Immovable assets outside RSA management/disposal: Public Works & DIRCO briefing, with Deputy Minister; Committee Legacy Report

Public Works and Infrastructure

12 March 2019
Chairperson: Mr H Mmemezi (ANC)
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Meeting Summary

Available here once published: Legacy Reports

Continuous changes to political office bearers have delayed the process to dispose of all outstanding SA foreign properties even though the approval was granted in 2008.
 
The Department of Public Works reported this when it was briefing the Portfolio Committee on Public Works on progress regarding the management and disposal of foreign properties. It said 18 properties were identified for disposal in various countries because they were superfluous and a burden to the state. The disposal of the Namibian properties was prioritised as a pilot project.
 
The Public Works and International Relations Portfolio Committees undertook an oversight visit to inspect all the 16 properties in Namibia. Some of these properties were used for government business and residential purposes, while others were vandalised, vacant, and privately leased out. The Department of Public Works (DPW) has also assisted the Department of International Relations and Cooperation (DIRCO) in conducting conditions assessments of the properties in Namibia. This would assist DIRCO in making an informed decision on the future use of the properties.
 
The Department of Public Works indicated that in early March 2019 its officials and those of DIRCO went on a two-day visit to Swaziland with a view of acquainting themselves with the four state-owned land parcels, the leased Chancery as well as the two-state-owned residences. The information gathered would inform feasibility studies on the preferred solutions for development of the Chancery as well as the diplomatic compound and refurbishment of the official residence.
 
The Department of Public Works further stated that clause 9 of the Foreign Service Bill which was adopted by the National Assembly on 4 December 2018 was empowering the DIRCO minister to be the custodian and caretaker of the foreign immovable assets and to follow the GIAMA principles in terms of maintenance and disposal. With regard to the disposal of assets, the Minister of International Relations and Cooperation would consult first the Ministers of Public Works and Finance.
 
Members were disappointed by the presentation because the department told members what it wanted to tell them but not what members wanted it to tell them; wanted to know if the committee recommendations about the Bonn and Namibia properties were sent to the department because the department appeared not to have factored them in its report; asked if the task team comprising DIRCO, DPW, and SSA was necessary because it was not a good story to tell the committee once upon a time there was a task team; and wanted to know if DIRCO would be in a position to do the maintenance work seeing that it has now got the mandate to look after the properties, and asked if carrying out the work was not going to be an audit query.
 
The Committee considered and adopted its Legacy Report.

Meeting report

Opening Remarks by Deputy Minister
Mr Jeremy Cronin, Deputy Minister of Public Works, said the Department was dealing with a matter that should have been sorted out long time ago, especially in relation to the significant SA properties that were in Germany and Namibia. Because of the curiosity of law, the properties rested with DPW, but later around 2000 the DPW felt it was not equipped to dispose of the foreign properties. The disposal function of the foreign properties, it was decided, should be dealt with by the Department of International Relations and Cooperation (DIRCO).
 
There has been a slow move by DIRCO to dispose of the properties, but now it has been indicated in the Foreign Service Bill that was passed by the NA during December 2018 that the disposal function of foreign properties lay with DIRCO. The custodians of the properties have to follow the GIAMA principles in terms of maintenance and disposal. The Bill would be promulgated by the new President after elections.
 
Adv Sam Vukela, Director-General: DPW, reported there has been a task team that was established by DIRCO, DPW, and State Security Agency (SSA).  A request was made by SSA to use the outside properties, and the role of DPW was to do oversight. The task team could not complete its work because one member of SSA was deployed to another department.
 
Deputy Minister Cronin indicated that the presentation to the Committee was about activities taking place within the department with regard to the outside properties.
 
Briefing by the Department of Public Works
Ms Magdelise Tshabalala, Chief Director: Real Estate Investment Registry Services (REIRS), DPW, informed the Committee that in early 2000 DIRCO identified a number of properties in various countries as redundant and a financial burden to the state. DIRCO confirmed 18 properties for disposal. The 18 properties were made up as follows: 13 properties Namibia, two properties in Bonn (Germany), one in Zurich (Switzerland), one in Madeira (Portugal), and one parking bay in Paris.
 
She reported that continuous changes of political office bearers have delayed the process to dispose all outstanding foreign properties after the approval was granted by the former minister of DPW in 2008 to dispose of all identified redundant foreign properties through the public tender, with the disposal of Namibian properties being prioritised as a pilot project.
 
In July 2018, the Public Works and International Relations Portfolio Committees undertook an oversight visit to inspect all properties in Namibia. There are sixteen properties in Windhoek. One is used for office accommodation and six are used for residential purposes. One of the residential properties from the six is informally privately leased out. Further, there are six residential properties which are vacant and vandalised. In addition, there are three residential properties which are also vacant but require maintenance.There are four properties in Walvis Bay. Three of the properties are vacant and vandalised and one is leased out privately.
 
The DPW has subsequently assisted DIRCO in conducting conditions assessments of the properties in Namibia. This would assist DIRCO in making an informed decision on the future use of the properties. In August 2018, the DPW also assisted DIRCO with accommodation options and space planning solutions for the leased South African Mission in New York. At the request of DIRCO in March 2019, officials of the Department accompanied their counterparts on a two-day visit to Swaziland with a view of acquainting themselves with the four state-owned land parcels, the leased Chancery as well as the two-state-owned residences. The information gathered would inform feasibility studies on the preferred solutions for development of the Chancery as well as the diplomatic compound and refurbishment of the official residence.
 
Ms Tshabalala stated that DIRCO has tabled the Foreign Service Bill which was adopted by the National Assembly on 04 December 2018. Clause 9 of the Bill states that the Minister of International Relations and Cooperation is the custodian of all immovable assets outside of the country which were acquired for use by the foreign service, and must act as a caretaker of the immovable assets and must manage them according to the GIAMA provisions. The Bill further states that the Minister of International Relations and Cooperation may dispose the immovable assets under his or her custodianship in accordance with the Foreign Services Act (when the Bill is signed into law and in operation) and GIAMA provisions after consultations with the Minister of Public Works and Minister of Finance. She added that should the Bill be promulgated, all life cycle asset management functions including disposals of foreign properties would be undertaken by the Department of International Relations and Cooperation
 
Briefing by DIRCO
Mr Mphumzi Mdekazi, an official from the DIRCO Ministry, informed the Committee that the intention of DIRCO was not to change the disposal process and methods undertaken by DPW. DIRCO agreed with many of the things that DPW presented. The current location in Mbabane (Swaziland) was not conducive to mission operations due to security concerns. The Chancery should be relocated. The official residence was vacant and could not be rehabilitated. It was agreed between DIRCO and DPW not to rehabilitate the house and that there was an available land parcel to be discussed with DPW.
 
He further stated the mission in Namibia was still to be evaluated. High level scoping was completed, and the process of putting together consultants has been discussed between the DIRCO and DPW. He also noted there was a discussion document from DIRCO that would be sent to the Committee after it has been signed by DIRCO Minister.
 
Discussion
Mr F Adams (ANC) remarked that foreign missions were in a bad state. He thought that the passing of the Foreign Service Bill and transfer of properties to DIRCO should have been done long time ago because those properties and staff belonged to DIRCO. He asked that the Committee be furnished with the discussion document DIRCO stated would only be sent to the Committee once it has been signed by the Minister.
 
Mr Adams noted that DIRCO has not fully informed the Committee about its stance on the matter, but it has learnt a lot from what the DPW presented even though the Bill has been passed. He remarked that there was a Concourt judgement which ruled that old property owners were not indebted to fix properties bought by new owners. He then he asked if this had an effect on DIRCO or if there was a change of certain things.
 
Deputy Minister Cronin said the ownership of these properties was not going to change. The only thing that would happen was the disposal part of it because DIRCO has to consult DPW and Treasury.
 
Mr D Ryder (DA) said he was disappointed by the presentation because the DPW told members what it wanted to tell them but not what members were expecting to hear from it. The report from the department was shocking because it was shifting the blame to DIRCO. He commented that after the Namibia and Bonn trips the Committee compiled recommendations which have been omitted from the presentation.  Two of the recommendations asked the Department to investigate why the residential properties in Bonn have been left to deteriorate so badly because the properties had a value of 20m euros; and in consultation with DIRCO and Bonn, the Department has to investigate the disposal of ambassadorial residences to ensure the highest possible market value was achieved, and all these to be done before and during 2019.
 
Ms E Masehela (ANC) found it strange the two departments were blaming each other because the function of maintaining the properties was given to the DIRCO Minister because DIRCO was using the properties or land parcels. She suggested everything should be relinquished to DIRCO to ensure the buildings were in a good state. She further said the Committee needed to know about the exact land parcel figures in Swaziland; and it should be clear who the custodian of the asset register was between DIRCO and DPW.
 
The Chairperson indicated that the history of these properties has been with the two departments. He blamed both departments because former Minister Skweyiya stated it should be the responsibility of DIRCO to look after these properties in consultation with DPW. It was not acceptable for the two departments to operate in silos. It was unfair to blame the DPW officials because they have been to Namibia. Both departments have to take responsibility and they were both guilty as charged. He added that it was not even acceptable for DIRCO to send juniors to the meeting.
 
Dr Q Madlopha (ANC) commented that the mentality of working in silos was the one that resulted in the discord between the two departments. This did not look like an inter-departmental arrangement and presentation. Decisions taken by the then minister in 1999 gave DIRCO the mandate to be responsible for the properties because it was using them. But during the Namibia visit DIRCO did not know about this responsibility for the properties. It did not look like SA would get any value from these properties because in some Namibian areas there were individuals who wanted to buy a property for R1m. She then asked if the task team comprising DIRCO, DPW and SSA was necessary because it was not a good story to tell the Committee that once upon a time there was a task team. The disposal clause was clear that disposal of assets was the responsibility of DIRCO in consultation with DPW. Therefore, the blame should not be shifted to DPW. She also asked that the Committee to be given the total number of immovable assets outside of SA, not only the few ones in Germany and Namibia. Members were told about the existence of 20 properties in Namibia, only to discover there were many more. This meant the country did not know the number of assets it had outside her borders. Lastly, she wanted to know if the Committee recommendations about the Bonn and Namibia properties were sent to the DPW because the department appeared not to have gone through them. Hence the recommendations were not factored in the presentation.
 
Adv Vukela stated it was their responsibility to work with other departments because the exiting of SSA from the arrangement or task team did not mean what has been started could not be concluded with DIRCO. He said DIRCO was in possession of the asset register regarding foreign land parcels, and indicated that the recommendations from the Committee would be discussed with DIRCO. The report to be sent to the on foreign land parcels would be done jointly with DIRCO.
 
Mr Peter Chiapesco, Acting DDG (PMO), DPW, said the disposal function of properties belonged to DIRCO. The only thing the committee had to do was oversight on the custodian role given to DIRCO to ensure there was capacity to do the work. He indicated there were plus minus 110 foreign properties that the country had around the world, according to the information contained in the 1999 asset register. The intention of DIRCO was not to duplicate services, but to work in consultation with DPW, which in turn, would provide technical information so that DIRCO could make the right decisions.
 
Ms Tshabalala insisted the committee recommendations were still a draft report and the Department would implement them when they have been adopted by the National Assembly.
 
Mr Mdekazi said DIRCO would send the asset register with all the listed foreign properties to the committee. He said there were two land parcels in Swaziland. The first one was not well located and would be disposed, and the second one was well located and would be given Chancery.
 
Deputy Minister Cronin stated DPW has not had a sight of the asset register that DIRCO was in possession of. His Department was there to offer assistance and not to interfere in DIRCO’s work. There was a need to have a clear understanding of the roles to avoid encroachment. DPW was the custodian of GIAMA and could only assist DIRCO in the understanding of its principles. He warned the committee not to underestimate the political principles because a change in policies could mean a change of ministers now and again, and that was why sometimes departments end up blaming changes to political office bearers as the reason for not implementing taken decisions. The key thing in this whole thing was to work together even though it was going to be difficult to trace all the properties.
 
Dr Madlopha wanted to know if DIRCO would be in a position to do the maintenance work seeing that it has now got the mandate to look after the properties, and she asked if carrying out that work was not going to be an audit query.
 
The Chairperson indicated there has been a commitment from the ministry’s side (DIRCO) even though the department did not attend the meeting. The DPW Director-General was going to consult with DIRCO on properties abroad for a joint report. He pointed out that he did not accept Ms Tshabalala’s response that the department would act on the committee recommendations once the recommendations were adopted by the NA. That was unacceptable because the work of the committee on oversight was the work of Parliament and should be implemented, and not to be ignored. The Department has not done as per the law, which says the two departments have to work together. The two Bonn properties were on prime land. The fact that the two departments have not moved on this matter after 21 years meant they have compromised the people of SA from benefitting from the sale of the properties. There were many properties, internally and externally, that were not used yet people were in need of houses. DIRCO must not wait ‘til people occupy the properties illegally. People must not be put into temptation. The two departments should explain in their joint report what they were planning to do about the Bonn properties.
 
Adoption of the Legacy Report
 
The Chairperson indicated the legacy report should reflect the names of the committee members, and it should be clear on unutilized properties of the state which are foreign and internal because that was something the new incoming committee must look into. He proposed members should send additional amendments to the committee secretary and this should include additions that stemmed from the engagement with DPW and DIRCO and updated report on Bonn and Swaziland properties.
 
Dr Madlopha moved for the adoption of the report with amendments.
 
Mr Ryder seconded the motion.
 
The report was adopted with amendments.
 
Adoption of Minutes
 
5 March 2019 minutes
 
The Chairperson took the Committee through the document, page by page.
 
Ms Masehela proposed for the acceptance of the minutes.
 
Dr Madlopha seconded the proposition.
 
The minutes were adopted with minor technical amendments.
 
The meeting was adjourned.
 

 

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