Inter-Ministerial Task Team (IMTT) update on North West intervention, with Ministers

Ad Hoc Committee on North West Intervention

16 August 2018
Chairperson: Mr C de Beer (ANC; Northern Cape)
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Meeting Summary

Ministers Nkosazana Dlamini- Zuma, Senzeni Zokwana, Thulas Nxesi and Michael Masutha were present as the Inter-Ministerial Committee  (IMC) to report on progress. At the conclusion of the analysis into the North West by the Inter-Ministerial Task Team (IMTT), five departments were put under section 100(1a) and five were put under section 100(1b) of the South African Constitution. Section 100(1a) meant that the province was still in charge although national government would regularly give directives on issues of concern. Section 100(1b) meant that the provincial executive authority was removed from the department such as Members of Executive Council (MECs) or Heads of Departments (HODs) and this authority would be vested in the National Government through an Administrator and the convening Minister.

Departments under section 100(1a) were: Finance Economy & Economic Development (DFEED), Rural, Environment and Agricultural Development (DREAD), Social Development (DSD), Local Government and Human Settlements (DLGHS) and Tourism. For DLGHS there had been an agreement that certain municipalities would be placed under section 139 due to the situation within those affected municipalities. Departments under section 100(1b) were the Office of the Premier (OTP), Health (DOH), Education and Sports Development (DESD), Public Works and Roads (DPW&R) and Community Safety Transport and Management (DCST).
 
There had been a slight delay in the signing of a MoU due to the appointment of a new Premier. With the MoU signed, that moved work from planning and assessment to inception of real implementation and intervention. The administrators had to gain an understanding of the institutional environment, challenges and changes that have to be implemented. The labour unrest had consumed significant time and energy. The IMTT had to put controls into place to regulate financial mismanagement and irregular, unauthorised, fruitless and wasteful expenditures. July activities therefore had involved finalising implementation protocols between national and provincial government and appointing and installing administrators with their support teams in North West. Work underway was to activate the monitoring capacity of the OTP to support the monitoring of the intervention. The six key result areas included effective implementation of section 100(1a); clean governance and institutional capacity; improved service delivery and labour relations; effective communication and public accountability; effective coordination and intervention.

On institutional capacity, the Premier had been concerned he would not have sufficient capacity within North West to deal with the challenges. He had then asked the United Nations (UN) for capacity support and the IMTT had agreed with the Premier to first look at where capacity gaps existed for each department. Thereafter national government could support where gaps existed before seeking help from the UN.
There had been some de-motivation of North West officials in terms of pockets of resistance. However, the IMTT was prepared to deal with that as the work unfolded.

The coordinating committee  as envisaged in the MoU between the Premier and the IMTT had been established and had met once on 2 August 2018. It comprised of all the Heads of Departments (HoDs) from the North West together with the Administrators from national departments. The meetings would continue regularly and the directives issued through section 100(1a) would be tracked to ensure that work continued between the Ministers and the relevant Administrators.

In terms of the contracts there had been work on transferring functions from the DCST to North West Transport Investments (NWTI) which was an entity of the Department. On the learner transport contracts, NWTI had been successfully supported to ensure that it executed that function. However for commuter transport with Gauteng Province, all that depended on whether the Gauteng government would indeed sign the seven year contracts with the North West to provide certainty and improve the NWTI financial position. That guaranteed pipeline would enable the NWTI to be certain about the services that it had to provide, which would have been moved from the DCST.

The IMTT had been forced to think about security of the administrators because of alleged threats against staff members for actively supporting the intervention efforts due to Capital Expenditure (CAPEX) and big contracts at DPW&R.

The Committee  commented:
- A bone of contention was whether it was 20 or 12 out of 22 North West municipalities that were dysfunctional. The initial report reported 20 but the report before the Committee stated 12 municipalities. Parliament could not simply accept contradictions in the report.
- It could not be right that the very people that had collapsed the North West Province were still able to threaten the administrators.
- DPME in the first briefing had touched on forensic investigations and possible criminal prosecutions and an update on that was requested.
- It had been reported that the North West Department of Health had exhausted its funds and so what intervention had been put in place?
- In the first report IMTT had said the challenges at DCST were mainly in the transport component whereas today it had reported that all components of DCST were challenged. What had changed in the interim?
- It hoped that the intervention was not a mere fire extinguishing exercise but that it would restore governance.
- The IMTT had said nothing about capacitating councillors.
- Why had R35 million been removed under the R1.5 billion irregular expenditure reported previously?

Meeting report

Minister's opening remarks
Dr Nkosazana Dlamini-Zuma, Minister in the Presidency: Planning, Monitoring and Evaluation, gave an overview of what had transpired since the IMTT and Inter-Ministerial Committee (IMC) last engaged with the Committee on 14 June 2018. In June, only the North West Department of Health administrator had been appointed and no memorandum of understanding or agreements had been signed with the authorities and departments. At the conclusion of the analysis into the North West by the IMTT five departments were put under section 100(1a) and five would be put under section 100(1b) of the Constitution.

Section 100(1a) meant that the province was still in charge but national government would regularly give directives on issues of concern whereas section 100(1b) meant the provincial executive authority was removed from departments such as Heads of Departments and Members of Executive Council (MECs) and authority would be vested in the national government through administrators and a convening Minister.

Departments under section 100(1a) were: Finance Economy & Economic Development (DFEED), Rural, Environment and Agricultural Development (DREAD), Social Development (DSD), Local Government and Human Settlements (DLGHS) and Tourism. For DLGHS there had been an agreement that certain municipalities would be placed under section 139 due to the situation within those affected municipalities. Departments under section 100(1b) were the Office of the Premier (OTP), Health (DOH), Education and Sports Development (DESD), Public Works and Roads (DPW&R) and Community Safety Transport and Management (DCST).

There had been a slight delay in the signing of a MoU due to the appointment of a new Premier as he had been appointed as the IMTT was about to sign with the Acting Premier of the North West. With the MoU signed, that moved work from planning and assessment to inception of real implementation and intervention. The administrators had to gain an understanding of the institutional environment, challenges and changes that have to be implemented. The labour unrest had consumed significant time and energy. The IMTT had to put controls into place to regulate financial mismanagement and unauthorised, irregular, fruitless and wasteful (UIFW) expenditures.

July activities therefore had involved finalising implementation protocols between national and provincial government and appointing and installing administrators with their support teams in North West. The administrators for section 100(1b) had been introduced to the Premier and provincial executive council on the 5 July 2018; the administrators appointed under section (1b) also became accounting officers in the Departments they were appointed to. Their appointment as accounting officers had been completed by the 10 July 2018 as that process involved National Treasury. The coordinator of the North West intervention had been appointed and was on the ground, with a monitoring system focusing on six key areas which had been developed. The system had a range of indicators to provide a picture of the intervention based on a wide range of information sources; it would focus on the fundamentals of tracking implementation plans.  
Work underway was to activate the monitoring capacity of the OTP to support the monitoring of the intervention. The six key areas included effective implementation of section 100(1a); clean governance and institutional capacity; improved service delivery and labour relations; effective communication and public accountability; effective coordination and intervention.

On institutional capacity, the Premier had been concerned that he would not have sufficient capacity within North West to deal with the challenges the North West faced expeditiously. He had then asked the United Nations for capacity support and the IMTT had agreed with the Premier to first look at where the capacity gaps existed for each department. Thereafter national government could support where gaps existed before seeking help from the UN.

Further to that there had been some de-motivation of North West officials with pockets of resistance. However, the IMTT was prepared to deal with that as the work was unfolding.
The coordinating committee  as envisaged in the MoU between the Premier and the IMTT had been established and had met once on 2 August 2018. The committee  comprised of all the North West Heads of Departments (HoDs) together with the administrators from national departments. The meetings would continue regularly and the directives issued through section 100(1a) would also be tracked to ensure that work continued between the Ministers and the relevant administrators.

Inter-Ministerial Task Team for the North West Province Progress Report
Ms Mpumi Mpofu, DPME Director-General, provided highlights of the progress made to date. Progress had been made in the construction programme for schools building. The Premier had gone on a road show with administrators and introduced them to staff in the province - see document for more details.

Department Of Community Safety and Transport (DCST)
Ms Mpofu said that in terms of the contracts there had been work on transferring functions from the DCST to North West Transport Investments (NWTI) which was an entity of the Department. On the learner transport contracts, NWTI had been successfully supported to ensure that it executed that function. However for commuter transport with Gauteng Province, all that depended on whether the Gauteng government would indeed sign the seven year contracts with the North West to provide certainty and improve the NWTI financial position. That guaranteed pipeline would enable the NWTI to be certain about the services that it had to provide, which would have been moved from the DCST.
 
Department of Public Works and Roads (DPW&R)
Ms Mpofu said that outside of the challenges within the North West DoH, the rural roads and public works projects had either been incomplete or not fully fulfilled such that communities had heightened expectations about those being resolved in the short term. The IMTT had been forced to think about security of the administrators because of alleged threats against staff members for actively supporting the intervention efforts due to capital expenditure (CAPEX) and DPW&R big contracts.

Discussion
The Chairperson noted that the breakdown in relations between the DCST and the South African Police Service (SAPS) could not be left unattended because section 207(5) of the Constitution compelled the SAPS provincial commissioner to submit an annual report to the provincial legislature which could then facilitate that the relationship improve between SAPS and DCST in the North West. 

Minister Dlamini-Zuma said that the South African National Defence Force (SANDF) had not only helped with engineers but had always been involved with the DoH whenever help was needed.

Mr M Chetty (DA; KwaZulu Natal) said that a bone of contention was whether it was 20 or 12 out of 22 North West municipalities that were dysfunctional even though the initial report  had reported 20. The report before the Committee stated 12 municipalities and he wanted clarity. Parliament could not simply accept contradictions in the report. He said that it could not be right that the very people that had collapsed the North West Province were still able to threaten the administrators.

Mr O Terblanche (DA; Western Cape) asked whether a standard had been developed to measure when the intervention had been successful and what targets were they aiming for achievement? How were the administrators appointed and selected? He noted that the administrators were gender skewed towards men and racially biased towards one race; was that how government was progressing to date?

Mr M Khawula (IFP; KwaZulu Natal) said that DPME had in the first briefing touched on forensic investigations and possible criminal prosecutions. He asked for an update on that. It had been reported that North West DoH had exhausted its funds and so what intervention had been put in place for that?
In its first analytical report, the IMTT had said the challenges at DCST were mainly in the transport component whereas today it was reported that all components of DCST were challenged. What had changed in the interim? He hoped that the intervention was not merely a fire extinguishing exercise but would restore governance. Also, the IMTT had said nothing about capacitating councillors.

Mr J Nyambi (ANC; Mpumalanga) wanted to understand the conduct of the provincial executive in relation to the work of the administrators in the intervention. What had been done to date about the security threats to state officials assisting in the intervention. Sometimes, the Committee confused and tended to treat the IMTT as if it were representing the North West when in fact it was presenting its findings since being on the ground.

Ms C Dlamini (ANC; Mpumalanga) was also concerned about gender parity in the administrator team. How had R35 million been removed from the R1.1 billion irregular expenditure as reported previously? She asked that the progress reports going forward include indicators and progress against these.
 
Mr M Monakedi (ANC; Limpopo) said that an embracing of the intervention did not mean there would be no resistance from some quarters in the North West. The fact that threats existed did not mean the intervention was unwelcomed or there was contradictory reporting. Indeed he appreciated the stability that the IMTT had brought to the province administratively.

Minister Dlamini-Zuma replied that the skewed gender parity in the appointed administrators was possibly due to Departments individually appointing administrators instead of appointments being made centrally. Secondly when some of the women were approached they had declined relocations because of family responsibilities such as children whereas men tended to be mobile; which was a global societal problem. Embracing the intervention did not mean there would be no tension and there was no contradiction therefore therein. The threats did not mean the intervention was not accepted. Threats that could not be identified as to where they originated from meant that whatever was being done would be a process. If one had a contract, it could be in jeopardy due to the intervention. These contractors could threaten staff and the administrators and the IMTT was unable to separate those to date. The IMTT had engaged the Justice Crime Prevention & Security (JCPS) Cluster to provide security for the intervention team.

Indeed 20 municipalities in the North West had all received qualified audit opinions or disclaimers. The Department of Cooperative Governance and Traditional Affairs (COGTA) would intervene on a case by case approach. Some municipalities could be found to be only needing directives, some would need section 139 (b) intervention, and others could require section 139(c). A discussion with the current Premier had been had about North West municipalities which already historically had had section 139 interventions to guard against having improved governance and then when the intervention was complete, the municipalities regress again.

It was inaccurate to say one race made up the administrators team rather it was ‘predominantly’ one race. Similarly the administrators were predominantly one sex, not just one sex. The IMTT acknowledged that and because it was planned for short term, the IMTT hoped the intervention would indeed be short-term.

The relationship between the IMTT and the MECs was generally functional and good; of course it would become better with time although of course tension was here and there.

Minister Dlamini-Zuma said that there was a diagnosis about what needed fixing. When those issues had been fixed, she though the IMTT would have to exit. The section 100(1) intervention was constitutionally provided for but there was no law to support the intervention which gave details, standards and guidelines about how the intervention was to be deployed. Hopefully that legislation to assist on when and how to intervene would be developed.

Mr Michael Masutha, Minister of Justice and Correctional Services, said although the question was directed at SAPS, and he would not pretend to represent SAPS, he wanted to inform the Committee  that the JCPS had been an active participant in the IMTT under the Department of Defence and Military Veterans. However, it was a pity that at the time of this meeting, a North West consolidated report of the whole JCPS had not been compiled and confirmed. It was public knowledge that there had been significant change with the transition and handover of leadership within the National Prosecuting Authority (NPA). The Special Investigating Unit (SIU) did have a brief summary of what progress had been realised on North West investigations and on proclamations issued. However, it had not been advisable to submit that summary in isolation from a consolidated cluster report. The Directorate for Priority Crime Investigations (DPCI) had investigated matters which had been referred to the SIU for assessment to determine which could be dealt with through proclamations. At least three proclamations had been issued to date from those matters. Investigations were underway for the three proclamations. There were also seven proclamations drafts which were being investigated, five of which were with this Minister. Therefore there was work happening and the JCPS being a national competence had always been present in the North West but the intervention would have in part necessitated the attention of law enforcement and those new matters from the intervention were under investigation.

Mr Thulas Nxesi, Minister of Public Works, remarked that the yardstick of success for the intervention, as Dr Dlamini-Zuma had noted, had been initiated through a thorough diagnosis of the problems and their root causes in all the departments in the province. Following that would have been a determination of whether the challenges were related to departmental structures or capacity weaknesses.  An intervention plan would then be developed and implemented and monitored regularly through the structures put in place as part of the intervention that included the administrators, coordinator, IMTT and the Premier. All the progress made with such an intervention generally would take place over one complete financial year. The exit strategy would not be a sudden withdrawal but a gradual process.

Mr Thabatha Mokonyama, DCST Administrator in North West, said that the initial pointers at DCST had been on the transport component with learner transport management being the most problematic. It had then been discovered that Supply Chain Management (SCM) especially transversal contracts involved the entire DCST. The Civilian Secretariat in the Department of Police had deployed someone who was assisting the DCST Administrator with Community Safety matters. Desktop analysis had found major transgressions in the transport component of DCST but deeper analysis had found challenges in the relationship between SAPS and DCST. Apart from criminal investigations which the JCPS would be undertaking, DCST also had disciplinary committees which it could rely on for transgressions.

Ms Jeanette Hunter, DoH Administrator in North West, replied that in 2017/18 NWDoH had run out of money in September 2017. If one looked at some of the hospitals in the Basic Accounting System (BAS) there had been a critique that some hospitals had spent only 67% to 70% of their budget, but over expenditure could be found in other areas of the province. At a certain point the North West Province had stopped everyone from spending further. The result had been under expenditure in some health facilities. In 2018/19 NWDoH had to date underspent in Quarter 1 as expenditure was only 20% instead of 25%. The reason was twofold. The labour and community unrest had resulted in NWDoH staff returning to work only on 21 May 2018. Secondly North West Province notoriously annually released its funds late and she had raised this with the Premier and other colleagues in the North West that this had to be changed. For NWDoH to ensure that its funds would go the 12 months, the verification of what was being paid for was important. NWDoH had to ensure it was paying for valid contracts, the invoices had to be scrutinised for compliance and to ensure that payment was for actual services rendered. For example, an analysis of Buthelezi Emergency Medical Services (EMS) had shown NWDoH had overpaid for 2016/17 and had not paid for services in 2017/18. The Administrator wanted to reach an agreement with Buthelezi EMS for NWDoH to get credit notes. That of course spoke to a complaint from suppliers that NWDoH was not moving at speed. However, NWDoH had to ensure no further irregular expenditure would be incurred.

There was, however, key services for which there were no regular contracts in NWDoH such as for doctors accommodation in rural facilities. The contract had expired two years ago and the administrator could not go without paying for those as the hospitals would be without doctors. There were about 100 essential services contracts that had expired between two years and one year ago in the North West.  

Mr Nkhono Mohlala, DESD Administrator in the North West, explained the removal of R35 million from the accumulated R1.1 billion irregular expenditure. They were unbundling the irregular expenditure to assign to internal auditors to investigate it and it had emerged that about R35 million had been for procurement of Learner Teaching Support Material (LTSM) where the NWDESD had awarded a tender for LTSM procurement but it had been contested legally. The court had ruled that the tender process had to be restarted but administered independently and NWDESD had to outsource that. A company was appointed and it charged NWDESD R1.2 million to evaluate and adjudicate the tender. During the adjudication of the tender, somehow NWDESD irregularly appointed that company to supervise the LTSM distribution at a cost of R35 million. When that was discovered the transaction was stopped but as the company had already signed a Service Level Agreement (SLA) with NWDESD it had litigated against NWDESD for the R35 million. The matter was before the courts. Due to all that the company had refused to give DESD a letter that it had adjudicated the tender as it wanted to be paid the R35 million before issuing the letter of adjudication. DESD realised that there was the necessary evidence to take to Auditor-General for the disaggregation of the R35 million from irregular expenditure.

Mr Mzwandile Matthews, Department of Basic Education Head: Monitoring & Evaluation Oversight Unit, said that as part of the diagnostic analysis, the IMTT had found a steady and perennial increase in irregular expenditure over the years without any action by DESD to address that nor any consequence management. The R1.1 billion irregular expenditure had been accumulated over four years. This meant about R200 to R300 million annually had been spent irregularly at DESD. Fruitless and wasteful expenditure increased as well. The Department of Basic Education was interested to see the final audit report.

Mr Loyiso Ncoko, COGTA Director: Local Government Improvement Unit, said that COGTA through its strategic partner the South African Local Government Association (SALGA) had created an enabling environment for councillors to get capacitation. Section 167 of the Municipal Finance Management Act (MFMA) barred councillors from attending training programmes as AGSA said it was the COGTA Minister that had to determine the upper limits in the Gazette. COGTA had therefore provided for that although SALGA was intimately involved with that. COGTA had seen an increase in councillors attending programmes at institutions of higher learning. It remained the prerogative of each municipality to select which councillors attended programmes and mostly it was members of the executive in municipalities and where ordinary part-time councillors were left out. Therefore, probably it was for part-time councillors that municipalities had to provide learning opportunities as well.
 
The Chairperson said that the Committee  would perhaps need to be supplied with a North West skills audit and the communication strategy between the IMTT and the North West provincial leadership.

Consideration of Committee  minutes
The Committee  adopted its minutes of the 7 August 2018

Mr S Mohai (ANC; Free State) said the Committee  had to strongly condemn the intimidation of the administrators in the North West.

Mr Chetty said the Ad Hoc Committee  was there to exercise oversight and the Committee  had to be cautious about trying to answer its own questions without allowing the IMC and IMTT to answer questions.

Oversight visit to North West
The Chairperson said that he had reviewed the NCOP programme and consulted the NCOP House Chairperson to find space for the Committee to conduct oversight of the North West intervention over a period of three days. He asked for inputs from the Committee on his proposal.

Mr Monakedi said although he agreed with the proposal, he felt the oversight could be done over two days.

The Committee resolved to finalise the North West oversight programme at its next meeting.

The meeting was then adjourned.

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