Committee Legacy Report

Public Accounts (SCOPA)

09 July 2019
Chairperson: Mr M Hlengwa (IFP)
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Meeting Summary

Members of the Standing Committee on Public Accounts (SCOPA) received a presentation on the SCOPA Legacy Report. The Report touched on the mandate of the Committee, SCOPA’s three strategic objectives, focus areas, key stakeholders, findings, challenges, key achievements, and recommendations for the Sixth Parliament.

The main challenges were identified as ESKOM, SAA, Transnet, and National Treasury Members were pleased with the presentation on the Fifth Parliament SCOPA Legacy Report as it provided the current Committee with a base off of which to work and guided priority areas in terms of follow up and further attention. Members were unanimous in voicing concern on the critical matters facing National Treasury, the SA Revenue Service (SARS), Eskom and South African Airways (SAA). On Treasury and the Integrated Financial Management System (IFMS), Members called for accountability and punishment for Treasury officials, for their inability to enforce rules, and called their rampant rule breaking “unacceptable”. Similarly, Members wondered why SARS was not investigated by the Auditor-General, what was happening in Eskom with the Kusile and Medupi power stations and the amount of money spent on them with nothing in return, essentially bringing the country to its knees, and looting incurred by contracts running for many years. On SAA, Members wanted to see the financial reports published, considered turning the Committee’s attention to the Public Investment Corporation, departments not adhering to reporting timeframes and problematic municipalities.

Members discussed the need for reorganising of the work arrangement of the Committee so that one grouping was not more overburdened than the other.

Meeting report

The Chairperson outlined the procedure for the meeting, i.e. a presentation of the Legacy Report, followed by Committee discussion.

Legacy Report (2014-2019)

Ms Ntandokazi Cenge, Content Advisor, SCOPA, began on page 3 and outlined the mandate of SCOPA. She explained the Committee was established in terms of National Assembly Rule 243.  She detailed the three other Standing Committees in Parliament - Appropriations, Auditor-General (AG), and Finance. Unlike the other Standing Committees, there is not a specific Act that gives mandate to SCOPA and thus the rules are derived from the Constitution. She then reiterated the functions and powers of SCOPA, per Rule 245.

Page 5

During the Fifth Parliament, the Committee developed a five-year strategic plan identifying three core objectives:

-To consider all Annual Reports tabled

-To enhance the effectiveness of SCOPA

-To improve the understanding of SCOPA work by the public

Ms Cenge explained the process of tabling the Annual Reports. Section 65 of the Public Finance Management Act (PFMA) requires that all Annual Reports must be tabled in Parliament by the Executive Authority (Minister). She explained that within two months, after conclusion of the financial year, the Departments submit financial statements to the Auditor-General (AG). Once the Accounting Authority has signed all documents, financial statements must be submitted to Parliament (Section 65). In the event that the Executive cannot table the reports, they must explain to Parliament via the Speaker’s Office.

As cause for concern, Ms Cenge highlighted that in recent years, departments have not been submitting annual financial reports, hindering the work of SCOPA. Ms Cenge gave various reasons for non-compliance: disagreements, poor departmental controls, and ongoing appeals to the AG. There are 300 entities and 42 departments that fall under the review of SCOPA and she outlined the grouping process and AG audit outcome options.

Page 6-9

Ms Cenge reiterated SCOPA’s main focus areas and key stakeholders described in the Legacy Report. She explained the role of the AG, National Treasury, Parliamentary Committees/Standing Committees, Anti-Corruption Task Team (ACTT), Special Investigating Unit (SIU), Public Service Commission (PSC), Public Accounts Committees (APAC, SADCOPAC) and the media.

Page 10 - 19

Ms Cenge covered oversight issues and findings regarding Supply Chain Management (SCM), irregular expenditure, unauthorised expenditure, and fruitless and wasteful expenditure. The AG reported expenditure per the 2017/18 PFMA:

-Unauthorised Expenditure: R2.1 billion

-Irregular Expenditure: R51 billion

-Fruitless and Wasteful Expenditure: R2.5 billion

Ms Cenge finished with deviations and expansions, weaknesses in internal controls, SCOPA’s key achievements, and challenges

*See Document: Standing Committee on Public Accounts 5th Parliament Outstanding Matters Group 1.

SCOPA researcher, Mr Sifiso Magagula, continued with the presentation, looking at departments and entities with outstanding issues during the Fifth Parliament. In group one*.  Mr Magagula highlighted the Department of Public Work and Infrastructure (3.1), National Treasury (3.2), South African Airways (3.3), Transnet (3.4), ESKOM and IMTT (3.5), and the National Student Financial Aid Scheme (3.6).

On ESKOM, Mr Magagula explained to Members that municipalities currently owe ESKOM around R18.5 billion. Yet, the Minister of Cooperative Governance and Traditional Affairs (COGTA) has not engaged with these municipalities in debt. In closing, Mr Magagula revealed that South African Airways has not tabled financial reports in over five years. Also, DENEL, SA Express, SA Forestry, and the South African Bureau of Standards are all behind on submitting financial reports.

*See Document: Standing Committee on Public Accounts 5th Parliament Outstanding Matters Group 2.

Ms Gugu Shabalala, SCOPA Researcher, covered departments and entities with outstanding issues during the Fifth Parliament in group two*

There are three departments with issues stemming mainly from the social cluster.  Ms Shabalala cited issues with the Department of Water and Sanitation, and its entity, the Water Trading Entity. Both the Department and entity have repeatedly appeared before the Committee. They have incurred unauthorised expenditure of R933 million, irregular expenditure of R6.2 billion, and fruitless and wasteful expenditure of R16.2 million. Ms Shabalala highlighted very unstable and weak management at the Department and entity.

The Special Investigating Unit (SIU) also conducted several investigations, finding several infractions. Ms Shabalala called upon the Sixth Parliamentary SCOPA to take action to resolve the nagging issues with the Department of Water and Sanitation and subsequent entities.

 Ms Shabalaba spotlighted issues with the South African Police Service (SAPS) and South African Broadcasting Corporation (SABC), emphasising the need for the new Committee to take on these issues.

The Chairperson thanked the research and content staff for their very thorough unpacking of the issues.

Discussion

Mr M Dirks (ANC) commended the various presenters for their stellar and helpful presentation. According to him the four most critical issues facing South Africa are National Treasury, SARS, ESKOM, and SAA. National Treasury is looking after finances, SARS must collect finances, ESKOM must keep the lights on, and SAA takes us around the country.

On Treasury and the Integrated Financial Management System (IFMS), Mr Dirks called for accountability and punishment for Treasury officials, for their inability to enforce rules, and called their rampant rule breaking “unacceptable”. On SARS, he wondered why the AG has not investigated SARS. Where are the reports? Where are the consequences? On ESKOM, in regards to Medupi and Kusile power stations, he emphasised the coal is still not ready to be delivered even though billions have already been paid for these power stations.  The Member found this was essentially paying for coal which has never been received because it could not be delivered. Mr Dirks took great issue with the 30-year+ contracts with ESKOM. He argued that contracts should not exceed 10 years. Mr Dirks challenged the politically -connected who benefit from these excessive contracts. Who are the politically connected? “These people have been looting the country for decades and decades”. On SAA, Mr Dirks asked to see the forensic financial report that was published last year. He challenged the Committee to take decisive action against these big issues, “where the real money is”.

Mr A Lees (DA) agreed with Mr Dirks on some of the big issues that need to be dealt with, however he wanted to focus on the general operating structure of the Committee before tackling the key problems. Mr Lees suggested the Committee operate in the same way it has operated in the past, with two sub-committee groups sharing the oversight of the departments and entities.  Mr Lees asserted that the biggest financial issue facing South Africa is ESKOM, stating “ESKOM is about to bring South Africa to its knees.”

Mr Lees questioned the unequal work distribution of the groups. He was concerned that group one has too much responsibility taking on the whole of Public Enterprises and National Treasury and recommended re-organising the groups.

Mr S Somyo (ANC) thanked the staff for the report presentation. He echoed the clear and pertinent issues that had been previously addressed and felt they should be the Committee’s priority as it impacts the whole of the South African government. Mr Somyo mentioned that the Public Investment Corporation (PIC) had recently been in the spotlight, but this was not represented as an issue in the report.

Ms A Beukes (ANC) referred to page 19 of the Legacy Report and expressed concern that the departments are not adhering to timeframes. She called for the Committee to “put the bite back in the bark” so that things actually get done. Ms Beukes stressed the importance of addressing the outstanding matters of the Fifth Parliament first so that the Committee sets a strict and accountable precedent. She asked how assistance to provinces can be increased to capacitate the Municipal Public Accounts Committee (MPAC).

Ms B Swarts (ANC) thanked the presenters for the comprehensive presentation. She reiterated the importance of dealing with the outstanding reports before more are introduced in September. She called for increased accountability and for work to begin immediately.

Ms N Tolashe (ANC) apologised for arriving late and requested to hear more information on the issues between the MPAC and SCOPA. She lamented the poor service delivery of municipalities. She seconded the need for more “bite”. “Without bite, the Committee will just sit and talk about the same things for days and nothing will get done”.  She called for the Committee to work smart and plan work thoroughly.

Ms T Marawu (ATM) apologised for arriving late. She stressed the vital importance of assessing and addressing the challenges of the previous Committees, so that similar mistakes are not made in the Sixth Parliament.  She advocated for the development of a strategy to implement recommendations and start working as soon as possible.

The Chairperson thanked all Members for their feedback and comments. On the matter of resolutions, the Chairperson admitted it had always been a problem due to difficulties working alongside the Speaker’s Office. The Chairperson stressed the need to work closely and follow through with the Speakers Office.

On ESKOM, the Committee wrote to the chairperson of the board, particularly around Medupi and Kusile, and will distribute ESKOM’s response to Committee Members by the end of the day. He encouraged Members to conduct oversight on both the ground and in head offices. He emphasised the need to visit the ESKOM construction sites to compare what is on paper, with what is on the ground.

On operations, the Chairperson agreed to maintain the group system as a clearinghouse for plenary. He admitted that one group may be overloaded and will need to be re-arranged.

On the high number of outstanding matters from the Fifth Parliament, the Chairperson started the process of writing to all relevant Accounting Officers and boards regarding these matters. When the information arrives, it will be circulated to Members. Logical conclusions must be reached on all these matters.

On APAC and MPAC, the Chairperson stated he has met with the House Chairperson in charge of Committees but the Committee is still waiting on the formal handover on the matter.

The Chairperson said there are “problem child” municipalities receiving disclaimers and adverse findings for the past five to ten years without any consequences. He stressed the priority of addressing those issues and the need for detailed reports. He appreciated that a Member of the Standing Committee on the AG was also a Member of SCOPA. Some of these municipalities are under administration so the Committee needs a detailed report on how these matters are going in these areas. While SCOPA could not deal with every municipality, there must surely be a case for paying very close attestation to the municipalities constantly receiving disclaimers and adverse findings for the past 5 years or more. These are the repeat offenders who need to be dealt with.

On SAA, ESKOM, National Treasury and SARS, the Chairperson admitted these are big matters that need to be addressed. The Committee needs to work smart with purpose and direction. He requested that Members keep Tuesdays, Wednesdays, and Fridays open for meetings. The next meeting(s) will be July 24-26 to finalise the Strategic Plan and Annual Performance Plan (APP) and he requested Members give input on the Draft Training Program by 10 July.

Mr Lees requested future Committee meetings be held in room V454

The meeting was adjourned.

 

 

 

 

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