Allegations of corruption against GPW Acting CEO; with Ministry and Update on EOH, ABIS & VFS contracts

Meeting report

The Chairperson commended the guidance of the National Corona-virus Command Council (NCCC) for preventing a national catastrophe. He also commended the Minister of Home Affairs Dr Aaron Motsoaledi for his hard work during the lockdown. He welcomed Deputy Minister of Home Affairs Mr Njabulo Nzuza and thanked God that he had survived a recent hijacking. The repositioning of the Department of Home Affairs (DHA) as a security department was taking shape well. He accepted the apology of Ms A Khanyile (DA).

Mr J McGluwa (DA) observed that Ms Alinah Fosi appeared to be attending the meeting and questioned whether this was appropriate given that she was the subject of one of the agenda items.

The Chairperson asked the secretariat to clarify whether Ms Fosi was allowed to be in the meeting.

Ms Fosi left the meeting.


Advice from the Parliamentary Legal Advisor
Adv Frank Jenkins, Senior Parliamentary Legal Advisor, Constitutional and Legal Services Office, explained that the whistle-blower had approached the Public Service Commission (PSC) and the Minister of Home Affairs before writing to the Committee “out of frustration.” However the Committee could only handle the information given to it within the provisions of the law. This was the basis for the advice to be given. He had read the PSC interim report but the allegations of the whistle-blower went beyond the scope of the PSC investigation and the advice to the committee was specifically on these allegations. The Committee should ensure that the Minister was taking on the recommendations of the PSC report, but it should not get involved in the day-to-day management of the Government Printing Works (GPW).

Ms Thiloshini Gangen, Senior Assistant State Attorney, added that the crux of their opinion was that the allegations against the acting Chief Executive Officer (CEO) of GPW could be referred to the PSC for investigation.


Remarks by the Minister of Home Affairs
Minister Motsoaledi began by clarifying the sequence of events leading up to the whistle-blower’s letter to the Committee. On February 4 he had received a letter with an attached statement, by a recently-departed employee, alleging that the acting CEO of GPW, Ms Alinah Fosi, had asked him to act corruptly in the appointment of a facilitator for its strategic management meeting. The employee claimed to have audio evidence. On February 13 he had received a letter from the Public Servants Association (PSA), the majority union at GPW, asking him to suspend the acting CEO and investigate the allegation. He had sent both letters to the PSC on March 17 and asked the PSC to investigate the allegations. On April 15, while the investigation was ongoing, he had received an email from a Siphokele Mike Mgwambi alleging that he had done nothing about the allegations against the acting CEO and was intending make her appointment permanent. Mr Mgwambi also claimed to know that the Minister was being lobbied by senior ANC members and had promised business deals to the acting CEO, and threatened to write to the Portfolio Committee, the President, the Minister of Public Service and Administration and the media, and go to court, if she was appointed. This was the letter the Committee had received. He had written back asking for the name of the accuser so that he could follow up on the various allegations against the acting CEO and himself, but GPW had denied that this person had ever been an employee. The Minister had also sent a letter to the accuser’s lawyers but the accuser had not revealed himself. At this point the Minister had approached the State Security Agency (SSA) to identify the accuser. The SSA required a warrant from the police; they passed the matter to the Hawks, which asked the Minister submit an affidavit. The Minister had prepared an affidavit requesting the names of the senior officials who were allegedly lobbying him. While the Hawks were investigating, new allegations had been made that the acting CEO had influenced him to approve a trip to a conference in Paris, and the acting CEO had written to him to tell him that applications for the posts of CEO, Chief Financial Officer (CFO) and operations manager had been stolen. He had taken this information to the Hawks as well. In the meantime the PSC had completed its investigation and he had received the report on it the day before. In summary, it found no evidence of corruption against the acting CEO. The report noted that the accuser had lost the audio recording he claimed to have when his phone fell into some water. The report did recommend that the Minister should consider “corrective action” against the acting CEO, among other recommendations. The PSC was being requested to investigate all the later allegations.

Discussion
Mr D Moela (ANC) observed that there were two distinct issues. The first was the allegations against Ms Fosi. These had been investigated thoroughly by the PSC and found to be untrue. This matter should be closed. The second was the allegations against the Minister. He was happy that the Minister had escalated these issues to the security agencies. The Committee should allow the investigations to unfold, and the Minister should present the report to the Committee when it was released. He called on members to treat the issues in a dignified manner. A member had accused others of defending corruption, and this member should be dealt with accordingly.

Ms L van de Merwe (IFP) thanked the Minister for referring the allegations to the Hawks. She pointed out that the PSC report recommended that the Minister take corrective action in relation to non-compliance with supply-chain management processes by Ms Fosi, which implied that she had been implicated in manipulating tender processes. With all the allegations that had been levelled against the acting CEO, she should be placed on precautionary suspension until all the investigations by the PSC and the Hawks were complete. It would not be correct for the Committee to absolve her of any wrongdoing on the basis of this one report.

Minister Motsoaledi disagreed that the report implied that Ms Fosi had manipulated tenders. Manipulating tenders was tantamount to corruption.

Ms T Legwase (ANC) said that the Portfolio Committee was in no position to investigate the allegations. The Minister had referred the matter to the Hawks and the Committee should leave the matter until the report was presented. She was worried about the way in which this issue had come before the Committee, and it was unfortunate that Ms Khanyile was not present today and that she had made allegations outside the committee. As a member of the ANC, she herself had been given a mandate to fight corruption and maladministration, and it was wrong for Ms Khanyile to publicly accuse members of the committee of defending corruption. Ms Khanyile should apologise to committee members or withdraw her allegations of corruption.

Mr A Roos (DA) denied that Ms Khanyile had accused anyone of being corrupt. She had said that they “seemed to turn a blind eye to corruption.”

Ms Legwase said that turning a blind eye would mean that someone was comfortable with corruption. Ms Khanyile should be taken to task.

Mr McGluwa welcomed the Chairperson’s decision to investigate Ms Fosi’s presence at the meeting. Ms Fosi should have known better than to enter into a meeting at which she was a point of discussion.

Mr M Chabane (ANC) agreed. The Committee should also get a view on the fact that the meetings were public and anyone could watch the broadcasts.

Mr McGluwa was concerned that the report had only been received at 11 am that day and it did not include any of the 15 annexures mentioned in it. What was the reason for this? No consideration to consequence management had been given throughout the whole saga. Why was information being hidden from the committee? If there was confidential information, the Committee should have a meeting in camera to interrogate the complete report. The Committee could not make recommendations on such serious allegations on the basis of an incomplete report.

Ms M Modise (ANC) commended the Minister for acting swiftly to ensure the allegations were dealt with. Ms Khanyile’s allegations against members of the committee were unfortunate, and she should apologise. She added that the Committee had no duty or obligation to conduct an investigation, and appreciated the legal opinion which referred the Committee to the PSC report.

Mr M Lekota (COPE) said that the Committee was procedurally wrong. The Minister should deal with the matter because the allegations were being made against him. The Committee were not the police or investigators and should not have been confronted with this pile of stories with no owner. The Committee should only have to deal with a fully processed matter. He called for the matter to be left in the hands of the executive and the police, and anyone implicated could be charged in court. There was no reason for the Committee to consider it and committee members could be summoned to court for things they said.

Mr Roos disagreed with Mr Lekota. The matter was part of the Committee’s oversight. The Committee needed to make sure that the allegations were timeously investigated and that the Department was protected in the meantime. He agreed with Mr McGluwa that the full report and the documents referred to by the Minister should be considered at the next meeting, with the PSC present to answer questions. There was an allegation that the lead investigator at the PSC had worked at the Department and may have been a colleague of Ms Fosi. If this was true, would it constitute a conflict of interest?

Adv Jenkins replied that a conflict of interest could either be financial or personal. The fact that the lead investigator might have been a colleague of Ms Fosi would not on its own be enough to establish a conflict of interest.

Mr Roos said that the PSC report showed that the allegations of Mr Mgwambi had some substance, and the PSA had also raised concerns. In other words it was not just one disaffected employee who was bringing up the issue. Whether the report found that she had made a mistake or acted deliberately, it raised questions about the capability of Ms Fosi to serve as the accounting officer of the GPW. There were two questions: whether Ms Fosi had issued an unlawful instruction, and whether this had led to an irregular appointment. It was untrue that no evidence to suggest corruption had been sent to the PSC. A submission challenging the series of events presented in the PSC report was made. This submission should be referred to the relevant competent body for attention. The PSC needed to answer questions on the full report, including the addenda. How had it arrived at its conclusions? Not all the allegations had been investigated. The acting CEO should be placed on precautionary suspension.

Adv Jenkins replied that a suspicion was not enough to place someone on precautionary suspension. It required a reasonable apprehension that something had been done wrong and a reasonable apprehension that there would be interference if the person was not suspended. It would be the Minister’s responsibility to suspend someone. Furthermore, the suspended person would be receiving full pay so it should not be a knee-jerk reaction.

Minister Motsoaledi agreed that placing someone on suspension was not an automatic consequence of allegations against them. The initial accuser had not presented his evidence against the acting CEO, and the further allegations were being investigated by the Hawks, so the question of whether to suspend her should be left to them. All the complaints considered in the report originated with one person, so it was inaccurate to say that many stakeholders had raised concerns, and the identity of the person who had written to the committee was unknown, so it was not possible to say whether he was a stakeholder or not. Mr Roos’s statement that the PSC report was untrue where it said that there was no evidence of corruption should be directed to the PSC rather than himself.

Mr Chabane thanked the Department for ensuring that the Committee received the report quickly. He welcomed the PSC report and observed that it exonerated the acting CEO of corrupt activities, but it was also haphazard insofar as it also made recommendations to the systems within GPW. The Committee should affirm the report’s exoneration of the action CEO. He agreed with Mr Lekota that the remaining allegations, particularly the missing job applications, should be handled by the Ministry and the committee should wait for the report on these to be presented to the committee. The Committee needed detail on anyone who was irregularly appointed at GPW, as it was the committee’s responsibility to perform oversight, but there was no reason to suspend Ms Fosi. Ms Khanyile did allege that some committee members were corrupt and she should withdraw her allegations or apologise for them.

Ms L Tito (EFF) thanked the Minister for handling the allegations and handing over information to the Hawks. She called on the committee to wait for the Hawks’ report and take it from there.

Mr R Dyantyi (ANC) agreed with Mr Lekota that the committee members were not police or investigators and that the matter should be put to rest. He disagreed with members who called for the suspension of Ms Fosi. Further engagement with the report would be a waste of time. Mr Roos and Mr McGluwa were “kicking for touch” by suggesting that the appendices to the report might contain something very important.

Mr Roos asked for clarity on whether the recommendations of the PSC would be adopted by the committee.

The Chairperson said that the Committee was moving on to the next agenda item. The report had found no evidence of wrongdoing against Ms Fosi. The Minister was empowered to follow the recommendations and implement corrective measures, but this did not include precautionary suspension. There was no time to call the PSC to the committee and the committee had more important matters to deal with. The Committee should do oversight at GPW to determine what the issues there were.

Mr Roos said that the Committee had not decided whether it had accepted the recommendations of the legal team. It was also unusual to receive a report without the author of the report being present to answer questions. The committee needed to see the full report and the PSC needed to answer questions on it.

Mr Lekota suggested that the Committee wait until all the investigations were complete, and the Minister presented a final report, before adopting any recommendations. It was a waste of the committee’s own time to discuss the matter before that.

The Chairperson agreed with Mr Lekota. He welcomed the PSC report to the extent that it did not find that the acting CEO of GPW had committed any wrongdoing. He would seek legal advice on Ms Khanyile’s remarks about other committee members.


Briefing and progress update by the Department of Home Affairs on the EOH, Automated Biometric Identification System and Visa Facilitation Services contracts
The Chairperson asked the Minister to take the presentations as read and proceed to the recommendations to allow committee members more time to engage.

Minister Motsoaledi explained that the report given to the committee on Visa Facilitation Services (VFS), a company that assisted citizens in other countries to apply for South African visas, had been amended to reflect the fact that the contract with VFS would no longer be terminated. A thorough investigation, which took into account COVID-19 and other factors, had concluded that terminating the contract would destroy the Department because there was no replacement for VFS. Terminating the contract would cause tourism to collapse. He asked Mr Jackson McKay, Acting director-general, DHA, to deliver the presentation on the Automated Biometric Identification System (ABIS).

Mr McKay began on page 19 of the presentation on ABIS, where the audit findings of the ABIS procurement process were discussed. The Auditor-General of South Africa (AGSA) had found that the ABIS contract had been awarded irregularly. It had found a limitation of scope on the accreditation process (due to the inability of the State Information Technology Agency (SITA) to provide the required documents) and on the proposal and awarding phase (related to the security clearance of Ernst & Young). DHA believed that the correct procedures had been followed and that the missing documents would show this. An independent audit firm, SAB&T, had been appointed to investigate the matter in March 2020 but had only begun its work in May 2020 due to COVID-19. It was expected to conclude its work before the end of June 2020.

Mr McKay reiterated the Minister’s assertions about the VFS contract. Starting on page 24 of the presentation on VFS, he said that the recommended way forward was to protect the Department against operational disruptions at a time when there was substantial uncertainty and global risk due to COVID-19, and this was the reason for the Department’s decision to extend the contract with VFS. He looked at some of the opportunities the extension would bring. For example, it would give the Department time to complete the public-private partnership (PPP) process to appoint a replacement. He observed that COVID-19 had introduced unprecedented and unforeseen changes on the Department in 2020, and any drastic changes to its current operations would impose high risks going forward. The Department recommended that the committee support the extension of the VFS contract while it was establishing a PPP.

Discussion
Mr McGluwa asked what the Department had in common with VFS, apart from being based in Dubai.

Mr McGluwa said a company could not have a monopoly on the service for more than ten years. The company had violated the Public Finance Management Act (PFMA), and the Department should not use COVID-19 as an excuse. For how long would the contract be extended? When would it be reviewed? What skills transfer had taken place?

Ms van der Merwe asked who owned the biometric data under the current contract with EOH. She recalled that Cash Paymaster Services and Net1 had unlawfully used data from social grant recipients, in some cases leading to deductions from their accounts. Now that EOH was exiting the contract, was the Department doing enough to ensure that people’s data was protected, given that the Protection of Personal Information Act was not yet fully operational?

Ms van der Merwe asked what reasons EOH had given for wanting to exit the contract, and if the legal opinion allowed them to exit the contract, what measures had been put in place to deal with the effects?

Mr Roos asked why the Department could not implement penalties for delays as part of contractual agreements with EOH. He also wanted to know about the legal implications for the Department if the legal opinion was that EOH was within its rights to exit the contract.

Ms van der Merwe agreed that COVID-19 should not be used as an excuse for extending the VFS contract. Was the Department confident of success should it face litigation related to extending the contract without a formal bidding process? A negative outcome would impact on service delivery and audit findings.

Ms van der Merwe asked if VFS was one of the four preferred bidders for the PPP. If not, how would skills transfer be ensured?

Ms Modise asked what the Department would do with the remainder of the ABIS contract if AGSA found that EOH and Ernst & Young had colluded.

Ms Modise asked whether VFS also ran mobile visa application services. If they did, were they similar to DHA’s services? How many were there?

Mr Roos said that the VFS contract had been raised as an issue last year and the committee was now sitting with the further extension of the contract without a competitive bid. This would result in a negative audit finding. The committee had made resolutions, and there needed to be a way of tracking them. He was encouraged by the news of the PPP because the lack of accountability that went with outsourcing of security-sensitive services such as visa applications was a worry. For example, thousands of South Africans could not currently access their passports because they were locked away in the offices of TLScontact. Why did the security service at Lindela Repatriation Centre need to be outsourced? He asked what three models were being looked at on page 22 of the VFS presentation. The New Zealand model, which involved significant investment in staff capacity overseas, looked interesting, given that just three countries (China, Nigeria and India) accounted for half of all South African visa applications. Nigeria and India in particular could benefit from more Home Affairs officials. Was the Department looking to invest in these kinds of offices as part of its PPP model? Perhaps smaller diplomatic missions could be completely outsourced and more control of larger missions could be taken.

Ms Tito asked who had represented the Department at SITA during the ABIS bidding process. What was their report on the process that awarded the bid to EOH Mthombo? She recalled that the Minister of Communications had said she was preparing reports on the missing documents. However SAB&T had received some empty CDs that were supposed to contain relevant documents. When would SITA come to the committee and explain what was happening?

Mr Moela called for a briefing from the DHA immediately after the investigation by SAB&T was concluded.

Ms M Molekwa (ANC) said that the issues raised by AGSA should be attended to as a matter of urgency, and the committee should get a progress report on this.

Mr Chabane recalled that the former acting director-general had presented a report on ABIS in 2019. The issues presented seemed to be the same and while there was some movement, it was too slow for accountability. The Committee should have a meeting with SITA and the DHA to get clarity on the EOH-ABIS matter. The matter might need to be referred to the standing committee on public accounts. What was the cost of non-service by EOH to the Department?

Mr Chabane said that the committee had agreed to allow the Department to extend the VFS contract and continue developing the PPP even before the emergence of COVID-19. The Department should be allowed a period of transition in the appointment of a PPP. The question of a monopoly was a historical and political debate. It was not in anyone’s interests for the Department to collapse. The committee should align its thinking within the context of the repositioning of the Department.

Mr Njabulo Nzuza, Deputy Minister of Home Affairs, said that DHA would become the owner of data migrated to the ABIS system. There should be no fear that the data would be owned by someone else. He said that it should be remembered as a general point that the DHA faced a predicament because of the cap placed on the cost of staff by National Treasury. In some areas, DHA had reached the staff cap imposed by Treasury and had to find innovative ways to continue offering services. This was a reason for using the system offered by VFS. The ultimate objective was for DHA to build its own capacity, which was why it was developing the e-visa system. DHA would prefer not to outsource security at Lindela Repatriation Centre; the problem was the staff cap. In general, change should be progressive and not involve the disruption of services.

Mr McKay explained that the relationship with VFS was that VFS was a service provider of frontline services for visa applications. The question of where VFS was based came up frequently. He explained that DHA had a contract with VFS South Africa, a subsidiary of VFS UK, which was owned by Sweden-based EQT. The corporate office of VFS was in Dubai and it had offices all across the world. He explained that VFS’s services were different from those offered by DHA. They were “suitcase services” designed to register people offline. He said that VFS was one of the preferred bidders, noting that internationally, there were only five companies who offered these services.

Minister Motsoaledi said that he had researched the history of the Department’s relationship with VFS when he began working there, as members of parliament had been asking questions about it for a long time. He had been told that someone had brought the name of Gupta into it. It seemed that VFS was suffering from association with this name. If it was excluded from the new bid, it would not be on any legal or financial basis but on the basis of perception and stigma. He agreed with Mr Chabane that the amount of money paid to EOH should be established. If they were not delivering a service, under what conditions were they being paid? There should be accountability. He said that it was an international practice to use the services of companies such as VFS. It was unrealistic to expect South Africa to perform these services itself. There were only five companies that offered them. Frontline visa services could not be compared with security services, as Mr Roos had done. It would take ten years for the Department to build the capacity to offer these services itself.

Mr Thulani Mavuso, Deputy Director-General: Institutional Planning and Support, DHA, said that the National Population Register was stored on state-owned software. The systems underlying the HANIS system which ABIS was replacing were state property. He said that EOH had wanted to cede its contract with DHA to one of its subcontractors. Discussions between the legal teams were ongoing. EOH could not cede their responsibilities without the consent of DHA, the client, and DHA needed to make sure there was some benefit from the money it had already spent. The Department wanted to move toward ABIS because it offered enhanced biometrics such as iris recognition and would enable the establishment of e-gates at airports which would be important in the post-COVID19 era. He observed that TLScontact served citizens of the United Kingdom in South Africa. (some parts of his response were inaudible)

Closing
The Chairperson thanked the Department for its engagement. He said that there would be a follow-up meeting with the Minister of Communications on EOH. He would discuss matters with the Chairperson of the standing committee on public accounts to see what could be done. Where corruption arose it needed to be exposed. The Department’s work should not be compromised in the transition to the PPP. He hoped that local entrepreneurs could be part of providing these services. The international companies should be localised.  (parts of his remarks were inaudible)

The meeting was adjourned.