SASSA irregular, fruitless & wasteful expenditure, deviations: hearing with Minister

Public Accounts (SCOPA)

22 May 2018
Chairperson: Mr T Godi (APC)
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Meeting Summary

Documents handed out: Deviations 2016/17 [presented at next meeting]; DPCI Presentation [not available to public]

The Committee questioned the absence of former Acting SASSA CEO Ms Pearl Bengu. It was revealed that she was on sick leave, and Members requested the provision of a doctor’s certificate. Concerns were raised about the numerous cases of non-compliance with Department procurement processes such as the application for Social Relief for Distress where the cost of mattresses, blankets, baby packs and vanity packs were doubled. Irregularities were reported for three December 2017 events in KwaZulu where a cost breakdown revealed that all items procured were just below the R500 000 threshold, thereby not requiring the Department of Social Development (DSD) to report a deviation to Treasury. Ms Bengu had to appear before the Committee to account for the 321 cases of irregular expenditure that had been condoned.

It was suggested that SASSA was failed entity as it had irregular expenditure of R1.4 billion for 2016/17, and the number of deviations and contract expansions were a concern. It was difficult to understand how SASSA requested a deviation for cleaning services which was clearly not an emergency and for office accommodation leases. Concerns were raised about the personal security provided to Ms Pearl Bengu, Ms Lumka Oliphant and her children, and Ms Virginia Petersen which was irregular, given that it was not accorded to all other SASSA executives. A security needs assessment was requested by the Committee to ensure that money was recovered in the event the security provision was found to be erroneous. The irregular payment of R316 million to Cash Paymaster Services (CPS) by SASSA was questioned.

The Hawks presented a progress report on the SASSA cases which it admitted was not comprehensive enough. There were currently 27 SASSA related cases under investigation, of which 5 were court cases, 1 had been provincially withdrawn, 14 were under investigation and 7 were with the Public Prosecutor. Those cases with the Public Prosecutor had been taking too long. A meeting would be set up with the Public Prosecutor to understand why cases were not moving. A comprehensive progress report on its cases would be provided at the next SCOPA meeting.

Meeting report

The Chairperson explained that for purpose of accountability, the hearing was to understand how SASSA managed money at their disposal. The Committee wanted to check on its internal investigation into irregular, fruitless and wasteful expenditure as well as get information from the Hawks on their investigations.

Mr T Brauteseth (DA) expressed concern over the absence of the former Acting SASSA CEO who was required to answer questions about the 2016/2017 financial year. Was the irregular expenditure of R24 622 910 due to non-adherence to Construction Industry Development Board (CIDB) policies and standards such as the use of local South African content? Why were the protocols not observed? Who used persons outside of the protocols? Why were they used and why were they paid?

Mr Abraham Mahlangu, Acting CEO: SASSA, replied that standards had been implemented but he asked the Chief Finance Officer to provide more detail on certain events that happened in between.

Mr Tsakeriwa Chauke, SASSA CFO, replied that he was aware of the CIDB Act. The project for pay point development at regional offices did not comply with the CIDB register of contractors or with company ratings This was because SASSA had never been involved in the procurement of capital projects. SASSA had therefore followed the same procurement process as its other projects.

Mr Brauteseth interrupted his response by emphasizing that the Committee was interested in knowing who was involved, why they had used protocols outside the standard and why they were paid.

Mr Chauke replied that it was done by facilities management and supply chain management officials with names of individuals.

Mr Brauteseth asked if the Acting CEO signed off.

Mr Chauke replied that it was not the Acting CEO at the time who signed off but the supply chain management delegation. The service provider was paid because they had delivered the goods (pay point structures) which were certified and correct.

Mr Brauteseth asked if it was picked up during payment that the process contravened the CIDB requirements.

Mr Chauke replied that it was not.

Mr Brauteseth asked why this was the case.

Mr Chauke explained that at the time of the project, the SASSA checklist did not include capital projects. Therefore checking on CIDB requirements was not part of the checklist.

Mr Brauteseth asked if that meant that the checklist was defective. In the event that it was, who was responsible for the checklist and what action had been taken against them?

Mr Chauke confirmed that the checklist had since been amended to include CIDB. Letters had also been sent to Regional Executive Managers to explain what went wrong. They had since realized that the main problem was the lack of refresher training.

Mr Brauteseth cautioned SASSA Head Office about saying it forgot to do something it ought to have done because they were expected to be the experts. Did those responsible have a diary or some sort of tracking system about the extension of leases? Who was responsible for checking when leases ended and ensuring that the renewal was done correctly?

Mr Mahlangu replied that ordinarily everyone had a diary to monitor timelines on the work SASSA did. There had however been challenges between Public Works and SASSA in the procurement and supply of leases and accommodation SASSA had since been working on creating a single point of accountability for procurement of contracts.

Mr Brauteseth was not pleased with the response from the Acting CEO because the Committee had heard the same story for four years. Did SASSA have a tracking system on contracts? There was clearly incapacity of staff within SASSA to monitor contracts. What was SASSA doing about taking action on officials who should have done timeous tracking of contracts?

Mr Mahlangu explained that he had instructed Human Resources and Legal Services to assist in taking action against officials who were involved and did not comply with contract and lease management.

Mr Brauteseth referred to cleaning contracts in KwaZulu Natal where five contractors were providing cleaning services on an ad hoc basis amounting to R700 000, R750 000, R250 000, R640 000, R767 000. These contracts would eventually lead to irregular expenditure in the next year because the executive in charge did not ensure that the contract was awarded on a competitive and fair basis. How was SASSA planning to stop such occurrences and the lease extensions?

Mr Mahlangu had instructed the Human Resources and Legal Services to assist in taking disciplinary measures per region, per case and per person for the purposes of accountability

Mr Brauteseth raised concern about local content non-compliance for furniture, textiles, leather and footwear as required by National Treasury instructions and the Department of Trade and Industry (DTI) directives. Insufficient training had been given as a reason for non-compliance but there was sufficient information to show that DTI had done extensive training with SASSA. Despite training, SASSA had ignored protocols. Why had this happened and what had been the consequences for people who did not comply? The purpose of local content was to empower local people. SASSA was clearly thwarting efforts to empower South Africans.

Mr Mahlangu reiterated that the process of dealing with individuals had just commenced.

The Chairperson clarified that the question was on local content non-compliance and not contracts

Mr Mahlangu replied that local content non-compliance was due to employees not doing their job. For that reason, action had to be taken against them for non-compliance.

Mr Brauteseth expressed frustration that Ms Pearl Bengu who made non-compliant decisions was not present for questioning. He drew attention to an email sent to Ms Pearl Bengu on 4 December 2017 asking for five events to be run in KZN at a cost of R4 million each to educate beneficiaries on the new grant system. On the next day, 5 December 2017, Ms Bengu signed off the letter, yet there was no breakdown of costs. Did this request sound regular?

Mr Mahlangu asked to investigate this further but asked the KZN Executive Manager to explain.

Mr Simlindile Jabavu, SASSA KZN General Manager, confirmed that indeed approval was granted for five events in KZN in December but only three events happened.

Mr Brauteseth explained that he was not asking for an explanation. Did he think that the process was regular given that there was no correspondence on cost breakdown and approval was given within a day?

Mr Simlindile Jabavu refused to comment.

The Chairperson pointed out that the reason he was before the Committee was to comment. Was the process regular according to Jabavu’s understanding?

Mr Jabavu replied that it was not regular.

Mr Brauteseth asked why it took five months to respond to a parliamentary question on this matter.

Ms Nelly Vilakazi, Acting Director General: Department of Social Development, replied that she was under the impression that the response should have come from SASSA and then submitted to Parliament via her Department.

Mr Brauteseth raised concern over the cost breakdown for the event at Emakhosini which was sent in the parliamentary reply. A marquee was going to cost R485 000, R482 000 for flooring, R490 000 for mobile toilets, R480 000 for extras (chairs, generators, air condition and decorations), R493 000 for catering, R493 000 for transport, R492 000 for the sound system and R480 000 for gifts and promotional items. A total of R3 904 409.62 was approved in one day and notably all items were below the R500 000 threshold. Could SASSA give a response to this?

Mr Mahlangu requested that the accounting authority at the time be present for questioning because she was still an employee of SASSA.

Mr Brauteseth asked why Mr Mahlangu did not insist that Ms Pearl Bengu be present at the meeting because she fell under his authority. Did she have her own authority because of her association with the former Minister?

Mr Mahlangu replied that she had requested leave of absence because she was not feeling well.

Mr Brauteseth asked for assurance of a doctor’s certificate. It was ridiculous that a whole delegation was sent to answer questions for one person who was absent. What was the procedure for a Social Relief for Distress (SRD) application in the case of a natural disaster such as the flooding in KZN?

Mr Mahlangu explained that there was a policy that guided immediate action once a natural disaster occurred. The policy outlined how to handle procurement and under what delegations and approvals.

Mr Brauteseth understood that when there was a natural disaster, SASSA officials went to the ground, reported about the disaster and did an application for assistance. Were applications done before or after the aid came?

Mr Mahlangu replied that application was done before.

Mr Brauteseth asked how aid was distributed once it was procured and taken to the ground.

Mr Mahlangu replied that it was distributed to the affected people according to need and the area.

Mr Brauteseth suggested that there should then be a list and Mr Mahlangu agreed.

Mr Brauteseth asked if a list was available. Why were mattresses being ripped off trucks by people in affected regions, with no distribution process at all. What was the explanation for this?

Mr Mahlangu agreed that it was not process and action would be taken against the individuals involved.

Mr Brauteseth asked if he was aware of R71 million spent at Ray Nkonyeni Municipality and Ethekwini.

Mr Mahlangu was aware.

Mr Brauteseth asked if the CEO was familiar with the Social Relief for Distress (SRD) policy on how much should be paid for certain items.

Mr Mahlangu was familiar.

Mr Brauteseth asked how much should be paid for a blanket.

Mr Mahlangu replied that it depended on market price.

Mr Brauteseth clarified that he was asking according to policy.

Mr Mahlangu replied R150 for a blanket.

Mr Brauteseth asked how much was supposed to be paid for a mattress

Mr Mahlangu could not remember.

Mr Brauteseth reminded him that it should be R300. What about a baby pack?

Mr Mahlangu asked the CFO to assist with the price list

Mr Brauteseth said it was R380. How much did a vanity pack cost for a male or female?

Mr Mahlangu was not aware

Mr Brauteseth replied that it was R80 for females and R70 for males. Could SASSA explain why in the case of Ethekwini, a deviation was issued by Ms Pearl Bengu where the cost of blankets were doubled to R300, adding up to R71 million. Furthermore the invoices show that the blankets were procured at R460. The same happened with mattresses, baby packs and vanity packs. Could SASSA comment on this? What was SASSA planning to do about this?

Mr Mahlangu was aware of the incident and the report from internal audit was currently being looked into. Doubling the price was not acceptable and action was going to be taken based on the internal audit report recommendations.

Mr Brauteseth asked what authority the CEO had to double prices? Did the CEO have to consult anyone?

Mr Mahlangu explained that the CEO had no authority to double prices without market research to go outside of the policy.

Mr Brauteseth asked if any action was going to be taken against KZN Executive Manager, Ms Pearl Bengu.

Mr Mahlangu confirmed that he would implement the audit recommendations and take appropriate action.

The Chairperson wanted specific details on the action that was going to be taken.

Mr Mahlangu explained that the person involved would be informed of disciplinary action against them, after the internal audit report recommendations were implemented.

The Chairperson asked how the money was going to be recovered as this was the Committee’s interest

Mr Mahlangu explained that recovering the money would be the final outcome but due process had to be followed.

Mr Brauteseth highlighted two transgressions committed by SASSA officials. The first was changing policy by doubling prices, and second, officials allowing suppliers to add an extra R160 when submitting invoices. There were instances where mattresses were sold for R600. The Committee wanted confirmation that the CEO would institute action against Ms Pearl Bengu who had no authority to double prices, and then blacklist suppliers for invoicing higher prices. Was the CEO going to take that action?

Mr Mahlangu indicated that he was going to take action.

Mr Brauteseth asked about an official who made a comment to the internal audit department that the inflation of prices was to raise funds for a campaign run in December 2017. Could the CEO confirm that these comments were made to internal audit and what did he make of it?

Mr Mahlangu explained that the matter was subject to pursuing non-compliance of individuals. He did not know about the comments made by the official to internal audit. If funds were indeed raised for campaigns, it was not in compliance with SASSA policy and action would be taken.

Mr Brauteseth requested the CEO look into the allegations, specifically if there was proof of officials colluding with suppliers to raise funds for campaigns. With regard to VIP security, how much has been spent on personal security for Ms Pearl Bengu from 2012 to date?

Mr Chauke did not have details of the exact amount spent but he would make the figures available.

Mr Brauteseth asked if an assessment was done to justify the provision of security. Could the Committee be provided with that assessment?

Mr Chauke confirmed that this was done and the assessment would be provided to the Committee.

Mr Brauteseth asked why Ms Bengu was provided with security. Were there threats on her life or specific reasons why she received that level of protection, or was it standard for provincial representatives and Acting CEOs to have protection?

Mr Chauke replied that it was not standard for executives to have security.

Mr Brauteseth asked the CEO to confirm that no other provincial managers and executive regional managers were provided with security except Ms Pearl Bengu. If the assessment was erroneous, would it be fair to ask her to pay back the money, as it would be regarded as fruitless and wasteful expenditure?

Mr Chauke confirmed that no other executives received protection.

Mr Mahlangu added that it would be difficult to question experts who made the assessment, but if the assessment was found to be erroneous, money would be paid back.

Mr Brauteseth asked about the work streams where no discernable benefit had been reported from them. Had the work streams been declared fruitless and wasteful expenditure? If a decision had been made, was the money going to be recovered?

Mr Chauke explained that the report on work streams had not been discarded and would therefore not be regarded as fruitless and wasteful expenditure but irregular expenditure.

Mr Brauteseth asked if there was conflict of interest if the head of the legal work stream was also an attorney at SASSA.

Mr Chauke regarded it as a prudent decision.

Mr Brauteseth asked if SASSA had considered bringing back former staff that had left under the regime of the former minister because SASSA was suffering from a lack of capacity in the supply chain management field and in many others.

Mr Mahlangu replied that SASSA’s capacity was under review and mechanisms were being looked into to address the issue.

Mr Brauteseth asked how long former SASSA CEO, Mr Thokozani Magwaza had been on suspension, because SASSA could use his services if they were still paying him his salary of R100 000.

Mr Mahlangu replied that the former CEO was not under suspension but had resigned.

Ms N Khunou (ANC) asked if there was an internal audit team. How often did the CEO meet with the internal auditors because the fruitless and irregular expenditure should have been picked by internal audit before Auditor General South Africa (AGSA)? Could the Committee be furnished with proof showing that the CEO met with internal auditors? On the security of Ms Pearl Bengu, could the Committee be furnished with the cost of security and that she was supposed to receive the security that she did. The money paid for her security could have been used elsewhere in SASSA.

Mr Mahlangu confirmed that the internal audit function existed. He was scheduled to meet with them in the coming week for the first time since his appointment. The Hawks would provide more information on security.

Ms Khunou asked the CFO to comment on the internal audit because he had been in SASSA longer.

Mr Chauke asked the Corporate Services executive manager of to respond.

SASSA Executive Manager of Corporate Services, Ms Dumisile Ndlovu, confirmed that there the internal audit team consisted of 25 members, which was properly capacitated and effective. Prevention of fruitless and wasteful expenditure was however a challenge because internal auditors were not present when a transaction was being done. They could therefore only give recommendations once an audit was complete.

Ms Khunou asked about the CPS registration of grant benefits amounting to irregular expenditure of R316 million which SASSA had asked National Treasury to condone. A court had ordered Cash Paymaster Services (CPS) to repay the R316 million to SASSA but CPS had lodged an appeal with the Supreme Court. How far was SASSA with this back and forth?

Mr M Booi (ANC) asked for clarity on what was going on with CPS and SASSA? The protection given to Ms Pearl Bengu was nothing new to this Committee. Ms Lumka Oliphant, the communication officer of the former minister and Virginia Petersen had also received the same security protection as Ms Pearl Bengu, which showed there was a history of people getting protection in SASSA. What further advice did SASSA need from experts when money spent on the protection of Ms Lumka Oliphant and her children had not been recovered? How was the matter of Ms Pearl Bengu going to be concluded? Who was going to pay back the money? AGSA was unable to find irregular expenditure in SASSA because there were no systems in place at SASSA to provide information on the irregular expenditure. This was where the problem lay.

Mr Mahlangu explained that a letter of demand had been given to CPS for the repayment of the R316 million. A contract extension was granted to CPS by the Constitutional Court for it to provide cash payment at physical points until the end of September 2018.

Mr Booi asked that the Committee be provided with the letter of demand.

Mr Chauke explained that there was no agreement on the R3.5 million spent on the protection of the former Minister and Ms Lumka Oliphant and their children. SASSA had written a letter to Ms Virginia Petersen to make representation why the money should not be recovered. Correspondence in the form of additional information had since been received from her lawyers. Only after receiving representation from Ms Virginia Petersen will SASSA be able to get Legal Services to resolve the matter going forward.

Ms T Chiloane (ANC) asked if Ms Zodwa Mvulane was still an employee of SASSA.

Mr Mahlangu replied that she was.

Ms Chiloane asked why there was no response from National Treasury on the request for condonation.

Mr Chauke explained that National Treasury needed more information on who had been held responsible before they could approve.

Ms Chiloane asked if SASSA was still in communication with Treasury.

Mr Chauke replied yes.

Ms Chiloane asked what services were provided by Blue Falcon Protection Services.

Mr Chauke explained that it was VIP security services.

Ms Chiloane asked if it was related to the protection of one of the former CEOs.

Mr Chauke explained that it was used for the protection of either the former CEO, DG, or General Manager for Fraud Management.

Ms Chiloane had a problem with the CFO not being able to remember because SASSA had spent R811 000, and there was no proper documentation submitted to the bid committee. No proper procedures were followed and the payment had since been classified as irregular expenditure.

Mr Chauke requested that SASSA be allowed to give a response in writing on this.

Mr Booi asked the CFO to answer questions directly and not redirect the questions of Committee Members as a way of undermining them.

Ms Chiloane was not satisfied with the responses from SASSA. Could the Chairperson assist in getting information from National Treasury as to why it did not respond to the request on work streams?

The Chairperson asked SASSA to talk to time frames on how soon they would respond to National Treasury on the information Treasury had requested which would guide it on whether the expenditure was condoned or not. He clarified that the problem was not with National Treasury but SASSA which had not provided sufficient information.

Mr E Kekana (ANC) asked about the workshop. Three companies had participated in the workshop. There was conflict of interest because those companies were part of the workshop, had tendered during the bidding process and had also been awarded the tenders. Was this correct? He also referenced the termination of CEO, Mr Thokozani Magwaza in July 2017

Mr Mahlangu requested the CFO assist with an answer but in the event he did not have one, he asked for time to go and investigate and report back to the Committee.

Mr Kekana was surprised that the CEO and CFO were not aware of what he had been referring to. He however allowed them to go back and investigate and provide the Committee with facts. Why was SASSA going to extend the contract of R11.6 million on an emergency basis to Rangewave Consulting, owned by Mr Patrick Monyeki, a former work stream leader and Department of Home Affairs employee?

Mr Chauke explained that the contract had not been extended after Treasury refused to grant the deviation requested by SASSA. The consulting company was therefore not going to do work for SASSA.

Mr Kekana raised concern over the extension of the physical security contract under 2015/16 irregular expenditure. Who was the employee involved and what action had been taken against the person? The reasons given for irregular expenditure in 2015/16 amounted to a form of malicious compliance. What irregular expenditure had been reported to National Treasury for condonation? Was there a progress report on the 2015/16 matters, and had there been at least a response from National Treasury?

Mr Chauke confirmed the status of reports from National Treasury and extensions of the security contract. The Department’s own review revealed that it was an administrative error but Treasury recommended that SASSA open a case with the police to establish the motive behind the numerous extensions. SASSA had referred the matter to its Internal Fraud Unit because Treasury needed an A1 statement before Treasury could condone the irregular expenditure, to ensure there was no element of benefit by SASSA officials. The Department had also considered the report by National Treasury which was detailed to understand who committed the irregular expenditure and at what level.

Mr Kekana asked if the CFO agreed that the irregular expenditure was indeed malicious non-compliance. Could SASSA explain what determined that 128 cases involving R22 million should not to be classified as irregular expenditure on 31 March 2016?

Mr Chauke explained that the determination was made by the SCM compliance unit which checked the individual transactions against the checklist of expenditure classified as irregular, with the intention of correcting the register. In the process, some transactions classified as irregular were found not to be irregular and were eventually validated by AGSA.

Mr Kekana expected that the CFO should explain this process of certification before the list was submitted to AGSA for validation. Could SASSA clarify this process?

Mr Chauke clarified that he had directed the validation of all contracts with SASSA. Each region had to go through its existing contracts to check for compliance. Contracts that did not comply were recorded on the ACM register as irregular expenditure. This register was then checked to ensure that the transactions recorded were indeed irregular to avoid overstating the register. The regional managers then signed off and sent the report to SASSA head office where it was consolidated by internal control and eventually signed off by the CFO. Thereafter it was handed over to AGSA.

Mr Kekana asked if AGSA had concurred with SASSA

Mr Chauke replied that AGSA was still busy reviewing the registers but would provide information on the outcome of the process.  

Mr D Ross (DA) expressed his concern over the failed state of SASSA after R1.4 billion had been declared as irregular expenditure. SASSA was still being run by the Constitutional Court and the time frames for grant contract management were also concerning. Did the failed entity have the political will and capacity to deal with irregular expenditure? Of the 321 cases of irregular expenditure condoned by the SASSA CEO, could these cases be revisited with external support and approval by National Treasury? The lack of commitment to enforce consequence management was unacceptable. The Committee was not expected to guide or push SASSA to enforce disciplinary action. Who was the CEO who condoned the 321 cases? A separate presentation should also be made on cases related to Ms Pearl Bengu, what were the outcomes and were her actions supported by National Treasury.

Mr Mahlangu committed to take action on non-compliance to policies and prescripts. He did not condone the 321 cases and welcomed the suggestion of relooking at these condoned cases.

Mr Booi asked Acting CEO Mahlangu to commit to resigning in the event he did not comply.

Ms Khunou asked about the R1.4 million contract for NEXIA SAB&T to conduct forensic investigations for a period of three years. How far was SASSA with that?

Mr Chauke confirmed that SASSA had received the court judgment which found the award of the tender to NEXIA SAB&T by SASSA was unlawful as it was only the second highest scoring bidder. A parallel investigation by National Treasury was not yet available because it had been given to the former Minister. SASSA had therefore not yet been guided on how to proceed with the matter.

The Chairperson requested that Minister Shabangu check if she had received a report from National Treasury. He did not understand why this matter had been handled politically and not administratively.

Ms Khunou stated that money had been paid when the contract was clearly irregular. Since Mr Solly Tshitangano from Treasury was present, she suggested he be given a chance to explain what happened.

The Chairperson clarified that directly referring a matter to the Minister ensured that the political head would follow up with Administration.

Ms Chiloane said that section 16A.6.4 of the Treasury Regulations allows an organ of state to deviate in circumstances when it is impractical to invite competitive bids. Looking into the list of deviations by SASSA, some of them should not have happened. What was the reason for the deviation of R47.8 million to Rangeway Inc for the new payment system?

Mr Chauke explained that it related to payments to companies that were part of the work streams.

Ms Chiloane had a problem with deviations for normal supply chain management processes and requesting audit services from the Auditor General. Was it possible to ask for deviations for the work of the Auditor General done on a yearly basis? Could SASSA convince the Committee?

Mr Chauke stated that it was an administrative process which according to the guidelines on deviations would fall under the sole provider in terms of contracting.

Ms Chiloane asked if it was a result of poor planning on the part of SASSA.

Mr Chauke replied that it was not possible to go on a competitive bid process for AGSA services because it was a sole service provider. It was therefore not poor planning on the part of SASSA.

The Chairperson asked why the procurement of AGSA services would be classified as a deviation.

Mr Chauke reiterated that it fell under the sole provider category of deviation guidelines.

The Chairperson understood that the expenditure for AGSA services was legitimate, but it should not have been classified as a deviation from a competitive bidding process.

Ms Chiloane agreed and said she would find out from other departments if they classified AGSA services as a deviation. She noted that a deviation was requested to appoint Media 24 for content marketing advertisements. What were the advertisement for?

Mr Chauke explained that the advertisements were for a communication drive to communicate with beneficiaries.

The Chairperson clarified that SCOPA wished to understand the context that led to SASSA settling with Media 24 and not any other media house.

Mr Chauke replied that it was based on the ability of newspapers to reach certain communities.

The Chairperson asked why Media 24? Deviations were asked for when Departments had issues with time. Was time in this case a factor? Did someone in SASSA have connections with Media 24? Why did SASSA not go for a bid?

Mr Chauke explained that the decision was based on understanding which newspapers the community read as well as the reach of the newspapers.

Mr Kekana said the Committee was interested in knowing what happened in this particular case. Mr Chauke should refrain from generalizing.

The Chairperson asked who in SASSA took the decision.
Mr Chauke replied that it was presented to the Bid Adjudication Committee (BAC) by the Head of Communication, then recommended to the SASSA accounting officer and later went to National Treasury for approval.

The Chairperson asked if approval was granted.

Mr Chauke replied yes.

Ms Chiloane wondered how Media 24 spoke to 71 year olds. Who could afford to buy an Independent Newspaper?

Mr Chauke clarified that Media 24 had a wide array of newspapers that were accessible nationwide. The Department targeted talking to immediate and secondary beneficiaries who would assist in passing on information.

Ms Chiloane still did not understand how one would afford to buy a newspaper when one received a R420 child grant.

The Chairperson asked Treasury's Mr Tshitangano to note the motivation for and response about Media 24.

Ms Chiloane raised concern about the R1.8 million deviation for the Trifecta contract. Could SASSA give assurance that this was justified?

The Executive Manager, Corporate Services guaranteed that Government was currently being charged correctly. The contract with Trifecta had come to an end after which the Department of Public Works was not ready with a new building. The Department therefore had no option but to enter into a new contract with Trifecta where a deviation was requested by SASSA from National Treasury. Public Works to source for accommodation

The Chairperson emphasized that he was asking a moral question because Trifecta had been convicted for corruption in the way the first lease was granted, but SASSA went ahead to extend a contract with the same people.

SASSA Executive Manager of Corporate Services, Ms Dumisile Ndlovu, explained that there was unfortunately no other alternative for SASSA to find accommodation for SASSA.

Ms Chiloane said that unfortunately it was spending money that needed to be accounted for. It was already overcharging government but SASSA went further to request a deviation from Treasury. It really was not fair or justifiable. There was a deviation for Northern Cape where Delta Property Fund was appointed for leasing accommodation. Who was who in the Northern Cape?

Mr Chauke explained that the leased properties previously run by Trifecta were now run by Delta Property Fund. Numerous deviations had been made by SASSA for leasing office accommodation as it had been struggling to synchronize its processes with those of the Department of Public Works. A directive was issued by the former DSD Minister for SASSA to stop procuring office accommodation, and instead use the services of the Department of Public Works. SASSA at the time had leases it had already entered into, which Public Works had refused to accept and it had recommended that SASSA wait for the leases to end.

The Chairperson understood that the synchronizing of SASSA and Public Works had taken years resulting in SASSA requesting deviations. Could the Minister intervene?

Ms Chiloane sought clarity on the work that Delta Property Fund was doing for Trifecta.

Mr Chauke explained that Trifecta had been sold to Delta Property Fund
Ms Chiloane asked if Trifecta was still the parent company.

Mr Chauke saw them as two separate companies legally even though the directors were the same

Ms Chiloane asked the Chairperson if they were both correct and he confirmed that they were both right from a political and legal perspective but the Minister would give more information later.

Ms Chiloane asked about the expansion of hours and contract prices over the 15% threshold of the original contract for the presiding officer or initiator in disciplinary hearings of SASSA officials. How many disciplinary proceedings of officials were yet to be concluded?

Mr Chauke replied that the expansion of hours arose when the number of hours worked by a presiding officer or initiator exceeded the number of hours estimated, and therefore a deviation was needed to cater for the additional hours.

Ms Busiswe Mahlobogoana, SASSA General Manager: Legal Services, explained that hours were extended because of the many reasons given by the employees facing disciplinary action. Some were either sick, not prepared or had no legal representation and the process had to start afresh.

Ms Chiloane asked why it was so hard for SASSA to plan for cleaning services in the Eastern Cape. What exactly were the R500 000 sanitation services in Mpumalanga?

Mr Bandile Maqetuka, SASSA Eastern Cape Executive Manager, explained that the procurement processes had been delayed.

The Chairperson asked who caused the delay and why had it happened.

Mr Maqetuka replied that one of the bidders wanted to litigate on the matter.

When asked why the supplier was litigating, Mr Maqetuka replied that it was due to allegations of interference by one of the parties in the procurement process. An investigation had been instituted to find out which officials had been involved.

In reply to the Chairperson, Mr Maqetuka confirmed that the contract had been awarded by SASSA.

The Chairperson asked what SASSA would do if the investigation report agreed with the complainant about interference by one of the officials.

Mr Maqetuka replied that he had received indications from the report that no wrongdoing was committed by officials and therefore went ahead with awarding the tender.

Ms Chiloane asked about the deviations for cleaning purposes.

The Chairperson pointed that the deviation for cleaning for R3 million was actually for three years and not three months. What did the deviation mean?

Mr Maqetuka replied that it was for six months.

The Chairperson asked who then indicated three years instead of six months

Mr Chauke apologized for the typing error.

Mr Mahlangu asked for time to confirm if the deviation was for three months, six months or three years, after which he would revert to the Committee.

The Chairperson asked National Treasury to note the deviation for cleaning and provide the Committee with correspondence between SASSA and Treasury.

Ms Chiloane asked Northern Cape to brief the Committee on its office accommodation.

Ms Tsebeletso Makhetha, Acting Regional Manager, SASSA: Northern Cape, responded that SASSA had since 2016 been able to reduce the number of square meters occupied in two buildings under Trifecta. The Northern Cape regional office was still facing challenges in getting Public Works to find alternative accommodation for SASSA staff.

The Chairperson asked Northern Cape to speak about the R9 million paid to the Independent Development Trust (IDT) for construction of local offices and not a regional office.

Ms Makhetha apologized for not having the document to refer to.

The Chairperson did not understand how she did not know about the deviation which was one of the largest in the Northern Cape.

Ms Chiloane insisted that SASSA speak on the IDT matter

SASSA Executive Manager of Corporate Services, Ms Dumisile Ndlovu, explained that SASSA had decided to build three offices in different parts of the Northern Cape because it would have cost more to rehabilitate the old premises than construct new offices.

The Chairperson raised concern over the differing information provided in the presentation which spoke about two offices but now three offices had been mentioned.

Ms Chiloane agreed that SASSA contradicting itself. She moved on and asked if SASSA could explain the R5.6 million ICT deviation where Telkom was appointed to provide metro ethernet connectivity for three years?

Mr Jabulani Makomba, Acting Chief Information Officer (CIO), SASSA explained that SASSA decided to use Telkom as it needed to increase its bandwidth. A contract already existed with Telkom for the next two years.

Ms Chiloane raised concern over poor planning within SASSA which left other participants out of the normal bidding process.

Ms Chiloane asked what contract expansions above the 15% threshold meant? For deviations on cleaning services that did not have an amount or a service provider but were supported and granted, what did they relate to?

The Chairperson requested that deviations and expansions be dealt with at a later date when the Committee would allocate sufficient time to do justice to deviations and expansions.

Mr Booi agreed and suggested that both SASSA and Treasury be present at the hearing to understand whether policies and procedures were followed.

Ms Khunou said that the Committee had already had discussions with Treasury on deviations in the past and had not made any progress. She agreed that the Committee bring SASSA and Treasury together to get to the bottom of the deviations and contract expansions.

Investigations by Hawks and the Police
The Chairperson asked Mr Booi if the Hawks should be allowed to present on current investigations or if he had specific questions to direct to officials.

Mr Booi replied that the police should have assisted with consequence management for wrongs committed by persons in public entities and the public service. The Hawks report before the Committee however raised many questions as there was no report on high profile cases in which the Committee was interested. What happened to Ms Virginia Petersen and others in SASSA? Was the Hawks afraid to arrest them?

The Chairperson agreed that there were no high profile cases in the report but he referred to the indication from the CEO who had committed to opening cases on SASSA individuals that would indeed be high profile.

Mr Booi explained that the reason the Hawks was present was due to the reluctance of departments to involve the Hawks and other law enforcement agencies. SASSA being a culprit could not be asked what it was going to do. The Virginia Petersen case had taken close to two years to be reported. He wanted to understand how the justice system worked for persons who committed crimes on social grants within SASSA. The Committee would never get consequence management done if investigations were referred to the departments because they took too long for cases to be resolved.

The Chairperson understood that on the SAB&T matter, National Treasury would not process SASSA requests until SASSA demonstrated that it had opened a case and that time frames were provided for the completion of cases. The idea was that where wrongdoing had occurred, there should be consequence management that would change behavior.

Mr Kekana suggested that the Hawks be allowed to present after which Members would could engage.

Ms Khunou commented that it was not the first time for the Hawks to take three years to complete an investigation. This presentation was not going to be any different but they should be allowed to present.

Mr Ross suggested that the Committee make direct referrals to the Hawks for transgressions committed by officials in departments, instead of referring matters back to departments to investigate.

The Chairperson invited General Khana to present what the Hawks were doing about SASSA related cases.

Directorate for Priority Crime Investigation (DPCI / Hawks) presentation on SASSA cases
Major General Alfred Khana, DPCI Head of Commercial Crime Unit, said that there were currently 27 SASSA related cases under investigation, of which 5 were court cases, 1 had been provincially withdrawn, 14 were under investigation and 7 were with the Public Prosecutor. Those cases with the Public Prosecutor had been taking too long. As a result, a meeting was going to be set up with the Public Prosecutor to understand why cases were not moving.

The amount of irregular expenditure was high. If 321 cases of irregular expenditure had been condoned, by SASSA, there needed to be a tracking mechanism outside of SASSA. All government departments should work together to prevent fraud. The legal change of names of business entities should not be accepted in order to differentiate one entity from another. Even though the report provided was not comprehensive enough, DPCI was looking to expedite all its cases. A comprehensive progress report on its cases would be provided at the next SCOPA meeting.
Mr Booi asked about corruption amongst prosecutors and magistrates themselves. Were they handling cases in the manner Parliament wanted? Corruption could only be dealt with if the finger pointed to the individual.

The Chairperson pointed out that the police were present to speak about SASSA investigations.

Mr Kekana asked from where the report came and the Chairperson clarified that it was from the police.

Mr Kekana was not comfortable with the language used in the meeting. He wanted to set the record straight that the Committee was dealing with all cases, however small, not just high profile ones. He urged the police to speed up all cases before them so as to build the public’s confidence in them.

Ms Khunou agreed with Mr Kekana that the Committee was interested in anyone who had defrauded the state and they wanted the police to assist with those cases. From the presentation, it was clear that there were processes inside SASSA that could be bypassed. This required a serious look into SASSA procedures. Taxpayers’ money should properly be accounted for.

Mr Brauteseth asked if the security provided to Ms Bengu was private or public and Mr Chauke confirmed that it was private.

Mr Brauteseth suggested that Ms Bengu be summoned to appear before the Committee to account for her time as SASSA Acting CEO, especially when reviewing the 321 cases that had been condoned. The Committee was wasting its time if it could not receive answers.

Mr Ross stated that political interference by the former Minister was the reason for SASSA problems. Could the current Minister make a commitment to be accountable and provide leadership that would give SASSA new direction?

Closing Remarks by Minister
Ms Susan Shabangu, Minister of Social Development, assured the Committee of her decisiveness and commitment to deal with all concerns raised, including the police investigations. The lack of permanent leadership posed a challenge to SASSA which would be looked into to ensure that SASSA had a permanent CEO. Going forward, the Executive Authority would take the necessary action at all times and report back to the Committee on the actions taken. SASSA was not a failed institution. If individuals were failing, individuals should be dealt with so that the institution could regain its integrity. The challenge of leases and contracts was being addressed through a comprehensive approach in conjunction with the Department of Public Works. A comprehensive plan with timeframes was being worked on to ensure that accommodation was made available within two years.

Disciplinary matters were not only a SASSA challenge but a government challenge which the Committee should look into further because of the impact the delays had on rising costs. The Department will strive towards proper planning especially on deviations to ensure that they were justified. Information on the forensic report will be made available to the Committee. Actions against the former Acting CEO and other officials were going to be looked into. On the R316 million that Cash Paymaster Services was supposed to pay back, the Department would defend itself against the CPS appeal. Consequence management on how that irregular payment arose will definitely be looked into and shall be reported to the police especially where there were fraud or criminal elements. The Department was keen on finding solutions together with SCOPA while at the same time address the capacity issues, all within the context of protecting the future of SASSA.

The meeting was adjourned.

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