PSIRA on Quarter 4 performance

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20 June 2017
Chairperson: Mr F Beukman (ANC)
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Meeting Summary

The Private Security Industry Regulatory Authority (PSIRA) presented its fourth quarter performance report, and indicated that the organisation had achieved almost all of its targets in the period under review. However, in terms of financial performance, only 67% of the revenue had been collected. Total revenue was 12% below budget, annual fees were 8% down, and registration fees had fallen 10% short. Expenditure had ended up 11% below budget due to cost containment measures, as well as the delay in the implementation of the Economic Recovery Programme (ERP), so PSiRA had recorded a surplus of R6.9 million.

Members asked about the PSiRA Amendment Bill, and whether there had been any further communication or interaction with the Presidency and the new Minister of Police regarding the Bill. They were also interested in PSIRA’s experiences in their interactions with the new Minister of Police. What was the Authority going to do about its R44 million of bad debts -- had a service provider been appointed to assist with the recovery of the money? Why were the annual fees below the budget, and how was this going to be improved? What systems, processes and mechanisms had been put in place that had led to the improved relationship with the South African Police Service (SAPS)? They asked for the causes of the delay in the occupation of PSiRA’s offices in Mthatha, Port Elizabeth and Johannesburg. Why was there a delay in filling vacant posts, and what was the impact of that delay so far on the performance of the organisation? They asked questions about the vacancy rate for inspectors; the price of the identity cards for security officers, the eligibility of foreign nationals for registration, and how realistic PSiRA’s expectations were regarding its ability to recover its bad debts. 

Meeting report

The Chairperson welcomed the Members and the delegation from the Private Security Industry Regulatory Authority (PSIRA), and announced that later on in the day the Committee would have a joint meeting with the Portfolio Committee on Higher Education. The stakeholders that would be present at the meeting would include the PSiRA and the South African Police Service (SAPS), to engage on the how SAPS had carried out its operations for the ‘FeesMustFall’ campaign, and how private security could play a role in crowd management of that nature.

PSiRA on its fourth quarter performance report

Professor Fikile Mazibuko, Chairperson of the PSiRA Council, said that the Council continued to conduct its oversight role. It had conducted the annual review of its policies and approved them. It had been busy working closely with the executive team because of the outreach programme that had been strengthened. The transformation team was still doing its work, but it was work in progress and the Council hoped to get a report by the end of July.

Mr Manabela Chauke, Director and Chief Executive Officer (CEO): PSiRA, reported on the year to date performance, highlighting that 90% of the planned activities had been achieved in terms of the strategic objectives. With regard to its financial performance, only 67% of the revenue had been collected. Total revenue was 12% below budget, annual fees were 8% below budget, while registration fees were 10% below budget. The sale of goods was 57% below budget, and course reports income 4% above budget. Expenditure was 11% below budget due to cost containment measures implemented in terms of printing, advertising, travel and accommodation, and venue hire. In addition, there had been a delay in the implementation of the Economic Recovery Programme (ERP). Therefore, PSiRA had ended up with a surplus of R6.9 million.

Ms Mmatlou Sebogodi, Deputy Director, took the Members through programme one, highlighting that the purpose was to provide leadership, strategic management and administrative support to the Authority. In the sub-programme – finance and administration -- the Q4 target was achieved in terms of effective financial management, an internal audit strategy was developed and monitored quarterly, and all audit findings were addressed as per the action plan. In terms of sub-programme three – human capital -- only 90% of the planned targets were achieved.

Mr Stefan Badenhorst, Acting Deputy Director, presented on programme two – law enforcement -- which was designed to ensure that there were effective regulations in the security industry, enforcement of the law and compliance with the regulations. He said that Q4 targets were reached for the number of security inspections carried out, to ensure that there was compliance with applicable legislation. This had been accomplished through the filling of vacancies and the fact that some newly appointed inspectors were no longer under training and working independently. The targets were over-achieved in respect of the percentage of investigations finalised, as well as the number of criminal cases against non-compliant Security Service Providers (SSPs), due to the additional number of inspectors transferred from the Compliance to the Enforcement Department, and the improved relationship with the SAPS.

The Q4 targets for the number of security businesses licensed to possess firearms inspected, were over-achieved, as well as the percentage of cases of non-compliant SSP’s prosecuted per year. This was due to the new process of issuing charge sheets and summonses simultaneously being fully implemented in Q3.

Ms Mpho Mofikoe, Deputy Director, presented on programme three – communication, training and registration. This programme was designed to provide effective stakeholder engagement, ensure that training standards were adhered to, and that the registration process was done in accordance with the PSiR Act.  The number of public awareness programmes on PSiRA’s role and functions was overachieved due to additional engagements conducted by PSiRA related to the protests that occurred during the first three quarters of the financial year. The targeted average turnaround time of applications for registration meeting all the requirements for security businesses was achieved, and the improvement was attributed to staff capacity.

The target for new registration certificates rolled out on active security businesses was not achieved due to the slow down in the business registrations, but the annual target had already been reached.

Total revenue was 8% below budget for the following reasons:

Annual fees were 8% below budget. During the budget process, it had been anticipated that security officers (SOs) employed and nominated for payment would increase to 500 000 during the 2017 financial year, but only 487000 SOs had actually been nominated for payment.
Registration fees were 4% below budget. The total number of newly registered SOs was lower than budgeted, due to the unavailability of identity document (ID) cards.
The sale of goods was 61% below budget. ID cards were sold to only employed SOs. The renewal of certificates project was also lower than budgeted.
Course reports were 4% above budget. The rate budgeted (R75) was lower than the rate approved for the 2016/17 financial year, of R80.

With regards to expenditure, total expenditure was 11% below budget due to:

Staff costs were 4% below budget because of the delay in filling certain funded positions.
Office and office machine rentals were 27% below budget due to the delayed occupation of new offices in Mthatha, Port Elizabeth and Johannesburg as a result of tender processes and renovations.

Other operating expenses were 31% below budget due to:

Printing of ID cards was done only for employed SOs.
Software licence costs, amortization and depreciation related to the ERP system had not incurred during financial year.
Cost containment measures were implemented for other expenditure items.

Non-current assets had increased, and this increase of 12% was mainly due to purchases of new fixed and intangible assets of R6 million, also taking into consideration the depreciation and amortisation for the current year. The current provision for bad debts was R44 million, calculated on service providers that had not paid PSiRA for the past two years. Most of these services providers had been withdrawn and would be handed over to the legal department for collection.


The Chairperson asked about the PSiRA Amendment Bill, and whether there had been any further communication or interaction with the Presidency and the new Minister of Police regarding the Bill, and the importance of it being finalised. The R44 million of bad debts was a big amount, so was the organisation looking at improving its policies to ensure that such an enormous amount of bad debts was avoided? Had there been any appointments of other service providers to assist with this, because it may be a risk going forward? What was PSiRA going to do about it?

Ms M Molebatsi (ANC) asked whether PSiRA would achieve a clean audit in the 2016/17 financial year. Secondly, she asked about the cost of the ID card. Thirdly, the offices in Mthatha, Port Elizabeth and Johannesburg were occupied, but how long would the Acting Deputy Director still be in an acting position? She also wanted to know about the internship programme run by the organisation.

Ms M Mmola (ANC) asked why the annual fees were below the budget, and how was this going to be improved. Was PSiRA dependent on the Department of Public Works in order to secure office accommodation, and if so, what challenges was the organisation experiencing?

Mr Z Mbhele (DA) commended the two aspects that had been reported on with regard to the broadening of the consumer education, so people were better informed and had a more substantive understanding of how they could get better quality and service in the sector; as well as the mobile projects to provide extension services for remote clients, because other departments could improve their outreach using this method.

He asked the delegation to elaborate on what systems, processes and mechanisms had been put in place which had led to the improved relationship with SAPS. Did PSiRA find that it interacted more effectively when it approached a particular level -- for instance, the provincial level, station level or national level? 

What had been the experience of support from the entity’s engagement with the new Minister of Police, and how responsive had he been? What had caused the delay in the occupation of those offices in Mthatha, Port Elizaebth and Johannesburg? It had been indicated that it was linked to tender issues – were they the same issues experienced with the Bloemfontein office? Regarding vacant posts in the organisation, which funded posts were being delayed in filling, and what was the impact of that delay on the performance of the organisation?

Mr P Mhlongo (EFF) referred to the “rogue” activities of some members of the industry under programme two (law enforcement). Yesterday, the Public Protector had made a profound finding with regards to the violence of diplomats. His information was that the role played by private security at that hostel had not been totally immune from the actual violence itself, so did PSiRA depend on police investigations, or did it conduct its own investigations and detection of these discrepancies?

PSiRA’s response

Professor Mazibuko responded on the engagement and meeting with the new Minister, and said there had been a sense of urgency from the Minister to meet with PSiRA. A meeting was on the cards, and the interest had been communicated through the Minister’s Chief of Staff to arrange a meeting, but a date had not yet been secured.

Mr Chauke replied that there had been good interaction with the office of the new Minister thus far. There were a number of outreach programmes that had been carried out by both the Ministry and PSiRA, as well as several Imbizos that had taken place through the office of the Minister to market the entities. At the administration level there had been good interaction, and they were awaiting the formal interaction with the Minister in respect of other issues.

The Amendment Act was one of the priorities that would be discussed with the Minister. There had not been any interaction or response from the Presidency yet since the last interaction.

The R44 million in bad debts was a cumulative amount from over the years. The year’s actual bad debts amounted to R15 million, and PSiRA had an elaborative process in place to ensure that this does not continue. PSiRA had not had the capacity to collect these amounts over the years, but what it had done so far was to use the State Attorney’s capacity to write letters of demand and collection, as well as issuing summons. Furthermore, PSiRA had begun recruiting litigation attorneys which would sit with the State Attorney to ascertain further how the monies could be collected. At the moment there was a pending meeting with the State Attorney and Chief Litigator, so that was the capacity currently being built to collect the outstanding money.

Professor Mazibuko said that it looked promising that PSiRA would achieve a clean audit. It had reviewed its internal controls, internal audit had reviewed the supporting documents prior to submission for auditing, and issues that related to the supporting documents had been addressed.

The cost of the ID card was R60.

When PSiRA had budgeted for its office accommodation, it budgeted for 12 months, but the implementation of the new lease and its finalisation had come later in the year, hence the under-spending on that item.

In addition to what the CEO had outlined on the outstanding R44 million, the team had gone further to analyse where the cumulative bad debts were coming from, and established that it occurred with service providers who registered for the tendering process. PSiRA would bill them, but after the tendering process, if they did not get the tender they did not come back, and therefore failed to pay for the registration. With regard to the annual fees, the cash collection was not possible because PSiRA owed the security business, but was still recovering from the R80 million.

Mr Chauke responded further about the annual fees. PSiRA always budgeted upwards in terms of the number of security companies that would be declared, and every year the security service providers found a way of declaring lower numbers so that they could remain at a certain threshold, rather than what they should be paying. This was one of the challenges that PSiRA was facing. Now it would issue ID cards only to security officers that were employed, and who needed to furnish proof of their employment upon the issuing of ID cards, because when PSiRA issued ID cards and certificates, they disappeared. Now that had changed, and the numbers had become fewer.

PSIRA was not a client of the Department of Public Works. Perhaps it would be in the future. The challenge was that the organisation could not find the type or size of premises that it wanted to procure.

Mr Badenhorst said that PSIRA’s relationship with the SAPS was key to the success of regulating the industry. There was a very important relationship with SAPS in terms of the central firearms registry, and also visible policing. Historically, PSiRA had tried to build this at the station level, but this had not turned out very well. There had then been an agreement that perhaps there should be a formulation of a national agreement. This had been discussed throughout the 2015/16 financial year and thereafter signed in April last year. The agreement provided for the establishment of a national consultative forum with relevant police units that played a crucial role in assisting PSiRA with its mandate. Through the forum PSiRA now gets a far better response and a significant improvement. Even when challenges were faced, they were tabled and dealt with in the forum.

Mr Chauke referred to the funded positions, and said there were too many positions. The executive had been trying to recruit a senior manager of communications, and the appointment process had taken a long time. The other position was the deputy director of law enforcement, and the appointment would be made soon as the chairperson had issued a letter of appointment. The letter would be presented by human resources (HR) next week. The other funded position was the specialist who would have been employed when the ERP was in place, but due to the delay, there had been a saving.

He said that he was not privy to the Public Protector’s report in relation to the question relating to the violence in the hostels. However, PSiRA had its own investigation units. There were two of them – the one deals with the enforcement of the Act itself, where criminal offences have been committed, and then reports to SAPS. The second was the forensic department that touches on matters of corruption at the employee level -- the selling of certificates, and the corruption of service providers. They also do criminal investigations, working closely with SAPS. In the main, PSiRA depends on SAPS due to capacity because it had just about 60 inspectors across the country.

Mr Mhlongo said that there had been no specific matter reported by the Public Protector in relation to the private sector, but what he had been referring to was policing in those areas. Perhaps PSiRA could develop a hotline that was linked to the national level, for communities to be able to communicate with the leadership. The role played by the private security industry in those areas was highly questionable, and people pursued violence in order to remain in employment. There should be a direct communication with ordinary people, because sometimes there were police officers who were corrupt, so if PSiRA was entirely dependent on SAPS for investigation then the system would not be inclusive enough.

Mr Chauke replied with regard to the involvement of the private security in the taxi industry violence, saying PSiRA had started conducting research on this and the research had indicated that the private security companies were indeed involved in the violence. The findings of the research also showed the over-trading of routes between taxi associations, and that executive members of the taxi associations also owned security companies. It was alleged that some of members of SAPS also owned taxis. PSiRA undertook to work with the departments of safety and transport, the State Security Agency (SSA) and crime intelligence, and to join forces to try and bring stability into that area. PSiRA also worked with the office of the Premier to ensure that there was an agreement signed between the taxi associations. It was an on-going process, but a collaborative effort was being made to deal with the problem in that area. In addition, routine inspections were carried out, ensuring that the licensing of firearms was adhered to, and that there was a cooperative relationship amongst all stakeholders.

Mr Badenhorst added that PSiRA had also shared its recent findings with the National Intelligence Coordinating Committee (NICOC) and had meetings with the national Department of Transport in connection with the issues identified. PSiRA had a hotline for the members of the public to utilise, and any complaints lodged through the hotline were then provided to the forensic investigation unit for further investigation.

Ms Mofikoe said that the organisation had decided to bring young people to be part of the team and empower them with skills. One of the areas had been the registration area, because the organisation had identified that when it went out to reach the communities through the mobile channel, it found that there were gaps, hence the decision to bring in young people.

Mr Nhlanhla Ngubane, Deputy Chairperson: PSiRA Council, added that of the interns that were in PSiRA last year, about 60% of them had been retained and absorbed for permanent employment. This was a major achievement and PSiRA sought to continue with that trajectory.

The Chairperson said that with fewer registrations in the organisation, he wondered if that was something that would continue, with a consolidation of ownership in the industry –the bigger companies taking up the smaller companies. He added that there were reports in the media about activities, or perceived activities, of some security companies that were involved in illegal activities such as the drug trade, so was there cooperation between PSiRA and the new unit of the Directorate for Priority Crime Investigation (DPCI) that focused on drug enforcement. He asked what PSiRA was doing about the monitoring of illegal foreign citizens who were employees of security companies.

Ms Malebatsi stated that the issue of crowd control kept on coming up, so was there an intention on PSiRA’s part to include this in its curriculum. Secondly, what was going on with regard to the building in Belvedere Street?

Ms Mmola asked why there were only three PSiRA members in the delegation -- where were the rest of the members?

Mr Mbhele asked about the current vacancy rate for inspectors. As the industry of “bouncers” at night clubs and bars also fell under PSiRA’s jurisdiction, had the organisation received any complaints and dealt with them, such as the Cape Town scene which had been on the spotlight in the past few months? He asked for an assurance that the authority was fully compliant in dealing with conflict of interest by both Council members and by senior management members, to avoid a situation where employees in PSiRA had a financial interest in the private security scene.

Mr Chauke commented on the possible continuation of fewer registration numbers, and said the organisation believed that the registration numbers would stabilise. What PSiRA did was analyse the trends of the previous year to look at the gaps, and re-evaluate that certain categories of companies were sitting in the right thresholds. The disclosures changed, but the trend of companies buying each other seemed likely to continue, with the big companies buying the smaller ones.

PSIRA’s was not specifically working with the DPCI regarding drug enforcement, but more on firearms investigations involving some of the security providers that were not adhering to the law. PSiRA was working with SAPS on dealing with illegal foreign nationals, and last week about 20 illegal foreign nationals were arrested for being in possession of illegal firearms. It was a very successful operation.

Mr Badenhorst said that the issue of crowd control would also form part of the programme in the afternoon session with the Portfolio Committee on Higher Education (joint meeting). Generally, the Act recognised that there was a specific training curriculum that dealy with access control and crowd management, and it specifically focused more on controlled crowds – the Events Security Curriculum. PSIRA’s recommendations included adequate training for security guards to deal with crowds in a hostile environment.

On the club environment, the “bouncers” were required to be legally registered with PSIRA. There were two partiess in the club security environment -- the contracted security company, which must be registered (and its employees) and was rendering the service to safeguard the property of the client, as well as the in-house security. PSiRA had taken note of what was happening in Cape Town, and this situation had now moved to Johannesburg. From a compliance perspective, PSiRA had initiated a programme with the SAPS national intervention unit, the DPCI and Cape Town law enforcement, which had been part of two operations in Cape Town. What PSiRA had found during these operations was that the particular security company that was involved was legally registered with PSiRA, as well as the two individuals that were deployed, and there would be continuous operations in the next few months to ensure that there was compliance. Allegations surfaced that the bouncers themselves in some instances were involved in the drug trade, but PSiRA was partnering with the other stakeholders to ensure that compliance took place.

Ms Mazibuko replied that the rest of the PSiRA members who were not present in the delegation, was because of cost containment.  When the budgets were being reviewed, it had surfaced that the travel expenses had escalated, so it was purely an exercise of cost containment.

Mr Chauke said that in the main there were two policies that had not been approved, and these had been finalised around February and taken through to EXCO. They had been wrongly classified as operational policies instead of policies relating to the industry. This was an oversight and they would be now properly and correctly approved in the new financial year.

Mr Badenhorst said that the vacancy rate was 7% for inspectors. It seemed high, but it was just ten positions, and six were new positions that had just been recently advertised and would be filled in August. The remaining four were currently in the process of being filled, and some of the staff had already started working.

Mr Chauke replied on the operational aspect of dealing with the disclosures with regard to Council members and PSIRA’s employees. Every year the organisation circulated its disclosure policy amongst the employees, and it was quite an extensive process. Once there were disclosures, they were taken to the forensic department to do a thorough check on whether the interests abided by the policy. There was also a hotline which allowed members of the public to report any conflicts of interest. In the past there had been reports that were made and dealt with accordingly. There were adequate processes in place to deal with this matter.

Mr Mmola asked for an explanation as to how the registrations were not completed due to the unavailability of ID cards.

Mr Mbhele asked how realistic was it to expect that PSiRA would be able to recover the bad debt money, and how much of that was something to be expedient and pragmatic about, such as focusing the efforts more on people that were in a position to pay.

The Chairperson asked if there had been any indication in the past year that there had been general compliance in the firearms registration of security companies.

Ms Sebogodi replied on the unavailability of ID cards, and said that the renewal of the certificates with the added security features had been introduced and had been successful. However, PSiRA had found that as it intensified its awareness campaign, people had wanted to establish whether the security guards were registered. Security guards did not always have their certificates available at hand, only their ID cards, so it had been decided that the certificate expiry date and the ID cards would be aligned. This meant that from a systematic and process point of view, the whole process was stalled. PSiRA had also made sure that the issuing of ID cards was done to actively employed security guards.

Mr Badenhorst responded that generally there was two parts to the inspections – inspections of security companies and security officers. The organisation conducted about 30 000 security officer inspections within certain segmented categories of clients. On the other side, there was the SAPS which sometimes approached PSiRA for operations involving individuals, but sometimes it depended on the source and the information that had been provided. With regards to the firearms, PSiRA had conducted an audit on the central firearms registry database, and it had identified about 3 300, but out of the institution database there were about 9 000 businesses licensed for firearms. However, part of the inspection programme was to focus on the 3 300. The compliance levels were quite high at the two levels of firearms inspection – individual and business – and generally, the compliance levels had improved significantly.

Ms Sebogodi responded to the bad debts question, saying that it was indeed realistic that some money would be collected from the bad debts. The amount could not just be written off. There had to be reasonable efforts from the organisation’s side for the auditors to be certain that reasonable steps and efforts were being made to try to recover the money.

Ms Malebatsi asked about how foreign nationals could register without the ID.
Mr Chauke responded that foreign nationals who held permanent residency were eligible to register, but the ones who were mentioned earlier were those who were not on the books. With regard to the Mthatha, Johannesburg and Port Elizabeth offices – Mthatha and Johannesburg were up and running, and with Port Elizabeth the appointment was currently under way.

The meeting was adjourned.

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