SANParks and SANBI on their 2018/19 Annual Reports

Environment, Forestry and Fisheries

09 October 2019
Chairperson: Mr F Xasa (ANC)
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Meeting Summary

Annual Reports 2018/2019

SANParks reported that 74% of its targets had been met. There were three big external issues over which it had no control: the risk of the effect of climate change; the state of the economy; and crime and wildlife crime. A fourth issue was of an internal nature and related to irregular expenditure. SANParks had, as the outcome of a three year process, identified irregular expenditure that had occurred years ago and had proactively declared it to the accounting and audit authorities. It had taken steps to ensure that staff understood what was needed to prevent future occurrences. On Goal 1: Sustainable Conservation Assets, there had been a decrease of 75.5% in fines as traffic fines within the parks could no longer be issued in terms of the National Road Traffic Act. An air wing strategy had been developed and approved but high costs had stopped its implementation. On Goal 2: Diverse and Responsible Tourism, SANParks had experienced a 7.7% decrease in visitor numbers. On Goal 3: Progressive, Equitable, and Fair Socioeconomic Transformation, 6 400 full time equivalent jobs were created. On Goal 4: Effective Resource Utilisation and Good Governance, the total male to female ratio target was not achieved. Turning to the financial statements, SANParks reported that its asset base had increased by R210m. SANParks was a going concern with a strong cash position and total revenue that breached R3b for the first time.

Members asked what resources were made available for oversight of the Marine Protected Areas (MPA) and were the resources sufficient. What impact would the cordoning off of certain areas to elephants have on the migratory routes of elephants and other animals? Members asked what reforestation programmes were in place as a way to mitigate against climate change and the rise in temperatures. Members asked if SANParks was engaging with the Green Scorpions as rhino poaching was not sporadic but was organised crime. Members asked what plans it had to mitigate speeding. Why did it take 10 years to review the parks’ management plan? Members asked if rhino poaching involved SANParks officials. Had arrests been made rhino poaching? On the donation of science laboratories, did SANParks monitor the work being done at the labs? Members said there was no mention of the audit report in the presentation.

Members asked how SANParks managed the hectares of land under its control and what impact it had on its budget. What strategies was SANParks implementing to mitigate the decrease in income from traffic fines? What alternatives was it considering for the air wing strategy? Members asked if CSIR and tertiary institutions were used for SANParks research projects. Why had visitor numbers decreased? How much revenue was generated? Members asked if local communities were being used for the full time equivalent job creation projects. What happened to all the people that underwent training in EPWP projects?  What were the green economy projects? How would the male/female ratio be corrected? What were the minimum educational requirements? Members asked about consequence management for the irregular expenditure. They asked what the liquidity ratio was and its projection for the next few years. Members said SANParks procurement procedures were not up to standard. They wanted to see more black women faces in the organisation, not just more women. Members asked how SANParks supported and monitored SMMEs. Members asked what the outcomes of the investigations it had done were.

SANBI had attained 88% of its targets but was facing many challenges, especially in the integration of the National Zoological Gardens (NZG) and in its financial reporting. The NZG had joined SANBI the previous year and had come with ageing infrastructure which needed upgrading and maintenance. A new Chief Director had been appointed to head the NZG.

Performance indicators for each programme were noted: Programme 1: Render effective and efficient corporate services achieved a 90% score. Programme 2: Manage and unlock benefits of the network of National Botanical Gardens as windows into South Africa’s biodiversity achieved 70% of its targets. Programme 3: Build the foundational biodiversity science; Programme 4: Assess, monitor and report on the state of biodiversity and increase knowledge for decision-making, including adaptation to climate change; and Programme 5: Provide biodiversity policy advice and access to biodiversity information, and support for climate change adaptation had all achieved 100% of its targets. Programme 6: Provide human capital development, education and awareness in response to SANBI’s mandate achieved 80% of its targets. Programme 7: Manage and unlock the biodiversity conservation contributions and benefits of the National Zoological Garden of South Africa achieved 75% of its targets. It did not meet its target number of visitors for the year.

SANBI received a qualified audit opinion because it had not included all irregular expenditure. Some of the irregular expenditure was historical and SANBI had not been able to quantify it when auditing to determine the final amount because there had been non-compliance with SCM policy and Treasury Regulations and non-compliance with delegations of authority. There had been no fruitless and wasteful expenditure. The second item which qualified its audit outcome was the evidence supporting R58.6 million of transactions recorded at the National Zoological Gardens which was not adequately maintained and readily available for audit purposes. As a result the total revenue from exchange transactions of R183m in the statement of financial performance was qualified. There were also other compliance and internal control deficiencies.

Members asked why eligible bidders on the Thohoyandou upgrade did not qualify and how was the issue sorted out. Members asked what the value of SANBI projects were and how much was spent. Was the target of 35 research articles, for articles submitted or accepted? Members asked what the impact of the contact with 13 universities was. Was this information sharing only? What remedial action was taken on arguments over infrastructure and safety? How were economic pressures on customers being mitigated? Members said six issues were flagged by the AG for disciplinary action to be taken. What actions had been taken? How was SANParks going to get back its R9m loss? Why was a loss referred to the Treasury for advice and condonation? Should disciplinary action not have been taken? Members said its employment costs at 59% were almost equivalent to the government grant which was 68% of revenue.

Members asked what the consequences were for not following the audit action plan. They asked about funds that were not received due to later commencement dates. Was the surplus cash or cash and property? No mention of property plant and equipment was noted in the budget given the admission that infrastructure was ageing. Members asked for the liquidity ratio as well as its projection for the next few years. Members asked if reference to a Pretoria campus was the same as the NZG. Were there SCM officials at each campus and if so, when were they held accountable? Who dealt with procurement at the different facilities?  Members felt centralising the procurement process would cause more challenges. Members asked if the one National Biodiversity Assessment was for all the facilities or was it a sample. How were the universities it worked with chosen? Members asked for a staff breakdown including junior, senior and management staff.

Meeting report

South African National Parks (SANParks) 2018/19 Annual Report
Ms Joanne Yawitch, Board Chairperson, said 74% of SANParks targets had been met. There were three big external issues over which SANParks had no control. The first was the risk of the effect of climate change. For example the consequences of the increase in temperatures could lead to runaway fires which would mean that SANParks deliverables would not be met. The second was the state of the economy. There had been a decrease in visitor numbers and consequently in revenue. 80% of revenue was generated from tourism and there had been a decline of 10% in tourism numbers into the country. The third issue was crime and wildlife crime where rhino poaching for example meant that SANParks came up against sophisticated international crime syndicates. A fourth issue was of an internal nature and related to irregular expenditure. SANParks had, as the outcome of a three year process, identified which had occurred years ago and had proactively declared it to the accounting and audit authorities. It had taken steps to ensure that staff understood what was needed to prevent future occurrences.
 
Mr Fundisile Mketeni, Chief Executive Officer, said the Vision and Mission of the organisation would be reviewed. He spoke to Goal 1: Sustainable Conservation Assets. The target growth of the conservation assets of 2 000 hectares and been achieved with an expansion to 5 000 hectares. Only 28 000 out of a target of 34 000 hectares were rehabilitated. Three rhinos were poached and only 90% of the rhino plan was implemented while only 74% of the elephant plan was implemented. There was a decrease of 75.5% in fines because traffic fines within the parks could no longer be issued in terms of the National Road Traffic Act. An air wing strategy had been developed and approved but high costs had stopped its implementation.

On Goal 2: Diverse and Responsible Tourism, it had experienced a 7.7% decrease in visitor numbers. On Goal 3: Progressive, Equitable, and Fair Socioeconomic Transformation 6 400 full time equivalent jobs were created. The beautification as per land claim identified was not implemented. For Goal 4: Effective Resource Utilisation and Good Governance, the total male to female ratio target was not achieved because of slow staff turnover of 1%.
 
Mr Dumisani Dlamini, Chief Financial Officer, spoke to the financial performance. He said the asset base had increased by R210m. The increase in transfer revenue was because of EPWP funds and the change in its accounting treatment. There was a 3.8% increase in employee related costs. SANParks was a going concern with a strong cash position and total revenue was now over R3b.

Discussion
Ms H Winkler (DA) asked what resources were made available for oversight of the Marine Protected Areas (MPA) and were the resources sufficient. What impact would the cordoning off of certain areas to elephants have on the migratory routes of elephants and other animals?

Mr M Paulsen (EFF) said reforestation was one way to mitigate against climate change and the rise in temperatures. What reforestation programmes were in place? He said rhino poaching was not sporadic and was organised crime. Was SANParks engaging with the Green Scorpions on the matter?

Mr P Modise (ANC) asked what plans it had to mitigate speeding within the parks. Why did it take 10 years to review the parks’ management plan? Two rhinos were recently poached even with the police and army involved with SANParks. Could this be an inside job and what arrests had been made on poaching of the rhinos? On the donation of science laboratories, did SANParks monitor the work being done at the labs?

Ms S Mbatha (ANC) said there was no mention of the audit report in the presentation.

Mr Fundisile Mketeni said it was still to come to the Committee.

Ms Mbatha asked how SANParks managed the hectares of land under its control and what impact it had on its budget. On the decreased income from fines, she asked what other strategies SANParks was implementing to mitigate the decrease in income. She asked what alternatives were considered for the air wing strategy which was not implemented due to expense. She asked if the CSIR and tertiary institutions were being used for SANParks research projects. Why had visitor numbers decreased? How much revenue was generated? She asked if local communities were being used in the full time equivalent job creation projects. What were the green economy projects? What happened to all the people that underwent training in EPWP projects? The target of 40% for women employed by SANParks was not achieved as it was only 39.6%. How would the male/female ratio be corrected? What was the minimum educational requirement? The presentation did not talk to misconduct at SANParks, yet newspapers carried articles of a person being suspended because they were a whistleblower.

Ms T Mchunu (ANC) asked what the consequences for the irregular expenditure cases were. She asked what the liquidity ratio was and its projections for the next two to three years.

Ms Joanne Yawitch, Board Chairperson, said the irregular expenditure was a concern for the accounting authority and a plan had been put in place to address this. SANParks had proactively declared the irregular expenses.

On the migratory routes, all the parks no longer operated in open systems and they were all fenced. The degradation of the trees in parks was due to elephants uprooting them and the elephants were not managed through culling which created a dichotomy.

She replied that operating an air wing was very expensive.

Domestic tourism had taken a knock and there had been a decrease in tourists. New offerings were trying to address this.

Senior positions had a low turnover rate therefore it took longer to fill positions with women but it remained a big issue for the board.

On criminal cases, Mr Mketeni said the only time it got feedback from the prosecutors was when it asked for feedback and sometimes it took a year for a case to be finalised and sometimes one got repeat offenders.

He said SANParks was still maintaining visibility on its roads but it could not issue fines. He suggested that perhaps an amendment to legislation be done to give it the right to issue fines. There were speed bumps in parks but not in all parks

The parks management plan was legislated on a ten year basis and there were plans to implement it.

He said the army only patrolled the international border areas such as Mozambique and Zimbabwe but it did not have powers to arrest. He said SANParks did interact with them. It was true that there were inside jobs and that staff had been infiltrated and SANParks did arrest staff implicated in poaching.

The science laboratories were classroom buildings with interactive screens. He admitted that SANParks was not strong on monitoring the labs. Some labs had been visited and found to lack water or flushing toilets and this was the educators’ responsibility.

He said SANParks received a land grant to buy and to rehabilitate land.

He acknowledged that the budget was stretched.

He said fundraising for the air wing was being discussed.

SANParks was working with institutions such as the Universities of Mpumalanga and Nelson Mandela. It worked with the CSIR but there was no MOU between them. SANParks publications were peer reviewed by relevant scientists.

On revenue generation, twelve new revenue generation products were implemented but the figures relating to them were only projections.

On job creation, he said that SANParks focussed on the local communities. There were specific targets for women, youth, and the disabled in alignment with EPWP and he would send those figures to the Committee.

He said funding was received for green projects. It identified projects linked to Phakisa, Green and Ocean economies.

SANParks did not have an awareness campaign plan and it would speak to the Department about one.

On the figures for women in management, he said it was using the Presidency dashboard and according to those definitions it had achieved its target. SANParks had bench-marked itself to other similar bodies at 50% but it would have to change its APP. All management positions had to be approved at the CEO level. A retention strategy needed to be worked on as women were appointed but then left for greener pastures.

A SANParks official said the minimum educational requirements for each job would be at a particular level.

On labour matters, Mr Mketeni said fairness in applying labor law could only be measured if an appeal went to CCMA. He requested an opportunity to present the full scenario of labour issues, appeals and fairness. 

Mr Dumisani Dlamini, CFO, said SANParks received an unqualified audit with findings on irregular expenditure. Irregular expenditure for 2018/19 was R6m, 90% of this was identified by management and 10% by the Auditor General. SANParks had done further extensive work and total irregular expenditure had grown to R198m based on historical expenditure from many years ago. SANParks was trying to put in place systems and controls. The irregular expenditure was still happening but not to the extent that it had been in the past. SCM policies and standard operating procedures had been updated via road shows and increased training. The fundamental problem was contract management where SANParks did not have the capacity to manage contracts and employed service providers. SANParks would have a loss and control officer.

The second finding of the audit report was on commitments incorrectly reported on. SANParks was working on how to prevent this.

On performance management, he said certain information was not submitted with the financial statements.

Ms Mbatha said there was inadequate prevention of irregular expenditure at SANParks so its procurement procedures were not up to standard and the report put the Department in an embarrassing position. She
wanted to see more black women faces in the organisation, not just more women. She asked how SANParks supported and monitored SMMEs.

The Chairperson asked what came out of the investigations SANParks had done. He said to the CFO that where the Committee saw procurement procedures not being followed, it thought it was deliberate.

Mr Dlamini apologised as he had not been aware that a full report on the Auditor General audit was expected. Mr Van Wyk of AGSA could clarify any matters he had not articulated fully.

On the irregular expenditure, he said SCM had been updated because of non compliance with legislation and further amendments would be made to make the SCM more competitive and proper. He said the problem was contract management where contractors were used after their term had expired which was regarded as irregular expenditure. Consequence management for this was being implemented.

He said SANParks had a duty to report the historical irregular expenditure and would follow it up with consequence management.

On information not provided to the AG, he said SANParks had provided all the requested information to the AG and nothing was outstanding. Mr Van Wyk of AGSA could comment on the matter.

On property, plant and equipment, he said that not every asset was paid by cash; some were donations and therefore the discrepancy in the numbers.

On revenue generation, he explained that SANParks did not acquire land for tourism purposes but rather for conservation. The liquidity ratio was 1.39:1 and that it was difficult to predict for the future. SANParks was looking to take the figure to 2:1.

Mr Mketeni said the AG’s report was received the previous day and they were asked to present one slide on it at the meeting.

South African National Biodiversity Institute (SANBI) 2018/19 Annual Report
Ms Beryl Ferguson, SANBI board chairperson, said a new Chief Director had been appointed to head the National Zoological Gardens (NZG). SANBI had attained 88% of its targets but was facing many challenges especially in the integration of the NZG and its financial reporting. The NZG had joined SANBI the previous year and had come with aging infrastructure which needed upgrading and maintenance.

Ms Carmel Mbizvo, Acting Chief Executive Officer, spoke to SANBI’s programmes. Programme 1: Render effective and efficient corporate services had exceeded all its targets except the attainment of a clean audit and achieved a 90% score. Programme 2: Manage and unlock benefits of the network of National Botanical Gardens as windows into South Africa’s biodiversity achieved 70% of its targets. It received additional funding for staffing Programme 3: Build the foundational biodiversity science; Programme 4: Assess, monitor and report on the state of biodiversity and increase knowledge for decision-making, including adaptation to climate change; and Programme 5: Provide biodiversity policy advice and access to biodiversity information, and support for climate change adaptation all achieved 100% of its targets. In Programme 6: Provide human capital development, education and awareness in response to SANBI’s mandate achieved 80% of its targets. It only reached 13 out of the 15 universities it had targeted to participate in a biodiversity careers programme. Programme 7: Manage and unlock the biodiversity conservation contributions and benefits of the National Zoological Garden achieved 75% of its targets. It did not meet its target number of visitors for the year. She then spoke to staff demographics.

Ms Lorato Sithole, Chief Financial Officer, said SANBI had received a qualified audit opinion because it had not included all irregular expenditure. Some of this irregular expenditure was historical and SANBI had not been able to quantify it when auditing to determine the final amount because there had been non-compliance with SCM policy and treasury regulations and non-compliance with delegations of authority. There had been no fruitless and wasteful expenditure.

The second item which had qualified its audit outcome was the evidence supporting R58.6 million of transactions recorded at the National Zoological Gardens which was not adequately maintained and readily available for audit purposes. As a result the total revenue from exchange transactions of R183m in the statement of financial performance was qualified. There were also other compliance issues and internal control deficiencies.

Ms Ferguson said that SANBI was committed to clearing the irregular expenditure and record an unqualified audit report the following year.

Discussion
Mr J Lorimer (DA) asked why eligible bidders on the Thohoyandou upgrade did not qualify and how was the issue sorted out.

Mr M Paulsen (EFF) asked what the value of SANBI projects were and how much was spent. Was the target of 35 research articles for articles submitted or accepted? How was this research funded?

Mr P Modise (ANC) said he did not understand how most of the targets were met but not exceeded. On international platforms, he asked what the yardstick was to determine if targets had been reached and what was the benefit of this to the people. On contact with 13 universities, he asked what the impact of this contact was. Was this information sharing only? What remedial action was taken on arguments over infrastructure and safety? How were economic pressures on customers being mitigated? He said six matters were flagged by the Auditor General for disciplinary action to be taken.  What actions had been taken? Most of the offences had occurred at Kirstenbosch yet the NZG finance function was being transferred to Kirstenbosch. He did not think this would be a solution. The employment costs at 59% were almost equivalent to the government grant which was 68% of revenue.

Ms T Mchunu (ANC) said that the audit outcomes document stated that there was an audit action plan but it had not been followed. What were the consequences for this? SANBI had to made amendments to the financial statements after the AG had picked up issues. She wanted more information on funds that were not received due to later commencement dates. She asked if the surplus was cash or cash and property. She did not see any mention of property plant and equipment given the admission that infrastructure was ageing. She asked for the liquidity ratio as well as its projections for the next few years. She asked if reference to a "Pretoria campus" was the NZG. Were SCM officials at each campus and if so, when were they held accountable?

Ms Mchunu did not agree with the presenter that there was 100% compliance with the PFMA, given the AG’s report. Who dealt with procurement at the different facilities?  She felt centralising the procurement process would cause more challenges. There had been reports of a community member feeling depressed and dissatisfied after visiting the zoological gardens. She asked if the one National Biodiversity Assessment achieved was for all the facilities or was it a sample. How were the universities it worked with chosen? Who trained the SCM officials, because the corrupt worked as a team?

Ms Gantsho (ANC) asked what SANBI’s plan was for the two universities that they had failed to work with. On the recovery of monies plan, she said that the Department could recover the monies from the person’s pension. She wanted a breakdown of the staff which included the categories of junior, senior and management staff.

Response
Ms Ferguson replied that the update on Thohoyandou, the value of projects, and the breakdown of the organogram would be responded to in writing.

Mr Thompson Mutshinyalo, Acting Chief Director: National Zoological Garden (NZG), said the ageing infrastructure of the NZG was because of historical issues when NZG fell under the National Research Foundation. NZG was looking for potential funding to address infrastructure and was working with the Department of Tourism who are assisting with funding of projects. It was also negotiating with them on a master plan for a world class zoo.

On the comments on social media about the NZG, he said he was aware of complaints and they were working to address safety and health and needed to revamp and refurbish the animal enclosures.

Prof John Donaldson, Acting Head: Biodiversity Science and Policy Branch, replied SANBI only counted papers that were published. Research funding went mainly on the salary of researchers. The NRF covered operational expenses and SANBI did not qualify for Department of Higher Education subsidies.

On the biodiversity careers programme, Ms Mbizvo said a big weak area in human capital development had been identified. While many students got hear about a potential career in biodiversity, nothing was done at universities in the biodiversity sector. SANBI partnered with a university to develop programmes to offer opportunities for students in the field of biodiversity. The two universities they had been unable to cover would be covered in the forthcoming year’s programme. The North West University was one of SANBI’s targeted groups for the biodiversity programme. CSIR was a very strong partner for SANBI and the national Biodiversity Assessment could not have been done without the partnership of the CSIR.

On national and international platforms, the target was about sharing the experience of nationally recognised bodies and SA was regarded as a leader for these types of funding and the SA model was shared on these international platforms.

The impact of being accredited was beneficial in getting funding and the impact of this was felt at the provincial and local levels, for example the green climate fund.

Ms Lorato Sithole, CFO, said the liquidity ratio was 2.55:1 with the ideal being 1:1 as per the requirements. The surplus was an accounting surplus rather than a cash surplus as GRAP standards applied. The ageing infrastructure costs were included in the non current assets. Amendments were made to the AFS and this resulted in material non compliance, but this was not done by SANBI on its own, it was done in consultation with the AG. Consequence management was being followed up in this quarter to identify the people involved.

The irregular expenditure was dealt with by following Treasury guidelines. An investigation was done on each item and those who were directly responsible for irregular expenditure were identified.

The 'Pretoria campus' reference was to the National Botanical Gardens.

The SCM structure was that of separate SCM structures with a responsible person in each structure in each of the 14 different areas. However there was an increase in compliance requirements and an increase in their complexity which meant that there had to be increased monitoring and control over SCM.

On the question of project donations for projects with a later commencement date, the projects had not started at the scheduled time for various reasons and would start in 2019/20.

Various disciplinary actions were taken for the irregular expenditure transgressions and a person was being dismissed in one case. In cases related to the Harold Porter National Botanical Garden, four people had received warning letters. On security services and tree felling services, different people had been investigated and letters of warning were given. In the fuel supply case SANBI had agreed to try and recover the monies. The fuel was used by SANBI, it was not a case of fraud and wastage and where recovery was necessary, SANBI would try to recover the monies.

On the emergency procurement case, the building project was already in progress and contracts for the professional teams had expired. Given this, emergency procurement was done for professional services to allow for the completion of the building. SANBI had seen it as a new procurement process, but the AG said it should not have been done as an emergency procurement.

The centralising of the financial functions to Kirstenbosch was to the Kirstenbosch campus not the Gardens itself. The challenge was that NZG came through with its own functions that were not centralised so SANBI’s view was that it was better that NZG join SANBI’s centralised operations.

The meeting adjourned.

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