson requested that the legal opinion from the lawyers recommending the withdrawal of the case be forwarded as soon as possible to the Committee.

Mr Hlengwa assumed that the decision to oppose must have been informed by some legal opinion so he requested both legal opinions; or information about how the decision was taken to oppose the case in the first place.

The Chairperson agreed that someone had made the decision to oppose the case and the Committee needed to know who it was and why the decision had been taken.

Mr Brauteseth stated that the financial report was short on detail. There were two amounts for which SASSA had requested National Treasury for condonation. One amount was a contractual detail. The report referred to finalised cases on other irregularities but there were no details on action against individuals for three irregular expenditures.

The CFO spoke about the security incident. He had explained the circumstances in November. There had been an investigation to find out if any steps should be taken about the security expenditure. They had discussed this with National Treasury and the Auditor-General. It was not deliberate, but the consequence of various actions. No official was responsible for it as it was simply maladministration.

Mr Brauteseth interrupted, saying that irregular meant irregular, whether it was deliberate or not. What disciplinary action had been taken?

The CFO attempted to explain that the problem was the extension of the contracts, over and over again. National Treasury had said that it was an incorrect interpretation.

Mr Brauteseth asked again what disciplinary action had been taken against people who had broken the law.

The Chairperson asked who had made the incorrect interpretation on the extension over and over again. It was not SASSA but one or two people.

The CFO stated that the matter had gone through the accounting processes. It had been considered at the tender committee and so on.

The Chairperson wanted to go back to the issuing and adjudication of the tender and what happened then the contracts were renewed. Mr Hlengwa added that he did not want a softening on the interpretation of policies.

National Treasury Chief Director: Governance, Monitoring and Compliance, Mr Solly Tshitangano, stated that Treasury had an obligation to investigate and that the Treasury report should be there when they submitted the report to Parliament.

In reply to the Chairperson asking if the investigation had been done, Mr Tshitangano confirmed that the investigation had been done. It had found that the previous CEO had made the decision, but the bids received were non-responsive and so the previous CEO had signed off on an extension of the contract.

Mr Brauteseth referred to the next irregular expenditure for the leases on the buildings occupied by SASSA. Who had done that?

The CFO explained that the Trifecta leases were leases for buildings that SASSA had inherited from the provinces. They could not find the original leases but he believed that it was value for money but they had gone to court and some people were found guilty about Trifecta. At the time of taking over leases, a due diligence could have been done but the Accounting Officers at the time had not done due diligence. It was an oversight. The Accounting Authority had signed off on the R223 million but had not checked the procurement processes that led to the leases. At the time that the matter took place, it was the Accounting Officer prior to Dr Petersen.

The Chairperson asked who was supposed to do due diligence? Was it provincial or centralised? The leases were provincial but at the point they were centralised who was doing due diligence?

The CFO reported that SASSA had sought the leases but they could not be found and Trifecta, the leasing company, had opposed the cancellation of the leases. What was legal opinion of SASSA? Legal services tried to cancel the leases.

The Chairperson asked who had taken the decision not to cancel the leases when the leases were centralised? He was adamant that he wanted the name. He stated that the Minister would have to answer.

The CFO admitted that the accounting authority was the one who had taken the decision. An evaluation of the Trifecta leases suggested that they should have been cancelled. Some contracts with REM were cancelled but others could not be cancelled.

Mr Brauteseth noted that it was becoming tiresome and that they should just move on. The Committee knew who the accounting authority was and it was Dr Virginia Petersen. He asked whether National Treasury had ever been asked to undertake an accounting of what the leases should have cost as opposed to what they had, in fact, cost.

Mr Chauke knew that National Treasury had looked at some of the leases but he did not have the answer to the question as he had not received such a report.

Mr Tshitangano said he could make the report available to the Committee as the matter had been presented to court. When entering into the contract, the contract rate per sq. metre was R65 per m2, but the market-related rate was R40 per m2. The contract period had been advertised for five years but when the contract was signed, it was signed for ten years. There had been a number of irregularities in the contracts but they were still waiting for the amounts. When the company was convicted, they were still arguing about the amounts and intended to appeal. There were also irregularities with the tender processes and committees and the accounting authority.

Mr Brauteseth asked SASSA or National Treasury to give a figure showing how much money was paid in excess. They needed to consult the forensic audit or give it to the Committee. It was irregular expenditure. The person had left and therefore could not be dismissed but he wanted the Committee to take legal opinion on a civil case against the person responsible. The Committee could not let off a CEO who was responsible for such irregular and fruitless and wasteful expenditure. It cannot be a signal to future CEOs out there.
The Committee could not let off a CEO who was responsible for such irregular expenditure and fruitless and wasteful expenditure

The Chairperson asked how long the contracts still had to run. He believed that the Northern Cape contract with Trifecta had ended because there was a conviction, but what had happened about the contract in the North West?

The CFO indicated that the final contract had ended at the end of April 2017.

Mr Booi asked if Treasury was able to give information to help the Committee write its report. He had expected the CFO to have all the information at his fingertips, but he did not. It would cause a delay to wait for him to find the information. The Chairperson added that nothing could hold the Committee up.

Mr Brauteseth complained that the irregular expenditure was simply a list of amounts but provided no details of the cases, who was responsible and what it had cost, but the cases were supposedly finalised. One case of R6 million had been condoned by the CEO, which in itself was irregular. He asked if CEOs were permitted to condone irregular expenditure.

The CEO explained that annexures had been sent to Parliament. As the document had not been received by the Committee, SASSA had handed out copies to the Committee members.

The CEO explained that National Treasury Guidelines 2014 and 2015 had said that if the transaction had been completed within the organisation, the CEO could condone if it did not require certain figures to be sent to National Treasury for condonation.

Mr Tshitangano clarified that Treasury did not receive all irregular expenditure. If an irregular expenditure was discovered within an entity which had not been signed by the CEO, it could be investigated and determined whether the transaction approved by those delegated the authority to approve was irregular or not. The Accounting Authority could condone but not approve.

Mr Brauteseth noted that there were 245 cases of irregular or fruitless expenditure and he had not had the details during preparation. It would take time to go through the lists and determine whether there were people who could be or had been held accountable. He asked the CFO how many people had been held accountable or disciplined.

The CFO noted that the Mikondzo Project had taken place in 2012 to 2013 when deviations took place as SASSA had incorrectly approved irregular expenditure and not followed correct procurement procedures. The CFO had provided the provinces with the lists so that they could provide explanations. The list of 129 was then given to the Auditor-General for review as it should not have been listed as irregular expenditure. In the budget, some cases of Trifecta in Northern Cape were duplicated by Head Office during the consolidation process for the budget and they had been adjusted. The process for disciplinary procedures would be provided in writing. The CEO usually took cases of internal irregular expenditure to its Financial Misconduct board, which included a member of the executive, for a decision. The CFO said he would provide a list showing which cases had been presented to the Auditor-General and where disciplinary action had been taken.

Mr Brauteseth thanked the CFO but pointed out that that was exactly what the Committee had asked for in the first place. SASSA had presented 99 cases that were under review process “in line with approval delegations” and were still under investigation. SASSA had given no details so the Committee did not actually know what it meant. The Committee could not approve things when they did not know what they were approving. They needed details and they needed to see consequences for those responsible for breaking the law.

The Chairperson said that it appeared the Committee had not yet received the big thick documents. He had been phoned by someone from SASSA and was told that the document was too big to email so they would hand out copies at the meeting. The CFO had not handed over copies of the finance report even though he had had copies of the report in his possession. They had inhibited the Committee’s ability to do work.

Mr Brauteseth commented that it was precisely that level of incompetence that had led SASSA and the Committee to where they were. SCOPA’s aim was to fix departments and entities and to get them on their way. SASSA needed to up its game. He handed over to Ms Mente to do fruitless and wasteful expenditure.

Mr Booi complained about the incompetence that was delaying SCOPA. It would reflect on SCOPA not Mr Chauke when they did not complete their work in time.

The Chairperson had hoped that they would deal with these issues which were really critical issues:
- the Mikondzo event that was cancelled
- security for officials
- security for infrastructure
- R316 million for CPS
- SAB&T forensic report
- Trifecta.

Ms Khunou asked Mr Chauke if he could provide the documents to the Committee so that members could have it. Why could he not give the copies? Or provide the answers previously. If it were not concluded, it would stay in the records of SASSA as an irregularity.

Mr Hlengwa found it very difficult to get responses from SASSA. Could they get the answers to their questions? He was unable to follow the responses. The CFO was defending, not responding fully.

Mr Booi warned SASSA that they would suffer if SCOPA did not have the full details. The CFO was not to be the arbiter and the judge.

Mr Kekana asked Mr Chauke to distribute the documents.

Ms Khunou said that it was not right to receive reports late at night. They were not robots. Sometimes the documents were not compatible with the programmes on their computers.

The Chairperson stated that he wanted no further explanation from SASSA. The documents had to be distributed.

Fruitless and wasteful expenditure
Ms Mente led the questioning. She referred to the report sent on 27 February for the meeting of 28 February but which they could not go through. In that report, CFO had promised that everything that was under fruitless and wasteful expenditure would have been finalised by 31 March. Was everything under fruitless and wasteful expenditure finalised as promised?

The CFO responded that not everything had been finalised.

Ms Mente referred to the presentation on 28 February and noted that seven cases had been appealed; 36 cases for review and approval and 21 cases were still under investigation. She wanted the CFO to confirm that those cases were not part of the number that had been finalised. Had any been finalised since February?

The CFO stated that some had been finalised but he had only found out the previous day that SCOPA required the information. Some of the cases had been finalised in the regions so he had been unable to consolidate a report in time.

Ms Mente appreciated the progress but she needed to refer to small claims. Those cases were finalised but it did not show that the people responsible had paid back the money. How could a traffic fine be written off? That person did not comply with the traffic laws. Several hotel room no-shows were written off. It did not make sense as not so many people could have been sick. Also, there was damage to cars that had been written off. She wanted to know how these had been written off.

The CFO responded that traffic fines were commented on in the addendum but he did not know which case she was referring to. SASSA had 10 000 officials so it was possible for a number of people to be ill and not able to be at a hotel. It happened that people have a reason for not attending. They could bring the documents. There was no area where the committee could make a recommendation if there had been a reason for someone to be unable to stay at a hotel. He had documentation for any case.

The Chairperson suggested that the CFO should provide documentation for all cases and the Committee would pick at random.

Ms Mente was surprised that there was documentation for each and every case as they wrote off 84 899 instances with no explanation and then the Committee was supposed to believe that people were ill or had family matters to attend to. The Committee needed to be taken into account. The Department could not pay for traffic fines.

Ms Mente said on the presentation, SASSA had two lines written in red which stated that there was an amount of R3.5 million under investigation which relates to the VIP Protection. The Chairperson referred to it earlier on. SASSA had indicated that they would have dealt with it by 31 March but to date it had not been dealt with. The Committee wanted to know why it was still there and why it was not paid back by the people who were supposed to pay it back. If the Auditor-General had said that it was fruitless and wasteful expenditure, then you had to provide them with the relevant documentary evidence. Who was responsible for the money and who had to pay it back? SASSA had stated that they had taken money from the budget to deal with these issues of the Department of Social Development. The Committee needed to start there and to close that gap.

The Chairperson said that they needed to know why the children of the Minister were amongst those who were given VIP protection. With the Minister now present, he wanted to know why SASSA had to pay for the safety of the children. They had asked for the security assessment. Nothing made sense in the report and it had appeared that the officer was under pressure. His own analysis did not find anything that resembled a threat. The report on the service protection was illogical and impossible to understand. Why was there a squabble between SASSA and the Department as to who should pay?

The CFO informed the Chairperson that he had believed that they could deal with the matter between themselves and the Department. SASSA had sent an invoice to the Department of Social Development claiming the funds because payment had been made on behalf of the Department for the Minister. The claim was sent to the Department on 1 March 2017 and they were awaiting a response. It had been an agreement between the former CEO and the former Director-General. The CFO asked the CEO to help him out.

Mr Booi wanted to know why there was such a difficulty that the two officials could not resolve the matter.

As far as the second matter was concerned, the CFO had appointed someone to investigate. He had heard the Minister say at the previous SCOPA meeting that she had been called to Pretoria to a meeting with the President. The Chairperson interrupted, informing the CEO that Ms Mente was talking about the amount of R3.5 million. Mr Dangor had a meeting with SASSA and he had promised that he would resolve the matter. He had discussed the matter that morning but the Acting CEO of the Department had not received anything from the previous CEO. The Acting CEO had been in the position since mid-March. He had asked the Minister to

The Chairperson said that the CEO should have cleared it up when the Acting CEO was appointed in the position.

Ms Mente said that she had not been answered. Was the VIP protection a necessary action, what informed it, and why was it necessary? Why were the children of the Minister and officials of the Department protected? The children were not members of the Department so it is wasteful expenditure. If there was no report showing there was a need for protection, why has it not be repaid? Who must pay and when will the person pay? On 23 November, the CFO had said that it would be resolved but six months later, nothing had been paid.

Minister Dlamini said she wanted to try and answer the two questions. The first one was about the VIP protection. She had also seen the report which speaks in tongues but the recommendation was that Ms Oliphant, DSD spokesperson, be provided with necessary security measures by the Department to mitigate any possible risk to her physical security. It was further recommended that the allegations against the principal be dealt with swiftly by the Department to alleviate the risk profile of the principal. The police report was sent to the Director-General of the Department.

The Chairperson interrupted to confirm that the letter spoke only to Ms Oliphant’s security and not that of anyone else.

In response, the Minister suggested that they could ask for the report.

The Chairperson noted that he had the same letter that the Minister had before her.

The Minister said, secondly, because she had experience of government, that when her kids were phoned by someone who was in prison, that was a big challenge. That was what had happened but she had hired someone to take her children to school and games and whatever because she did not want to use government cars for her children. Even when the security was brought in, she continued and she had her transactions in her account because she did not want to confuse them. Thirdly, she noted that some of them understood government more than others. Even the former DG had a challenge so they made an arrangement that he was going to use in-house security, that is, the security of the Department. That is why he was not appearing there in the letter. During that period, there were three burglaries where she stayed. The last time they had to leave because they removed windows when there were police guards in the area. So, she thought that she should highlight that but also one other thing that happened.

The Chairperson interrupted asking if he was hearing her well that the protection was done by a private security company that she had hired and not by SASSA, or it was in addition to what SASSA was providing.

The Minister explained that she said that she had hired someone to take the kids to school, games and study to make sure that they pass exams. She had never hired her own security. There was an agreement because Mr Pagadi was there, Mr Dangor was there. Since government processes were going to take an extended period, they were going to provide security and when the police submitted their report, the Minister would then move over. So, what happened was that with her, there was no security until the police completed their report. So, the private security provided security until the police completed their report and they provided the back-up.

The Chairperson explained that he was trying to clarify was whether there was an amount that was incurred to protect the kids until the police report was completed or government services could be activated. The Minister agreed that there was an amount. About the R1.3 million, she agreed with the CEO that there had to be an investigation.

Ms Mente informed the Chairperson that the Committee was not yet on the R1.3 million. She asked the Minister about the ‘someone’ that she had hired to look after her kids. Was it at the Minister’s expense or was it people that came from the Department.

The Minister explained that the au pair was at her expense.

Ms Mente continued by asking the Minister whether, when the security from the Department had arrived at her house to be additional security for her children, had she informed the Department that it was irregular for the Department to protect her and her kids? According to the scope of the Department, the Minister was not a member of the Department. She was a Cabinet Minister so her protection should come from SAPS, not from the Department. Had she informed them that they should not have done what they were doing, or had she taken over the security and they worked with whoever was working for her?

The Minister stated that when the security had come, they had accompanied the kids to school. When the police came, they had a meeting with them and they explained the process and then they had to fold-up the security.

Ms Mente told the Minister that she knew full well that her protection was under SAPS so any danger or threat against her, required her to inform SAPS. However, she was provided with private security although in her position, she knew full well that was not supposed to be the case. Had the Minister asked them to take the private security away or did she accept them and utilise them, knowing that the Department was going to pay for them, which they were not supposed to do?

The Minister replied that the security was for her kids and not for her because she thought that she was safer than them. They never provided security for her.

Ms Mente understood her concern for her children but the problem was that it was her children and she was a Cabinet Minister and not an employee of the Department. Her children could only be protected by SAPS, not by the Department.

The Minister called on the Chairperson to understand that anyone, particularly a woman, would feel that her children needed more protection than she did and that was what had happened to her.

Ms Mente understood what the Minister was saying but the Department could not protect her children. If there was a threat to her kids, she could not accept security services from a department. The Minister had to be held responsible and would have to pay back the money for protecting her kids. The principle was that she was not an employee of the Department. The Minister had to be held accountable and she had to refund the money for the protection of her own children.

The Chairperson expressed his delight that the kids were safe but the Committee had to be guided by the principle of law in relation to public funds. The Minister had provided her explanation and they would be able to pronounce; the decision being much clearer.

Mr Booi noted that SCOPA had to accept what the Minister had said and they should go back to the Auditor-General and provide the reasoning that had been put in front of them, without arriving at a decision. They should verify all the information provided by the partners before they concluded the issue.

The Chairperson explained that the Minister’s explanation merely gave context to the situation. The Committee could understand a situation without such an explanation changing the law.

The Auditor-General representative agreed with the Chairperson’s opinion. The Auditor-General applied the rules and regulations. They raised an audit finding if something was not right. The management of the Department had disclosed it as fruitless and wasteful expenditure in the financial statement so the PFMA required that processes be followed to investigate and determine if anyone specifically could be held accountable.

Ms Mente disagreed with the process because getting the Department to find security took far longer than phoning SAPS who would have responded immediately.

The Chairperson said that it was an understanding that was necessary.

Mr Booi pointed out that they could not dismiss it lightly. It was out of nature to get a Minister to come and explain what had happened during that period. There were other questions, including where were the police? What had happened? What were the circumstances? The Auditor-General could only give a financial position but in terms of what had been said, someone had to pay the money and was it the Minister? It became a problem and they would need to know who was going to pay the money. More information would bring up a whole different sense of what had actually happened. He wanted to reflect on the matter and to process the information. The law said that that it was irregular expenditure. They needed a better solution.

Mr Hlengwa noted what the Minister had to say but in the final analysis the transaction was not processed by the Minister, but an official, which goes all the way to the Accounting Officer, had processed the transaction. To which budget did he think he was going to allocate it? What advice was given to the Minister? He did not want a decision taken based on sympathy, sentiments or emotions. Where was the administrator who knew that it was wrong?

The Chairperson asked Mr Chauke which officials were involved. Could they not find details of the process followed?

Mr Chauke replied that he had not been there but in following up, he found that the decisions were taken at the level of the Accounting Officer. He was not privy to the details of the threat as they were given only to management. SASSA had taken the matter to the Auditor-General for noting.

Ms Mente asked the CFO who was the accounting officer? It was Dr Petersen.

Ms Mente then stated that they would deal with Dr Petersen as she had spent the Department money on her friends. The next question dealt with the R1.3 million which was spent on the Mikondzo Project that was cancelled. In November, the then-new CEO had said that he would attend to the matter. When would the money be paid back?

Mr Hlengwa had a sense that they would not be able to get an explanation about the expenditure. Some of the transactions had set certain precedents. He wanted to park the issues of SASSA and to get Dr Petersen to come and explain her actions. Here they were only getting superficial explanations but they had to tread carefully.

Mr Booi noted that the Auditor-General had said that the officials had signed off. The official responsible could speak to the whole process. SCOPA could not set a precedent that was unlawful. There was no guidance from Treasury at the time. He wanted to know what laws were used by the official responsible.

Ms Khunou said that Mr Booi had taken the words from her mouth. She wanted to go back to the additional information, where SASSA talked about paying Wesbank interest. Why could they not pay timeously so that they did not need to pay interest? His response to the no-shows was inadequate. There were 60 no-shows. There were people who went to a three-day meeting and then left after one day. The Committee needed a better explanation. The executive were going to attend a strategic meeting but they did not show. She wanted a better explanation.

Mr Ross expressed his concern for the Minister’s children but asked if National Treasury had red flagged the security contracts for the children as fruitless and wasteful expenditure. He appreciated the Minister’s presence and informed her that he had written to the SCOPA Chairperson about the implications of the Constitutional Court decision that rendered the big CPS contract unlawful and what the SCOPA resolution in terms of consequence management would be.

He was interrupted by Mr Booi, who was now acting Chairperson, who told him to finish just the one question. He knew Mr Ross and that his question was really directed to National Treasury.

National Treasury was not aware of the security irregularity until it appeared in the annual financial statements. It was only looked at after SCOPA has requested them to look at the SAB&T matter, the R1.3 million issue and the one Mr Ross had referred to. It was ticked during the audit and National Treasury had not been aware of that contract.

Ms Khunou said that she had a problem with the way in which the CFO was responding to questions. The officials of Social Development would continue to drag their feet. The question of supply chain management compliance – how much had it cost the entity. It was something that needed the CEO to put his foot down. The R803 000; the R1.4 million; R3.9 million; R1.2 million were incurred because the travel and subsistence processes were not complied with. It was costing government a lot of money. Proper processes had not been applied in the approval of leases which cost a lot of money. The CFO was not taking it seriously. It was taxpayers’ money and the Committee wanted proper accountability. He had 64 cases and R1.1 billion; many of the employees of SASSA were in contravention of the law. He had to be firm so that cases could be finalised. People had to account and they had to go to jail if they could not pay the money they had used unlawfully. He had to ensure time management when dealing with cases. Money that SASSA needed was being wasted. She did not believe that he or he CEO had been responsible or accountable. They had not given answers or been helpful. The Committee wanted answers. They could not run the entity as they were and the Minister was ill-advised.

Mr Kekana asked about the progress of recoveries. There was a footnote on the expenditure and the closing balance and the recommendations advise the reader to “note”. Was SASSA going to give a progress report on these issues? The entity could not simply ask SCOPA to note. He wanted the progress report as soon as they had dealt with the issues.

Mr Brauteseth asked the Minister if she could explain about the R6 billion and five years she said it would take to get SASSA independent as the CEO did not know what she was talking about.

The Minister replied that she thought she should start with the structure of the Minister’s office, which includes security but sometimes a Minister moved over and found things done. Her security person had moved to Social Development as there was always a threat to someone in Social Development because of the nature of their work.

The R6 billion was unfair. She had been asked a question and she had made an estimation based on the work that had to be done. The R6 billion was going to stretch over five years and they would go back to the Committees and give a proper budget for the whole programme. SCOPA would be given the budget when the right time comes. On the SAB&T forensic investigation, SASSA was a very challenging space. If they wanted to fight crime and corruption, SCOPA needed to be given information on everything that was happening there. People would hold a workshop with secretaries about security and after the meeting secretaries were given vouchers to buy TVs and fridges and everything. Those things are not raised but they must tread carefully if there is difference between officials. She had frequently raised their good relationship with the Auditor-General. She did not want to start from scratch about what happened with SAB&T. When she had received the report from Auditor-General, she said that they must be terminated. The people who were implicated challenged the report. The issue of security came in when she had received a letter from the Auditor-General saying that SAB&T was competing with others and it was not true that some of the big companies did not qualify. The companies explained exactly what was happening. The report said that the local companies could not do the work. Big companies did not win the bid but one of the companies said that she had to let it go through or they would be told by National Treasury to take a six-month tender. She was shocked that someone would know exactly what National Treasury was going to do. Trifecta was a difficult area. The Trifecta case had happened long ago, before most of the current people were there. Some of those who had been involved had passed on. It had been to court and had been challenged. She did not know why they had not moved out of the North West contract. Mr Chauke was doing his best at SASSA. Giving a proper report depended on the availability of the records that were there, and the availability of information in the office.

SASSA needed an opportunity to have a discussion about the re-registration of grants and come back. It was unfair to blame Virginia (Petersen) for everything. Virginia did not institute processes. She had come in only when she had to approve and she put trust in her officials. SAB&T had done a forensic audit of the work done by CPS because they had thought that CPS was going to take six months but they realised that there were too many people to be visited. Parents were not sending their kids to school because they were afraid that they were not going to get their money. In the report on re-registration, one could see that there was no time when CPS had sat and done nothing. At the time Virginia had motivated why she had to pay R316 million to CPS. The remaining team had asked for condonation, which was given but because one NGO challenged it, condonation was withdrawn. Which other department had been faced by that in South Africa? Whatever decision they made had to be based on evidence which is why they wanted to re-register everyone. They were praised for saving R2 billion per year for a period of five years. Virginia had done her work excellently. If it were not for Virginia, SASSA would not have been able to register all the beneficiaries in that short space of time. Those were the areas she wished to address but if there were areas that they had not filled in properly, she agreed that the team had to go back and fill them in. When she had tried to address the Mikondzo question earlier, she was told that they were not on that point but immediately after the meeting, she would call officials and they had evidence of her communication with the officials in the Western Cape two days before the event.

The Chairperson wanted to tie down the documents that had to be submitted so the Committee could finalise its report on the R1.1 billion irregular and fruitless and wasteful expenditure. Once the Minister and the CEO had the timelines around the implementation of the Constitutional Court decision, they would consider that report.

Meeting adjourned.


 

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