DIRCO implementation of Committee recommendations

Meeting report

The Committee received apologies from the Minister and Deputy Ministers of International Relations and Cooperation. Newly appointed Minister Ms Lindiwe Sisulu and Deputy Minister Ms Reginah Mhaule were in a Cabinet meeting. Deputy Minister Mr Luwellyn Landers was out of town on official business in Geneva, Switzerland.

Department of International Relations and Cooperation (DIRCO) on progress over the implementation of Committee recommendations as contained in the Budgetary Review Recommendations Report (BRRR) 2016/17

The delegation comprised of Mr Kgabo Mahoai, Director General, and Ms Delores Kotze, Chief Director: Planning, Monitoring and Evaluation. Ms Kotze undertook the briefing. The Committee was presented with DIRCO’s responses to recommendations made in its BRRR 2016/17. Some of the recommendations along with DIRCO’s responses were:

Recommendation: Conduct a skills audit in the Finance Unit to determine whether there was appropriate capacity to address the root causes of recurring qualified audit opinions for the past four years.

DIRCO Response: The DIRCO had taken a holistic approach to this, firstly to review and update the current job descriptions for levels 1-12 in the Branch: Finance and Asset Management (Head Office), followed by job evaluations, conduct work study and then the skills audit. The framework for the work study had been agreed upon with the Department of Public Service and Administration (DPSA). The job evaluations were 90% complete. Once the report was available the skills audit would commence.

Recommendation: Deal with serial issues raised in the Auditor General’s Report, especially on supply chain management, ICT, asset management and consequence management as well as compliance with rules and legislation.

DIRCO Response: An Audit Action Plan had been developed and was being implemented. The Audit Action Plan was being monitored by the Audit Steering Committee on a quarterly basis.

Recommendation: Immediately pay back the African Renaissance Fund (ARF) monies amounting to R204m and any other outstanding amount without delay in line with the prescripts of the ARF Act.

DIRCO Response: The DIRCO had already paid back R92m to the ARF during the current financial year. The balance would be transferred in the last quarter of the 2017/18 financial year.

Recommendation: Compile a progress report on the circumstances impacting on the conclusion of inter-departmental negotiations relating to the establishment of the South African Development Partnership Agency (SADPA).

DIRCO Response: The SADPA had actually been established and proclaimed by President Jacob Zuma as far back as 2013. However, what was outstanding was the legislation underpinning the work of the SADPA which was the Partnership Fund for Development Bill which would repeal the ARF Act. The impasse on the Partnership Fund for Development Bill was being deliberated upon between the DIRCO and National Treasury. Once this was concluded the Bill would be resubmitted to Cabinet.
Recommendation: Compile a progress report on the processes relating to the provision of permanent headquarters for the Pan African Parliament.

DIRCO Response: This matter was beyond the purview of the DIRCO. However, an inter-ministerial task team had been established and met quarterly with the Department of Public Works over the matter. The Department of Public Works was the lead department on the project.
Recommendation: Conclude investigations and report on the outcomes into the allegations against the Chief Financial Officer (CFO).

DIRCO Response: Anonymous allegations had been made in 2017. The CFO had been placed on special leave for a month during the investigation. The investigation had been completed. The report had been reviewed by legal counsel to advise on the modalities of implementation of the recommendations considering that the allegations emanated from an anonymous source. 

Recommendation: Where criminality had been established due to irregular expenditure to refer such cases to law enforcement agencies.

DIRCO Response: The investigation report was not conclusive on determining whether a criminal process should be followed or not.

Discussion

Ms T Kenye (ANC) on the DIRCO’s response to Recommendation 24 that the investigation report was not conclusive whether a criminal process should be followed or not, asked what the DIRCO’s take on this was. On Recommendation 25 she asked why reconciliation information for 2018 been included in a report when reconciliation for 2017/2018 was done up until December 2017.

Mr Mahoai on the DIRCO’s response to Recommendation 24, explained that the investigator could not get sufficient corroboration. There was no conclusive evidence. The case was however not closed yet. The reconciliation report had been generated in January 2018. It was an ongoing thing and would be regularly updated. 

Ms Kotze, on Recommendation 25, explained that the financial year being dealt with was 2017/18. Hence the first three months of 2018 was covered as well.

Mr M Maila (ANC) on Recommendation 4 which spoke to upgrade of Information Communication Technology (ICT), asked how the rollout was to be implemented. Would the upgrade be to DIRCO’s Head Office, its missions, or was it being done on a regional basis?
On Recommendations 5, 6 and 7 the DIRCO had indicated that various partners like National Treasury and the SA Reserve Bank had been consulted. A comprehensive study was to be done. The DIRCO was asked what the timeframes were.

The DIRCO responded to Recommendation 9 that there was a property management strategy in place. At present property management sat with the Department of Public Works. Was the property management strategy in place in anticipation of the Committee passing a bill placing property management with the DIRCO?

Mr Mahoai said the upgrade on ICT infrastructure should be done up until the point where the DIRCO was able to manage it. Upgrades were done and the correct processes were followed. The rollout was in phases that were connected to one another. The phased approach was used for cost effectiveness. Consultation with National Treasury and the SA Reserve Bank had taken place at a time when the currency market was in SA’s favour. The comparative study had commenced.
The comment on timeframes was noted by the DIRCO. He pointed out that there was a monitoring tool in place. Timeframes would be spelt out. In 1999 property management had been delegated to the DIRCO by the Department of Public Works. The problem was that there was not enough input by the Department of Public Works on the issue so that the DIRCO could make property management work. The DIRCO did however have a good relationship with the Department of Public Works. 

Ms Kotze said the rollout of upgrades to ICT infrastructure would be done regionally. She explained that the property management strategy allowed the DIRCO to procure and maintain property but not to dispose of it.

Ms D Raphuti (ANC) on the DIRCO’s response to Recommendation 15 that it had no additional funding for the payment of its assessed contribution to the African Union, asked what the amount due was. Was the payment to be made annually? On Recommendation 16, she recalled that land had been earmarked in Centurion for the Pan African Parliament’s headquarters. The problem was however that there were some environmental issues tied to the land. She asked whether an Environmental Impact Assessment (EIA) Study had been done.   

Mr Mahoai understood the contribution by SA was towards the African Union’s Peace Fund. The amount that SA was supposed to pay was R700m. The DIRCO unfortunately did not have the funds. He observed that there was a disjuncture between what the DIRCO was expected to do and what it actually did.

On the land earmarked for the Pan African Parliament, the impact assessment issue had been resolved.

Mr S Mokgalapa (DA) on the ICT upgrades, asked what the progress was thus far. On a recent visit by the Committee to the Ottawa, Canada, mission, the Committee had observed that the mission had an ICT security issue. He asked what progress was made to resolve the issue.
On the training that the DIRCO provided to its finance branch he asked when the training had started. Was there an improvement after the training had been provided? On the DIRCO’s response on Recommendations 5 and 6 he commended the DIRCO on its cost cutting measures to let Locally Recruited Personnel (LRP) go at missions across the world. He was however concerned why SA was paying its mission staff cost of living allowances that were higher than what other countries were paying. Why was this so? He felt that it was something that should be looked at.

On Recommendation 11 which spoke to the DIRCO being required to pay back funds from the African Renaissance Fund (ARF) which it had borrowed. The DIRCO was asked whether it had implemented measures to prevent this from happening again.

On South Africa’s R700m contribution to the African Union, he asked whether the amount was based on the new assessment or was it the normal African Union contribution.

He asked what the progress on the 250 disciplinary cases at the DIRCO was. He was concerned about the DIRCO not being able to find things to corroborate the cases against its staff. If sources were anonymous it was because the persons were afraid of being victimised. On the case against the Chief Financial Officer (CFO) who had been placed on special leave for a month, he asked whether the CFO had been suspended. Where was the CFO issue at present? He commented that the Committee appreciated the report compiled by the DIRCO and that Members were aware that it was work in progress.

Mr Mahoai, on the figure of 250 disciplinary cases, was not too sure where members had obtained the figure from as it was not from the DIRCO. He had in total 40 charge sheets on senior managers on irregular expenditures for 2015/16.
On ICT infrastructure upgrades, the project was for the DIRCO’s head office and for all missions. The upgrades dealt with security and bandwidth. South African staff at missions was paid a South African salary plus an allowance. The payment was tax free. The salary that was paid was comparable to relevant institutions.  

Ms S Kalyan (DA) also appreciated the responses that the DIRCO had provided on the recommendations of the Committee in its BRRR. However, she pointed out that the responses lacked specifics. On Recommendation 1 the response was that training was done but no specifics were provided on how many people had been trained, what types of training was done etc. How was staff trained whilst still doing their normal work duties? On Recommendation 3 she felt that the CFO of the DIRCO needed to head up the Audit Steering Committee. If the CFO was under suspicion the DIRCO was asked whether someone was standing in for him. Was the CFO still being paid? She was concerned that the DIRCO was vague around the disciplinary action against the CFO. Who sat on the disciplinary committee? She found it unacceptable that the investigator could not come to a conclusion after the investigation. The Committee needed to be provided with timeframes. At what level was the investigation? How long had the investigation been ongoing? Things should not be dragged out as persons being investigated were being paid to sit at home.

On the South African Development Partnership Agency (SADPA) she understood that there was legislation but that Cabinet had not yet signed it off. However, all outstanding legislation of Parliament had to be finalised by July/August 2018. She asked what the SADPA legislation was for.
She pointed out that the Chairperson of the African Union Ms Nkosazana Dlamini-Zuma had committed the DIRCO to contribute R200m to the African Union but National Treasury had not yet approved the release of the funds. She asked what the R700m was for. Was it for subscriptions or hosting people? On Recommendation 22 where the DIRCO had found that members of the Bid Adjudication Committee had committed financial misconduct, the disciplinary process seemed to be slow. The DIRCO was asked when the process was to be completed. The Committee needed a breakdown of timeframes. On the construction of the building for the Pan African Parliament it was supposed to start in May 2017 according to then President Jacob Zuma. There was a host agreement between the African Union and parliament. The Committee needed to be provided with the Inter-Ministerial Report. On Recommendation 26 the DIRCO’s response was that it had abolished 85 LRP posts. Did the severance packages to the LRPs come from the budget of respective missions or the budget of the DIRCO?

Mr Mahoai said the DIRCO noted the comments of Members about timeframes being needed. The Committee would be provided with a breakdown of SA’s commitments to the African Union. He conceded that the report to the Committee could have included more detail. Specifics should have been given but the DIRCO had limited time to compile the report. He stated that the CFO could not be the chairperson of the Audit Steering Committee. The Auditor General of SA and various directors from the DIRCO would sit on it. Staff underwent training whilst they had to do their work.
On the SADPA issue, legislation had been referred back to Cabinet. There was one sentence in the bill that the Ministers of International Relations and Cooperation and of Finance could not agree upon. He conceded that the internal mechanisms of the DIRCO could be slow over the CFO disciplinary issue. On the host agreement between parliament and the African Union the DIRCO would follow up on the matter. He agreed with National Treasury that the DIRCO’s staff complement needed to be cut and hence LRP staff had been let go. Severance packages of LRPs had been paid from composition of employees of the DIRCO.  

Mr B Radebe (ANC) also expressed appreciation for the report of the DIRCO. He was pleased that LRP employees were now to be employed on fixed term contracts instead of permanent contracts. On property management he felt it good that the DIRCO was consulting with the Department of Public Works. Private – Public Partnerships (PPP) in SA was more complicated than it was in other countries that had less regulation. On Recommendation 11 he asked why only R92m of the R204m ARF funds that it had been used by the DIRCO had been paid back. The ARF funds should not have been used in the first place. The ARF kept its funds in an interest-bearing account and lost interest when the funds were used. How was the interest lost to be recouped? On Recommendation 14, which spoke to the establishment of the SADPA, he felt that there were people who did not wish for the SADPA to be established. There would be better control if the SADPA was established. Presently there was no clear regulatory environment. He suggested that the Committee give the DIRCO and National Treasury three months within which to provide the Committee with an explanation on what was happening over the SADPA issue.  There seemed to be a deadlock over the issue.
He felt that the provision of a host building for the Pan African Parliament had been delayed for far too long. SA owing the African Union R700m was another matter which had to be resolved. SA not being able to meet its commitments was a problem.
Regarding the investigation into the activities of the DIRCO’s CFO how the investigation report could be inconclusive. What was the qualification of the person who had undertaken the investigation?

Mr Mahoai explained that the investigating officer was an employee of the state. He was an internal auditor. The person however did not have the power to issue a summons. There was no extra cost to the DIRCO as the person was already a state employee. The DIRCO wished to conclude the matter around the CFO. At the time of the investigation the CFO had been placed on special leave for a period of one month. The CFO had not been suspended and he was at work. The case had not yet been closed. The DIRCO was not giving excuses because the allegations made were of an anonymous nature. The DIRCO respected whistle blowing.
On the amount that the DIRCO owed to the ARF, he explained that the ARF kept its funds in an operations account and not an interest-bearing account. It was not the ARF that was losing out but rather the DIRCO. The DIRCO would pay back the funds in dollars. The R204m would be paid back by the end of the financial year. He assured the Committee that the situation would not be repeated at least not under his watch.

The Chairperson pointed out that the R700m African Union issue was going to be contentious. The USA’s contribution to the United Nations was 25%. Other member states contributed less. The USA in return for such a huge contribution got a great deal of political leverage from it. Did the same apply for African countries that made huge contributions to the African Union? Amongst the richer African countries was SA and Nigeria. How were the contribution amounts determined? What were the funds for? The DIRCO did not have the funds in any case. On LRPs he too was glad there were fixed term contracts. In other countries persons were allowed to work well into their 80s. Was it because there were no pension schemes?
On Recommendation 13 which was about the DIRCO having to compile a dossier of unoccupied properties of missions abroad and to deal with the issue of having to rent properties, in the DIRCO’s response nothing was said on how the matter was to be dealt with. The Director General of the Department of Public Works and Mr Mahoai needed to meet to deal with the matter. Leadership needed to drive the matter. Some properties were being neglected and property owners complained that it devalued their properties. Countries who had donated properties to SA complained that the properties were not being used.

He noted that Clause 8 of the Foreign Service Bill dealt with asset management. At some point the Committee and the Portfolio Committee on Public Works would have to deal with the issue. This was to ensure that by the time that the Committee made recommendations on the Foreign Service Bill over the matter that Parliament was in agreement. The Department of Public Works could dispose of properties on behalf of the DIRCO.
On Recommendation 18 the response by the DIRCO said that the allegations against the CFO were from an anonymous source and hence could not be attended to. Whistle blowing was allowed in terms of the Public Finance Management Act. He agreed that the DIRCO’s response on the issue of the CFO was very thin. The DIRCO response on the CFO issue had to be specific. Even the trade union NEHAWU had taken issue with the matter. NEHAWU’s members within the DIRCO preferred to remain anonymous. The Committee would give the DIRCO three months within which to deal with the matter and to submit a report. Other than that, the responses of the DIRCO to the recommendations were good.    

Mr Mahoai on the Foreign Service Bill stated that the DIRCO wished to have legislation that gave power to the DIRCO to deal with issues. The DIRCO at present did not even sit in negotiations. On the African Union contribution of R700m, the DIRCO used assessed contributions. SA was the highest contributor in the African Union.
On whether SA was leveraging political power from making the highest contribution he noted that SA needed to take up as many of the slots that it could in order for its voice to be heard. The arrears that SA owed were for the African Union Peace Fund. The Committee would be updated over the matter. The DIRCO would engage the Department of Public Works on the current Public Management Strategy.
On reporting back to the Committee by June 2018 over the SADPA issue, National Treasury had taken away the R8m for the SADPA. The DIRCO was using its own funds to pay staff of the ARF. He was the accounting officer of the ARF but was not a member of the ARF. He reiterated that the DIRCO did not have 250 disciplinary cases.

Ms Kotze said that the DIRCO would provide the Committee with a breakdown of African Union contributions. The DIRCO’s next progress report would set out timelines as Members had requested. The DIRCO would get to the Committee on the Pan African Parliament issue based on the outcome of the Inter-Ministerial Task Team. The Committee would be updated on the SADPA issue in three months’ time. The DIRCO would engage with the Department of Public Works on unused properties abroad.

The Chairperson pointed out that the Auditor General’s Office had stated that there were 250 disciplinary cases.

The Committee Content Adviser, Ms Dineo Mosala, confirmed that the figure was mentioned in the 2016/17 Auditor General’s Report. She pointed out that the DIRCO had refuted the figure.

Committee Minutes

Minutes dated the 31 January 2018 was adopted as amended.

The meeting was adjourned.