The Department of Defense and Military veterans presented its annual report for the 2017/18 financial year to the committee. The overall performance of the branches of the Department was outlined with specific attention being drawn to areas of concern and areas that require intervention including the quality of submitted performance information and Information Technology. Limited levels of assurance were flagged for the Department’s internal audit mechanism. The Department further presented on its expenditure, indicating that it had used 96.7% of its budget during that period. However, this was contrasted with the small number of targets it was able to achieve. In total 18 targets were set, but only five were reached. Within the programme of Administration only three out of nine targets were achieved due to a lack of proper planning, effective monitoring, post vacancies and the lack of Memorandum of Understanding between stakeholders. However, it was able to increase liberation struggle history research output and increase representation of disabled persons among its staff. In the programme of socio-economic support one out of fours targets were achieved. Again, inadequate human resources and administrative obstacles were highlighted as key impediments. In programme 3 on Empowerment & Stakeholder Manangement the Department was able to only achieve one out of five targets, providing 154 veteran’s businesses with access to business opportunities.
The Committee raised concerns about the lack of consequence management facing those who did not do their jobs within the Department. Questions around return on investment were also raised about the disparity between the spending of the Department and the poor performance. The Committee asked about the effectiveness of the educational support provided to veterans and their dependents and how well the system was being monitored. Were all beneficiaries still eligible to receive support and what criteria was being used to determine whether the appropriate individuals were befitting? MPs expressed concerns about the lack of planning and weak implementation of projects within the Department. Some members also asked questions about the movement of funds away from certain programmes and towards others. The Committee also asked the Department to provide more information on cases on irregular, fruitless and wasteful expenditure. Members were dissatisfied with the Department support of an MK Military Veterans Association conference, claiming that it was misusing taxpayers money inappropriately.
Briefing by the Department of Military Veterans (DMV)
Lt Gen (Ret) Derrick Mgwebi, Acting Director General, DMV, presented a visual summary to the Committee outlining the performance of the Department in the 2017/18 financial year. He pointed out that the Department had maintained its unqualified with findings audit status from the previous year, after being upgraded from qualified with findings in the 2015/16 financial year.
He said managerial performance had been concerning and limited assurance in the Department’s internal audit structure. The root causes of the lack of performance were identified as the slow response by management to the issues arising as well as consequence management of poor performance.
He pointed out several risk areas which were concerning including the quality of financial statements, financial health, human resources and supply chain management within the Department. The quality of submitted performance information by the various branches as well as the IT services required intervention. Leaders within the Department needed to do more and an effective and responsive culture needed to be created. One reason why the Department was not able to get information on financial and performance management in time was due to a lack of automatic record keeping. Regular reporting, monitoring and compliance as well as IT systems needed serious attention. Leadership needed to increase levels of assurance within the Department based on the key controls and risks.
The Department spent 96.7% of its budget during that year which amounts to an actual expenditure of R601 500 000 of the total R622 111 000 that had been allocated for the various programmes. He highlighted the variance in expenditure on each of the programmes and said that the payments for capital assets was not yet ideal, with a variance of 36.3% between final appropriation and actual expenditure. Some of the variance in expenditure was driven by an inability to acquire provincial offices which depends on the Department of Public Works. There were also delays in the payment of performance bonuses. Socio-economic Support spending had been nearly on target due to a higher than expected demand for Education Support to veterans and their dependents. Underspending on the Empowerment and Stakeholder Management programme was as a result of the Department’s inability to process payments relating to travel. There had also been a less than expected expenditure on Skills Development Service Delivery.
The Department was guided by the Military Veterans Act 18 of 2011 in the benefits it needed to provide to veterans. During the year under review, 16 673 veterans accessed healthcare, 270 houses were provided to deserving veterans in several provinces. Some provinces were not included in this number due to challenges of working through provincial governments. 4 958 veterans and their dependents received support for basic education and 2 744 for tertiary education. Up to 148 beneficiaries have since graduated from university, with 74 in the 2017 academic year. Only 952 veterans and their dependents were provided with skills development support, which is a relatively small amount given the funds allocated to the programme. 154 veterans were provided with access to business empowerment opportunities.
There were 18 targets set for the 2017/18 financial year namely nine for Administration, four for socio-economic support (SES) and five for Empowerment and Stakeholders Management (EMS). However, the Department only managed to achieve five of these. The Department had taken note of its weak performance during this period. In Administration only three of the nine targets had been achieved. The Department had planned to achieve a 50% representation of women, but only achieved 48% due to the resignation of one female staff member. Only 28% of the targets set in the Annual Performance Plan had been achieved due to the unavailability of the APP or a clear plan for achieving this. For targets achieved against those planned on the approved MPAT Improvement Plan, only 15% was achieved. This was because the performance plans were not monitored leading to a lack of desired results. On the implementation Communication Strategy activities, the target had been set at 75% however only 60% was achieved due to resource limitations in IT. The Department was able to respond to 90% of the cases from the Presidential Hotline, which was a decrease of 10% from the previous year. This was partly due to the unavailability of a Public Liaison Officer, a post that has not yet been filled. Progress on integrating veteran’s benefits management was delayed and would be implemented in the 2018/19 year. This delay resulted from a delay in the appointment of a Systems developer, finalising the workflow framework and a lack of Memorandum of Understanding and Policies. The payment of legitimate invoices paid within 30 days of receipt achieved 76% missing the target of 90%, this was mainly due historical debts on travel, cell phones and computer service invoices which has further been slowed by the manual processing of documents. He said the targets set for research output of liberation struggle history was achieved, as well as the target for percentage representation of Persons with Disability.
Programme 2: Socio-economic Support set four targets and managed to achieve three. The planned number of veterans to be provided with healthcare was 1000, but only 933 were serviced due to the high demand. The planned number of veterans to receive houses was 1000, but only 270 were accommodated due to administrative challenges with developers and a lack of land. The building of houses also does not make up the Department’s mainline function and it submits its requirements to the Department of Human Settlements which then works with the provinces. The target to increase the percentage of veterans captured on the National Military Veteran’s Database aimed to achieve 90% completion, but only achieved 40%. The post of the director in charge of the project was vacant and the Department relied on the two deputy directors to run the project, however final approval remained a problem. The Department planned to provide 8 700 bursaries to veterans and their dependents but could only provide 7 702 due to some applicants not meeting the necessary criteria.
Programme 3 on Empowerment and Skills Management the Department set five targets but only managed to achieve one. The Department planned to enter into partnerships with four private sector companies but did not establish any partnerships. This was as a result of internal processes not being in place such as MOU’s that could guide the Department in its work. The planned number of veterans to be provided with skills development was set at 4000, however only 952 veterans received this benefit. This result was informed by the Standard Operating Procedures not being in place and the chief director in charge of this project had also resigned further creating a challenge. The Department planned to provide access to empowerment opportunities for 110 veteran businesses and managed to provide 154. This was due to the large number of interested applicants that approach the Department with proposals. The target for the percentage of approvals for burial claims paid within 30 days of receipt was 100% but the Department only achieved 64% due to a lack of operational capacity. Two veteran memorial sites were planned to be erected however none were erected again due to a lack of human resource capacity within the directorate, however he pointed out that this had since changed.
In Human Resource Management, there were 103 approved posts, with 79 posts being filled and a vacancy rate of 23%. Additional employees such as contract workers or interns amount to 73 members of staff. There were 20 approved posts for the socio-economic support programme which dealt with matters of healthcare, education and housing. However; only 16 posts had been filled permanently with 25 additional employees. The small number of staff could be a determining factor for the backlog the Department experienced in these areas. The EMS programme saw a vacancy rate of 30% with 7 additional employees. Overall, the Department experienced a 25% vacancy rate, which was unacceptable.
The Chairperson thanked the Acting Deputy General for the report and said that the Committee expected that the Department would tell the Committee what was being done to address the weaknesses that had been identified. He handed the floor over to members for questions and comments.
Mr S Esau (DA) asked what situation was with the position of Deputy Minster Maphatsoe after the withdrawal of the delegation by the Minister. He further asked how many dismissals the Department had issued for underperforming and delinquency within the Department where HR staff had continuously been identified as a high risk resulting from a lack of capacity. In some areas he did not see progress from previous year or mitigation plans to improve these areas. The Department was not getting value for money when comparing the money it spends to the achievement of targets. He attributed this to problems within the HR performance running the operations of the DMV. He commented that the new organisational structure plan had not been submitted to the Committee and asked that this be done as well as the financial implications of the plan. He added that one of the key positions within that structure was the Deputy Director General to which the running of certain divisions of the Department could be delegated.
Mr Esau questioned the turnaround strategy of the Department. What was really achieved and implemented? HR had been a consistent problem, with employees coming and going. There was an excess of employees working within the DMV and a serious problem of allocation of work and mismanagement of oversight. Middle management was not ensuring that people below them did their jobs, thus showing a weakness in leadership which was also a consistent problem. There is a need for changes on the ground to employ competent employees. It was an embarrassment for the Committee and Department when it could not deliver to military veterans. He emphasized that HR issues needed to be resolved.
Mr Esau said socio-economic support remains severely understaffed. He pointed out that the Committee alerted the Department to the dangers of reallocating funds only to show that funds were spent on programmes that required a long-term commitment like bursaries for education which needs to be consistently paid. The Department had made a mistake when its allocation to the programme was increased from R36 million to R132 million due to lack of performance in other areas. The DG had at that time already issued a moratorium for new applications for bursaries as a result. He asked whether those who were still receiving bursaries still met the criteria. He had requested a breakdown of the amounts being paid for tertiary level education and the success rates. What are the success rates? What is the policy on what happens to beneficiaries who fail? The Committee rejected the payment of postgraduate studies. If the education benefits were not properly managed it would skew the budget at the expense of other programmes.
Mr Esau said the Committee warned the Department that reducing the monitoring budget, while the appropriate frameworks were not in place, would result in performance problems. He expressed disappointment that the integrated system had not yet been put in place. The database is the most important instrument for determining the quantum of money required to sustain the Department and draw up the necessary budget. In addition to this, he emphasised the need for MOU’s to be drawn up with other departments, which has also not been concluded.
On healthcare, Mr Esau said the Committee was glad the numbers had increased, however he asked who the actual beneficiaries were. He knew many veterans who had been turned away from hospitals and did not have the transport to get to the appropriate facilities. Transport remained a serious problem yet there were no targets set, though it is a means to an end of helping veterans access the benefits provided for them. He emphasized that transport had been identified as one of the most important factors for ensuring access.
Mr Esau asked how many people had undergone skills development and got jobs so that they could become independent from the department. This was the goal of any educational program. Many people were being provided with skills but did not leave the system. The impact of the investments that the Department made was not translating into change. He said there should be a tracking system for performance and progress. Achievements could only be measured in terms of impact not outputs.
On support for burials, he highlighted that this was a sensitive matter for many South Africans in traditional communities and cultures. Though money had been spent, no targets were set. There was also no indication of the complaints that were received. Many cases were delayed which resulted in candidates no longer qualifying for support. The Department could not have outstanding matters for years on end. A social worker had been appointed by the DMV tasked with renewing Social Relief of Distress (SRD) applications. The social worker visited people but then nothing happened thereafter, while others have been denied. There were people on the SRD system who no longer deserved to be there and were financially stable. Why has the Department not reported on that? What were the exact criteria to qualify, was it only income? And how was that information verified? If there were loopholes in the system people would use that to their advantage.
On housing, he said according to section 6 of the Military Act all other spheres of government that deliver services to the DMV and military veterans must be recorded and reports submitted. He also pointed out that in Kwazulu-Natal there had been cases of invasions of veteran houses. What was the situation of other spheres of government in terms of the services they provide? Was there a record on a local government level for these services? He emphasised that the Inter-Government Relations Policy and Legislation needed to be implemented effectively to have appropriate management and oversight between departments. He commended the DG on the summary within the report. He however added that people within the Department responsible for submitting reports on finance and performance needed to be held accountable. What was being done to those who failed to submit the appropriate information and documents to the accounting authority and CFO? He pointed out that leadership in the report showed only some level of assurance which affected the DMV.
Mr Esau said IT has been considered a high-risk area for years with little progress. SITA was responsible for concluding that arrangement but was adding to the problem. Given the shortcomings outlines, where were the Department’s mitigation and action plans? He emphasized that people who were being employed needed to do their jobs otherwise senior leadership was not playing its role. The lack of assurance in the first level leadership would prove detrimental to the work of the Department. He raised concern over the fruitless and wasteful expenditure of approximately R3 million and irregular expenditure of approximately R21 million by the DMV and asked for an explanation on why this was the case. He asked why there had been regression in supply chain management. He said that 75% of incidents of potential fraud and irregular expenditure had not been investigated, was this due to a lack of capacity?
The Chairperson asked Mr Esau to wrap up his remarks for the sake of time.
Mr Esau asked why money had been transferred away from programmes that were in greatest need. He asked why R5.4 million had been shifted from the database project which is performing at only 40%. He asked why R9.7 million had been shifted from healthcare and wellness even though there was a serious lack in provision to veterans. He said R11.3 million had been shifted from provincial offices despite the Department needing to establish five more offices, why has this been the case? Why are offices not being capacitated? He pointed out that R46 million had been moved from the Empowerment and Skills Development programme. He asked for a report on disciplinary matters.
Mr G Skosana (EFF) welcomed the report by the Department under the leadership of the Acting DG. The Department had maintained an unqualified audit with findings for two years running. He asked why this had not yet been upgraded to a clean audit. He expressed concern that the Department could go back to a qualified audit if it did not maintain its efforts. He asked whether the Department was able to follow its cost audit action plan after the previous audit outcomes and the recommendations made by the Auditor General. What was wrong with the internal controls and internal audit unit of the Department? Was there a proper record management system in place and functional? He said that when a large portion of the budget is spent but targets were not being met then there was no value for money. He said the performance of various programmes was concerning. Administrative issues should not be an obstacle to performance. He asked why there was no APP available. He asked when the payment of historical debts would be addressed. He asked why access to land was an obstacle to providing accommodation to veterans when the Department had been given funds. He commended the Department on the veteran businesses it supported beyond its set target. He was concerned about contracts being awarded without the proper processes being followed.
Mr P Mhlongo (EFF) said if the Department has an outsourced HR service, was there a skills plan for the Department? He said that in the Auditor General’s report he pointed out that in South Africa a gap existed between aging people who were better equipped than the younger generations. He asked if the Department did not have skills most people would remain economically inactive. The AGSA raised serious concerns about the deteriorating management capabilities within the Department. He asked whether there could be a clear blueprint drawn up to address these concerns. The problems arising were due to either structural issues or the capacity of employees on the ground to discharge the necessary services. He pointed out that poorer countries like Mozambique have greater capability in their defense force structures due to strategic plans that equip younger members to actively involve themselves in the economy. Without a sustainable blueprint to address the problems the country has inherited from the past it will not be able to advance and xenophobia will also continue as younger South Africans remain unable to compete with more competent foreigners because the government could not capacitate them.
The Chairperson said that the DG would not be able to answer the question on the position of the Deputy Minister.
The Acting DG said the challenges of consequence management result from a culture within the Department. He was not aware of any dismissals due to lack of performance except for one individual. The department was attempting to align management structures to improve programmes and would report back to the Committee. He acknowledged that the expenditure did not align with target performance. This pointed to the Department’s planning and implementation ability. Key challenges in the organisational structure was that there were only 169 approved positions as well as the kind of delivery model necessary to provide services. He asked the CFO to answer the question on the Department’s turnaround strategy.
Mr Sibongiseni Ndlovu, Chief Financial Officer, CFO, said the turnaround strategy report was very specific with milestones and timelines; hence the Department has worked on a phased approach. The Department was working towards setting smart and realistic targets, however critical posts have been filled such as the CFO, Acting DG and DDG positions. There had been 3 phases and the Department would measure its performance against each of the phases and report to the committee. Some improvement could be seen in financial accounting and supply chain management overall since the previous year.
The Acting DG said the Department was not doing good enough in ensuring that the approved structure was filled and that the capabilities of the individuals employed were what the Department needed. This resulted in contractual employees being hired temporarily. He emphasised that the desired outcome was to employ permanent skilled people or empower those with potential. Consistency was important for the Department’s top management but the top management was not stable. He hoped that the Minister would address this. Middle management needed to be made an example of because consequence management was critical. The Department would make every effort to reduce the vacancy rates. posts were being advertised and applications had been received and sent to the office of the Minister to be signed. The DDG position for Socio-economic Support was also advertised and the names have been sent to the Minister for shortlisting. The Department needed to set down the key priorities to focus on to avoid shifting funds which has been an indication of a lack of proper planning. Education became a key focus where funds were moved but the Department could not achieve what it wanted to and the money was moved again. That said, it was important to monitor who failed and no longer qualified for benefits. He emphasised that this was where the stakeholder and communication strategy became critical. Individuals were being skilled but there was no follow up to see whether they had been employed. What skills are required in the in the market? Identifying this has been one of the shortcomings of the Department. MOU’s needed to be drafted with the Department of Labor to encourage people to link up with areas of the market where their skills are required. The database was central to ensuring that the Department spends its money on those who qualify and deserving. The appointment of a Chief Director become very important. The Department of Home Affairs needed to ensure that it kept track of South Africans and who their dependents were. People used children with similar surnames to get benefits by claiming that they are dependent. The Department needed to look into these cases.
The Chairperson asked if the birth certificates were abridged and unabridged and which ones the Department asked for.
The Acting DG replied that the Department had begun asking for certificates that indicate the parents of the children, but there was miscommunication and misunderstanding by veterans who have already submitted their documents. The Department needed to explain to veterans why it was asking for the documents again. The Department had started a communications campaign to make its intentions clearer. He acknowledged that targets and policies had not been set up around transport. The Department needed to work with the Department of Transport and local municipalities to create a strategy for managing transport subsidies including implementing an ID which identifies veterans. The challenge around invoices was the processing of the invoices once the service had been provided. The Social Relief of Distress was meant to give individuals a period of relief for 12 months; however some beneficiaries become dependent on the stipend for their income making it difficult to take away. The Department of Social Development had been approached to assist individuals who could no longer be supported by the SRD through old age or military pension. In some provinces housing had been illegally invaded. The strategy that the Department was following at that time was to try and regularised the case when the veteran had been staying in the house for six months or a year and it was no longer viable to evict them. He stressed that they wanted to avoid setting a precedent and encouraging further invasions, but envisioned a once-off process in partnership with the provinces and the department of human settlements. The building of the Department was not conducive to land points which created challenges for ICTS improvements. The Department management would meet with the Minister on a monthly basis to outline challenges. The Department would embark on a strategic work session with the minister to look at her priorities and concerns. He asked the CFO to comment on the fruitless and wasteful expenditure as well as the challenges facing supply chain management and the investigations into fraud.
The CFO said that SEM has shown an improvement but there were cases such as the procurement of above half a million Rand, that matter was still under consideration with National Treasury as the Department had requested permission to deviate based on the circumstances at the time to assist with hosting the MKMVA conference as was instructed by the Department. However, Treasury included the matter into their report as unsupported. The Department is awaiting the final outcome. The Department had indicated to the Auditor General that the matter had not been concluded. Members needed to appreciate that SEM had significant irregular expenditure historically and there had been much improvement. The status of the investigation into potential fraud was outsourced and the report was in process at that time. This would be available the next time the Department appeared before the Committee. The Department acknowledged that it needed to improve on concluding payment within 30 days, however it ensured that it paid SSME’s on time, non-compliance was usually due to the volume of invoices related to travel and Vodacom expenditure. The Department gave support to both staff and beneficiaries for these expenses. The process was delayed because there was no automated system; everything was tracked manually which was made even more difficult due to the lean staff in the Department. The rollout of LOGIS was in progress and would significantly speed up the process and would be linked up with the BAS accounting system, further improving monitoring. He said the investigation into the irregular, fruitless and wasteful expenditure would help to change the organizational culture within the Department.
Mr M Booi (ANC) asked whether the CFO was implying that wasting the money of tax payers required cultural change. He said that irregularities were due to money being used wastefully and he said the Department was abusing the fiscus.
Mr Mhlango said that military veteran associations were political and statuary organs. He expressed concern over the CFO’s mention of the Department funding a MKMVA conference. He said the Department was meddling in the politics of veterans instead of acting as an organ of the state. State funds from the public purse could not be used for political formations.
Mr Booi said that the blame needed to be placed squarely on the Department because the MKMVA did not authorise the payment. He asked under what authority the payment was made. The CFO needed to manage the funds and protect the fiscus.
Mr Esau asked for details about the wasteful expenditure to understand the current situation. How was the matter addressed?
The Acting DG said he took note of the concerns raised. Provincial offices needed to be put in place to better assist veterans. The Department had taken the concerns raised to heart to not slack on the progress that has been made. The Department would follow up with the audit report. Internal controls rely on the implantation of more effective and efficient record keeping systems. The Department had not yet mastered setting targets and would work to set targets that are measurable and achievable. The Department would engage other stakeholders to assist in ensuring that graduated veterans and their dependents are able to access employment. He also emphasized the focus on skills development for the Departments staff. He reiterated that consistency in senior management remained key to achieving the goals of the Department.
The Chairperson said that the remaining questions would be submitted to the committee and the Department would be allowed to respond in writing.
The meeting was adjourned.
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