DSD, NDA & SASSA on action plan progress to respond to AG audit findings; with Deputy Minister

Social Development

13 May 2020
Chairperson: Mr M Gungubele (ANC)
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Meeting Summary

Video: Portfolio Committee on Social Development, 13 May 2020
Audio: DSD, NDA & SASSA on action plan progress to respond to AG audit findings and BRRR

The Deputy Minister of Social Development assured the Committee that the COVID-19 draft regulations did not aim to prohibit the provision of cooked food to communities, but rather to promote the fair distribution of cooked food and food parcels that followed strict health and safety protocols. The concern with cooked food was that people could not congregate and eat food at communal centres, so the regulation stipulated that a ‘knock-and-drop’ approach to delivering cooked food and food parcels must be adhered to.

The Department of Social Development (DSD), answering Committee questions about its response to the lockdown, said it was looking into traditional leaders and pastors being considered essential services to help provide psychosocial support during the pandemic. It made a commitment to focus specific attention on programmes dealing with gender-based violence, HIV/AIDS and substance abuse in the annual performance plan.  Members of the Committee said the Department had no excuse for not reaching the 2% target for the employment of disabled people, after which the Deputy Minister clarified that the Department now worked on a 7% target for the employment of disabled people, as per the latest White Paper on the Rights of People with Disabilities.

The National Development Agency (NDA) acknowledged that appropriate action had to be taken to ensure that vacancies in key positions were filled within the portfolio. Internal controls over the monitoring of compliance with all applicable legislation, policies and directives had to be strengthened, and audit action plans should be implemented and monitored quarterly to support financial management and governance. Structures should be put in place to manage consequences, and should be enhanced to ensure that all cases were dealt with timeously to prevent long-outstanding cases in the NDA.

The South African Social Security Agency (SASSA) clarified that it had no relationship with Cash Paymaster Services (CPS), and said the allegations that CPS was assisting the Agency with social relief of distress (SRD) grant applications were false. It explained that it had not gone out to tender to obtain the particular platform to use the Unstructured Supplementary Service Data (USSD) line and WhatsApp line, because the Departments of Cooperative Governance and Health used the same platform.

SASSA had appointed a labour relations specialist to help deal with eight big cases of officials who were allegedly liable for irregular expenditure. The specialist had started working in January, and his work was continuing despite COVID-19. The processes for three of the eight cases had already started, and SASSA expected to resolve all of them by the end of the financial year.

Meeting report

DSD Audit Findings

Mr Linton Mchunu, Acting Director General (ADG), Department of Social Development (DSD), said the Committee would be furnished with a written response from the previous meeting’s discussion by the close of business on 14 May. The Victim Support Bill had been submitted to Cabinet for approval, and would then be passed through Parliament.

The Department overall aimed to increase the capacity within the Department and entities by appointing social workers. It was committed to better reporting of gender-based violence (GBV), HIV/AIDS and substance abuse campaigns.

Ms Nelisiwe Vilakazi, Deputy Director General (DDG): Strategy and Organisational Transformation, DSD, said there was a lack of oversight within the entities. To improve this, the DSD was establishing a board of directors for the South African Social Security Agency (SASSA). This was still in the consulting phase. The National Development Agency (NDA) board would be completed in a few weeks.

SASSA audit action plan

Ms Busisiwe Memela-Khambula, Chief Executive Officer (CEO), SASSA, said there were still teething issues with the South African Post Office (SAPO). SASSA did not monitor and/or enforce the service standards outline in the service level agreement (SLA) entered into with SAPO. The old SLA was monitored on a monthly basis and enforced appropriately, with the exception of sections agreed for amendment such as refunds of benefits not withdrawn by beneficiaries by the end of every payment cycle.

Agreement had been reached between SASSA and SAPO on the revised service fees, and approval had been received from National Treasury only on 17 April. Therefore the agreement between SASSA and SAPO relating to the social assistance transaction fees would be signed by 31 May. The following agreed rates were effective 1 April 2019:

  • National Payment System (NPS): R6.65
  • Over the Counter: R68
  • Cash Pay Point: R176

Irregular expenditure dated back to 2015/2016, and had not been resolved due to leadership changes in 2016. Fruitless expenditure dated back to the eight broad cases in 2016. There were two cases that were recent, one of which involved property lease agreements. The Department had appointed a labour specialist to expedite the process of pending cases, as they were considered important and required external support. Three cases had started, with the labour specialist driving them.

Mr Tsakeriwa Chauke, Chief Financial Officer (CFO), SASSA, presented the summary of progress on the 2019/20 audit action plan.  The Auditor General of South Africa (AGSA) was concerned that the reconciliations between SASSA and SAPO were not up to date due to the unavailability of information. SASSA, as at the date of review, had not recognised all potential debtors. The reconciliations between SASSA and SAPO were part of the 2019/20 year-end procedure. The reconciliation framework had been agreed with SAPO, and adjustment journals would be processed.

The AGSA had found that there was slow progress in finalising cases under investigation, which impacted on consequence management. SASSA had achieved an increase in the number of disciplinary steps being taken, and the outcomes to date of 282 cases already completed were as follows:

Irregular expenditure

  • Verbal warning (three officials)
  • Written warning (21 officials)
  • Dismissals (one official)
  • Not guilty (13 officials)
  • Resignation (14 officials)
  • Training (41 officials)

(The number of consequence management implemented as reflected above does not equals the number of cases as there were instances where an official was linked to multiple cases).

Damages and losses

  • Verbal warning (three officials)
  • Written warning (three officials)

NDA audit findings

Ms Thamo Mzobe, Chief Executive Officer (CEO), NDA, presented the Progress report on the implementation of AGSA’s audit findings. It had received an unqualified audit opinion with findings expressed on the audit of the annual financial statements. A disclaimer of opinion had been expressed on the audit of performance information.

The NDA recognised that appropriate action must be taken to ensure that vacancies in key positions were filled within the portfolio. Internal controls over the monitoring of compliance with all applicable legislation, policies and directives must be strengthened to prevent non-compliance. Audit action plans must be implemented and should be monitored quarterly to support financial management and governance. Structures should be put in place to manage consequences, and should be enhanced to ensure that all cases were dealt with timeously to prevent long-outstanding cases in the NDA.

In-year changes were not implemented in the annual performance plan (APP). The NDA’s annual performance report would therefore be in accordance with the approved APP, and in line with the planned targets. The decision not to amend the APP was prompted by the little period left for its implementation and the non-retrospective applicability of the APP changes. The delay in the implementation of the information technology (IT) system for collation of data had an impact on the verification and audit of performance information. The verification and audit processes would be undertaken before the annual performance report was compiled.

Irregular expenditure was monitored and reported to the Executive Committee (EXCO) monthly and to the Board on a quarterly basis. Irregular expenditure incurred in the 2019/20 financial year had been assessed in line with the National Treasury framework, and a list of cases of non-compliance that required disciplinary processes had been submitted to human resources (HR) for processing.

The process for the appointment of the chief financial officer (CFO) was concluded in October 2019, and the CFO had assumed duty on 1 December. A number of internal controls in supply chain management (SCM) and finance had been strengthened following the measures that the CFO had put in place. The appointment of a permanent CFO had ensured that the necessary review of the annual financial statements would be performed to ensure compliance of these to generally accepted accounting practice (GRAP) standards, and timeous submission to the AG.


Ms B Masango (DA) said that the lack of oversight, vacancies in critical positionsn and the lack of consequence management were recurring issues in the AG’s report. A lot of the challenges were inherited from the previous administration, but the people that were key to the implementation were not necessarily from the previous administration. Mr Mchunu had stated that the Department would appoint social workers, which was exciting news until one received a letter from a social worker who was based in Limpopo stating that they did not get treated like a professional, and were given stipends despite being a trained, four-year graduate. Other professionals were being paid in accordance with their training, so social workers felt like they were a stepchild of the Department and were being exploited.

According to the AG’s report, SASSA had 16 deviations to the value of R720 million, and this did not seem like the amount the CFO had been addressing. Does this mean that work had been done to reduce the amount?  Why had it taken SASSA so long to issue invoices for the recoverable money from Cash Paymaster Services (CPS), considering that the case from the Court of Appeal had been on 30 September?

Ms A Abrahams (DA) said that the billions of Rands wasted on irregular expenditure could have been money spent on the poor as part of COVID-19 relief. She asked the Minister to comment on the draft document dated 7 May entitled, “Directions on the Distribution of Food Parcels in South Africa during COVID-19 and beyond.” Why was the Department proposing a ban on cooked food? At the last virtual meeting, the Committee had been assured that people would not be thrown in jail for distributing cooked food -- this document now seemed to go against that. If the Department’s concern was about sustainability, civil society organizations (CSOs) had been sustaining communities for 48 days since the start of lockdown. Many of these CSOs had been doing so without the aid of Government. If the concern was then about dignity, where was the dignity in parents not being able to feed their children? This directive would cause irreversible trauma, pain and suffering in South Africa. Was this directive not unconstitutional, as it infringed on the Constitutional Bill of Rights to have access to food? When would the Minister sign new directives for COVID-19?

With whom had SASSA’s R25 billion “Wide Area Network” been contracted? In the next financial report back, it was hoped that there would be fewer performance bonuses paid out, as it was seemingly because of management that had not implemented, reviewed, monitored and performed in a manner that would prevent the root causes of the billions of irregular expenditure.

Ms L Arries (EFF) asked why the Department had hired a labour relations specialist. Did the DSD have a labour relations department? According to the discipline outcomes, R314 million had been recovered from the CPS, but there was no report of a single cent being recovered from the irregular expenditure. What was the cost of the labour relations specialist, and was he a full-time employee?

When students applied for the R350 social relief of distress (SRD) grant, their National Student Financial Aid Scheme (NSFAS) agreement was automatically terminated. Students could not be denied their right to education by losing their NSFAS support. It had not been mentioned that they would lose their NSFAS benefit. SASSA should reject their application for the SRD grant, rather than cancel their NSFAS benefits.  It was mostly women who received the child support grant as caregivers, which made them ineligible for the R350 SRD grant, and this meant that men would benefit from this grant. However, the parents that received the child grant were also unemployed -- would SASSA rectify this? 

Ms D Ngwenya (EFF) asked about the mandate, progress and achievements of the high level committee, chaired by Minister of Social Development and the Minister of Communications and Digital Technologies, which had been established as an intervention to monitor and enforce the standards of the service level agreement with SAPO? It had been said that this committee would be in place until the services rendered by SAPO had stabilized -- when would that be? What payments had been made without following proper procedure at SAPO, and were any people held accountable?

The 282 cases of disciplinary action taken against officials had been reported in previous reports. There had been no update or progress in reporting on this fruitless and wasteful expenditure by officials, but rather a repetition of the 282 cases. When was the labour relations specialist appointed? SASSA needed to unpack the 282 cases, as it had been said that some officials were liable for more than one incident of fruitless and wasteful expenditure. The cases did not tally with the verdicts and sanctions seen in the report. About R13 million of irregular expenditure had been paid for communications and marketing. These officials were said to have submitted written representations of their actions. While the investigations were being concluded, were these officials suspended or in office?

Ms Ngwenya said that her biggest concern with the DSD was the filling of vacant posts. The posts were critical, and some had been vacant since 2017. Could the filling of these posts be expedited? She encouraged the Department to reach the 2% employment equity target for disabled people. It should focus on social workers who were disabled, as well as female employees.

According to Net1, CPS had applied for business rescue. The Committee would be looking closely into this saga, as it looks like there was a new lease of life coming through. Companies intertwined with CPS and Net1 might be gaining something from the new business at the DSD -- and the R316 million must be paid back to SASSA from CPS.

There had been numerous complaints that the SASSA Head of Department in the KwaZulu-Natal (KZN) provincial office, Mr Sbusiso Ngubane, was not answering his phone and was unhelpful. Ms Ngwenya asked the NDA’s CEO to look into this, and said she would furnish her with a detailed report. 

Ms T Breedt (FF+) asked if the NDA could explain how they had been handling their consequence management and irregular expenditure cases in a similar fashion to SASSA. Were they laying criminal charges with the South African Police Service (SAPS) only against officials accused of irregular expenditure? If so, this was inadequate, and consequence management needed to be tightened. The SASSA irregular expenditure cases seemed to be lagging, with new cases being added on each year. The SLA for the labour relations specialist and the specifics of the tender process needed to be provided.

The R1 billion of irregular expenditure had been deemed unrecoverable, so how was SASSA going to ensure that the unauthorised, irregular, fruitless and wasteful (UIFW) amounts would be recovered going forward? What were the annual service transaction fees that SASSA paid to SAPO?

What had been the information technology (IT) findings for the DSD? There was a tremendous problem rolling out the R350 grant, with users being kicked off the system or the system being unresponsive and timing out. How would the system be improved to be more user friendly?

Ms M Sukers (ACDP) appealed to the Minister to reconsider the new draft regulation regarding cooked food. Food distribution efforts would be severely hampered if the regulation were to go through.

The DSD and its entities needed to clean up their image. She expressed her support for Treasury that charges should be laid against officials who were no longer in the Department but were liable for fruitless and wasteful expenditure. Investigations needed to commence so that there may be a restoration of trust in social development, which was critical for South Africans to believe in an effective government.

Ms Suckers said there were 1 800 social workers who were a part of the COVID-19 response. The Western Cape was experiencing cluster outbreaks of COVID-19. Within her constituency, she needed psychosocial support for people where there were cluster outbreaks of the virus. Would pastors be considered an essential service during this pandemic? Pastors were able to upscale the efforts of the Department to provide psychosocial and GBV support.  

Ms L van der Merwe (IFP) said that “work-in progress” and “on-going” were not timeframes -- the departments needed to have specific timeframes when presenting progress reports. There were critical positions that had been vacant since 2015. This was unacceptable and regardless of COVID-19, these positions needed to be filled.

Last year, the Committee had recommended that the Department be more specific in its reporting on GBV programmes. In the APP and strategic plans that the Committee interrogated last week, there had been a silence around GBV programmes and interventions. More could be done to strengthen the shelter system and the visibility of the GBV command centre.

After COVID-19, the Department needed to give an indication of how it had worked with other departments in absorbing social workers in critical areas such as primary schools, police stations and communities. There was no excuse for the Department not employing 2% of people with disabilities. There had been progress in the evidence-based reporting which the Committee had recommended previously, but there was still a lack. Evidence-based reporting on substance abuse, anti-gangsterism and youth programmes could be improved to determine if they were actually making a difference in peoples’ lives.

The investigations into fruitless and wasteful expenditure cases needed to be finalised. Why had the process taken so long? What were the on-going IT challenges faced by the DSD? Could the Committee be furnished with the monthly reports on the oversight of the entities conducted by the office of the DG? She also asked SASSA to provide a brief update on the SRD grant applications.

It was concerning that officials from CPS had returned and would be assisting SASSA through a company called “Capital Appreciation” or “Synthesis.” She asked SASSA to comment on the allegation that CPS had made a comeback though a backdoor to assist them with payments and applications for the SRD grant.

Ms K Bilankulu (ANC) said it seemed that the DSD was more concerned with filling vacant posts at the national and provincial level, while work was done at the district level and in some districts there were critical posts that needed to be filled. SASSA had been operating in nine regions, but had since changed to working within three regions. If this was correct, and there had been nine regional managers, did SASSA think they could serve all the regions with just three regional managers? What had happened to the other six regional managers? Would they be reinstated somewhere else at the level of regional manager?

The Chairperson said that the biggest challenge when dealing with the AG’s report was when it was reduced to their new format. It had created a risk, as the Committee was dealing with the report in line with how it had been rephrased. The challenges had to be dealt with, using the same metrics and words of the AG. It should perhaps be reported in the words of the AG, side-by-side with the root cause of the issue mentioned and the understanding of the Department. Paraphrasing could potentially be problematic.

There were different types of expenditure; fruitless, irregular and wasteful. SASSA had managed to breakdown the expenditure in these categories, which had helped to determine that out of R1.8 billion, R800 million had been dealt with, and R1 billion was still outstanding. This enabled better oversight for the Committee. The DSD and entities needed to follow this fashion of reporting. As much as there were gaps within SASSA, they had moved in the direction of effective accountability through the way which matters had been cleaned up.

According to the NDA, a number of the AG’s findings fell within the scope of the CFO. Was the NDA awaiting the appointment of the CFO to deal with these issues?

All the appointments of the Department had been tendered, and it was up to the AG to tackle that transparently. Thus, the Committee needed to decide if the specifics of the tender for the labour relations specialist had to be interrogated by the Committee, as it was currently not in question, nor had it been flagged by the AG. She asked Members who had said they wanted to look at the details of the pending cases to realise that there were about 700 cases – did they want to look at specific cases, or review all 700?

The Chairperson asked the Department to give a brief update on how it was dealing with COVID-19, as no meeting could escape the fact that government was operating in exceptional times.

DSD Response

Mr Mchunu ensured the Committee that the reporting would be done on the premise of a results-based approach in a more uniform fashion across the entities.

The root cause of the repeat IT findings was due to the lease agreement that had come to an end, and the DSD had been faced with deciding to renew the lease or not. The G-tech process was assisting in this regard, as the DSD was moving towards a campus where the entire portfolio would be housed. It would be working steadily towards that over the next few years. It was introducing controls around IT governance and resuscitating the IT steering committee to prevent the same issues recurring. The G-tech process was around organisational design, which would look at change management and a skills audit sector-wide.

National Treasury had approved the appointment of 1 809 social workers. The Department would update the Committee on how these social workers had been deployed. The government was moving towards a more proactive approach, rather than a reactive approach to governance. It was important to appoint more social workers than police officers.

A two year moratorium had been placed on the Department, which had affected the vacancy rate. COVID-19 had disrupted the plans for filling posts, but this was not an excuse and various measures were being considered to enable that recruitment to still take place. The recruitment process was at various stages per vacancy. Other stakeholders, such as the SSA Recruitment Group and stakeholders responsible for competency tests, had contributed to the delay in filling vacancies.

Ms Conny Nxumalo, DDG: Welfare Services, DSD, said there were no social workers in Limpopo that were being paid a stipend. Child and youth care workers that were trained at a community-based level, received stipends. The Department was looking at how it could appoint these workers so that they could receive salaries. Child and youth care workers working in the Departments facilities received a salary, and not a stipend. The 1 809 social workers appointed to deal with COVID-19 management would not be permanent after the pandemic, as there was no additional budget. The 200 appointed in November 2019 to assist with GBV matters would be appointed permanently moving forward.

The Department would integrate and repackage GBV in the APP, as this matter had been raised by the Committee. There were many operational activities currently under way which had been linked to HIV/AIDS and substance abuse, which she had previously reported on. The work was still under way, and was being recorded as being at an operational level. The Department would look at how to elevate this to an APP level.

The religious sector played a big role in providing psychosocial support.  The Department was looking into integrating them as part of the COVID-19 response, as well as working with traditional leaders to operate in their communities.

Mr Peter Netshipale, DDG: Integrated Development, DSD, said that people could not eat in community nutrition and development centres (CNDCs), just as people could not eat at restaurants. To maintain social distancing and the spread of COVID-19, a knock-and-drop approach had been taken to provide cooked food to houses identified as being in need, as well as the delivery of food parcels to households. The draft regulations were still internal, and would not prohibit the distribution of cooked food. Section one of the draft regulation stated that in terms of application, cooked food should not be distributed at a centre where people would sit and eat, but cooked food must rather be delivered to households. Any food provided must adhere to strict health and safety protocols.

NDA response

Ms Mzobe said that the findings the NDA had received had been inclusive of HR, which was indicated in the 16 polices in the presentation. The 16 policies had been finalised and were waiting on the approval of the board. The process had started in November and had been finalised. The remaining findings were aimed squarely at finance in terms of supply chain management. Most investigation processes had been dealt with, however. The bulk were due to historical leases that had expired, and others that were coming to an end.


SASSA response

Ms Memela-Khambula said that the labour expert had been employed to help with eight big cases that required external, independent support. The expert had started working with SASSA in January, and this work was still being done through the lockdown. The processes for three of the eight cases had already started, and SASSA expected to resolve all the cases by the end of this financial year. It was looking into whether hearings could legally happen online, as the people involved were in different parts of the country.

Ms Raphaahle Ramokgopa. Executive Manager: Strategy and Business Development, SASSA, said that the labour specialist was not a tender appointment, but an employee of the agency. About R706 million of the R1 billion cases had been handled by the office of the CEO, as top management cases were handled by the office of the CEO. The reason it was taking so long to recover the R316 million from CPS was due to the CPS taking the matter to the Constitutional Court, and a verdict had been reached only in February. SASSA was still engaging the CPS on the payment of this debt. 

A portion of a contract SASSA had with Telkom had been deemed as irregular due to the process that had been followed to vary the contract to include additional work. Irregular expenditure did not mean expenditure was incurred in vain, but was rather expenditure where the Department had received value but had not followed the required process of appointing a service provider. In such an instance, money may not necessarily be recovered, but consequence management was required for the officials who were involved. SASSA had appealed to National Treasury to condone the expenditure, and due processes would follow.

There were currently oversight structures that monitored the implementation of the agreement between SASSA and SAPO, where both Ministers had been briefed. The transaction fees due to SAPO were paid based primarily on the choice of the beneficiary. R1.4 billion had been paid in the 2019/20 financial year for the SAPO/SASSA contract, and it was projected it would be around R1.5 billion this financial year, based on SAPO remaining with its current portfolio, with the majority of accounts held with SAPO. 

Ms Memela-Khambula said that SASSA had began looking at the structure of the organisation after the Portfolio Committee had raised concerns that it had had people in acting positions for a very long time, as well as other concerns raised by the AG. Apart from people acting in the same position for a very long time, the structure of the organisation also saw 22 people reporting to her, and it was difficult to ensure that people were able to assume the responsibilities delegated to them. SASSA had started the process of reconsidering the structure of the organisation in August 2019. Issues such as the culture of the organisation, decision-making – financially, and in terms of HR – had been delegated to a local level, whereas previously everything went to the head office, which had contributed to making it ineffective and difficult for implementation to occur at the local level.

With the nine acting regional managers now reduced to three, the remaining six would now focus on the grants administration side, providing support to the regional executive members (REMs) at the local level. The other REMs would focus on streamlining operations and ensuring decision-making was fast-tracked. There was still much work to be done around the business process.

SASSA did not have a relationship with CPS at all, despite the issues that had been raised by the press. A document would be issued to clarify this. The original founder and chairman of CPS had left CPS long before SASSA entered into a relationship with the company.

SASSA had not gone out on tender to obtain the particular platform to use the Unstructured Supplementary Service Data (USSD) line and WhatsApp line, as the Departments of Cooperative Governance and Traditional Affairs (COGTA) and Health used the same platform.

 Closing remarks

Ms Ngwenya clarified that she did not mean all the investigation cases should be unpacked. She had been referring to where there were cases with an individual that was liable for more than one offence. These should be reported in a fashion that stated each offence and the outcomes. That way, the numbers would tally.

Ms Hendrietta Bogopane-Zulu, Deputy Minister of Social Development, said that the Department operated on a 7% target for employment of disabled people, and no longer 2%.  The white paper on the rights of people with disabilities had amended this. Where the Department needed volunteers for a programme, it prioritised social workers and in these cases, social workers received a stipend. This allowed the social workers to remain current, and the Department had no intention of disrespecting these workers.

SASSA, SAPO and the DSD had been working much more closely, rather than sending letters back and forth to each other. Reports had been compiled on the progress made at these meetings and reported to the President. The current circumstances were putting much pressure on the Department, resulting in new ways of working, so whatever questions had not been answered at the meeting, the Department would issue a written response.

The distribution of food was critical at this time. Co-ordination with communities was important. Regardless of whether it was cold or hot food being distributed, it needed to be co-ordinated in such a way to ensure it was distributed fairly. There were different tools that could be utilised according to the lockdown levels, and it was essential that all stakeholders worked together to adhere to all protocols that were expected. She requested the Committee to consider each level and its regulations, as well as the overall government approach -- the risk adjustment approach -- as a guiding factor for responding to COVID-19.

The regulations were in the hands of COGTA, but the DSD was still expected to issue the directives. Issues raised by the Committee regarding food and other matters could be followed up by the publication of the regulations and directives issued in line with the risk adjusted approach.

The Chairperson clarified that the Committee did not need a detailed report of the Department’s COVID-19 developments, but just a brief update at each meeting. Minister Zulu agreed to this.

The Chairperson requested that the Mr Mchunu provide an updated report using the suggested metrics with concrete timeframes, avoiding phrases like ‘on-going’. There had been a significant attempt by the Department in this administration to correct actions taken a long time ago. Issues had been carried over from the prior financial years, but in 2020/21 there was a need to simply deal with the previous year, and no longer all the issues that had been carried over.

The Committee adopted the revised draft second term Committee programme on social development.

The meeting was adjourned.



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