Bosasa contracts with Correctional Services, with Minister & Deputy

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Justice and Correctional Services

27 February 2019
Chairperson: Ms M Mothapo (ANC)
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Meeting Summary

Correctional Services contracts with Bosasa had totalled an astounding R7.1 billion. The Minister of Justice and Correctional Services said he would focus on the Bosasa contracts. If the Committee was interested in the prosecutorial actions taken, the Special Investigating Unit (SIU), National Prosecuting Authority (NPA) and South African Police Service would be better suited to respond to those questions.  

Contracts for catering services between Bosasa and the Department dated back to 2004. He was advised that the outsourcing of catering services emanated from the Jali Commission in 2001 which recommended Department of Correctional Services outsource its catering. Correctional Services acted on the recommendation and procured catering services from Bosasa in 2004, which was extended and renewed over time. The last renewal took place in 2017 and stretches to 2020. After he was privy to the SIU Report which came out in 2009, the Minister made several follow ups on the steps taken by the NPA on the SIU recommendations.

On receiving information that Bosasa had filed with the Master’s Office for liquidation – Correctional Services intensified its efforts to restore in-sourcing catering. Subsequently, Correctional Services issued a 30-day termination notice to Bosasa for breach of contract for filing for liquidation.

The Deputy Minister referred to testimony at the Zondo Commission suggesting involvement of officials still within Correctional Services today, and said that no details have come forth yet if these officials were implicated in the initial impropriety or the current Bosasa contract ending in 2020.

The Committee was assured that Correctional Services would be able to insource catering when Bosasa employees leave around the 25 March. Correctional Services National Commissioner gave details of the contracts with Bosasa:
-The first contract was awarded on 27 July 2004 for a period of three years ending 31 July 2007. This contract was extended twice and ultimately ended on 31 January 2009.
-The second contract for five years commenced 1 October 2006 until 30 September 2011 for Waterval Management Area. It was extended twice and ultimately ended on 31 July 2013.
-The third contract for three years commenced 1 February 2009 until 31 January 2012. This contract was extended twice and ended on 31 July 2013.
-The fourth contract for three years commenced 1 August 2013 until 31 July 2016. The scope of the contract was expanded to include Groenpunt and Bizzah Makhate Management Areas. The contract was extended for six months until 31 January 2017.
- The current contract for three years, commenced 1 February 2017 to end on 31 January 2020.

The National Commissioner noted that the Minister pointed out that the 2009 SIU Report did not recommend that Correctional Services blacklist Bosasa. In hindsight, SIU might see that as a gap in its recommendations. He felt that Correctional Services should have made an effort to ascertain if it should look into blacklisting. Although correspondence took place, it did not provide any specific details about initiating blacklisting proceedings.

Members asked about Correctional Services experience in catering versus outsourcing; if Bosasa was the only company providing this service; if not, which other companies were involved; is the long term goal to in-source or outsource; the proliferation of successful bidding on the part of one company and its subsidiaries that undermines a fair bidding process; if steps are taken to avoid one company doing all the contracts for one department; is there vetting of personnel and service providers in tender processes; absorption of the 4500 Bosasa employees by DCS; whether Correctional Services was fully prepared to in-source catering; the conditions under which supply chain management was conducted in Correctional Services; how the procurement process should be handled by the Department; if the Minister believed these contracts were made in a fair and transparent manner; why the Minister did not take action on the SIU Report; and the Deputy Minister should confirm his name was mentioned as receiving house security upgrades along with Vincent Smith and Gwede Mantashe.

Members asked if the Minister had met any of the Watson Brothers; to whom the remaining five kitchens belonged and if DCS was happy with the service; if remedies would be followed to recoup the R7.1 billion awarded for the dodgy contracts; the dieticians in the in-sourced kitchens; ownership of the equipment in the kitchens; if the Deputy Minister had indeed intended paying for the security upgrades to his house; if the Minister had done anything about the Pretoria Chief Magistrate who received home security upgrades; why the Sondolo Protection of Courts project was not cancelled; about lifestyle audits for previous Commissioners such as Tom Moyane.

Meeting report

Minister’s Remarks
Minister Michael Masutha submitted that the invitation was understood to focus on services provided by Bosasa specifically to the Correctional Services. The primary focus is catering services procured from Bosasa by Correctional Services since 2004, and a current contract ending in 2020.

Bosasa had in addition a contractual relationship with the Department of Justice (DoJ) to provide mainly security services dating back approximately to 2008. There is also a leak arising out of that relationship where security services were extended to premises currently utilised by the Zondo Commission. No officials from Department of Justice or the Zondo Commission were present as the Committee’s invitation specifically referred to Correctional Services. He requested that any engagement about DoJ and the Commission be deferred to a time when the relevant officials were present or invited to the Committee.

He asked that questions about criminal investigations arising from the findings of the Special Investigating Unit (SIU) Report of 2009 about Bosasa procurement by Correctional Services be held back until the right officials were present. The focus today would be confined to a discussion of procurement of services from Bosasa. Correctional Services would outline how it intended to deal with the unfolding situation. Hopefully, that would suit the Committee.

Mr J Selfe (DA) said that he would agree with the Minister particularly about the criminal prosecutions, but he wanted to know why no criminal charges came forth from the SIU Report.

The Minister replied that he was merely suggesting that one of the 2009 SIU Report recommendations relates to prosecutions. The responsibility to deal with prosecutorial referrals from the SIU lies with the National Prosecuting Authority.

The NPA or the SIU was not present today to respond to any prosecutorial questions. He was under the impression that the invitation and thus the engagement would be focused on Correctional Services. The SIU Act states clearly that recommendations for criminal charges must be referred to the NPA. Therefore, that is the body that must account for criminal investigations that occurred or did not occur. So he proposed that leg together with the DoJ leg be deferred to a date that suits the Committee. He had no difficulty responding to any questions relating to his part but if Members want to get it from the ‘horse’s mouth’, the Committee may request those authorities to come and account.

The contractual relationship for catering services between Bosasa and Correctional Services dates back to 2004, and his account would be confined to that relationship. He was advised that the outsourcing of catering emanated from the Jali Commission in 2001 which recommended Correctional Services outsource its catering. Correctional Services proceeded to act on the recommendation to procure catering from Bosasa in 2004, which was extended and renewed over a period of time. The last renewal took place in 2017 and stretches to 2020 as the end date.

In 2009, the SIU issued a report following a proclamation that was issued in 2006 by the President instructing the SIU to investigate the irregularity in the procurement of catering services by Bosasa in 2004. Based on its findings, the SIU made recommendations that required action. Two of the most senior officials were found to have engaged in acts of impropriety in the procurement of those services - the then Commissioner and the CFO. The recommendation was that disciplinary action was required to be taken against the two officials.

By the time the SIU Report came out, the Commissioner had left Correctional Services so he could not be subjected to disciplinary action. However, the CFO was dismissed as a result of the disciplinary hearing. There was a further recommendation that criminal charges be pursued. The other recommendation was for the recovery of any loss by the Department arising from the impropriety or irregular procurement. Correctional Services will clarify how that was dealt with in more detail.

There were certain aspects that could have been dealt with which did not feature in the SIU Report and this included blacklisting the service provider (Bosasa) from continuing to render services to the Department and generally the state. That recommendation did not appear in the Report but the Department may clarify that. However, as far as he was aware, based on the testimony at the Zondo Commission, the allegations relate to the initial procurement. Thus, he was yet to receive any information that suggests that the current contract ending in 2020 is tainted by the same acts of impropriety. If the Department was aware of any impropriety in the current contract, it would have requested to deal with the matter appropriately.

In 2015 the Minister was asked a question in Parliament about what had happened to the prosecutions recommended in the SIU Report. His response at the time was that the investigation was at an advanced stage after suffering delays from the South African Police Service (SAPS). The prosecutor who was handling the case left and so the investigation was not finalised. The investigation was due to be finalised later in 2015.

Subsequent to that response he made follow ups with Mr Shaun Abrahams who informed him that the matter was assigned to a new prosecutor and confirmed that investigations had resumed.

The Minister followed up again, and he was told that the DPCI (Directorate for Priority Crime Investigation) would need to conduct a forensic report to complete the investigation but it did not have resources to pursue it. Dissatisfied with the response, the Minister raised the matter again to the new NPA Head.

Minister Masutha concluded by saying that upon receiving information that Bosasa had filed with the Master’s Office for liquidation – the Department intensified its efforts to restore in-sourced catering. Subsequently, the Department issued a 30-day termination notice to Bosasa for breach of contract for filing for liquidation.

Deputy Minister’s Remarks
Deputy Minister Thabang Makwetla said the testimony at the Zondo Commission that suggested involvement of officials still within the Department today – no details have come forth yet whether the officials mentioned were implicated in the initial impropriety or for the current contract with Bosasa ending in 2020.

Commissioner’s Remarks
National Commissioner of Correctional Services, Arthur Frazer, said that Correctional Services has provided an update to Members which clarifies some of the information that has come to light as a result of the Zondo Commission. When dealing with the Bosasa contract matter, Correctional Services was responding to the 2009 SIU Report and it also considered individuals that were cited in the Zondo Commission.

Following the announcement by two major banks, FNB and ABSA, that they will be closing the bank accounts belonging to Bosasa on 28 February 2019, Bosasa notified DCS of its intention to apply for voluntary liquidation. Consequently, DCS served Bosasa with a 30 day notice to cancel the nutritional services contract. This was the only existing contract between Correctional Services and Bosasa commencing 1 February 2017 until 31 January 2020.

The Committee was assured that Correctional Services would be able to insource catering when Bosasa employees leave around the 25 March 2019 (see document). Eight contracts had been awarded to Bosasa companies since 2004/05. Under these contracts a total of R7.1 billion has been paid to date including extensions and expansions of contracts.

▪ The first Nutrition Services contract (HK2/2004) for nutritional services was awarded on 27 July 2004 for a period of three years ending 31 July 2007. This contract was extended twice and ultimately ended on 31 January 2009.

▪ The second contract (HK5/2006), on 30 August 2006, Correctional Services awarded the contract for nutritional services to Bosasa for the period of five years, commencing 1 October 2006 ending 30 September 2011 for Waterval Management Area. This contract was extended twice and ultimately ended on 31 July 2013.

▪ The third contract (HK14/2008) was awarded on 8 December 2008 for a period of three years, commencing on 1 February 2009, ending 31 January 2012. This contract was extended twice and ended on 31 July 2013.

▪ The fourth contract (HO11/2012) was awarded on 11 June 2013 for three years commencing on 1 August 2013 until 31 July 2016. The scope of the contract was expanded to include Groenpunt and Bizzah Makhathe Management Areas. Furthermore, the contract was extended for the period of six months which ended on 31 January 2017.

▪ The current contract (HO3/2016) was awarded on 19 December 2016 for three years, commencing on 1 February 2017 until 31 January 2020.

Commissioner Frazer said the Minister highlighted two points arising out of the reflection on the 2009 SIU Report. He did not come across a recommendation in that Report requiring Correctional Services to institute blacklisting proceedings against Bosasa. In hindsight, SIU might see that as a gap in its recommendations. He felt that Correctional Services should have made an effort to ascertain if it should look into black listing. Although correspondence took place, it did not provide any specific details about initiating those proceedings.

A second gap was the SIU Report had required civil recovery arising from the irregular procurement but he did not see a clear finding about which aspects of the contractual relationship caused Correctional Services to be unjustifiably out of pocket and to what extent. If the Report had done so, DCS would have been armed with specificity as to the nature of the claim and its quantum, given that the SIU, armed with its capacity, would have had a number of years and ample opportunity to probe and establish those facts. The notion that serves as basis for civil recovery is one has to prove out of pocket loss and in what manner it arises. Therefore, without seeking to exonerate Correctional Services which should have made the effort, it is without a doubt that the lack of specificity in that regard in the SIU Report was not helpful.

Lastly, in the investigation currently conducted by the Commissioner about the alleged inducement and conduct of officials, it needs to be established if there was real justification for the implementation of the Jali recommendation to outsource catering and the reasons outsourcing was deemed necessary. Correctional Services had the responsibility to justify the outsourcing.

Mr M Maila (ANC) said that this matter should not be taken lightly even though the Department assured Members that interventions were underway and service provision would not be disrupted. He suggested the Committee embark on an oversight visit to ensure that Members would not later be taken by surprise.

He said to the Minister, there was a Jali Commission which recommended outsourcing the catering services in correctional centres. The recommendations were surely encompassed by certain findings to which Correctional Services ended up outsourcing 30%, and 70% was in-sourced. He asked about Correctional Services’ experience in catering versus outsourcing. Secondly, he asked if Correctional Services would consider outsourcing again. Thirdly, was Bosasa the only company that was providing this service; if not which other company or companies were providing the service? Lastly, given Correctional Services’ experience, what is the long term goal? In-source or outsource?

Mr S Swart (ACDP) said this matter highlighted a lack of oversight on the Committee’s part over the Department and perhaps it may be included in the Legacy Report - the challenges the Committee faced over the past five years over Justice and Correctional Services. In light of the presentation, he found it disgraceful that it took so long to implement the SIU recommendations.

Firstly, on the criminal side, the delays expressed by the Minister, admittedly out of his control, and the attempts he took to find out why the prosecution was not being instituted, illustrate the depth of state capture and corruption. It is clear the lack of criminal prosecution, which has been seen across the board with various inquiries. The Committee exercises oversight over the SIU, and it indicated that 686 criminal cases had not been instituted and this was just one over ten years. Suddenly, there is the Zondo Commission and only then investigation proceeds.

Secondly, it is again disgraceful that no civil action has been instituted. The Minister indicates that it was not clear, without exonerating the Department, which seems to cast aspersions on the SIU for not being clear enough in its Report. The Minister knows the powers the Department has to blacklist companies and that the SIU brings recommendations that the Department must institute civil action. The Minister involved is accountable to the President to implement those recommendations. Well if the President is involved in state capture that explains everything.

Mr L Mpumlwana (ANC) interjected on a point of order to say that the rules that apply in the House apply in the Committee as well. He asked through the Chairperson for Mr Swart to withdraw his statement that the President was involved, and that it was improper to make such assertions.

The Chairperson appealed to Mr Mpumlwana that Mr Swart should be given the opportunity to finish.

Mr Swart rephrased and said there were a number of allegations against the President in different forums.

Mr Swart resumed that with regards to civil action, he commented on the delays in the setting up of the SIU Tribunal. The ACDP has been calling for this for years and had it been set up a number of years ago, it would have instituted the civil action. He was concerned about the aspersions cast on the SIU for its Report. He asked the Minister whether he had raised his concerns about the lacunae in the SIU Report about blacklisting and the civil action required. He asked the Minister to accept some political responsibility for the state of affairs. He found it astonishing that aspersions were cast on the SIU given the fact that its budget has been cut and with the 686 cases of corruption that have not yet been investigated.

Mr Selfe said that he heard the Minister and the Commissioner say that the evidence might be confined to the award of contract HK2/2004. This was a much more complicated matter and hopefully the investigation would not be confined to the involvement of Mr Agrizzi and DCS CFO Gillingham. It is common knowledge that they conspired with one another that Bosasa would get the HK2 contract. It is very well documented that the bidding adjudication committee recommended that Bosasa would get seven out of eight management areas, although in the end Bosasa got all eight management areas. The contract was administratively extended in the amount of R82 million to include satellite correctional centres that was not included in the original specifications of the contract. That administrative extension was in violation of the PFMA and Treasury regulations that the value of the extended contract should not be more than 20% of the value of the original contract. The contract was also administratively extended on two occasions. On one occasion the former Minister of Correctional Services wrote to the National Commissioner threatening him that he should not stand in Minister Balfour’s way in the extension of the contract. The former Commissioner was then forced to leave and become the Director General of Sports and Recreation. There is a group of people who were involved in that decision to extend – this was part of a pattern, and it extended to the award of the contract to Sondolo. Sondolo was given a contract in 2005 to supply access control facilities, amongst other things. Everyone knows that was a joke and over R200 million was wasted.

Other evidence of this pattern was that Minister of Correctional Services Nosiviwe Mapisa-Nqakula came before the Committee stating her case for in-sourcing of catering; putting Correctional Services on terms and that beginning of 2012 they should in-source catering. All of a sudden there were a lot of reasons why that could not happen — amongst other things, the equipment in the kitchens belonged to Bosasa and Bosasa would remove that equipment and Correctional Services would not be able to in-source at all. The Commissioner said that Correctional Services audited the equipment and it shows that it belonged to DCS. Clearly someone was telling a lie at the time. Now the Commissioner has informed the Committee that Correctional Services was ready to in-source and was capacitated. This smelt of a big rat and he insisted that when the Commissioner undertakes an investigation on this matter, it should be very thorough and that it includes every single person in the Bid Adjudication Committee, the awards, every person alleged to have received some sort of a commission or a bribe because this was a sorry tale of theft and bribery.

Mr W Horn (DA) spoke on the lack of oversight by the Committee which may have compounded the severity of the matter. The Minister needs to tell the Committee why in previous years in his budget debate, he chose not to respond to the DA’s questions about Bosasa. The Minister as the Executive Authority in this saga was unfortunately raising more questions than answers. The Minister stated that only the initial contract was tainted with impropriety or irregularity, but on the 25 February, he informed the world that there would be an independent, thorough investigation undertaken of the contracts. This indicates that at that stage he was not certain about what was going on. The initial contract gave Bosasa a seat at the table, but it needs to be clear if he is uncertain about all these contracts and the forensic audit he referred to is actually happening.

On blacklisting, the Minister’s stance was astonishing to tell the Members that it should have been the SIU that was supposed to clearly indicate the blacklisting. If the Minister since 2014 did not communicate to the Accounting Officers in his department that the demands of clear governance places a responsibility on them to take proactive steps against irregular contracts, then perhaps he should not be on his seat as a minister. The blame should not be shifted to the SIU especially since the Department failed to take steps way back on these issues.

On the renewals and extension of contracts, he wanted to know from the Minister; at what point does the proliferation of successful bidding on the part of one company and its subsidiaries start undermining a fair process of bidding. If Members leave these issues unanswered, the message to citizens is that this is wholesale corruption and Parliament was not playing its role effectively.

Mr S Mncwabe (NFP) agreed that perhaps the Committee did not do well enough in its oversight function, if one takes into consideration everything that was said. He asked if any steps were taken to avoid a situation where one company was doing all the work in one department. It raises questions why it was only one company providing all these services and the Department did not question that at all.

Mr G Skosana (ANC) said that this was a serious matter affecting Parliament, government and the country at large. The SIU identified vetting of personnel and service providers in tender processes as one item that need to be addressed by the Department. He wanted to know the steps that have been taken by the Department to address that matter. Secondly, the Auditor General in the 2017/18 audit report raised procurement and contract management in the department where disciplinary steps had not been taken. It outlined that some of the Goods and Services with a transaction value of over R500 000 were procured without inviting competitive bids as required by Treasury regulations and similarly non-compliance was reported in the previous years.

In some instances persons in the service of the department, who had a private and business interest in contracts awarded by the department, failed to disclose such interests as required by Treasury, and disciplinary actions were not taken by the department. This was also the case of persons in the department whose family members had private business interests in the contracts awarded which were not disclosed and disciplinary action was not taken against the officials involved. He asked for an update on this. This would be a red flag if it was not dealt with by the department in two consecutive years.

About the Bosasa employees, the union made a proposal to the department that the 4500 Bosasa employees should be absorbed by the department in light of the liquidation currently underway. What is the department’s response on this?

On in-sourcing of catering services, how is the department going to deal with the challenges that previously led to outsourcing? The Commissioner stated that prior to the Zondo Commission DCS was already looking into the process of taking over all the facilities from 1 February 2020 and DCS did not renew the contract of Groenpunt that expired in January 2019 and developed a process to in-source. Now the in-sourcing was required to be done immediately, so is the department ready for that full takeover without any challenges?

Mr S Tleane (ANC) said that the Bosasa saga has shocked the entire nation, and as legislators it was important that this matter was handled objectively to avoid exacerbating the situation and to resist the temptation of using foul language towards people. Facts can be made without degenerating.

He wanted to examine the environment that existed in the department before the SIU commenced the investigation; what were the conditions under which the Supply Chain Management (SCM) was conducted in the department? What was the view of the department about how the procurement process should be handled? Did the department believe that these contracts were handled in a fair and transparent manner? It was important that Members understood the view of the department in terms of how it conducted its business.

On the action and correctional measures contemplated by the department – will it be able to move quick enough but correctly to win back the confidence of the people in the department?

He commented on some of the statements made by Members towards the Minister. It is important for all Members to try and understand the situation that prevailed at the time; the people who were breaking the law at the department were covering their tracks in a way that it was hidden. Therefore, Members should not be pointing fingers at the Minister without a full understanding of the issues that prevailed. Oversight was undertaken by the Committee, and it was not correct to say that the Committee did not do enough. Corruption was hidden away from the human eye. The situation needs to be monitored very closely, going forward, and those responsible must be arrested and prosecuted and sent to jail.

Mr M Mulaudzi (EFF) thanked the Presidency for the Zondo Commission. He asked the Minister after he received the 2009 SIU Report and it came to light that there were two recommendations that were not implemented – why did the Minister not follow up on the Report? Where was the political will in implementing this Report? What delayed the Minister not to take action?

The State Attorneys were responsible for laying the charges against Bosasa, but what was the Minister’s role in ensuring that these charges were delayed. It seems as though the department was only now catching up to what had transpired, and lacked proactively to safeguard state funds. The Minister said that DCS would commence an offenders skills development project to internalise the systems on 8 March. Why was this offenders skills development not done long before when the Bosasa contracts were still active? The Minister said he looks forward to the speedy conclusion of this investigation, but this corruption has been going on for a long time.

Mr Mulaudzi said that the Deputy Minister should confirm that his name was mentioned regarding his house security upgrades alongside Mr Vincent Smith and Gwede Mantashe.

Mr Mpumlwana interjected on a point of order stating that this matter was being dealt with and was being investigated. It seems as though the Member was trying to shame the Deputy Minister. The department was here to respond to contracts relating to the department and its plans going forward.

Mr Mulaudzi said that the Deputy Minister was responsible for Correctional Services, and the Committee was discussing the dodgy contracts of Bosasa whose employees confirmed the upgrades to his house. Members need clarity and need to know if the Deputy Minister would be able to effectively deal with addressing the dodgy contracts of Bosasa if he is implicated.
He appreciated the action that the department took when it issued the letter to Bosasa in November 2018. This shows that the department is proactive. If the Commissioner maintains this sort of proactiveness, it will certainly yield good results.

There are 31 kitchens and 26 were Bosasa linked, now the remaining five, to whom do they belong? Is the department happy with the remaining five and its services? He asked if any measures would be taken to recoup the R7.1 billion that was awarded to the dodgy contracts. The department is under resourced so that money needs to be recouped.

He asked the Commissioner to tell the Committee why solutions were only being implemented now when these matters have been ongoing in the department for a long time.

He asked about dieticians for the in-sourced kitchens. Who monitors the diet for the facilities that are not outsourced?

He referred to page 12 and asked who purchased the equipment utilised in the kitchens – was it the department or Bosasa and what does the contract stipulate about the equipment?

Adv G Breytenbach (DA) said that the provincial analysis on page 11 indicates the department is ready to take over from the service provider in the various outlined provinces. Now if the department is ready, what was Bosasa doing all this time because clearly Correctional Services could have done the job? Many billions were paid for something that the department could have done by itself. Why were billions paid for something that the department could have done by itself?

The invoices for the security upgrades at the Deputy Minister’s house were not denied by the Deputy Minister. She had seen all the documentation and invoices related to that transaction. The Deputy Minister had said that the reason he allowed it was because he intended to pay for it but he never received the invoice. It has been so long, the system was installed on the 27 July 2015; so when did the Deputy Minister hope to receive the invoice and make payment because it is now 2019? At what point did he realise that he was never going to get an invoice or make payment?

She asked if Minister Masutha ever met any of the Watson Brothers and in what capacity did he meet with them. Has the Minister, bearing in mind the allegations that have come up from the Zondo Commission, done anything about the Pretoria Chief Magistrate who also received security services from Bosasa? Why were the Bosasa contracts not cancelled including the Sondolo Protection of Courts Project? The information about these contracts was quite damning, and serious allegations were made, and they were renewed under dodgy circumstances. One must bear in mind that these people now have access to the courts and the judiciary in all its forms – what has been done to put measures in place to ensure that these people are properly protected?

According to Mr Agrizzi, all the previous Commissioners, besides Vernie Petersen and Frazer, were involved in impropriety. Why did the Minister not do anything? Were lifestyle audits done on any of the officials? Did the Minister not do anything to check or verify or ascertain the information put out in the public – except relying on the NPA for criminal investigation? According to Agrizzi, the bribe to the Commissioner was increased to R750 000 when Mr Moyane took over and there must have been a noticeable change in lifestyle. Was a lifestyle audit conducted on Mr Moyane? If not, why not?

Minister Masutha replied that it seems Ms Breytenbach was suggesting that he should have done lifestyle audits on former National Commissioners who have longed ceased to be in office since his stint began in 2014. He asked under what dispensation she envisaged him to do that.

Ms Breytenbach said that even after they had left he could have still conducted an investigation after he was privy to the SIU Report and the press reports. The Minister could still have conducted lifestyle audits on senior officials that were in the department when he took office.

She wanted to know why it did not strike the Minister that one firm received all the contracts in the Department of Correctional Services. Did the Minister follow up on the NPA’s response about conducting a forensic audit on the SIU findings?

Mr Mpumlwana said that he was under the impression that the meeting was convened with the objective to ascertain the department’s plans going forward to mitigate the challenges facing the department. Members were now coming up with historical matters.

Mr Mpumlwana asked if the disparities in the standard of catering would not be a cause for concern in the department once it has taken over that function completely and whether those disparities would not cause instability in Correctional Services. He wanted to know the department’s response to absorbing the Bosasa employees that worked in the kitchens.

The Chairperson asked the Commissioner to share light on the meeting he had with the Bosasa liquidator and what issues were discussed. On the business continuity plan, how ready is Correctional Services in ensuring that nutritional and catering services would not be disrupted?

Mr Romeo Adams, DCS Chief Deputy Commissioner: Human Resources, replied about the current Bosasa staff. DCS has divided the mitigation plans into Immediate and Medium-to-Long Term. For Medium-to-Long Term, a work-study investigation is currently being undertaken to look into the eight management areas in terms of the posts needed for the work in the 31 kitchens and the grading for those posts. DCS would then proceed with a process to fill those posts. On the Immediate plan, the department is clear that there is capacity on the day after Bosasa leaves and that required looking into available resources. For the 26 kitchens affected, the regional managers have confirmed that they have identified relevant staff members to conduct the supervisory roles in the kitchens.

DCS has evaluated what it has available currently in terms of resources as well as the skills gap for what is required. At this stage there is no firm decision on the absorption of Bosasa staff as it was still looking at whether it had sufficient staff.

All areas in the provincial analysis have been highlighted as ready because DCS conducted an assessment, and it was discovered that there are colleagues in the regions to do the work immediately.

On the Auditor General’s finding of non-disclosure by staff about doing business with the department, DCS has two units (Internal Control and Compliance and Special Investigative Unit) that will conduct investigations and make recommendations about those individuals.

The Medium-to-Long Term plan would have financial implications on the budget for compensation of employees. The Immediate plan would stretch from when the exit happens up to a period of 12 calendar months, and in the 13th month DCS would have identified the posts that would need to be created permanently within the kitchens.

The CFO said that since 2004 until January 2017, Bosasa was the only company utilised to outsource nutritional services at various management areas. However, the current contract from February 2017 was awarded to three different companies. Seven of those management areas were awarded to Bosasa and one to Seatree Food Services for three years and Ukweza Holdings for a period of two years whose contract ended in January this year. On whether those service providers would be be engaged, at the moment the department was only considering in-sourcing.

In the past there was no limitation on the value of contract extensions. Consequently Treasury issued regulations that speak to limitations. Now the rule is that variation and extensions may not exceed more than 15% of the value of the original contract. If one looks at the nutritional services contract, there were a series of contracts that were awarded, not necessarily extensions. Over that period it was one service provider but in between there were extensions.

DCS now conducts vetting of officials including SCM officials and almost 80% of the officials have been vetted in terms of the vetting policies issued by the DPSA.

On the Auditor General’s finding, DCS has developed a turnaround strategy within SCM. Previously the biggest challenge had been the capacity within SCM and the skilling of SCM officials. DCS has now started having annual sessions where all key SCM officials are housed and share best practices across regions to ensure that there is consistency and compliance with legislation. This empowers officials and improves compliance levels. In addition, there is a SCM turnaround strategy which encompasses a range of skilling. It forms part of the audit outcomes turnaround plan found in the Annual Report of the previous financial year.

The R7.2 billion was not only for the nutritional services but it was the total amount of all services rendered by Bosasa. In terms of the contract, it provides that there are minimum assets that the service provider must bring or procure to ensure that there are adequate tools to render the service. When they procure the assets, the arrangement is that they procure the excess and the department would pay for them and own them. The majority of those assets DCS has paid for and it owns them. The only exercise needed to undertaken was to ensure that there was no mismatch in the ownership of the assets in the centres.

National Commissioner Frazer replied about the risk assessment on page 11 with all centres being shown as ready, this related to the immediate plan to provide the most basic service although it has impact on human resources. In the short to medium term the department would be capacitated. However, by instruction of the Executive the department has rolled out a learnership programme, and 1000 learners will be starting on 1 March. The second batch will start towards the end of April. This capacity will complement the staff shortages as reflected. It may be useful that the department provides a more comprehensive plan.

DCS was looking into the matter of the officials that have been mentioned and it will come back and report to the Committee on that.

The SIU had written to the Commissioner in November and DCS acted on some of the state capture revelations. The reason the notice to terminate was issued by DCS was that Bosasa filed for voluntary liquidation. This was one of the provisions in the contract and it was violated by by the liquidation application.

When the Commissioner met with the liquidator yesterday, he provided assurance that during the process of termination they would be able to provide services until the termination date of around 24 March.

Deputy Minister Makwetla replied about the allegations on work done by Bosasa at his house and said that he would never be found dead in such schemes. There are agendas aimed at tainting his reputation. These allegations surfaced last year but he did respond appropriately in his statement on this matter. At the end of the statement, he stated that he was considering taking the matter up with the Public Protector. Unfortunately, the Ethics Committee of Parliament took up the matter and wrote to him for a response and an explanation. He has subsequently responded to the Ethics Committee. Therefore, he would prefer that this matter be dealt with in that space as far as Parliament is concerned. Furthermore, he has written to the Zondo Commission asking to appear before the Commission to respond to the allegations that have been made against him. This development was very unfortunate and regrettable.

He stated that he has not participated in the budget debates of the department for very good reasons he did not highlight.

Minister Masutha said that many of the questions from Members were in the form of observations and comments which in large measure he agreed with. He noted the matter of committee oversight and that more could have been done to ensure that there is an effective practice of oversight. He had already indicated that when it comes to consequence management, especially criminal action against those that were implicated, it would be more profitable for the Committee to invite the NPA to respond to those concerns and questions.

The Minister clarified that in his correspondence with the NPA, some of which has been documented, he pursued the matter of prosecutions. At the time when the last Acting National Commissioner took office, he raised the matter. In the testimonies coming forth at the Zondo Commission, it is clear that there are challenges in the value chain of the law enforcement agencies in the country.

With confidence, Minister Masutha stated that any of the senior managers in Correctional Services would confirm that year in year out, he asked if there was justification for the outsourcing. There would be significant amounts that would be shifted from Human Resources to Goods and Services and virements. He asked why the budgets were not corrected to effect the adjustments to ensure that the shortfall would be taken care of. The Deputy Minister had also raised this matter. He asked all the time why the Goods and Services line item was supported by virements but no satisfactory answers were provided.

On the matter of civil recovery and blacklisting or the lack thereof in the SIU Report, he was not apportioning blame to the SIU as a failure on its part. He was saying that the SIU could have clearly articulated after conducting the investigation the nature and the extent of the losses sustained. Even in the SIU Report it was not definitive that a loss was incurred, it only stated “if such a loss existed”. He felt it was fair to make such an observation, and he did not see why the SIU did not go all the way to recommend to the department that it exclude the company. He did not imply that the onus thus shifted from the department to recover losses and to pursue blacklisting.

Over the past four years, the department could have pursued the matter vigorously. However, in a similar vein by pursuing law enforcement to act in line with the SIU recommendations, his hope was that once criminal proceedings were up and running that would have strengthened the department’s hand to take further action.

The SIU indicated that its powers to institute civil recovery only came into effect in 2012; three years after its Report was issued. It was possible for it to pursue civil recovery even if it had a basis for it. the point was accepted but it would have been helpful nonetheless if it had given full advise to the department.

Since he took office, he has pursued the resuscitation of the SIU Tribunal, and records would support this. This was especially in light of the build up civil recovery actions that needed to be dealt with. From the beginning of next term, the department should be able to activate the Tribunal.

Of the 686 cases referred to the NPA and not acted upon, as soon as the SIU raised this matter last year, the Minister convened a meeting with the SIU Head and Acting NDPP, and asked them to meet with the DPCI Head to reconcile in detail matters that have been referred by the SIU to the NPA. There were a lot of explanations that came forth as to why there were delays. The current NPA Head has taken over this project and the agencies are in conversation about the work and the Committee will soon receive an update on this.

On the contract extensions that went against the PFMA, he was uncertain about the remedial actions that were taken against these violations. One of the reasons that he chose not to continue with the appointment of acting officials in the departments he is responsible for was that the Auditor General had proclaimed every year about the need for consequence management and yet the Minister was not getting satisfactory answers from the Acting Commissioners.

The problem of evergreen contracts was something that needed to be dealt with but the department was working on this.

About his meeting with a Watson brother, in 2016 during an ANC rally, he received a call from a cadre who offered the Minister accommodation since his office was struggling find accommodation as it was such a busy time in Port Elizabeth. He accepted the offer gratefully. On the morning of his departure, he called his colleague to thank him and his colleague insisted that he thank the owners of the place himself as they were already on the way to the accommodation. Upon the arrival of the two gentlemen, one of which one was Mr Watson, he thanked them. However, they insisted that the Minister deal with a procurement issue they had with the department. In his response, the Minister made it clear that he did not deal with Supply Chain Management matters. After that encounter, he never met any of the Watson brothers again.

The Chairperson thanked the Minister and Deputy Minister as well as the Commissioner for the inputs and responses.

The meeting was adjourned.

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