PSIRA Quarter 4 performance

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05 June 2018
Chairperson: Mr F Beukman (ANC)
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Meeting Summary

The Private Security Industry Regulatory Authority (PSIRA) briefed the Committee on the performance and financial reports for the third and fourth quarters. Progress within the organisation had been recorded in the areas of auditing the firearms in the private security industry, regulations on the issue, use and possession of firearms, and the review of the funding mode and introduction of the Private Security Industry Levies Act.

PSIRA said there was an annual target to conduct inspections at 5 400 security businesses and on 31 000 security officers, to enforce compliance with applicable legislation, and the quarterly targets had been met or exceeded. The over-achievement had been due to an additional five inspectors in the compliance department. The roll-out of new registration certificates for active security officers had been significantly surpassed because a communiqué had been issued to enforce compliance in respect of the renewal of certificates. Although revenue had exceeded budget, higher expenditure had resulted in a R4 million deficit. The entity was in the process of addressing its financial sustainability by reviewing its current funding model.

Members commented that the financial sustainability of PSIRA looked like a major concern that had to be addressed. Who was responsible for doing debt collection, as PSIRA had said it had a debt of about R58 million, and R32 million of that debt was uncollectable? They asked whether there was collaboration with the South African Police Service (SAPS) to help deal with cash-in-transit heists. Why was the PSIRA Act not in operation?  Had there been an improvement in the previously reported unhealthy relationship between PSIRA and the Safety and Security Sector Education and Training Authority (SASSETA)? It was clear that the training provided to cash-in-transit security guards was not adequate, considering how they were being attacked by criminals -- was there any specific course that these guards were required to undertake? How many security guards had been killed during the heists? They alleged there were companies employing foreigners, despite this being in contravention of the PSIRA Act. It would be important to know if there was any strategic outlook from PSIRA to become the main security role player in the country, since SAPS had been failing to address the increase in crime adequately.

Two issues were raised by Members which the Committee decided needed to be investigated further. They wanted to know if the private forensic investigator, Mr Paul O’Sullivan, was registered with PSIRA, as the Committee was worried about his relationship with the Independent Police Investigative Directorate (IPID). The other issue involved the soldier from Israel who was training South African farmers in self-defence, as this training should be provided by PSIRA so that people could not just do as they pleased. The relationship between South Africa and Israel was not very good at the moment because of their different political positions. 

Meeting report

PSIRA: Third and Fourth Quarter Performance

Mr Manabela Chauke, Director (CEO): Private Security Industry Regulatory Authority (PSIRA), referred to matters of progress within the organisation, including the auditing of firearms in the private security industry, regulations on the issue, use and possession of firearms, the review of the funding mode and the introduction of the Private Security Levies Act. All four targets had been achieved in the third quarter  in programme 1, five out of seven targets in programme 2, and eight out of 11 targets in programme 3.

Ms Mmatlou Sebogodi, Deputy Director: Finance and Administration, PSIRA; said that in quarter 3, registration fees had been 27% above the budget, course report income was 31% above budget. while fines and penalties were 115% above budget. The annual fees were 1% below budget, while sales and goods were 48% below budget. The travel and accommodation was 32% above budget, and seminars, conferences and venue hire were 64% above budget. The surplus as at 31 December had been R21 million. The cash flow collection target on annual fees stood at 80%, while cash flow as a percentage of billing was 67%.

In quarter 4, total revenue was 8% above budget, registration fees were 30% above budget and fines and penalties were 1% below budget. The deficit for the year in quarter 4 was R4 million. Regarding the plan to obtain an unqualified audit opinion with no significant audit findings, there had been a review of internal controls conducted by the internal auditors. There had also been a review of the implementation and effectiveness of the internal action plan to address the Auditor-General’s (AG’s) findings. PSIRA was waiting for the audit to be completed.

Mr Chauke stated that under programme 2, there was an annual target to conduct inspections at 5 400 security businesses to enforce compliance with applicable legislation. The target in the fourth quarter had been to conduct 1 215, inspections and the actual achievement had been 1 735 inspections – an over-achievement of 520.  There was an annual target to conduct 31 000 inspections of security officers to ensure compliance, and the quarter 4 target had been 6 980 inspections, which was what PSIRA had carried out. The overachievement was the result of an additional five inspectors in the compliance department. The target for investigations finalised against non-compliance in quarter 4 had been exceeded, also because of additional staff within the enforcement department. There was a target to inspect 270 companies licensed to possess firearms, and the organisation had inspected 354. The reason for this was the introduction of new targets for assistant inspectors and the addition of five inspectors in the compliance department.

Mr Chauke said that under programme 3, there had been a target of having 35 public awareness programmes on the role and functions of PSIRA, but the resources in the fourth quarter had been redirected because the annual programme had already been achieved. The target for the roll-out of new registration certificates for active security officers had been overachieved by 142% a communiqué had been issued to enforce compliance in relation to the renewal of certificates. The target for the training of security service providers currently registered with PSIRA accredited for National Qualification Framework (NQF) qualifications was not achieved because of the reluctance by training service providers to be NQF accredited by the currently non-binding legislation.

Ms Sebogodi summarised the quarter 4 financial performance by indicating that actual revenue had been 8% above budget, which equated to a variance of R17.8 million. However, expenditure had been more than the revenue, hence the deficit of R4 million. The biggest revenue source (annual fees) had a negative variance of R1.7 million. The budget had been based on the number of security officers employed, but it had been discovered that some of the security officers were employed by more than two security businesses. The management was confident that the entity would achieve an unqualified audit opinion. The entity was also in the process of addressing its financial sustainability by reviewing its current funding model.      


The Chairperson asked about the financial sustainability of PSIRA, as this looked like a major concern that should be addressed. Who was responsible for looking after the financial expenditure in its unit? Who was responsible for doing debt collection? Was it writing off some of the private security companies that were unable to make their payments? Regarding the issue of spate of cash-in-transit heists around the country, there had also been a similar peak in about 2007, but there had been collaboration between PSIRA and South African Police Service (SAPS) to deal with the problem. It looked as if there had not been such collaboration in the past two years. What had happened?

Ms M Molebatsi (ANC) wanted to know why the PSIRA Act was not in operation. It had previously been  indicated that there was an unhealthy relationship between PSIRA and the Safety and Security Sector Education and Training Authority (SASSETA). What was the progress in this regard? There were reported cases of funds that had been paid to PSIRA but were untraced. What was the current situation now?

Ms M Mmola (ANC) asked if there was any specific reason why there had been a 3% increase in staff costs. What plans were in place to augment the revenue? What firearms were being used by security guards involved in the cash-in-transit heists? Had any progress been made with the PSIRA Amendment Bill? Had there been any consultation with the President or the Minister of Police on the Bill?

Mr Z Mbhele (DA) said that the overall financial picture of the organisation was scary, but there was also an understanding that this was linked to historical debt. It would be important to ascertain whether the debt repayment was sustainable. It had been stated that the staff cost variation was currently sitting at 58%. What was the ideal percentage that the entity was aiming for? What was the ideal inspection/ security ratio it was aiming for as an organisation?

Ms D Kohler Barnard (DA) questioned the protocol that was being followed by private investigators (PIs), as there were reported cases of PIs who would undertake a number of investigations and then just disappear. What was the exact role of assistant inspectors? It was clear that the training that was provided to cash-in-transit security guards was not adequate, considering how they were being attacked by criminals. Was there any specific course that these cash-in-transit security guards should undertake? How many security guards had been killed during the cash-in-transit heists? The videos circulating around these cash-in-transit heists showed that the criminals were trained in some form of army, and this was scary considering that it often left security guards traumatised.

Mr P Mhlongo (EFF) asked if it was possible to get the actual figures of non-compliance by security companies instead of being provided with percentages. The National Commissioner had indicated yesterday that there were security guards who were involved in these cash-in-transit heists in around the country. There were also some security companies employing foreigners, despite this being in contravention of the PSIRA Act. Was it possible to get the name of these companies that were in contravention of the PSIRA Act? During the visit to KwaZulu-Natal (KZN), people in Glebelands were complaining that a current member of Secureco Metsu was involved in the assassination of Glebelands people. The main concern was that this was not a former member of Secureco Metsu, but a current active member of the company. What steps were being taken against this individual and the company?

Mr Mhlongo said it had been mentioned that there had been reluctance by service providers to provide training to security guards that would be in compliance with the NQF. Was any effort taken to scrutinise this reluctance by service providers? This reluctance could emanate from the fact that service providers wanted to be provided with cheap labour, where people could be kept in one place without having to move to look for greener pastures. It was really absurd to hear that the increase in cash deposits could be linked to a decline in revenue generation. How could this be possible? There were many guards complaining about the long distances that they had to travel for the renewal of their certificates, and there were also reported cases of stampedes in some cases, and this was because of lack of PSIRA offices throughout the country. What was going to be done to try and address this issue from now on? PSIRA could perhaps address this by providing temporary buildings, where people could register during the peak season for the renewal of certificates. He wanted to make it clear that he had been to the PSIRA offices in Cape Town, where people had said they had been standing in these queues from 9 a.m. to 4 p.m. There should be a solution to prevent this situation where people had to stand in queues for extremely long hours. 

Mr J Maake (ANC) commented that there had been reference to multiple employments by security guards. What did this mean in terms of registration?

PSIRA’s response

Mr Chauke said that the industry had been growing, meaning that there would be a number of new security officers that were being registered, and a growth in terms of disclosure. The central issue was about how many security guards were disclosed by security companies. There was a total of more than 2.1 million security officers in the country, and only 500 officers had been disclosed as being actively involved in the security industry. There was a category of security companies -- large, medium and small companies. Smaller companies were those that employed the most security guards. The pressure for the payments was usually felt most by the smaller companies, and this was where one found a problem with debt collection. There had been poor debt collection precisely because PSIRA tried to collect a lot of money from smaller companies that were unable to pay it. This model was not sustainable in the long term, as it brought the organisation to where it was right now. PSIRA was writing off debt that was over three years and uncollectable legally, but it still issued summonses to those companies to make payment. PSIRA had a debt of about R58 million, and R32 million of that debt was uncollectible. It always tried to use other companies to collect on its behalf. PSIRA was also making use of its internal staff to collect other outstanding debt, and also blacklisted other people who were actively involved in the industry. There was a review of these measures to ascertain whether they were effective in improving debt collection.

The Chairperson wanted to know if there were any internal mechanisms in place to monitor the cash flow.

Mr Chauke said that the organisation was able to determine the collection rate towards the end of the third quarter and whether it was spending more than it was collecting. There was a budget committee in place, and this was where it reviewed its expenditure and possibly implement cost-cutting measures. It was considering reducing expenditure on travelling and accommodation, and the entire Council had taken a decision that everyone would start flying in economy class, and was monitoring the travelling to stakeholders, including Parliament. PSIRA not only monitored these expenditure figures, but also took decisions to reduce them. The increase in number of registrations usually led to an increase in the amount of bank fees.

There had been a working relationship with the South African Banking Risk Information Centre (SABRIC) and other stakeholders, but there had been lack of inclusivity when dealing with cases of cash-in-transit heists. PSIRA had conducted research and it had become clear that the relationship between SABRIC and PSIRA was not as strong in the past years in dealing with cases of cash-in-transit heists. There had been problems within PSIRA in 2010, which was before the current management came, and these problems ranged from the mismanagement of funds to other challenges. The new management had looked at the Private Security Industry Levies Act, to see if there were ways to deploy it. What was lacking at the time was policy direction on how to implement this Act. It was difficult to implement the Act at the time as the focus was on restructuring the organisation. PSIRA had gone out to do benchmarking on how to implement the Act. There was now enough literature around to implement it.

Ms KohlerBarnard wanted to know when PSIRA would be implementing the Private Security Industry Levies Act, as this was something that should have been implemented a long time ago. What was the exact deadline for the implementation of the Act? Was PSIRA now beginning to implement it?

Mr Chauke replied that PSIRA would be publishing a consultation document with the implementation of the Act. The plan was to give industries about a year, and therefore the Bill should be implemented by 1 April 2019. It was also planning to ask the President to sign the Bill into operation from September this year.  

The relationship with SASSETA was slowly but surely improving, but there was still a long way to go in terms of providing clarity on the role of both PSIRA and SASSETA. There was a new board that had been put in place at SASSETA, and this could also improve the relationship even further.

Mr Mhlongo questioned whether there was an equity committee in existence within PSIRA to ensure that there was empowerment of previously disadvantaged individuals. Did it have these structures in place? It was now glaringly obvious that there were huge imbalances in the private security sector.

Mr Chauke responded that there were governance committees within PSIRA, with a specific committee dealing with stakeholders and the core business of PSIRA. It was planning on introducing sector committees which would address issues of training.

PSIRA had done very well in dealing with the problem of untraced funds, and it was no longer a problem because of the relationship that it had with the banks. The problem was not completely gone, but these untraced funds needed to be materially within a particular threshold that was acceptable, according to the Auditor-General (AG).

Increasing staff costs was a difficult issue, as they increased because of increased benefits and the growth in staff. PSIRA was a service delivery organisation and therefore there was a need to increase the number of inspectors, and this would increase staff costs.

PSIRA would need to deal with long queues because of registration, and this included the introduction of online registration and decentralisation of some of the processes for the registration to be done by other service providers. It was planning to accredit service providers throughout the country that would be able to do all the fingerprinting, verification and validation of identity documents (IDs) so as to drastically reduce the long queues. This would also save funds, as it would mean that PSIRA would not have to sit with open offices throughout the country, which usually increased the administration costs.

The Chairperson asked if there was a concerted effort to look into the use of technology to make life easy for the organization, and also to address the issue of long queues. There were now even banks that allowed people to open an account by simply taking a ‘selfie.’ The organisation should not be behind in terms of technology, but ahead.

Mr Chauke responded that there was an app being put out for registration purposes, and this had been one of the ways to introduce technology within PSIRA. The app would allow the security officers to book before coming to its offices, and this was a way to manage and control the volume of people coming to the offices. There was a challenge where security guards constantly changed their cellphone numbers, which means PSIRA was unable to reach them when it sent messages to them to come and collect their certificates.

The security guards in cash-in-transit were using handguns, semi-automatic rifles, stun grenades, teargas and many other forms of security equipment. The guards were not allowed to use fully-automatic rifles and many other types of rifles that were used by the army.

The President and the Minister had looked into the comments of the people who were lobbying against the PSIRA Amendment Act.

Ms Mmola questioned if this was making reference to the former or the current President.

Mr Chauke replied that this was making reference to the former President, but there must have been some correspondence with the current President.

There had been 960 criminal cases opened against security service providers for illegal practices and other transgressions, and 96% of the cases had been finalised.

Mr Mhlongo suggested that perhaps the Committee should get the name of these security companies so that it could look at the repeat offenders and possibly consider ways to completely deregister them.

Mr Chauke responded that names of these companies could be forwarded to the Committee.

The Committee could be assured that PSIRA was able to meet its obligations. One inspector was looking at 200 companies, while the ideal ratio was one inspector for 122 companies. The assistant inspectors were also doing inspections of companies, and this was a way to target a bigger number of inspections.

The Private Investigators were supposed to be registered by PSIRA, and there was no PI who could just willfully conduct investigations without being mandated by anyone to conduct that investigation.

Ms Molebatsi asked if Mr Paul O’Sullivan was a registered private investigator.

Mr Manabela said that there was a company registered under the name of Mr O’Sullivan, but Mr O’Sullivan was not the registered owner. Complaints could be lodged against unregistered private investigators. The fines that were being imposed on private security companies had increased from R10 000 to R1 million, and these fines were for any contravention to the PSIRA Act.

Ms Kohler Barnard wanted to know about the exact procedure to be followed when someone wanted to complain about being illegally investigated.

Mr Chauke responded that there were various ways in which people could lay complaints to PSIRA. They could phone its offices or send an email. There was also an anonymous hotline that PSIRA and KPMG administered. The telephone numbers were all available on its website.

Ms Mmola asked for clarity if the person who was registered under Mr O’Sullivan’s name was even a South African.

Mr Chauke replied that the company that Mr O’Sullivan was working for was registered under PSIRA. Mr O’Sullivan was not one of the directors that was registered. The person registered under the company was a female, and she was a South African.

Ms L Mabija (ANC) said that she was not convinced by the explanation provided on the issue of Mr O’Sullivan. The Committee should perhaps be provided with detailed information based on an investigation into the issue of Mr O’Sullivan, as the Committee was worried about his relationship with the Independent Police Investigative Directorate (IPID). Did PSIRA have a mandate to investigate Mr O’Sullivan?

Mr Manabela responded that no specific complain had been directed to PSIRA to investigate Mr O’Sullivan. SAPS in the past had been looking at the issue of whether Mr O’Sullivan was registered or not. PSIRA had the responsibility to look into whether a person was registered as a Private Investigator. PSIRA could investigate the matter immediately a complaint was forwarded by the Committee, or anyone else.

Ms Mabija said that the Committee was lodging that complaint, and this would be done in writing.

Mr Chauke said that this would be noted and then investigated.   

The Chairperson questioned whether there was any compliance in terms of the payment of the fines.

Mr Chauke responded that one was likely to see an improvement in the payment of these fines.

Regarding the training provided to cash-in-transit security guards, they first needed to be registered as security officers. They then had to complete the normal security training to be considered as security officers, and then there was specific training called cash-in-transit training that they needed to undertake. The training would entail self-defence tools and bomb threats. There was also a focus on the protection of information, fire prevention, and risk and protection and legal aspects. There were currently almost 17 000 security guards trained in cash-in-transit. There were no exact figures as to the number of guards that had been killed during cash-in-transit heists precisely because there was no obligation from security service providers to provide those figures. The amendment of the Act would provide an obligation to provide those figures. There could be a request to get those figures from security service providers, but there would be no obligation to get those figures as they would think it would be a cost to them.

Mr Chauke said that all the incidents that were in the public domain which involved security companies, like political shootings and shooting at taxi ranks, had been investigated by PSIRA. It needed to establish all the facts before proceeding to suspend a service provider, as it could not just suspend a service provider without an investigation. PSIRA was near to completing its investigation into the shootings in KwaZulu-Natal (KZN), and action would be taken. PSIRA was dealing adequately with these matters. He admitted that it was the first time that he heard about the issue of the Secureco Metsu security company, but this would be investigated.

It had to be clarified that there was reluctance from security service providers who were in training for NQF level training. The complaint from members was that NQF level training was intensive and very expensive, and people who were accredited to train did not make a lot of money when they were accredited. PSIRA had been constantly in contact with the stakeholders in the industry, and the industry had suggested lifting the moratorium on the accreditation of new training service providers. This would be aimed at improving the number of people to be trained at NQF level.

Ms Kohler Barnard wanted to know whether there was a moratorium on registering the companies that trained security officers. When had this moratorium been implemented? Why had it been implemented?

Mr Chauke said that there was indeed a moratorium on the registering of companies that trained security officers. The moratorium was to stop accrediting new training providers, but PSIRA would train with the old Grade E to A courses, and then accredit the new providers based on this professional training. The industry realised that it was not making as much money, because people were not registering for this training. The moratorium was to return to the old system.

There were lots of duplications of security officers, and the system could not pick them all up. PSIRA was addressing this issue.

Mr Nhlanhla Ngubane, Deputy Chairperson: PSIRA, said that section 4 of PSIRA Act dealt with the issue of training security service providers to ensure a high quality of training was being provided. It was the mandate of PSIRA to provide high quality training. There was always confusion from service providers on the role of PSIRA and SASSETA, and this was something that would need to be clarified.

Mr Mhlongo said there had been a newspaper report of a solider from Israel who was training South African farmers in self-defence, while the South African army was also very professional in nature. The important question was whether this training was provided by PSIRA so that one did not just get people doing as they pleased. The relationship between South Africa and Israel at the moment was not very good, because of their different political positions. The security of South Africa’s formers was a collective responsibility, whether they were white or black. Any training that focused on self-defence was based on ideology, and therefore it needed to be controlled or regulated.

Mr Mbhele said that there was a problem with the shrinking of SAPS because of the reduction in the post establishment. The Crime Intelligence (CI) unit, on the other hand, had been captured for about six years and was now on the path of recovery, but this would take a long time because the capacity and expertise which needed to be rebuilt was very fragile at the moment. The capacity to tackle organised and violent crime was just not there. The CI at the moment was in an absolute shambles. It seemed the private security industry in various manifestations was going to remain much needed, and was likely to be a proliferating feature on the landscape -- mostly for people who could afford it.

It would be important to know if there was any strategic outlook from PSIRA about becoming the main security role player in the country. It was clear that SAPS was failing to provide security for the Passenger Railway Agency of South Africa (PRASA) infrastructure, with the central line in Cape Town closed for weeks because of disruption of the signal.  There were also cases of clinics closing down in Hanover Park because of gang violence, and the area had just become messy and inoperable. The key question in all of this was whether PSIRA had any plans to become a cornerstone of security in the country. The last thing one needed was a scenario where corners of this country get taken over by vigilante groups who were operated by warlords because SAPS capacity was literally insufficient, and they could run their systems with full impunity, and the rule of law existed on paper only.

The Chairperson wanted to know if there was a move towards getting involved in sporting events. What was the progress in regard to the issue of uniforms? The Committee encouraged PSIRA to interact more closely with the DPCI and SABRIC.

Ms Molebatsi expressed concern about the markings on private security vehicles.

Mr Chauke responded that indeed there had been a look at PSIRA about providing oversight over the country’s private security as a whole. It was certainly taking its role very seriously and was aware that security officers were needed to protect the safety and integrity of the citizens. PSIRA was looking at adequately capacitating itself in future to be able to carry out additional mandates. It had law enforcement powers to arrest and conduct searches, but it was always a difficult to expand this because of capacity. There was a need to capacitate the regulator as an enforcement body.

PSIRA was looking into the misuse of firearms. It could do better with better capacity and more publicity.

There was greater willingness from the sporting side to approach PSIRA, but it also did not want to find itself at the centre of decision making, as it was responsible for providing oversight.

There were regulations regarding uniforms and insignia, but they were not adequate. The amendment Act was planning to strengthen the area of uniforms and insignia. There other challenge was that PSIRA was not getting complaints from people about the uniforms in order to address them.

PSIRA had a relationship with the DPCI, and he had already met with the former acting head of the DPCI, but yet to meet with the newly appointed head. PSIRA was looking at meeting with the Public Protector, because there was a belief that there were areas that the Public Protector needed to look into.

The marking of the vehicles was a matter that would be addressed by the Amendment Act. There was also an abuse of lights by security companies and the current legislation did not allow private security companies to have the stropping lights -- it was only the police who should have those lights.

Ms Molebatsi wanted to know more about the death or injury of security officers in the line of duty.

Ms Mabija emphasised that the importance of uniforms in order for security officers to be identifiable to the general public.

Mr Chauke responded that all security training provided in the country needed to be registered, and PSIRA was investigating the specific instance related to the solider from Israel who was training South African farmers in self-defence. It was unclear at the moment whether the soldier was registered by PSIRA, but this would be investigated.

Mr Mbhele questioned if martial arts training was also regulated by PSIRA.

Mr Chauke replied that martial arts training was not under PSIRA, as it was regulating close protection training.

Mr Ngubane said that there had also been a video clip from Sky News that had referred to the training of South African farmers. The clip had not portrayed the country in a very good light. PSIRA was looking into this issue, and politicians also needed to look into it as it was in PSIRA’s domain.

The meeting was adjourned.       

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