Deviations by national departments and entities for 2016/17: Treasury briefing

Meeting report

The Chairperson noted that the meeting of the day was of a different kind, as it did not involve a company. It was similar in kind to meetings with the Auditor-General (AG) that informed the Committee on how to decide about conflict of interest reports. The information would assist SCOPA to examine what to do.

Mr C Ross (DA) asked about the SCOPA programme, with reference to recommendations made by the Committee, dates for calling municipalities, the Vrede project, and the release of the final report by the NT. According to the Minister, it was already within the domain of SCOPA.

The Chairperson replied that the Vrede project was dealt with by a provincial department. The National Parliament could not jump into that. Enquiries would have to be made via the national department, and could be done only once a report had been made. The findings would then be examined. There were some complaints against the Auditor General (AG), but these had to be sent to the Standing Committee on the Auditor General, as the AG accounted to that Committee.

Mr Ross asked if it was the report on the municipalities that was being referred to.

The Chairperson replied that complaints had to go to the Standing Committee on the Auditor General. That Committee looked at the work of the AG -- its strengths, weaknesses, lapses and omissions. It had been said that the AG had not done its work in an appropriate manner. A secondary question could be raised about actual corruption. Currently it was still an allegation. It still had to be established whether the AG had not done its work properly.

Mr Ross asked if the third National Treasury (NT) report would be submitted to SCOPA or not. The Chairperson had said that he and the Minister would deal with it.

The Chairperson replied that the Minister had indeed called him to clarify matters. The report would be forwarded to SCOPA, but there was as yet no timeframe. There would be a follow-up to deal with the issues, and to find a position.

Mr Ross asked if there would be clarity when the Committee reconvened. The report was in the press, and SCOPA was alleged to have the report.

Mr M Booi (ANC), Committee Whip, insisted that the business of the day be proceeded with.

The Chairperson asked the Treasury officials to introduce themselves.

The officials introduced themselves as Mr Solly Tshitangano, Chief Director: Supply Chain Governance, and Mr Bongani Dawo.

The Chairperson asked Mr Tshitangano if there was any word from his seniors. Correspondence had been directed to the Director General (DG), who had to be present at the meeting.

Mr Tshitangano replied that when there was an invitation, the DG and the Deputy DGs allocated officials to present the briefing. Information was then communicated to the Parliamentary office and the relevant committee. He and Mr Dawo had been delegated to present the briefing.

Ms N Khunou (ANC) suggested that Mr Tshitangano’s seniors be phoned and asked to attend for ten minutes, as they had to account for what had been done.

Mr Booi insisted that the DG had to account. There was no explanation for the DG’s absence, which amounted to a weakening of Parliament. It was a strategy by the NT to weaken and undermine Parliament. SCOPA was being ignored and undermined. There was no explanation. Solly (Tshitangano) was not the accounting officer (AO). The DG was needed to make decisions. The NT had to learn to respect Parliament.

Ms T Chiloane (ANC) commented that although Mr Tshitangano had been an observer at previous meetings, the matter was at the level of the office of the Chief Procurement Officer. The person in charge there had to answer about how decisions were made to allow deviations. Whoever led in the office of the Chief Procurement Officer had to account in terms of the Public Finance Management Act (PFMA).

The Chairperson remarked that the NT was going to account for deviation in all departments, not within the Treasury itself. It was merely going to supply information about what happened in other departments.

Mr T Brauteseth (DA) said that it was unfortunate that key senior people were not there. The day’s session was meant to be a briefing, to get information for engagement with the AG. When the AG presented, it was not expected of the Auditor-General himself to be there. The AG sent representatives. The question was who had been invited. If those who had been invited did not arrive, he would agree that there was demeaning of the Chairperson’s authority. Still, the briefing was an interesting presentation and could be a good learning exercise. He was concerned about the fact that Mr Willie Mathebula, Chief Procurement Officer (CPO), NT, was not there, but he would still advise that the meeting should continue.

Mr Booi said that processes of procurement were supposed to be directed by the Integrated Financial Management System (IFMS). He reminded all that he was leading that particular presentation, and that the Treasury official would not be able to survive his questions. His first question to Mr Tshitangano would have been what the proper directive of the IFMS would have been. The DG had been told at the previous meeting to return. The DG had not even written a letter to the Chairperson, but had merely sent a junior person. There were questions about how procurement had ignored the IFMS for years. The NT was undermining Parliament. There had to be a letter to say that Mr Tshitangano would represent the Department.

Mr Brauteseth reiterated that it was scheduled as a briefing. When a hearing was scheduled, he prepared throroughly for it. But he attended a briefing to receive information. It would not do to turn a briefing into a hearing. The context had to be known.

Ms N Mente (EFF) commented that in terms of the PFMA, deviations resorted under the DG. The DG had been present at a previous meeting and had not indicated that he would not be present on the day. SCOPA was supposed to be briefed by a responsible person, who understood how deviations worked. The Committee was supposed to be briefed by a responsible person, who could answer questions for clarity. The NT knew about the day’s meeting, and the DG had not written an apology.

Ms Khunou said that the PFMA made it clear that deviations were the responsibilty of the DG. According to the programme, there would not be another meeting with the NT. She advised that the officials should call their seniors. The DG had been present the week before.

Mr Ross agreed with Mr Brauteseth that it was an information session, and that it would be best to have it continue.

Mr E Kekana (ANC) warned that it could set a precedent of incorrect procedure being allowed. Normally the DG was there to bring in the relevant communication. Had the DG been there, he might not have approved what was being presented.

Mr Brauteseth reiterated that the session of the day was a briefing. When the AG briefed on Trade and Industry, for example, the Auditor-General himself did not have to be present.

Ms Mente commented that ‘deviations’ were at the centre. The question was why deviations were granted. The Committee had to be persuaded that this was reasonable and responsible. That information had to come from the CPO and the DG.

Mr Booi insisted that the accounting officer had to be present. He referred to the example of case 88. There had been an urgent presidential visit to Kwaggafontein. Cooperative Governance and Traditional Affairs (CoGTA) had been the relevant department. Mr Tshitangano would not be able to answer. Decision makers had to say why unauthorised decisions had to take place. It would be wrong to set a precedent, as that what SCOPA accepted would be followed by other departments. The presiding officer was needed. Responsibility did not rest with Mr Tshitangano.

Mr Kekana opined that the officials might be able to give a response, but the Committee had to deal with the principle.

The Chairperson said that when departments deviated, decisions made had to be reported within 10 days to the relevant treasury and the AG. He asked if the purpose of that report was information seeking or condonation.

Mr Tshitangano replied that if the AO approved an emergency, it had to be reported to the NT within 10 days. The NT’s role was to check if there was evidence of an emergency. If it was not due to an emergency, but to poor planning, it would be irregular expenditure, and would come to the NT for condonation. The NT reported only on what it received.

Mr Booi reiterated that the presiding officer needed to answer, not Mr Tshitangano.

The Chairperson commented that deviations might be approved in a department by the DG, not the Treasury. If the NT approved it, Mr Booi’s point would be substantive. The document distinguished between supported, partially supported and not supported. If the NT approved the deviation, then that person would have to explain why it was supported or not. Officials were responsible for technical work, under the signature of the DG. If it was approved by the AO of a department, the Treasury played no role, and was merely giving information to the Committee. The question was whether the deviation was approved by the Treasury.

Mr Tshitangano replied that where there was deviation from competitive bidding, for example, the department could submit an application, and the NT would approve the deviation. In the case of the South African Social Security Agency (SASSA) in the preceding year, the executive authority of the institution had approved it. In that case, the Treasury would say that it declined. What was to be seen in the lists was a combination of the two. In the majority of deviations, DGs were allowed to approve, but had to report them to the NT. Reporting had to ensure transparency, as all procurement behind closed doors posed a high risk. Risk taking deviations had to be accompanied by a letter. In the case of SASSA in 2016, it was the only institution that did not have to do competitive bidding, and there had been abuse.

Mr Booi interrupted Mr Tshitangano to say that the PFMA prescribed that the AO had to go to SCOPA. Mr Tshitangano was not the AO. If that was done, experts in any department could be called. There were experts in every department.

The Chairperson commented that there were deviations where the NT was merely informed by the AO of the department, and others were the NT had to approve. The Committee was dealing with a combination, as there were deviations where the Treasury had to take a decision.

Mr Ross remarked that the Chairperson was asking interesting questions. It was the kind of questions he himself wanted to ask. It appeared that Mr Booi had a document that contained damning evidence. He understood that there was the need to interrogate the DG of the department, but there were interesting questions with regard to thresholds, and when exceptions were allowed. The documents before the Committee provided information. He understood Mr Booi’s frustration, as alarming evidence was being gone into. But balance had to be sought. He said that the briefing provided needed information, and an urgent meeting could then be called with the relevant DG for proper interrogation.

Mr Kekana proposed that the meeting be called off and that the Committee discuss what it had to do.

Mr Booi repeated that the DG had to come. Different amounts were involved. The question was how an intervention was made when a small amount was involved. The matter affected SCOPA and Parliament. The NT was not being genuine. It was an old story for things like that to happen in the NT. The NT was not presenting a clean house. It had many problems. It had to be known what happened in the NT.

The Chairperson remarked that he and Mr Brauteseth were a minority. He believed in democratic centralism. The minority had to submit to the majority. He asked if the deviations could be separated into categories where Treasury approval was sought, and where it was merely informed, as in an emergency.

Mr Tshitangano replied that it was possible. There was a column where there was sorting according to institutions, and another that stated reasons for deviations. Another column could be addded, for whatever purpose SCOPA desired. Deviations and expansions were published on a quarterly basis. There was consolidated information for 2016/17, and then information for the first quarter, from April to June.

The Chairperson told the officials that they had his full sympathy. They were the technocrats who did the actual work, but in terms of accountability, it would have been mitigating if the DG or Schalk (Mr Human) had been there. Where deviations and expansions did not need Treasury approval, it would have been possible to proceed. But where the Treasury had to be accountable, it created a challenge, even if it was recommended. Where somebody took a decision for the Treasury, it became an official position that SCOPA had to talk to. A date had to be agreed on, in the evening, for an engagement with the NT. SCOPA would visit South African Airways (SAA) and SA Express in the following week. Trade and Industry had requested a postponement.

Mr Booi reiterated that it had to be known if the DG would cooperate with Parliament or not. A reason had to be provided, else Parliament would be undermined. He asked if it would be necessary to subpoenae the DG to appear. The NT organisational culture had to be fought. There were too many problems in the NT. A proper date had to be found for engagement with it.

The Chairperson asked if the DG was around.

Mr Tshitangano answered that he was not.

Mr Booi said that Mr Tshitangano did not run the diary. It was not his job to make a commitment. The office had to apply properly. Parliament was being ignored on the day.

The Chairperson advised the Committee to remain behind to discuss the matter further. He instructed the officials to divide the deviations into those where the NT just needed to be informed, and those where it had to take decisions. NT decisions could be interrogated.

Mr Booi said that there were different criteria for figures.

The Chairperson asked if it was possible to separate per category, not per institution.

Mr Tshitangano asked that it be put into a letter to the NT. It could be done. When institutions were invited, the NT gave information on that department.

The Chairperson said that it was the Office of the CPO that approved, not the DG. There would be a meeting on the following day with the Special Investigations Unit (SIU). When the AG came, it was not the AG himself or his deputy that appeared. There were two levels. There were the people who did the auditing, and those to whom they reported. The officials present were the ones who did the fieldwork, and they had to report to the manager in the Office of the CPO. In the NT, the superior officer had been appointed only on the previous Thursday. That superior could not account for what had happened in October 2016. The difference between a hearing and a briefing was that in a hearing there was an “accused”, although that was an unfortunate term. The purpose of a briefing was to provide information. There might have been engagement with the briefing of the day, even though it was for purposes of information. Mr Booi was correct that it was to be possible to raise any issue. Still it was with a heavy heart that he was letting the officials go without any engagement. However, reporting had to be tightened up. Names of those presenting had to be in by the preceding Friday.

Mr Brauteseth commented that it was unfortunate that the officials were not allowed to proceed with the briefing, but it was due to a lack of communication. He enjoyed engagement. He had arrived on the previous evening, and schedules had been sent to Members only on that morning. Members could have been instructed to go through the documents. Focus areas were pointed out before hearings. It would be good to go back to that system. He asked if the SIU would be dealt with on the following day. It was supposed to be the Department of Trade and Industry (DTI). If the Committee had to moer (beat up) someone, Members had to be informed.

The Chairperson said that it was impossible to confirm on the previous afternoon if documents had been sent. The problem was that there was always a fight with departments to submit information on time. SIU documents had been received only on that day. The NT had been supposed to submit on the preceding Thursday.

Mr Booi insisted that it was a principle that the NT had to comply, just like other departments. He told Mr Brauteseth that substantive information had been received from SASSA and Water and Sanitation, on a spreadsheet. It was possible to bite into it and see what kind of deviation had taken place. The amounts involved were stated, which made SCOPA more capable. Pressure should not be removed from the NT. SCOPA had to put its foot down on them. The Treasury had to learn to account. It had centralised power. It made decisions on behalf of departments. The NT had to be interrogated on the basis of figures in front of SCOPA, on why deviations had taken place. It could be that small amounts were involved. Information had to be broken down into departments and areas of focus. Mr Tshitangano had referred to the AG, but it was not stated whether the AG had any authority in the process. It seemed that the Treasury did not consider what the AG might have said. A lot of information bypassed SCOPA, as it went straight to the Treasury. The question was whether the AG had a say in the process.

Ms Khonou opined that issues of receiving information late had to be addressed. Correspondence to departments had to be clear. If a department did not submit documents on time, it should not be allowed to come to SCOPA. When departments were written to, they had to be informed to send information on time. It might be that the CPO was a new appointment, but the DG was not. He had been supposed to take the Committee through a thick document. Some Members experienced problems with the Parliamentary email system. The new Parliamentary email system was frustrating, as she was not able to open it.

Mr Kekana added that the late reception of information created problems. Timelines had to be set out when departments were communicated with. Researchers were sometimes at fault when they provided information late. Things had to be tightened up.

Ms Chiloane agreed with Mr Booi. There had to be focus areas for departments. SCOPA had to be able to identify areas in terms of groupings. The Treasury had not cooperated in the matter of SASSA deviations. When Minister Gordan was questioned, it was clear that there was no agreement between his Ministry and SASSA. Deviations had to be understood in relation to what was raised about focus areas. It was unacceptable in terms of the PFMA that technocrats accounted -- it was the responsibility of the Accounting Officer.

Ms Khunou commented that deviations had to be equitable, fair and profitable. The AO had to show where something went wrong.

Mr Ross remarked that the commitment to work with the Treasury and the AG had to be reinforced. It was sad to send the NT back. The NT simply came to brief, there was no accused. The Treasury was central to the protection of the public purse. SCOPA had to hold it accountable. The role of SCOPA was dealt with in strategic planning sessions. It could call any entity of state to account.

He returned to the matter of low cost housing at Vrede, and the Treasury report. He felt that the wrong decisions had been taken. In the matter of Vrede it had to be possible to engage directly with the institution. He opined about the final tabling of the Treasury report, that there was the AG report and the findings of the Constitutional Court. Minister Gordhan had been correct to intervene for the Treasury as he did. He was looking forward to the Committee’s strategic planning session. The role of SCOPA had to be redefined. The Treasury was the custodian of the public purse. Its importance had to be recognised.

The Chairperson said that the rules of the National Assembly had to be taken along to the strategic plan review in the following month. Those rules defined the SCOPA goals.

Mr Booi appealed to the Chairperson, supporting Mr Ross, that the Chairperson and the Speaker agree that when the AG presented, all public accounting institutions were to be called. Provincial and National could be brought together. He wanted to plant the idea in the Chairperson’s mind. Matters could be broken down into areas of concern. Provinces and local government wanted assistance from SCOPA, and the process could be started up from there. He knew that it would take time.

The Chairperson remarked that he grew up in a rural area, where people took their time.

Ms Mente said that she had had a similar idea. When OR Tambo District Municipality presented, there was an amount of R500 million that was supposed to be written off. Nobody knew what to do, as the culprit had to pay. The question was how information and accounting could be taken to a different level. A separate session could be dedicated to that, apart from the strategic plan review.

The Chairperson agreed that if information was late there could be no engagement. The researchers had to see to it that even when the outside was late, internally things had to be on time. SCOPA needed three or four days to go through information. It had to be tied up in the next strategic plan review session. The Treasury had in the past changed its presentation three times. It had to be tightened up. The rules could be studied to see what leeway the Committee had to call national and provincial at the same time, when the AG reported. It could be interrogated in the strategic plan review.

Committee matters

There were alterations to the Committee programme. It had been requested that the DTI appear on the following day, but it was not available. The Special Investigation Unit (SIU) was available. SCOPA had met with the unit before, and there was a sense that it had a good grasp on what it did. There had to be a sense of what that entity actually did. The SIU had to pronounce on what it did. There were possibilities of collaboration between SCOPA and the SIU. The SIU might say that it was the best in the business, but if SCOPA wanted to work with the unit, it had to be aware of possible lapses and gaps. If there was to be a movement forward together, everything had to be clarified.

The following week was Committee week. There was an upcoming meeting with SA Express, and outstanding reports to be approved by the Committee. There were issues related to Water and Sanitation accruals, and the investigation done by Advocate Tau, to deal with before the end of September.

Mr Brauteseth asked if the scheduled meeting with the DPW in the following week had been cancelled.

The Chairperson replied that it was not yet certain.

Mr Brauteseth asked if the meetings with SAA and SA Express would take place in the following week.

The Chairperson replied that theyt would be in different weeks.

Mr Brauteseth asked about that night’s meeting.

The Chairperson replied that it would take place after the House debate.

Ms Chiloane requested that documents be made available quickly for the meeting with the SIU. A relationship would be established on the following day. There had been an engagement with the Anti-corruption Task Team, in which it was asked about the nature of its work. She asked if the meeting with the SIU would be of a similar kind.

Ms Khunou said that the Minister of Communication had mentioned that the SIU charged high rates, which had to be addressed.

Mr Booi opined that at the end of the day, the SIU had an obligation to create consequences. The question was when the SIU would start arresting people. SCOPA would lose its relevance if there were no consequences for corruption.

The Chairperson noted that there would be a submission by the Post Office on that evening.

The Chairperson adjourned the meeting.