Correctional Services on Irregular, Fruitless and Wasteful Expenditure: hearing, with Deputy Minister

Meeting report

Chairperson Opening Remarks

The Chairperson said the Committee was pleased to see progress made by the Department of Correctional Services (DCS) with its audit outcome – the Committee shared in the joy of that achievement, small as it might be. It was an important milestone – the Committee hoped the Department built on it. In terms of the Public Finance Management Act (PFMA), there was supposed to be a register of irregular expenditure maintained – did this register exist in the Department?

Mr Zach Modise, National Commissioner of Correctional Services, affirmed that there was such a register.

The Chairperson asked if the information on the register was complete, up to date and readily available.

Commissioner Modise confirmed this.

The Chairperson then asked if there was a challenge in making the details of the register available to the Committee.

Commissioner Modise confirmed this was the case because the register was updated on Monday.

The Chairperson asked why this was only done on Monday.

Commissioner Modise explained this was only picked up as the team was preparing for meeting with the Committee.

The Chairperson asked if any communication was sent to the Committee indicating delays.

Commissioner Modise responded that outstanding reports and information was provided to the Committee through the Department’s parliamentary liaison except for the register of irregular expenditure – he apologised therefore.

The Chairperson said that the Committee needed to have information in time for there to be preparation for meaningful engagement. For an email to arrive at 21h46 the night before the meeting was problematic especially when challenges were not communicated with the Committee. This created problems with engagement between the Committee and Department.

Mr M Booi (ANC) requested guidance from the Chairperson because he was shocked by the behaviour of the Commissioner only providing information required by the Committee last night. 

The Chairperson did not see the list of instances of irregular expenditure in the Department in terms of date, company, amount, contract, investigation thereof and, if so, outcome. 

The Committee secretariat informed the Committee that she spoke to officials in the Department via email and telephonically.

Mr E Kekana (ANC) was excited for the improved relationship between the Committee and Department but was now disappointed because it seemed as if the Department was sliding back to where it was. The Committee could not prepare for a meeting if it received documents the night before or morning of the meeting – this undermined the Committee. Why was the Department reverting to its old behaviour? If the Committee was not furnished with the requisite information, it could not effectively engage with the Department. This was malicious compliance on the side of the Department by providing information to the Committee when it felt like doing so– this attitude must come to an end. The Committee would not tolerate this behaviour. It was unacceptable for the Commissioner to say the team only met on Monday and then realised there was some information outstanding.  Perhaps the Committee should ascertain when the request from the Committee was made to, and received, by the Department. If the request from the Committee was received well in advance, there would be a problem – a better response was required from the Commissioner.

Ms N Khunou (ANC) agreed with Mr Kekana – a message should be sent to all departments that the Committee would not tolerate documents being received late by the Committee as it impacted the preparedness of the Committee.

Mr M Hlengwa (IFP) was reminded of a time in varsity when a student would know of a test or exam three weeks prior but would have partied and gone AWOL for those weeks – the student would remember he/she was writing the next morning and would then be in a mad rush the night before trying to cram studying. The trend of setting the Committee up to fail must come to an end – if documents were provided late the Committee could not fully prepare itself and an image was sent to the public that Members did not know what they were talking about or doing. The Committee had a certain work ethic and conducted itself in a way which inspired confidence and assisted those before the Committee. The Committee needed to draw a line in the sand to ensure this behaviour ended and did not go further – today was that day. He was not prepared to continue with the engagement with the Department simply for the sake of doing it.

Mr T Brauteseth (DA) noted that he was ready to go ahead with engagement with the Department.

Mr Booi felt the behaviour of the Department, in not submitting pertinent information to the Committee, showed disrespect to Parliament. The Committee was now discussing this instead of assisting the Department with areas of weakness. The Deputy Minister should provide guidance on how such an environment existed under his leadership.

Mr Brauteseth asked if the list of irregular expenditure was simply not provided to the Committee on time or if the list did not exist at all.

Mr Kekana urged the Department to respect the Committee.

Ms Khunou felt it important to know the communication between the Committee and the Department –it was vital for the Committee to receive documents on time and perhaps the Committee needed to check if it did what it was supposed to.

The Chairperson said the Commissioner already apologised for information arriving late.

Mr V Smith (ANC) felt the Commissioner needed to explain why the register was not provided – an apology was not an explanation. The Annual Report of the Department, from last year, also did not have details on the irregular expenditure. If the request from the Committee was received in time but simply ignored, it would mean the Department had a serious problem. The Commissioner needed to answer as to why the list was not made available to the Committee. Parliament has the ability, and has already made use of, the power to summon documents.  

The Chairperson clarified that during preparations on Monday, the DCS team realised some information had not been provided to the Committee such as the list of irregular expenditure, which had to be updated, and the list of conflicts of interest, which was only made available last night.  He appealed for Members to get into discussions and then see how much progress was made.

Mr Thabang Makwetla, Deputy Minister, Department of Justice and Correctional Services, apologised, on behalf of the Ministry, for inconvenience caused to Members arising from unavailability of information required on time.

Mr Brauteseth interjected to say the apology should be to the entire SA public which the Committee was representing.

The Chairperson urged Members to allow the Deputy Minister to proceed.

Deputy Minister Makwetla proceeded to say the Ministry regretted things were not carried out in a manner which made the meeting fruitful. The Department and the Committee communicated through the office of the Minister. As a result, he was unable to provide helpful comments on the matter raised. He regretted that he did not have an opportunity to speak to the Minister before attending the meeting of the Committee because he was unaware the Minister would not be in attendance today. If he was aware, he would have ensured he was fully briefed by the office of the Minister to ensure he was fully aware of the totality of the information regarding the matters at hand. He was appreciative of the work of the Committee especially in assisting all ministries in executing its function of political oversight of the departments. Many incumbents in government relied extensively on the exercise of SCOPA in keeping departments accountable – the apology was a sincere one.

Mr Booi told the Deputy Minister that the problem faced was not new – the Executive must know it has a constitutional obligation to ensure decisions of Parliament were taken seriously. He was confident with how the Chairperson and the Committee worked – the decision to call the DCS was not taken yesterday. Commissioner Modise had total disregard for Parliament. Inmates were the responsibility of the Department yet Commissioner Modise had no regard for the Constitution. The Member was not interested in how Ministries worked – it was clear the Department was unprepared. Parliament could not be undermined in such a fashion and with such behaviour- Commissioner Modise had been told this many times before. He was ready for engagement with the Department.

Mr Hlengwa acceded to the ruling of the Chairperson that the meeting continue. He cautioned the Committee against setting a precedent. From his point of view, SCOPA was being treated like an irritation and annoyance. This was not the first time this attitude was displayed. The Committee would have to draw a line in the sand to prevent future discussions being carried out in a similar vein. The Member could easily have staged a walkout in defiance to not dignify the incompetence displayed but he would accede to the Chairperson’s decision out of respect to the Committee.

The Chairperson asked if someone from the Department could send the list of irregular expenditure to the Committee while the meeting was underway.

Commissioner Modise said this was possible. He requested to make some additional remarks.

Mr Booi, on a point of order, said the Deputy Minister already spoke to the matters at hand, as the political head. The Commissioner had not done his work and the Committee would not be dictated to.

Commissioner Modise said that he sought to provide clarity.

The Chairperson requested the substance of the meeting be delved into at this point. Any further remarks could be made at the tail-end of the meeting.

Mr Brauteseth noted that the cumulative figure of R494 million in irregular expenditure could be broken down into four areas i.e. (1) bid processes not followed (2) non-compliance with SITA Act (3) deviations from transversal contracts (4) officials failing to declare interests. The Committee did not have a breakdown of the individual cases in each of the categories – did such a breakdown exist?

Commissioner Modise said the information could be provided as there was a breakdown.

Mr Brauteseth asked why the breakdown was not with the Department today.

Commissioner Modise replied that he understood the directive of the Committee, in terms of today’s meeting, to be to provide an update on progress made regarding the 2011/2012 – 2015/16 financial years. A complete breakdown could be provided to the Committee

Mr Brauteseth asked the Commissioner how many times he appeared before SCOPA.

Commissioner Modise could not say exactly but it was more than five times.

Mr Brauteseth asked if it was then fair to say the Commissioner should be familiar with the information requested by the Committee.

Commissioner Modise said this was not quite so because at times it was not clear what the Department should provide. In terms of detail on irregular expenditure, that directive only came through on Monday, 5 June 2017, and the Department then struggled to provide that information on time.

Mr Brauteseth reminded the Commissioner that he could go back into Hansard and find every engagement between the Committee and the DCS where the request was to provide a detailed list of irregular expenditure, disciplinary cases etc. Was the Commissioner saying the Committee never requested that type of information?

Commissioner Modise explained the detail requested by the Committee differed from invite to invite.

Mr Brauteseth thought the Commissioner was now misleading Parliament because when asked if the register of the irregular expenditure was available, the Commissioner affirmed this. When asked why the register was not present today, the Commissioner said it was because he was not sure of what the Committee would ask for. The Committee had established a pattern, at least over the past three years that he had been a Member of the Committee. Every single year since democracy the DCS appeared before the Committee – the only variable was the meeting location. The Commissioner had constantly been at those engagements – the explanation of the Commissioner on the matter was thus unacceptable. 48% of irregular expenditure was due to bid processes not followed – could examples be provided of bid processes not followed, since the detailed list was not made available?

Commissioner Modise replied that the bulk of irregular expenditure was due to procurement policies not followed to the letter, where competitive bids were not advertised and where only two price quotations were received instead of the mandatory three.

Mr Brauteseth knew this - he was looking for the detail of the cases. It was really bad that the Commissioner was now looking to his colleagues. The Commissioner said he could provide the Committee with the detail of the list but was lying to Parliament.

Commissioner Modise responded that the two biggest bid cases involved procurement of a system where the Department did not comply with the SITA Act as well as procurement of a service to assess correctional facilities through a contract with the Department of Higher Education and Training.  

Mr Brauteseth asked what was wrong with the Integrated Inmate Management System (IIMS) system and the role Mr Patrick Monyeki played in irregularity of this contract.  

Commissioner Modise said the IIMS contract was not procured through SITA, as was mandatory and, at the time of signing the service level agreement, the tax certificate of the service provider expired. The Minister was interdicted from discussing the details of the procurement in public.

Mr Brauteseth felt the Committee needed to know what was wrong with the IIMS contract.  

The Chairperson suggested Mr Brauteseth frame his question as what was allegedly wrong with the contract so that it was discussed as an allegation and not fact.

Mr Booi thought the Member should be allowed to frame his question in his own way especially as the Department did not provide the Committee with requisite information. The Commissioner should not be protected from answering questions of Members.

 

Mr Brauteseth reiterated there were four categories of irregular expenditure – the IIMS matter fell under the category of non-compliance with the SITA Act. The interdict was on the Minister but the Minister was a Member of Parliament – in terms of the Powers, Privileges and Immunities of Parliament Act, the Minister can say anything he wished to before Parliament and nothing could be done to him. The Committee needed to know what was irregular about IIMS and which persons were involved in irregularity. The exercise would be much easier if the Committee had the detailed list and breakdown of irregular expenditure. The Member suggested the lack of response explained why no list was provided or did not exist – it would be proven that Parliament was being lied to by the Commissioner.

Commissioner Modise said the IIMS bid was audited by the Auditor-General of SA (AGSA) after it was approached for help by the Department to provide assurance that the bid was done fairly competitively. The AGSA found the Department contravened the SITA Act, that there was subcontracting of more than 25% of the contract by the successful bidder and that there was no evaluating capacity or capability to execute the contract. With the code of conduct of bid adjudication, in terms of the PFMA, no contract could be awarded to anyone whose tax matters had not been declared by the SA Revenue Service (SARS). The two main issues was non-compliance with the SITA Act (the Department was engaging SITA and National Treasury on the matter) and the expiration of the tax certificate of the successful bidder at the time of signing the service level agreement. The Department informed the AGSA the tax certificate was valid at the time of the adjudication process – the successful bidder was asked to show that his tax matters were correct regarding SARS.

Deputy Minister Makwetla added the Minister could provide any further relevant information on the matter as it fell under corporate services of the Department, the responsibility of which lied in the office of the Minister. What the Commissioner was raising was what the Deputy Minister saw in the documents – there were issues around the non-involvement of SITA and that the tax certificate of the service provider expired.

Mr Brauteseth asked who IIMS was awarded to and what the value of the tender was.

Commissioner Modise answered that the contract was awarded to Integritron for the amount of R378 million over a period of three years. 

Mr Brauteseth asked if Sestech had anything to do with Integritron.

Commissioner Modise did not know.

Mr Brauteseth then asked which other bid process was not followed.  

Commissioner Modise said the other major bid was with regard to assessment of correctional facilities to the amount of R158 million. The service was procured through utilisation of a contract awarded to the Department of Higher Education and Training (DHET) for assessment and refurbishment of places of residence for students.

Mr Brauteseth asked what was wrong, or irregular, with this particular tender and which officials were involved.

Commissioner Modise replied that the matter was currently under investigation by the Special Investigating Unit (SIU) – the Unit was conducting a complete forensic audit to determine who did what and what was done wrong. One official was named and disciplinary procedures concluded – the official was dismissed from the Department but the official was taking the matter on arbitration, as part of the Labour Relations Act. The Department would have to defend its decision then. DCS, through the SIU, was also trying to establish other officials involved and further action to be taken.

Mr Brauteseth asked what charges were laid against the official and what the name of the official was.  

Commissioner Modise said it was Mr Ndlela. He could not recall what the transgressions were but the case was heard before a jury-constituted disciplinary tribunal and the information put against the official was obtained from the SIU.

Mr Brauteseth noted that the dismissal of Mr Ndlela was not included in the information provided to the Committee about disciplinary cases and action taken against them – this was then a false report provided to the Committee. Was the Commissioner lying to Parliament?

Commissioner Modise stated there was no way he would lie to Parliament and the Committee – he was relaying information at his disposal. The matter was handled by the SIU and it therefore might not have been included in the information provided to the Committee.

Mr Brauteseth informed the Commissioner that he used to work for the SIU – the Unit did not conduct disciplinary cases. DCS conducted disciplinaries. The one case where there was dismissal was not included in the information provided to the Committee – what was actually going on? What was Mr Ndlela charged with? Was he the only official involved in this matter?

Mr Booi highlighted the Hawks and SIU were present and could verify what was being said so that the Committee was not misled.

The Chairperson said only the Hawks were present and not the SIU.

The Hawks official present said he did not have information from the SIU.

Ms Khunou said the Anti-Corruption Task Team worked with the SIU, and other stakeholders, on amounts above R5 million – it would be a problem if the Hawks then did not have the information.

The Chairperson clarified that the files of the SIU and police (Hawks) were different.

Mr Brauteseth suggested the Committee wrote to the SIU to obtain clarity on the investigation. He then asked who chaired the bid evaluation and bid adjudication committees in the IIMS tender.

Commissioner Modise replied that the bid evaluation committee was chaired by Mr Mandla Linda, who was a chief director, and the adjudication committee was chaired by an individual, who was the CFO.

Mr Brauteseth asked who signed off on the bid.

Commissioner Modise explained that once the bid adjudication committee adjudicated, it would inform the Accounting Officer, through a letter, to note that the particular bid was adjudicated and who the successful bidder was. The Accounting Officer would then inform the Executive on what transpired. A Service Level Agreement (SLA) then needed to be signed between the successful bidder and DCS.

Mr Brauteseth asked who signed the SLA.

Commissioner Modise responded that it was signed by the supply chain management unit of the Department – in most cases it was the Deputy Director and/or Director of Supply Chain Management.

Mr Brauteseth asked the Commissioner if, as Accounting Officer, he satisfied himself that all documents relating to the bid were correct.

Commissioner Modise said the information he had was that the adjudication committee had done its work diligently, ticked all boxes and the bid was therefore done correctly at that point in time.

Mr Brauteseth, focusing on the IIMS contract because of its substantial cost, asked why the contract was redeveloped when the Department already had a software product which already did what the IIMS contract did. Perhaps the Committee needed to know what the IIMS contract did for DCS.

Commissioner Modise explained IIMS allowed for a single view of all the information on any offender, at any given time, at any of the offices, be it at management, regional or head office. This was also in line with the Integrated Justice System (IJS) vision for having information which could be utilised by other departments. There was a project called Remand Detainee Offender Management System (RDOMS) which was instituted for the Department to manage remand detainees. The System was initiated at the Johannesburg correctional facility, particularly, Medium A, but the system crashed a number of times. Between DCS, SITA and the service provider, there was discussion on how the System could work. The service provider was given another opportunity but the System again crashed.

Mr Brauteseth asked if the Commissioner was saying RDOMS crashed and so IIMS had to be brought in. Why was IIMS purchased if there was RDOMS?

Commissioner Modise said the RDOMS solution crashed in Johannesburg, on a number of occasions, and the Department then had to look for a system which would assist in having a single view and to ensure there was data integrity of the information.   

Mr Brauteseth asked what RDOMS cost.

Commissioner Modise replied that the RDOMS cost to the Department was R43 million at one site.

The Chairperson asked if this was the value of the contract or the money actually paid.

Commissioner Modise said this was the value of the contract.

Mr Brauteseth asked if there were more sites and if the R43 million was then just part of the cost.

Commissioner Modise clarified that the contract price was R43 million and, to date, the Department paid R39 million. This occurred during 2014 when a settlement agreement was signed – the service provider was given another opportunity but the RDOMS crashed again.

Mr Brauteseth sought clarification on the number of sites there were and if this increased the cost of the contract – this was important to know.

Commissioner Modise responded that R39 million was paid out while the contract was valued at R43 million. The contract was procured through SITA.

Mr Brauteseth asked the Commissioner if he was confirming R43 million was the total or the total per site. The Member needed to know this.

Commissioner Modise said the R43 million was per site.

Mr Brauteseth then asked how many sites there were.

Commissioner Modise answered that it was R43 million for one site to be piloted in Johannesburg.

Mr Brauteseth asked if it was correct to say the Department moved on to IIMS after the RDOMS pilot failed in the Johannesburg site.

Commissioner Modise confirmed this.

Mr Brauteseth wanted to know why the Department spent money on a product which did not work and why R378 million was spent on the replacement.

Commissioner Modise said payment on RDOMS was a result of a competitive bid – the bid was advertised and awarded to a service provider. A council advised the Department and in the end DCS agreed to a settlement agreement with payment.

The Chairperson felt more detail needed to be provided on why that amount was paid for a system which failed – what was being paid for then?

Commissioner Modise responded to say that a settlement agreement was entered into with SITA and the service provider in March 2014 that the project had to be re-implemented with reduced scope and corrections with regard to biometric information. The system failed again. The settlement had to be honoured by the Department.

The Chairperson felt the response was not talking to the substance of the question which was on what basis the settlement payment was made. The Department was short of nearly R8 million in payment of the entire contract even though the system failed – what did the Department then agree to pay in the settlement? Did the Commissioner see the settlement himself?

Commissioner Modise did not see the settlement.

Mr Brauteseth said he was asking the question on behalf of a South African citizen – he made the analogy of the citizen giving the Member R50 to buy a pawpaw and the Member then bought the pawpaw. On the way home it was found the pawpaw was rotten and the Member then used R200 of the citizen’s money to buy a watermelon.  How could the RDOM system not work yet the service provider still be paid? Was IIMS piloted before it was taken on board? What was the status of the IIMS contract?

Commissioner Modise explained the pilot at Johannesburg, which was paid for, was under the auspices of SITA – as the agent leading the process, SITA, DCS and the service provider settled the matter and the settlement was paid for. The matter was however on the court roll for finalisation as the service provider was arguing it provided a service to DCS. With the IIMS contract, this was a three year, phased project where the Department developed its own specifications.

The Chairperson asked how much was paid so far for the IIMS contract.

Commissioner Modise answered that expenditure to date on the IMMS project was R68.5 million.

The Chairperson asked what percentage of the contract this expenditure was.  

The answer was that it was more than 20%.

Mr Brauteseth still wanted to understand how a project could be paid for which did not work –did the Department break RDOMS where the service provider could now strongly argue for payment in court? Without belabouring the point, he wanted to understand.

Commissioner Modise, in a layman’s explanation, said a solution was bought i.e. information was loaded and the information was then carried for a period of time. RDOMS crashed as a result of the amount of information loaded at the Johannesburg site, after the settlement was entered into by SITA, DCS and the service provider.

Mr Brauteseth asked if the officials of the Department overloaded the system above the specifications.  

Commissioner Modise said this was a good question which he could not answer as it would require technical expertise in the IT field. In Johannesburg there were over 4 000 remand detainees – he was informed the system did not have the capacity to carry this.

The Chairperson said the Member wanted to know whether the system crashed because it was overloaded or if was built with a limited capacity so that it could not perform its primary function of loading information.

Ms Nthabiseng Mosupye, Government Information Technology Officer, DCS, said the system crashed after being loaded with biometric identification information relating to verification.

Mr Brauteseth asked if the RDOMS developers informed the Department that the system could do this.

Ms Mosupye confirmed this.

Mr Brauteseth asked why the service provider was then still paid.

Ms Mosupye explained projects had plans and milestones and there was agreement on which milestones would be paid at which specific time – the money paid was for the milestone of building the solution but the portion not paid for was the system actually working in the environment. 

Mr Brauteseth asked if it was then correct to say the system operated at 80%.

Ms Mosupye responded that milestones to be paid differed – the final milestone was the system working. Payment would still be made for development of certain parts of the system such as software, licences etc.

Mr Brauteseth used the analogy of a car bought where the owner paid for the body, seats and other parts of the car only to find there was no engine but 80% of the car was already paid for – was this what the Department did? Did the Department understand concerns in this regard?

Ms Mosupye then used the example of a car having all the specifications as requested by the buyer only to find the engine was 1.1 instead of 1.6 as requested – this was the situation the Department found itself in.

The Chairperson asked if this was then a breach of contract.

Ms Mosupye confirmed this.

The Chairperson said this meant the DCS paid for the contract under false pretences and should be refunded.

Ms Mosupye agreed.

Mr Brauteseth asked why the Department paid in the first place. Why did the Department not tell the Committee it wanted to be refunded in the first place?

Ms Mosupye said the service provider took the Department to court and the Department counter-claimed thereafter – this was the nature of the court case.

Mr Brauteseth asked if it was then correct to say, despite a breach of contract, the Department paid the service provider R39 million, then, when the service provider got cheeky enough to ask for the full R43 million, the Department refused to pay and asked for a refund.

The Chairperson added that it seemed the Department was paying for the milestones blindly without actually realising it. It was as if one was paying for a tractor but receiving a Toyota Yaris. The Department wanted a refund when it was found the last leg of the system did not work yet all milestones, leading to the final product, were already paid for.

Mr Brauteseth, moving on, asked if Mr Nthabiseng Mosupye was present.

Ms Mosupye indicated herself.

Mr Brauteseth asked if she ensured RDOMS did not register more than 1 500 people or population of the EM.

Ms Mosupye said that RDOMS and EM were different systems.

 

Mr Brauteseth then asked who headed the IT support division of DCS.

Ms Mosupye said that she did IT support within the Department with a team.

Mr Brauteseth was concerned that the RDOMS was sabotaged from the get-go in order to buy the better solution/system – the expenditure of the better solution was predicated on the basis that RDOMS did not work even though 80% of the System was paid for. If there was a problem with the engine of the analogous car, why was the engine not simply replaced instead of buying an entirely new car? Additionally, the process of appointing Integritron on IIMS was irregular. This picture did not look very good.

Ms Mosupye responded that RDOMS came from the 2008/9/10 period and it failed. The settlement agreement looked at what could be utilised or improved in order to ensure the System was not sabotaged. The System however failed again – it failed multiple times. The architecture of the system was incorrect and the way it was built was incorrect. As a pilot project, the System was only meant to operate in one site – the Department had 241 sites.

Mr Brauteseth asked the Commissioner where the matter was currently – was condonation asked from Treasury?

Commissioner Modise responded that the Department undertook a process to get the irregular expenditure regularised. SITA was also engaged because when the IIMS contract was started, the Department told SITA condonation was needed. The matter was now with the Minister of Telecommunications and Postal Services – the Department under which SITA now fell.

Mr Brauteseth asked if Treasury was involved in the process.

Commissioner Modise said Treasury would be engaged after the Minister gave the go ahead. The Commissioner had raised the matter with the former National Treasury DG, Mr Lungisa Fuzile, and there was agreement that preliminary work should be done first as the irregular expenditure was with DCS.

Mr Brauteseth requested Treasury provided comment.

An official from Treasury, on the issue of condonation, said SITA was engaged on a number of occasions – SITA indicated it did not know how to deal with the matter as it had never dealt with condonations and it was not the responsibility of the Agency. It was not understood how DCS procured the contract through SITA without involving National Treasury. With the MSW contract, Treasury was involved with the SIU investigation – the SIU was working on the criminal investigation and assisting the Department with the labour issue, the latter on which Treasury was requested to provide evidence at the hearing involving one DCS employee. The hearing was done by DCS and not the SIU. The main issue with MSW was that DCS participated in a DHET tender which was expiring.  In terms of section 34 of the Prevention and Combating of Corrupt Activities Act, Treasury provided its report to the Hawks –although a case was opened, the investigators were not moving as expected.

Mr Brauteseth felt the Committee needed to pay close attention to the MSW case and the IIMS matter. The other area of irregular expenditure was officials not declaring their interests – the list provided to the Committee made mention of a case where the official was not part of the company providing renovating work but the recommendation was to blacklist the supplier – why was this done? There were other examples in the list of officials not doing wrongdoing but the service provider was blacklisted anyway. If so, why?

Commissioner Modise explained there were officials who did business with DCS or other departments and there were relatives of officials doing business with the state. When the Public Service Commission (PSC) provided the Department with the list of officials deemed to be doing business with the state, the Department conducted an investigation where it was found that officials did not disclose relations. Treasury was also engaged on the process and provided expert advice on whether to dismiss service providers or not.

The Chairperson asked why companies were blacklisted if the officials were not guilty. Why was the official accused in the first place?

Commissioner Modise said the Department did not have its own system to ascertain whether officials, or spouses of the officials, were doing business with the state. The Department relied on lists from PSC and investigation could be taken from there to determine whether there were relationships between suppliers and departmental officials.

The Chairperson cited the example of Best Brights Electrical where the official was not found to be a partner in the company however the recommendation was that the company be blacklisted – why should the company be blacklisted when there was not instance of wrongdoing in terms of what the Commissioner was saying?

Commissioner Modise said, in this case, the PSC highlighted the fact that the company and the official were partners in a specific point of time and this relationship could easily translate into some form of influence – this was the basis of the investigation conducted.

The Chairperson said the two were partners in a prior venture and not in Best Brights Electrical – why was Best Brights Electrical then blacklisted?

Mr Nick Ligege, DCS CFO, explained the DCS official was a partner in a different company but the partner did not disclose the relationship with the DCS official in this other entity. The Department sought guidance from Treasury on how to deal with the cases. 

The Chairperson still did not understand where Best Brights Electrical featured if the official was a partner in another, different company  - it was Best Brights that provided the service to DCS and not the other company.

Mr Ligege explained the reports were pulled from the Companies and Intellectual Property Commission (CIPRO) and were exceptions picked up by AGSA...

Mr Booi requested the Member answer the question and not direct the Committee to CIPRO. Members needed to know what was going on.

The Chairperson wanted to know what Best Brights did to deserve blacklisting.

Mr Ligege responded that the finding was that the DCS official was a partner in a company which did business with the state through Best Brights. The director of Best Brights did not disclose this relationship with the departmental official in another company.

Mr Brauteseth wanted to know who compiled the list because it appeared the Department was caught off guard. It was inherently unfair that there was blacklisting in this case and it highlighted that the Department did not compile the list.

Commissioner Modise said the list was the Department’s - it was compiled by internal control and compliance.

An official from internal control and compliance in the Department added that companies doing business with DCS were supposed to declare their interests, as a requirement of supply chain management processes.

The Chairperson clarified the Committee was not questioning blacklisting of companies but it was seeking explanation for what was contained in the list. The document was highly summarised, contradictory and did not reflect well on the Department. Non-written explanations did not assist the Committee.

Mr Brauteseth then turned to the issue of consequence management and the fact that officials did wrong but the company was blacklisted. The Minister himself told the Committee that consequence management needed to be taken very seriously. Many of the 738 cases showed “investigation pending” which effectively meant nothing was done five years down the line. Only 55 of the 738 cases were resolved which amounted to R720 000 out of R494 million – explanation was needed on why no proper action was taken and why those disciplined only received verbal or final written warnings (as per the Department’s own explanation)? These were officials contravening the law which resulted in irregular expenditure. Was this oversight on the part of the Department or deliberate action because it was looking deliberate? Better answers were needed.

Commissioner Modise responded that the Department inherited the cases but it was busy with a process of prioritising them beginning with the bigger cases. Departmental inspectors were assisting with investigations. Information provided by the AGSA was also assisting. Some of the cases began in 2011/12 and this was a huge backlog – the Department did not have the necessary capacity to move with the necessary speed.

Mr Brauteseth thought the answer was not good enough – almost every case said “investigation pending” even those stemming from 2011/12. How was this possible? Exceptions/condonments could not be seen – if the case was not condoned it was still under investigation. How could any person not draw the inference that the Commissioner was absolutely useless at carrying out discipline?  The Commissioner would have to resign as the Committee had been talking to the Commissioner for three years. The Member stressed the Commissioner would have to step down as he was useless at his job and could not get things done. The Commissioner could not have inherited the list of cases – examples of condonation would have provided some comfort. The Commissioner always had the same excuses – he needed to find something else to do better because Correctional Services was not that.  

Commissioner Modise thought the opinion of the Member was wrong and was not informed by what DCS did and achieved so far. The Member should align himself with the Committee and conduct site visits to establish progress made by the team. It was important for the Member to base his opinion on facts as some of the opinion conveyed was not in line with the spirit of engagement with the Committee. The Committee invited the Department to respond to pertinent questions to the best of its ability – if the Department could not do so it would be indicated. To say that the Department was lying and useless was incorrect.

Mr Brauteseth highlighted that there 576 cases still not dealt with – he apologised for offending the feelings of the Commissioner but stood by the point that the Commissioner was not good at his job and called on him to do the right thing and resign.

Mr Smith asked the Commissioner if he recalled saying he signed off on the bid because “it was done correctly” after Mr Brauteseth questioned the Commissioner thereon.

Commissioner Modise responded that he qualified his answer to say the bid was done correctly at that time.

Mr Smith did not hear that – nevertheless, in hindsight, did the Commissioner still think he did a proper job at the time?

Commissioner Modise did not think so.

Mr Smith thought the Commissioner should have said so from the start because the impression of South Africans now was that the Commissioner thought he did a good job. The Member agreed the Commissioner did not do a good job because the Department’s own report said that bid processes were not followed. The Commissioner said he did a good job when answering Mr Brauteseth, the Department’s own report said bid processes were not followed and then the Commissioner admitted he did not do a good job in hindsight.

The Chairperson suggested time be set aside in the afternoon next week for Members to engage in deeper discussion of pertinent questions instead of discussing matters on a broad and generic level. From the report and case before the Committee, a range of other issues needed to be discussed.

Mr Hlengwa noted that there were certain matters around IIMS he still wished to tease out so that some conclusion could be found.

Mr Kekana agreed with the Chairperson –going through the document, there was some discrepancy around whether cases were closed/condoned or was still under investigation. Perhaps an afternoon session should be arranged with the Department to discuss this matter.

The Chairperson requested the Committee Secretary look at what the programme of the Committee looked like next week and ascertain whether some time could be found for the suggested engagement.

Ms Khunou agreed with the suggestion for deeper engagement next week. Perhaps the Department should also rework the document because, for example, some cases contained officials’ names while others did not. Another key question was what internal audit was doing in the Department especially as there were some issues picked up by the AGSA that one would have thought internal audit would have picked up on – the Committee might needed to speak to internal auditors.

Mr D Ross (DA) also agreed with the suggestion of the Chairperson that the Committee organise a session next week to probe some issues on a deeper level with DCS. He reminded the Committee that at his last engagement with the Committee, the Minister declined to have an investigation into the IIMS contract as it was not yet pronounced by the AGSA. SCOPA existed to prevent irregular expenditure so it was unfortunate that the Minister conveyed the sentiment that he would only pronounce on a finding by the AGSA. The Committee needed to have deep discussion on the IIMS contract especially because of the large sum of money involved – the Committee should even have the view of rescinding the contract to prevent irregular expenditure as in line with the mandate of the Committee.

Mr Booi agreed with the Chairperson and said the Executive would have to provide more information especially as there was no clear communication between the Department and Ministry regarding today’s meeting. The Committee would not relent in keeping the Department accountable. Members should be allowed to continue discussion for the duration of the meeting.

Ms Mente requested that, ahead of next week’s meeting, the Commissioner consider looking at the PFMA and check where it was not applied – if not, the Committee should be provided with reasons as to why the Act was not applied. This was particularly in relation to section 38, 41 and 85.

Mr Smith, continuing with the line of questioning, asked the Commissioner if he recalled the DCS Government Information Technology Officer saying the only reason RDOMS failed was because of the biometrics.

Commissioner Modise responded that the Government Information Technology Officer spoke to biometrics and the ability of RDOMS to hold information.

Mr Smith highlighted that the Commissioner wrote a letter to SITA on 14 December where it was observed that RDOMS failed because of inadequate system development, inadequate project planning and ineffective steering committee – this was signed by the Commissioner. The DCS Government Information Technology Officer told the Committee that the reason the System failed was because of biometric and information loading – which explanation was the truth? Why did the letter to SITA not talk to biometrics as a reason for RDOMS failing? Was the Government Information Technology Officer telling the Committee the truth?

Commissioner Modise confirmed that he wrote the letter and explain that biometrics was part of the deliverables expected from the service provider – this was covered under the observation of inadequate systems and inadequate project management.

Mr Smith gave the Commissioner the benefit of the doubt in this regard. Did the Commissioner recall the DCS Government Information Technology Officer saying RDOMS was for one site i.e. Johannesburg Central? The letter stated that RDOMS would provide the Department with an integrated business system and facilitate management for the entire remand detainee and offender lifecycle – why were the two explanations contradictory?

Commissioner Modise replied that the Government Information Technology Officer was referring to the pilot which would give DCS the assurance that, if rolled out to the entire Department, would provide an integrated business system and facilitate management or the entire remand detainee and offender lifecycle. Rollout of a system would only occur after a pilot was launched as the pilot would provide the Department with the confidence that the solution procured had the capacity to be utilised effectively.

Mr Smith highlighted that R43 million was paid for only one site – there were 141 prisons as he last recalled. Had the pilot worked, would it mean SA taxpayers would pay R43 million x 141? Or was the R43 million for the entire Department? If the R43 million was only for the pilot, how would the Department pay for the other sites? SITA would have to be called to be part of the engagement next week.

Commissioner Modise indicated that the R43 million was for the Johannesburg site and, once the solution was developed successfully at the site, it would be rolled out. Facilities differed so capacity required would differ therefore he could not say how much it would have cost the Department to roll out to all 243 correctional facilities in SA.

Mr Smith outlined the AGSA observed inadequate project planning – the Commissioner had just said the Department ran with the pilot anyway despite not being sure of what the entire system would cost if rolled out. One would assume the Department worked according to a budget so what the Commissioner was saying did not make sense and the Commissioner knew it – government needed to plan according to a budget. What the Commissioner was not telling the Committee was not the entire truth otherwise the AGSA would not have made the finding of inadequate planning. Did the Commissioner stand by the point that he did not know how much the entire system would cost but paid R43 million upfront anyway?

Commissioner Modise responded that the R43 million was for the pilot after which the Department would have sat down, made projections and then issue a tender.

The Chairperson asked if the tender would be for someone to design new uniform software or if there would be different software in different prisons. From his view, he would have assumed the system would have to be uniform so that it was easily replicated across the facilities.

Commissioner Modise said that once the solution was successful and procured by DCS, it then became the property of the Department. At the time of the 2008/09 pilot, the amount of R43 million was paid. Had the System been successful it would have been rolled out to all remand detainee centres to allow for a single view.

Mr Smith requested the Commissioner expand on the failures of RDOMS as outlined in the SITA letter so that the Committee could interrogate it ahead of next week’s meeting.

Mr Hlengwa did not believe this was a pilot programme – he understood a pilot project to involve trial and error until the system was perfected. In the case of RDOMS, the pilot project did not work, it was thrown out the window and another system was then procured in its place. What action was taken to ensure the pilot project was corrected until the desired outcome was achieved? Was IIMS a pilot project? Was the pilot successful?

Ms Mente noted that before any IT project was installed, presentations would be made by different companies – who was present when these presentations were made? Was the Commissioner present? Was the DCS Government Information Technology Officer present?  Specifications of the system would already be made known in the presentations.

Ms Khunou noted that when the Minister was last before the Committee, he spoke confidently of a turnaround strategy. Next week the Committee also needed to hear more about the condonments made by the Commissioner. More clarity was also required on the disciplinary cases, officials involved and the funds involved.  Was there any report on improvements made on the findings of the AGSA such as lack of internal controls? Year-in and year-out, the Committee complained about the procurement systems of government – regulation required that mandatory IT goods and services be procured through SITA but this was not done. She agreed that SITA too should appear before the Committee to get to the bottom of the issue and for answers to be found.

Commissioner Modise said that Mr Hlengwa was correct in saying the nature of a pilot project was that of trial and error. In the case of RDOMS, implementation of the pilot did not yield any success. SITA, DCS and the service provider then reached a settlement arrangement in 2014 – even though the settlement had its own deliverables and milestones, RDOMS crashed at Johannesburg a number of times. It was clear the service provider running the pilot was not able to do the work – this explained why the Department settled for another project. Presentations occurred after potential bidders were identified in response to bid advertisements.  He agreed that it was also important for the Committee to meet with SITA as the Agency could provide more clarity on RDOMS and the process undertaken with the IIMS contract. DCS did have a turnaround strategy with many pillars, one being HR, where the intention was to augment the staff of the Department as the current number on the organisational structure was inadequate. Also to be looked at was capacitation of the financial and supply chain branch of the Department as many of the findings of the AGSA related to supply chain and financial management – these areas of the Department needed to be strengthened urgently. This strategy was presented to Cabinet and would need to be implemented immediately. While not everything could be done at once, the intention was to take the process step by step ad phase by phase. While the Department experienced challenges, as the Committee was aware, light was being seen at the end of the tunnel. Other departments were assisting such as Public Works in terms of accommodation, Public Service and Administration regarding HR and Health in terms of health care services – this was part of a multi- and inter-departmental approach to rehabilitation.

Mr Hlengwa, bemoaning the lack of time, noted the service level agreement was signed in December 2015 but in October 2015, a letter from National Treasury advised that one supplier met functionality requirements which meant it was difficult to determine the reasonableness and competiveness of the price. The DCS Accounting Officer responded by simply noting the concerns. How did the Department respond to this letter from Treasury? He imagined that if such a serious fundamental flaw was made by Treasury that the Department would go further than merely noting it before signing the SLA. Section 31 (1) (A) of the PFMA said the Accounting Officer must ensure the trading entity or constitutional institution, has and maintains a proper procurement and provisioning system which was fair, equitable, transparent, competitive and cost effective. How could the DCS Accounting Officer sign off when such a key matter was raised by National Treasury? Was the Department aware the company was fronting? If so, how did the Department proceed if fronting was established? The chairperson of the bid adjudication committee had a litany of allegations around him when he was CEO of the Municipal Demarcation Board – the issues were brought to the attention of DCS. In light of this, the Member sought explanation for the individual made chair of the bid adjudication committee. Did the DCS Accounting Officer receive any requests, at any time, by the Chief Procurement Officer to review the process? If so, when was the request received and what was the response by the Accounting Officer? What reasons did the Chief Procurement Officer giving for reviewing the process? A litany of red flags had been raised around the process but for some reason the particular transaction was pushed right through to the very end. RDOMS was either a quick money-making scheme for a certain intention or DCS did not ascribe to certain requirements. IIMS must really have belonged to someone who wielded a lot of influence to exert pressure even in the face of National Treasury and the PFMA pointing out glaring failures. While the answers could be provided in writing he requested the Department respond to the question of the DCS Accounting Officer receiving any requests, at any time, by the Chief Procurement Officer to review the process and, if so, when the request was received and what was the response of the Accounting Officer and what reasons the Chief Procurement Officer gave for reviewing the process.

Ms Mente again requested to know who was present when the presentation was made on RDOMS – this answer would lead to many of the responses Mr Hlengwa requested. It seemed as if RDOMS was just a pilot system run without attention or supervision so that it was an initiative meant to fail so that a bigger system was purchased. Who failed to identify the prescripts of a desired system and did not know what they wanted so that what was not desired was still paid for? This was the person the Accounting Officer needed to fire.

The Chairperson suggested the question was best posed when SITA was part of the engagement. It would be important to follow up on who was in the steering committee - the matter went beyond just one individual at DCS.

Mr Brauteseth requested a full breakdown, by the end of the week, of how Integritron received R378 million – this information was vital for the Committee’s engagement next week.

Ms Khunou noted that her question on the ineffectiveness of the internal audit of the Department was not answered by the Commissioner – the AGSA spoke to the weak internal audit and a reason for this needed to be provided. What was needed to ensure internal audit was strengthened? Some of the findings of the AGSA should have been picked by internal audit. The Committee needed to know the number of cases referred to the SIU by DCS – documentation in this regard was required. A status of the pending cases also needed to be provided as almost 90% of the cases were still pending. The Committee needed to see the turnaround strategy in document form so that it was clear what the problems were, how it would be resolved and what the target dates were. Non-payment in 30 days was a serious problem killing black business – Treasury required that suppliers be paid within 30 days. While many suppliers were not being paid for work done and were trying to make ends meet, DCS paid millions for a system which failed. Further probing was required on DCS officials doing business with the state.   

The Chairperson proposed the Committee convene a meeting next Wednesday, 14 June 2017, after plenary (18h00), to further engage on the matters with DCS. The Committee would require a detailed list on condoned cases (issue, who was involved, amounts, dates, investigation).  The internal audit unit of DCS would have to dust off its books and programmes – the Committee needed to know what the unit was doing on a daily basis as many matters were still pending and it was clear there were issues with capacity. The Hawks should also be present at next week’s evening engagement to talk to the MSW case and provide details on findings, why no progress was made, why there was a delay and what still needed to be done to finalise the investigation. SITA would also be present to talk to RDOMS and IIMS. The SIU would also be engaged to find out the outcomes of DCS cases. The Committee needed detailed information on DCS accruals in terms of companies the Department owed, how much was owed, what services were provided, how long payment was outstanding and when last services were rendered from the provider. The Department would need to redo its document on conflict of interests because it was poorly done – this was to be provided to the Committee by Friday.  The Department could also provide its turnaround strategy and the costing of IIMS.

Commissioner Modise took note of the issues raised by Members and would provide written responses where it was required. A complete report on RDOMS and IIMS would also be provided along with consequence management.

The Chairperson said the spotlight did not just fall on the Commission but also on the CFO who was responsible for Rands and cents –this was something for the Committee to keep in mind ahead of the engagement next week.

Commissioner Modise continued by noting capacity in terms of internal audit of the DCS would be sent to the Committee, regarding the work it did. The Department was in full agreement with the findings of the AGSA – the Department had a plan to deal with and turnaround issues bedevilling the Department regarding regulations and performance information. At times the DCS officials failed to appreciate the thinking of Members as politicians but he was assured that engagement with the Committee would take the Department a long way. All information requested by the Committee would be provided by Friday, at the latest. Any additional, necessary, information could be provided also. A breakdown of the irregular, wasteful and fruitless expenditure would be made available along with disciplinary cases and issues of condonment.

Mr Hlengwa expected that his questions were at least acknowledged.

The Chairperson assured the Member his questions were heard. The questions would assist the Department in preparing for next week’s engagement.

Deputy Minister Makwetla did not have anything to add – he acknowledged that the space of the current discussion was not that of the Ministry. His personal view was that the way in which these issues were dealt with should be with the aim of ensuring positive progress was made and that the Department was helped in “getting out of the woods”. While much work was done, today’s discussions proved even more needed to be done. The Deputy Minister asked if the Ministry was expected to be present at next week’s engagement.

The Chairperson confirmed this.

The meeting was adjourned.