The Department of Agriculture, Forestry and Fisheries admitted it has misused R60m for what it was not intended for.
The R60m in question was money given to the Department from National Treasury for the monitoring and evaluation of Comprehensible Agricultural Support Programme projects. The Department revealed, recently, to the Portfolio Committee on Agriculture, Forestry and Fisheries that when the money went into the account, it caused a lot of problems within the Department because there was no clear direction on how to spend it and who should be the custodian of it. It was then decided to direct it to other projects because it was not ring-fenced.
The Department further appealed to the Committee for assistance to canvass for additional funding because it is forecasting a shortfall of R68m on compensation of employees. When the Department made its projections, they used the budget given to them by National Treasury in terms of compensation of employees’ ceiling which is R2.182 billion. By the end of April 2018, it had already spent R168 million of the budget and assumed the same number of officials would still be with the Department until the end of the year. This projection came to R1.986 million. They thought there would be a surplus of R212 million in terms of salary payments. It reasoned when it made the projections and analyses on issues of overtime, service bonuses, and foreign offices, there was no agreement yet between the state and unions. Leave gratuities and salary notches were also not taken into consideration.
The Department achieved 79% of the set targets and that in terms of the sector Medium Term Strategic Framework progress there has been a reduction in the rural unemployment rate and in the number of hectares transferred land which is under-utilised to previously disadvantaged individuals. An increase is registered in the percentage ownership of productive land by previously disadvantaged individuals, and there is reduction in the percentage of households vulnerable to hunger. Improvements have been noted on natural resources and food security.
The Fisheries division of the Department also informed the Committee about a court judgement from the United States in which South Africa was supposed to claim millions of dollars after Mr Arnold Bengis was ordered to pay $29m to SA. The prosecution was done by the United States government. The district court of New York gave an order in favour of SA because she was the victim of massive looting by Bengis who was stealing fish from SA and selling it in the United States. During November 2017, SA managed to repatriate the only remaining money to the tune of $1.25m which the United States was about to re-allocate to its own institutions. $5m was already given to National Ocean and Atmospheric Administration. The money was then transferred to National Treasury which then transferred it to the Department. The state attorneys, it was reported, had been handling the case since 2000 but with no progress. As a result, the Department had to make use of private attorneys to ensure the case sees the light of day. An amount of R17.763 million was recouped.
The Agricultural Research Council took the Committee through its progress on the implementation plan of audit comes of 2016/17. It indicated that the Audit Improvement Plan was devised in consultation with the Council’s Internal Audit and the Auditor General of South Africa. The Audit Improvement Plan was approved by the Council’s Audit and Risk Committee and Agricultural Research Council’s Council in September 2017. Due to the nature and composition of the Audit Improvement Plan the audit scope of Internal Audit was reviewed to ensure alignment to Audit Improvement Plan focus areas. The Internal Audit focus now incorporates testing of control adequacy and effectiveness in combination with a substantive testing approach. The entity assured the Committee huge strides have been made on the Audit Improvement Plan, with respect to the completion of treatment action areas, despite constraints and challenges. The Chief Financial Officer is leading a team to work on a plan of action to deal with people, process and technology issues on completing the Audit Improvement Plan; cleaning up problematic account balances; and improving revenue recognition and collection processes.
Members remarked that the issues the audit chairperson raised were very minor compared to the basic matters raised by the Office of the Auditor General, especially on consequence management and supply chain; wanted to know if the shortfall on compensation of employees was the result of things done incorrectly like irregular salary increases because it is not the duty of the Committee to address those things; wanted to understand why there are capacity problems on policy planning and monitoring and evaluation when R60m was received from Treasury to do the work; asked for clarity on Public Works programmes; and enquired if the reported R7.5 million has been deposited into the account of the Department and what it was for.
Members wanted to understand from Fisheries what happened to the decision taken by the Department that the contract of Amagagasi Utshintsho would be terminated; asked if the appeals in the Western Cape have been finalised; wanted to know if there is cooperation between the Department of Agriculture, Forestry and Fisheries and the Department of Small Business Development seeing that the presentation constantly mentioned cooperatives; wanted to know what measures are in place to stop the scourge of thieving by syndicates who encroach on marine species because government seems to be struggling in fighting the battle.
The Committee agreed to nominate Ms Rethabile Nkosi and Mr Wandile Sihlobo to be recommended to the Minister of Finance for appointment to the Board of the Land Bank.
Mr Joe Kgobokoe, DDG for Policy, Planning and Monitoring & Evaluation: DAFF, informed the Committee that in terms of the sector Medium Term Strategic Framework (MTSF) progress there has been a reduction in the rural unemployment rate and in the number of hectares transferred land which is under-utilised to previously disadvantaged individuals. An increase is registered in the percentage ownership of productive land by previously disadvantaged individuals, and there is reduction in the percentage of households vulnerable to hunger. Improvements have been noted on natural resources and food security.
Programme 1: Administration
The DAFF ICT Disaster Recovery Plan (DRP) document has been finalised. The reviewed ICT DRP was tabled at the EXCO meeting of 13 November 2017. EXCO has recommended the DRP for approval by the Acting DG. The Approved quarterly report was submitted to the Public Service Sector Education and Training Authority (PSETA) on 20 December 2017. DAFF coordinated and facilitated the CEO Forum held in Saint George Hotel, Gauteng Province on the 1 December 2017. The Department participated in the stakeholder engagement session held at the East London International Convention Centre (ICC) on 5 December 2017 which was organised by the Eastern Cape Rural Development Agency. Media plans were developed and implemented for the World Food Day, Food Security month, National Marine Week and International Fisheries Day.
The Draft Integrated Development Finance Policy was not submitted to MINMEC for approval and recommendations to the Clusters (Social and economic clusters). A decision was taken by the Executive Committee to incorporate Draft Integrated Development Finance Policy as a chapter in the policy on Comprehensive Producer Development Support.
A total of 74% first bi-annual assessment for employees on salary levels 1-12 were finalised and submitted. A total of 65% Senior Management Staff (SMS) members’ mid-term review were finalised and submitted. There are employees who are ineligible for assessment due to temporary incapacity leave, maternity leave and suspension.
Programme 2: Agricultural Production, Health and Food Safety
The monitoring report on seed crops and seed potato schemes has been compiled. Regarding data analyses conducted on 2 animal improvement schemes, no verification of documents has been completed. The verification of supporting documents on World Poultry Foundation (WPF) training and advisory workshops were not completed. The management of the Foot and Mouth Disease (FMD) surveillance and analysis of collected information has been done. However, non-compliance of 64% to the sampling criteria was noted and was not done due to budget constraints.
Programme 3: Food Security and Agrarian Reform
The draft quarterly review report on National Food and Nutritional Security interventions has been compiled. Validation process was on-going to confirm the reported numbers. On recruitment and selection of 2018/19 graduates’ intake, interviews in 103 stations (Directorates within DAFF & Industries) that would be hosting 255 interns for 2018/19 were concluded on 22 December 2017. The Provincial Extension Coordinating Forums for Gauteng and Free State took place on14 September and 23 November 2017, respectively.
Programme 4: Trade Promotion and market Access
37 cooperatives were supported on FARMTOGETHER training: 12 in Eastern Cape, 6 North West, 6 in Limpopo, 8 in the Western Cape, and 5 in Mpumalanga. Draft AgriBEE Enforcement Regulations document was presented to EXCO on the 27 November 2017. However, inputs from the public were not done. EXCO recommended that all affected stakeholders must be taken through the document in the form of a workshop before it could be approved. The draft report on the market opportunity for the meat sector has been compiled.
Programme 5: Forestry and Natural Resources Management
247.66 hectares were planted in the Eastern Cape (198.65), Kwazulu-Natal (41.17) and Limpopo regions (7.48) in temporary unplanted areas (TUPs). A deviation of - 602.34 was due to expenditure carried over from 2016/17 financial year which reduced the 2017/18 budget and negatively affected the attainment of the 2017/18 targets. 100.33 hectares of state indigenous forests have been rehabilitated.
The Department has received letters of consent from the La Motte Empowerment Trust and Kluitjieskraal Community Empowerment Trust adopting their existing trust for re-commissioning. The Kluitjieskraal community has amended its constitution to make provision for the re-commissioning. La Motte communities would not adopt a new constitution because they already have the existing constitution which was adopted when their trusts were formed. Both communities would use their existing constitution for re-commissioning. The Lebanon Community would not be able to proceed with its existing entity due to it not being suitable for re-commissioning purposes.
The plan and supporting documents were submitted to MANCO for further deliberations and recommendation to EXCO regarding the Climate Change and Adaptation and Mitigation Plan for agriculture, forestry and fisheries. The document was referred to the Departmental Executive Committee for approval.
Programme 6: Fisheries
The annual target for Operation Phakisa project support has been met. No additional projects have been supported during this quarter. A progress report on the development of production technology for culturing the sea urchin and the development of replicable method for the production of the scallop was developed and signed off. The Total Allowable Catches/Total Allowable Efforts (TAC/TAE) recommendations for the allocated fishing sectors have been developed. The appeals have been finalised in the Fish Processing Establishment and Net Fish fishing sectors. Appeals in the Fish Processing Establishment and Net Fish fishing sectors were finalised before the 2017/18 financial year. The setting up of the co-management structures did not occur because it is dependent on the allocation of small-scale fishing rights which have not occurred.
Mr Kgobokoe also briefed the Committee on the current status of HPAI H5N8 outbreaks in SA. The total number of outbreaks detected and reported to date (15 February 2018):
- 140 locations tested positive for HPAI H5N8
- 8 outbreaks in backyard chickens
- 30 outbreaks on commercial chicken farms
- 20 outbreaks in birds kept as a hobby and Zoos
- 44 outbreaks on commercial ostrich farms
- 38 outbreaks in wild birds
At the moment South Africa does not allow for the vaccination against HPAI. The decision on vaccination has been done through broad consultation and by taking all the available scientific information into account. Vaccination against HPAI does not prevent infection. It merely reduces the clinical signs of the disease and shedding of the virus. Due to the high possibility that vaccination will mask infection with HPAI, most trade partners would not accept poultry, poultry meat or products from a country that vaccinates against HPAI. Consultation between DAFF and Industry continues to formulate a position on vaccination.
Concerning the Preservation and Development of Agricultural Land Bill (PDALB), it was reported the process has been slow but a solution has been found. An external service provider has been appointed to fast-track the Bill and is assisted by a Technical Task team.
(Tables and graphs were shown to illustrate finances and budget expenditure)
Ms Siphokazi Ndudane, DDG for Fisheries Management: DAFF, stated the Department has conducted an expression of interest process and identified 316 communities to be part of the registration and verification process which was conducted between March and August 2016. Applicants were verified against 5 criteria prescribed in the Regulations. She provided the Committee with progress in Northern Cape, KwaZulu-Natal, Eastern Cape, and Western Cape.
The Northern Cape is reported to be far ahead compared to other provinces. After registration and verification in this province, the announcement of provisional lists of successful fishers was completed in August 2016. Those provisionally unsuccessful were given an opportunity to appeal and appeals closed in September 2016. DAFF assessed and finalised appeals in June 2017. The Minister signed off the final list of successful fishers during November 2017.The final list of small-scale fishers was announced in communities in November 2017 with a total of 103 recognised as small-scale fishers. Training of fishers and registration of cooperatives was completed in February 2018. One cooperative, Longtime Hondeklipbaai Fishing Primary Cooperative Ltd, was successfully registered by the Companies and Intellectual Property Commission (CIPC) on 28 May 2018 and the Department is waiting for lodgement and receipting of the cooperative registration documents for the Port Nolloth successful community.
After registration and verification, an announcement of provisional lists of successful fishers was completed in July 2017. Those applicants that were provisionally unsuccessful were given an opportunity to submit an appeal. Appeals closed in August 2017. DAFF assessed and finalised appeals during November 2017. The Minister signed off the final list in January 2018. The final list of successful fishers was announced in communities during February 2018 with a total of 2,184 recognised as small-scale fishers. Training of fishers and registration of cooperatives was completed in April 2018. The Department is waiting for lodgement and receipting of cooperative registration documents.
Work is currently in progress and would be finished towards the end of June 2018. After registration and verification in the EC, an announcement of provisional lists of successful fishers was completed during November 2016. Those applicants that were provisionally unsuccessful were given an opportunity to appeal. Appeals closed in April 2017. DAFF assessed and finalised appeals during November 2017. The Minister then signed off the final list of successful fishers in January 2018. The final list was announced in communities in February 2018 with a total of 5,335 recognised as small-scale fishers. Training of fishers and registration of cooperatives commenced on 21 May 2018 and would be concluded end of June 2018.
This province is behind when compared with other provinces. This is the most challenging province especially when it comes to the implementation of small-scale fisheries in terms verification and identifications. After registration and verification in the Western Cape, the announcement of provisional lists of successful fishers was completed in October 2016. Those provisionally unsuccessful were given an opportunity to appeal and appeals closed in December 2016. DAFF assessed and finalised appeals in April 2018. DAFF received tip-off information from 15 communities and those were investigated and finalised in May 2018. DAFF is still to announce final list of small-scale fishers in the Western Cape.
Training and registration of cooperatives would follow thereafter as per other provinces.
Ms Ndudane said during this financial year DAFF is planning to finalise the Small-Scale Fishing fee structure by July 2018 and to conduct rights allocation process for Small-scale fisheries (SSF) cooperatives between June 2018 and September 2018. It also plans to finalise rights allocation appeals by December 2018 and to conduct a cooperative needs assessment analysis in order to facilitate support programmes to small-scale fishing cooperatives.
Ms Ndudane also briefed the Committee on progress on the harvesting of abalone in the Eastern Cape. DAFF held two meetings with Eastern Cape Divers and Fishing Forum (ECDFF) on 6 April 2018 and 30 May 2018 at the DAFF’s offices in Port Elizabeth. The outcomes of the two meetings clarified that the 13 tons of wild abalone, Haliotis midae, is not exclusively for ECDFF, but for the entire province of the Eastern Cape. It further explained that the provision for harvesting of wild marine fish resources may not be done outside the Fishing Rights Allocation Process (FRAP) and/or Small-Scale Fishing Rights Allocation as doing so would be contravening the Marine Living Resources Act of 1998. It was concluded that the 13 tons would be allocated through the small cooperatives that also include women.
Mr Hilton Vergotine, General Manager for Risk and Planning: ARC, indicated that the Audit Improvement Plan (AIP) was devised in consultation with ARC Internal Audit and the Office of the Auditor General of South Africa (AGSA). The AIP was approved by ARC Audit & Risk Committee and ARC Council in September 2017. Due to the nature and composition of AIP, the audit scope of Internal Audit was reviewed to ensure alignment to AIP focus areas. The Internal Audit focus now incorporates testing of control adequacy and effectiveness in combination with a substantive testing approach.
The AIP comprises a total of 332 treatment actions directly aligned to the total of 152 findings raised by the AGSA. The treatment actions were developed in order to deal with and close out the root causes of all the findings raised. Of the 332 treatment actions, 162 actions are directly linked to the areas of qualification, i.e. property plant and equipment, receivables from exchange transactions and payables from exchange transactions, as was identified by the AGSA. With respect to the qualification areas, the nature of the treatment actions (162) was to ensure, amongst others, the correction of all prior financial year errors, i.e. 14/15, 15/16 & 16/17, the undertaking of a 100% asset verification across all 11 campuses of ARC and the introduction of more stringent measures pertaining to the management of our debtors.
Progress updates, on the status of treatment actions, were done on a weekly basis commencing on 5 October 2017 until 12 December 2017. During this period, the ARC Internal Audit independently reviewed and verified all weekly status updates. Between 30 January and 31 March 2018, an additional two reviews were undertaken by Internal Audit. Status update reports were compiled and communicated to the ARC President & CEO, Acting Chief Financial Officer, Council Audit & Risk Committee, ARC Council and AGSA.
On constraints and challenges, he stated delays in the appointment of a suitable service provider that was identified as being key in enhancing the functionality requirements of the current ERP (AX) system; and AX system technical errors and system bugs which presented limitations in the finalisation and processing of multi prior and current year adjustments and the clearing of invalid commitments (more particularly on WIP).
The resignations of both CFO and Group Financial Manager and one staff member who has gone on maternity leave have left a void on human resources. The ARC CO finance personnel had to continue with their normal work activities, inclusive of completing treatment actions. These voids presented challenges in the allocation of key activities required under the AIP and in the establishment of a new team that would be focusing on the WIP treatment action areas; and the temporary redeployment of staff from various campuses to work on specific treatment actions provided some relief but, in turn, caused additional work pressures at campus level.
Activities were undertaken on the majority of AIP action items, some of which were completed (although “not sufficient” evidence was provided). Some action items required a review / adjustment (e.g. matter of contracts requiring change of contract clauses) and some action items were of an ongoing nature (e.g. debt collection process, etc.). Extended engagements were held with key external government departments and agencies, namely: National Treasury; AGSA; SARS; Companies and Intellectual Property Commission; Departments of Agriculture, Forestry and Fisheries; Rural Development and Land Reform; and Environmental Affairs, etc. The reviewing, calculating and confirmation of prior year’s errors and subsequent adjustments was done, more particularly on WIP.
In his conclusion, Mr Vergotine assured the Committee huge strides have been made on the AIP, with respect to the completion of treatment action areas, despite mentioned constraints and challenges. The new ARC CFO and Chief Internal Audit Manager were appointed on 1 May 2018. The compilation, approval and submission of ARC 17/18 Annual Financial Statements to Auditor General and National Treasury as well as finalisation of the 2017/18 audit have been set as immediate priority areas. The team led by the CFO to work on a plan of action to deal with People, Process and Technology issues on complete Audit Improvement Plan; cleaning up problematic account balances; and improve revenue recognition and collection processes.
The Chairperson asked how far the Department was with the audit matrix.
Mr Ayanda Wakaba, Audit Committee Chairperson: DAFF, explained the report has been tabled before the audit committee. The process was underway to attend to the findings of the previous year from the Auditor-General (AG). There are areas where there are challenges. The allocation of resources was having an impact on monitoring and evaluation. The Department has been experiencing incidents where the money has been allocated. There are no adequate systems to follow money through to the final point of disbursement. ICT is proving to be another challenge. 14% of critical value chain processes are automated. Extra efforts are needed to help the process. R500 million is needed to be invested in the ICT so that it is in a better position than it is now.
A number of reports highlight significant risks on border control. This is exposing the country to huge risks. There is a strong link between the risks and the outbreaks. Governance issues were adding another challenge because there are two risk audit committees. One is for the Department and the second one is for Fisheries. There is no strategic alignment between the needs and deployed resources and between mandate and functions. Theft problems that are experienced in Forestry. Investments in systems and human resources are needed to put preventative measures. He admitted they are not comfortable with the status quo because some of the challenges were now becoming repetitive because of the allocation of resources.
The Chairperson remarked that the issues the audit chairperson raised were very minor compared to the basic matters raised by the AG, especially on consequence management and supply chain.
Ms A Steyn (DA) wanted to know if the shortfall on compensation of employees was the result of things done incorrectly like irregular salary increases because it is not the duty of the Committee to address those things. She further wanted an update on listeriosis, bird flu and swine flu. She was shocked by the report of the audit committee chairperson. The audit committee needs to compile a detailed written document for the Committee to follow up, especially on theft in Forestry. There is a lack of will to fix things. The conditional grants given to the provincial departments should be followed up because money has been stolen from farmers. There is nothing positive from the audit committee chairperson's report.
The Chairperson said the report on listeriosis and other things would be presented later because the Committee has an agreement with the Committee on when to report on those matters.
Mr Jacob Hlatshwayo, DAFF CFO, explained that when they did their projections, they used the budget given to them by National Treasury in terms of compensation of employees’ ceiling which is R2.182 billion. R165 million has been spent by end of April and they assumed the same number of officials would still be with the Department until the end of the year. This projection came to R1.986 million. They thought there would be a surplus of R212 million in terms of salary payments. Compensation of employees came with other factors. There is also an issue of overtime where they projected R41 million, R4.5 million for service bonuses, a focus of R14 million for leave gratuity, and R31 million focus for foreign offices. So, when the analysis was done, there was no agreement yet between the state and the unions. In the calculations, notch increases and Occupational Specific Dispensation (OSD) were not taken into account. The projected salary increases from 1 April 2018 were based on 7%, which yields R139 million. All these expenses, excluding salaries, amounted to R277 million. So, if you take R277 million from the R212 million surplus, then that is where the shortage of R68 million comes from. That is the situation around the shortfall.
Mr Sipho Ntombela, DDG for Corporate Services: DAFF, added that this problem of salaries comes from the old public service regulations of 2001 to attract and retain critical scarce skills for the Department. The provision on retention has been done away with and for attracting scarce skills, there is nothing happening.
Mr N Capa (ANC) wanted to know if the two animal improvement schemes to be analysed have been continuing or are part of the data to be used. He also pointed out the Department has not reported on the recruitment and selection of 2018/19 graduate intake; and he wanted to find out if there is anything done to correct repeat findings from the AG.
Mr Kgobokoe stated the two animal improvement schemes were on-going projects. There is a programme every year on the schemes.
Mr Wakaba reported that 44% of matters raised in audit findings have been resolved, 19% were in progress and the rest have not been resolved. There are improvements on supply chain which resulted in reduced irregular expenditure. In the next financial year proactive actions would be undertaken to reduce risk findings and internal controls would be tightened. He said there have been operation challenges in the implementation of the budget from National Treasury.
Mr Kgobokoe stated the recruitment and selection of graduates refers to the internship programme of the Department. Interns are taken for 12 months and placed in different units of the Department. They get remunerated and also gain work experience for marketability. Some get employed before they finish the internship. A detailed report on this programme would be sent to the Committee.
The Chairperson asked for clarity on the sector research agenda implemented through the Research and Technology Fund (RTF) programme. She asked why there are capacity problems on policy planning and monitoring and evaluation when R60 million was received from National Treasury for doing the work; and she asked for clarity on Public Works programmes.
Mr Kgobokoe, regarding the research agenda, elaborated that every year DAFF implements research projects on various topics. The Department has entered into an SLA with NRF to monitor this research. The NRF gets funded to monitor this research given to the universities that are conducting research.
The Chairperson asked why this work was not given to the ARC.
Mr Kgobokoe stated they have started discussions with the ARC to see how it could take over the NRF work when the SLA with NRF has expired because it was entered into 5 years ago.
Mr Hlatshwayo reported they have engaged with Department of Public Works (DPW) and halted work on the Stellenbosch quarantine station because there are no funds available and engagements with DPW were fruitless.
Mr Kgobokoe explained that when the R60 million was allocated to DAFF, it came in the name of CASP monitoring. The Department has a CASP unit responsible for the administration of funds plus Project Performance Monitoring Evaluation (PPME) that does professional monitoring. This created a problem within the Department. It was not clear which unit should be the custodian of the money. It was then decided the CASP unit and PPME should take the money to provinces to conduct a study on how to use it.
The Chairperson wanted to understand why R60 million from National Treasury meant for monitoring and oversight was used to commission a study because she did not understand the story from Mr Kgobokoe. She said it was clear that money meant for monitoring CASP projects went to do a study; and she wanted to know the kind of theft experienced by Forestry.
Mr Wakaba said forestry theft is related to timber and collusion between employees and the locals.
Mr Kgobokoe explained that none of the R60 million was used for the study. The capacity of the Department was used to deal with the matter. He requested to submit a detailed report on how the Department monitors CASP projects. When they do monitoring on the projects, they then take a closer look at the business plans of the provinces. Thereafter, they make recommendations to the HODs of the provincial departments
.Mr Hlatshwayo pointed out the Department has never used the R60 million. There was no clear direction on how it should be spent. It was directed to other projects in the Department because it was not ring-fenced. The money was not used for what it was intended for.
The Chairperson stated it was clear the Department received the money without having planned what to do with it. The absence of strategic leadership is the cause of in-fighting within the Department.
Ms Steyn stated the Committee is trying to help the Department. The biggest frustration is there is no monitoring in the Department. It does not look like the Department is monitoring because the stealing in Forestry is being said casually.
Mr P Maloyi (ANC) enquired if the audit committee had a session with the Department on the 37% of unresolved audit findings. He further asked for an update on the 14 fishery inspectors that were involved in the Bengis case and asked if there has been something done to them; and wanted to understand if the reported R7.5m has been deposited into the account of the Department and what it was for.
Mr Wakaba, regarding audit challenges, elaborated that findings from the AG and internally are in all programmes of the department. They are all related to the provision of evidence for reliable information, accruals, commitments, etc. There are actions the management of the department is monitoring on issues that have been picked up in the last years. The systems that are in use are manual and subject to human error and manipulation. Sometimes reports from DPW are received very late when the department has reported already.
Ms Ndudane reported that the case involving 14 fisheries inspectors started in 2000 when Fisheries was part of the Department of Environmental Affairs and Tourism. Half of these inspectors resigned from the Department in 2001 and others were charged in 2001. By 2003 the implicated officials had left the Department completely. Then she explained the R7.5 million relates to a contract that was irregularly awarded to Wilgaro to process and market abalone. The contract was to the tune of 90 tons of abalone. The contract was later withdrawn by the court. It has been before the courts since January 2016. As a result, the Department received R7.5 million from a company in Hong Kong that was supposedly meant to receive the abalone. Owners of the money came forth to claim it. The money could not be given back to the company because the Hawks are still investigating the matter. Then members of Wilgaro company started to spread allegations that the Minister, Ms Ndudane, Acting Chief Director for Monitoring, Compliance & Surveillance, and Ms Nazeema from Finance have relations with the underworld mafia in China and Hong Kong. The Hawks are still investigating the matter.
The Chairperson enquired if the millions of US dollars she has heard about have been deposited to the Department's account
.Ms Ndudane elaborated this story involves money Mr Arnold Bengis stole from the country. He was stealing fish from SA and selling it to the US. He was making a huge profit. The prosecution was done by the US government, not by the SA government. He was prosecuted in the US. The district court of New York gave an order in favour of SA because she was the victim of massive looting by Bengis. In 2013, the court said SA should be remunerated with $29m. The court ordered Mr Bengis to pay $29m US dollars to SA. However, the SA government never followed the court judgement. The case has been dealt with by SA state attorneys since 2000. In 2016, the Department became aware of this during an international meeting when the prosecutor of the case of Bengis was making a presentation. The Norwegian government approached SA to bring back the money to the country. Then DAFF started to make engagements with the US. It discovered that the $5m SA should have claimed was re-allocated by the US government to NOAA (National Ocean Atmospheric Administration). During November 2017, SA managed to repatriate the only remaining money to the tune of $1.25m which the US was about to re-allocate within their institutions. The money was then transferred to National Treasury which then transferred it to DAFF.
On the day it was transferred, the exchange rate amounted to R17.763 million. The Department managed to resuscitate the case by making use of private lawyers because the state attorneys have been handling it since 2000. The evidence the Department received from the US included affidavits from certain SA individuals telling the US that SA was not interested in getting back the money. It was against this background that the Department decided to pursue the case. Within six months inroads were made. DAFF petitioned the US government to sentence Bengis. He was sentenced during 2017. The court judgement was again raised from $29m to $67m at the request of the SA government. The challenge was that Bengis was pleading bankruptcy and unable to pay $29m. The judge then increased the order to $69m. He still pleaded bankruptcy. DAFF had to try to trace his assets. The judge gave DAFF the go-ahead to find assets worth $69m, confiscate them, and take the money.
DAFF then discovered that Bengis had hid $22m in a trust at the Island of Jersey in the UK. Bengis then asked his UK bank to release the money. DAFF then made a submission to the Royal Court of Jersey to freeze Bengis account so that money could form part of the $67m. However, DAFF still needed to find a balance between the $22m to the fulfilment of $67m and it has been able to do the work. The work is in progress and that is why there has been an issuance of a media statement. DAFF is activating diplomatic channels to have the bank release $22m to the AG of Jersey who has committed to keep it for SA. DAFF has also asked the US to pursue other affairs of Bengis because the Department has been able to trace his other assets to the value of $100m. The work is in progress and documents and evidence would be forwarded to the Committee.
Mr W Maphanga (ANC) wanted to understand how the ARC was planning to complete the missing area of qualification with regard to property, plant and equipment; and asked if the entity has technology and human resources to deal with issues.
Mr Vergotine stated they have undertaken to do 100% across the ARC to make adjustments and ensure there is an asset register. They have worked towards the timeline of May 2018 when they decided on January 2018. A team led by the CFO is working on a plan of action to deal with people, technology, and processes. Work is happening already.
Mr Maloyi asked when the team led by the CFO was established.
Mr Vergotine said the team started its work in May 2018. The team has finalised financial statements. It is an on-going exercise and the Committee would be updated on progress.
Mr Maphanga wanted to understand what happened to the decision taken by DAFF that the contract of Amagagasi Utshintsho would be terminated.
Ms Ndudane explained that the proposal from the Committee was to terminate the contract of Amagagasi, but the Department sought legal advice. The legal opinion stated it would be expensive to cancel the contract because they would have to be given money and the Department had to find a new service provider. The Department then entered into a deal where Amagagasi were swapped to service a certain area in the Eastern Cape while the service provider in the Eastern Cape was given the area which was serviced by Amagagasi in KZN.
Mr Capa asked if the appeals in the Western Cape have been finalised; and wanted to know if there is cooperation between DAFF and the Department of Small Business Development seeing that the presentation constantly mentioned cooperatives.
Ms Ndudane indicated the appeals process was concluded in the Western Cape during April 2018, but in May 2018 they received complaints from communities regarding verification. The process of verification is expected to be finalised end of July. The process is being fast-tracked to avoid adding a burden to the already volatile Western Cape. Regarding cooperatives, they have not held meetings with the Department of Small Business Development. It is not something inevitable, but this is homework for the Department to consider the interaction.
Ms Steyn wanted to establish how far the Department was in ensuring the theft of abalone is reduced and asked for an update on the Doringbaai abalone fishing rights. She asked if it were true there is a person who died in a recently reported clash with poachers.
Ms Ndudane said the theft of abalone is recurring. The Minister had indicated in his budget speech for a need to tighten controls. The storage of abalone would be given to a private security company which would be paid for making sure the abalone is not lost and would get backing from SAPS. She also reported the Doringbaai abalone is on the list of the Phakisa project. Fishing rights have been allocated to the community already. She further indicated no one died during the clash with poachers. When dealing with poachers, it is really a situation of life and death. She noted when they recruit fishery compliance officers, they have decided to recruit from the police; a decision was taken not to recruit civilians. They would also be making use of military veterans.
The Chairperson remarked that people in fishing communities should be empowered because they have been in the industry for a very long time even though they have not made money from the activity. She asked for an update on membership and returns on the Indian Tuna Ownership.
She wanted to know what measures are in place to stop the scourge of thieving by syndicates who encroach on marine species because the government seems to be struggling in fighting the battle. Lastly, she requested the Committee be furnished with a detailed report on an aquaculture project that was opened by the president and the Department needs to ensure the project does not die.
Ms Ndudane said once cooperatives are formed by people in these fishing communities, people would be empowered in terms of processing and transportation because these things would need to take place and they have an agreement with the dti (Department of Trade and Industry) to give the Department funding once the processes are in place.
On Indian Tuna Ownership, they are motivating for SA to have more tuna. They have entered into negotiations with other countries. This has resulted in 12 long line vessels and more income for the country. 365 000 jobs are going to be created. She is the Commissioner of this project. A full detailed report would be sent to the Committee.
Concerning aquaculture and the Petwane project, significant work has happened in that space but a couple of things went wrong. She would send a detailed report to the Committee.
She also noted there are successes on Phakisa and law enforcement. However, two difficulties exist. When Operation Phakisa was conceptualised, it was stated there would be no new money. As a result, some projects died. The MLRF is now focusing on generating income for law enforcement because the country is losing billions of Rands on illegal harvesting. There is a need to refocus strategies.
The Deputy Minister of Agriculture, Forestry and Fisheries, Mr Sfiso Buthelezi, indicated a detailed report on Wilgaro would be sent to the Committee. He said there are high level engagements with the security cluster regarding law enforcement. The Department needed to do an educational awareness drive with stakeholders to know about the loss the government is incurring.
Nomination of candidates for appointment to the Board of the Land Bank
The Committee agreed to nominate two names to be recommended to the Minister of Finance for appointment to the Board of the Land Bank. The following candidates were nominated:
Ms Rethabile Nkosi
Mr Wandile Sihlobo
Ms Steyn moved for the acceptance of the candidates.
Mr R Cebekhulu (IFP) seconded the move.
The meeting was adjourned.
- Committee Report on request to nominate candidates for appointment to Board of Land Bank
- City of Joburg presentation
- DAFF: Overview on Progress: Establishing Small-Scale Fisheries Sector & Harvesting of Wild Abalone in Eastern Cape
- Update on ARC Implementation Plan Progress on Audit Outcomes for 2016/17
- DAFF Quarter 3 Validated Organisational Performance Report for 2017/18