The Standing Committee on Public Accounts (SCOPA) expressed concern at the delays and lack of response to its requests to government departments and entities to provide reports on challenges affecting their operations. In a virtual meeting, the Committee dealt with internal business on follow up correspondence and information expected from department and entities which have appeared before the Committee. The Chairperson said there was merit in corresponding with the leader of government business to enforce the principle of ensuring that Parliament was respected, and that information was given to the Committee immediately. It had to make recommendations on the information presented to it, and in the absence of that information, it had to make recommendations speaking to the fundamental shortcomings within the operations of the department or entity. The frustration of the Committee was warranted, but Members should expect to run into these difficulties because it was interrupting people’s misbehaviour, so they were bound to be resistant to the expectations and demands of the Committee. Nevertheless, it had to enforce a culture of accountability on public entities.
The Committee was briefed on follow-up correspondence, and listed outstanding information regarding the Department of Public Works and Infrastructure (DPWI), Eskom, the Department of Water and Sanitation (DWS), South African Airways (SAA) and the SA Express, the South African Police Service (SAPS), and the Unemployment Insurance Fund (UIF).
Information was still awaited from:
- The DPWI, on disciplinary proceedings against the implicated officials in the PricewaterhouseCoopers (PWC) report, and irregular expenditure involving state funerals.
- Eskom, on the cost-benefit analysis of the take-or-pay contract, and the R4 billion contractual overpayments at Medupi power station.
- SAA and the SA Express, where full details of its liquidators had not been submitted, and the remuneration of the limited duration consultants paid by the liquidators was outstanding.
- SAPS were now providing their monthly reports on time, but there had been only a modest improvement from their previous submissions.
- The DWS, where the requested information on water boards’ investigations and water tanks had not yet been received.
- The UIF, in connection with the R5.7 million which had been paid into an incorrect bank account.
The Committee agreed to schedule follow-up meetings with the various entities and departments, to make recommendations based on the information presented.
The Committee was also advised that it would be asked to make input soon on the modalities and structure of the Association of Public Accounts Committees (APAC) at the National Assembly. It was pointed out that the Committee paid a subscription fee to APAC, and Parliament would not pay the fee until such a time that the leadership was elected, and these matters were handled in a manner that inspired confidence.
APAC elective issue
The Chairperson commenced with the Association of Public Accounts Committees (APAC) elective issue by stating that the Members were due to have the APAC conference, and the related documentation had been circulated. The council of delegate Members had to be appointed next week. None of the APAC office bearers had returned to Parliament or the legislatures, which posed a dilemma. The Speakers’ Forum had been engaged in a long discussion about the migration of APAC to the National Assembly. This was because of the undesirable situation of hosting APAC in the office of the Auditor-General of South Africa (AGSA), which made it hard to perform appropriate checks and balances. APAC was now temporarily housed in the Gauteng legislature.
There had been meetings of all the jurisdictional chairpersons of the Public Accounts Committees, where a process of preparing for the conference had been put into motion. In the absence of legitimate office bearers, the conference would be called by the Speaker. He had engaged with the Speaker and the Deputy-Speaker, and the conference would be hosted on a virtual platform. The decision that the Committee must take within due course was to elect the council of delegates, which must include the chairperson, one Member from the opposition party, and one Member from the majority party.
The conference was scheduled for the end of July 2020, but the requirement of a notice of 21 days meant that flexibility must be exercised in this regard. Members had received the constitution of APAC, and the Committee would be asked to make an input on the modalities and its structure at the National Assembly. He invited the Members to discuss the issue.
Mr A Lees (DA) spoke on behalf of the Members, stating that they did not have anything to add to the discussion, but that their positions were reserved to a later date, if needed.
Ms V Mente (EFF) asked what the Committee sought to achieve with APAC. What impact did it have, and what solutions was it providing to the mandate of the Committee? She requested clarity on the mandate of APAC, and what it sought to achieve. Follow-ups were needed to ensure that APAC tied down to every aspect of corruption that was identified, and how it would resolve those kinds of issues.
The Chairperson said that Ms Mente’s concern was what had sparked the intervention from the Speakers’ Forum, as there was an absence of consensus on whether APAC was an association that empowered the Public Accounts Committees to fulfil their mandates in their respective jurisdictions. It was felt that APAC should not be in the AGSA’s office and separate from the legislative sector itself, but brought to Parliament. APAC had become too elitist and devoid of the fundamental training that was required.
After the leadership had been elected, the first task would be to make a change in thinking and bring APAC to fulfil its mandate of bringing the Committees together. Once the position papers of the discussions were finalised, there would be a discussion to substantively alter the direction of APAC. It was a capacity-building institution which must ensure that the Public Accounts Committees operated effectively. The other consideration was that the Committee paid a subscription fee to APAC, and Parliament would not pay the fee until the leadership was elected, and these matters were handled in a manner that inspired confidence. APAC was a work in progress.
Ms Mente said that the Members would wait for the discussion papers, which would hopefully give clear guidance and direction as to what APAC must achieve and the format of its conferences.
Follow-up correspondence and information
The Committee Content Advisor tabled follow-up correspondence and outstanding information to the Committee from the following public institutions: the Department of Public Works and Infrastructure (DPWI), Eskom, the Department of Water and Sanitation (DWS), South African Airways (SAA) and SA Express, the South African Police Service (SAPS), and the Unemployment Insurance Fund (UIF).
Department of Public Works and Infrastructure
She said Members should remember that the hearing on 4 February 2020 was about the debt of Eskom and the municipalities that was owed by the DPWI. The Committee had decided to call the DPWI before it, as it was the department with the highest amount owed to Eskom. From the hearing, it transpired that the R3 billion owed by the DPWI was owed by user departments, and not necessarily the DPWI. The Committee had needed three things from that hearing:
- Firstly, it required a list of municipalities that were not reporting in terms of section 72(1) of the Public Finance Management Act 1 of 1999 (PFMA), as it was reported that some municipalities did not prepare the monthly schedules agreeing with what was said was owed.
- Secondly, the Committee requested the list of departments involved, and the DPWI had sent the relevant correspondence. The DPWI noted that some of the departments had not responded, while others did acknowledge the receipt of its communication. Some of the departments that did respond stated that they were not ready to take over the payments to Eskom.
- Thirdly, the Committee requested a list of employees that were responsible for not paying over the Eskom debt within 30 days, as required by law. These documents had been forwarded to the Members. 29 user departments had acknowledged receiving the communication from the DPWI, of which 14 presented responses. Only two departments indicated their readiness to take over the Eskom payments, which were the Department of Social Services (DSD) and the SAPS.
On 3 March, the DPWI had appeared before the Committee and accounted for their 2018/19 Annual Report and financial statements, and from this hearing the issue of banking overdrafts to facilitate the Eskom payments were discussed. The Committee had requested the DPWI to provide it with the required documentation before 17 March. This included a report of the cleaning staff that had been utilised in the finance section to process invoices, especially in the Cape Town region of the Western Cape. The Committee had also requested a copy of the legal advice given to the DPWI advising on the delay of disciplinary proceedings against the implicated officials in the PricewaterhouseCoopers (PWC) report.
The Committee had also requested an update within 14 days on the Director-General (DG) who was implicated in the irregular expenditure involving state funerals. These documents were provided to the Committee on 17 March. The Minister of Finance, Mr Tito Mboweni, informed the Committee that the matter of the DG would be dealt with by the Office of the Minister, as mandated by the Presidency.
On 3 June, the DPWI had appeared before the Committee regarding the Beit Bridge issue, where a 40km border fence had been constructed at a cost of R 37m. During the hearing on 6 June, the Committee had requested several documents from the DPWI that were due for submission on 12 June. It had asked the National Treasury (NT) to investigate the matter, and NT had stated that a report would be given to the Committee on 19 June. The Committee had not received the report in question.
Ahead of the hearing on 3 June, the Committee had requested a ministerial directive to be issued to make the project an emergency project in terms of the Regulations of National Treasury. The Committee had also requested reports from the project manager outlining their involvement, which had not been received by the Members. Lastly, the Committee had requested all other reports, including the internal audit report, the report from the AGSA, and the Special Investigating Unit (SIU) report assessment on this project when it was available.
During the hearing on 8 July, the DPWI had engaged with the Committee regarding a status update on the PWC report relating to the investigation into the DG and other officials. The Committee had received a copy of the PWC reports, and it had been provided to the Members.
The Committee had a hearing with Eskom on 18 February, where it had requested a list of submissions to be made. It had asked for a list of all the deviations and expansions for the institution, and for details pertaining to the recovery of funds of R5 billion from three major companies. It had also requested information on the contribution of independent power producers (IPPs). The submissions were discussed in detail during the meeting on 18 June. Eskom had stated that the IPPs provided 11 244 GW to the grid, representing 5% of the total power supply. On 31 March 2019, the cost of these IPPs amounted to R 26 billion. On 30 November 2019 and 9 April 2020, the take-or-pay contract amounted to R9.1 billion.
The high-profile investigation cases were forwarded to law enforcement agencies, while waiting for the final report. The Committee requested a status update on the vetting of employees appointed at Eskom who had not been cleared by state security agents. Most of Eskom’s executive members had not received their security clearance certificates. The Committee required quarterly reports to be submitted to address the issue of the investigations. The last submission in this regard was on 10 June.
On 18 June, the Committee had met with Eskom to discuss the progress of the recommendations made to them during oversight visits. From that hearing, the Committee had requested four documents from Eskom. These included a report on the investigation of the chief operating officer (COO) that was due on 19 March, and a cost-benefit analysis of the take-or-pay contract, as Members felt it was not beneficial and was not value for money. The Committee also requested the details of the R4 billion contractual overpayments at Medupi, which would be provided by the Standing Committee on Appropriations when the information became available.
Investigations on various allegations involving Mr Jan Oberholzer, Eskom’s COO, were conducted, because there were reports in the media alleging dishonesty, corruption, conflict of interest and abuse of power. The investigators were given 10 days to complete their investigation and produce a report. From the report, six key issue areas were identified. The first was whether there was any undisclosed conflict of interest by the COO pertaining to Stefanutti Stocks, or any other entity, which may potentially result in breaches of the conflict of interest policy of Eskom. The second was whether Mr Oberholzer, since his return to Eskom in 2018, in his dealings with any functionaries of Stefanutti Stocks, had breached his fiduciary duties and any policies of Eskom. The third issue was whether there was any corruption or personal benefit derived by the COO arising from the placement of the Black & Veatch contract in 2007, or subsequently from his involvement in the Black & Veatch contract. Lastly, there was the issue of the circumstances that led to the complainant being transferred from his position as General Manager: Mega Projects (Capital Division), to the human resources (HR) department, and whether such transfer was done in accordance with the applicable HR policies of Eskom.
Mr Oberholzer had been employed by Eskom until 2008, after which he left to form his own company. He was then employed as the Managing Director of Stefanutti Stocks, where he was allocated 35 834 shares. In his declarations of interest made during his re-employment at Eskom, Mr Oberholzer disclosed his interest in ABSA Bank, Sanlam, and First National Bank (FNB) Holdings. During the investigation, he explained that he had not declared his interest in Stefanutti Stocks as it was part of the securities portfolio of FNB Holdings, which he had declared. The investigation found that a proper disclosure had been made.
An investigation was conducted into whether he had breached Eskom’s policy, because Mr Oberholzer should have recused himself from any involvement of the company with Stefanutti Stocks. However, on 11 December 2019, he had signed in his capacity as Eskom’s COO, to support a joint venture contract with Stefanutti Stocks, and again on 27 January 2020, he had supported the board of directors’ decision to increase the value of that contract. The investigator had found that this matter did not merit a disciplinary hearing, because Mr Oberholzer had not been involved in the signing of those contracts, but was merely engaging in his operational duties as mandated by his position as the COO.
On the matter of the Black & Veatch contract, the investigator found that there was no factual content supporting the allegations of corruption or wrongful conduct on the part of Mr Oberholzer in relation to his role in the contract that originated in 2007.
On the whistle-blower matter, and the payment of R42 million to one of Eskom’s contractors, it was alleged that the COO had not acted in the interest of Eskom. The investigators found that the payment was not approved by Mr Oberholzer, and recommended that there should be a disciplinary hearing on the matter to enable proper ventilation of the issues to be determined. Judgment was pending on this matter, which was heard by the Gauteng High Court in Johannesburg on 18 May. The investigator had noted that Eskom had to wait for the Court’s findings, as it would be prudent and reasonable to do so for all concerned. The investigator had found that proper processes were followed when Mr Oberholzer approved his brother-in-law’s transfer from Cape Town to Johannesburg, as it was within his rights to transfer.
Currently, the cost-benefit analysis of the take-or-pay contract, the analysis of the R4 billion contractual overpayment, and the details of the lifestyle audit report were outstanding, and had not yet been received by the Committee or the Members.
SAA and SA Express
From the hearing on 19 February, the Committee had requested the bailout amounts that were provided to SAA from 2004 to 2020, and how much was still required. It had received the requested legal advice on the non-submission of financial statements by SAA on 26 February.
There had been a hearing with SAA on 15 May between the government and business rescue practitioners (BRPs). The information requested included the full details of the amount spent on business rescue, the schedule of consultation fees, the board and shareholder meetings, meetings with the BRPs, meetings of the unions, monthly reports, and the provision of a projected date for the completion of the business rescue process. The information requested at that hearing, which was due on 26 February, had not been provided to the Committee.
The Committee and the unions had received notification of the Minister’s withdrawal from the Leadership Consulting Forum on account of not being treated well by the unions. There was a R 2.2 billion offer to the unions as voluntary severance packages to the affected SAA employees.
Currently, the full details of the liquidators of SA Express had not been submitted to the Committee. The list of the sale of assets required, the report on employees that would be paid by the liquidators, and full details of the interested parties and buyers were still outstanding and must be submitted to Members. Details on the remuneration of the limited duration consultants that were paid by the liquidators were also outstanding.
South African Police Service
The SAPS had provided monthly reports on its investigations, as required by the Committee. The last monthly report was received on 25 June. There had been few challenges with the processing of these monthly reports, and there had been only a modest improvement from their previous monthly submissions.
Department of Water and Sanitation
The Committee had requested information on the outcome of the investigations on all water boards that received double payments, and a report on the validation of work performed by the water boards. The requested information had not yet been received. Details were requested on the R9 billion, which was irregular expenditure by the DWS. The Committee also requested information on the location and the distribution of the 19 000 water tanks provided by the DWS that had cost R1.6 million, and about the mechanisms in place to ensure that it was protected against theft.
During the hearing on 19 June, the Committee had asked for a breakdown of the R8.9 million expenditure involving a conflict of interest relating to employees who were involved in business with the DWS. This information was subsequently provided to the Committee. The disciplinary referrals to law enforcement agencies had also been submitted to the Committee.
Unemployment Insurance Fund
The Committee had requested more information on the 16 cases that were under investigation at the UIF, and this information had been provided. The Committee had also asked for reports on the false profiles that had been submitted, and this information had not yet been received. An outline of the payment and benefits calculations to employees at the UIF was submitted on 30 June, as requested by the Committee. A report was provided on the R 5.7m which was paid into the incorrect bank account. The bank account of the suspect had been frozen, and the Hawks were in the process of recovering the money with the assistance of the Financial Intelligence Centre. The UIF was also conducting its own investigation into the matter.
The Chairperson said that SAA had received correspondence from the Committee to remind them of their outstanding submissions, but they had not yet responded to the letters. He highlighted the outstanding matter at Eskom relating to the investigation report regarding the COO.
Mr Lees expressed concern that there was an extensive list of outstanding documents and information. The principle was that Parliament made requests for information, and Members expected to get the information at the appointed dates. In many instances, however, this was not happening. He believed that the information was deliberately being withheld from the Committee, as certain information came forth quite easily, while information that may be embarrassing or implicating was withheld. The Committee needed to deal very robustly with the principle of ensuring that Parliament was respected, and that information was given to the Committee immediately when it was requested, and not at the sole convenience of Ministers or departments. He suggested that the Committee write a letter to the leader of government business to point out all the information and reports that had been requested and not been submitted. The leader of government business must be asked to intervene, to make sure that the Committee was supplied with the information it requested without any further delay.
Ms Mente said that the DPWI and the DWS must be followed up on and probed further, to ensure that the Committee was achieving conclusive results. The DPWI had given the Committee insufficient information and showed a lack of accountability that undermined the Committee’s capacity to understand its issues. The Committee’s mandate was to police how public funds were spent and to ensure that it was responsibly managed. It also had to ensure that those who were found to act improperly with public funds were held accountable. Stricter measures must be put in place in this regard.
She noted her dissatisfaction at the amount of outstanding issues at Eskom. The matter of the COO left a lot to be desired, and was different from how previous officials with the same allegations had been treated. The basic principle that should govern the investigation into the conduct of the COO had to be guided by the Public Finance Management Act (PMFA). It did not matter whether the disclosure he failed to make was under the umbrella of FNB Holdings. When the matter of an official or staff member was under consideration by the courts, it did not rule out the need for a disciplinary hearing from the employer – it constituted two independent actions.
The Committee needed to be informed on the consequences and accountability of the people responsible for the overpayment of UIF money, and the contractual overpayment of R4 billion at Eskom. SAA and SA Express needed to be called before the Committee for an update on the acceptance of the proposal by the BRPs. The SAPS also needed to be called before the Committee to clear out the inconsistencies regarding their information communication technology (ICT) systems.
Mr M Dirks (ANC) emphasised the point made by Mr Lees that public entities and departments were deliberately withholding the required documents and information from the Committee. News agencies were in possession of reports that had not yet been made available to Parliament, which was highly problematic.
Mr B Hadebe (ANC) voiced his disappointment that the Committee had not been given a concrete response to the enquiry into the R4 billion contractual overpayment at Eskom. This matter must be dealt with expeditiously, and the Committee must put pressure on Eskom to recover these funds before those who received them exhausted the funds and filed for bankruptcy, as R4 billion was not an insignificant amount of money. Who had authorised the payment and under what circumstances? What steps had been taken to recover the money?
The Content Advisor said that Members had been provided with a document on the investigation into the COO of Eskom, and the outcomes of each allegation had been explained. On the policing of public funds and the PFMA, the Public Service Regulations of 2017 prohibited employees from conducting business with the state. The Committee would be provided with a report in this regard in due course.
The Chairperson said that the substantive and probing questions of the Members had been noted. The emphasis so far was on the extensive list of documents that were outstanding. The Committee would receive the updated Parliamentary programme from the National Assembly Programming Committee on 19 July, and according to the programme the concerns of the Members would be slotted in and follow-up meetings with the various public entities would be scheduled.
He said there was merit in corresponding with the leader of government business to enforce the principle of ensuring that Parliament was respected, and that information was given to the Committee immediately. The Committee had to make recommendations on the information presented to it. In the absence of that information, the Committee had to make recommendations speaking to the fundamental shortcomings within the operations of the department or entity. The frustration of the Committee was warranted, but Members must also expect to run into these difficulties. It was interrupting people’s misbehaviour, so they were bound to be resistant to the expectations and demands of the Committee. Nevertheless, it must enforce a culture of accountability on public entities.
The Chairperson said that the Committee must now formally resolve as to what matters and which inquiries it was proceeding on, so that it could then formally task the Parliamentary legal services to ensure the entities made the required submissions. The entities included so far were the DPWI, the DWS, Eskom, the SAA and SA Express, the SAPS, and the UIF.
Mr Lees emphasised the need for the Committee to have a focused and targeted approach. It had to keep an eye on how SAA and its projects progressed should it be allocated further funding.
Mr Dirks said that before the Committee decided to hold an inquiry, it must consider whether there were any other entities or departments that were already conducting inquiries into the matter.
Mr Lees supported the point raised by Mr Dirks, saying the Committee should not duplicate the work done by other entities such as other parliamentary committees or the SIU. The Committee had taken it on itself to handle the Steinhoff issue, and it was an important focus, as it was one of the biggest corporate scandals in South Africa’s history and the effect it had on the country was massive.
Mr Dirks agreed with Mr Lees, and stressed the importance in investigating the Steinhoff scandal to hold those who were responsible accountable.
Ms B van Minnen (DA) raised her concern at the Committee holding hearings with the entities, but being unable to hold people accountable. It needed to be focused and target the issues and entities it addressed so that real action and accountability could be facilitated.
Ms Mente suggested that the Committee develop a schedule of what it wanted to achieve, with the issues it decided to focus on. The purpose was to achieve results and hold the entities accountable.
The Chairperson emphasised the importance of ensuring that the investigations into these entities were not duplicated, and that the Committee did not overstretch itself. There was consensus regarding the Committee taking on the Steinhoff issue. The Steinhoff issue and the Passenger Rail Agency of SA (PRASA) parliamentary enquiry would be prioritised as the immediate areas for inquiry, and the other entities were the work for the normal course of operations of the Committee.
The meeting was adjourned.
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