Media Development and Diversity Agency status: Minister & Deputy briefing

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Communications

14 September 2017
Chairperson: Mr H Maxegwana (ANC)
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Meeting Summary

The Minister of Communications briefed the Committee on the status of the Agency.

The MDDA is facing a host of challenges. Currently there are only three board members and a quorating board needs five members. Parliament recently recommended two new appointments to the Board and these are being processed. As a result of the board not quorating the agency in quarter one (1) did not achieve its key targets. The agency only achieved 33% of targets in this period. Achievement is at a low level because of decisions that should have been taken by the board and because the board does not quorate those decisions could not be taken.

The MDDA does not have a permanent Chief Executive Officer (CEO) and Chief Financial Officer (CFO). As a result, it is currently plagued with governance and instability. There were other vacancies agency that needed filling. These included Project Director for Strategy, Monitoring and Evaluation Director, Risk Management Specialist,Internal Audit Manager, Research and Capacity Building Manager, Knowledge Management Coordinator and a Travel and Events Coordinator.

On governance instruments, the MDDA (Schedule 3A) is not required in terms of Treasury Regulations to conclude a Shareholder’s Compact. For most SOEs this is required, because it assists in determining the authority and accountability and other governance related matters but here it is not catered for. However, the Department has initiated that the MDDA concludes a Governance Agreement, which is similar to a Shareholder’s Compact to enhance accountability by the Board to the Executive authority. The governance agreement will be finalised by the end of September 2017.

The agency received an unqualified audit opinion (2016/17), the following areas as identified by the AGSA requires strengthening of controls:

  • Performance Information – reliability and material misstatements;

  • Procurement and Contract Management – no declaration forms (SBD4 forms) and preference points allocation not in line with the PPPFA and BBBEE;

  • Management of Irregular expenditure – R6.7 million;

  • Misstatements on AFS (annual financial statements);

  • Senior Management and Accounting Authority did not exercise adequate controls and oversight on performance information and financial information submitted to AGSA.

The Agency’s challenges included the following:

  • Instability within the Agency

  • The Agency acts outside its delegation

  • Tedious and slow appointment process of board members

  • High Vacancy rate within agency

  • High vacancy rate of Executive

  • Lack of cooperation

  • Reputational challenges

  • Interpersonal skills within and among the board and the executive

The Deputy Minister also shared her concerns about that Agency, highlighting that the Board is illegitimate and therefore could not take decisions on behalf of the Agency. A lot of issues were brought to her attention by various people within the organisation concerning the Chairperson of the board. There were allegations about irregularities in the organisation, and those irregularities were also presented to the Minister by the Deputy. The filling of vacancies will not address the issues that are currently persisting in the agency. In 2015, the previous executive authority had received a report which contained findings against the Chairperson of the Board but this report was never acted on. The Deputy Minister further stated that the reason the Acting CEO was fired was because he cancelled irregular contracts, as well as the MOU that was signed with the Competition Commission. She requested that the Committee to intervene in the same way it did in the SABC.

Members expressed their concerns about the non-quorating board; victimisation of staff members by the Chairperson of the Board; the legitimacy of the allegations; key positions that are vacant in the Agency such as the CEO and the CFO; the Chairperson of board executing a managerial position role in the Agency; the provision of outstanding board meeting minutes; irregularities around issues contracts and the poor performance of the Agency.

Members advised the Minister to immediately take corrective steps, because swift intervention will be in the interest of the public. Some encouraged the Ministry to become more involved in the running of the entities because the delivery of the Department’s mandate is also dependent on these entities.

It was agreed that the Minister will provide a report that will be ready by 19 September and the Committee will also extract the 2015 investigation report that the Deputy Minister mentioned. The Committee will then decide on what the Minister will do regarding the issues as a way forward. These reports must be submitted immediately after the 19th so that when the Committee meets in October, it has a clear direction to take, whatever interventions that might be taken will also be informed by those reports. The Committee cannot take a decision on what will be done without scrutinising the reports and conducting its own investigation.

 

Meeting report

Opening remarks

The Chairperson officially opened the meeting and welcomed the members, Minister and the Deputy Minister, as well as the media.

The Chairperson read out the apologies.

The Chairperson indicated that the item to be dealt with today is the briefing from the Minister on the state of the Media Development and Diversity Agency (MDDA). Members would recall that the last meeting with the MDDA was not pleasant due to conflicting reports received from the board and the acting CEO. There accusations and counter-accusations so Members were worried about the state of affairs at the agency. Therefore, Members decided to have this meeting and be briefed properly by the Minister herself. Afterwards, the Committee can come back in October (after the recess break) to deal with the issues that will emanate from this meeting. At a previous meeting, the Committee had received presentations from the agency but this was not satisfactory as Members wanted to hear directly from the Minister. The Committee will then decide what to do after that.

The Chairperson handed over to the Minister.

Opening remarks by the Minister

Ms Ayanda Dlolo, Minister for Communications, apologised for her absence at the previous meeting. She is not well but feels better this morning.

Minister Dlolo commenced by reading out the objectives of the MDDA, and stated that these objectives are established to guide the agency as it attempts to deliver its mandate. She read this so that Members can get an understanding that this presentation is premised on what the agency is supposed to be doing as per its mandate. Sadly, this does not happen, the Agency does not implement its objectives but it did not only start now.

Briefing by the Minister on the state of the MDDA

The Minister stated that she was supposed to brief the Committee on 29 August 2017 on the state of the MDDA but was unable to attend and instead the entity made a presentation. After she was appraised about what transpired at that meeting she was not pleased, and put a team together from the Department to look into what is really going on at the agency. The team was led by one of the Chief Directors. Notwithstanding that, information was handed to her by the Deputy Minister about issues at the agency. The team carried out the instructions and made findings.

The Minister stated that she will have discussions with the board and the Deputy Minister to share with them her views on the report findings and how to proceed with the implementation of the MDDA mandate

As per the report, the MDDA is facing a host of challenges. With regards to the status of the board, it is common knowledge that the board does not quorate and it is not a fact that the board does not quorate because the Minister does not care or the board itself does not care. Those processes are largely dependent on Parliament and the Presidency. On the Department's side, it has done everything it can to ensure that what needs to be done is done. Currently there are only three board members and a quorating board is five members, but it is not within the Minister’s powers to ensure that the board quorates. However, she has gone out of the way to ensure that two people have been appointed but these appointments had taken forever. One was appointed this morning and the other one hopefully will be appointed next Monday. The one person is from the media sector and the other is from within the Department. Hopefully by the end of next week the board will be quorating.

As a result of board not quorating the agency in quarter one (1) did not achieve their key targets. The agency only achieved 33% which is regrettably a far cry from credible margin

Section 12(1) of MDDA Act stipulates that the board must appoint a person qualified and experienced in accounting and financial matters, and who is, as far as possible, qualified or experienced as the Chief Executive Officer (CEO) of the Agency. The positions of CEO and CFO are vacant and 24 out of 33 positions are filled (9 vacancies). This is creating administrative instability in the agency. Hence, MDDA is currently plagued with governance and other stability challenges. The agency has just interviewed for the position of the CEO and it will finalise the appointment soon after the board quorates for the Minister’s concurrence. The short listing for the CFO is taking place, as well as for the legal and contracts officer, the assisting company secretary, the executive secretary, and the digital media coordinator. The positions that were advertised on 9 September were Project Director for Strategy, Monitoring and Evaluation Director, as well as the Risk Management Specialist. Other vacancies that also need filling are for Internal Audit Manager, Research and Capacity Building Manager, Knowledge Management Coordinator and a Travel and Events Coordinator. Out of these positions, only two rely on the board to make the appointment, and the rest of them the CEO has to appoint them. The reason these positions were not filled over time was not because of a non-quorating board but because the executive was dragging its feet on making appointments.

On governance instruments, The MDDA (Schedule 3A) is not required in terms of Treasury Regulations to conclude a Shareholder’s Compact. For most SOEs this is required, because it assists in determining the authority and accountability and other governance related matters but here it is not catered for. However, the Department has initiated that the MDDA concludes a Governance Agreement, which is similar to a Shareholder’s Compact to enhance accountability by the Board to the Executive authority. The governance agreement will be finalised by the end of September 2017. There are different viewpoints in the Department as to whether the Minister is legally within her rights to develop such an agreement. In her view, it is imperative otherwise the board will then be able to run on its own without the executive authority and she would have to come back to Parliament and respond to issues that she does not have much hold on. As such she asked the Department to finalise this agreement which will go via the Deputy Minister for its final authorisation. With most SOEs, the recruitment process rests with both the board and the executive authority, in this instance it rests solely with the board but when she has to come back and account especially on matters where she does not have governance hold over it becomes difficult. The reasons for the delay was that the Executive Authority needed to ensure that critical gaps are closed and the board not quorating (from April).

As for the performance, it is dismal as reflected on the slide. Achievement is at a low level because of decisions that should have been taken by the board and because the board does not quorate those decisions could not be taken. However, the bulk of these decisions were dependent on the executives. The main areas of concern are capacity building and sector development.

The agency received an unqualified audit opinion (2016/17), the following areas as identified by the AGSA requires strengthening of controls:

  • Performance Information – reliability and material misstatements;

  • Procurement and Contract Management – no declaration forms (SBD4 forms) and preference points allocation not in line with the PPPFA and BBBEE;

  • Management of Irregular expenditure – R6.7 million;

  • Misstatements on AFS (annual financial statements);

  • Senior Management and Accounting Authority did not exercise adequate controls and oversight on performance information and financial information submitted to AGSA.

The Agency’s challenges included the following:

  • Instability within the Agency

  • The Agency acts outside its delegation

  • Tedious and slow appointment process of board members

  • High Vacancy rate within agency

  • High vacancy rate of Executive

  • Lack of cooperation

  • Reputational challenges

  • Interpersonal skills within and among the board and the executive

After the CEO was allegedly fired and left his office, the Minister stepped in because the agency was not heeding the Deputy Minister’s call to re-appoint the Acting CEO. She went in to reinforce the Deputy Minister’s directive.

The Minister admitted that she also wanted to get to the bottom of the things. The process that was applied to fire the CEO was really bad, but the board had reached a point of exasperation because things had been asked of the CEO to do but there was no delivery. To illustrate this, after the meeting that was held, they (the board, the Minister, and the Acting CEO) all agreed on all the things that had to be achieved, but when they met on Monday all but one of those things that were asked of the CEO were done. This showed that the relationship between the CEO and the board was non-existent.

The Minister said she refused to act on rumour about people within the MDDA; however, she opted to have conversations with the individuals that were affected. She learnt that there are a lot of things that is going wrong within the agency. The Chairperson of the board does not have the confidence in the acting executive (CEO) and the staff of the Agency.

The Minister asked that the Presidency and Parliament expedite the process of appointing a quorate board so that a new CEO can be appointed and deliver and implement the objectives of the MDDA Act and someone who will steer the ship in the right direction for the Chairperson of the board. She had also asked her advisor who assisted with the SABC’s financial issues to advise on the same in respect of the Agency, with a proviso that a full report will be furnished to the committee by the 19th of September.

Ms Tandi Mahambehlala, Deputy Minister of Communications, stated that in April the Minister gave her responsibility to oversee the MDDA, Film and Publications Board, Brand South Africa (domestic side) and other responsibilities of the Department after the appointment in April. She then convened all the entities that were delegated to her in order to get an overview of the state of where those organisations are but MDDA did not come to the meeting.

The Deputy Minister said the MDDA Board only had three members and she stopped working with this structure because it is illegal according to the law. As an executive authority she would not work with people who are illegitimate. She sought legal advice on the matter, and it was made clear in writing that the MDDA board, in terms of the charter and Act, is not quorating, and therefore legally it cannot take any decisions on behalf of the Agency. A lot of issues were brought to her attention by various people within the organisation concerning the Chairperson of the board. There were allegations about irregularities in the organisation, and those irregularities were also presented to her and the Minister. She wrote to the Chairperson to respond to those allegations because they were directed to her, but to this day, that response has not been received by the office of the Deputy Minister, instead the Board Chairperson wrote to the Minister and asked her to intervene.

 

The Deputy Minister further said that on 18 May 2017, she wrote to the board requesting meeting minutes and resolutions of the board meetings so that she is empowered about the decisions that had been taken by the board. In particular, she requested the minutes of the meeting where the CEO was appointed, and the APP decision that was later presented to the Committee. However, those minutes have not been received. The filling of vacancies will not address the issues that are currently persisting in the agency. The reason she believes this to be true is because in 2015, the former Deputy Minister had received an investigation report which contained findings against the Chairperson of the Board. The findings of that report were not implemented by the Department, perhaps if they were implemented some of the issues facing the agency would have been eliminated.

The reason why Donald (acting CEO) was fired was because he cancelled irregular contracts and the MOU that was signed with the Competition Commission. These are precisely the reasons why he was fired by the Chairperson and the board that has no legal powers to do so. She lamented that the Board Chairperson has a track record of terrorising everyone in the Agency.

The Agency has 22 human resources personnel, but the responsibility of hiring employees is outsourced (by an Agency called Holistic) but yet this is a small Agency, and this constitutes wasteful expenditure as far as she understands.

She requested that the Committee intervene the same way it intervened in the SABC, because appointing new people who will be part of a baggage that is polluted is not going to help resolve the issues. The three board members at the agency that are remaining are taking decisions on behalf of the Agency when they should not be doing so. In terms of the PFMA, in this situation, the CEO is supposed to take charge of the Agency, but this is not happening there.

The Deputy Minister said community radio stations were affected by issues emanating from the MDDA. She cited one radio station located in Newcastle where the MDDA did not respond to a letter written to the Agency by that radio station concerning funding. She wrote to the MDDA about the matter and to date this has not been dealt with. She was highlighting these issues to the Members so that when the Committee decides to intervene, it does so appropriately. According to her, that dysfunctional board is non-existent, and therefore she does not even entertain it. She will furnish all the information to the Committee including the contracts, legal opinion and other relevant documentation. She thanked the Committee.

The Chairperson advised the Department to speed up the appointment of board members, so that the board is legitimate. Parliament has done its work but now the rest is up to the President and the Department. The allocation of responsibilities to the members of the board will follow after that board is fully appointed, so that there are no issues about who will occupy which position. The Committee will discuss the investigation and the information received today by both the Minister and the Deputy, and then it will be able to finalise all matters in October and take a decision on the way forward.

The Minister agreed with the Deputy Minister on the fact that the CEO is supposed to be in charge in the interim whilst the board is not quorating. However, the CEO cannot appoint him/herself, that appointment will require a quorating board. With that being said, whether the board is full or not, there is an executive that is supposed to make the decisions, but those decisions were not made. Hence, the performance is still dismal. A meeting was held to deal with the dismal state of affairs in the MDDA, but still nothing changed until she called a meeting again to check the status to date.

With respect to the Competition Commission, there are many sides to this and she had asked the Commission to account legitimately on this issue because on the one hand the board blamed the CEO for setting up some account that is not his prerogative to do so. On the other hand, the CEO believes that there is nothing untoward about what he did, but he said that he would write a letter to the Commission to clarify his position.

The Minister concluded that she has an audience with the Commission on this matter and it is currently being taken care of.

Discussion

Ms V Van Wyk (DA) stated that it seems there is a contradiction between what the Deputy is saying and what the Minister is saying particularly regarding the decision making process of the executive and the board. Since the Committee started on this matter, she wrote letters to bring the matter of the Agency to the Committee. The Chairperson of the board has been acting in a managerial position, and letters have been written to the Committee by the staff members of the agency. Those letters indicate that something is wrong, and there is a petition before her from the Agency and only three people did not sign that petition. Members of the staff have been writing to the Committee asking it to intervene. That petition was addressed to the Minister as well.

Ms Van Wyk asked for the minutes of the board meetings, and whether those decisions that were made would be reversed since they were not legally made. Furthermore, 2 board members had put out a media statement accusing the acting CEO of being guilty of certain things; she asked the Minister to provide guidance on this and whether the acting CEO was found guilty by the GCIS, and if so, why was he still appointed.

Ms Van Wyk asked about the true nature of the Agency’s performance, in the previous presentation, the MDDA reported that its performance is at about 70% but now the Minister is talking about 33% in her report. Lastly, she stated that the victimisation of staff members continues to be prevalent.

The Chairperson stated that these issues raised by Ms Van Wyk are related to the MDDA which needs immediate interaction, so if the Minister and the Deputy Minister wished to respond to what Ms Van Wyk had raised, they are welcome to do so before he hands over to the rest of the members. The Committee is meeting on 6 October to receive MDDA’s quarterly report, and some of these issues will be dealt with in that meeting.

The Minister responded that the report that was going to be submitted on the day that the MDDA came before the Committee was not the report that was sanctioned by her. In the report she was going to present, it is very clear that of the 30 KPIs, the Agency only achieved 10. 20 other KPIs were not achieved which translates to a 33% of the KPIs achieved in the first quarter, and she was very clear that the Agency is not performing according to its objectives.

The Chairperson stated that whatever report is received by the Committee, it needed to go through the correct processes. One important process is going via the Minister, because if it does not things like this will emerge.

The Minister made it clear that there is such a case and the outcome of that investigation comes from the Public Service Commission (PSC), not the Department. The Department only had to implement the directive of the Commission, and a disciplinary process based on that outcome was done as per the directive of the Commission. When the Acting CEO was appointed, that process had not been completed yet. As the matter stands, he has taken the PSCs decision on review.

The Deputy Minister responded to the question about victimisation. Her office is in possession of a letter that was written by the Chairperson of the board to a staff member asking the staff member why she should not be taken to a DC. How do Chairpersons of the board interfere with the work of the executive? This is a reflection of the level of victimisation in the agency.

The Deputy Minister confirmed that she is in the possession of the petition referred to by Ms Van Wyk.

Mr M Kalako (ANC) noted that Parliament has just recommended people to the board and if you look into the situation it seems that they will join three people who are problematic. Some things have emerged widely in the media, and that is also problematic. This type of environment will continue because it seems the root causes of these issues will not be cut off, it also shows why the MDDA has been regressing in the past financial years.

The Committee’s oversight revealed the true state of the Agency, some of the projects and people who were awarded money had to be hunted by the Committee because the MDDA could not provide names and information. This issue will need to be deliberated on. The term of office of the three current board members will end next year but the Committee needs to do something about it before more damage is caused in the agency. Dissolution may not be an option; perhaps a forensic investigation might be helpful. It was necessary to deal with Human Resource issues decisively. It appears that the Chairperson of the Board is very arrogant; the mere fact that the board just dismissed the Acting CEO without even informing the Minister is a gross reflection of her arrogance. In his view, it will not be possible to continue working with the current board members; they have a very bad attitude. Therefore, in order to turn things around the board needs to be dealt with and an investigation needs to be conducted.

Mr M Gungubele (ANC) said he did not wish to deal with gossip but established facts of what is actually really going on at the agency. So there are various processes that can be employed to establish those facts such as an inquiry or a forensic investigation.

A number of the issues presented today have been presented to the Committee before, and the forensic investigation may be limited, so oversight will have to be conducted yet again so that the Members can establish these facts. The report received in the last meeting reflected a very good performance by the Agency, but now the Minister reports a 33% performance - there is a discrepancy in the information presented to the Committee, and this is something that needs to be dealt with. Furthermore, Q1 issues that emanated took place under the current Ministry, so the state of the board cannot be the only reason why the performance of the agency was bad.

He doubted whether the MDDA is not required to have a Shareholder’s compact, the law might be silent on it but saying that it is not required is stretching it but he appreciates that the Minister has highlighted she is working on a governance agreement that will enforce the board to account.

The Committee was very clear that in the event of a non-quorating board, the CEO was instructed to carry those decisions and functions, but clearly he failed to do so. He supports the Chairperson’s remarks about dealing with the matter urgently, and actually establishing facts and then dealing with the facts appropriately.

Ms N Tolashe (ANC) stated that the Ministry should come back with one message and give clear answers about when the board stopped quorating. That is important for the Committee to know because it will assist in looking into the issues that pre-existed the non-quorating board. The Committee will also be able to look into issues that existing during the tenure of the non-quorating board. That report will inform the Committee on the direction it should take the Department needs to know that the Committee needs time to gather its facts because it cannot take a direction on all these matters based on hear-say or gossip.

Furthermore, she said she wants to see the Ministry getting its hands into these entities, because the delivery of the Department’s mandate is also dependent on these entities. As it stands, it seems that the Department is not really hands on or fully involved. She then called upon the Ministry to respond to the Committee’s oversight report; she believes that report contains a lot of information that the Department can make use of when conducting its investigation. During the oversight visit, it appeared that a lot of money was wasted with no accountability; this will also help the Ministry when compiling its report to get a full picture of what is actually going on at the Agency.

Ms M Matshoba (ANC) stated emphatically that the Agency needs to be rescued ASAP, if things are prolonged, it will not assist the Department at all. Therefore, it would be advisable that the Minister commence immediately to take corrective steps, because swift intervention will be in the interest of the public. It seems that these persisting issues have been going on for a really long time, so she wondered what the previous Ministry did to intervene and rectify these issues.

Taking into consideration that the problem is not going to be solved by appointing new people, Ms Van Wyk suggested that the Committee conducts an inquiry.

The Deputy Minister appreciated the responses and comments from the Members, and she agreed with the irregular contracts raised by Mr Kalako, and the importance of how these contracts need to be nullified. There is an Agency called Brand Connections that has taken the Agency to court due to the cancellation of a contract - this contract was administered by the Chairperson of the non-quorating board.

Furthermore, the former executive authorities tried to intervene in these matters, and they furnished the current Ministry with an investigation report. However, there was no implementation of the findings of that report, so the incumbents came into office and inherited all these issues. If the findings of that report had been implemented some of the issues would have been dealt with. However, part of dealing with the issues is the reason why the Ministry is present today to inform the Members of what has actually been transpiring at the Agency.

With regards to the inconsistency of the information regarding the performance, she highlighted that she will not be held responsible for the 33% poor performance of the Agency because she has written to the Committee before raising the issue of the illegitimacy of the board but yet the Committee still heard a presentation from the very same board that she has deemed illegitimate.

The Minister stated that she had heard about these issues that come up today for the first time. She advised that the teams work together so that informed decisions and directives are taken to deal with these issues.

Dealing with the current members of the board is part of resolving the issues; she then expressed her keenness for that to be done. When the report in question was brought to her attention by the members of the Committee, she started a process within the Department that looked into the issues reflected in the report and her team produced a report that concurred with some of those issues. She advised that all the reports that are sent to the Deputy Minister also be sent to her office so that she can get on top of the issues as well, because the dismal performance or failure of the Agency reflects badly on her as a Minister.

The Chairperson stated that what will happen as a way forward is that the Minister will provide a report that will be ready by 19 September and the Committee will also extract the 2015 investigation report that the Deputy Minister mentioned. The Committee will then decide on what the Minister will do regarding the issues as a way forward. These reports must be submitted immediately after the 19th so that when the Committee meets in October, it has a clear direction to take, whatever interventions that might be taken will also be informed by those reports. The Committee cannot take a decision on what will be done without scrutinising the reports and conducting its own through investigation. Whether these issues were pre-existing before the current Ministry or not is irrelevant, the responsibility lies with the current leadership, although the Committee is aware that these issues existed long before the current leadership. The Committee itself is also responsible, but going forward all these matters will be rectified.

The meeting was adjourned.

 

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