Inter-Ministerial Committee (IMC) on North West intervention, with Ministers and Deputy Ministers

Ad Hoc Committee on North West Intervention

14 June 2018
Chairperson: Mr C De Beer (ANC: Northern Cape)
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Meeting Summary

The Ad Hoc Committee met to receive its first diagnostic summary report from the Inter-Ministerial Committee on the intervention in the North West Provincial Government in terms of Section 100 of the Constitution. The meeting was attended by the Minister in the Presidency, Planning, Monitoring and Evaluation, the Ministers of Sport and Recreation, Human Settlements and Health, and the Deputy Ministers of Finance and Cooperative Governance and Traditional Affairs.

On 23 May 2018, section 100 (1a) had been invoked for the North West (NW) Departments of Finance, Economic and Enterprise Development (DFEED); Local Government and Human Settlements (DLGHS); Rural, Environment and Agricultural Development (DREAD); and Social Development and Tourism (DSDT). Section 100 (1b) had been invoked for the Department in the Office of The Premier (OTP); the Department of Community Safety and Transportation (DCST), specifically the transportation component; and the Departments of Basic Education and Sports Development (DBESD), Health (DoH), Public Works and Roads (DPWR).

The Department of Performance, Monitoring and Evaluation (DPME) presented the implementation plans for section 100 (1a) and (1b) for specific provincial departments, and also dealt with the state of governance in the NW overall in terms of the Inter-Ministerial Task Team’s (IMTT’s) findings. The IMTT had confirmed that the affected departments would issue directives and prepare for monitoring and evaluation reports which would be submitted to a chief coordinator. The central coordination function would accommodate all the heads of the 10 departments under the section 100 (a) intervention, where they would also be accounting to the IMTT. After the appointment of administrators, they would assume the responsibilities of accounting officers in those departments and would work in concurrence with National Treasury. Administrators would also submit reports to the coordinator, but would also identify apparent risks to service delivery.

The province’s problems were related to ineffective financial controls, governance and accountability, despite the existence of governance structures. Supply chain management (SCM) control systems had been weakened and entirely collapsed in certain cases, all the way down to local government. There had been a considerable increase in unauthorised and irregular expenditure, which had cumulatively grown by an annual average of R2.1 billion, from R8.6 billion in 2013/14 to R15.39 billion in 2016/17.

The Committee sought clarity on:

  • What the challenges were with the transport component of the DCST;
  • What progress had been made with the forensic investigations;
  • Whether the administrator already on the ground for the provincial DoH had ever briefed the IMTT on Mediosa, a Gupta-linked company that had impacted health services, including the outsourcing of ambulances to Buthelezi Emergency Medical Services (BEMS);
  • Whether a close out report from AgriDelight had been submitted, and if not, why there had been resistance to submitting the report by that company;
  • Why the report had been silent on detailing creditors and verification of invoices for services rendered or goods received at each of the ailing departments;
  • What the strategic plans of the affected departments had been saying all along, and how the DPME had been tracking them;
  • What the provincial engineers from DLGHS had been doing, if housing structures had been found to be structurally uninhabitable as far back as 2013;
  • What the rationale had been for the existence of Project Management Unit (PMUs), and what the extent of the capacity challenges had been that had necessitated the PMUs.

Members also asked what recommendations the IMTT had for municipalities that had been put under administration before, and would be administered again during the ongoing national intervention. In NW, there had been a trend of changing portfolios for officials when they were found to be under-performing or guilty of misconduct by the political administration -- was the IMTT reporting that there remained such a trend, seeing that it had identified a lack of capacity in the critical positions it had identified? The Committee also requested that timeframes be submitted for the expected regularisation of the situation in NW.

Meeting report

The Chairperson said that the presentation distributed to the Members on the previous day had been amended, but the amendments would be explained during the presentation. He welcomed the attendees from other National Council of Provinces (NCoP) Select Committees, observing the Ministers who were present. He referenced the memorandum of the instruction of the implementation of section 100 (1a) and (1b) of the South African Constitution for the intervention in the North West Provincial Government. The Committee’s programme was subject to change going forward, and the Committee had also been supplied with the Auditor-General of South Africa’s (AGSA’s) audit report for North West (NW).

Minister’s opening remarks

Dr Nkosazana Dlamini-Zuma, Minister in The Presidency: Planning, Monitoring and Evaluation, said that as the events in NW were known to all through broadcast and digital media, Cabinet had resolved to intervene, and President Ramaphosa had appointed an Inter-Ministerial Committee (IMC) for that purpose. Its mandate had been to evaluate the state of governance in the NW and the potential risks facing the province.

At the time of deployment, the provincial Department of Health (DoH) of the NW had been put under section 100 (1b). The IMC had established an Inter-Ministerial technical task team (IMTT), which had gone to the NW and returned with a report. The IMC had then also gone to the province and done its own due diligence on the matters on the ground. Having discussed with the executive and the premier, the IMC had realised that although the problems of the province were serious, there were bigger problems at the municipalities of NW. The IMC had then briefed Cabinet to propose that NW be put under section 100 (1), but that national departments had to further assess what further interventions would be needed.

The national departments had returned to NW assessing the extent of the challenges to see whether (1a) or (1b) had to be implemented. Thereafter, the departments had proposed which sub-section each provincial counterpart had to be put under, and the IMC had revisited the municipalities to get a better sense of the extent of the challenges and had realised serious challenges. The departmental assessments had found that not in every department was it required that national had to intervene with section 100, but areas that needed intervention were nonetheless identified.

The IMC had returned to the NW and informed the executive, mayors and municipal managers (MMs) and the provincial legislature about the intervention process. To date, there remained the appointment of administrators and coordinators for the intervention in the NW. The DoH had had an administrator on the ground already in the NW, as it had been the first to be put under administration.

The Chairperson outlined the programmatic steps that the Committee would be following in addressing the NW issues.

Dr Dlamini-Zuma clarified that the IMC had engaged not only the NW legislature and Government, but a variety of stakeholders in a number of sectors.

Director General on implementation plans

Ms Mpumi Mpofu, Director-General (DG), Department of Performance, Monitoring and Evaluation (DPME), said her presentation would discuss the implementation plans for section 100 (1a) and (1b) for specific provincial departments. It would also deal with the state of governance in the NW overall in terms of the IMTT’s findings.
 
At the meeting of 23 May 2018, section 100 (1a) had been invoked for the Departments of Finance, Economic and Enterprise Development (DFEED); Local Government and Human Settlements (DLGHS); Rural, Environment and Agricultural Development (DREAD); and Social Development and Tourism (DSDT) in the NW. Section 100 (1b) had been invoked for the Department in the Office of The Premier (OTP); and the Department of Community Safety and Transportation (DCST), specifically the transportation component. The Departments of Basic Education and Sports Development (DBESD), Health (DoH), Public Works and Roads (DPWR), had also been put under Section 100 (1b).

The DFEED had identified capacitation in terms of supply chain management (SCM) in provincial departments and entities in the NW.
 
Directives

The IMTTs findings had been that DFEED had had a clean audit but had not performed so well in its oversight of others. Issues had arisen regarding how the DFEED extended the capacitation of SCM to other departments and entities to get them performing similarly as DFEED. Strengthening of those SCM systems, redress on unauthorised, irregular, fruitless and wasteful (UIFW) expenditure by provincial departments and entities and non-compliance backlogs, infrastructure procurement and relocation of the NW Development Cooperation (NWDC) to report elsewhere instead of centrally for better accountability and rationalisation of NW public entities, had been processes the NW Government had told the IMTT it had already been undertaking.
 
Improving revenue collection and health resource allocation, and strengthening the local Municipal Finance Management Act (MFMA) unit within the DFEED was required to ensure that local government in NW received the relevant support from DFEED. A review of the MFMA structure to accommodate four directors placed at district offices and strengthening head office coordination was needed. There had to be clarification of the roles and responsibilities, with a Memorandum of Understanding (MoU), which would apply to the entire intervention at NW, covering all the affected provincial departments and their national counterparts. The primary objective was to improve the audit outcomes of municipalities in the NW.

The DHS had identified human settlements as high risk in NW, and had approved the DLGHS business plan. However, the provincial department had not met its targets and the DHS had recommended seven intervention areas for the DLGHS. The directive was the two departments formalising what had already been an ongoing intervention. This involved delivery business plans, a multi-year human settlements development plan, appointing suitably qualified and capable contractors who were National Home Builders Registration Council (NHBRC) and Construction Industry Development Board (CIDB) registered. The performance of contractors, project management and effective programme management, beneficiary management and community outreach and repositioning of DLGHS, had to become fit for purpose.

The Department of Cooperative Governance and Traditional Affairs (COGTA) had also identified and issued directives to the DLGHS, where problems at NW were worse at local municipalities. Of the 20 disclaimed audit opinions for the 22 NW municipalities 12 were dysfunctional and required urgent intervention. Those municipalities had either previously had section 139 applied to them before, or disclaimers and other serious situations. COGTA had been clear that it could salvage those municipalities and restore governance and ensure approval of a new organisational structure, deal with audit improvement plans, the appointment of senior managers in municipalities, bloated organisational structures and develop revenue enhancement plans for the DLGHS.
DREAD had had its scoping done by the Department of Agriculture, Forestry and Fisheries (DAFF), where among the interventions would be the assessment of programmes regarding implementation of projects, especially the Comprehensive Agriculture Support Programme (CASP), and the iLima Letsema programme that NW had. There was engagement on the reasons why the NW DREAD business plan for the year had not been approved, and interventions for that; auditing of CASP conditional projects; and the development of modus operandi to define a working relationship and responsibilities between the IMTT and the DREAD. The litigation process to demand the close-out report from AgriDelight remained outstanding.

The biggest finding had been AgriDelight, which had been a Project Management Unit (PMU) which had been appointed to do a lot of work at DREAD. The IMTTs findings had been that a lot of UIFW expenditure at DREAD had actually originated from the controversial contract of AgriDelight. The transfer of mechanisation assets for beneficiaries and a forensic audit into AgriDelight remained the biggest challenge for DREAD. A general finding had been that there had been a lot of PMUs which had been appointed in different departments in the NW to help, whereas they seemed to have been the cause of problems in the NW. 

The provincial DSDT at NW had participated in strike action, where it had been found that officials had been complaining about the building and occupational health matters where the Department was housed. The IMTT had had very limited work on the tourism component of DSDT, and the challenges there related to the separation of powers between administration and political leadership. Assessment of oversight, financial and contract management, and management of litigation and governance arrangements was required.

Ms Mpofu said the real work lay in section 100 (b) invoked instances. The assessment for the DOTP had been done by the Department of Public Service and Administration (DPSA) and the national DPME, as the OTP served as the central management of administration as well as having responsibility for planning, monitoring and evaluation for the NW. The findings had been that the OTP had failed to provide administrative leadership for the NW, and could not prevent conditions that had led to the breakdown of essential services which had necessitated national intervention.

The DPME and DPSA had then developed a section 100 (b) plan for the OTP with responsibilities which both departments would assume, including, enhancing governance and ensuring compliance with legal prescripts, reviewing of delegations, provincial departments to develop service delivery improvement plans, and the audit of the information and communication technology (ICT) systems in the entire NW, as another PMU had been found to exist in the OTP for transversal ICT functions. Planning, risk management and assessment of all the PMU contracts from the centre would be done, as it appeared that PMUs had been authorised from the OTP. Feedback would then be provided to the OTP and all provincial departments in order to prevent speculation and misinformation, as the IMTT had found that the OTP had admitted a failure to adequately communicate even with trade unions.

At the DBESD, which needed to restore service delivery and good governance, the main concerns and interventions had been matters of emphasis from AGSA’s report, including strengthening financial and human resources management, curriculum development, management and delivery, conditional grants and early childhood development management, district coordination. Infrastructure development, identification of learners qualifying for learner transport and the national schools nutrition programme, would also be matters receiving emphasis.

The DoH had already been on the ground since the health workers strike action at NW, where major interventions had been effected. Subsequently an administrator had been appointed, which saw more work having been done in that sector compared to other departments because of the nature of the crisis at the provincial DoH. The findings of the IMTT had been serious challenges around governance at the provincial DoH, and the absence of effective SCM and financial controls. Because the issues had been more serious, investigations had started and had been handed over to the relevant authorities. The DoH would assume responsibility for strengthening SCM, focusing on potential risks related to corruption, initiation of disciplinary and criminal proceedings, and diagnostic assessment of investigating root causes of internal governance, leadership and organisation matters. The sustainability of projects and an exit strategy, including monitoring and evaluation, ensuring implementation of the procurement reform project, would be rolled out by DoH national, together with National Treasury (NT). More work by the national and provincial DoH would be on reviewing the DoH’s provincial structure, restoring services and bringing about recovery plans for good administrative practices, a review of historical audit committee reports and reporting on progress of the IMTT, the health portfolio committee, the provincial legislature and the NCoP.

Regarding the DPW working together with the DPWR, the IMTT had found the challenge to be what seemed to have been a centralisation of functions of the DPWR, where certain functions had been eroded away from the DPWR to the OTP. The DPWR wanted clarification and a re-delegation of some of those functions to better execute its mandate, client management unit, joint planning and execution and reporting, centralisation of technical professional skills and requisite capacity for project implementation. The DPWR had to focus on planning, monitoring and implementation of a model for infrastructure projects, proper controls accountability and maintenance. The DPWR also needed a clearly structured facilities management and maintenance plan, and to appoint competent service providers. A cross-cutting challenge in the public works environment seemed to be the availability of technical and skilled professionals in the NW, and the DPWR had to focus on recruiting and retaining such highly qualified built environment professionals. Worsening matters had been irregular expenditure of R3.4 billion in the 2017/18 financial years attributable to non-compliance with SCM and deviations from procurement, and the review of the SCM organisational structure had to deal with an adequate segregation of duties.

In the DCST, the IMTT assessment had showed normal capacity shortages in the community safety component, which could be resolved. The big problems were in the transport management component of the DCST, and the DoT would assume responsibility for ensuring forensic investigations would be conducted for areas already identified to possibly have had problematic contracts. One of the problem areas had been scholar-learner transport, internal controls system gaps in the SCM, the review of strategic planning and the update of risk assessment registers. There had to be a review of provincially-owned entities, management of conditional grants, and restructuring and review of bidding processes and committees, as there seemed to be some corruption regarding the contracts, as earlier alluded to.

IMTT Stakeholder engagements

In the stakeholder engagements in Mahikeng, Ditsobotla and Madibeng and other locations, the second part would be taken up by people outside Government employ with the IMTT.

What had emerged as common issues had been insufficient and ineffective governance, widespread corruption, poor and lack of service delivery, appointment of incompetent officials and lack of consequence management on investigations into reported fraudulent practices. Dysfunctional municipalities and a lack of support for youth initiatives had been what the IMTT had been alerted to by stakeholders.

Stakeholder proposals

Stakeholders had further proposed which municipalities needed section 100 (b) and implementation of section 139 interventions, including Rustenburg, Madibeng, Potchefstroom, Mahikeng and Ngaka Modiri Molema district. There should also be a realignment of provincial government, comprehensive investigation into corruption, the appointment of competent and ethical accounting officers, and outreach programmes and implementation plans with the local stakeholders to address specific service delivery challenges.

Addressing stakeholder issues
         

Ms Mpofu said the operational phase of the intervention was at the appointment of administrators for section 100 (b), and the issuing of national directives for those in section 100 (a).

The community of NW expected feedback from the IMTT on a regular basis, so a structured communication plan would be developed. COGTA would develop a rescue plan for problems for the identified municipalities, over and above the section 100 (a) intervention into COGTA’s provincial counterpart. The traditional affairs component of COGTA had addressed itself in one of the stakeholders’ meetings at Madibeng, where there had been a looming risk and conflict around the role of traditional leadership and municipalities which had been long outstanding and not been addressed.

The Department of Basic Education (DBE) had found that schools at the municipalities had not been in operation since 21 February 2018, where 72 schools had been affected, with three in Ratlou. Closure of the schools seemed to have been a resolution of the community that no schooling would occur until service delivery issues related to unfinished housing and amenities, roads construction and the disputed elections committee were sorted out. The attempt had been to deal speedily with the reopening of schools and the services issues, which the IMTT was making good progress on.

Regarding the DHS business plan for 2017/18, NW had delivered 57% of the plan. 17 864 housing opportunities worth R300 million of DHS provincial funding had been stopped and had been reallocated. Planned project delivery targets for the three financial years had not been met, against the full expenditure of the allocation of grant funding for that purpose. There had been increased under-performance in the delivery of sites, services and housing in the province, despite increases in financial allocations. Also brought to the attention of the IMTT, and through its findings, there had been projects in Naledi Municipality where there had been 5 341 housing structures which by and large had to be demolished because of improper construction. There also seemed to have been projects that needed two phases to be completed properly.
 
Implementation of section 100 (a)

As earlier indicated, there would be a MoU. The IMTT had confirmed that the affected departments would issue directives and prepare for monitoring and evaluation reports which would be submitted to a chief coordinator. The central coordination function would accommodate all the heads of the 10 departments under the section 100 (a), and they would also be accounting to the IMTT.
 
Implementation of section 100(b)

After the appointment of administrators, they would assume the responsibilities of accounting officers in those departments and would work in concurrence with NT. Administrators would also submit reports to the coordinator, but would also identify apparent risks to service delivery.

Next steps

Ms Mpofu said there had been clarity among the Executive Committee (EXCO) of NW, including the Premier’s coordinating council, mayors, the provincial legislature and external auditors regarding how the processes were intended to unfold.

Work continued behind closed doors on the development, finalisation and signing of the single overarching MoU between the OTP and national government, and on the appointment of a coordinator for the national intervention, the issuing of directives to provincial departments on section 100(a), and the appointment of five administrators for the provincial departments under section 100 (b). All that would be followed by the discussion on monitoring mechanisms and the frequency of reporting.

Assessment of state of governance
 

Financial governance

The problems were related to ineffective financial controls, governance and accountability despite the existence of governance structures. SCM control systems had been weakened and entirely collapsed in certain cases, all the way down to local government. There had been a considerable increase in unauthorised and irregular expenditure, which had grown cumulatively at an annual average of R2.1 billion, from R8.6 billion in 2013/14, to R15.39 billion in 2016/17. The main contributors to the irregular expenditure had been the provincial DoH (R4 billion), DPWR (R3.4 billion), DCST-transport management component (R3.7 billion), DBESD (R946 million), the OTP (R535 million) and DREAD (R413 million). Unauthorised expenditure in the provincial DoH totalled R362 million, which seemed to originate from general under-funding for their mandate, DCST (R13 million), and DBESD (R8.7 million).
 
Ms Mpofu said that the challenges of budget implementation and financial management had been exacerbated by a 42% vacancy rate in the provincial SCM unit, and a lack of appropriate SCM skills. There had been worsening audit outcomes across the departments, with no documented improvement plan in existence exhibiting a turnaround. There had been regression in the provincial DoH audit outcomes.

Corporate governance

Structures existed with no sense of there being oversight, as all departments had audit committees but with no sense of consequence management been implemented.

Overall, when the IMTT engaged officials to find out what the challenges were, there seemed to be poor overall management of the political-administrative interface, a poor relationship between labour and employer, and an overall lack of communication between labour, employer, external stakeholders and communities.

Corporate governance lapses also included the hospital revitalisation programme and equipment acquisitions at the provincial DoH, the illegal contracts entered into by PMUs, the awarding of scholar transport contracts by the transportation component of the DCST, as well as the OTP and the AgriDelight contract at DREAD.

Institutional governance

The centralisation of SCM, which had compromised management and use of the PMU model, had contributed to the breakdown of the management prerogative in SCM functions because as soon as a PMU would come in, accounting officers would not know whether they were still in charge or not.  The South African Police Service (SAPS) had arrested the civil unrest situation, and the IMTT attitude had been that when matters needed law enforcement, they had been dealt with adequately.

Risks and remedial action

Ms Mpofu said municipal water services authorities in NW were operationally weak and required intervention. There remained rising levels of UIFW expenditure, where irregular expenditure posed the biggest risk as it had been of the highest magnitude. The remedial action needing to be taken was already encapsulated in the implementation plans the IMTT had for each department.

The DBE was quite concerned about the schools infrastructure build programme and had slowed it down, as it had found that there were significant problems at DBESD and how the building of schools had been taking place in NW.
 
Ms Thokozile Xasa, Minister: Sports and Recreation South Africa (SRSA), said that seeing that information was not elaborated on DBESD, SRSA was still working on its submission on reconfiguration. She agreed with Ms Angie Motshekga, Minister of Basic Education, that SRSA had to support the national intervention in the NW, but that would be dealt with by the administrator who would be appointed by the DBE.

Mr Mondli Gungubele, Deputy Minister of Finance, said that irregularities generally would emerge for condonation or when uncovering corruption. The list of forensic investigations covered municipalities and the provincial administration at NW. The ongoing disciplinary hearings had been disaggregated to various criminal and forensic steps.

Discussion

The Chairperson said that the Committee would engage NT on the fiscal position of NW through the intervention.

Mr J Nyambi (ANC, Mpumalanga) wanted to know what the challenges were with the transportation component of the DCST at NW.

Mr M Khawula (IFP, KwaZulu-Natal) wanted elaboration on what stage the forensic investigations were at.  He had expected the presentation to have addressed the roles that departmental accounting officers would have played or not in the collapse of governance structures at NW.
 
Ms T Mokwele (EFF, North West) said there were enough prescriptive laws that could have been implemented at NW to have avoided what had occurred in the province to date. She said that the local government component of the DLGHS had its own challenges, and wanted to know what the IMTT findings had been in that regard. What recommendations did the IMTT have for municipalities that had been put under administration before, and would be administered again during the ongoing national intervention?

In NW there had been a practise of changing portfolios for officials when they were found to be under-performing or guilty of misconduct by the political administration -- was the IMTT reporting that there remained such a trend, seeing that it had identified a lack of capacity in the critical positions it had identified?

The provincial DoH in NW had problems where the management of hospitals had been centralised in the OTP or the Member of the Executive Council (MEC) for Finance or Economic Development. Chief executives (CEs) of hospitals were having difficulty performing their duties because of that arrangement, and that issue needed immediate attention as well.
 
Had the administrator already on the ground for the provincial DoH ever briefed the IMTT on Mediosa, a Gupta-linked company that had impacted health services, including the outsourcing of ambulances from Buthelezi Emergency Medical Services (BEMS).

Mr O Terblanche (DA, Western Cape) asked if the Committee would ever engage the DPW, as the recommendations that expertise be pooled into a central place had been why the DPWR had failed to perform in the first place.

Mr M Chetty (DA, KwaZulu-Natal) said that with 12 dysfunctional municipalities, he certainly would have put the DLGHS under section 100 (b). Had the close out report from AgriDelight been submitted and if not, why had there been resistance to submit the report by that company?
 
It would be great for the Committee to recommend that section 56 and 57 employees, who had been found to have irregularly and illegally brought municipalities to collapse, could not be employed or re-deployed anywhere else in the public service.

Ms T Wana (ANC, Eastern Cape) said the report had been silent on detailing creditors and verification of invoices in terms of services rendered or goods received at each of the ailing departments at NW. It had also been silent about the relationship between traditional leadership and the DLGHS in getting mutual assistance from the two parties. What had the strategic plans of the affected departments been saying all along, and how had the DPME been tracking them?

Ratepayers had been given authority by a court of law to run municipal administrations, and the IMTT report had not touched on that issue at all.

What had the provincial engineers from DLGHS been doing if housing structures had been found to be structurally uninhabitable as far back as 2013?

Mr T Motlashuping (ANC, North West) said he understood that the NCoP would be given time to process the report and to proceed with meetings having analysed whatever facts would be unearthed by ongoing investigations. He pleaded that emotions be separated from the facts in how the Committee’s work would proceed.

Concerning for him had been the workers who had been on strike for some months, but were being remunerated, and he wanted to know what legally mandated the payment of persons not rendering services, as he was also concerned about that situation becoming a precedent.

The IMTT’s report had identified UIFW expenditure, but his research had found nothing categorised as “wasteful expenditure,” and he wanted to find out how the IMTT had arrived at such a determination.

Mr Motlashuping said he knew that Gauteng’s human settlements housing delivery was at 54% to date, compared to the 57% of NW, and although he was not being defensive, other provinces had surely been doing worse.

Of the stakeholders engaged by the IMTT, the ANC, EFF and the DA as political parties had never been invited to the engagements, and he did not understand how the engagements had been undertaken. There had been contestation between the Head of Department (HoD) and administrators during the Limpopo intervention, as there had been no role classifications and responsibilities. He wanted to know who would be the accounting officer for the intervention. Would the chief coordinator be appointed through a vacancy bulletin in newspapers, or would there be secondment from government officials?

Mr E Makue (ANC, Gauteng) said education, health and other social services had to continue in the NW, but it would also be helpful at some time for the IMTT to develop and share with the Committee the terms of reference for the intervention. He asked that timeframes also be submitted for the perceived regularisation of the situation in NW, even if that would be submitted later.

Mr S Mohai (ANC, Free State) wanted to know from Ms Mpofu what the rationale for the existence PMUs had been, and what had been the extent of the capacity challenges such that PMUs had been needed in NW.

The Chairperson outlined the process the Committee would follow together with the IMTT, from implementation to recovery plans. In Limpopo, the challenge had also been an exit strategy for the intervention, including continuous communication between the administrator and HoDs during and post-intervention.     

Minister’s response

Minister Dr Dlamini-Zuma said because the IMTT report was the entry report, some of the issues Members had raised would probably be contained in subsequent and exit or close-out reports.
The rationale had been the national DPME would work with provincial DLGHS to identify municipalities in need of sections 139 and 154 interventions. The DLGHS was under section 100 (a), but municipalities would be administered in the relevant municipal administrative sections, as stated above.

The municipality where ratepayers had been legally allowed to run municipal functions was Koster. It was a precedence-setting judgment and quite serious, in that it could lead to similar situation elsewhere where the revenue base and standing of the municipality was at risk of being eroded, and that spoke to why it was important to attend to service delivery issues. The departments had appealed the judgment, but its existence was a lesson that government had to attend to peoples’ grievances.

Minister Dlamini-Zuma said she did not recall any of the provincial departments having done capacity audits or taken disciplinary action because of misconduct of officials to date, even though the IMTT had determined this was a capacity challenge, although in the course of the intervention that could come up.

The Mediosa contract had been stopped.

She said that with every stakeholder engagement of the IMTT in every municipality, the council’s political party representatives had always been there, and no political party had been deliberately excluded, including engagements with the provincial legislature. Anyone who felt excluded had not been excluded deliberately, as engagements had been attended by people who had an interest and not always only by those who had been invited.

The IMTT had engaged the National Health Education & Allied Workers Union (NEHAWU), requesting its members to return to work some time ago and that had occurred. Those who had resisted and had wanted an audience with the Minister of the DPW and Department of Social Development (DSD) had been workers working at the DSDT, whose issues included the occupational hazard of the building they were working from. The DSDT had since, with the IMTT, engaged those workers and they had returned to work.       

The UIFW expenditure was definitely there, although the wasteful expenditure amounts were not as big as the irregular and unauthorised amounts. In Ditsobotla, Madibeng and certainly in other municipalities where COGTA had already been, there had been wasteful expenditure but the IMTT report was summarised and had highlighted only the big amounts.

The IMTT would submit the timeframes once the MoU’s had been signed.

The IMTT had asked for the close-out report from AgriDelight and, as stated above, if there was resistance to submission of the report, only then would litigation be undertaken.

Department of Human Settlement’s response

Ms NomaIndia Mfeketho, Minister of Human Settlements, said the DHS would be cognisant of separating the HoDs when appointing the administrators for the DLGHS, so that the DHS and DLG would have separate HoDs working with the administrator.

While the DHS seemed to have left matters until late, the perception was that there seemed to be more departments in the NW on the verge of collapsing, whereas the fact was that the DLGHS was already being given attention by the DHS before the civil unrest created a bigger crisis for the whole province. DHS already had ongoing actions, some of which involved criminal investigations and litigation in the province.

Department of Finance’s response

Deputy Minister Gungubele said that if the Committee were to be a judge and had to decide on a matter where citizens had been subjected to an irrational authority, how would it decide?

Traditional leadership had been engaged, and during the stakeholder engagements they had wanted to be engaged separately, which government had done.
 
On the national monitoring of the NW province, as the convening Minister had already noted, the intervention was at its initial stages and it would possibly reveal weaknesses, including national weaknesses. There was no attempt to shield others from accountability.  

On stakeholders’ perception of which municipalities were dysfunctional or not, was neither here nor there as the IMTT records were referenced from AGSA and had been presented directly from AGSA’s report.

His understanding was that the identified areas of intervention defined the terms of reference, especially the areas of weakness as had been identified.

Department of Health’s response

Dr Aaron Motsoaledi, Minister of Health, confirmed that the Mediosa contract had been terminated and easily so, because the contract had had a provision that when services were not provided for a particular period, termination could be actioned. When he had visited the province on 2 March 2018, he had found both the NEHAWU and Mediosa workers on strike. The NEHAWU members had been angry that Mediosa employees had been paid, whilst they had not been paid, Mediosa had been angry because the salaries had never been paid to them.
 
The Buthelezi Emergency Medical Service (BEMS) ambulance service had been contracted for transporting P1 -- very high priority patients -- between health facilities. There were also P2 and P3 patients which had not been part of the BEMS ambulance contract, but after being awarded the contract, the P2 and P3 patients had also been added to their services, which was why there had been an increased cost for their services. The DoH had restricted the BEMS to P1 patients only until the investigation into the contract was concluded.

Department of Sport and Recreation’s response

Minister Xasa said when the reconfiguration for schools had started in the fifth administration, it had been a programme under the DBE. It had excluded recreation, which had been added only in the 2017/18 financial year. AGSA over the years had not really delved into that programme, and when SRSA had assessed it had found that overall internal controls had been lacking at the DBESD, especially regarding the funding allocation SRSA had been channelling for recreation to the NW. There had been issues around leadership, financial and performance management and record keeping which made DBESD unable to account for the allocations. This had resulted in SRSA withholding further allocations as a punitive measure to encourage the NW to better plan for targets, account, manage and improve its mechanisms. That had affected and decreased participation in sports by the NW, as tournaments were no longer taking place in schools. SRSA was intervening to ensure that all this changed going forward, including capacity building, as it had been a big weakness identified by SRSA.

Additional responses

Dr Motswaledi added that the DoH had also engaged the South African Federation of Trade Unions (SAFTU) as part of the stakeholders, as he had noted its omission from the list of stakeholders.

Dr Dlamini-Zuma said that the DPME had learnt a lesson from the NW situation, and would try to be proactive going forward.

Ms Mpofu said that the DPME’s assessment had been that while the establishment of a PMU was not a bad idea and was allowed for in law, in NW they had been used excessively. The bigger concern had also been the irregularities that had emerged from the PMUs. The DPME had become aware of the PMUs which had been established in the OTP and others established in provincial departments, and the DPME would assess all the PMUs to find out what the common threads had been and what had given rise to them. In some instances, there had been capacity challenges and in others it had been about creating a transversal service in a central point to promote efficiency with PMUs. However; the final result had been the opposite of efficiency. The DPME wanted to establish what criteria had been used to determine the need for a PMU in each instance where a PMU had been used, what the result had been, and why there had been transgressions resulting from PMU use. The DPME’s sense was that PMUs undermined the authority of accounting officers, and although there remained capacity issues, that did not seem to have been the main driver of the PMU’s existence, but efficiency.  

Mr Dan Mashitisho, DG, COGTA, said the determination of municipalities being on the brink of collapse actually spoke to bad audit outcomes across the 20 municipalities, but in fact the Eastern Cape had overtaken the NW on the issue of bad audit outcomes by AGSA. However, 12 municipalities remained dysfunctional in NW, including Ditsobotla, Mamusa, Tswaing, Lekwa-Teemane, Naledi, Maquassi Hills, Ngaka Modiri Molema district, Mahikeng, Ramotshere Moiloa, Madibeng, Kgetlengrivier and Bojanala District and local municipalities. Dysfunctionality of municipalities had three areas of determination -- financial management, governance and service delivery.

Governance referred to both administrative and political, where in some cases political governance caused most of the problems. An example was Mamusa, where COGTA had found the municipality with two council speakers. At Ditsobotla, sewage spillages had been taking place and the IMTT had decided that some cases could not be said to be still at the diagnostic stage because some issues needed urgent attention. The Municipal Infrastructure Support Agent (MISA) and South African National Defence Force (SANDF) engineers had been sent to Ditsobotla to address the sanitation matter. A similar issue was being addressed in Madibeng.

Mr Obed Bapela, Deputy Minister of COGTA was also specifically involved with issues raised by the traditional leadership. On municipalities that had been administrated before and what difference the new intervention would bring, COGTA had realised that there had been deliberate efforts to sabotage the administrators that had been appointed, to render the intervention ineffective. COGTA believed the section 100 intervention would also include better support for the administrator to make a success of the new section 139 (b) interventions which would be implemented in the province.

Ms Wana said her questions were not to police anyone, and she was aware that in the Eastern Cape municipalities had R13.5 billion in debts, and it was not fair to respond to her as if she had been comparing situations that were equally serious.

The Chairperson said he had not perceived anyone deliberately saying anything offensive to anyone at the meeting.

Ms N Koni (EFF, North West) interjected on a point of order that the Chairperson seemed to have missed the point, because Ms Wana had been referencing Mr Motlashuping.    

Mr Nyambi said his perception had been that the ad hoc committee would be briefed to provide clarity so that it could further engage the IMC in future and also deliberate in the NCoP.  He was therefore pleading for Members to not be tempted to view the IMC as representative of all stakeholders in the NW. He asked that unless there were more clarity-seeking questions the meeting had to proceed as per the Chairperson’s ruling.

The Chairperson requested the IMTT to respond.

Mr Mbulelo Tshangana, DG, DHS, said that the Department had done an extensive capacity audit of the DLGHS and were clear about the level of technical capacity required by the DLGHS to perform its mandate. The DLGHS had changed HoDs four times in the past five years, and the acting MEC for Human Settlements responsible for DBESD had been confirmed only 12 months ago as MEC for DLGHS. Those instabilities affected the organisational strategy because however hard one would try to fill technical capacity, if there was no strategic leadership very little progress would be made. DHS had presented a diagnostic report to the IMTT which had been co-compiled with the current HoD of DLGHS, and had been co-signed by the current MEC, and would certainly come before the ad hoc committee. The DLGHS had agreed on what needed to be done in the NW.

There was a block of flats that had been approved in 2011 and currently remained a crime scene, as earlier alluded by Minister Mfeketho. The National Director of Public Prosecutions (NDPP) had obtained a prohibition and preservation order on those flats, and the DHS could do nothing until the NDPP handed over the site to the DLGHS in that regard. There had been mischief involved in that Marang block of flats project, and the NDPP and NT were still investigating the project.

A second block of flats project had also been blocked while municipalities had been in charge of building houses, and the DHS had a comprehensive list with project numbers and dates of blocking, where more than 5 000 units in NW could not be delivered. Unblocking those projects needed AGSA and NT assistance, because the government could not pay twice for the same incomplete product because either the contratcor had gone under and vacated the site, or the DLGHS had not managed the project properly, as there were a number of reasons projects were incomplete. All that information would be presented to the IMTT in subsequent meetings and worked on before being tabled to the Committee.

NW had in 2009 consciously decided to remove the function of human settlements from municipalities as they had failed to implement and manage DLGHS projects. The biggest challenge with the NW DLGHS had been that it had under-spent by about R1 billion, and the DHS had taken R300 million from them and given it to provinces which were perfoming in terms of the DHS mandate. R700 million had been given to the Housing Development Agency (HDA) to manage projects that had not been managing well, based on a Ministers and Members of Executive Council (MinMEC) decision. Mr Tshangana said that unfortunately, the DLGHS had no technical capacity.

Mr Motlashuping reiterated that what he had said was that there were provinces perfoming worse than the NW, and his point was to delimit the briefing to the NW.

Mr Chetty thanked the DG for DHS for his responses, as that vindicated his earlier inputs. He cautioned against Members representing their biases on the basis of the provinces they represented and their particular political parties, because the intervention in the NW had to be focused on serving the people.

Ms Mokwele said the responses had reminded her of other implicated projects in the NW, including Setsokotsane, small dorpies and villages where departments converged in one area like Moses Kotane local municality with all the resources from each department, without clarity as to who then would remain responsible for the other projects within the same departments. She hoped the follow up report would delve into Setsokotsane and the other projects she had mentioned. She appealed to the IMC and IMTT, saying that there remained victimisation of whistleblowers in the NW, and that both structures had to look into that as well as people were still being suspended from work for whistle-blowing.

Mr Makue proposed that the IMC and IMTT be released so that the Committee could deal with household issues.

The Chairperson thanked the IMC and IMTT for the briefing the ad hoc committee, and said that Members would represent their provinces when dealing with the reports of the Select Committee on Finance.

Dr Dlamini-Zuma thanked the Committee for the audience and said that whatever information the Committee had regarding occurrences in the NW had to be sent to the IMTT, and those matters would certainly be followed up.

She asked when the next planned interaction with the Committee would be.

The Chairperson replied that the draft programme was subject to the NCOP programme committee’s approval, but the programme would be sent to the DPME upon approval. He outlined the dates of follow-up meetings.

Mr Chetty asked for clarity on the date of the next proposed meeting.

Ms Dlamini said she thought the Committee would have been given an opportunity to deliberate and approve the programme.

The Chairperson said that he was giving the opportunity for that now.

Mr Motlashuping proposed that the programme be adopted as presented, as it had accommodated what had been raised in the previous meeting.

Ms Mokwele seconded the adoption motion.

The programme was adopted without any amendments.

Mr Nyambi requested that in future bigger venues be sought to accommodate everyone, including visitors.

The meeting was adjourned.

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