The Committee received presentations from its support staff on the 2017/18 audit findings of the provincial departments of the North West, specifically the five departments under section 100 (b) of the Constitution. The Committee was informed of which departments failed to submit financial statements, auditees with qualified opinions and key concerns raised by the Auditor-General. Also highlighted were areas of regression, repeat findings and unauthorised and irregular expenditure.
Members were also taken through its key recommendations and resolutions.
The Committee asked if there was a proper turnaround strategy and implementation plan, consequence management and disciplinary action taken and sustainability of the intervention. The task team must report on whether action plans are being implemented and what is being done to address challenges. The way forward will be clearer after the follow-up briefing by the task team.
Apologies were received from several absent Members.
The Chairperson added that Mr Nyambi and Mr Mohai were in another meeting for preparation of the State of the Nation Address (SONA). He explained the background and procedure of what gave rise to the intervention. He said the purpose of the meeting is to prepare for the briefing by the Inter-Ministerial Task Team (IMTT) next week.
Ms Jabulile Makhalima, Committee Researcher, began with an overview of the 2017/18 audit findings of the North West provincial departments, specifically focusing on the five departments under section 100(b) of the Constitution. She noted that the Department of Health (DOH), Social Development (DSD) and the Office of the Premier (OTP) failed to submit financial statements and as a result these audits have not yet been finalised. She explained that the number of auditees with qualified opinions increased. She added that the Provincial Treasury was the only department that sustained a clean audit outcome. She explained key concerns raised by the Auditor-General (AG) included that the provincial leadership failed to prioritise redress of undesirable audit outcomes, establishment of a provincial advisory committee by the Premier was ineffective, poor quality of submitted financial statements and non-compliance with laws and regulations. She said the main challenges were the following:
1. Lack of accountability and consequences in the province
2. The Premier’s office did not adequately monitor the post-audit action plans of departments
3. Vacancies and instability with regard to key financial positions
4. Non-adherence to procurement and contract management requirements
5. Culture of non-compliance to key legislation
Ms Makhalima noted the DOH remains the most financially vulnerable provincial department.
Ms Yolanda Brown, Committee Researcher, went through the findings of each department whose audits had been finalised. She said the Department of Education and Sports Development (DESD) maintained an unqualified audit finding for the last five years. She said the Department of Community Safety and Transport Management (DCSTM) and Public Works and Roads (DPWR) have qualified audit opinions with findings. She added there is a regression in the OTP and DOH because these audits are not finalised. She explained there was no incurrence of unauthorised expenditure but there had been an increase in fruitless and wasteful expenditure by all three departments. She said that there was an increase in irregular expenditure in all three departments except for DESD. On the findings for all three departments, there were repeat findings of unreliable reported information and non-compliance with legislation. She recommended the matter of irregular, fruitless and wasteful expenditure needs to be addressed, particularly in the DPWR. She added that repeat findings need to also be addressed and accountability and discipline needs to be enforced.
Mr P Dlomo, Content Advisor, said the focus of the presentation summarises the Committee’s key recommendations and resolutions. He explained that this would be the focus of what Members would ask the task team next week. The Committee had the following recommendations:
1. Disciplinary action to be instituted against all employees and officials who were alleged to have committed acts of misconduct. He noted that this would relate to the irregular contracts for Mediosa, Buthelezi Ambulance and High Care Emergency Medical Services (EMS) under the control of the DOH. He added the DOH is the most vulnerable due to the lack of controls and collapse of systems. In the DPWR, this related to the irregular contract known as Ayama Consulting
2. Criminal proceedings to be instituted against officials who have committed any criminal offences and legal proceedings to recover any loss suffered by the state as a result of such criminal offences. He added that there were tender irregularities in the scholar transport programme. He explained that there was duplication of routes which was not advertised in the tender. This impacts the matter of monitoring and structures of accountability
3. Compliance with legislation should be enforced to enhance accountability and robust oversight of monitoring of the intervention. This speaks to the collapse of internal controls.
Mr Dlomo said the sector recommendations of each department raise the same matters.
The Chairperson said the focus is on the implementation of the action plan and exit strategy.
Mr O Terblanche (DA; Western Cape) asked whether there was a proper turnaround strategy. He was concerned about a proper implementation plan.
Ms L Zwane (ANC; KZN) said the turnaround strategy must touch on the repeated audit findings. What is going to be done about the matter of management? She added that Members need feedback from the IMTT on the matter of consequence management and whether disciplinary action has been taken. She said the submission of statements is a matter that needs attending to. She asked that a copy of the turnaround strategy be made available for Members to monitor it.
The Chairperson replied that the main matter is sustainability. How sustainable will the intervention be post-intervention?
Mr M Monakedi (ANC; Limpopo) asked whether the Committee’s resolutions were sent to the IMTT. He said the task team must be ready to respond to questions concerning implementation of the resolutions. There is a need for a balance to be struck between building cities and maintaining existing ones. The task team had a plan of action to address witnesses who have been identified.
The Chairperson said that officials of the task team have had enough time to implement the action plan. The team must brief Members on the progress of the action plan and the Committee’s recommendations.
Mr Dlomo said the province has a responsibility to come up with improvement plans which might not be part of the expected submitted report by the task team. There is the matter of sustainability and there must be an exit strategy. The problems in the province are common problems in other provinces.
Ms Brown said there are two action plans but questioned how the two connect - the Committee might want to interrogate the task team on this.
Mr Daniel Plaatjies, Chairperson: Financial and Fiscal Commission (FCF), said that one of the key things that needs to be looked at are governance challenges. He noted the matter of service delivery. He explained that there was an early warning system which detected the collapse of service delivery. There is a distinct difference between section 100(a) and (b) of the Constitution. He asked why the document read ‘recommendation’ when the report was being tabled as a resolution – were these the resolutions or recommendations of the Committee? He said that there is one government system and it must read ‘inter-departmental co-ordination’ rather than ‘inter-governmental’. On the matter of the delegation of functions, it does not necessarily mean delegation of authority - one can delegate the function but the decision-making still sits with the individual. On the matter of health, there are two types of infrastructure and it is useful to draw a distinction between the two. On the matter of vandalism, when people burn schools there is a cost to the community and cost to the state. He suggested that one has to re-invest. On the matter of verifying the routes of school bus drivers, he said the pricing of the route must be based on a verified contract. He explained there must be verification of the bus route so that its cost reflects it. He added that this remains a cost and pricing matter. He explained that a new contract for any supplier is a matter of procurement specifications. The specification of the tender must be in the contract. On the issue of remedial action, what were the interventions taken to fix the systems? On the matter of consequent management, how many people were arrested? He explained that criminal procedures can take some time and suggested that disciplinary action, labour law and civil proceedings can help the matter of taking legal action. On the intervention plan, he said the biggest matter is contracting and contract management. He added that there is a difference between the two. On the matter of the exit strategy, he said government has learned hard lessons.
The Chairperson replied that section 100(2)(c) of the Constitution guides the Committee on making recommendations. The task team will have to respond to recommendations in the report. The Chairperson wished to conclude the meeting as Members had flights to catch.
Mr Dlomo requested for the input made by Mr Plaatjies to be made available in writing. The details should have been given to officials before the Committee report was made.
Ms Zwane agreed on the point raised by Mr Monakedi and said there needs to be a rephrasing for a balance to be struck. The new capital projects should go with the maintenance plan.
Mr Monakedi agreed with Ms Zwane. He said the Committee is making recommendations to the task team not making resolutions. He thanked Mr Plaatjies for his input. The Committee is required to deal with the task team and not the provincial administration. The task team must report on whether action plans are being implemented and what is being done to address challenges.
The Chairperson said the way forward will be decided after the follow-up briefing from the task team.
The meeting was adjourned.