Department of Defence deviations and expansions: hearing

Meeting report

The Chairperson welcomed everyone and indicated that the Committee had noticed that the special dispensation on deviations, which should cater for emergencies and exceptional circumstances was actually becoming a new normal in departments. There was thus need for firm and decisive action around it. The purpose of the engagement was to provide the Department of Defense with a platform to lay the Committee’s concerns to rest; that the system was not being abused but rather being used as intended.
Mr V Smith (ANC) led the questioning using documentation received from the Department. He noted the R109 million deviation in financial year 2015/16 identified by the Auditor-General. He further noted that the officials responsible were said to have received letters of reprimand. Who were the officials and where were they now?

Mr Siphiwe Sokhela, CFO, Department of Defense, said the deviation was an asset management contract for Mpumalanga Department of Education. The officials involved were in the procurement space and still occupied their positions.

Mr Smith said the retention of people who cost the Department and the fiscus R109 million was problematic. If no action is taken against them in the next six months, Mr Sokhela and the Secretary of Defense would get arrested or have their assets stripped, following the strengthening of the powers of the Auditor-General. If the officials involved were guilty and no decisive action was taken, then top management was not playing its role.

Mr Sokhela said as part of internal investigations, a forensic audit was instituted and management was awaiting a forensic report.

Mr Smith failed to understand why the forensic audit was being conducted almost two years later. Justice delayed is justice denied. Consequences were supposed to happen immediately. He referred to the R3.7 million deviation for catering contract for Colenso Mess School of Logistical training. He noted that an investigation was said to have been finalised but the matter was with Legal Services for comments. He asked what this meant. What does Legal Services have to do with a finalised investigations?

Mr Sokhela said having the matter with Legal Services was part of a determination process by the Inspector-General of Defense on whether a board of inquiry should have to be instituted. This was in line with the nature of the Department and consistent with military judiciary channels. The delays in finalisation was due to backlogs in the system as well as delays in the appointment of military court judges.

Mr Smith said the military channels and processes were well-understood. However, as per the Public Finance Management Act (PFMA) the onus of accountability rests with the CFO as the accounting officer. Military processes were internal and the Director-General and CFO had to account regardless of such parallel processes. It was not good enough that investigations were taking more than 18 months to be finalised. It was unacceptable that almost three year down the line, there seems to be no consequence management and officials involved in such huge deviations were still within the supply-chain management space. In addition, he asked when and where the 2019 Armed Forces Week would be commemorated.

Mr Sokhela said it was slated for 21 February 2019 but the venue had not yet been decided upon. The venue would be decided after consultations with the provinces.

Lt Gen Bongani Mbuli, Chief of Logistics, Department of Defense, said teams had already gone on reconnaissance tours in Mpumalanga and the Western Cape. The Armed Forces Week was going to be hosted by the navy and the decisions about the venue would be taken by chief officers.

Mr Smith asked for a precise response on when the decision would be taken. Were the officers doing the fieldwork not given a timeframe on when to report back after their reconnaissance tours?

Lt Gen Mbuli said the fieldwork was a massive task but was hoping final decisions would be taken by September by the Military Command Council.

Mr Smith expressed concern that the delays in deciding on the venues would mean the Department would have to revert back to Treasury requesting deviations when the decisions could have been taken when there was still sufficient time. This was the crux of the problems- lack of planning and leaving things to the last minute.

Lt Gen Mbuli said these were challenges the Department was confronted with from time to time. However, the importance of accountability in relation to deviations was well-understood. He agreed that the root cause of most problems was poor planning.

Mr Smith made reference to the last Armed Forces Week commemoration where there was a R4 million deviation for acquisition of additional mobile ablution facilities as well as R2.3 million for transport. He noted a Treasury report at that time which stated that the deviations were approved but not justified. Why would Treasury approve deviations that were not justifiable? The Committee would want to get a response from Treasury at a later stage.

Lt Gen Mbuli clarified that the identified previous year deviations were not attributable to lack of planning as the logistical arrangements were done timeously. However, the number of expected attendees increased just a week before the commemoration commenced and they all had to be accommodated. The acquisitions added to that which had already been acquired. An unforeseeable change in circumstances called for the additional resources.

Mr Smith asked from which line items these deviations were taken from. There is surely no money put aside for deviations. This should be dealt with at a later stage. He referred to a request for extension of the list of suppliers for supply and delivery of various dry and wet ration commodities to the Department for a period of nine months starting from 01 February 2018 till 31 October 2018. The deviation was explained as due to absence of contract following the internal withdrawal of instruction to utilise South African Forces Institute (SAFI) as a single source for rations. The understanding was that in 2017, the Department applied for a R1 billion deviation for a 12 month period. The Department then went back to Treasury to request an additional R850 million. What was going on? Was this a case of double dipping? Were these two separate requests?

Mr Sokhela said the Department initially applied for a nine month deviation but was granted four. The period ended in February, which explained the additional request of R850 million. The R850 million was to cater for the nine month period that was initially not granted.

Mr Smith said documentation had to be clear as they could be liable to misinterpretation in the public domain.

The Chairperson said documents received by the Committee explaining the deviations were awash with broad statements. The Committee needed precise details on how funds were being utilised. The military occupies a special place in a democracy and the principle of transparency and accountability needed to be upheld at all times.

Mr Smith reiterated the question whether the officials involved in such huge deviations were still in the procurement management space. If this was the case, accounting officers within the Department would be charged for negligence. He asked whether the Department went ahead with processing the deviations without approval from Treasury.

Mr Sokhela identified obtaining challenges in the supply of wet and dry rations. He pointed out that a decision was taken in 2017 to have the decentralization of procurement in military facilities so as to empower local communities. He admitted that the transition from central to local procurement was not planned properly. Therefore, the Department was still in the process of finalizing the awarding of local procurement tenders.

Mr Smith asked where the military was sourcing its food provisions in the meantime when the ration procurement processes were being finalized.

The Chairperson asked why no single local procurement tender had been finalized in the past four months. This led to questions about whether there was a deliberate desire to delay processes for whatever reasons.

Mr Sokhela said provinces were in the process of evaluating respective local procurement tenders. Gauteng and Limpopo had already finalized their own and the rest of the provinces were expected to do so in due course. Information on the modalities was with the procurement department within the Department and the timeframes are well-defined. All provinces were expected to have finalized their local procurement processes by September 2018.

Mr Smith failed to understand how securing tenders for the supply of wet and dry ration would take so long when there was a multitude of local suppliers and small businesses who were looking for work. The Department should revamp its procurement systems as a matter of urgency.

The Chairperson queried why a decision to decentralize procurement was taken in 2017 when the Department knew it was yet to work on its systems. Why were procurement systems changed without adequate capacity to implement them?
Mr D Ross (DA) was alarmed by the irregularities. The Department was expected to live up to expectations and was clearly failing to do so. The delays in taking decisions and implementation could be seen as deliberate attempts to enable corrupt practices. It should be probed why there had been no consequences for the aforementioned deviations. The localization of procurement was a noble initiatives which would have to be properly implemented as soon as possible. He emphasized the need for stern consequences for inaction.

Ms N Khunou (ANC) said Defense was one department which should be looked up to. It seemed deviations were not being given the serious attention they deserve. She emphasized the need for consequence management within supply chain management space. As it stood, conditions of military veterans on the ground were dire.

Ms T Chiloane (ANC) added that the Department should lead by example in adhering to PFMA and Treasury procurement regulations. Also, cases of poor planning had to be addressed.

Mr E Kekana (ANC) asked whether the Department had enough capacity to deal with the challenges identified by the Committee. It was problematic that the Department of Defense, although part of security cluster, was in transgression with the law. The buck stopped with the CFO, as the accounting officer.

Mr M Booi (ANC) asked whether there was tension between the military and civilian side of the administration within the Department. He asked Mr Sokhela if the military officers were defying his orders. Accountability was supposed to run through the entire Department.

Mr Sokhela expressed commitment to improving accountability mechanisms within the Department. Consequence management was crucial and this was well-understood. He made reference to 10 military officers who were recently fired and their cases referred to the justice system for prosecutions after being found to have flouted procurement processes. The defense intelligence and military police work very closely with South African Police Service to deal with any misconduct arising. The Department does have capacity but might need strengthening owing to its complexity. There was no tension between accounting officers and the military personnel; there was only healthy tension to ensure compliance across the Department.

The Chairperson said the Committee’s expectations had been made clear. He was underwhelmed by the responses from the Department. He underscored the need for wholesale revamps in of how things were done and in terms of accountability. He hoped the Committee would have a proper engagement with the Department going forward. Consequence management had to be strengthened and lack of accountability should not be normalized.

The meeting was adjourned.