Steinhoff Hearing: tabling of correspondence; Committee Programme

Meeting report

The Chairperson welcomed all present in the meeting. He said that the purpose of the meeting is for the tabling of Committee Programme, tabling of correspondence: Steinhoff Hearing, and to look at the Progress Report on Improvement of Financial Management in PFMA Compliant Institutions (2017).

Committee Programme

The Chairperson requested Members to make their inputs with regards to the Committee programme.

Mr E Kekana (ANC) said that according to the document there were a number of issues and entities leftover from the previous year. One of those departments the Committee touched on and did not finalise is PRASA, and there are quite a number of issues that are happening at PRASA which was left hanging. His proposal is that the Committee needs to create some space in the programme to look at PRASA this financial year.

Mr Kekana noted that according to the programme, the Committee will deal with matters around state capture. He therefore asked what the issues are in that regard.

Ms T Chiloane (ANC) said that last year the Committee did a lot of work but was lacking in terms of resolutions. This Committee’s role is to report back to Parliament (the House), and this body needs to adopt resolutions that will encompass the Committee’s work. But in this programme there are no days that are set aside in terms of matters being carried over so as to finalise key issues.

Ms Chiloane noted that the study tour is not mentioned in the programme.

Ms N Mente (EFF) said that on the issue of water and sanitation there were over payments made by some municipalities to water boards, which the Committee didn't receive any feedbacks from the Department of Water and Sanitation. Some of those municipalities include Amathole Municipality and Chris Hani Municipality to name a few.

Ms Mente said on the issue of Basic Education the Committee has already pass a resolution and she is not sure whether that resolution will be taken over to the House. However, on Basic Education when they were receiving the overall financial assessment by their own researchers there were accruals, which were contributed by non-payment within 30 days, and which directly affected transport particularly and ended up affecting children that were not transported to school because there was no payment within that 30 days. Therefore, the Committee needs to take this issue over because in the resolutions that were passed in the House on Basic Education fell on other issues but not on accruals.

Mr M Hlengwa (IFP) said that the Committee engaged with SAA and SABC but the people they engaged with are all not there currently because there are new boards in these entities. Therefore, it will be worthwhile to revisit these entities so as to bring their interaction with them to a logical conclusion as opposed to one pony intervention. It is important to go back and deal with whatever matters that are outstanding and to know what is what and who is where in so far as any other interventions are concerned

Mr M Hlengwa (IFP) said that they've engaged with SAA and SABC but the people they've engaged with are all not there currently because there are new boards in these entities. Therefore, it will be worthwhile to revisit these entities so as to bring their interaction with them to a logical conclusion as opposed to one pony intervention. It is important to go back and deal with whatever matters that are outstanding and to know what is what and who is where in so far as any other interventions are concerned

Mr Hlegwa said the Committee should not to lose sight of the fact that they as the Committee they're concerned about the state of affairs at SASSA. Even though the matters will be carried over but on their dashboard they must note that they need to engage more with SASSA.

Mr Hlengwa said on the issue of water and sanitation he had took time to listen to the Minister of Water and Sanitation and she has very good plans with her department, even though one is sensitive to the realities of Cape Town and day zero, but for those who come from rural areas day zero has been a reality for many years. So, the issue of water is not only confirmed in Cape Town. But the concern is about finance because all these grand plans whether they are Cape Town plans or national plans they need to go to the overall control of water management and realignments should be done. The Cape Town water crisis may be used as a case study of the broader national problem because there truck loads of water that has been bought to the city of Cape Town, which is something that should be done to the whole populous of the country. Therefore, if they could zoom in to the water management in and around Western Cape they will be able to identify the deficiencies in the tendering of water contracts because if one report stated that there was water warning in 1995 and in 17 years water in Cape Town would run out. Therefore, this Cape Town water crisis should be used as a case study to look at the broader national water problem.

Mr Hlengwa also asked what the status is of the study tour because they need to put that issue into bed, whether it’s happening or not so that it is not a recurring matter.

Mr C Ross (DA) said he was pleased with the Vrede Valley programme which is included in the programme and the Hawks intervention should be welcomed. The Committee should call National Treasury (NT) to account to the Committee to address it on the status of municipalities but it will be proper that NT does that in the second term in terms of the financial reports of the municipalities so as to see who the main transgressors are.

The Chairperson said the Committee is no longer going to Uganda but would go to Canada instead because the system is more or less the same.

The Committee Researcher said the requested the programme of the study tour from the Canadian embassy and are still waiting for it so that they send it with the application. The days of the study tour are scheduled 24 - 28 March 2018.

The Chairperson said on the issue of municipalities and how they owe ESKOM and also owe water boards, it is a relevant issue in terms of the engagement the Committee held with ESKOM and water boards. The Committee will call all relevant municipalities to come before it to explain their (municipalities) financial dilemmas in paying ESKOM and water boards.

The Chairperson agreed with Mr Kekana in the past PRASA submitted its Annual Financial Statements (AFS) late after the Committee concluded their programme. This was the same case last year and this year PRASA had not submitted yet. So, PRASA is an area of concern for the Committee, and it should be remembered that PRASA has the highest amount of irregular expenditure.

In terms of the SABC it should be remembered that there was an SIU investigation and the Internal Forensic Unit was supposed to investigate a whole range of other things and at that time there was lot of haste for this thing to be sorted out rather than later. Therefore, it might be useful to meet with the new board of the SABC and also invite the SIU on whether there is any interim report and anything that has been done or it has just died down with the old board or whatever.

In terms of Basic Education, the Chairperson also agreed that this is also an interesting angle to look at which is quite practical in a sense that it affects people directly on a day to day basis.

In terms of Correctional Services the Chairperson said the department only received an unqualified audit the last time the Committee engaged with Department, but it has revert back to a qualified audit. Therefore, the Committee needs to be concerned about that.

The Chairperson said what is not included in the Committee programme is the State Security Agency (SSA) in terms of the vetting. The IMC where SASSA also has its own issues separate of grants around irregular expenditure, fruitless and wasteful expenditure and the whole lot of other things that the Committee could not ignore because of the grant issue.

The Chairperson said on the issue of expansions and deviations it should be remembered that NT confirmed or agreed on 5 December 2017, that it could brief the Committee on a quarterly basis. It should be remembered that in August last year NT promised the Committee that it will set up a forensic investigation, it will report people to the police and all that kind of stuff. In all the things the Committee wants to do the issue of IFMS is very strategic because it is a system that will ensure that Government has a common system that will replace all the hundreds systems that exist. And it will ensure that the fight against corruption will minimise the linkages that happening in terms money. And when Government says it wants to consolidate its budget, the IFMS is one of the biggest and most important tools and it is the system that has been followed by SETA and also by NT.  Therefore, this IFMS system is one of those key elements they (Committee) want to pursue and if they get that right they will know that Government is functioning very well.

Mr Ross said the Committee should also call ESKOM to come and present its AFS so as to see what the real crisis in the entity is.

Mr Booi said they should also invite KPMG to come before the Committee.

Mr Hlengwa said they should also draw the attention of the municipalities to the Portfolio Committee on Cooperative Governance and Traditional Affairs.

Mr Kekana moved for the adoption of the programme with the additions made by Members.

The Chairperson said it seems that all the issues highlighted above will be added to the Committee programme.

Ms Chiloane seconded the move to adopt the programme.

The Committee adopted the programme.

The Chairperson thanked Members for their inputs.

Tabling of Correspondence: Steinhoff Hearing

The Chairperson said Members have a document which has a draft programme of the Standing Committee on Finance, the Standing Committee on Public Accounts and the Portfolio Committee on Public Service and Administration. When the issues of Steinhoff Holdings came to the fore and the exposure of the Public Investment Corporation (PIC), which manages the pensions of Government employees the Committee responded that it wanted to engage with all those that are involved. A few weeks ago the Chairperson of the Standing Committee on Finance called him to say that they also issued statements showing interest to engage parties involved. But equally the Portfolio Committee on Public Service and Administration has also shown its interest in the matter. And in line with the rules of Parliament it will be less cost effective if all of them came together and engage on this issue jointly. Therefore, as the Chairperson of the Committee he has agreed on behalf of the Committee that they are not hostile towards that suggestion. They agreed on the date of 31 January 2018, to engage with the parties concerned.

The Committee should have a common basis and know what its role should be in that engagement. There is a proposed agenda for that engagement. They have invited Steinhoff, JSE, NT, Financial Services Board and the South African Reserve Bank. Therefore, Members of the Committee must prepare their questions to the representative of these entities. Each member will be allocated sufficient time to ask questions from these entities regarding the issue of Steinhoff International Holdings.

Mr M Booi (ANC) asked what the purpose is to invite Steinhoff Holdings when the Committee does not have the capacity to investigate the company because in terms of job security people will lose jobs if the company continues to sell its shares. What it is they (Committee) want to achieve?

The Chairperson responded that the PIC is the biggest investor at Steinhoff Holdings and, therefore Government as representative of the people would want the company to account for its activities. So, beyond tomorrow’s meeting there will be follow up meetings from their oversight bodies like the Reserve Bank and the Financial Services Board, which will be able to tell the Committee this is what they have as oversight bodies have investigated and the actions they have taken against transgressors, and forward recommendations in terms of tightening their laws so that there is no repeat. Therefore, after these institutions have made their presentations, the joint committees will have a full picture of what has transpired and be able to make them account on their actions.

Mr Booi said for them as a Committee it is important to talk to NT in terms of its role and how it gives money because if there is R20bn invested at Steinhoff any public servant should be worried and how will that money come back if Steinhoff is selling its assets.

The Chairperson said the leadership of Steinhoff has committed to come before the Committee tomorrow. But their concern as a Committee is the PIC's investment strategy because these companies employ investment analysts, people who are earning not less than R2m per annum to analyse the markets, to analyse investment opportunities. So, once they are done with Steinhoff, the PIC which holds the public money must tell the Committee what its role and responsibilities are in terms of that money

Mr Ross said that it a massive amount of money that is invested at Steinhoff and they need to address accountability tomorrow. In terms of financial accountability they have limited time to go into detail because they have to look at the Companies Act which deals with reckless compliance and non-compliance. They've dealt with KPMG in terms of the state capture and they can also do that at Steinhoff.

The Chairperson said Members of the Committee will be allocated questions for the different entities that will come and present tomorrow.

Progress Report on Improvement of Financial Management in PFMA Complaint Institutions (2017)

The Chairperson said the issue improvement of financial management in PFMA complaint institutions will be dealt with when they engage with NT tomorrow and documents will be forwarded to Members.

The Chairperson thanked Members for their inputs.

The meeting was adjourned