Waste Management of Tyres; Waste Management Bureau: legal opinion; SAN Parks Annual Performance Plan

Environment, Forestry and Fisheries

17 April 2018
Chairperson: Mr M Mapulane (ANC)
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Meeting Summary

SANParks told the Committee that its board wanted to ensure that there was a balancing act between a constrained economic environment, where the government grant was declining quite substantially, and carrying out its conservation mandate as effectively as possible while having to generate sufficient revenue in order to carry out the mandate. Enough resources had to be channelled into expanding its revenue generating capacity, while ensuring that the funds to carry out its activities were in balance.

After outlining its objectives and strategies for the coming year, SANParks drew attention to certain strategic risks, and their corresponding mitigation plans. These included:

  • The threats to bio-diversity and the escalating wildlife crime on key species;
  • Wildlife diseases resulting in the inability to translocate or sell wildlife from national parks because of the health risk to other animals, staff and visitors;
  • Poor infrastructure maintenance;
  • Compromised ranger health and wellness due to the increasing militarisation of the ranger corps in the Kruger National Park (KNP);
  • A breakdown in relationships with neighbouring communities.

Among its current challenges were the human resource budget growing to R1.1 billion, because it was a very labour-intensive organisation, which could automate operations only to a certain extent. Maintenance costs were projected to be R191.5 million, because of the ageing infrastructure. When one looked at the Kruger National Park, which was established in 1926, most of the infrastructure was beginning to crumble and required significant attention. Based on its current funding, it would take SANParks up to 30 years to replace its infrastructure. Although it was growing its revenue, it was not enough to sustain and conserve the SANParks environment.

The Committee said that there was not enough detail in the presentation, and the budget had to be unpacked to identify the trends and the plans. It urged SANParks to purchase its requirements locally wherever possible, and to employ those who lived close to the parks. The Committee needed to know where SANParks was in the war against rhino poaching. It would like to see if there had been a reduction in rhino poaching and, most importantly, whether the number of rhinos being killed was decreasing.

The Department of Environmental Affairs (DEA) updated the Committee on its programme to divert used tyres from landfill sites through the Waste Management Bureau, which had replaced the failed Recycling and Economic Development Initiative of SA (REDISA) project. It explained how the diversion rate was determined by the number of new tyres entering the market each year, with a 25% annual wear and tear rate factored in, and the need to take into account the number of scrap tyres which were exported. Based on past performance, a diversion target rate of 50% for 2018/19 had been set, rising by 10% for each of the next two years.

Members were sceptical that this could be achieved, based on the past performance and a budget that was smaller than REDISA’s. The DEA had been expected to explain how the REDISA plan had collapsed and where the DEA was now. Was the Waste Bureau successful or not, and if there were challenges, what were they and how could they be addressed going forward? The more the DEA concealed information, the more suspicious the Committee became. There was no basis for discussion. The DEA must note the issues raised by the Members and speak to them when the DEA did the presentation again. This current presentation undermined the Committee.

Another issue affecting the Waste Bureau was confusion over the legality of the Department’s Director General (DG) acting as the Bureaus’s Chief Executive Officer (CEO), as the CEO had to report to the DG. This seemed to indicate that the DG had to report to herself. The DEA’s Director of Law Reform presented a legal opinion on the nature of the Bureau and its relationship with the Department, based on the provisions of the National Environmental Management Waste Act (NEMWA) and the Public Finance Management Act (PFMA). He concluded that because the Bureau had been established by a governmental Act, the PFMA stated that if there was a board, the board became the accounting authority. If there was no board, then any other person could be designated as the accounting authority in order for that public entity to perform its function.

The Chairperson said the issue that had been raised concerned accountability: who was accounting to whom? Was it by design that there was a situation that had created this loophole? This was a legal loophole that was seemingly being exploited. This arrangement, where the DG was acting as the CEO, existed because of this loophole, when in fact someone inside or outside of the DEA could have been delegated or appointed to avoid it. The Bureau had been legally established in 2014, and a CEO had not been appointed yet. He suggested that this matter should be discussed when the DG herself was present, so that it could be engaged on more deeply.

Meeting report

South African National Parks: 2018/19 Annual Performance Plan

SANParks’ Chairperson’s overview

Ms Joanne Yawitch, Chairperson of the Board: SANParks, started by giving a sense of the issues that that the board had top of mind when developing the annual performance plan (APP). These included the issues of poverty, unemployment and inequality. The National Parks, given where they were located, were a huge asset and could play a very positive role in terms of economic empowerment and rural development in some of the poorest parts of the country. The board wanted to ensure that the activities and spending of SANParks, as reflected in the APP, addressed these issues.

The board also wanted to ensure that there was a balancing act between a constrained economic environment, where the government grant was declining quite substantially, and carrying out SANParks’ conservation mandate as effectively as possible, as well as generating revenue in order to carry out the conservation mandate. What SANParks’ wanted to ensure was that enough resources were channelled into expanding its revenue generating capacity, while ensuring that the funds to carry out SANParks’ activities were in balance. This was to achieve the virtuous circle of generating the revenue that drove the conservation and ensured that it was sustainable. The concern of the board was that it had to put itself in a situation where there was long-term financial sustainability that allowed it to carry out its mandate in the most effective way possible. There were a number of challenges, however, which were hindering doing this.

Lastly, the board’s term had been extended until September, or until the Minister took the decision to appoint a new board. The current board’s terms had been extended from the end of March to September 2018. The board had been trying to deal effectively with some of the long-standing issues which related, for example, to finances, land claims and post-retirement medical aid.

APP Presentation

Mr Fundisile Mketeni, Chief Executive Officer: SANParks, explained SANParks’ mandate, which was to develop, expand, manage and promote a system of sustainable national parks that represented biodiversity and heritage assets, through innovation and best practice for the just and equitable benefit of current and future generations. Nearly four million hectares (67% of protected areas) were under SANParks’ management.

SANParks’ guiding framework was made up of the South African Constitution; the National Development Plan ( growth, employment and transformation); international policies; government’s 12 outcomes; and a Schedule 3a company governed by national legislation – especially the National Environmental Management (NEM) Protected Areas Act, the NEM Biodiversity Act and the P:ublic Finance Management Act (PFMA).

SANParks’ other key considerations included local communities (socio economic development, radical economic transformation); priorities at the provincial level; the triple challenge of poverty, inequality and unemployment; climate change and its impact on biome boundaries; and the challenging compliance environment

Mr Mketeni clarified a range of imperatives and challenges which were derived from the 2018 State of the Nation Address (SONA), which encompassed the themes of tourism, agriculture, youth education and employment, radical economic development and public entities’ efficiency and sustainable funding. (See slides 5-6).

SANParks had four overarching strategic goals. These were sustainable conservation assets, diverse and responsible tourism, progressive, equitable and fair socio-economic transformation, and effective resource utilization and good governance.

Strategic Goal 1: Sustainable Conservation Assets

This strategic goal had three objectives -- improved representative conservation estates, effectively managed ecosystems, species and cultural heritage management, and enhanced knowledge for decision making, with the aim of achieving the following deliverables:

  • The consolidation of land under conservation;
  • The provision of input on declarations on the establishment of MPAs;
  • Managing parks effectively;
  • The reduction in fossil fuel energy and water use (water meters, solar energy in partnership with neighbouring communities, etc.);
  • The review of two park management plans;
  • The implementation of the black and white rhino management strategy, especially anti-poaching activities;
  • A 2 % increase in arrests for key species;
  • A cultural heritage strategy and resource mobilisation; and
  • To champion South Africa’s and SANParks’ positive conservation influence in Africa .

Strategic Goal 2: Diverse and responsible tourism

Under this goal, the strategic objectives were to enhance tourism returns and  to provide diversified and enhanced tourism opportunities and experiences, with a view to achieving:

  • An 8 % growth in gross operating tourism revenue;
  • Increasing the total number of visitors to national parks;
  • A 2% growth in the number of local black visitors;
  • Hosting an annual tourism investment summit to attract domestic and international investors; and
  • To Implement new revenue generating products which would provide opportunities for black and female-owned small, medium and micro enterprises (SMMEs).

Strategic Goal 3: Progressive, equitable and fair socio-economic transformation

The strategic objectives under this goal were an optimised contribution to the green and blue economy, enhanced awareness and skills and improved stakeholder engagement. Activities would include a contribution to the wildlife economy; sustainable resource harvesting (wildlife farming, aquaculture, honey bush, fynbos and medicinal plants harvesting); the development of land claims beneficiation packages; supporting 400 SMMEs, and to spend R159 million through them. The integrated transformation strategy would include black economic empowerment (BEE) spending, and there would be enterprise development and incubation of SMMEs. Other initiatives would be environmental education partnerships, involving science laboratories and libraries. To promote accessibility, 80 000 free visitors would be allowed in during SANParks week.

Strategic Goal 4: Effective resource utilisation and good governance

Under this goal, the objectives were adequate, appropriately skilled, transformed and diverse human capital and a conducive working environment. This would involve the creation of 4 330 permanent jobs, of which 59% of total management positions would be filled by blacks (target 60%); 38,5% of total management positions would be filled by females (target 40%); people with disabilities would comprise 2% of the total staff complement; for 5 904 full time equivalent (FTE) jobs to be created through the Expanded Public Works Programme (EPWP); 110 internships (conservation and other graduates) ; and management and leadership effectiveness interventions.

Key Risks

Mr Mketeni said the board had recently had a workshop, at which the strategic risks had been revised. When SANParks returned to the Committee, it would consolidate these risks, how they were described, and how each risk was linked to the strategic objectives of the organisation.

The following strategic risks, and their corresponding mitigation plans had been discussed:

  • The threats to bio-diversity and the escalating wildlife crime on key species;
  • Wildlife diseases resulting in the inability to translocate or sell wildlife from National Parks because of the health risk to other animals, staff and visitors;
  • Inadequate enterprise applications due to a lack of enterprise applications in support of information management;
  • Poor infrastructure maintenance;
  • Compromised ranger health and wellness due to increasing militarisation of the ranger corps in the Kruger National Park (KNP);
  • A breakdown in relationships with neighbouring communities;
  • Inadequate skills, knowledge and experience of staff; and
  • The sustainability of EPWP funding, since the key component of mandate execution was currently being funded by EPWP project funding, with no guarantee of continuation.

2018/19 Budget and MTEF Estimates

Mr Dumisani Dlamini, Chief Financial Officer: SANParks, said the projected revenue of SANParks was R1.959 billion, which was comprised of various categories (See slide 21). It was operating in a very difficult economic environment in which unemployment was increasing and South Africans could not afford the basic necessities of life. This had an impact on SANParks’ operations and the revenue that it generated. SANParks was thankful that its markets extended beyond the borders of South Africa. It had had to revise its revenue forecast down, given some of the challenges, one of them being the issue of water in Cape Town, where some of SANParks’ international guests had to reconsider whether or not to visit the country depending on how the water situation affected them.

There were a number of things which SANparks aimed to do. All of the activities mentioned by the CEO need to be funded by the money that SANParks generated. It generated approximately 82% of its own revenue, while government funded the balance. As an organisation, SANParks was doing its best to reduce the financial pressure on the government, which had other pressing priorities.

Mr Dlamini described some of SANParks’ challenges. In terms of its capital development plan, the human resource budget would grow to R1.1 billion. SANParks was a very labour-intensive organisation, which could automate operations only to a certain extent. There were certain activities which only humans could execute. It was doing its best to maintain its headcount level, the target ceiling being 53% of the budget. This was very efficient for a public entity.

SANParks’ maintenance costs were projected in 2018/19 to be at R191.5 million. It was experiencing a lot of maintenance because it had ageing infrastructure, and at some point in time it would require replacement. Its operating costs would grow from about R543.9 million to R739.9 million. It was expecting to generate interest from some of the money that it kept from its bank account, reaching R49.7 million in the 2018/19 financial year. Finance costs had grown significantly. from R4.9 million to about R30,5 million for the 2018/19 financial year. The reason for this was that SANParks had decided as an organisation to in-source its vehicles. SANParks had an ageing fleet which was becoming expensive on its balance sheet. The best way was to ensure that it in-sourced its vehicles, which had been funded by ABSA. SANParks was not only maintaining these vehicles, but monitoring their efficient use. Various technologies had been installed to ensure the safety of SANParks’ employees.

Mr Dlamini explained why the budget did not mention anything in relation to capital costs. When one looked at the Kruger National Park, which was established in 1926, most of the infrastructure was beginning to crumble and required significant attention. The replacement value of SANParks’ infrastructure at this point in time was about R20 million, which included buildings, civil infrastructure, roads, drainage, and dam infrastructure. In areas where SANParks did not have enough water to supply its animals, including critical species such as rhinos, it had to use service providers to drill down into the ground to source water for those animals to survive. These service providers could cost up to R1.8 million at a particular time to ensure SANParks sustained its animals. All these challenges required a significant amount in terms of SANParks’ balance sheet, beyond what it was able to generate. Based on its current funding, it would take SANParks up to 30 years to replace its infrastructure. Although it was growing its revenue, it was not enough to sustain and conserve the SANParks environment.

One of the initiatives which the board was currently was exploring was the possibility of raising funds in the capital market by borrowing. SANParks would like to bring National Treasury (NT) and the Department of Environmental Affairs (DEA) on board. NT had already indicated that there was not enough funding for public entities because of other pressure within government. It became critical that when money was borrowed, it was used for income-generating assets. Out of the 19 parks which SANParks had, there were only four parks that were income-generating. This meant that only four parks subsidised the rest of the parks within the parks system. SANParks was quite aware that not all parks could generate money, as they had been established as part of conservation, rather than tourism.

The Chairperson interrupted that there was not enough detail in the actual presentation that had been handed to the Members. This was an area for improvement. The budget must be unpacked in terms of the trends and the plans. The narrative which the CFO had presented was not in the document. This left a lot to be desired. The Committee needed to understand the finances of SANParks. Could SANParks give an explanation for the significant increase in the finance costs?

Mr Dlamini said that over the years, SANParks had never owned vehicles. These vehicles had been leased. At the end of the lease, the vehicles were not owned, which meants they were returned as part of the agreement that had been signed. What SANParks was doing now was to buy vehicles. The method of financing the acquisition of those vehicles was by way of a finance lease. The finance lease had a interest portion. Interest was paid on the money borrowed from the bank. The inflated growth in the finance costs reflected the full interest based on the vehicles which SANParks was budgeting to buy. However, if the Committee looked at the line item of the operating lease payments, there was a significant decrease. These vehicles would be kept for a period of five years or up to a certain number of kilometres, and they did not have to be maintained -- SANParks had been paying a lot of money to maintain its vehicles.

The Chairperson asked where the operating lease could be found.

Mr Dlamini answered that it could be found under the operating costs. A bulk figure had been given, which could be unbundled.

The Chairperson said this was a problem, because the CFO was referring the Committee to something that did not appear in the documentation. There were other questions that had to be answered -- for example, the value of the vehicles.

Mr Mketeni responded that all these details could be provided. For example, SANParks was paying about R80 million a year to a service provider. The figure now was far less in terms of operational costs. ABSA had won the tender which provided this facility to SANParks.

The Chairperson agreed that these figures needed to be presented to the Committee at the next meeting.

Ms Yawitch confirmed that this would be at the end of May.  

Discussion

Mr R Purdon (DA) supported the Chairperson’s view that a breakdown of the budget was desirable.

The Chairperson commented that this breakdown would not be in the next presentation, as  SANParks would be giving details of its vehicle financing model. Concerning the income, perhaps the CEO and CFO could respond, bearing in mind that the Committee had expressed its concern that the presentation of the budget lacked detail. It had not been broken down. In the next presentation on the budget, SANParks had to go into detail.

Mr Purdon asked which four of the 19 parks were generating a decent cash flow.

The Chairperson advised that all the finance questions should be answered first.

Mr T Hadebe (DA) asked what percentage of the budget was earmarked for research and for the development of employees?

Dr Z Luyenge (ANC) referred to SANParks’ asset management and disposal policies, and asked who SANParks’ inventory holder was? Did the information contained in the register for the asset management policy speak to the origins of the manufacturers of the items SANParks was using? It was important for the government and SANParks to know from where it sourced the items which it used, since localisation was a key government priority. Did SANParks have a suspense account which, in many cases, was not declared and where unclaimed monies were kept? Were there policies to govern its use? What was the percentage of litigation, and how was it managed?

Mr Z Makhubele (ANC) commented that it would be important for the Committee to know how the entity intended to address its challenges and risks in the medium to long term, so that it could move with SANParks to ensure that the entity was on the right track. These risks and challenges should not be left by the wayside.

Ms Yawitch suggested that at the meeting at the end of May, where SANParks reported on the third and fourth quarters, SANParks should go into the revised risk register and do a full presentation on its high-level risks, the risk map and some of the key mitigating factors that the entity was putting in place. This would help to give a much better context for being able to look at the detail. For example, where there had been quite a lot of policy development put in place related to questions around asset management, there could be an explanation of what the thinking was around the in-sourcing of the vehicle leases, etc. These types of measures were some of the ways SANParks was managing some of the financial risks in the organisation.

The Chairperson agreed that these issues, as suggested, should be presented on at the end of May. This would give much more context and detail to the new model for the financing of its own fleet of vehicles which SANParks had adopted.

Mr Mketeni said that the four parks that were generating a decent cash flow were the Kruger National Park, which contributed about 70% of the revenue, Tsitsikama, Kgalagadi and the Addo Elephant Park.

In response to Dr Luyenge’s question regarding local content, SANParks had a mix of assets, because the entity owned buildings. Some buildings came with the land SANParks bought. It owned vehicles and helicopters etc. Concerning local content, there were issues around the types of equipment available. For example, SANParks’ helicopters were manufactured by Airbus, which was a French company. Nevertheless, by the same token, the contract stipulated where the helicopters must be maintained and by whom. While some of the content was obtained locally (for example, through Denel), some of equipment was not found in South Africa. This was an area that needed to be improved upon by making available locally the specialised equipment used by SANParks.

SANParks did have a register of its different assets and where they came from. In respect of buildings, there were those that had been built by SANParks using infrastructure money received from the DEA. There were also buildings which accompanied the farms which SANParks had acquired. It had embarked on a process of verifying some of the old buildings which were in SANParks asset register, but which had been demolished because they were so dilapidated.

Mr Dlamini answered Mr Purdon’s query concerning SANParks’ “other income” -- why it had increased so substantially, and what was signified by it. “Other income” included income like donations, special project income and the EPWP allocations, which varied from year to year. SANParks projected that its “other income” would double, as it would be doing more projects in the coming year and would receive more donor funding.

Concerning Mr Hadebe’s query about SANParks’ research and development budget and how much it was, the research component was 3%, which amounted to about R72.5 million, while human capital development was 2.3%, which amounted to about R55.6 million.

Concerning Dr Luyenge’s query on SANParks’ asset management and disposal policy in relation to the origin of the assets which it acquired, because of the threshold of R500 000, the procurement was mainly via tenants. One of the key priorities of SANParks, other than BEE, was locality, which not only implied the use of domestic as opposed to international companies, but the local sourcing of items where the activity was happening. If, for example, SANParks had a project in Port Elizabeth, it encouraged suppliers who were from PE to bid for the work that was happening in the area, rather than getting an organisation from Gauteng. This did not only apply to asset acquisition, but to goods and services, construction work etc.

By way of conclusion, with regard to whether SANParks had an expense (or control) account, most organisations, private and public, had this type of expense account. People deposited money into the SANParks bank account, for example, to make a booking at the park, but details as to who the person might be were not provided. This made it difficult to allocate this money, as the purpose of the deposit had to be determined. One would have a control account up until documentation was received in relation to the account. Once received, the deposit could be claimed.

Finally, with regard to how SANParks dealt with challenges, the challenges were discussed without going into specific details, because there were a number of them. SANParks had a monthly executive committee meeting, which dealt with all the challenges of SANParks.

The Chairperson recommended that clarity be given to how SANParks dealt with its challenges when SANParks risks were discussed. The Committee would like to receive, in writing, the risks which SANParks was raising -- financial risks in particular -- and how these were being mitigated. These issues could then be thoroughly engaged.

Mr Purdon wanted clarity as to why no mention had been made of the targets in SANPark’s APP for the Marine Protected Areas (MPAs), although the DEA’s APP mentioned 18 MPAs. Clarity was needed as to why wetlands were measured in terms of cubic metres instead of hectares. With a low target of a 2% reduction in rhino poaching, what had the baseline of this year’s target been? A detailed update was needed on poaching in general and other statistics. Were the statistics improving or deteriorating? SANParks referred to a 2% reduction in the elephants poached in the Kruger National Park, but was it only in the KNP that elephants were being poached or were there other parks, such as Addo Elephant Park, where elephants were also being poached? Finally, while the mitigation plan for Table Mountain wildlife crime had been mentioned under the strategic risks, clarity was needed as to how this would work and how the entity would partner with other non-governmental organisations to take this plan forward, as this impacted on tourism.

Mr Hadebe requested more information on the revenue generating products developed by SANParks. To provide enhanced air support night capability, had SANParks considered using drones in the park? How were the individuals who participated in the environmental education programmes identified?  Were they from around the park? These were the people who should be educated to protect South Africa’s wildlife.

Regarding the 40 contractual agreements that had been entered into in the previous financial year as part of SANParks’ commercialisation strategy, had all the public-private partnerships been successful? What had been the challenges for those that had not run as expected? What had been the incentives for the private sector to invest? Was there a policy which guided the duration of these contracts and projects? Had SANParks been able to compensate communities or individuals for the damage caused by wildlife? Had it budgeted for this in the current financial year?

Mr Purdon asked how often infrastructure and maintenance was reviewed and whether SANParks was insured nationally, specifically for Storms River, which was a major income revenue generator for Tsitsikama.

Mr Hadebe referred to SANParks’ intention to increase the number of hectares for the parks, and asked which parks would be affected and whether there were communities that would be affected. If so, had it negotiated at the grassroots level with the communities for them to buy or to sell?  

The Chairperson pointed out that there had been a change developing the target for rhino poaching. The more complex this process was made, the more would be missed. Was there no way of simplifying the target? The Committee needed to know where SANParks was in the war against rhino poaching. It would like to see if there had been a reduction in rhino poaching and, most importantly, whether the number of rhinos being killed was decreasing.

SANParks’ response

Mr Mketeni said SANParks’ five year strategic plan was from 2015/16 to 2019/2020, and did not include a baseline because it contributed to the DEA process.

No mention was made of the targets in SANPark’s APP for the MPAs, compared to the DEA’s APP, because the DEA was driving a process of declaring Robben Island and the Namaqua National Park as MPAs. SANParks’ only contribution to this process was saying what regulatory framework was required in order to have a proper functioning MPA. Therefore, SANParks did not have a target or baseline. It was contributing to the proclamation process because it had knowledge of the area. Once this work had been done, the DEA would declare the MPA and handover to SANParks. However, the DEA could handover an MPA to any authority if it wished to. SANParks did not know at what stage the actual proclamation would take place so that it could include the targets and baselines.

As to why wetlands were measured in terms of cubic metres instead of hectares, the formula had been given to SANParks by Dr Guy Preston, Deputy Director-General: Environmental Programmes, DEA, who could expand upon the matter. There had been a lot of discussion about whether to measure in hectares or water yield, and the latter had prevailed. The volume of water was seen as the outcome that SANParks wanted.

SANParks had a security strategy for all national parks. However, each park also developed its own plan. There was a security plan for Table Mountain. The area of Table Mountain was co-owned, belonging to different command structures of Cape Town. It was not co-ordinated properly. The CEO of SANParks was participating in the process to enhance co-ordination. Not exclusive to Table Mountain, the provinces should start discussing as a standing item the issue of wildlife crime or crime in national parks. SANParks was recommending to SAPS and other clusters to treat wildlife crime as a priority. In most cases, there were also mandated issues in terms of where the line needed to be drawn in terms of using rangers, even on Table Mountain, for security. In the final analysis, understanding in the cluster was necessary. Mandate creep did create some challenges. SANParks was trying to elevate the issue to create a proper structured way of dealing with the problem.

Insofar as elephant and rhino killings in the KNP and other parks were concerned, SANParks was still able to contain the situation in small parks. In about 600 small parks, there was no killing of rhinos because SANParks patrolled and used its small planes as a deterrent. It was not easy for poachers, because rangers were there around the clock. Air mobility and neighbours did assist SANParks, and the probability of arresting poachers in small parks was much greater. SANParks’ biggest challenge was the size of KNP’s border. So far, no killings had been recorded in other parks.

SANParks had tested drones. It was realised that what was key was for a camera to be able to distinguish between a shadow, an animal and a human being. The drones that were available in the area were not helping SANParks because at the moment they could not make this distinction. After testing them for six months, SANParks had established that it could not invest in drones, with the hope that a more advanced camera would be developed that could distinguish between a human being versus a shadow or an animal.

To identify the individuals who participated in the environmental education programmes, SANParks focused on neighbouring schools where there were structured programmes involving, among others, principals and community forums.

Mr Mketini said SANParks was driving a commercialisation strategy. The ‘bricks and mortar’ approach had been successful. Among the incentives for the private sector to invest, SANParks offered its location, brand, the ‘Big Five’ and wildlife parks like the KNP. The challenges which SANParks confronted related to retail facilities. There had been failures of some enterprises, for example, in the north of the KNP. It had a lot to do with how these enterprises were managed, their projections and feasibility. They tended to exaggerate in order to get the contract. Projections had to be spot on.

Ms Yawitch continued SANParks’ response, and said that the concessions were put out in the early 2000s on the basis that it took anything from 20 to 30 years to reach full profitability. These were long-term investments with long-term contracts. Once the investors got through the initial period and had recovered their upfront investment, they tended to be very profitable. The Committee should be alerted that some of these contracts were coming to an end shortly at slightly different points in time. The concessionaires had pushed quite hard for SANParks to extend the term of those concessions. After much consideration, SANParks had decided that it would not, and that the facilities would need to be put out to tender again. It was a lease that essentially came to an end.

Part of the thinking around this was that, among other factors, those concessions and private-public partnerships (PPPs) had been done at a period when black economic empowerment (BEE) and community infrastructure and legislation were not in place. Putting these facilities out to tender again would allow greater participation than before by small and black enterprises, by women and by youth, in the way that the new concessions were structured. The board would like to use this as an opportunity to push an empowerment strategy in a more conscious way than at the point when those concessions or contracts were first signed.

Mr Mketeni said that the only park that had a policy to compensate communities or individuals for the damage caused by wildlife was the Kruger National Park. SANParks had clear criteria under which compensation would apply. The individuals or communities had to make a convincing case that the animal involved was from the park.

SANParks’ current insurance had been approved by the board about one and a half years ago. When it was tendered, it had got the best deal. Storms River was insured.

Regarding SANParks’ intention to increase the number of hectares for the parks, there was a country-wide DEA expansion strategy. SANParks was involved in a portion of this in terms of where it wanted to expand. It had an expansion plan that was approved by the board yearly, which fed into the larger strategy.

SANParks did a lot of risk assessment. When the strategy was approved, and there was a land claim afterwards, the land claimants were spoken to first to determine whether or not they would like to be part of the national park. Land claims were not dealt with by SANParks, but by the Land Claims Commission. While the appetite in communities to be part of national parks was limited, there had nevertheless been some requests. The key issues related to the criteria and the viability. To belong to a national park, the state of biodiversity in the community must be in accordance with what SANParks’ needed.

With regard to where SANParks was in the war against rhino poaching, the help of the Committee was needed. Before the current Committee’s term, SANParks had a different target which had been questioned. Currently, it focused on the reduction as a ‘percentage of attempts,’ and measured its success against the number of attempts. What SANParks had added in its APP was two indicators -- a rhino sustainability threshold indicator, and a crimes indicator. The assistance of the Committee was needed to know how SANParks could report appropriately.

Mr Makhubele said that at a previous briefing, SANParks had indicated that the Auditor-General (AG) had suggested the current indicator. As the Chairperson had indicated, the Committee had its own view. What was perhaps needed was to reconcile the Committee’s view, which was concerned with the actual reduction, with the AG’s position.

The Chairperson thanked Mr Makhubele for his intervention. The target had to be revised to take into account exactly what needed to be achieved. It was one thing looking at the activities, but quite another taking into consideration the overall objective. While the Committee was aware that the board of SANParks was as concerned as it was about rhino killings, there must be a way of tracking success so that there could be a bit more focus. Every year, the Minister released the statistics, so there was a baseline available from which SANParks and the Committee could work. There had been a spike, which was beginning to come down. This showed that the efforts were bearing fruit. That baseline must be considered and ambitious targets on reduction must be set. Everybody must know what the targets were, what resources were available and what resources would be required. Rhino poaching must be significantly reduced. In order to do this, clear and measurable targets needed to be set. 

Mr Ishaam Abader, Deputy-Director General: Legal, Authorisation, Compliance and Enforcement, DEA, made the distinction between the number of incursions and the number of animals. The number of animals killed had been reduced over the years, but the number of incursions into the park -- people trying to actually poach -- had increased. While the DEA may not be winning the war, there was definitely an improvement in that regard. On 5 June, the DEA would be briefing the Committee on the initiatives to curb the killing of rhinos and wildlife trafficking. During that briefing, the DEA could address the Committee’s concerns.

The Chairperson said that the killings remained a concern and there had to be a reduction. How would the plan be revised? Apart from the number of incursions, the target had to measure the decline in the number of animals being killed.

Mr Mketeni responded that SANParks had a target that measured the decline in the number of animals being killed.

The Chairperson asked whether this target appeared in the APP.

Ms Jill Bunding-Venter, Acting Chief Operating Officer: SANParks, said that this target was in the 2017/18 APP, where the baselines of the thresholds of the four different species were set. It was against these thresholds that SANParks measured its performance.

The Chairperson replied that these targets had to appear in this APP, or SANParks would not be able to measure its performance as far as poaching was concerned. It needed to be continually in SANParks’ APP so that it was able to track and measure its performance on this important aspect. It was agreed that this part of the APP had to be revised.

Mr Makhubele wanted clarity on the PPPs, and whether there was any policy guiding this process. Concerning compensation to communities, once an animal got across into their area and did the damage, the community could identify and kill the animal, turning it into a source of meat. Identification by SANParks would be tricky, but the damage would have been done.

Mr Purdon said he looked forward to the presentation on 5 June, and stressed that it should also contain details of arrests and convictions. There was no shortage of ‘foot soldiers.’ It did not help to take pride in killings in the KNP coming down when the provincial parks were being hammered. A combined approach was needed. While this was a national portfolio committee, would the presentation, for example, contain the figures of provincial wildlife parks? Clarity would be needed here.

Mr Hadebe referred to how the individuals who participated in the environmental education programmes were identified, and asked if SANParks felt that it was achieving the outcomes it intended, namely, the conservation and protection of biodiversity. Since the culprits would be the adults, did SANParks not see the need for another strategy of also educating adults, apart from school children?

The Chairperson asked whether the presentation would include details of rhino poaching across the country.

Mr Abader confirmed that when the DEA compiled the poaching statistics, and collated the national figures. The DEA could give the Committee a breakdown, per province, of the number of rhino that had been shot. While the numbers had gone down in some provinces, in others they had increased. Enforcement was only one aspect of the DEA’s strategy. It had to be looked at holistically in terms of increasing the number of rhinos in the country. Anti-poaching was only one aspect of the overall strategy. The national statistics for all rhinos in the country contained figures from state-owned as well as private reserves.

The question which the Committee wanted answered in the 5 June presentation was whether the numbers were going down. One could develop as elaborate a strategy as one could, but in the final analysis the Committee needed to know whether it was bearing fruit. That target had to be included in SANParks’ APP.

Mr Mketeni, on whether there was policy that was guiding the PPP process, said SANParks had only a commercialisation strategy, not a policy, because there were guidelines in the strategy -- for example, in terms of the type of investment. What SANParks had not looked at was a specific policy. It was strategy that was driven very much by the market. It was an area that could be looked into.

In compensation cases, where an animal that had damaged community property had been killed, the person who suffered the damaged property was not necessarily the one who ended up killing the animal. It could be somebody else. These factors were taken into consideration where compensation for damaged property was sought.

Ms Khungeka Njobe, Board Member: SANParks, referred to the question around impact and how SANParks could come up with new strategies, and said one of the reasons why the board was putting a lot of emphasis on socio-economic development was in order to act as a catalyst and a meaningful player around the communities in terms of accessing social and economic benefits. From a strategic perspective, this helped a lot. When the communities began to see that they could also participate meaningfully in the park, they could also be champions of issues around crime and other issues in SANParks’ interaction with communities. SANParks’ was leveraging the land claims process, but also actively engaging with communities to access the economic opportunities and resources in the parks. This would make a difference.

The Chairperson concluded that in the next quarters, SANParks and the Committee would be able to expand on the risks that the board had identified. The Committee was particularly interested in the various financial risks and how they could be mitigated. There was a need for a revision of the targets for poaching which needed to be incorporated into the APP. The Committee was happy with the APP except for these issues and those raised during the course of the discussion, such as a more detailed breakdown of the budget being required.

Diversion of waste tyres from landfill sites

Ms Limpho Makotoko, Chief Operating Officer: DEA, and Mr Mark Gordon, Deputy-Director General: Chemicals and Waste Management, DEA, gave an overview of the presentation, after which Mr Gordon introduced the delegates, including the speaker, Ms Mamogala Musekene, Chief Directorate: General Waste and Municipal Support: DEA.

The Chairperson highlighted two goals or elements of the presentation -- a breakdown of the diversion of waste tyres, and a follow-up discussion based on the concerns that had been raised at the previous briefing. The first critical question was whether there had been an improvement in the diversion of waste tyres over a period of time, or if the performance was deteriorating. The second key question concerned the need for a legal opinion regarding the role that the Director-General was playing, not only as the CEO, accounting on behalf of the Waste Bureau, but also as the Accounting Authority in terms of the Act, and the Accounting Officer of the DEA.

Ms Musekene explained that the determination of the diversion rate required information on the amount of new tyres that were put on to the South African market on an annual basis, and the DEA also had to take into account the rate of wear and tear. It worked on the assumptions that, for a given year, all the new tyres that were put on to the market became waste; and that each tyre lost about 25% by mass due to wear and tear.

Historically, before the Redisa Plan, there had been no clear figure on the amount of waste tyres that were put on to the market. Once the Redisa plan was implemented, because there was a fee that was linked to the mass, it was possible to compute the amount of new tyres that entered the market.

When looking at the performance against the target, it was important to consider the challenges that were faced which had led to the withdrawal of the Redisa plan. Two key issues that had to be highlighted were the performance in terms the amount of tyres that were being processed, as well as the deviation with regard to the undisclosed amount of waste tyres that were exported, as this distorted some of the amounts in terms of the reporting, because it was not done at the time. It was only afterwards that some of those issues were taken up.

Ms Musekene gave a breakdown of the waste tyre diversion performance against the target. The plan had been approved in November 2012. Because that was the baseline year, no target had been set. The DEA had first to understand what was being put on to the market. In that year, the revenue that was collected by Redisa amounted to R106.5 million. The diversion that was reported for that year was 8%. In that year, the DEA was able to determine the baseline in order to set the targets. The target for 2014/15 was then set in the DEA’s annual performance plan at 10%. In that year, the amount of revenue that was collected by Redisa amounted to R572.3 million.

In 2015/16, the target which the DEA set in its APP was 25%. The performance which was reported at the end of quarter four was 42%. As part of the APP, there was mention of 31% in the Minister’s foreword, which was linked to the performance as reported by the DEA in quarter three of 2015/16. Because of the timing of the tabling, the DEA also had to reflect on the audited figure. Although the amounts to qualify this were not available, they included exports.

The Chairperson asked for this to be repeated.

In 2016/17, the target was 60% and the performance was 19%. The revenue collected by Redisa at the time was R523.3 million. In this year, the DEA started to pick up on the exports. At the time, the DEA made sure these were taken out, because it now knew that Redisa was not fully reporting. They were deviating and were now disclosing that they were not part of the 19%. That was when the DEA had started some of the processes to deal with the under-performance and other issues, so the performance improved.

The Chairperson asked whether the 42% had included the exports.

Ms Musekene affirmed that this was the case, although the DEA did not know how much. Some of the reports which came at the time did not disclose exports, but when they tabled the other reports that included the previous months, that was when the issue of exports was revealed.

In 2017/18, the target had been withdrawn because the DEA was working on how to address the matter. It did not have a target in the APP. In February 2017, that was when SARS started collecting the levy as well. The DEA had also received an allocation which the Waste Bureau – which had started working in October 2017 – was working on. The Waste Bureau had presented on its performance to Parliament last month.

In 2018/19, the target had been set at 50%. It took into account the issues surrounding performance, the transition and the need to address the targets of 2016/17. There were issues that the DEA was dealing with to make sure that it was able to divert waste tyres from the landfill sites.

The plan was to make sure that the system recovered in terms of the build-up and raising the targets. The target for 31 March 2020 was 60%, while the target for 31 March 2021 was 70%. This was also reflected in the budget. The DEA was hoping that it would be able to influence the allocation, because the diversion needed to meet those percentages required huge amounts of money. The allocation received by the DEA for the next three years was only half of what was required. This was a matter that would still need to be addressed with National Treasury.

Discussion

The Chairperson voiced his disappointment with the presentation, and asked whether this was all the DEA had prepared.

Ms Makotoko responded that perhaps the DEA had not understood what was required. Its understanding was that the Committee wanted clarity, because the DEA had presented the plan, but it seemed as if there had been confusion over the figures. It had thought the Committee was indicating that the DEA had seemed to have taken the figures down, and that it would have to explain what had been presented. The brief was intended to explain what had happened to the figures.

The Chairperson said that based on the last discussion, the expectation was to look at the performance of the diversion ever since Redisa was introduced. It was in the programme that had been submitted to the DEA. Essentially, the aim was to work out whether the waste tyre recycling programme was working or not, because there was a lot of money that was being directed to this programme. The document that had been handed out could not serve as a briefing to the Portfolio Committee, as it said nothing. The background gave a statement that he thought would be unpacked. Members of the Portfolio Committee needed to understand the entire cycle and value chain. This could not be understood based on this presentation, which was giving the Committee the barest minimum. This was very disappointing.

Ms J Steenkamp (DA) said she agreed with the Chairperson’s comments. It was very unclear how the Waste Bureau measured the targets. How was the unit of measurement of these targets determined? What was the formula used to calculate the diversion rates? It was very vague, based on the presentation. The DEA should give the Committee a detailed explanation of these targets in tons -- what they were and what they were going to be. How did exports feature in the diversion targets? How did exports affect the performance? Did the diversion and performance targets include the Off the Road (OTR) tyre backlog? What was the Waste Bureau’s plan in terms of the commencement of OTR waste tyre collections? Specific timeframes need to be provided. What were the Waste Bureau’s current options to enable the collection and recycling of the OTR’s nationally? What happened to the tyres once they had already been collected and transported to the depots? Most of the depots that had been contracted were already full, and most did not comply with the waste tyre regulations.

One could not talk about diversion rates without including recycling rates. With these targets and the performance, where were the recycling rates? In the 2017/18 financial year, the Waste Bureau had a performance of 28%. What did this performance constitute in terms of tons? By way of comparison, in the 2018/19 financial year, what were the DEA’s expectations in terms of tons? How would the 2018/19 target of 50% be incorporated into the industry once the plan had been approved? Could the Waste Bureau achieve this with the R320 million available? The DEA’s target was 70% by 2020/21 with only half the budget that Redisa had.

Mr Makhubele said it was important to establish what the initial expectation was. Based on the last set of meetings on the matter, there was still a figure, which might have been 54%, that had not yet been explained. That presentation had been abruptly terminated because what had been needed was a comprehensive presentation. What had been expected was some analysis or assessment of how the Redisa Plan had worked and what the performance had been since the Redisa Plan had collapsed. There had been allegations in this regard. Today, the DEA had been expected to explain how the Redisa Plan had collapsed and where the DEA was now. Was the Waste Bureau successful or not? In the process, these figures could then have been clarified. At the last meeting where the DEA was asked to present the Waste Tyre diversion rates, there had been other reasons which were not discussed. What needed to be clarified was whether the waste tyre diversion project was successful, and if there were challenges, what they were and how they could be addressed going forward.

The Chairperson agreed, saying that this presentation did not respond to the expectations of the Committee, flowing from what happened at the last meeting, where the Committee had noticed that there were figures which seemed not to be speaking to each other. In particular, it wanted feedback on the performance of the tyre recycling programme. The programme spelt out the expectations of the Committee. The presentation had been a joke, which suggested that the Committee was being taken for granted. Why did the DEA not elaborate on the statement it had started with? Why did it not go into the yearly performance of Redisa, and then do a comparison of the figures? The more the DEA concealed information, the more suspicious the Committee became. There was no basis for discussion. The DEA must note the issues raised by Ms Steenkamp and speak to them when the DEA did the presentation again. At the end of the day, there must be a proper basis for discussion. This current presentation undermined the Committee.

This presentation was rescheduled for a future date.

Waste Management Bureau relationship with DEA: Legal Opinion

Mr Sibusiso Shabalala, Director of Law Reform: DEA, said that this legal opinion stemmed from the briefing which the DEA had presented on 13 March 2018. The Committee had raised a concern regarding the Director-General of the DEA acting at the Chief Executive Officer of the Waste Management Bureau in the absence of a functional board. Did this mean the Director-General, as the accounting authority of the DEA, was also the accounting authority of the Bureau? This legal opinion attempted to answer that question.

He said he would discuss the applicable legal frameworks, which were:

  • The National Environmental Management: Waste Act, 2008 (Act No. 59 of 2008) (NEMWA), which was amended by the National Environmental Management: Waste Amendment Act, 2014 (Act No. 26 of 2014) (NEMWAA).
  • The Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA).

Referring to the NEMWA and NEMWAA, Mr Shabalala addressed the provision which dealt with the establishment of the Waste Management Bureau. Among others, Section 34A provided for the establishment of an implementation bureau to be known as the Waste Management Bureau within the Department, as a juristic person. It stated that in the event of the absence of a functional bureau or a Chief Executive Officer, the powers and duties of the bureau reverted to the Director-General of the Department who, in such a case, must exercise those powers and perform those duties until the bureau was functional or a Chief Executive Officer was appointed. This model was based on the South African Social Security Agency (SASSA), established in terms of the Social Security Act, 2004 (Act No. 9 of 2004).

Mr Shabalala then dealt with the section which dealt with the policy and the Minister’s supervisory powers. The Bureau exercised its powers and functions independently from the Department within the parameters of the policy set by the Minister in terms of section 34B, the service level standards and norms set by the Minister in terms of section 34C, and any directives issued by the Minister.

He referred to the sections of the amendment bill which dealt with the functions of the Waste Bureau, which entailed, inter alia, the implementation of industry waste management plans; monitoring the implementation of industry waste management plans and the impact of incentives and disincentives; capacity building within the Bureau to provide specialist support for the development and implementation of municipal waste management plans and capacity building programmes; and to provide advice with respect to the waste management plans.

Mr Shabalala then addressed the provisions which dealt with the funding and financial management. The Bureau would be funded in the main from funds appropriated by Parliament and income derived from services rendered. Section 34G required the Bureau to manage its books of account and all necessary records in accordance with the PFMA. The Director-General of the Department was thus designated as the accounting authority of the Bureau. The Chief Executive Officer must comply with the provisions of the PFMA in so far as they related to the Bureau’s annual budgets, corporate plans, annual reports and any financial statements. These financial matters must be processed through the Director-General of the Department as the designated accounting authority for the Bureau. 

He described the provisions which dealt with the functions of the Chief Executive Officer of the Waste Bureau, who was responsible for the management of the operations of the Bureau; the compilation of a business and financial plan and reports in terms of the PFMA; and the appointment of members of staff. However, these powers were exercised subject to the direction and approval of the Director-General as the designated accounting authority of the Bureau. The Chief Executive Officer must ensure that the Bureau complied with all relevant provisions of applicable public service policy, regulations and legislation. However, the Chief Executive Officer was accountable to the Director-General of the Department and must report to him or her on the activities of the Bureau.

Mr Shabalala referred the Committee to the last piece of legislation in terms of the applicable legislative framework – the PFMA -- the object of which was to secure transparency, accountability, and sound management of the revenue, expenditure, assets and liabilities of the institutions to which this Act applied. Chapter 6 was applicable to public entities. Section 49(1) required every public entity to have an authority which must be accountable for the purposes of this Act. Section 49(2) stated that if a public entity had a board or other controlling body, that board or controlling body was the accounting authority for that entity; or if the public entity did not have a controlling body, the chief executive officer or the other person in charge of the public entity was the accounting authority for that public entity unless specific legislation applicable to that public entity designated another person as the accounting authority.

Legal Analysis

Mr Shabalala said the Bureau had been established in terms of the NEMWAA on 2 June 2014. In this regard, section 34A(1) of the NEMWA, as amended, provided for the establishment of the Bureau as an implementing bureau within the Department. It was important to note that the Bureau was established within the Department, as a juristic person.

The intention of the legislature at the time was to establish an implementing bureau without a board, with a Chief Executive Officer reporting to the Director-General of the Department as the designated accounting officer. This approach was based on the SASSA model.

Section 34G(1) of the NEMWA, as amended, designated the Director-General of the Department as the accounting authority of the Bureau, and section 34K(2) of the NEMWA, as amended, provided for the Chief Executive Officer of the Bureau to be accountable to the Director-General of the Department. It was noteworthy that the Chief Executive Officer of the Bureau exercised the powers of the Bureau, subject to the direction and approval of the Director-General as the designated accounting authority of the Bureau.

Mr Shabalala emphasised the view that the legislature’s intention was to establish an implementing bureau in the Department, without a board of directors. The bureau had to be headed by a Chief Executive Officer accountable and reporting to the Director-General of the Department. The legislature intended the Director-General of the Department to be the accounting authority in terms of the PFMA.

The Bureau had to comply with the provisions of the PFMA. It appeared that the legislature further intended for the financial management, reporting and audit requirements of the PFMA to be applicable to the Bureau, despite not being a listed public entity under the PFMA. In addition, the Bureau was established within the Department. However, the reference to a juristic person in section 34A(1) presented a legal challenge regarding the actual legal nature of the Bureau. A consideration of the features of a juristic person presupposes an independent legal personality. Such a level of independence inherently required a juristic person to have a board of directors to perform all its functions.

 

Mr Shabalala concluded that it was indicated that the Bureau was established within the DEA, and the relationship between the Bureau and the DEA was that the DG was designated as the accounting authority of the Waste Bureau in terms of this legislation. Because the Bureau was established by a governmental Act, that Act -- specifically if one looked at the PFMA 49(2) -- stated that if there was a board, then the board became the accounting authority. If there was no board, then any other person could be designated as the accounting authority in order for that public entity to perform its function.  

Discussion

The Chairperson thanked Mr Shabalala for the legal opinion, and commented it would have been ideal to have this discussion in the presence of the Director-General. The DEA would need to speak about the critical role played by the CEO of the Waste Bureau, and that the establishment of the Bureau would not be complete without the accounting officer being in place, as per the legal opinion. Therefore, one of the questions that arose was why a lot of other people in the Bureau were appointed, but not the most critical position of the CEO. Was this by design or omission? Why did the DG have to be placed in such a difficult situation where she had to play the role of the accounting authority on the one hand, and the role of an accounting officer on the other? Who was accounting to whom? Was the DEA ready to answer the question? Did this arrangement pose a legal challenge where the DG played the role of the Chief Executive Officer when the CEO was supposed to report to the DG? The conclusion in the presentation did not answer this question. The Act had been passed in 2014. There had been a process of establishing the Bureau, and many people had been appointed. A logical way of proceeding would have been to start by appointing the person who was actually the accounting officer. It was the accounting officer who appointed the rest of the employees.  

Ms Makotoko answered that, with the challenges that were confronted by Redisa, the operationalisation of the Waste Bureau had come with transitional mechanisms. At the same time, the DEA had also been seeking to change the nature of the entity, so even the people who were currently operating in the Waste Bureau did not have permanent contracts. Because it was a transitional mechanism, The DEA had approached National Treasury to say that if it was in the process of amendments to change the nature of the Waste Bureau, what was the best thing that the DEA could do to ensure that there was no gap in terms of the industry from October to when the DEA had fully listed the entity, with a CEO and its own board? National Treasury had advised that the DEA could institute short term contracts just to ensure that the Waste Bureau started operating. The DEA had also consulted the Department of Public Service and Administration (DPSA) on this issue. It was on this basis that the DEA had looked at what the critical posts were, just to ensure that operations could continue in the meantime. The Bureau had no more than 10 people who were currently operating. The DEA was looking, in the main, at the technical expertise that was needed on a contract basis.

The Chairperson asked why the critical position of the CEO had not been considered. An acting CEO could be part of the transitional arrangement. The DEA could use someone from the DEA to act as the CEO to perform those functions. The Act as it was identified the critical person as the CEO who was responsible for appointing the rest of the people. While the challenges that had been raised were appreciated, the question remained as to why the DEA could not get this one key person to avoid the conflation of roles. Why did the DEA not create a situation where the DG did not find herself straddling the two roles? Could a person just be delegated to the role of interim CEO? At the colloquium on waste last year, there was a lady who had been introduced as an interim CEO. Last month, when the Committee was briefed on the Waste Bureau, her designation had changed. This had resulted in these challenges. Did the delegates feel that they could answer these questions, or should they be posed to the Director-General herself? The delegates should not answer these questions for the sake of compliance, as these were quite serious issues which had implications for the Bureau itself.

Mr Hadebe suggested that the responses should be received from the DG herself. Had the DEA consulted the Auditor-General’s office? It was essential that a response was also received from the AG’s office, as this was a critical issue to consider, with all the repercussions of the DG’s decision to fulfil two roles.

Mr Shabalala said he fully understood the Chairperson’s question. There was a situation now where the Director-General of a department was the accounting officer in terms of the PFMA. However, there was also a situation, in terms of the NEMWAA, where the acting CEO, who was also the DG, was acting as the CEO of the Bureau. Because there were certain roles that needed to be played, the functions that the DG had to perform as the acting CEO of the Bureau – dealing specifically with the financial management, the reporting and auditing requirements in terms of the PFMA – stemmed from the PFMA, which were already seamlessly part of the functions which she performed in the DEA. The chances that there would be a conflict with respect to those functions might be very slim. However, the question may then be: who did the DG, who was also the acting CEO, report to? In the NEMWAA, it stated that the CEO reported or performed the function through the direction and approval of the Director-General.

That was where the legal challenge might be, because the very same person who the CEO was supposed to report to in terms of the legislation, was now acting in that position. That might be the challenge. That was where the issue that comes up of the legal persona, which quasi the Bureau was. However, the board was not, and the acting CEO was supposed to report to the board. In this instance, there was no reference in the Act to say that in the event where the DG was the acting CEO of the Bureau, the acting officer must then account to the Minister. One could only assume that the Minister became that authority to whom the DG was supposed to report in terms of the functions and performance of the duties under the Bureau. The same person in the same role may create this legal challenge.

Mr Abader said that that fact the DG was acting CEO must be understood in the context that it was an interim arrangement. The provision for this arrangement was made in the Act itself. This same Parliament allowed this provision. This had passed muster in terms of the State Law Advisors as well. When the initial proposal had been made in terms of how the Waste Bureau should function, it was accepted in Parliament that this was how it would function. While the concerns of the Committee were appreciated, the ultimate question was whether or not there was accountability and how to ensure this accountability. Throughout the legal opinion, reference had been made to the PFMA. Whether the accounting officer was the CEO or the Director-General, they were all accountable in terms of the PFMA. If there was a CEO, that CEO would act under the supervision and direction of the DG who would, in turn, act under the direction of the Executive Authority. That authority was derived from the Act itself. Although it was not ideal, it was legally permissible because the Act allowed it.   

That Chairperson asked under what conditions the Act allowed it.

Mr Abader responded that the Act allowed it in the event that there was no CEO, as the function then reverted to the Director-General. In this instance, until the CEO was appointed, the Director-General would carry out the CEO function. This applied to the functions of any other boards of all the entities. The initial functions of the board and those of the CEO would revert back to the DEA, until a CEO was appointed, and ultimately the Minister would have accountability for that. The law currently permitted a situation where the DG acted until the appointment of the CEO.

The Chairperson said that in his understanding of the legal opinion, in the interim period when the Bureau was not functional, the DG could assume that responsibility. However, when setting up a bureau one normally started with appointing the head, who was supposed to appoint all other people, but this process had happened. There was an interim CEO who had been identified, Ms Nolwazi Tetyana, and there had been an advertisement and all the other people had been appointed with interim contracts. Given what had happened, it may not be the case that the DG still had the latitude to act as the CEO when the DEA was in the process of establishing the board, and there was an interim CEO. The issue that had been raised concerned accountability: who was accounting to whom? Was it by design that there was a situation that created this loophole? This was a legal loophole that was seemingly being exploited. This arrangement, where the DG was acting as the CEO, existed because of this loophole, when in fact someone inside or outside of the DEA could have been delegated or appointed to avoid this legal loophole. The Bureau had been legally established in 2014, and a CEO had not been appointed yet.

The Chairperson suggested that this matter should be discussed when the DG herself was present so that it could be engaged on more deeply. Ultimately, it was the DG who was the accounting officer who could state why a CEO had not been appointed. The CEO could be appointed as part of the transitional arrangement. There was no need to have the other transitional arrangements, except to formally establish the Bureau.

It was understood that there were some difficulties in the DEA, but there were some things that had to be done properly. The Director-General should not continue being the CEO, because the CEO had been introduced to the Committee. The reason why she was no longer the CEO but was still part of the system was unexplained. This discussion, including the conversation around all the legal challenges, would be postponed for when the DG was available to respond. It presented a problem of accountability. Based on the discussion with the DG, a proposal would be crafted on the way forward.

The establishment of the Bureau was critical to the issues that had been discussed earlier on the performance of the waste tyre collection and recycling programme. Without a functional Bureau, the gaping disparity between the performance and the target would remain. Part of the reason why the DEA could not access all the mines was because it had not made a compelling case to National Treasury to give it all the money that had been collected by Redisa. This was because there was no functional Bureau in existence. This was what the Committee would like to see happening.

The Chairperson said the Committee had expressed its extreme dissatisfaction about the quality of the presentation which it had received. A proper presentation was required. A date would be scheduled. The rationale for discussing the legal opinion was to help the DG herself to get out of the situation which may be compromising the progress of the Bureau. A CEO needed to be appointed who would report to her. The DG had mentioned that the current arrangement was not ideal. Fundamentally, the issue was about the Bureau. With all these problems hounding the Bureau, the Bureau may have the same fate as Redisa. Four years down the line, there would others sitting here as officials and Committee Members, with the blame directed at the way in which the Bureau had been established. The intention was not to say there was something wrong, but rather to sort out the issues so that in the future the AG did not make findings of non-compliance.

Mr Makhubele added that more clarity was needed around the amendment to the NEMLA bill, especially in relation to the issues that had been raised. This would assist in paving a way forward.

The Chairperson responded that the DEA was proposing, among others, a board.

Mr Shabalala said that based on a request stemming from the last briefing, the presentation would also deal with a comparison between the DEA’s state-owned enterprises in terms of the requirements for governance – namely, that they were consistent -- which would assist the Committee.

The Chairperson concluded that the object of the Committee was to assist in creating a functional Bureau. The passing of the Act would still take some time, because there would be public hearings. Very few people had made written submissions. The closing date was 19 April 2018. If there were very few submissions, then the processing of the Act may have to be fast-tracked. The ideal situation was to appoint an acting CEO of the Bureau.

The meeting was adjourned.  

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