Foreign Properties owned by RSA: briefing; with Deputy Minister

Public Works and Infrastructure

18 September 2019
Chairperson: Ms N Ntobongwana (ANC)
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Meeting Summary

The Department of Public Works and Infrastructure explained that all state-owned immovable assets abroad used by the diplomatic service – including leasing, purchasing, disposal, alterations, maintenance, refurbishment, furniture and facilities – were transferred from Public Works to the Department of International Relations and Cooperation on 1 May 1999 by official letter of transfer.  DIRCO was not to duplicate professional, technical and essential services such as architects and valuers but to continue to source services from Public Works as far as possible. DIRCO currently manages 911 rented properties and 163 state owned properties. DIRCO spoke about spending, particularly on maintenance of foreign properties. DPWI and DIRCO were in the process of reconciling their immovable asset registers.

Although DIRCO had the mandate to dispose of redundant properties it did not have the legislation to do so. The Foreign Service Bill, once revived in the Sixth Parliament, will formally legislate that all immoveable asset management functions including disposals of foreign properties will be undertaken by DIRCO.

DPWI will continue to assist DIRCO with technical expertise, project management. The two departments are negotiating a Memorandum of Understanding. This professional partnership will achieve:
• shared services – deployment of professionals to accelerate project execution, process review, system design and investment analysis
• shared best practices and systems;
• shared skills, training and development via specialized agencies such as the South African Property Owners Association SAPOA, Construction Industry Development Board (CIDB) and Council for the Built Environment (CBE).

The remaining DPWI foreign immovable asset register comprises mainly of a First World War Memorial in Delville Wood in France and number of islands in the southern Atlantic Ocean (Marion Island, Prince Edward Island), as well as the South African Research Base Station in Antarctica run by the Department of Environment, Fisheries and Forestry.

Members expressed concern about expensive rentals and suggested purchasing foreign properties. They asked about anomalies in the number of properties in Namibia; how many unused properties there were; the cost of rentals for the year; the cost of recent acquisitions; maintenance spending on foreign properties; and the need to execute its custodial functions in line with the Government Wide Immovable Asset Management Act (GIAMA). Members also expressed the need to remember the country’s heritage in the form of memorials and graves and heritage sites located in Africa for those who had fallen fighting for democracy.

Meeting report

Opening Remarks
The Chairperson paid tribute to Deputy Minister, Ms Bavelile Hlongwa, who passed away on 13 September 2019. All were asked to stand and hold a minute of silence.

The Deputy Minister, Ms Noxolo Kiviet, took the opportunity to pay tribute to her departed colleague as well. She noted that the Committee was creating a good plan to leverage South Africa’s heritage and expand the property portfolio in foreign countries, as part of the liberation South Africa enjoys. It was therefore important to take stock of what South Africa has, and what the country uses these properties for.

Deputy Minister Kiviet introduced Ms Swanzie Matthews, Deputy Director General: IAQ as the leader of the delegation from DPWI. Next to her was Mr Siboniso Sokhela, Acting Chief Director: Immovable Asset Register (IAR), DPWI; Mr Peter Chiapasco, Chief Director: Portfolio Analysis, DPWI; Ms Manini Dumane, Portfolio Manager: DPWI; Ms Magdeline Tshabalala, Chief Director: Property Performance Management, DPWI; Mr Caiphus Ramashau, Chief Financial Officer, DIRCO; Ms Bernice Africa, Chief Director: Properties Management, DIRCO. Other members of the delegation were: Ms Melanie Titus, Parliamentary Liaison Officer (PLO): Dan Botes, DIRCO; Mr MS Nkosi, PLO: DM C Mashego-Dlamini, DIRCO; Mr Thulani Stemele, PLO: Ministry (DPWI); Mr Sivuyile Mkebe, PLO: DM C Mashego-Dlamini, DPWI. Ms S Subban, Deputy Director General (DDG): Real Estate Investment Services, sent apologies.

Ms Matthews announced that Mr Chiapasco would give the DPWI briefing on the nature and extent of South Africa’s foreign assets, given his extensive knowledge of the portfolio. This would be followed by a presentation by DPWI’s colleagues at DIRCO.

Number and Status of DPWI Properties in Foreign Countries
Mr Peter Chiapasco, Chief Director: Portfolio Analysis, DPWI, said that the two presentations were aligned, and talked to the robust relationship between the two departments, making for a more effective and judicious management. The presentation dealt with DPWI property portfolio abroad, its role in their management, and its leadership and technical assistance to DIRCO as custodian of foreign properties.

The DPWI mandate in the Government Immovable Asset Management Act (GIAMA) comprises three roles:
• The role of custodian as defined by GIAMA for those immovable assets for which the DPWI is the custodian. DPWI is required to adhere to GIAMA and other relevant legislation and regulations.
• The role of user of managing immovable assets utilized by DPWI to fulfill its mandate.
• The role of implementing agent building, managing and maintaining properties in the portfolio.

Over the years, its historical role as the preeminent custodian of state immovable assets, its portfolio had reduced over time as segments were handed over to other sectors in government to provide a focused and dedicated operation. Leading up to 1999, the Department of Foreign Affairs (DFA) had argued that it was better positioned to manage properties at foreign missions abroad owing to their extensive presence throughout the world and their proximity to the property markets, from which assets were leased or properties acquired or maintained. The Department of Public Service and Administration (DPSA) solicited the assistance of the Public Service Commission (PSC) to investigate and recommend on the matter. DPSA accepted PSC recommendations that the function to manage and maintain state-owned immovable assets abroad used by the diplomatic service – including leasing, purchasing, disposal, alterations, maintenance, refurbishment, furniture and facilities – was transferred from Public Works to DFA on 1 May 1999 by official letter of transfer. DFA was not to duplicate professional, technical and essential services such as architects and valuers but to continue to source services from Public Works as far as possible.

DFA had the mandate to dispose of such properties but it did not have the legislation to do so. Although the disposal function was handed over, the legislation empowering a custodian to dispose of immovable assets was not amended at the time (State Land Disposal Act 1961), leading to DFA not being able to dispose of redundant properties on its own.

Based on the information on Property Management Information System (PMIS) at the time, 206 improvements (offices and residential buildings) on 101 land parcels in use for diplomatic purposes throughout the world were handed over to DFA. Mr Chiapasco noted that it was important to understand that DIRCO is not an overseas custodian of properties.

DPWI Property Portfolio abroad
A number of departments have been custodian of state-owned assets abroad:
• In terms of the Intelligence Services Act, 2002, the State Security Agency is custodian of a portfolio of assets that service its line function in foreign countries (the information on those properties is known to them; the business of the SSA is not the sort of information that they would share with other departments).
• Leading to 1999, DPW was custodian of properties in use by Foreign Service (chanceries, official residences and land acquired for that purpose), and properties for other purposes (a prominent war memorial, base and weather stations on Antarctica and Southern Ocean islands).
• After transfer of foreign missions in 1999, DIRCO became the third custodian of assets abroad.

DPWI Immovable Asset Register
Through its Immovable Asset Register Enhancement Program, DPWI and DIRCO are in process of reconciling foreign immovable asset registers for further enhancement. Part of the exercise is also as a pre-eminent custodian, to assist DIRCO with generally recognized accounting principles (GRAP) compliance.

The current DPWI foreign immovable asset register comprises mainly of a First World War Memorial number of islands in the southern Atlantic Ocean (e.g. Marion Island, Prince Edward Island), as well as the South African Research Base Station (SANAE IV) as part of the South African National Antarctic Program (SANAP) in Antarctica which are programs run by the Department of Environment, Fisheries and Forestry (DEFF). Mr Chiapasco pointed out the distances between the islands and South Africa on a map which was one of the pictures added to the presentation. The station is designed to withstand inclement weather; being built on stilts allows winds to blow underneath the building, for example. The SA Agulhas II also know as Miriam Makeba, notable for its ice-breaking capability, takes the maintenance staff there. There is a South African weather station on the British Gough Island. There is a First World War Memorial to fallen South African soldiers in Delville Wood in France designed by the same person who designed the Union Buildings.

Mr Chiapasco mentioned the Commonwealth War Graves Commission looks after the war cemeteries throughout the world. DPWI is not a direct custodian of these cemeteries, but contributes pro rata. It does have a participatory role through Foreign Affairs.

The current DPWI register of its immovable assets abroad (properties and land parcels) will be provided to the Portfolio Committee to strengthen its oversight function as requested.

Property Acquisition and Management
For the DPWI foreign property portfolio, the Department undertakes lifecycle management of the Base and weather stations in Antarctica, Gough and Marion Islands, with staff and supplies travelling from Cape Town to these localities for purposes of maintenance. The Department does this as custodian on behalf of the Department of Environment, Forestry and Fisheries who is the User at these facilities. Maintenance is funded by the DPWI. Delville Wood is subjected to the same life cycle management on behalf of the Department of Sports, Arts and Culture, for which the Department has an official stationed in France, at the facility. This person handles both tourism and maintenance of the memorial.

Since 1999, DPWI has assisted DIRCO with a variety of functions, at the request of DIRCO:
• Project management and advice on construction of new diplomatic missions e.g. Abuja and Maseru;
• Valuation of various properties abroad to inform acquisitions and disposals;
• Options analysis and space planning proposals for the UN Mission in New York.

Property Disposals
DPWI is mandated to dispose of the DPWI foreign properties in terms of the State Land Disposal Act. However, the need has never arisen, and it is unlikely to do so, given the strategic importance of these immovable assets. No one owns Antarctica; there is an Antarctica Treaty and South Africa is one of 48 countries that were assigned that portion of Antarctica.

A number of properties in use by the Foreign Service were declared redundant from 1994. Pre-1999 these included former TBVC properties;  properties in the UK and Italy, and the official residence in Rio de Janeiro, Brazil. The balance of the redundant properties, as well as others identified by DIRCO after 1999, remained to be sold. However, both departments prioritized the development of enhanced operating models during the next era to improve portfolio asset management, including disposals. Some of these foreign properties were quite valuable in terms of heritage; these properties could not be sold as if there was no attachment to them.

DPW aimed to establish the State Property Management Agency (SPMA) and the Foreign Property Bill, exploring the possibility with National Treasury of retaining abroad proceeds from foreign disposals to be used for other capex investments projects. These initiatives were not realised, and in 2008 it was approved that the remaining 20 redundant properties at foreign missions should be disposed through public tender. The disposal of 13 Namibian properties was prioritized as a pilot project, managed by a Joint Foreign Disposal Committee (JFDC). Five were successfully disposed of by public tender in 2010/11. The remaining eight properties could not be disposed as the highest bidders could not raise the funds thereafter.

No further approval to dispose was granted thereafter, in view of emerging concerns about the loss of South African heritage, divesting the people of South Africa (most of whom had been historically disadvantaged in relation to property ownership) of valuable foreign properties, as well as concern that disposal of these properties was not without personal interest. Mr Chiapasco asked a rhetorical question: How would the country justify the disposal of these properties to the generations to come? It was intended for Cabinet to resolve on the matter but this did this not transpire owing to the changes in government in recent years.

During 2017, DPW received a request from the State Security Agency (SSA) for it to transfer the remaining redundant foreign properties for its own use. They indicated:
• concern with the costs and quality of the accommodation leased for them abroad, and
• they had available funds to rehabilitate the vacant foreign properties.

DIRCO and SSA have been engaging on a user/custodian basis with a view to determine if the reuse of the properties by SSA is feasible in the context of Foreign Service rules and regulations. Mr Chiapasco reminded Members that users abroad do not work with DPWI but with DIRCO, and they approached DIRCO with their requirements when they needed a custodian abroad.

Foreign Service Bill
While there were previous initiatives to set up operating models – which did not really gain traction – DIRCO decided that the foreign property disposal needed to be put to bed. The Foreign Service Bill which was adopted by the National Assembly on 04 December 2018, deals with disposal specifically in Clause 9 on Immovable Assets. Public Works participated as a key stakeholder in the development of Clause 9 and supported the Bill in alignment with the 1999 letter of custodial devolution. However, it required enhancement of the wording to align with definitions used GIAMA. DIRCO, in the main agreed to these requirements. Should the Bill be revived and promulgated, all life cycle asset management functions including disposals of foreign properties will be undertaken by DIRCO.

In closing, Mr Chiapasco mentioned that flowing from inter-departmental discussions, DPWI is continuing to assist DIRCO with technical expertise, assist as project manager on new capex projects abroad, and
with feasibility studies, valuations and condition assessments of foreign planning and acquisition projects.

Mr Chiapasco was pleased to report that the leadership of DPWI and DIRCO have recently envisaged an interdepartmental cooperation to achieve optimum management of the portfolio of foreign properties, moving forwards. This will be detailed in a Memorandum of Understanding in Quarter 3 of 2019/20; there will be very clearly articulated roles of both the departments.

Number and Status of DIRCO Managed Properties in Foreign Countries
Mr Caiphus Ramashau, Chief Financial Officer: DIRCO, stated that DIRCO was grateful for the relationship between the two departments; they would address challenges that they had experienced in the past. This included tabling the Foreign Service Bill, and difficulties in how DIRCO managed properties abroad, When DPWI released its mandate, DIRCO did not duplicate, but rather built on the expertise that DPWI had. DIRCO wanted to regulate disposals, that is what DIRCO is still engaging on how it would do that. Mr Ramashau handed over to Ms Bernice Africa, Chief Director: Properties Management, DIRCO, to speak on the number and status of properties managed by DIRCO outside of the RSA; achievements, challenges and initiatives to overcome these in foreign property management; and the cooperation between DIRCO and DPWI in this regard.

Ms Bernice Africa, Chief Director: Properties Management, DIRCO, gave details on DIRCO’s properties abroad and immovable asset register; property acquisitions, development and management, and explained how the Foreign Service Bill would give DIRCO full custodianship, including of disposals. DIRCO and DPWI have agreed on collaborating and strengthening its relationship in order for DIRCO to be ready to implement the Bill. The departments had agreed on a professional partnership to achieve –
• shared services – deployment of professionals to accelerate project execution, process review, system design and investment analysis
• shared best practices and systems; and
• shared skills, training and development via specialized agencies such as SAPOA, CIDB and CBE.
The departments are currently negotiating the Memorandum of Understanding to             give effect to this agreement.

DIRCO Property Portfolio Abroad
The property portfolio used for the Foreign Service consist of chanceries (offices), official residences and staff accommodation. DIRCO currently manages 911 rented properties and 163 state owned properties. DIRCO policy is that properties are only rented where no state-owned properties are available for use. The payment of foreign leases is one of the cost drivers of the DIRCO operational budget. The following internal control mechanisms are in place to contain expenditure:
• Accommodation norms and standards are set per mission and staff category;
• Procurement prescripts require the testing of the market for all new leases and renewals (missions go to estate agents and they will make a recommendation on what is the best property to rent);
• Accommodation is approved in accordance with approved Delegations of Authority (approvals are centralised at Head Office);
• Rentals are fixed for the contract period and contract periods are linked to an official’s term of duty;
• Mission budgets are based on approved norms;
• Legal review of all lease agreements is undertaken to ensure the inclusion of appropriate diplomatic immunities and privileges, landlord responsibility to maintain premises as well as            appropriate contract termination regimes.

A Lease Register with future financial commitments are included in the DIRCO Annual Financial statements and audited annually.

DIRCO Immovable Asset Register
DIRCO maintains an accurate and reliable Immovable Asset Register of all state-owned properties used for the Foreign Service, supported by Title Deeds in the name of the Government of the RSA. The Immovable Asset Register is included in the DIRCO Annual Financial statements.

DIRCO and DPWI are currently collaborating on an asset enhancement project to reconcile the assets transferred by DPWI to DIRCO in 1999 with the current register held by DIRCO (the register identifies what assets remain in the name of RSA, what assets were disposed of, the information on each of those assets, which assets were deployed afterwards, again with the entire paper trail on how DIRCO got to that point).

Property Acquisitions, Development & Management
Since the early 1990s and in line with the Government’s focus on the African Renaissance, DIRCO and DPWI have been collaborating on the acquisition and development of state owned facilities on the continent, notable achievements include:
            • Kinshasa, DRC: Chancery, Official Residence and 12 staff houses
            • Addis Ababa, Ethiopia: Chancery and Official Residence
            • Abuja, Nigeria: Chancery and Official Residence
            • Maseru, Lesotho: Chancery and 8 staff houses
            • Dar es Salaam, Tanzania: Chancery
            • Lilongwe, Malawi: Chancery and 3 staff houses

During this period, there was also a very big construction of a chancery in Berlin. In all these projects, DPWI acted as project manager or adviser with DIRCO being financially and operationally accountable and including an element of skills transfer (especially in project management) from DPWI to DIRCO. DIRCO increased the portfolio by strategic property acquisitions in areas such as London (OR Tambo House), Brussels (Chancery), Geneva (Official Residence) and New Delhi (land parcel for development).

The contraction of the South African economy has resulted in a DIRCO Property Acquisition Strategy, approved in 2017, which aims at reducing its rental expenditure by increasing property ownership via strategic acquisitions and developments and using alternative funding mechanisms such as development partnerships. DIRCO realised that when looking at properties abroad, and trying to acquire in dollars, its budget would not have gotten very far. Three criteria are set for investment decisions:
• the strategic importance of the country (Multilateral missions, P5 countries, BRICS partners, anchor states);
• economic factors - current expenditure in the form of rentals (New York is the most expensive rental);
• the availability of land.

An assessment of the current property portfolio, segmented into regions, reveal the following:
• The portfolio in Africa is the largest in number (103 properties), is the newest and presents challenges in maintenance because there are not necessarily a large number of local service providers;
• The portfolio in Europe is medium in size (37 properties), most valuable in Rand terms, many properties are regarded as heritage assets in terms of local laws (e.g. The Hague property is more than 100 years old), in need of extensive preventative maintenance and/or renovations, in some cases non-compliant with EU legislation on hazardous materials (e.g. asbestos, R22 gasses);
• Portfolios in Americas (16 properties), Asia and Middle East (7 properties) are small in size, relatively well maintained with service providers readily available.

DIRCO commenced with a programme of renovating and modernizing pre-1990s assets to prolong lifespan, make optimal use of space and improve the          overall condition of the asset. Renovation projects in Ottawa, Washington, Brasilia, Lisbon, Tokyo and Canberra have been completed.

DIRCO aims to maintain an effective balance between practical devolution of functions to missions and effective norm setting and control at Head Office.

Missions perform annual inspections of properties with or without the assistance of local professionals, which informs annual maintenance planning and budgeting. Missions report on maintenance activities and expenditure on a quarterly basis. Requests for unfunded priorities are considered by Head Office depending on budget availability.

Missions are supported in maintenance activities by locally recruited maintenance staff (locally-recruited personnel; LRPs) on the mission establishment.

DIRCO is facing a backlog in maintenance activities. This has been caused by:
• Maintenance being reactive in nature, with a high reliance on unscheduled activities;
• Reduction in locally recruited maintenance staff at missions, due to pressures to reduce            the Compensation of Employee ceiling;
• Lack of a fully-fledged and professionally staffed facilities management function at Head Office with a planned maintenance programme for all facilities.
DIRCO is prioritising the development and implementation of a comprehensive maintenance strategy, including scheduled and unscheduled maintenance, use of professionals, predictable costing and ease of reporting.

In developing such a document, DIRCO is using the National Infrastructure Maintenance Strategy (NIMS) published by DPWI as well as best practice from countries with extensive diplomatic property portfolios (e.g. the USA, the UK, Australia, Canada).

Property Disposals
There are 29 unused state properties in the current property portfolio.

Properties are vacant due to –
• The closing of missions or the closing of representative offices in Walvis Bay, Bonn, Funchal (Portugal), Zurich, Blantyre, The Gambia;
• Superfluous assets in Paris (parking bay);
• Assets in Brazil (Sao Paulo and Brasilia) located in areas that have deteriorated over time;
• Assets in poor condition in Mbabane and Windhoek (it will be the first priority of DIRCO to renovate the latter properties so that they can be used moving forward.

DIRCO is awaiting feedback from the SSA who has expressed interest in using some of the assets.

Efforts to rent properties out in order to defray maintenance costs are subject to the Vienna Convention of 1961 which affords diplomatic privileges and immunities to diplomatic properties. These properties may only be used for diplomatic purposes. ‘Commercialisation’ of the properties will lead to additional cost and risk. If these properties are no longer diplomatic, that would mean that rates and taxes would need to be paid on the property; and DIRCO would be sued, and DIRCO could sue either local [inaudible 01:12:23-01:12:24] and the landlord should DIRCO have a tenant on the property.

Despite the transfer of the property portfolio from DPW to DIRCO, DPWI remains mandated to dispose of properties via the state Land Disposal Act.

DIRCO missions remain responsible for the safeguarding and maintenance of the properties in terms of the Public Finance Management Act (PFMA). In addition to the cost associated with such safeguarding and maintenance, missions need to appoint caretakers to oversee the properties or incur travel costs due to the lack of presence in the city where the properties are located.

DIRCO has identified all unused properties and are engaging with interested parties on potential utilisation. A divestment analysis will be undertaken in order to make informed decisions on disposal or continued use of each asset in preparation for the promulgation of the Foreign Service Bill.

Foreign Service Bill
DIRCO introduced the Foreign Service Bill in Parliament in 2016. Clause 9 of the Bill aims to give legislative effect to the transfer of the property portfolio from DPW to DIRCO in 1999. As part of the consultation process, DPWI engaged the Portfolio Committee on International Relations and Cooperation and supported the Bill, provided that custodial functions are executed in line with the Government Wide Immovable Asset Management Act (GIAMA), which amendments have been effected. The Bill provides as follows:

9(1) Notwithstanding the provisions of section 4(1)(a) of GIAMA, the Minister is the custodian of all immovable assets outside the Republic which was acquired for use by the Foreign Service.
9(2) The Minister must act as caretaker of the immovable assets under his or her custodianship and must acquire and manage such immovable assets as contemplated in section 13(1) and (2) of GIAMA, in accordance with the Public Finance Management Act, 1999 (Act no 1 of 1999), and any other applicable law.
9(3) Notwithstanding the provisions of sections 4(2)(b)(i) and 13(3)(b) of GIAMA, the Minister may dispose of immovable assets under his or her custodianship in accordance with this Act and any other applicable law, after consultation with the Minister of Public Works and the Minister of Finance.
9(4) A decision to dispose of any immovable asset must:
(a) be in the interest of the effective management of the Foreign Service;
(b) be to the benefit of the Republic in order to achieve the best functional, financial, economic and social return or benefit from the disposal of the immovable asset; and
(c) take into account the value of the immovable asset.”

Adv Sandea De Wet, the DIRCO State Law Adviser, explained the current status of the Bill: The Bill had lapsed at the end of the Fifth Parliament. After the Bill was passed by the National Assembly, the NCOP had had a problem with Clause 2(2) that stated this Bill would trump other laws in the case of a dispute. It had accepted all other clauses. This Bill imminently to be revived in the Sixth Parliament and the Portfolio Committee on International Relations received a briefing last week. Feedback had been received from the Office of the Chief State Law Advisor that Clause 2(2) – and the rest of the Bill – was certified as constitutional.

The Department has commenced with the preparation of the regulations to give effect to the Bill.

DIRCO Preparations for Full Custodianship
DIRCO and DPWI has agreed on collaborating and strengthening its relationship so DIRCO would be fully ready to implement the Bill. The departments agreed on a professional partnership to achieve –
• shared services – deployment of professionals to accelerate project execution, process review, system design and investment analysis
• shared best practices and systems; and
• shared skills, training and development via specialized agencies such as SAPOA, CIDB and CBE.
The departments are currently negotiating the MOU to give effect to this agreement.

Discussion
Ms S Van Schalkwyk (ANC) stated that when looking at the Legacy Report of the 5th Parliament, they specifically talked about properties outside of the country, they had done some oversight visits. They had discovered anomalies in a number of properties reported such as in Namibia, against what was actually found on site visits. Now that the DPWI had received this report, had these anomalies been addressed in the presentation? Secondly, the DG of Public Works reported that a multi-departmental task team was working on geographical locations and maintenance needs. She asked if the multi-departmental task team, and the inter-departmental co-operative team, were the same team. How far were they with the work assigned to such a team? Was the presentation a reflection of the outcome of the work done? She asked if they had a list of all the fallen heroes housed by the War Graves Commission. In terms of New York rentals, was it not more viable to buy or construct than to rent, seeing that it is so expensive. She referred to the land parcels that are available. Could they not be developed to be better used, especially where SA is renting so much?

Ms S Graham (DA) appreciated learning more about SA’s international properties. She asked if, when SA was renting properties overseas, there were any differences in the immunities afforded to those properties, if SA did not own the property. What was being done with the balance of the properties in Namibia; had those properties gone out to tender again, or if they would be retained.

Ms S Kopane (DA) asked for a timeframe for the collaboration to reconcile the DIRCO asset register. She asked if it was possible for the presenters to tell them the value of those properties that DIRCO acquired, since "nobody talks about the money here, just numbers". It was clear that there was a backlog in maintenance so there were problems. She asked for details on the extent of the backlog. She asked if DIRCO have the money for the maintenance. From Slide 11 of the DIRCO presentation, it was clear that DIRCO did not have professional people assisting them with the annual inspection. It was the same in DPWI; the management of properties was running short of personnel. She asked that going forward, what did DIRCO think they could do better so that they could have professional specialists.

Ms A Siwisa (EFF) stated that in the previous meeting, the DG said that Public Works did not do any maintenance and inspections in any of their buildings. But now the Department lays claim to inspections management and maintenance for DIRCO? DIRCO talked about project management and how DPWI advises on construction and technicians. When it came to construction, the Members knew that DIRCO had entities in Public Works - were these entities actually consulted, so they are of use when it comes to advising? On disposals between 1994 and 1999, she asked if any other foreign assets had been acquired to fill the gap of those sold, especially the official residence in Rio de Janeiro in Brazil. She asked how much was being paid for the rented properties and why SA could not buy properties in those places. She asked what was being done about the properties that were just standing empty overseas; for example, in Bonn. There might be South Africans in those countries that might be in need of accommodation such as students. One needed to look into how the properties could be used productively for South Africans in those countries.

Mr W Thring (ACDP) referred to slide 5 presented by DIRCO and asked where the ten vacant land parcels were. There were 911 rented properties and asked for the cost of those rentals. He asked what the value of the state-owned properties was. He asked why those land parcels were purchased, and what the value of those land parcels was. The payment of foreign leases was one of the cost drivers of DIRCO. Why was DIRCO not using vacant land parcels to reduce the cost drivers? He referred to the superfluous asset of the parking bay in Paris. He asked the cost of the bay and referred to "fruitless and wasteful expenditure". He also what the intention was in dealing with that superfluous asset.

Mr E Mathebula (ANC) asked if there were assets that were acquired and disposed of before 1994. Were there any state assets which were not part of the assets register somewhere outside South Africa and if anything was being done to track those assets. He asked if any assets were prescribed, and in whose hands those prescribed assets were.

Ms L Shabalala (ANC) asked about the Foreign Service Bill and to understand why there was a problem with the Bill. The DPWI presentation noted the intention of the DFA not to duplicate professional, technical and essential services such as architects and valuers, but to continue to source services from Public Works. Based on this, it seemed that the two departments were still going to go a long way working together. However, DIRCO mentioned a quantity surveyor and she was trying to make sense of whether it would be a professional or technical person. She said that maybe it is too political and ideological but she is trying to understand the prominent war memorials. She had been to one of the countries where some of the comrades have been in the war. In those countries, there were graves of the soldiers or fighters of freedom. Do they fall outside of this? Does this Department take care of them? Or is it the responsibility of the Department of Arts and Culture? She had been to those graves, and she was not sure when DPWI talks about the "prominent war"….she was trying to understand if this includes everyone as you are talking about South African soldiers who died outside the country, and the war and the graves.

She was interested to know what DPWI does when they do maintenance via the SA Agulhas II. Do they send project managers of the Department or service providers? She was unsure about the Foreign Service Bill and what the Department is currently doing. She noted that the Bill was passed and yet still to be voted; she asked if she was correct in saying that. She was asking because there was still a part of the process that was outstanding. What she did not understand was that DIRCO was already implementing the Bill. She asked that she be corrected if she was wrong.

The Chairperson mentioned the sites in foreign countries. In 2017, the OR Tambo House was opened in Zambia and declared a Heritage Site. Was that included in the 103 properties in Africa? She noted the Solomon Mahlangu College in Tanzania in Morogoro. The Department could not just throw it away because it is part of our heritage. She asked if the Solomon Mahlangu House was part of the 103 sites in Africa. She knew the war memorials that Ms Shabalala was referring to were from World War One or Two. She asked that those who fought here for freedom should be considered. Those who fought for this democracy needed to be part of the sites that the Department currently has.

She understood that the Foreign Service Bill was already passed in the Assembly; she thought that now it was with the NCOP. Just as the previous Committee had done, the current Committee would support the Bill fully. The Department hoped that the Bill would be finalised, and that the President would sign it, so that there would be no overlap. Her interest was in the properties in Africa. She knew that there were many who fought for the freedom of this country. You talk about the OR Tambo House in London but what about the OR Tambo House in Zambia and Zimbabwe? She mentioned sites in Zambia, Tanzania and many other sites in Mozambique where many of South Africa's people were killed by the then-government. She asked what about those sites.

Response
Mr Chiapasco responded in reference to the Legacy Report and the anomalies on property in Namibia. He said that the former Committee on Public Works had spoken with the High Commissioner, who had passed on some verbal information that there were some other properties that neither DIRCO nor Public Works knew about. That was, Mr Chiapasco thought, part of the work that the Department was still busy with in reconciling the asset register. What the Department knew of was the properties that the Department handed over, and the properties that had become vacant. However, there was a much longer issue that went back long before 1994. South West Africa was under the territorial administration of South Africa. Specifically, the Government properties would have been run by South Africa. He had only been around since April 1994, but there were still people from the old Government who indicated that the Cape Town Regional Office of Public Works managed those. South West Africa was given over in two waves. The first was to Namibia while SA kept Walvis Bay, and by special legislation in 1993, SA handed over Walvis Bay. Mr Chiapasco said that it was very possible that the properties that went over had transfer in title but not purpose and could still be reflected in the name of South Africa. The fact of the matter was that what DPWI had on its register are foreign assets that pertain to the Foreign Service, and that was what DPWI knew of. DPWI would, in the reconciliation, go back to the Property Management Information System and see what was on it. DPWI would have to filter and close out and ensure that those properties have gone over in terms of whatever legislation may have applied at the time.

He replied that the task team was established in a meeting of Public Works, DIRCO and SSA. It started off principally around SSA wanting to use the vacant properties abroad. The role of Public Works was to assist in custodial oversight and show the User Asset Management Plans (AMPs) and Custodial-Asset Management Plan (C-AMP) and assist the two departments. It did not have a broader role. The task team initially dealt with those properties which the SSA said should be given to them. It is now a task team that would be working in terms of the MOU between the two agencies to ensure the complete life cycle and the complete operational model was handed over. The MOU stated clearly the role of the DPWI and that of DIRCO; it was very clear what the roles and responsibilities were.

The War Graves Commission was principally for fallen soldiers in the First and Second World Wars, and that DPWI would be in touch with the Commission to ask for the list of names and pass them on to the Committee. DPWI did not currently have a list of those names, but would ensure that they got that list.

Mr Chiapasco stated that DPWI would go to the Property Management Information System and its file records, and see what was transacted with regards to properties sold prior to 1994. He said that the Annals and the filing documentation should be able to provide information on what DPWI owned and what was sold off at particular points in time. DPWI would be happy to provide information on what they could find.

On war memorials that are more from our era and more reflective of the country's own struggles, Mr Chiapasco stated that in recent years, DPWI had been involved in the renovation of Kaweweta in Uganda. The other site was the war memorial in Mozambique. DPWI would come back with more accurate information. DPWI worked on both of those sites very closely with the Department of Military Veterans, who was the lead Department for memorials. The DPWI was the infrastructure department, that supported the reconstruction, specifically of Kaweweta; DPWI handed over to the foreign countries to maintain the sites. Mr Chiapasco stated that there is place for further discussion as a country on this.

Ms Bernice Africa responded about the inconsistency in the number of properties in Namibia, that she thought Mr Chiapasco had done his best to explain that. A few years ago, DIRCO did an exercise where they wrote to each of the different provinces within Namibia to get a sense of whether there were any other properties registered in the name of RSA. DIRCO is quite confident that the current list of properties is all of the properties registered in the name of the RSA. However, DIRCO had also seen that for one or two of those properties, they had received the title deed, but if one asked the same question a year later, Namibia would say that the ownership is that of their government. DIRCO had to look on the list to find those items to find out that if it had been 100 percent converted. What DIRCO has on the list is definitely every property that DIRCO can account for.

The reason for the slight inconsistency might be that in 2017, DIRCO was requested by the Portfolio Committee to make a list of all properties not in use. DIRCO included the properties not being used in Namibia. That was the list that was taken to Namibia. Included was the Chancery, Official Residence and another which were in use, and those properties not in use.

On New York rentals, it was the intention of DIRCO's property acquisition strategy to identify the properties of highest rental value, and see how DIRCO could own such properties. Unfortunately, DIRCO was trying to own in a foreign jurisdiction, thus they were subject to local laws and legislation, as well as funding requirements. While DIRCO would like to own in New York, in looking at the costs, the Department could see that it would far exceed the budget. This brought them back the point of needing to identify alternative funding mechanisms for properties. DIRCO was engaging with Treasury to look at the ways DIRCO could use the current public-private partnership (PPP) regulations, and in what way that could be used in a foreign country. It is a matter of doing a proper investment analysis.

Ms Africa replied on the vacant land parcels, saying there is a land parcel in Gaborone, one in Mali, five in Mbabane, one in Abuja, one in New Delhi, and one in Riyadh, Saudi Arabia. Some of the land parcels were donated to the South African government, such as the parcel in Abuja. At one point, there was a big drive to donate to South Africa. Vacant land parcels can potentially be used, but what DIRCO will do is compare that to where they will get good value. On a list of rented properties one would see that New York is the most expensive, whereas Mbabane would be close to the bottom of that list. Doing an investment analysis would allow one to see what the expense of building in Mbabane would be versus the rental. One has to see if the land parcels provides a "big win". For DIRCO, two land parcels of immediate concern were in New Delhi (where a big difference could be made), and in Riyadh. From its acquisitions strategy, DIRCO would do an investment analysis to see what is of strategic and of economic importance, how it would link with what DIRCO already has, and that would indicate the property that DIRCO would develop next. It was thus not as simple as using the land parcels.

Ms Africa responded about differences in immunities. According to the Vienna Convention, whether SA rents or owns, SA has diplomatic immunities and privileges. This means that a property is considered as South African soil, and this means that a local government may not conduct a search-and-seizure on the property. From an ownership perspective, it is easier from a financial perspective as there are privileges that would be received if one decided to acquire land. If the land is owned, rates and taxes do not have to be paid. She mentioned the idea of renting the property in Bonn – if DIRCO were to do that, the property would become a commercial property; this would mean that the SA Government would have to start paying rates and taxes on the property; it would have to comply with local laws; and there would a be concern that since it is in a European Union area, it would be “incredibly regulated”.

Ms Africa stated that DIRCO had put walls and fences around the properties in Namibia, so that security is increased and they look better from the outside. DIRCO has started to engage with all the departments that may have an interest such as the SSA but has not come up with any real plan on what they would like to do. As the properties are subject to diplomatic immunity, DIRCO has given them a list of criteria that they comply with. Walvis Bay may be an area of interest area for the SANDF and the Department of Transport might also be interested. DIRCO would want to know as custodian what is it that a department would want to do with the property and it would use the property as DIRCO would have used the property. DIRCO is doing an investment analysis to see what the costs they are currently paying are, and what they will potentially get from the sale of the property. DIRCO has already done a professional evaluation of all the properties in 2019 so if they get to the point and make a decision to dispose of the property, they know its current market value. She would be "loathe to give" the values of the properties that were acquired. DIRCO's asset register contains valuations of every property and DIRCO would be happy to give that to the Committee formally.

Ms Africa replied about the maintenance backlog and how DIRCO is dealing with it. This question linked to the question of how to get professional expertise in maintenance. The big lesson for DIRCO was that in the past, DIRCO was relying on the missions to be the eyes and ears, to identify what needs to be done. DIRCO would provide the mission with the budget and they would do what needed to be done. That approach was ultimately not helpful - it is something that needs to be driven from Head Office with a fully-fledged unit to assist missions. But it would not help to have a professional assessment of 163 properties, and not do what DIRCO said it would do. DIRCO thought that it would be a better approach to do it regionally, where DIRCO can increase its capacity at Head Office. DIRCO would make the decisions on the professionals it would want the mission to engage. The mission would engage with the professional and get an assessment that DIRCO can comment on. For DIRCO, it would be moving from a reactive to a more proactive approach. DIRCO has regional ICT hubs as part of their structure going forward. For example, DIRCO would have an ICT hub in North America. DIRCO has been considering expanding those hubs to include property experts. The Canadians are using this approach very effectively. They have Head Office setting norms and a regional presence that is coordinating the work, and they have the actual mission reporting to a regional base. That might be an option.

Ms Africa replied that when DIRCO took over the portfolio in 1999, the asset register included a parking bay in the building. DIRCO is not paying anything for that unused parking bay. It is on the list of assets to be disposed of. She was aware of one prescribed asset that was bought many years ago in Maputo in the name of an official; it was the intention that the asset would be transferred into the name of the Government. It is a matter currently under litigation. The matter would be litigated in the country of origin, Mozambique, to ensure the asset is brought back to the state, and has a title deed in the name of the RSA. She was unaware of any other such assets.

On whether DIRCO is already acting as if the Foreign Service Bill has been promulgated, Ms Africa replied that DIRCO had taken responsibility since 1999 for acquisitions, management and maintenance. DIRCO could not dispose of assets at this point, and DIRCO has not taken on any project involving disposal. DIRCO is preparing for possible disposal in the future. For DIRCO, the starting point is to finalise the regulations under the Bill. There are a number of options: renting out the property or using it for an alternative option. There are a number of options to consider before DIRCO gets to the point of doing an actual sale and only after the Bill is promulgated. DIRCO is trying to get a system together to lead them to that point.

On whether the quantity surveyors were appointed by DIRCO or DPWI, Ms Africa replied that in all the projects between the two departments, Public Works acted as DIRCO's project manager or adviser. Public Works had an internal team that worked with them. That internal team would make a recommendation to DIRCO if there was a need to appoint professionals from the industry. In all of those joint projects, Public Works advised that an architect, engineer and quantity surveyor from the South African industry be appointed, and Public Works did all of those appointments. DIRCO jointly (with Public Works) appointed those professionals, and paid for the professionals; Public Works assisted DIRCO in managing those professionals. There were two layers of quantity surveyors involved.

Ms Africa stated that OR Tambo House is on the DIRCO asset register, and is being used for diplomatic purposes. DIRCO has a chancery, official residence and staff accommodation; OR Tambo House in London is used as one of the houses where SA houses diplomats. The two other properties noted are not used for diplomatic purposes so they are not on the DIRCO asset register.

Mr Caiphus Ramashau, Chief Financial Officer: DIRCO, replied that DIRCO had a Cape Town budget for 2019/20 valued at R263 million; for 2020/21 the budget is R278 million; for 2021/22 it is R298 million. There are challenges, and the way DIRCO wanted to address these, is approach National Treasury, to ask if the Department could explore other ways to increase its ability to speed up its completion of tasks. DIRCO calculates that its budget income falls short by 60 percent if one wanted to increase DIRCO's output.

He said that the Department agreed that the rental was high, and that something needed to be done to reduce that cost. Another challenge the DIRCO has is maintenance. Funding in the fiscus is constrained. If the Department could engage in discussion on [unclear 2:13:42.7-2:13:50.9]...in terms of being managed, would lead the fiscus in terms of the commitments that the Department shares. [Unclear 2:13:59.2-2:14:03.5]...in terms of taxes. But [2:14:07.1-2:14:10.0]...because the consulate therefore noted that [unclear 2:14:11.3-2:14:15.4; 2:14:18]....the contract that was signed by the consulate [unclear 2:14:20.5-2:14:27.2]...the consulate [unclear 2:14:29.9]...the Mission to the United Nations. That is the part that the Department was working on; the Foreign Service Bill is the framework that would regulate the matter.

DIRCO needed to develop regulations on performing this function of inspections of properties. The Department's implementation would go out to the market, and look for contractors; these contractors should be accredited in the country concerned. He mentioned Tanzania as well as Malawi, but the contractors must be based in those countries. The Public Works function abroad in terms of property inspection and project management team had to indicate that the [unclear 2:15:35.6-2:15:42] Even when the handover process was done, its obligations were [unclear 2:15:45.6-2:15:48.9] That would be [unclear 2:15:51.0] in terms of the mission. One of the areas that DIRCO wants to focus on is to leverage [unclear 2:15:56.2-2:15:58.7], because DIRCO wants to have the financial [2:16:00.9] in terms of how the Department manages this. [unclear 2:16:03.6-2:16:06.0] ...that already established that DIRCO wants to leverage on that, and see how it [unclear 2:16:09.7-2:16:16.6] ...require maintenance in terms of [unclear 2:16:19.6-2:16:23.4]...that DIRCO was able to approve.

A DPWI official addressed the relationship of the MOU that clarified the relationship that started in 1999. The 1999 statement had said that DIRCO would not duplicate the technical differences that it had with DPWI. The MOU did not change anything. What DPWI basically did was to start strengthening that relationship of technical support and expertise that it has with DIRCO. The idea was to accelerate the current priorities and projects, and to equip DIRCO to ensure that they are technically capacitated in the property and construction field that DPWI shares with DIRCO. Thus, the MOU reinforces what DPWI was doing over the years, looking at the capacity of DIRCO and to assist DIRCO to "walk instead of crawling".

Ms Swanzie Matthews, DPWI DDG: Real Estate Information and Registry Services, said that the Department was grateful for the reminders about the liberation struggle sites. The Deputy Minister mentioned earlier that the heritage roots are being extended, so that there is an international aspect as well. To the Department, the liberation struggle sites are not only significant in terms of sites such as the Solomon Mahlangu education facility, or the sites of the fallen heroes, but also in terms of the negotiations that would have taken place between some of the leadership and other African leaders. DPWI would go through its asset register to check what sites are actually there such as the OR Tambo House in Zambia, which had been mentioned and was on the list. The list would also indicate those sites where the respective countries have actually requested that those sites should be given back to them. The Department is mindful that for many of those sites, SA shares a common history with a country and that country's own combatants.

On the reconciliation of the asset register, Ms Matthews commented that the Department did not expect that exercise to go beyond two to three months. However, due to the element of the "quite complex" GRAP accounting framework, that may add a certain difficulty and require an extended period of DPWI support to DIRCO to meet the GRAP standards.

She addressed the question of immoveable assets that may have been stolen. The Department has a programme called "Operation Bring Back", where it looks at assets that perhaps have been illegally transferred, fraudulently transferred, or misappropriated. It has a specific programme that helps it to engage with its DIRCO colleagues in terms of the viability of looking at investigations into tracing international properties that have been stolen. She said that the Department took note of that "valid question".

Mr Siboniso Sokhela, Acting Chief Director: Immovable Asset Register (IAR), DPWI, addressed the GRAP accounting requirements. The exercise has started to reconcile asset registers between DIRCO and DPWI. It is estimated that the exercise will be completed within 30 days. The exercise will ensure there are no gaps in the properties transferred in 1999 to DIRCO. Apart from that, DPWI had also shared with DIRCO the policies and the guidelines it has developed. DPWI embarked on a programme to develop a GRAP compliant asset register in 2014. It took long to develop a GRAP compliant IAR as DPWI has more than 80 000 properties and more than 10 000 land parcels within the country.

A DPWI official replied about the maintenance done on islands, specifically if the Department uses its own officials or uses contractors. Someone mentioned that it was only officials who do maintenance on Gough Island and Marion Island. When the Department does maintenance it was still on contract. Most of the time, the Department uses internal staff to do maintenance. They either fly or they go on an expedition trip.

Deputy Minister Kiviet asked that she be allowed to indicate that sometimes DPWI and even DIRCO were looked upon as departments that were "problematic all the time". She went on to say: "But when you get exposed to what some sections of the Department do, you really appreciate the work that they do". There was a need to look at the war veteran sites, or heritage sites. The sites that are there now are those that sites from First and Second World Wars. The current Government has an Inter-Ministerial Committee that deals with the African heritage liberation roots. She said that she had received information the previous night on the work of mapping heritage sites internally in South Africa. Each province has identified three important sites within their boundaries. The Inter-Ministerial Committee is working with those neighbouring countries, as far afield as Tanzania and other liberation sites. Once the IMC has identified which properties would form part of the property range, it is only then that DIRCO would be involved. Currently, the Inter-Ministerial Committee is led by Sports, Arts and Culture, but the participating departments are Military Veterans, Tourism, Public Works and Infrastructure, Environment, Forestry and Fisheries, Basic Education, because those sites must be part of the country's education. Transport is also involved, because a means of transport will be needed to connect to sites. The President is also involved, and the Government Communications portfolio. Those departments meet from time to time to discuss the way forward, especially with respect to identifying these sites. Once heritage sites are built, they are handed over. The mission in that country would take responsibility for that site. She did not want Members to think that they had forgotten - one cannot forget.

The Chairperson thanked the Deputy Minister and her team for the clear explanations given in response to the questions. The Committee wanted to check how far they were with the Foreign Service Bill. As far as the Committee knew, there was no contestation between DPWI and DIRCO on the Bill. The Chairperson said it is crucial that DIRCO, when taking over the foreign assets, uses GIAMA. It must not be a "by-the-way" issue. GIAMA was used by DPWI when dealing with government assets.

The briefings had clarified many issues that were unclear. The Committee was taking this up as a continuation of the work by the Fifth Parliament Committee. The Committee had to take on the Legacy Report, that was why they had this meeting to finalise and close that chapter. Section 25 needs amending and the Chairperson raised that there are municipalities that are [unclear 2:33:03.3-2:33:15.6]. Regarding the City of Cape Town's land - it is in the public domain - the land is being sold. When the Committee returns from recess, that question will come up again. Members must be ready, because it is this land that is being talked about when SA amends the Constitution.

Committee programme
The Secretary said that the programme received its focus areas from the House Chairperson, and that was why the programme was in the manner that it was. The first deadline of the Committee is the adoption of the Budget Review and Recommendations Report by 18 October. That is why in the first week of third term, there would be Annual Report presentations from the Department, the PMTE and other entities. A second focus area was that the Committee would be getting the Second Quarter Report from the DPWI within the next term. A third focus area was the outstanding issues to do with the Council for the Built Environment (CBE), the Independent Development Trust (IDT), and the Expanded Public Works Programme (EPWP).

The Content Advisor, Mr Shuaib Denyssen, seconded the Secretary's last point about the three items. Those three came from [unclear 2:46:11.1] report. The Committee had legally to follow up on the three annual reports and annual financial statements. Otherwise the Committee would have focused on the other items, including the DEFF's response that was required.

The Chairperson noted that the Annual Report meeting started at 9:30 and ended at 17:00.

Ms S Van Schalkwyk (ANC) was concerned that there was insufficient time for considering the Budget Review and Recommendations Report (BRRR). Her proposal was to keep in mind that the Committee should receive the draft report latest Monday, so they could work on it and be ready for the adoption of the report on Wednesday 16 October.

Ms L Shabalala (ANC) noted that the Committee would get another briefing by the Auditor General. She made comments about the five-day oversight visit to small harbours and their development for economic transformation. It will assist the Committee to go to Western Cape ones and make a comparative study when they go to other harbours and she mentioned KwaZulu-Natal.

The Chairperson said the AG would present the actual audit report and point to items that the Committee should follow up with DPWI. That was the reason for having that part of the programme with the AG.

The Secretary responded about the oversight visit to small harbours that DPWI was strictly focusing on the IDT programme. The reason for not focusing on small harbours in the Western Cape was that the 5th Parliament had already dealt with that, and that these reports were circulated to the Members. The report recommendations have been incorporated into the Legacy Report also circulated to Members. The second phase of the oversight would be in the Eastern Cape and KwaZulu-Natal, with a focus on Port Edward and Port St Johns which are earmarked for development at this stage. The oversight visit programme was currently provisional until approved by the House Chairperson.

She replied to Ms Van Schalkwyk on the time allotted for consideration of the BRRR. Given the tight timeframe that the Committee had been given by the Office of the House Chairperson, she was not sure if the Committee would have the liberty of time to have two days of consideration. The Committee comes together to consider the report, after which a soft copy is sent to Members to have a look through. Then Members could pinpoint whatever needed to be changed, and finally the Members would go back and adopt the amendments.

The Committee approved the programme.

The minutes from the 11 September 2019 meeting were adopted.

Ms Graham asked a question on the Third Quarter Programme related to the Department of Environment, Forestry and Fisheries, (DEFF) where the Committee was supposed to have had a response to a letter by 16 September. Had a response been received?

The Committee Secretary replied that there had not been a response from DEFF. An email was sent to both departments but there had not been a response. She also flagged that with the DPWI, when there was a meeting with DPWI Members complained about matters that were still outstanding. DPWI was working on the written response.

The Chairperson said that they would get a response from DEFF through the Secretary.

The meeting was concluded.
 

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