The Department of Public Works and Infrastructure (DPWI) appeared before the Committee for a hearing that focused on issues involving management of contract expenditure, and investigations into alleged corruption involving senior officials in supply chain management.
The Members questioned why the Department had such a large backlog of unpaid invoices, and why they were not being paid within the prescribed 30-day period, to the particular detriment of small, medium and micro enterprises (SMMEs). Was it doing anything about its capacity challenges, the timeous certification of invoices, and measures to avoid a recurrence?
The Department responded that it received an average of 15 000 invoices a month from various service providers, and the lack of capacity to process them was the main reason for the failure to meet the 30-day deadline. In some regions, cleaners in the DPWI had had to be roped in to assist in reducing the backlog. When the financial year was closed, there had been only 511 invoices that were still outstanding. The Department had worked really hard to ensure that small businesses were not affected.
Members were not pleased with the Department’s responses, and were certainly unhappy with the fact that cleaners who had no financial background and acumen had been exposed to confidential financial information without being vetted. They also criticised the fact that the cleaners were not compensated for the work they had been asked to do to reduce the backlog.
During discussion on the investigations, Members focused on the relationship between the Department and the Special Investigating Unit (SIU); the state/official funerals where corruption was alleged; details of officials and service providers involved; and plans to curb corruption within the Department.
Members were generally dissatisfied with the Department’s plans and measures to curb corruption in its SCM value chain. This also included the pace at which the Accounting Officer and Executive Authority were moving in resolving cases pertaining to corruption. The Department was hesitant about providing the names of officials who were implicated in alleged corruption surrounding the funerals, but eventually revealed four names. However, these excluded the Director General, who was subsequently found to have also been implicated. Members said they failed to understand how the implicated officials, including the DG, were still working in the Department as though it was “business as usual,” arguing that they these officials ought to have been suspended pending the investigations that were being undertaken.
The DG told Members he was not aware that he was implicated and had no knowledge of the report that implicated him, despite the fact that the report had been produced by PricewaterhouseCoopers, which would have been procured by the Department to provide the service. This left Members perplexed, because the DG claimed that he had himself initiated the process of investigation.
The report in which the DG was implicated had been signed by the Minister, and the Minister had still to consult the President on how to proceed with the matter as far as the DG was concerned. The other less senior officials would be subject to the relevant labour relations and disciplinary processes. Members were not happy that six months had lapsed, and no action had yet been taken against the implicated individuals.
The Committee resolved to discontinue the hearing because the credibility of the Department’s responses was questionable. The Minister was given 14 days to consult with the President and report back to the Committee. Members felt misled and lied to by the Department for its failure to disclose all the information that had been requested. Therefore, as a matter of urgency, the Committee would also consult the Speaker of House, the Parliamentary Legal Services and the Leader of Government Business, on how to proceed with the matters that had been unveiled during the hearing.
The Chairperson welcomed everyone present, and acknowledged the presence of Minister Patricia De Lille from the Department of Public Works and Infrastructure (DPWI). Today’s hearing was based on the 2018/19 annual report of the DPWI, which was unqualified with matters around material impairments on receivables, and misstatements in the annual performance plan (APP) on issues around expenditure management and contract management, which were new findings.
The Minister indicated that this coming week the Department would be conducting special training for all its senior management on the Public Finance Management Act (PFMA), and on the new powers of the Auditor General of South Africa (AGSA). The Department was seeking ways to improve, and looked forward to the Member’s counsel.
Contract management and expenditure management
Mr S Somyo (ANC) said that government leadership always emphasized the importance of paying service providers within the 30 day period. The DPWI was failing many South Africans in this, because it failed to adhere to the 30 day period for payment. He wanted to know why this was the case.
Mr Sam Vukela, Director-General, DPWI, said that some of the service providers were not paid within the prescribed period for a number of reasons. Some of these reasons included disputes, and suppliers changing banking details during that period, which resulted in the time to make payment within the prescribed period lapsing. The Minister had introduced a programme where the Chief Financial Officer (CFO) holds weekly meetings with the officials responsible for processing payments to ensure that the backlog was resolved.
Mr Mandla Sithole, Chief Financial Officer: DPWI, said that at the beginning of the year, the backlog was bad -- there were 11 000 outstanding invoices unpaid within the prescribed period. However, when the financial year was closed, there were only 511 invoices that were still outstanding. The Department had worked really hard to ensure that small businesses were not affected. The Minister was also given daily progress reports, and last week the Department was just below 200 invoices. On average per month, the Department dealt with 15 000 invoices. Therefore, significant progress had been made to address the backlog.
One of the causes of the delays was the inaccurate invoices submitted by suppliers or service providers. Some of the rates charged were not acceptable, but any invoice that was ready and proper was paid within 30 days. There was a central office where all service providers submitted the invoices, and the system used kept track of all the invoices and provided the status update.
Mr Somyo felt that the delegation was being too general in its responses. However, he accepted the reduction of the backlog, and appreciated the efforts made to reduce it. At times it became a choice of which invoices to pay and which ones to not pay. The Committee wanted to determine in specific terms why the 511 invoices were not paid within 30 days, or rather not cleared. Some invoices stretched further than the 30 days, and there were still 200 invoices left unpaid. What were the reasons for not clearing up the outstanding invoices?
Mr Sithole said that some of the reasons included inaccurate information submitted, changing of banking details, the higher rates charged by suppliers disputed by the Department and, in some instances, officials not certifying the invoices on time in order for them to be paid.
Mr Somyo wanted to know what had been done so far to ensure that those accountable for certifying the invoices had been held to account.
Mr Vukela said that where it was found that the non-payment was as a result of the Department, or an official in the Department, it would take action and meet with the service providers to find out where the issues were resulting in non-payment. If the official was the cause, the Department would take disciplinary action against that official.
Mr Somyo asked for a written explanation on the outstanding invoices, as this would assist the Committee to close the grey areas. He was not satisfied with the responses provided by the DG and the CFO.
The Chairperson wanted a breakdown of the figures and an explanation of why the officials were not certifying the invoices in order to be paid on time.
Mr Sithole said that the accounting officer had issued letters to the responsible officials. The 511 invoices had been outstanding at the end of the prior financial year; the following month the number had changed and as of last week it was sitting at about 200 outstanding invoices. The letters issued to officials were directed to all regional managers within which the officials worked.
The Chairperson asked for the list of all the regions the letters were issued, and whether the letters were warnings or for charging the people who were responsible.
Mr Sithole said that the letters were asking questions about why service providers were not paid within the prescribed period, and had been sent to nine regions.
The Chairperson asked whether this was within the 2018/19 financial year. The Committee wanted to understand why the people did not do what they were supposed to do. What had been done since the issuing of the letters?
Mr Somyo said that the accounting officer had been supposed to take specific action, but this had not been the case. The Members needed to understand the details behind the invoices that were still outstanding, and to know whether anything had been done about it.
The Chairperson asked for the list and how many regions had responded to the letters, and which the problematic regions were.
Mr Sithole said the key offices included Cape Town, where it had been above 7 000 invoices, but as of last week it was sitting at about 48. The Durban regional office had 150, and there was an issue because it had over-spent the budget which was approved by the Executive Committee (EXCO). The Durban office had gone beyond its budget, and the invoices that were not paid were not paid due to the unavailability of funds.
The next region was Mmabatho with 17, Polokwane five, PE with zero, Pretoria 12, Mthatha two, Kimberly two, Head Office two, and Bloemfontein zero. The main regions were Cape Town, Durban and Mmabatho.
Mr Somyo referred to accruals and the danger of spending money which a department did not have. This was a problem not yet addressed with the Members.
Minister De Lille said that they were dealing with the 2018/19 financial year (FY), and some of the explanations that had been provided were not within that time frame, but referred to what was happening in the new FY. The measures that had been put in place were now in the current FY.
Mr Somyo said that the officials had gone on record and said that they were sitting with 11 000 invoices. Of those, there were still 500 outstanding, so Members were not convinced.
Mr Sithole said that invoices in Durban were not paid because of the unavailability of funds, and the reasons had been cited to be different.
The Chairperson said that this information was supposed to be available, because they were dealing with the previous financial year. He asked about the status update of the categories or breakdown cited on page 220 of the annual report. He asked for the breakdown of the invoices for the year under review.
Mr Sithole said that the delegation did not have the list at the moment. The payment of invoices happened on a daily basis, and at the end of the month they were quantified. He asked for the list to be provided at a later stage.
The Chairperson said that the point of departure was the previous financial year, and this information ought to have been available. Surely, there was a breakdown of this information?
Mr A Lees (DA) said that he had nothing to add, but looking at the report it was clear where the money was owed to, and R38 million had been paid to the Department of Defence.
The Chairperson said that the DPW had measures in place now, and asked whether the measures were associated with what the DPW had at the end of the year.
Mr Vukela confirmed that this was true.
The Chairperson asked when the measures came into force.
Mr Sithole said the measures had started in May 2018. In that year, the situation had been bad and the focus area was to ensure that the culture of paying service providers within 30 days was achieved, despite the outcry over incapacity. The plan had started that year, and when the Minister came on board, consequence management had been implemented for failure to pay within 30 days.
The Chairperson asked what had prompted the issuing of letters last week. When the Department issued the letters the first time, what had been the response from the regions?
Mr Sithole said a number of excuses had come from the regions.
The Chairperson interjected, and asked for breakdown of what the regions were saying when they responded, and what the reasons were for Cape Town being so high.
Mr Sithole said the main issue was capacity of the officials. They had had to use cleaners to send invoices to managers, but had eventually got contract workers, so the backlog was eventually reduced.
The Chairperson asked for more details on the lack of capacity.
Mr Sithole said the capacity challenge was the lack of human resources. There were a number of vacancies and they were funded, but the Department had had to sacrifice other regions.
The Chairperson said this had been at the expense of the small businesses. He wanted to know why the funded posts were not filled.
Mr Sithole said that there was a process of filling vacancies, and the priorities developed were within the funding available. It took a long time to fill a vacancy because of the processes that were involved. The structure of the Department was skewed because in the area where there was a need for capacity, one would find that there were insufficient vacancies.
The Chairperson asked how many vacancies were still available at the Cape Town office. Having to use cleaners was a clear indication of how dire the situation was.
Ms B Swarts (ANC) said that she was worried that the DG was referring to the chief financial officer (CFO) when he referred to meetings with the service providers. He wanted to know which service providers these were, and when he had met with them. If this had been the case, there would not have been a “to and fro” between him and the CFO. Clearly, there had been an imbalance.
She said Mr Sithole had indicated that there were corrective measures, but the number of outstanding invoices kept fluctuating. She felt that something was not right. She believed that the delegation had not scrutinised and studied its annual report because what was being said did not correlate with what was in the annual report.
Mr B Hadebe (ANC) asked whether there were systems in place as to how the invoices were processed. He also wanted to know whether, when meeting with the service providers, these issues were not clarified or addressed.
Ms N Mente (EFF) said that the CFO had earlier indicated the reasons why an invoice may not have been paid, and the DG had said there were inconsistencies as far as the organogram was concerned. When a service provider was appointed, bank details would be provided, but if there were no bank details at the time when payment was supposed to be made, were there financial administrators at the regions to scrutinise the contracts and the invoices that were submitted by service providers? It seemed that none of the regions had a consistent organogram, and it did not reflect well on the duties of the Department.
Ms N Tolashe (ANC) said she was worried about the way the Department was responding to this matter. It seemed the Department thought the service providers were doing it a favour. Society was alleging that the government was corrupt, as service providers were not being paid on time, and the responses provided today seemed to confirm those allegations. Unfortunately, the officials had been very naughty because it seemed that this was a new matter, although these problems existed before the new Minister came in. She had come in and provided solutions, but the officials were giving Members the impression that this matter was being addressed only now.
The 30-day payment to service providers was not a favour to them -- that was the law. These officials were undermining the law. What should be done about this?
If the DG was going to come to Members and complain about the organogram, what was he doing about it? He had been appointed in that position to do something about it, but he had not. She felt that this was a political gimmick, more than an administration.
Ms T Marawu (ATM) said that the DPW dealt with a lot of service providers, and there was no way that the Department could lack standard operating procedures. She wanted to know why this had been the case? Why had there been a lack of those procedures?
It would be extremely sad to hear what the service providers could say about their dealings with the Department. Most of the affected service providers were SMMEs that could not afford to bribe officials to have their payments fast tracked. These issues were man-made -- they were not systematic or structural. The Minister should actually meet with the service providers in order to ascertain the real issues.
The Chairperson suggested that in responding to the questions, the Department should juxtapose why suddenly the invoices had been paid, but all the other time they would not be paid. Now that the invoices had been paid, what magic wand was being waved?
To have cleaners take up those positions had been extreme and it spoke to the integrity of the Department and the information provided by the Director General.
To have fluctuations was normal, but the most important thing was having standards and procedures in place to manage those fluctuations. There was a huge number of unpaid invoices, and then the Department had started doing what it was supposed to do. Where were the individuals that had failed to discharge their duties, and what had been done about them? He felt that the narrative did not make sense.
Mr Somyo said that page 136, note 4, the AG had clearly indicated that there were instabilities in the Department, and the failure to fill the vacancies had caused even more instability. The Department had killed and separated families that had got into business with the government
Ms Swarts wanted to know what had happened to the Department in relation to the Central Supplier Database (CSD), because service providers uploaded their bank details on the CSD
Mr Vukela said that the issue of the organogram was currently being resolved. The Department had brought in contract workers, and when their contracts came to an end, the Department had continuously requested the filling of those positions additional to the establishment.
Ms Tolashe interjected, and said that the DG was abusing Members.
Mr Vukela said the contract workers had not been cleaners, but accounting professionals. The area to which the CFO had referred was in respect of where there had been no capacity available immediately.
The Chairperson wanted to know how the Department had arrived at a situation of relying on cleaners. Did these cleaners actually have a choice in this matter? This reflected on the labour relations of the Department.
Mr Vukela said that there were cleaners within the Department who were graduates. They had created a system where they could identify officials that had been appointed as cleaners, but could be posted to certain levels in the Department. The employees who were qualified at the cleaning level were permanent employees, and those under contract were temporary. Usually when the contract positions were available, the employees with permanent posts did not want to leave them to fill in with temporary work.
The Chairperson asked when the cleaners did the contract work, who did the cleaning?
Mr Vukela said that the intention behind utilizing the cleaners was to capacitate them and provide them with the skills required to work themselves up the echelons of employment at the Department. The specific focus was on the cleaners that had higher learning institution qualifications.
Ms Swarts asked the Department to provide the number of vacancies that were open, and explanations for why were those positions not filled. The DG was indicating a lot of things, and Members were not certain whether those cleaners were actually qualified. The Committee could not support this, because those cleaners had not signed any confidentiality documents, as people in finance surely had to do.
Ms Siwisa said that she was very disappointed with the explanations provided by the DG. The cleaners could not be held accountable, because they were doing the Department a favour. Why were those people not brought in on a permanent basis? This was pure exploitation of people who were desperate for an honest living. She was unhappy with the Department having people with degrees and qualifications to mop floors and clean toilets.
Mr B Hadebe (ANC) said the AG had stated clearly that the DPW was impacted by instability due to the lack of filling key positions.
The Chairperson said a number of issues had arisen over the 30-day payment of invoices. This matter would now be parked, and the Committee would proceed to other matters. There was nothing wrong with up-skilling people, but the issue was the high vacancy rate, instability, and funded posts that were not filled -- yet there were qualified people locked in cleaning positions. People who needed the job of cleaning were unable to take them, but instead the focus had been on “moonlighting” in the Department. The noble intention was undermined by poor execution. The DG needed to go back and review his model, and the people who were being up-skilled or the cleaners who were being used, should be compensated accordingly when taking up these temporary options.
The Committee required a briefing note on this matter. All details must be provided on the execution of this model.
The Minister said the new departure point was that there was no excuse for not implementing the law. If the law said one must pay within 30 days, that must happen. What had led to the vacancy issue was that although there were funded vacancies, they were not filled, but with the contract workers that became an additional staff structure. All those contracts had come to an end at 31 December 2019, but the Department needed to go back and find out who gave an instruction to have cleaners take up that work. She would conduct an investigation on this matter and provide a report to the Committee.
The Department was busy putting systems in place that could detect the status of the 30-day payment period and invoices, and their status would be released to the social media to let the public know that they were trying their best to address the matter. The cause of creating all these invoices by the Department was also a system failure, because one could not create a tender or request a proposal to react to any requests they got for maintenance, thereby generating hundreds of invoices with different contractors. The system would now change to term contracts that could be used when the services were required, because therein lay the corruption. Many of these service providers were being paid without delivering the services, or if they delivered the services, the services were of poor quality. Part of the challenge was in what was called the “Prestige” department.
She committed the Department to submitting a quarterly report on all of the 30-day payment period invoices to Parliament. She had also changed the key performance indicators (KPIs) of the senior managers from 80% to 100%, because that was the law. Consequence management had also been strengthened.
Governance, Risk and Compliance: Investigations
Ms B van Minnen (DA) wanted to know the relationship between the Special Investigating Unit (SIU) and the Department’s anti-corruption unit. When the SIU conducted investigations and found incriminating information or evidence, was it handing over to the Department, or what was the process undertaken thereafter? There seemed to be quite a gulf between what was reported and recommended, and the subsequent actions.
Mr Imtiaz Fazel, Deputy Director-General: Governance and Risk Compliance, DPWI, responded that the SIU made recommendations to the Department where it required its involvement. It also dealt with the outcomes of the investigations by itself, and referred matters directly to the National Prosecuting Authority (NPA) and the South African Police Service (SAPS) for further investigations. It also took matters to the civil court for recovery, where this was required. It was mainly for the purpose of effecting systematic recommendations and corrections in the Department that it referred investigations to the Department. It also referred affidavits to investigators to use as the basis for initiating disciplinary proceedings against specific members of the staff. The Department then referred the matter to the labour related unit, which would make the necessary recommendations to charge a particular individual. The Department would collaborate with the SIU during these processes, because the SIU investigator would become the primary witness at the disciplinary hearings.
Ms Van Minnen said that she was specifically looking at the actions arising from the recommendations, because in the reports there were a lot of cases where recommendations had been made and processed. Was it discretionary, or was it something that happened automatically?
Mr Fazel said that it was not discretionary, and the disciplinary proceedings were carried out as a matter of obligation. There was no discretion involved -- it was followed through.
Ms Van Minnen referred to the state funerals that cost R7.7 million, which was described as a management fee. There were no specific timelines for when these transactions had happened, and the information provided only reports of what had happened. She wanted to know how these transactions had occurred and about the system failure, and how it was eventually picked up.
Mr Fazel said there had been negligence involving the officials who had approved the transactions. The investigations had concluded that the officials that were overseeing the transactions did not conduct the necessary diligence, oversight and calculations, to ensure that the Department was charged for the services that were rendered, that it received those goods and services, and that the prices were in accordance with the tender awarded to the company concerned. The level of diligence and application from a financial and accounting point of view was lacking. This was the single reason for the overpayment made by the Department which had resulted in the irregular and fruitless expenditure. Some goods were delivered, but they had not been part of the initial tender schedule. It also appeared that there had been an inflation of invoices by at least 15% beyond the invoice price.
Ms Van Minnen said that what gravely concerned her was the systematic failure, and asked how broad the investigation into this matter was. Had there been a broader investigation into the entire system, and how many layers of oversight had failed? Had consequence management been implemented?
Mr Fazel said that the Department had conducted a high level review of other funerals that had taken place before the three funerals in question, and it appeared that the pricing of the funerals in question had been abnormal and much higher compared to the others, so the problem did not seem to be spread out but rather related to the funerals in question.
The procurement process was fundamentally flawed, and that created a platform for corruption. Consequence management had been implemented. The investigation report, which was approved by the Minister, made it clear that at least the four individuals who were involved must be charged for violating the PFMA code of conduct and causing the Department to incur irregular expenditure, and for failing to apply due diligence. There was also every possibility of applying the amendments in the new Public Audit Act in order to recover the amounts. There was also the option of recovering the amounts through a civil court, and criminal charges involving fraud may be pursued against the supplier concerned.
The Chairperson wanted to know when the Minister had approved the report.
Mr Fazel said that she had approved it in December 2019, according to his recollection.
Ms Van Minnen asked for details on how the procurement process was flawed, and what procedures had been put in place to avoid that from happening in the future.
Mr Fazel said that if one hosted an event like a funeral, one could not foresee the amount of the expenditure, as well as the nature of the equipment that would be needed for a future event. It might have been more feasible to put out a tender to events management companies, and pre-qualify them to have a look at the requirements which would be approved by the Ministerial Committee when the funeral was declared.
Companies quoted in a vacuum, and that process did not allow for proper assessments and negotiations for the right price, and strategies which result in value for money. There were excessive items that had been quoted for, and there were also items that were needed for the event that were not included in the tender schedule.
Ms Van Minnen pointed out that state, or official, funerals were not foreign concepts in South Africa, as these occurred almost every year. Therefore, what measures had been put in place to ensure that what happened was not repeated?
Mr Fazel responded that the contract in place, which involving the corruption, had expired. From a supply chain management (SCM) point of view, the team was establishing a new panel of service providers to support state events, and recommendations had been put to the SCM and Prestige officials. As a result of the investigation, they would look at the new procurement strategy, as well as the weaknesses that had led to the current situation.
Ms Van Minnen asked about the vetting processes in place in dealing with the members of the panel.
Mr Fazel said the companies that tendered for Prestige services were all vetted by the State Security Agency to ensure that they passed the vetting process, which was different from vetting individuals and officials of the state.
The Department’s system had failed it because the service provider had manipulated the Department, delivering goods that were not ordered and charging rates that were not agreed on.
The Chairperson asked whether the invoices regarding the funerals in question had been paid within 30 days or not.
Mr Fazel said that in accordance to his understanding, the invoices were paid well within the 30 days’ time frame.
The Chairperson said that this confirmed the point that payment of invoices within 30 days could be attributed to bribes and kickbacks. The small businesses that did not have the resources to pay bribes and kickbacks were left out in the cold. Therefore, the issue around the failure of certification was not a deficiency, but a deliberate act.
Ms Van Minnen said she was concerned about the system being in place, but failing. The point was that there was no certainty on how these actions would be stopped from recurring, as it continued to happen in different regions. Was the Department doing anything to get rid of people who were involved in negligence and corruption to ensure that taxpayers’ money was not abused?
Mr Fazel said that there was a deliberate intention in these transactions. He quoted an instance that had occurred in Pretoria, where an official had quoted a service provider R100 000 for every R1 million outstanding, and the Department had got the service provider to agree to make the payment and that individual had been caught. The Department had worked with the Hawks to trap the official. R50 000 had paid by the service provider, and now that individual had been subjected to a disciplinary hearing and dismissed. The case was now with the SAPS. In this case one could say without any doubt that it was not the system that had failed, but it was the individuals that had failed the system, so consequence management had to be seen to be carried out. This was a system override -- it was a human failure.
In the C-Max case, this had started out as a R100 million project, and a service provider had been paid 90% of the project value and then been dismissed, only for it to be awarded to a second service provider for more than the initial award. This talked to serious negligence and system override. The C-Max matter had resulted in suspension without pay for the relevant project managers, yet the organisation had lost almost R100 million. The DPWI needed to look at its disciplinary system, and they were applying their minds to how it worked. They were currently considering minimum sanctions encompassed by certain transgressions.
Ms Van Minnen said that it was well and good to say that the system had been failed by the human element, but there was still no clarity on how the Department could prevent this from occurring again. The Department needed to consider at what point negligence equated to a criminal action and went to the criminal court. Therefore, what systems and measures had the Department put in place to ensure that the human element was dealt with and did not continue to happen as a parallel system. How was the Department planning to ensure that there was proper consequence management taken on the human factor when required?
The Chairperson believed that this question should be responded to by the Director General.
Mr Vukela said that a discussion of this nature had been held in the audit committee, to put in place measures to address this question. The Department was a member of the Public Service Coordinating Bargaining Council (PSCBC), where issues of this nature were discussed. The Department had agreed that it would mandate the labor relations branch that sat in the Council to change policy matters. There were also discussions within the Department around how certain transgressions would be dealt with. The current method used relied upon on the PSCBC regulations.
Ms Van Minnen said that she was deeply concerned about the fact that Members were hearing about these problems and the steps taken to address them were not adequate. There was a lack of concrete responses on what was going to be done, or what specific steps would be taken on the criminal cases that had been reported. There was often an insurmountable delay, to a point where the transgressor either retired or resigned, or moved to another department.
Mr Vukela said that the government had taken a decision that the recycling of officials was not going to happen any more.
Mr Fazel said that from 2014 to date, the Department had covered the backlog of cases, and 293 investigations had since been conducted through the anti-corruption unit, of which 256 had been finalised and 19 referred to the SIU. The outcomes had been 325 disciplinary recommendations to the labour relations department to lay charges, and 288 had been finalised. As a consequence, there had been 13 dismissals; one demotion; 40 final written warnings; 60 written warnings; 21 suspensions without pay; 11 verbal warnings; and 24 retirements and resignations – these would often be converted to dismissals. 112 had not been charged, or the charge was not pursued because of the lack of evidence, and 37 were still pending, as well as 46 referrals to the SAPS, but the SAPS had not taken those to court.
The Department works with the SIU, and the Minister makes referrals to the Minister of Justice. The proclamation from the President emanates from the Department’s anti-corruption initiatives. As a result, there had been five proclamations leading to 2 325 investigations. It may seem excessive, but 2 000 of those investigations involved leases. The Department had investigated the leases, and as a consequence 79 disciplinary hearings had been held as a result of SIU investigations. These had resulted in eight resignations; three verbal warnings; 14 written warnings; 20 final written warnings and 15 suspensions without pay. There were also ten cases where the misconduct could not be proven, but there had been eight dismissals and only one person was found not guilty.
There was R1.3 billion that the Department was seeking to recover from the landlords through the courts, where landlords had charged the Department excessive rental amounts -- or charged the Department for space that it had not rented. Those amounts alone were significant, and may amount to R300 million of the R1.3 billion.
The SIU would constitute a tribunal, where all investigations would be presented to it. The judges had already been appointed.
So far, the Department had recovered R129 million from civil actions on 41 leases.
There were 72 criminal referrals made to the NPA, and the NPA was now under pressure from the SIU and the Minister. The Minister had communicated with the SIU in December to seek an explanation for why the pace on these criminal charges was so slow. The SIU ought to answer to that. Those 72 cases were yet to appear before the court.
The Chairperson asked the Department to submit the report that had been read to the administrative staff. All the relevant documentation was required by the Committee to be scrutinised. He wanted to know how far the Department was on the matter of vetting of officials.
Mr Vukela said that the Department was complying with the Cabinet decision regarding the vetting of officials. There was an internal unit that was responsible for this which was working closely with the SSA. The Department also conducted the vetting of companies.
An official from the Department responsible for SCM said that a report was received from security services that all 155 officials had been vetted and were in compliance with SCM requirements. The security clearance for service providers was done through applications to the SSA, which submitted the documents to the Department prior to the awarding of tenders.
Mr Lees referred to the funerals for the important people, and asked who the four people facing disciplinary were. He asked if the Kimberley mental hospital was one of the Department’s projects. It had started in 2001 with cost of under R300 million and had only recently opened. It was alleged that it was half-utilised, and the reported final cost had been in excess of R2 billion. He asked the Department to provide an explanation for this.
Mr Fazel said that the names of the individuals implicated were Mrs Ralarala, Mr Raswana and Mr Sazona.
The Chairperson said that these were only three names, not four, and asked for their designation.
Mr Fazel said the latter two were chief directors at head office, in the Prestige section.
The officials were hesitant to give the name of the fourth individual, and the Chairperson became irritated with this. He said that every time officials were required to give the names of colleagues implicated in corruption, there was always this “hide and seek” (mrabaraba) game that delegates played. The Members wanted the names.
An official from the Department said the other two names were Ms Ralarala and Ms Maboela, and the two were project managers.
The Chairperson requested a copy of the report to be submitted the administrative staff.
An official from the Department responsible for projects said the question had been noted, and he had gone through the system but had not located that project in the Department’s system. He requested to be allowed to provide information related to the hospital at a later stage.
The Chairperson asked about the timelines regarding the cases, and how far the Department was in processing the cases related to the individuals in question.
Mr Fazel responded that the Department had been advised by the legal and labour relations teams of the Department to look at other associated matters relating to the cases, such as the procurement process, in order to prepare properly. By the end of the month, this should have been finalised.
The Chairperson asked whether the implicated officials were still at work.
Mr Fazel confirmed that they were still employed, and a report with a full disclosure of the matter had been provided to the Committee to scrutinise.
The Chairperson was not pleased with the fact that these individuals were still employed, pending the cases. It could not be business as usual. The delegation had spoken about the gaps in the system, but it was very same senior officials within the Department that were collapsing the system by allowing such things to happen.
Mr Fazel said that the senior leadership would have to think about whether it was appropriate to suspend the individuals. This would be appropriate if there was an indication that the individuals were interfering with the processes pending the investigations.
The Chairperson asked whether the head of the legal department was present. He found it very odd that the implicated individuals were still working. He felt that something was not right about this. The system was compromised, because who was monitoring what these individuals were doing?
Mr Fazel said that he would consult with the Minister today to ascertain how the team should proceed with this matter, given the comments.
The Chairperson said that the Minister had signed off in December and it was three months later, but there were still no charges. This was not a political decision -- it was an administrative decision and the Committee did not encourage interference.
Ms Swarts asked, if the Minister signed off in December, the Department was aware that the four officials were in the wrong. Did this mean the legal team did not see any wrong because the individuals were carrying on as if it was business as usual? These individuals were going to work, and were still getting paid. If they were consulting with the Minister today, what was the consultation going to be about, because so much time had lapsed and nothing had been done.
Mr Vukela said that to have a precautionary suspension during the course of investigation was in order to prevent any interference, but once a report had been compiled, charging these individuals could proceed.
The Chairperson said as long as the DG and his senior officials were satisfied that the investigation would not be compromised in any way, the Committee would have to tread in that direction.
Ms Mente said three funerals had been discussed, but the corruption involved only the third funeral. However, on three different occasions there were no rules in place, there was no costing regulation in place and there was no guiding document on what should or should not be delivered for the funerals. The service provider had brought items that were not part of the scope, so who had received the items that were not part of the scope if there was a guiding document on what was required for the funeral? Members were not being told the truth here, and it could not be the case that it had been discovered only in respect of the third funeral.
Secondly, there was no legal department that was above the law. The PFMA was the guiding document of the Department and it also had its own regulations in terms of finance and procurement, as well as the Treasury regulations. A person had breached all three codes of conduct, and the Department was aware, so the Minister must charge the DG based on Section 86 of the PFMA. One cannot have three guiding documents that tell one how to handle one’s finances, and still put that on to someone else. The DG ought to know the officials that had breached the guiding documents.
Mr Hadebe commented on the precautionary suspensions, and said that people could not just be suspended without legitimate reasons, such as perceived interference in the case. There were regulations in place that must be adhered to, and in this case he was expecting the DG to say that there was no perceived interference from those who were still within the Department.
The Chairperson commented that the policy on funerals needed a review. He asked whether any advice had been given by the Department to the Presidency on this matter in order to ensure that there was better coordination. There was an instance where a funeral in KwaZulu-Natal had been declared on a Friday, and was taking place on the Saturday. This went to show how flouted the system was. There was a list of protocols that needed to be determined, with better planning and possibly placing a cap on the costs.
He requested the report with the names of the implicated individuals, because he wanted to confirm whether any people cited on the list were present at the meeting as well.
The Minister said she had set up a review of the funerals system in November last year, with the involvement of an inter-ministerial committee led by the Minister in the Presidency. She had proposed and made recommendations to the President to put a cap on the funerals’ costs, considering the corruption that was prevalent. She had indicated that when the President declared a state or official funeral, she had to be informed immediately. The role of the Department was to provide the infrastructure for those events. The procurement of the required equipment would now be done by the Department, but she suggested that perhaps the Department could look into purchasing its own equipment and have it stored. If the Department had this equipment already, there would be no need to procure the equipment. The Department would use its own.
The review was under way, and she had suggested to the President that the donations for the funerals should go directly to the families. Once the review had been finalised, the Department would report back to the Committee.
With regard to the report in question, in June 2019 the Auditor General had written to the Department and instructed it to conduct an investigation into the matters related to the funerals. She had asked the officials to conduct the investigation, and had brought in the services of PriceWaterhouseCoopers (PwC). The report had been presented to the Department by the end of November/December 2019. What needed to be done was to act on the recommendations in the report.
The Director-General was also implicated in that report, but the officials had failed to mention that to the Committee. The procedure to act against the DG was for the Minister to refer the matter to the Presidency. Implicated officials at a level lower than the DG needed to be processed according to the Labour Relations Act and the bargaining council, and that was where the failure had come about. She was not aware that there was another decision outside the report
This was the only Department where SCM was not within the office of the Chief Financial Officer -- it was within the Property Management Trading Entity (PMTE). The process to move it back to the office of the CFO in terms of the PFMA had been kick started. In dealing with the issues around SCM, the Department had opened a tender process to the public. It was not yet implemented in all the regions. The Department was also instituting a pilot programme to introduce block chain methodology in SCM, because everything was currently done manually.
To assist with reducing the irregular, wasteful and unauthorised expenditure, the Minister met with the internal and external audit committee on a monthly basis. She wondered whether those committees were actually playing their roles.
It had been emphasised that the Department must achieve a clean and unqualified audit opinion this year.
As for the matters relating to corruption and the cases, there were several cases, and the SIU had been requested to assign two full time officials to deal and process DPWI cases. The SIU had agreed to this, and the Department had paid close to R500 million to the SIU, but she was not happy with the pace of the work.
She had also asked the NPA to open up and review decisions that had been taken in the past relating to not prosecuting. It was clear that the evidence was there, but it was not known why they had chosen to not prosecute.
Lastly, these disciplinary cases could not drag on for so long. There were cases that had started in June 2019, but there was still no outcome and conclusion.
The Chairperson asked whether the report he had just received had been amended. The Minister had indicated that the DG was implicated, but his name had been crossed out in this report. This happened every time the Committee asked for names, but officials continued protecting each other and giving the Committee the runaround. He was not pleased about this matter -- it was unacceptable.
If this was the final report that the Minister had signed off on, the Committee was expecting a final report within 14 days after consultation with the President, and the process of the investigation into these individuals would start.
He could have used far stronger language, but out of respect to the Committee, he had not done so. The Committee would not allow this kind of behaviour, and this had been seen before. Every part of the report that had the DG’s name had been crossed out, and when the names were requested, the DG’s name had not been mentioned.
Mr Hadebe was baffled that the Minister had allowed the DG to respond to issues where he was implicated, as he was highly conflicted. The DG was also aware that he was conflicted, but he had continued to respond nonetheless. Why had she allowed people who were conflicted to respond on issues where they were implicated? This issue was part of the report, so the Minister could have easily brought to his attention that he could not be allowed to speak on the matter because he was conflicted.
Ms Swarts lamented that this was disappointing. All those officials who were implicated were basically secure in their jobs because the DG was also implicated. She did not want to entertain any stories or responses from the Department further, because she felt that the information provided had lost its credibility. It meant that the DG was signing off on all these matters. For the two officials who provided the report to the Chairperson to cross out the DG’s name was a sign of disrespect to this Committee and the Chairperson. Clearly, they were also captured. Members could not believe anything that the officials would say any more.
The Chairperson advised that the hearing would end off on this section. It would not continue.
Ms Lees said that given the information that had come out, he was beginning to question whether the absence of the legal team was somewhat of a background to these delays. If it was the legal team that recommended the disciplinary actions be delayed until the end of March, he requested the name of the legal advisor who made that recommendation, and for a written report from that legal advisor explaining why that advice had been given.
Ms Tolashe said this engagement confirmed the public perception that the DPWI was the most corrupt department. If the driver was allegedly involved in corruption, one could not expect much from the delegates. She appealed to the Chairperson to write to the Speaker to have the matter expedited. Everything that was recommended in that report needed to be implemented.
It was bad enough that world icons’ funerals involved corruption by people who were supposed to be the custodians of the taxpayers’ money. These were people who wanted to get rich quick. It was a shame, and this was disappointing.
Ms Mente suggested that the Committee discontinue proceedings, because she felt that if the meeting continued the Members would be sourcing wrong information. In speeding up the process, could Members attach some time frames -- not more than 14 days -- so that they could hammer on the office of the President to deal with reports submitted by the Minister?
Lastly, the Committee used to invite Hawks, and perhaps they should be invited to assist the Members in opening cases against people who came to Parliament to lie. Scratching out names from an official document was tampering with Parliament’s duties, and misleading Parliament was also a crime.
Mr Somyo said that it was indeed difficult for Members to continue at this point. The Auditor General had made recommendations to the Department, and those were contained in its annual report. Some of its comments included an emphasis on the instability of the Department. The Accounting Officer had to act decisively to those assertions, but if the Accounting Officer was also party to the instability of the Department, then there was nothing that could be done.
Mr Fazel said that the report had been sent via e-mail to the Committee, and no name had been scratched out on the Report. He had written a note earlier on to the Minister, raising the issue that the DG was implicated in the report. As subordinates of the DG, he felt that it would have been fit for the Minister to mention the name, rather than the officials that reported to the DG. There was no intention to mislead the Committee, and in dealing with information regarding the DG, he had to do so with due sensitivity.
The Chairperson said that he had cited only four names, and it had not been four names that were in the report and when he gave out the names. He had fallen short of giving all the names. Therefore, the explanation did not hold. Even if the report was e-mailed, when asked to provide the names he had failed to mention the DG as one of the individuals that were implicated.
Mr Vukela said he agreed with the Chairperson’s comments -- his name should have been mentioned when the Chairperson asked for the names. He was not aware that he was implicated in anything, and the investigation regarding the corruption of the funerals had been initiated by him. He had also not received the report in question. He stated categorically that he was not party to the submission of inaccurate or wrong information to the Committee. In addition, he had not been party to any corruption in the past.
The Chairperson said that he had not received the report as part of the batch of documents that had been sent to the Committee. All the information that came to the Committee had come from the DG, and it was problematic that he was not aware of the report because the buck stopped with him in the Department. The Accounting Officer in the Department was the DG. The fact that the DG was not aware of the report was problematic. At whose direction had the legal opinion been sought? Hopefully, the Minister could see and take note of this mess.
Ms Swarts alleged that Mr Fazel himself was actually corrupt. Therefore, the delegation should be chased away because they had totally undermined Parliament. Clearly, there was something wrong with the mentioning of the DG’s name. She wanted to know what was contained in the note he had passed down to the Minister.
Mr Fazel said that his note to the Minister was merely citing that the DG was implicated in the report and that she should raise it, not him as the subordinate.
The Chairperson afforded the Minister an opportunity to briefly comment, as the hearing was being concluded.
The Minister said PwC had been paid to conduct the investigation and produce the report. This begged the question as to who had signed off on the payment to PwC if it did not go through the Accounting Officer. The Minister did not want to speculate, but asked the Committee to afford her a week to document these events chronologically. She would also check the route form as to whether the DG was aware of this or not. Since the DG claimed that he had initiated the report, the question was, did he not enquire about the report at any point? This had become an issue in January when it was reported in the Sunday Times, because someone leaked the report to the newspaper and the Department had to respond.
Her responsibility was to report to the President, and perhaps the Committee may also follow up from the Presidency on this matter.
There had been no need for Mr Fazel to inform her about whether he or the Minister should cite the DG’s name.
The official from the Department said that the hospital in question in Kimberley was not among the national projects of the DPWI.
The Chairperson said that the Committee would probe that further.
The Minister would be given 14 days to update the Committee on her interaction with the President. He would write to the Leader of Government Business to let him know of what had transpired today. He would also write to the Speaker of the House and the Parliamentary Legal Services for advice on this matter and the matters related to the report, regarding whether the implicated individuals should be suspended or not.
The Members of the Committee had not received nor seen the document that had been handed to the Chairperson today. However, the Committee would check its records to ensure that everything balanced out. He emphasised that it was wrong to scratch out names or information from the documents that were provided to Parliament.
The Committee still needed more information about the cleaners. The Committee would just have to adopt this Department, because clearly it was not doing the right thing.
In conclusion, it was clear that Parliament may have not done justice when it took off its foot on the pedal regarding rigorous and stringent oversight over this Department. The revelations of “Nkandlagate” were an indication of the rotten state of corruption that was taking place in this Department.
The meeting was adjourned.
- DPWI: Combatting Fraud And Corruption Governance, Risk & Compliance Branch (Prestige Funeral Services, Irregular Expenditure, Abuse of Variation Orders & Unscheduled Maintenance)
- Media Statement: Parliament on implication of Director-General on fraudulent contracts of state funerals
- Media Statement: SCOPA Concerned About the Implication of the Director-General on Fraudulent Contracts of State Funerals
- Minister Written Response
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