Annual Reports 2016/17
Government Printing Works (GPW) noted that 28 targets, representing 79%, were achieved. Reporting on financial performance, it had a surplus for the year of R593 million. Revenue grew at a pace of 21% from 2015/16 to 2016/17 compared to 11% from 2014/15 to 2015/16. GPW received an unqualified audit for 2016/17 with matters of emphasis on irregular expenditure. Key challenges included leadership and management capacity and skills at Senior Management Staff (SMS) level; compliance with laws and regulations; and the organisational structure. The key priorities for 2018/19 were outlined.
Members applauded the administration of the Acting CEO and her taking of the intervention plan seriously. Members were concerned about corruption and fraud that could be a source of irregular expenditure. They asked what aspects of the irregular expenditure GPW was seeking condonation for. Members stressed the need to take disciplinary action against corrupt employees and prosecute them if they resign. The former CFO and CEO were discussed.
IEC said its strategic outcome-oriented goals were (i) strengthening governance, institutional excellence, and professionalism; (ii) achieving pre-eminence in managing elections and referenda; including strengthening of cooperative relationships with political parties; and (iii) strengthening electoral democracy.
It achieved or exceeded 21 of its 34 targets (62%) and received an unqualified audit opinion with one emphasis of matter. As disclosed in note 30 of its financial statements, the constitutional institution incurred irregular expenditure as a result of non-compliance with the Preferential Procurement regulations and the PFMA. The surplus for the year was R311.5 million.
Members were in consensus that the IEC had maintained its integrity and impartiality and asked if a survey had been conducted to determine the public perception of its impartiality. The comment was made that the IEC could recover if there was poor performance but it could not easily recover if it had a poor reputation.
Members asked whether Russians companies were given an IT tender by the IEC and asked questions on how integrity is measured as a performance indicator, what could be done to stop people from killing each other in the run up to elections and whether the remaining three million people without physical addresses on the voters roll would be properly registered prior to the June 2018 deadline.
The Chairperson stated that Auditor-General South Africa (AGSA) had talked about the performance of the IEC and Government Printing Works and that the two entities should not beat about the bush. He noted apologies from the Minister and Deputy Minister of Home Affairs as they were attending a meeting in Geneva on refugees.
Government Printing Works (GPW) 2016/2017 Annual Report
Ms Thandi Moyo, Acting GPW CEO, presented on the history of the GPW, its legislative mandate, contribution to national outcomes and strategic outlook, its performance outcomes, audit opinion, challenges and key priorities. On its performance indicators, 28 targets, representing 79%, were achieved. On financial performance, she noted that the surplus for the year was R591 957 000. Revenue grew at a pace of 11% from 2014/15 to 2015/16 and 21% from 2015/16 to 2016/17. GPW received an unqualified audit opinion with matters of emphasis related to irregular expenditure. Key challenges were highlighted and included leadership or management capacity and skills at SMS level; compliance with laws and regulations; and organisational structure. She concluded by highlighting key priorities for 2018/19.
The Chairperson asked what kind of condonation on its irregular expenditure GPW was requesting and whether it was related to tenders. He asked the GPW to give figures.
Mr M Kekana (ANC) said that the Acting CEO was a good administrator and she took the intervention plan seriously. Referring to the irregular expenditure of R180 million, he remarked that it was terrifying to see these things. He noted that the previous CFO was fired and was given a two-month salary package as a handshake for engaging in corruption. It was terrifying. To remedy this GPW should press charges against people engaging in corruption. It was a high time to stop the situation where people would do corruption, then just resign without legal consequences. Equally, Ministers were to be blamed because they were not doing oversight. If a person resigned after stealing money, he/she should be followed through prosecution. He asked what happened after dissolving the Procurement Committee on the basis of corruption. It looked as if nothing had happened because a year could not lapse without taking legal action to deal with the corruption. All this money disappeared under the CEO’s leadership but that corruption had impacted on the integrity of the Acting CEO’s leadership.
Ms N Kenye (ANC) expressed her concern over the irregular expenditure and commented that there was no consequence management in place to deal with those who were committing misconduct. She asked whether there was any disciplinary action and how companies were contracted without tax clearance certificates. It seemed nothing tangible in terms of managerial interventions could be reported on. This was disappointing. She asked why people were appointed first and security checks were done only after appointment? What could management do if an employee after appointment was found to have committed crimes elsewhere?
Mr A Figlan (DA) wished the Acting CEO good luck for the position of CEO, for which he hoped that she had applied. On the third Kraft Press, he asked GPW to give assurance that construction would be completed. He asked GPW for detail on the implementation of the security risk management plan and on the irregular expenditure of R135 million.
Ms H Hlophe (EFF) said that, based on her observations, she assumed that the Acting CEO was already appointed as CEO. Referring to key challenges in the past 12 months, she asked if the managerial challenges included the gap of a permanent CEO. As an acting CEO, there were many decisions Ms Moyo could not take or things that she could not do. It was apparent that many problems arise from the absence of effective leadership and said that a contract could not be awarded to individuals or companies who did not have tax clearance. What measures were taken against people who did not comply?
Mr D Gumede ANC) was concerned about corruption and fraud. People should understand that irregularities in chain supply management were rooted in the nature of the country. Corruption should be understood as a societal problem. All people were corrupt and South Africa was a corrupt country because corruption was being conducted even in the church. Other countries might have moved forward in fighting corruption but South Africa was moving backward in that respect. His major concern was security particularly around documentation. If AGSA reported that it was not happy with security, one should be worried because the security problem was not well clarified by AGSA. It would be helpful if the issue of security was elaborated on by AGSA. On consequence management and the filling of top management positions, he asked how many were subjected to disciplinary action and how many positions were vacant.
Ms T Kenye (ANC) sought clarity on the targets achieved.
The Chairperson said that the financial problems in GPW should be linked to the Chief Financial Officer. He noted that the former CFO was corrupt. The CFO worked for several years without contract. In other words, he was technically not employed by GPW. On top of this, there was a deputy director who could not live up to GPW expectations. He however appreciated that GPW had an effective Acting CEO who was unearthing all the corruption. He felt that the approach of putting people behind bars should be applied to resolve the problem of corruption. Employees should be people of integrity.
On the question of condonation, Ms Moyo replied that they had written to National Treasury to seek condonation for R230 million in irregular contracts. When contracting people outside the Republic, tax clearance was previously not needed. Tax laws were governed nationally. South Africa introduced the requirement that tax clearance should be obtained in both countries if a contracting company was foreign. South Africa required that foreign companies should clear tax first at home and then in South Africa.
On procurement, she noted that the Procurement Committee was absolved after picking up that procured goods and services were without delegated authority. On the question of giving assurance, she had personally done everything in her power to fight corruption and hope that the tender process would be finalised.
On the question of the corrupt CFO, she said that his corruption was compounded by the fact that the then CEO did not have the required skills to manage GPW. He was a medical doctor. His decisions were influenced by the CFO. Simply put, the organisation was run by the CFO because the CEO signed off on documents without understanding their contents. These problems were reported to senior authority. All these problems occurred in 2015 and had consequences for the current leadership. The CFO was not working in accordance with delegated authority. As a result, an advisory council was established by the Minister to ensure that the CFO had people to account to in addition to the internal audit. The CFO did not accept that. He objected to the establishment of an advisory council and finally he chose to part ways. Prior to his departure, Ms Moyo did sit with him, along with the advisory council, to state that there were financial challenges and that an investigation would be instituted to get to the root of the challenges. For an improvement in management and leadership, three committees were established including a procurement committee, bid specification committee, and adjudication committee. As noted earlier, the Procurement Committee had given contracts without following the rules and it was dissolved. The Adjudication Committee was dissolved and a new one was established.
On the irregular expenditure, certain matters were noted by AGSA as irregular because it did not understand the nature of the problem. There were a lot of disagreements with AGSA on whether certain expenditure should be classified as irregular. On the question of consequence management, she gave an example of a deputy director who sold visas and was arrested because he was caught red handed. Following his arrest, criminal proceedings were instituted.
The Chairperson said that documents provided by both AGSA and GPW had a lot of information and Members should read them and digest it for the Committee to decide on the way forward. He thanked the Acting CEO for the good work that she had done. The Chairperson would find out from the Minister about the Amendment Bill that should help GPW to operate smoothly.
Electoral Commission (IEC) 2016/17 Annual Report
Mr Glen Mashinini, Chair of the Electoral Commission, noted that the strategic outcome-oriented goals of the IEC were threefold: (i) strengthening governance, institutional excellence, and professionalism and enabling business processes at all levels of the organisation; (ii) achieving pre-eminence in the area of managing elections and referenda; including strengthening of cooperative relationships with political parties; and (iii) strengthening electoral democracy.
On performance outcomes, he noted that a total of 21 of the 34 targets (62%) for performance indicators were either achieved or exceeded during 2016/17. The audit outcome was an unqualified opinion on the annual financial statements with one emphasis of matter. As disclosed in note 30 to the financial statements, the constitutional institution incurred irregular expenditure. This was as a result on non-compliance with the Preferential Procurement Regulations and the PFMA. It was noted that total revenue was R1 533 936 805 for 2015/16 and R1 682 155 925 for 2016/17. The surplus for the year was R311 502 653.
Mr M Hoosen (DA) thanked the IEC for the good work it had done and commented that should the IEC fail South Africa, the country would be gone. It was an important institution which had huge responsibilities on its shoulders. The IEC reported to the Committee somehow differently because it was an entity which did not report on service delivery. He remarked that the IEC could recover if there was poor performance but it could not easily recover if it had a poor reputation.
Owing to its huge responsibilities, certain allegations were levelled against this institution. He was very mindful of comments made by Mr Mashinini and one could wonder why the craziest statements in the media were coming out. However, one should understand that these things could be in the media because of anger. One would start questioning why these things were in the media. He therefore appealed to the IEC to do an assessment and determine whether there was an increase in public perceptions that the IEC was an impartial and independent institution with integrity. What contributed to that? The AGSA audit report did not assess these qualities and he was unsure how AGSA could assess those qualities. These qualities were critical. He appreciated the openness and frankness of Mr Mashinini with the Committee because where the IEC failed, he put it on table. He was not afraid to speak of failure.
He noted that there was an issue of allowing unregistered voters to vote in one of municipalities and he recalled that this was raised by the EFF. Matters were taken to the police and, at the time of presentation, these matters were before the court. He was also mindful that politicians could take a small issue and make it sound like a national problem. When they did that, it created a perception that the IEC was not impartial and independent. He advised the IEC to deal with every complaint raised, especially by opposition parties in order to avoid the wrong perception. Was the question of perception being investigated? If not yet, it was something that the IEC was obliged to do.
On the question of staff, he knew that when appointing presiding officer and electoral officers, these officials were subject to security verification and he asked if this principle of security vetting was still applied.
He noted that there was a rumour that Russian companies might be involved in the upgrading of its IT system. He asked Mr Mashinini to take the Committee into his confidence and state whether there was anything he saw that was a problem or a concern that could tarnish the image of the IEC. He should not be afraid to speak if there were things that he has identified that could have implications on the fairness of elections. He asked about the R24 million, especially, who sponsored that money. What would be the impact on elections if the IEC did not get the money that it needed? On the principle of integrity, he asked what relationship Mr Mashinini had with the ANC and President Zuma, given that he had been his advisor.
The Chairperson stated that when Mr Mashinini responded, he should distance himself from talking about politics and should speak about the work of the IEC. Members should not encourage officials to talk politics.
Mr Hoosen felt that it was a fair question because he was concerned about Mr Mashinini’s work and he had the interest of the country at heart.
The Chairperson objected.
Ms Hlophe asked for details about the contracts worth R38 million that were awarded irregularly. On the question of credibility, she noted that if one compared the IEC with other electoral commissions in foreign countries, one would not hesitate to conclude that the IEC was indeed perceived as neutral and it should stay like that. If there was any problem that might tarnish the reputation of the IEC, they should not hesitate to call on Members of Parliament. She recalled the EFF did not want the IEC Commissioner because it felt he was partial but he had proven the EFF wrong. The IEC Commissioner had showed his willingness to serve the people. She appreciated the fact that a CEO and CFO were about to be appointed and asked if appointments were permanent. Referring to the performance information, she asked how integrity was measured since integrity could not be measured in the context of the service delivery. She asked how the IEC achieved its integrity goals and to clarify what the term referenda meant. She noted the outreach programme targets were not achieved. She asked how the IEC dealt with people being killed, especially when the country was close to elections and what role the IEC could play to prevent people from killing each other, instead encouraging them to vote. On the registration of voters, she appreciated that five million of the eight million without physical address were now properly registered to vote. She asked when the remaining three million people would be registered as the deadline was 20 June 2018. Would it be possible to have all those physical addresses by then?
Mr Kekana asked about the outstanding litigation and irregular expenditure. The presentation was unclear about the irregular expenditure because it did not state what part related to previous financial statements.
Mr Gumede noted that 2019 was another year of general election and that the integrity of the IEC was very important because every party was saying that it was going to win. On the question of physical addresses, he noted that the IEC should meet with political parties from time to time and report on progress. On the irregular expenditure in terms of River Side, he said that there was no problem of condoning the irregularities. Of concern was that the matter was before the court. On the financial status, he remarked that there ought to be petty cash and cash flow in order to ensure that the daily work could run smoothly.
Mr Mashinini responded that, based on the general thrust of questions on integrity, he agreed that the institution ought to operate on the principles of credibility, impartiality, integrity and independency. He appreciated that Ms Hlophe had the perception that the IEC had integrity. He said that people were appointed after consulting political parties. In situations where things might slip up, they were resolved in a similar fashion of consultation. In the foreseeable future, the problem of physical addresses of voters would be addressed. The problem of a physical address was a challenge as some people had no physical address. He noted that the IEC endeavoured to create an environment for elections that was free and fair and devoid of violence and insecurity. Measures and mechanisms would be put in place to ensure that security was maintained. The IEC could not afford not to comply with the ruling of the Constitutional Court because it resolved constitutional matters. On the question of sponsorship, he responded that R24 million was sponsored by three companies, including ICC Durban and Eskom. He explained that referenda was the plural of referendum and that the IEC was mandated to run referenda. On the question of whether Russian companies were involved in upgrading the IT system, he noted that local companies had been contracted in the context of local procurement.
The Chairperson thanked the IEC and noted that human resource capacity was needed but people should be employed in accordance with relevant laws. On the question of physical addresses, he expressed concern that this target would never be achieved because people moved from to time to time, from one suburb to another.
The meeting was adjourned.