CFO appointment investigation; Ministerial house maintenance: PSC & Public Works Minister

Public Accounts (SCOPA)

17 October 2018
Chairperson: Mr T Godi (APC)
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Meeting Summary

SCOPA had to again postpone the matter of the CFO appointment investigation. The Public Service Commission reported that it has concluded the investigation on the appointment of Mr Boitumelo Mokgoro as the CFO of the Property Management Trading Entity (PMTE) in the Department of Public Works. However, it could not present the report due to outstanding responses from the Minister and Mr Mokgoro, who had both requested more time to respond. It noted that the Director-General had responded. Both the Minister and Mr Mokgoro have until 27 October 2018 to respond.

SCOPA questioned the Public Service Commission on its mandate and suggested it might be causing tension between the Public Works Minister and Director-General. The PSC was asked how the decision arose to grant the Minister and Mr Mokgoro additional time to respond to the report findings. The Committee decided that PSC should send the Committee the preliminary report for discussion on 23 October 2018.

The Department of Public Works (DPW) reported on Ministerial house maintenance in its Prestige portfolio. Directors-General are often accommodated in the ministerial houses when they are in Cape Town on official business. Directors-General pay a monthly fee of R75, which is determined by the Department of Public Works’ treasury policy framework. DPW contracted a company named Broll for the maintenance of the ministerial houses to the value of R312 million over five years. DPW revealed that some ministerial houses have been vacant for nearly six years, yet millions are being spent to maintain them. Although some houses may indicate as vacant, there are tenants living in the “vacant” houses.

The Committee was unhappy about the millions of rand DPW is spending on houses that are not vacant; it questioned the fairness of the R75 monthly fee and whether this amount was morally justifiable for officials who earn a lot of money.

The DPW said it would submit in writing a thorough report on the lease agreements and a maintenance schedule report detailing the successes and failures.

Meeting report

CFO appointment investigation
The Chairperson told the Committee that the Public Service Commission (PSC) has not sent the report to the Committee yet on the appointment of Mr Boitumelo Mokgoro as PMTE CFO, and Mr Mokgoro has also not responded to the PSC report findings.

Mr M Booi (ANC) was concerned with the manner in which PSC was handling the report. He accused the PSC of not following their constitutional mandate, saying that PSC is allowing the DPW Director General to undermine the Minister of Public Works. He asked what informed the PSC’s decision to grant the Minister and Mr Mokgoro additional time to respond to the report.

Dr Dovhani Mamphiswana, Director-General: Public Service Commission, replied by explaining the timeline which led to the investigation of Mr Mokgoro. The request for the investigation was commissioned by SCOPA. Upon receiving this request, PSC conducted interviews with each of the affected parties: the Human Resources Manager, Mr Mokgoro and the Director-General. The interviews were done so that PSC could understand the process followed up until the appointment of Mr Mokgoro. On 1 October 2018 PSC wrote letters to the Minister, Mr Mokgoro and the Director-General informing them that they had to respond within five working days to the report on 5 October 2018. In response, the Minister requested an additional 21 days to respond, Mr Mokgoro requested 15 days and the Director-General indicated that he was satisfied and would not be requesting additional time. PSC communicated these requests to the SCOPA Chairperson. The report can only be presented to the Committee once it has received the responses from the two parties.

Mr Booi said PSC has not answered his question, the Committee is well aware of the timeline which led to the investigation. PSC has not explained which law it used as point of reference for granting the two parties an extension to respond to the report. The Committee had commissioned the investigation, therefore PSC should have requested the Committee’s permission for an extension. There is no law that allows PSC to grant such an extension when it had already indicated in its letter to the parties that they should respond within five working days. He was also unhappy that the PSC Chairperson was not present at the meeting.

Mr E Kekana (ANC) said this was the second time that the Committee has had to postpone the discussion for the report. He suspects that PSC has deliberately postponed the report because the term is almost coming to an end. He asked for DPW to provide the Committee with a detailed time-line of when the report will the finalised for submission.

Mr M Hlengwa (IFP) asked what is PSC's standard time for responses; what were the reasons for granting the extension; does PSC believe that five days is sufficient for a proper response and did it do a thorough investigation of the matter.

Ms T Chiloane (ANC) said it does not make sense that the Minister requested 21 days to respond but the Director-General indicated that he was happy with the report. This gives the indication that the Minister and Director-General are working separately, which is not the right manner in which a department should be managed.

Mr Booi asked PSC who has been put it under pressure to not comply with its own mandate.

Dr Mamphiswana replied that the standard time for a response is five days. With a failure to respond, PSC is mandated to hand over the report to the body which commissioned the investigation. In the event that an individual is unable to respond within five days, PSC is mandated to grant an extension that does not exceed 30 days.

Mr Hlengwa said he disagrees with PSC as the letters sent to the Minister, Director-General and Mr Mokgoro did not indicate that there could be a possibility for an extension or the individuals can request an extension.

Mr Booi said the PSC Director-General is bringing PSC into disrepute by clearly taking sides on the matter, and this has fuelled the tension between the Minister, Director-General and Mr Mokgoro.

Mr D Ross (DA) said PSC must enforce Section 217 of the Constitution to ensure that it adheres to the procurement process.

Mr T Brauteseth (DA) said it did not make sense why the report could not be presented to the Committee when PSC has completed it.

Mr Kekana suggested that the Committee advise PSC when it should present its report to the Committee. He said the Committee should give the Minister, Director-General and PSC five days in which to respond to the Committee. He also suggested that the Committee meets on 31 October 2018 to discuss the report.

Dr Mamphiswana replied that PSC is an independent body.  It received no pressure from any of the parties involved in the investigation and the report has been finalised. He said PSC saw it as being courteous to grant the Minister and Mr Mokgoro more time to respond to the report.

Dr Sam Vukela, Director-General: Public Works, replied that he was satisfied with the report, hence he did request more time to respond.

Ms Chiloane said the Minister and the Director-General are working in silos, and this is evident in the fact that they had contradictory views about the report. She asked the Director-General what his advice to the Minister was about the report.

The Chairperson asked when the requested 21 days woulde end.

Dr Mamphiswana replied that it will end on 27 October 2018.

Mr Hlengwa asked if the report was also given to the Minister because he was implicated in the investigation.

Dr Mamphiswana replied that the Minister was given the report as he is the executive authority of DPW.

Mr Hlengwa said he agrees with the proposed date of 31 October 2018 for discussion of the report.

Mr Ross said he would prefer that the meeting takes place on 23 October 2018.

The Chairperson requested that PSC sends the preliminary report to the Committee on 19 October 2018 and a discussion of the report will take place on Tuesday 23 October 2018. He noticed in the letter from Mr Mokgoro that he requested an extension until November. Regardless of the request, the Committee must receive the report.

Maintenance of Ministerial houses
Mr Hlengwa asked DPW to explain why some Ministerial houses are being used to house Directors-General.

Dr Sam Vukela, Director-General: Public Works, replied that Directors-General are only accommodated when they are in Cape Town for work related to their departments. The Directors-General pay a monthly fee of R75.

Mr Hlengwa asked how the R75 was determined and whether DPW believe it is morally right and justifiable to charge such a low fee to employees who earn a lot of money.

Dr Vukela replied that the rate for the Ministerial houses is determined by the Department of Public Works-Treasury policy framework, and according to the prescripts of the policy, the R75 fee is justifiable. The monthly fee cannot be changed because it also forms part of the salary package, and it is used as a way to attract employees to consider the public sector as their choice of employment. However, DPW is currently reviewing the policy.

Mr Hlengwa asked what maintenance the R75 covers when the minimum maintenance fee is R23 000.

Dr Vukela replied that DPW is currently reviewing the new policy framework in order to strategise a new maintenance fee.

Mr Hlengwa asked when DPW is expected to complete the review and what is the standard nominal fee that is paid by Members of Parliament and for Ministerial houses. He wanted to know the company that is responsible for the maintenance of the Ministerial houses and what the value of the contract was as received by the company.

Dr Vukela replied that DPW contracted the maintenance to a company named Broll, which is a facilities management company. The company is responsible for the repairs and maintenance of the houses. The total value of the contract is R312 million for five years. The standard nominal fee is calculated at 1% of the official’s income and multiplied by 12. He said that this was being reviewed to allow government to make savings and to avoid losses on property.

The Broll representative added that their contract with DPW started in 2014. Their main responsibilities are to do routine check-ups of the premises; planned maintenance; building fabrics and materials; landscaping and cleaning the houses.

Mr Hlengwa asked when the Broll contract would expire and for DPW to explain the new hybrid model for procurement.

Dr Vukela replied that the contract expires in 2019 and DPW will re-advertise the tender. In the past DPW has tried to do the maintenance themselves, but there was a shortage of skills, hence DPW had to outsource for areas that require specialised skills. The hybrid model is still in its foundation phase and it has taken longer than perceived because DPW has not yet purchased the necessary materials needed to insource the service. DPW did previously use workshops for the procurement.

Mr Hlengwa asked why the Ministerial houses in Cape Town and Tshwane are using a different procurement model for maintenance.

Dr Vukela replied that DPW has a shortage of skilled artisans, hence it decided to close down the workshops. DPW later struggled to fill the vacancies for artisans in all provinces, as such the workshops only take place in a few provinces where there is a sufficient number of artisans available. However even these workshops are not properly capacitated. DPW will continue to implement the hybrid model until there is a sufficient number of artisans to capacitate the workshops.

Mr Hlengwa asked how many people does Broll employ.

The Broll representative replied that they directly employ 105 people, but outsource to 305 employees.

Mr Hlengwa said the hybrid model sounds like a labour broker model. Broll does not do all the maintenance work themselves – they also outsource some of their maintenance responsibilities to other companies. He asked who does “eminent persons” refer to and what does DPW define as “vacant”?

Mr Ross asked if the Rockville residence is vacant.

Mr Mzwandile Sazona, DPW Chief Director: Prestige Portfolio, replied that “eminent persons” are individuals that have been declared by the President as such. DPW defines “vacant” as there being no occupant living in the house. The flat in Rockville is vacant, but there is someone living in the residence who is not a Member of Parliament, Director-General or Minister. The person living in the flat pays rent, hence DPW is able to save on the maintenance cost of the flat and this explains why the maintenance fee for the residence is also low.

Dr Vukela replied that the submitted maintenance report only records the 2016/17 and 2017/18 financial years. DPW made the mistake to not include records for 2018/19, hence the submitted maintenance report indicates that the residence is vacant while it is actually occupied. He apologised to the Committee for the incorrect data.

Mr Hlengwa said the incorrect data on the maintenance report raises a concern on whether the rest of the data for 2016/17 and 2017/18 is correct.

Mr Sazona replied that all the properties that are identified as vacant are indeed vacant, except for Rockville.

Mr Brauteseth said DPW continues to lease a building from Roux Shabangu who the High Court had previously declared as it being illegal to lease from him. He asked DPW to submit a maintenance schedule of all the properties looked after by DPW.

Dr Vukela requested that DPW submit to the Committee a thorough report on the lease agreements and they will also provide a maintenance schedule report detailing the successes and failures.

The Chairperson asked the Minister to respond to the pertinent questions. He also asked for the Minister's opinion on having a Ministerial Village instead of different properties.

Mr Thulas Nxesi, Minister of Public Works, replied that the Auditor-General found that although DPW is moving in the right direction, it seems to be doing so at a slow pace, especially with compliance at the operational level. There are inadequate management controls. As such DPW has started an initiative through the Property Management Trade Entity (PMTE) to address these operational challenges, especially in the area of asset management leases, the prestige portfolio and facilities management. DPW has included the Independent Development Trust in the initiative. DPW has established a high performance centre in the Project Management office. The centre will be responsible for rapid analysis of projects to eliminate the overlapping of projects; proper co-ordination and reporting systems and accountability and management control systems. In the State of the Nation Address, the President mentioned that he is looking into the probability of a reorganisation of government, ministers and deputy ministers. If this does happen the process will provide an opportunity for a more fundamental review to take place.

The matter of the possibility of a Ministerial village is one that should not be debated in isolation. Former President Jacob Zuma, Former Minister of Finance, Pravin Gordhan and the Speaker of the National Assembly have in the past alluded to the possible relocation of the Legislature to Pretoria. If the relocation does happen it will affect the consideration for a Ministerial village – in the short term the establishment of a Ministerial village will be expensive, but in the long term it will be cheaper.

The meeting was adjourned.

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