The Committee was briefed by the Department of Public Works and Infrastructure on the contracting obligations affecting the planned dissolution of the Independent Development Trust (IDT).
At the outset, the Chairperson stressed that the Committee had been clear that it did not support the dissolution of the IDT, and that it hoped the Department would clarify its intentions for the future of the entity.
The Minister of Public Works and Infrastructure said the decision to dissolve the IDT had to be taken in accordance with the trust deed, which required consultation between the trustees and Cabinet. This process had started. The Department had sought legal advice in this regard, and wanted to assure the Committee that due process was being followed, and that any impact on service delivery would be mitigated.
The Department’s presentation focused on its consideration of the viability of the IDT, including its financial and non-financial performance. Previous annual and audit reports depicted a going concern risk, that there was a declining portfolio as a result of the loss of major clients due to a loss of confidence in the entity, an unsustainable financial model, a corporate governance collapse, and a perpetual reliance on fiscal support.
The Committee sought clarity on who the trustees of the IDT were, the extent of consultation with the trustees and if there was enough of them to form a quorum to take decisions. They asked what impact the lack of trustees had on the management decision-making of the IDT. They also questioned the plans for the staff of the IDT, the litigation costs facing the entity, irregularities and malpractice within the organisation, the role of Infrastructure South Africa compared to the IDT, and the current relevance of the exit strategy task team. Members were not satisfied with the lack of engagement between the Department and the Committee.
The Minister said that upon taking leadership of the Department, she had inherited “a mess” that the Department was trying to sort out. Clarity on trustees had been sought from the Master of the High Court, and a parallel process with Cabinet on the decision to dissolve the trust had begun. The Minister was confident that in working together with the trustees, an amicable solution for the IDT would be found that was in the best interests of the country.
The Minister had to leave the meeting, and Members expressed dismay that their questions could not be addressed by her. They resolved to ask the Department’s officials in the meeting to leave so that the Committee could consider the issues on its own, and decide on the way forward.
Members were disappointed that they had not been engaged by the Minister or the Department on the decisions taken for the IDT, and said this hampered their ability to exercise their oversight role. They were seriously concerned that 103 IDT employees would lose their jobs at the end of October, despite the fact that the Department had previously promised that no job losses would occur.
The Committee was concerned that the process the Department was currently following might subject it to litigation, and decided that it would draft a letter to the Minister containing its concerns and recommendations to ensure that everything done by the Department regarding the IDT was above board.
Chairperson’s opening remarks
The Chairperson greeted all present. The purpose of the meeting was to get an update on the Independent Development Trust (IDT). The Committee had, at several meetings, been clear that it did not support the dissolution of the IDT.
When the Committee was dealing with the Annual Reports, there was a challenge with the issue of the IDT. It hoped to receive clear information and direction into what the Department of Public Works and Infrastructure (DPWI) was pursuing regarding the IDT.
Correspondence had been received from the trustees of the IDT, who felt that what was being done was illegal because they had not been consulted. The Minister had been able to meet these trustees. The Committee would also receive information that had emerged about the trustees. It had previously stated that everything that was done within the IDT must be legally compliant.
Ms Patricia de Lille, Minister of Public Works and Infrastructure, said she believed that progress was being made with the IDT and many things had happened in the past few weeks.
Importantly, when the Department wrote to the Master of the High Court in Gauteng to obtain the official status of trustees within the IDT, the Master had revealed that there were four trustees still registered. On learning this, the Minister had written to the four trustees, asking whether they would return. They had all agreed to do so. The Department had shared information with these trustees, and the trustees had recently had their own meeting. The presentation to the Committee had also been shared with the trustees.
The Department had met with the trustees on Monday night, and two other persons joined the meeting, claiming to be trustees too. In response to this, the Minister had sent a letter to the Master to confirm whether these persons were still trustees. A copy of this letter was available for the Committee to see. It was all a work in progress.
The decision to dissolve the IDT required due process to be followed according to the trust deed. The IDT trustees in February had provided two options to the Department. One of these was to dissolve the IDT and this had been pursued, considering all the IDT’s financial reports, annual reports, and its status.
The decision to dissolve the IDT could not be taken by a Minister. According to the trust deed, the decision must go to Cabinet. Cabinet would decide in terms of the trust deed. A parallel process had been followed to prepare a Cabinet memo to that effect, but this process had not been concluded yet.
The Department had also written to the state attorney for assistance by providing senior counsel to further guide the process and legally advise the Department considering the current circumstances. The state attorney had promised a response by Friday.
The Department wanted to work within the legal framework and what was prescribed in the trust deed.
Once a legal opinion and guidance was received, it could be shared with the Committee. The Committee could then ensure that the Department stayed within the legal framework.
Once feedback from the Master was received, the Minister would convene another meeting with the trustees.
The Department wanted to assure the Committee that it was trying to do everything and use everything at its disposal to make sure that whatever process was followed, any impact on service delivery would be mitigated. The Department had many projects for the good of citizens and it must ensure that while it ‘steers the ship,’ service delivery continued. This was the process that had been adopted, and any other information could be shared with the Committee.
The Minister and asked the Acting Director-General (ADG) of the Department to take the Committee through the presentation.
Mr Imtiaz Fazel, Acting Director-General, DPWI, proceeded with the presentation of the Department on the status of the IDT.
- The IDT revenue was based on programme expenditure, and this expenditure had declined.
- The programme expenditure represented the amount spent by a client, and the IDT charged a percentage as a management fee to implement projects under consideration.
- Declining expenditure had resulted in reduced management fees for the IDT. At the same time, the IDT’s operating costs had remained relatively the same, resulting in operating losses.
- The IDT operating model and cost structure required a review given the current circumstances and decline in portfolio and management fees.
- Currently, management fees were collected for projects only in stages 5 and 6. This meant that the projects must be under construction -- the IDT receives a project and conducts the design and procurement, but those phases do not see a recovery of any fees. This was one of the design flaws in the IDT business model which must be corrected going forward.
- There was no project pipeline from projects in stage one to four, and no potential management fees to improve future sustainability.
- The net cash position was the net deficit from income and expense account, plus collections from prior months' debtors outstanding.
- The IDT had been unable to meet its monthly expenses without a government grant. The deficits in the months to date had been funded by the collection of old debtors’ book/ outstanding management fees.
- Outstanding fees owed to IDT currently amounted to R26.4 million.
- There was a 50/50 proportion of core versus support staff. The advice received was that the ideal should be a 70/30 split at the very least, with the optimum being 80/20 in favour of core staff.
- The IDT’s proportion was distorted, and resulted in inefficiencies in the business.
- 103 fixed-term contract positions would terminate at the end of October.
Going concern risk status
- The IDT had been faced with a going concern risk for over eight years since its original endowment was exhausted in 2012/13.
- The DPWI had provided financial assistance for 2020/21 amounting to R128 million.
- The Department had applied to the National Treasury to reclassify funds from its baseline to fund the IDT. The National Treasury had approved the reclassification of funds, with conditions.
Consideration of dissolution
The Ministry of the DPWI had been engaging the IDT interim board since July 2019 on the IDT’s challenges. Given the financial difficulties, the interim board had been asked to provide various options.
The Chairperson apologised for interrupting, and asked that the presentation be wrapped up soon so that Members could ask their questions and receive a response from the Minister before the Minister had to leave the meeting. The Committee appreciated that the information had been received within the prescribed time so Members could read through it beforehand.
Mr Fazel continued that the Board’s two options had been presented to the Minister -- to start a process of closure for the IDT or a radical redesign of the entity. The Ministry had accepted the first option because the second was not financially viable.
IDT was facing over 80 litigation cases, many of which were due to poor quality of work and poor programme and project management. The trend of a loss-making entity, and its endowment had run out.
Reconsideration of the IDT’s institutional form was required.
Exit strategy consideration
A multi-disciplinary IDT exit strategy task team (IESTT), including the IDT, had been established to develop a detailed exit strategy implementation plan. The task team was never regarded as an institutional replacement of the IDT Board. It was to provide the necessary information on the option to disengage from the IDT so that a proper decision could be taken.
There were 2 600 active projects agreed between IDT and departments/provinces to the value of R4.6 billion.Over the medium term expenditure framework (MTEF) period, there were 3 549 projects valued at R6.8 billion. The IDT had many projects in its system that it would need to close out going forward. The Committee was informed of the provincial spread of projects that were active and inactive. These projects were in various stages of completion, with some planned for completion in the 2020/21 financial year. The final figures were being confirmed by the IDT.
Referring to the current agreements between the IDT and client departments, Mr Fazel said the IDT had two types of service level agreements. One was an agreement between the IDT and the client departments (two parties only), and the other was an agreement between the IDT, DPWI, and the client department (three parties or tri-party) agreements. The IDT had 25 memorandums of agreement/ service level agreements (MOAs/SLAs) in place with several national, provincial, local and other entities.
As part of the work of the IESTT, the IDT project portfolio over the MTEF had been sub-divided into three work streams to facilitate the possible closeout and/or handover of projects in various phases of completion. Work stream One was where projects were still in the planning phase, where it was easier for the IDT to exit and hand the project over to another implementing agent. Work streams Two and Three were where the IDT was more compelled to see them through.
Considerations for exiting from contractual obligations
For the IDT to adequately address all its contractual obligations regarding the possible exit, the following approach had been considered
- Workstream 1: IDT to continue with planning for projects agreed with clients in order not to hamper service delivery.
- Workstream 2: IDT to complete and closeout projects in construction for the 2020/21financial year.
- Workstream 3: IDT was in the process of formally closing out all legacy projects.
The Executive Authority (EA) was engaged in a process to reconstitute the Board.A letter had been sent on 10 October to the four trustees acknowledging their validity, as per the letter of authority. All four trustees had responded in the affirmative.
The EA had advised that a process was under way to identify additional trustees to augment the remaining four. Legal opinion was being sought on the addition of the trustees, returning trustees who accepted removal, governance processes to follow as a shareholder in responding to the going concern challenges and the inability of the IDT to meet its immediate commitments, and the dual institutional form of the IDT – as a trust and a Schedule 2 entity. Any approach taken would be guided by legal advice.
IDT’s social infrastructure role
No decision had been taken for any agency to take over the social infrastructure of the IDT. This was all work in progress, and the options were still on the table. The plan had always been that the mandate/function would revert to the sector (DPWI) by ensuring that internal capacity was built/enhanced to take over the projects. The full extent of any dissolution or continuation of the IDT, if it received support, would become apparent only in due course after a decision had been taken.
(See presentation for details)
Ms A Siwisa (EFF) said that in the Minister’s introduction, it had been stated that the Department did not know that there were trustees involved, but there had been a meeting with trustees in February and a meeting had been held on Monday. Trustees had said that they were not consulted regarding the IDT, so which trustees had the Department been meeting with?
A ‘work in progress’ was always mentioned, but there were never deadlines. It was unclear whether it was the pressure from the trustees or pressure from the Committee. If the Department referred to ‘work in progress,’ what deadlines had been put in place?
At a previous meeting, there had been a presentation from Infrastructure South Africa (ISA), which was going to take over the industrial and societal infrastructure in South Africa. She “got the feeling” that they were hearing another tune about the IDT.
The Minister needed to provide leadership. The Committee could not keep hearing different things. The DPWI may be taken to court by trustees because they had not been consulted on what had happened to the IDT.
At the meeting in February, who did the Department meet with to arrive at those options for the IDT? Why had the Department not followed up to confirm how many trustees there were, where they were, and what their role in the IDT was? Why were trustees not consulted?
Ms S Graham-Mare (DA) said that the IDT was controlled by a trust, and invariably there would be a trust document with guidance regarding the dissolution of the trust and the way it operated. Was there anything in the IDT’s trust document stipulating that ordinarily, trustees were the only ones who could decide to dissolve it? If so, what would be the quorate number of the trustees to take that decision? What number of trustees was required for the trust, and how many trustees were required to decide to dissolve the trust?
Clarity was needed on whether decision-making had been hampered by a lack of trustees. Would there be no board? Had authority been granted by any other body concerning things like signing variation orders, taking decisions on staff, and any other management decisions and the running of the IDT? These matters would have required the input of the board. If board input was required, who had done that in the interim to fill this gap? Would that have been lawful?
Had the IDT not been hamstrung by getting rid of the trustees in the beginning in terms of it winding up and finalising projects, etc.?
Had the Minister met with the staff of the IDT to give them any guidance as to the processes? Had there been regular engagement with the staff themselves? The uncertainty of the IDT’s future must be terrifying for people in the organisation in terms of where they were going to be, and the progress of the programme.
Regarding the exit committee, or the committee that had taken the decisions around the dissolution, had any of that information been shared with the staff or with the DPWI? It would be important to have an idea of the progress being made.
When did the Coega Development Corporation (CDC) and the Development Bank of South Africa (DBSA) enter the same market as the IDT? Had this impacted the year-on-year performance of the IDT? There were suddenly two role players in the same social infrastructure market as the IDT. Furthermore, what about the fact that the DPWI was not adamant that IDT be used in the same social infrastructure market as the Department, and as a social infrastructure implementing agent with its line departments.
Concerning the decline, had it been considered whether it was entirely the IDT’s fault, or whether external factors were contributing to it?
At a previous meeting with the IDT, the Committee had been informed that four tranches of money would be paid over to the IDT, to the value of R84 million. This was during the lockdown period. Did this amount include the R72 million, or was it something else? The money intended to be paid was R21 million for four months. What had happened to that money?
It was concerning that this year’s financial performance may be used as a reason to support the closure of the IDT. When looking at the project and project management fees that came into the IDT, these were based on the completion of the projects. There had been a complete shutdown, and no construction could take place, hence no projects could have proceeded during the lockdown. How could a comparison be made on management fees being collected when project management was constrained by the shutdown?
There had also been no renewal of the project management software on behalf of the IDT. People had raised the issue that they were managing projects on Excel programmes. It was understood that without the board and any financial guidance, they were precluded from renewing their project management software, and that this would also have had an impact on their ability to manage projects. Clarity was needed on this.
Mr W Thring (ACDP) said that the IDT was an entity of the DPWI, and he had three questions.
First, how was it possible that the number of trustees was not known? The Minister said that she had applied to the Master who had said that there were four, and now another two had popped up. There should be a paper trail to show that there had either been a change of trustees, or a resignation of trustees.
Second, should the IDT be dissolved, what was the plan for the staff?
Finally, did the Minister believe that the model under which the IDT had to operate had set it up for failure?
Ms M Hicklin (DA) observed that the Minister had stated that the decision on the dissolution of the IDT should go to Parliament. The Committee had found out about the dissolution of the IDT in the media. Due process had been mentioned, but due process had not been followed. A lack of confidence in the IDT had been indicated. Were there external reasons for this lack of confidence?
Some projects would be taken over by ISA. What was the difference between the IDT and the ISA? There was so much confidence in the ISA -- would it mean that the Department could run an entity that was supposed to be the infrastructure arm of the DPWI?
Ms S Van Schalkwyk (ANC) said that there was a lot of outstanding revenue owed to the IDT. Were there plans or measures in place to recover this money?
What was going to happen to the service level agreements between the IDT and the various entities? Ordinary people were depending on these contracts, and now it would be income lost for them.
There was an indication of approximately 80 litigations that had been costed. What was this amount, and how would these litigations be addressed?
There were 119 fixed-term contracts, of which 103 were indicated to terminate at the end of October. Considering that unemployment was so high, was there a possibility that some of these people could be absorbed into the Department in order to provide alternative opportunities?
Regarding the current situation of the IDT, there may have been some irregularities and malpractice. If there had been, had law enforcement agencies been involved in investigating any malpractice?
Mr P van Staden (FF+) said that at a previous meeting on this matter, it had been reported that there was one trustee left. The Committee had seen court papers, as provided by the Master from the notice of 2 March 2017, stating that there were originally 11 trustees. What were the salary packages of trustees? Were the trustees being remunerated? Why had the Minister not met with any trustees earlier in the year? A copy of the trust documents for the Committee was requested, as this could clear up some matters.
Mr T Mashele (ANC) said that he was confused because the Department kept changing its tune. The Committee had always been clear in meetings that it did not support the dissolution of IDT. However, based on the reasons presented to the Committee and what the Minister had said, the Minister had the dissolution of the IDT in the back of her mind. It was becoming difficult to engage on the IDT, as there were new issues at every presentation.
On the issue of the governance structure, the Minister must have been engaging with people throughout the year. The Committee had been informed that there were trustees.
The Committee had said that it did not support the IDT’s dissolution and the Minister had forged ahead with dissolution. There were inconsistencies. At the last meeting, the Minister said that there were no job losses and today the Committee had been informed that 103 fixed-term contract employees had been terminated.
The IDT had service level agreements with various entities. There would be an impact on social responsibilities, and programmes would not be achieved. The presentation had shown that the IDT was an underperforming entity, but this was on the basis that the DPWI had not met its obligations. What did the DPWI want to do with the IDT? Was there a plan for who would take responsibility for the IDT if it was dissolved? It seemed that the Minister did not want to say openly that the plan was to dissolve the IDT. There was a need to take the Committee into confidence and say what the DPWI wanted to do.
Ms L Shabalala (ANC) said that no mention of organised labour had been made. This anticipated litigation. What would happen to the staff? Were they going to be laid off? Was increasing the number of the unemployed being looked at, considering COVID-19 and post-COVID-19?
The Chairperson reminded the Minister that on 17 June, the Committee had held a joint meeting with the Select Committee of the National Council of Provinces (NCOP) to discuss the IDT. A full report of the work that had been done by the Task Team since 2018 had been promised. It was understood that there had been new developments. Would the Department do away with the Task Team now that there were trustees that had been legally recognised by the Master, or would the Department work with the Task Team and the trustees?
The Committee would ask the trustees to meet with the Committee so that they could provide it with their plans for the IDT. Confirmation was required on the two trustees that had resurfaced. There were four trustees already and to quorate, two more needed to be added. What was the Department going to do? There was a Task Team from which a report was expected on the one hand, and trustees on the other.
In full agreement with Members, it had been promised that there would be no job losses during the process, but the Committee had been told about fixed-term contracts being terminated. Were these employees going to be replaced? What was going to happen?
The Minister said that since taking over the Department, she and the Deputy Minister (DM) had had to familiarise themselves with the history of the entities as contained in many annual reports, financial reports, etc. The IDT had already been dysfunctional and the subject of a court case between the previous Minister and the trustees. There was a board of interim trustees subject to the outcome of the case. They had asked for records of that case to establish the facts. Adv Gauntlett was acting for the Department, and the current legal department was checking how the court case had been finalised. They had inherited a mess and were now trying to sort it out.
When she took over the Department, the trust was operating with four interim trustees, and that was who the Department had been working with. The letter of 17 February had been written by these interim trustees, and the process to establish the IDT Task Team had been started. The Department would be asked to provide the report of the Task Team.
The IDT had continued operating like this. When a letter from a trustee was received, the Minister had told the Department to write to the Master, the custodian of the IDT trust deed, for guidance on the status of the interim and current trustees. The Master had revealed that according to the court records, four trustees were registered. This was when the process had started to invite those four trustees back.
On the process of the final decision, the Committee had always been taken into confidence. The Department had reported to the Committee that a parallel process was going on to get the IDT on to the Cabinet’s agenda. The process was to draft a Cabinet memorandum, which was still ongoing. On Friday, the social and economic cluster was supposed to consider the Cabinet memo, but she had been informed that it had been postponed. The memorandum had gone through the Directors- General (DGs) of all departments.
As prescribed in the trust deed, the ultimate decision would be taken by Cabinet. The two trustees who had presented themselves on Monday were not part of the trustees the Master had provided. The Master had been asked for clarification.
The state attorney had been approached to obtain a legal opinion on how to legally manage the IDT. The difficulty was that the IDT existed as a trust and a schedule 2 entity guided by the Public Finance Management Act (PFMA). No record could be found of the procedures used to turn the IDT into a legal schedule 2 entity. In terms of the request for funding from National Treasury, Treasury used sections 48 and 49 of the PFMA for a schedule 2 entity to determine the conditions set by Treasury. The Department was not trying to be evasive. The problem was that sometimes the IDT was a schedule 2 entity, and sometimes a trust.
On providing leadership, she and the DM had been engaging with the IDT since July 2019. What was paramount was ensure that service delivery continued during the investigations. As had been noted, the portfolio and income of IDT had reduced by 16% and 62%. There were serious governance and financial problems.
Regarding the financial conditions, it was known that in the sixth administration a decision had been taken by this government to look at all state-owned enterprises (SOEs). The President had established an SOE council, and it was decided that there would be no further bailouts because there was no money in the fiscus. The debate over the IDT must be put within that context. The IDT was not different from other SOEs requiring bailouts, such as Denel, ESKOM, etc, but one needed to look at the government’s current position of how these entities were being dealt with. She had mentioned in a meeting that if the Committee felt strongly that further bailouts were needed for the IDT to continue to operate, a request by the DPWI could be made for further bailouts for operational costs. The DPWI had done its bit to request Treasury for help with funding for the IDT, because some contracts were ending. The Acting DG had noted that the further bailout was only conditional, and the Minister had asked the ADG for a letter stating whether the conditions set by Treasury were satisfactory so that the matter could be finalised.
The trust deed was available, and any Member could have access to it. It was a registered legal trust with the Master.
A decision to dissolve the trust had to be taken by the trustees in consultation with the shareholder. The shareholder was the government, specifically Cabinet, and that was why Cabinet was to be consulted.
The DBSA and the CDC had been implementing agents and had been around for years. Three implementing agents had been used for many years – the DBSA and Coega had been with the IDT as implementing agencies for a long time
This year’s performance was not the only year looked at. The performance of all years had been looked at in the audit reports, financial reports, Auditor-General (AG) reports, etc. There was a history, and the combination of that history had put IDT in the position it was today.
On the question of trustees, the four trustees were being worked with now. Those four trustees were the trustees confirmed by the Master. A letter had been written to the Master to confirm the status of the two other trustees that had popped up.
The model under which IDT was operating had been there for years. This model had contributed to the challenges of the IDT, and the Department had told the Committee about the weaknesses of the model.
She told Ms Hicklin that in terms of the trust deed, the IDT issue must not go to Parliament, but to Cabinet. Therefore, the Committee had been informed that a Cabinet memo would be given to the Cabinet, and this process was ongoing.
Comparing the ISA to the IDT, the IDT was an implementing agency such as the CDC and the DBSA, but the ISA was a structure of the DPWI and had been approved as such in terms of the reconfiguration of the Department in the Sixth Administration.
Responding to Ms Van Schalkwyk on service level agreements, she said the report to the Committee had explained that there were three work streams within the IDT. These work streams were looking at all SLAs, as had been indicated in the presentation. There were SLAs. There were service level agreements directly between the IDT and the various line departments and provinces and there were SLAs that were a tripartite agreement between DPWI, where a client of the Department had requested the DPWI to provide a service and the DPWI had then engaged the services of the IDT, and in that case, a tripartite agreement was created.
The litigation costs were part of the R26 billion liabilities of the IDT. The litigation that was currently active before the courts amounted to just under R500 million -- and there was one case that was as recent as August this year. The R500 million for litigation was part of the R26 billion liabilities of the IDT
The Department had indicated that it needed to act in line with the Labour Relations Act (LRA). Regarding the staff of IDT, the Minister had gone as far as to ask DPWI’s human resources (HR) department to work on the secondment of IDT employees to the DPWI so that service delivery and all projects outstanding could continue. The Department could not unilaterally decide what would happen to the staff of the IDT. The Department had also given a breakdown of the core staff and support staff of the IDT.
On the investigation of irregularities, a copy of an investigation that was done by National Treasury on the IDT had been attached to the report. Most of the action around the irregularities within the IDT had not been dealt with, and the investigation showed that big amounts were involved. The Minister had put this before the Committee again, because she had said to the Department that it should look at the forensic investigations that had been conducted by the various investigative agencies and then act with urgency on the recommendations of those forensic reports, based on the findings of National Treasury. That was a work in progress. If any questions had not been answered, a written response could be given.
She responded to Mr Van Staden that the intergovernmental relations department informed the DM and the Minister whenever there had been a resignation of a trustee, and it had informed the DM and the Minister that there was only one trustee left, and that trustee had also resigned.
The salaries or board fees of board members were prescribed by National Treasury. The Department had given the new trustees the new regulations from National Treasury that had placed a cap on the fees for the board of trustees. The ADG or chief financial officer (CFO) may be able to provide the current rate per hour.
A copy of the trust deed was available, and had to be read with Schedule 2 of the PFMA as an entity.
No moratorium had been placed on any of the projects of the IDT. The Department had continued to work very hard behind the scenes to find ways and means to mitigate any impact on the committed projects of the IDT, amounting to over 2 600 projects. This had been driven by Mr Chris Lombard, the acting chief executive officer (CEO), and the work streams that had assisted him. The IDT was an underperforming entity and to move forward and find lasting solutions, its performance needed to be looked at.
Ms De Lille said “it was not what I want to do” with the IDT. In terms of the trust deed, the shareholder was government, not a minister, and that was why there was theneed to take a memorandum to the Cabinet.
At the joint meeting with the NCOP, the Minister would make sure that the Department provided the updated work of the Task Team in the report, some of which was in the current report on the various work streams.
Four trustees had been recognised, and they were the trustees that the Department was working with now. If the trustees came to the Committee with a different plan, they needed a minimum of eight trustees, so she had suggested to the trustees that the process to add four trustees be started. The appointment had to be done following the procedure in clauses 8.2 and 8.3 of the trust deed. This process had begun.
In the meantime, the Department had been updating the trustees on what had transpired since 2018, when they were not part of the trust. She was confident that together with the trustees, an amicable solution could be found. The Department and the trustees would come to the Committee with a joint report of what had been agreed on, based on the best interests of the country, the best interests of the people, the plan to deal with the bailouts, making the IDT a viable entity.
It was for the people of this country -- it was not what the Minister wanted. The Minister could not close the IDT without following due processes within the law. She was looking forward to the legal opinion of the state attorney, as it would finally ‘put this thing to bed.’ It would also advise the Committee and the Department on how to proceed legally because they could not act unlawfully.
The Deputy Minister would remain in the meeting to answer any further questions, as she had to leave for a Cabinet meeting.
In the Sixth Administration, the DM had been delegated powers by the President to be responsible for all entities within the DPWI and all intergovernmental relations. The Committee was asked to provide support, solutions, and guidance and to not work against the DPWI, as that would not be in the interests of the IDT. Solutions from Members could enhance the process to find a lasting and amicable solution for the IDT.
The Chairperson thanked the Minister, and the Minister left the meeting.
Mr Mashele said that things were moving in a circle. In June there had been a similar discussion. If someone were to ask him what was happening with the IDT, he would be unable to respond. Unfortunately, the shareholder of IDT had left the meeting. The DM, ADG, and the Committee had remained to have an informal discussion. The main actor had left.
The decision rested with Cabinet, which was also a shareholder. The Committee had been told that there should be eight trustees, and the trustees had not been consulted.
He proposed that the DM and the entire Department be released from the meeting so that the Committee could stay and formulate a decision and instruct the Department on what it should do. Other questions for the Minister could not be raised. This should not be like previous meetings.
Ms Siwisa agreed with Mr Mashele, and said that the person required to answer the Members’ questions was no longer in the meeting. Perhaps there should be a special meeting to find out about the trustees. A question had previously been asked about the role of the Task Team versus the role of the trustees. Why had the Task Team been set up? Some questions had not been answered by the Minister.
Who had been consulted in February that had led to the establishment of the Task Team? Would they be moving forward with the Task Team, or with the trustees?
According to information received, there were 11 trustees. To quorate, eight were needed. There were now six, made up of the four who had come back and the two who had re-emerged. Had they been consulted? There were too many grey areas. It was as if the Minister did not want to put her head on the block and say what needed to happen. The Committee had been left with this task.
The Committee had said that the IDT should not go anywhere. The IDT had a mandate -- who was going to take over if it went?
People were losing their jobs. At a previous meeting, Members had raised the point about people losing their jobs, and the Committee had been told to watch its words and be careful about what was said in Parliament about the IDT closing, to prevent panic. Now people were losing their jobs.
The buck stopped with the Minister. The Minister sat in meetings with the President and was the last person to sign the papers. The Minister was supposed to be in the meeting.
Perhaps meetings needed to change. The Expropriation Bill meetings had to sit on Wednesdays, and the Committee’s normal meetings were on Tuesdays so that there was no disturbance of Cabinet and executive meetings. The Committee would also be able to receive answers from the Minister. There was currently no leadership, and the Committee “is steering a ship that was going to drown worse than the Titanic -- and there would not be any survivors.” While the DM could answer some questions, the buck stopped with the Minister. The Minister must answer all the questions.
When had the trustees been consulted for the other two to have resurfaced? This was the first time the Committee had been made aware of a meeting that had happened on Monday. There was also a meeting in February. The Committee had been told about ISA, the CDC and DBSA. The Committee had not been consulted. Was the Department not afraid of being taken to court by the trustees over the lack of consultation on the plans for the IDT? The trustees may have plans for what needed to happen with the IDT.
The Committee had always received positive reports, even though it picked things up as it always did on what happened with these entities. In January, the Committee had been told about the Task Team and the exit strategy, and in this meeting there was something else. The Committee needed to be taken seriously. The Members were part of the Committee to serve the Republic of South Africa, the public, and to ensure that people did not lose their jobs. The Committee could not be playing “merry-go-rounds,” and being told different things every time.
The Department was accountable to the Committee, but the Committee was being told different stories every time. The Committee received information from the media. The people in Parliament were constantly fighting in newspapers and forgetting that their main call was to serve the citizens of South Africa, who were the ones that had ensured that Parliament existed. The Committee was being ignored and should be taken seriously. South Africa had voted for this Committee, and its Members were to hold everyone accountable. He did not know what would happen if this situation continued. There was a lack of leadership skills, monitoring and evaluation were not taking place, and that was why the trustees of the IDT were not known to exist. He urged the Department to take the Committee seriously.
Ms Graham-Mare said that it was important to remember how this started. At a meeting in February, the Committee had asked the Director General (and the Minister what was happening with the IDT. It had been told that the IDT would be restructured. Two weeks later, the Committee had read in the media that the IDT would be closed by the Minister. The Committee had never been presented with any options by the Minister or the Department about the IDT. Three things were proposed by the board -- to commercialise the IDT, to change it to a schedule 3 entity, or to close it. None of those options had been brought to the Committee.
The Minister had said that she had taken the Committee into her confidence, but she had never taken the Committee into her confidence. The Committee learnt about everything in the media. The Minister had never approached the Committee with any options, or input from Parliament, etc. The Committee was being treated as though it was in the background, and that was unacceptable.
It was concerning that there were only four trustees, when eight were needed to quorate and take decisions. According to the Minister, a process to appoint further trustees had begun. The process had not been followed until now. How could the Committee be assured that board members would be appointed properly, or if people were simply going to be appointed and take decisions in support of what the Minister was trying to do? A lack of due process being followed was concerning.
The Committee had been asking for six months for the Task Team’s report on the IDT’s closure. The Committee was still waiting for it. The Minister was going ahead and ‘doing her thing,’ and not consulting the Committee.
The Committee had a role to play, and it was being obstructed from fulfilling it. When the Committee requested oversight, it was told that it could not ask questions of the Minister. This was unacceptable. The four board members should be called, and the Committee should ask for their input and find out what they had been told, because she had a feeling that the trustees had been told something completely different to what the Committee had been told.
She was in agreement with Mr Mashele that the Committee needed to decide how it would deal with this. The Minister had been doing what she liked, when she liked, and the Committee was being treated “like an ugly stepsister.” The Minister had not answered any written questions on the IDT for two months. The Minister was not treating the Committee the way it should be treated.
As Ms Siwisa had said, Members were earning salaries on taxpayer’s money to do Committee oversight of the Minister, and the Minister was not allowing Members to do their jobs.
In agreement with Mr Mashele, she said the Committee needed to reconvene and invite the existing board members. It had to see the trust document and monitor the process of the appointment of the additional trustees.
The Minister had decided to close the IDT when only the trustees were permitted to take that decision, and the trustees had to be quorate to do this. On what basis had the decision to close the IDT been made? It was unlawful, according to the trust deed, if the Minister had decided without a quorum of appointed board members. This needed to be properly addressed. The Committee could not continue functioning being treated the way it was being treated.
The Chairperson said that when the ADG was presenting, a bleak future had been indicated for 103 employees by Friday. On the one hand, trustees were resurfacing, and the Department was in the process of appointing a further four trustees so that they may quorate, and on the other hand the Department was continuing to release employees.
She suggested that the Committee write a letter after the meeting. The Department should reconsider releasing those 103 employees to prevent further litigation. The Department should ensure that the trustees were part of the decision-making and that the Department did not make any decisions alone. The decision may have been before trustees were known to exist. The Committee would communicate through its Committee secretary regarding the decisions taken at the meeting.
In agreement with Mr Mashele’s proposal, the ADG and the Department should be released from the meeting, and the Committee would be left to discuss its position, which was that the dissolution of the IDT was not supported.
The ADG and the DM were thanked for attending the meeting, and were formally released.
The Chairperson thanked the Members for their robust engagement in the matter and their consistency in trying to save jobs for many and the function of the IDT for South Africans.
There were issues for the Committee to address. First, there was the trustees that had resurfaced and the trustees that were there and not consulted, and then there was the 103 employees.
Ms L Mjobo (ANC) asked if the participants left in the meeting could be checked, to establish the quorum of the meeting.
The Chairperson said she had tried that at a previous meeting, but had been told that the meetings were public. The Department had been released because the Committee did not want the Department to listen to the Committee’s discussions.
Ms Nola Matinise, Committee Secretary, asked if the discussion was specifically for the Committee, or if the other participants could leave the meeting.
The Chairperson asked Members for input.
Mr Mashele said that he was not opposed to the meeting being public. The problem was remaining with the Department. The meeting could remain public and the Committee could raise its issues. The issues were not new but at some point, the Committee had to tell the Department to take it seriously.
Ms Matinise said that some of the trustees had joined the meeting, but she was not sure whether they should be released from the meeting or if they could stay.
The Chairperson said that the trustees were part of the public, and were able only to observe the meeting because they were not formally invited -- they could not respond to any questions. A formal invitation would be sent to the trustees when the Committee wanted to engage with them. Any other participants left were part of the public, and were present to observe the proceedings. The meetings were public and were placed on Parliament’s YouTube and TV channel -- the Committee could not say that the meeting was not public. The Department had been released from the meeting because the Committee did not want the Department to participate in the engagements of the meeting. The meeting was requested to continue.
Mr M Nxumalo (IFP) said that he would like it to be put on record that he had been disadvantaged by his connection at home. Being a rural boy had its advantages and disadvantages, and in this case, he was very disadvantaged. He had been able to come back on line only a few minutes ago, and did not know what had been said, but he would listen to what Members would say to get an idea of what had happened.
The Chairperson said that Mr Nxumalo’s challenge was understood. The reality was that there was no universal access to the internet and that was why there were challenges in rural homes. Mr Nxumalo would catch the gist of the discussions as the meeting continued.
The Chairperson invited questions from Members on the issues raised.
Mr Thring said that he had also experienced connectivity problems, and was not sure whether the Minister had answered his questions regarding how the trustees of IDT were not known, and how the Department had not been able to keep track of who the trustees were and how many trustees there were, considering the trustees who had resigned and so on.
There was an administrative and accountability problem within the Department. He had to agree with Ms Siwisa on the Committee being told to be careful about questions asked and statements made with the regard to the IDT. Indeed, the statement was that the Committee could be in a panic, but the questions asked by Members were legitimate.
There was a clear problem of what was going to happen to IDT. He also remembered the three options that Ms Graham-Mare had mentioned. The Committee had been told at that particular meeting that the dissolution of the IDT was just one of the three options, and the Committee would be consulted. As the oversight body for the Department and as Members of Parliament, the Committee had not been treated the way oversight Members ought to be treated. The Committee needed to put its foot down and be categorical about the Committee’s position of what should happen to the IDT. The challenge was whether decisions had been taken at a higher level that the Committee may not know about. There were rumours that the IDT might be absorbed into the ISA, so there may also have been decisions taken at a higher level that the Committee may not be privy to.
Ms Hicklin agreed with Mr Thring. The Committee had been told categorically that the IDT would be part of ISA. Unilateral decisions had been taken. The Committee was the oversight body of the Department tasked with holding the executive to account, but the decisions had been taken away from the Committee. It found out about everything that was going on in the Department through the media.
The Minister was constantly talking about following due process, but she was openly challenging the Minister to show where due process had been followed here. The Committee had found out about the pending closure of IDT, amongst other things, in the media. She said she was livid. The Committee was not being taken seriously. The Committee must claim its space. This was the Committee’s job and the reason it was in Parliament and it could not be dictated to.
Mr Van Staden agreed with Members. Since the start of the Committee’s new term, it seemed that there was a different story before the Committee from the Minister. The Minister kept passing the buck to someone else, and the Committee could not be a rubber stamp for what was being done incorrectly by the Minister. The Committee was not being kept in the loop and heard about what happened in the Department in the media. The Committee must be treated with due respect. As the Portfolio Committee of the DPWI, the Committee must know what goes on in the Department. A meeting with the trustees should be scheduled and the trust documents should be obtained for the Committee to gain clarity on this matter and make a decision. It could not continue like this. It was unacceptable.
Mr Mashele also agreed with what Members had said. The problem was that the Committee sat in these meetings and only some took the meetings seriously, while others did not. It was a trend to receive different responses. The Minister liked using intimidating tactics on Members. The Committee had been told by the shareholder that the decision rested with Cabinet. Who was the Cabinet? The Minister should invite another Cabinet member to assist and account.
At the last meeting, the Committee had been clear that it did not support the view of the Minister to close the IDT. The Minister had come as if this was a new meeting and Members were hearing this for the first time. It could not be like this. The Minister had given grand opening remarks and left. The Committee must be taken seriously.
A date to meet the Minister should be looked at, because this meeting had clashed with Cabinet. The Committee must meet on a Wednesday, and there should be another day to meet with the Minister when the Minister was available so that it could have discussions with her. His recollection was that in all meetings, the Minister would come in and leave, and the Committee was left to engage with other people.
The Committee must not allow the Minister to “butcher people’s jobs” and add to unemployment. The Minister herself had said that no one in the IDT was going to lose their job, but in this meeting’s report, 103 people were expected to lose their jobs. Why did the Minister make it a habit to come to the Committee and lie? The Minister had lied to the Committee when she said that people would not lose their jobs, and the report said that they would. The Committee was a representative of the people, and it had to be quiet about those things. It should not allow this or allow anyone, including the Minister, to close an institution that was supposed to deliver social infrastructure. It had admitted that there were problems in the IDT, just like there were problems in Public Works, and if the Minister was honest with herself, then she could close the DPWI and tell the President that she had failed her role as a Minister because the Department had not been delivering. Not one department was happy with the work of the DPWI, and this Department had not been closed. Why did the Minister want to take a short cut to deal with the problems of the IDT? Dissolving the IDT was a short cut.
Mr Mashele acknowledged that the IDT had problems, but asked how it could be saved. There was an interest in the IDT delivering social infrastructure. However, the Minister had taken a decision and did not take the Committee seriously. What powers did the Committee have? He wanted the Committee to sit alone and discuss its powers and begin to use “the axe” if they had one. However, if they were “a toothless barking dog,” that was something else. What were the Committee’s powers, and what could it do with the inconsistencies and if the Minister was lying? The Minister could not do that, and the Committee could not accept it as business as usual.
Ms Siwisa recalled previously making the Minister aware of the crisis within the IDT. Members had also expressed concern about the IDT, and now the Committee had a Minister and a Department that did not take it seriously. Different answers were given by the Department at every meeting.
The Department had reduced the funds available for monitoring and evaluation. She had told the Minister of the crisis within the Department, but where more funds were needed, they had been decreased.
The Minister tended to undermine the Committee and talked to Members as if they did not know what she was talking about. All Members came with different experiences, and did their research relevant to the Committee on which they sat. They did not just let time pass. They came prepared and knew what they were talking about.
The Minister had mentioned that the Committee was ‘taken into confidence,’ but the Minister could not even do that. There was mess after mess in the Department, and there was always a new issue.
The Committee kept on receiving different answers to the same questions. There was also a tendency of information not reaching the Committee on time, and Members had to rely on media statements to know what was happening in the Department.
The Minister had a shortage of leadership skills when it came to the Department. When all was well last year, the Committee had been told that the IDT would be saved, and certain things would be done. Then there was the presentation of the annual performance plan (APP), where the Department was drawn back, and the Committee had been informed of an exit strategy and a Task Team. No mention was ever made of trustees. The Committee had also been told of an issue between the previous Minister and the trustees regarding what was happening.
The Minister had said that the way the IDT was going was because sister departments were not paying it, and the Department would ask Treasury to intervene and push the other departments to make the payments. It was not clear how far that process was. Nothing had been said about that.
The IDT existed with the CDC and the DBSA, and nothing could be done about that. There were also oversight rights over the IDT, but the Committee did not know what was happening with the CDC.
What was happening with the CDC, and why was it and the DBSA brought on board if the IDT existed? Those were questions to include in the letter to the Minister. Were there any issues for the DBSA and the CDC to get their money on time, such as with the IDT? The IDT had an important role to play. There was also the ISA, which was very broad and was made up of a lot of things. The Committee had asked what would replace the IDT if it went, and there had been no answer to that. It had been told about the ISA and investors from the private sector.
There would always be problems with the Department -- not only IDT, which was the focus now -- but there were many others. People were losing their jobs and the Committee had discussed this. The Western Cape provincial parliament, NGOs and Non-Profit Organisations (NPOs) had complained about how things were done in the Department, and had questioned why they had “never been roped in with Covid”.
The Department’s motto was that if “Public Works works, then South Africa works,” and right now Public Works was at a standstill. There was one corruption incident after the next, and it was unclear how many there were. Why had the trustees who had not been consulted not taken the Department to court for making decisions when they were there? The trustees had been asked to come back, and the Committee was told that eight were needed, but there were only four who had apparently been consulted.
It was unclear whether the Committee would be informed of the consultation when the trustees were invited to the Committee. The trustees could tell the Committee what was happening.
Mr Mashele said that at a previous meeting, he had raised a point about the Committee not being told about technical things, and when the Committee did the Beitbridge oversight, it had been pointed out that that was not what had happened. They were still going to see heads rolling in this Department. There were a lot of things going on in the Department, and the Committee was being taken for granted. It seemed that the DPWI had made it a norm to fear only the Standing Committee on Public Accounts (SCOPA), and this Committee meant nothing to the Department. The Committee was sitting with taxpayers’ money, only to have to listen to stories from the Department.
It was time for the Committee to take a firm stand. There should be correct reports. The Department also tended to have long reports, only to skip certain pages in their presentations, thinking that the Committee did not know what was going on. The Department needed to take the Committee seriously. The Members were here because the public had asked for their voices to be heard and to hold people accountable. The public had queued in lines for the Sixth Administration to be here today and to see people being held accountable, but at every meeting the Committee had to listen to half-baked stories from the DPWI. People were losing their jobs on Friday even though the Committee had been promised that there would be no job losses.
The Committee needs to draft a firm letter to Minister De Lille, saying that the Minister needed to be transparent with the Committee and say what was happening. In the next meeting, something else would pop up, so the letter needed to be drafted. The Minister must be accountable and be able to take the Committee into her confidence.
Ms Mjobo agreed that there had been not a single day where Members had supported the dissolution of the IDT, and had stated clearly that the Department must come up with a recovery plan. The President, in the State of the Nation Address, had said that there were priorities, and one of those priorities was job creation, the DPWI was not supporting this. She aligned herself with other Members who felt that something must be done, and that the voice of the Committee must be heard., They were not in support of dissolving the IDT, and the Department had to do something about this, especially the Minister. She had to tell the Committee what the reasons were for dissolving the IDT.
The Chairperson read Rule 227, paragraph c, of the ‘responsibilities of the committees according to the Rules of Parliament:
- “The Committee may monitor, investigate, enquire into and make recommendations concerning any such executive organ of state, constitutional institution or other body or institution, including the legislative programme, budget, rationalisation, restructuring, functioning, organisation, structure, staff, and policies of such organ of state, institution or other body or institution.”
She had read the rule because Mr Mashele had enquired about the Committee’s responsibilities and duties. The Committee was given power by the rules to make recommendations to the Department through instruction, or enquire into what the Department ought to do. That was what the Chairperson wanted to start with before she provided her input on the issues before the Committee.
Mr Nxumalo responded in another language (refer to audio: 2:15:26-2:18:26)
Chairperson’s concluding remarks
The Chairperson said that unfortunately, some of the questions Members had asked could not be responded to correctly because the Department was not present. The meeting would continue with trying to summarise what Members had said to pave the way forward for the Committee. Having listened to what was said, it was important to remember that the country had a constitutional democracy which was led by what the majority of citizens had said they wanted.
The challenges that were within the Department, including its entities, were because of the lack of policies, particularly the Public Works Act, where the Committee had been given the timelines for the Act to be taken and passed by Parliament. There was a White Paper from one year, and then another from another year. The Committee should continue demanding that the Act be passed. The Committee had dealt with the Expropriation Bill, which was now in Parliament, but the Committee had also to call for enactment of the Public Works Act. Some challenges of the Department were because of the lack of the Act’s existence.
The Committee’s responsibilities had been read, and with the assistance of the Committee’s support team, a letter must be written to the Minister highlighting the issues it had raised. The exit strategy used by the Department had been developed without involving the trustees. The strategy itself was illegal. The Minister needed to be informed of this. The exit strategy had also forced the Minister to release 103 employees by Friday. This was wrong – the trustees had not been involved in this decision. The Committee was trying to save the jobs of the 103 workers who were destined to be released.
The Minister had to start the process afresh, in consultation with the trustees. The Committee would invite the trustees and demand that the Minister provide the Committee with timelines for the appointment of the four trustees to quorate. The Committee should also set the timelines in assisting the Minister to ensure that everything in the Department was done accordingly.
The debate should be rounded off. Once the letter was written, it would be shared with the Committee so that Members could correct anything before it was sent to the Minister. The Committee did not want the Department to be dragged to court. The Committee was the public representation to oversee what was being done in the Department. If the Minister continued the way she had with IDT, the Department would be dragged to court. This would mean that the Department had not done its work, but then at least the Committee would know that with the letter, it had provided advice and recommendations.
The Members agreed.
Committee minutes dated 27 October 2020
The Chairperson asked Ms Matinise if the minutes of the meeting on 27 October 2020 could be dealt with.
Ms Matinise told the Committee that at the meeting, the Committee had been briefed on the Expropriation Bill. She asked Members to confirm that the attendance register had been captured correctly.
Members confirmed that it was.
The meeting had outlined the process of the Bill, Members had provided input and their questions had been responded to. The resolution had also considered the meeting on 21 October and the Committee had adopted the resolution, with an amendment. The resolution was that the Committee would complete a draft plan that would set out the timelines along which the Committee would process the Bill.
Ms Mjobo said that the minutes were a true reflection of what had happened in the meeting, and moved their adoption.
Ms Hicklin seconded.
The Chairperson reminded the Committee that on 4 November, it would be doing its oversight on two parliamentary villages, Acacia Park and Pelican. At the Committee’s meeting on 3 November, Ms Matinise would outline how the oversight would be done. This meant that Members were required to be in Cape Town, as there would be no virtual oversight. This had been requested in 2019, when the Committee had seen the state of the houses, but it had been allowed only now. Members had to be in Cape Town to compile a clear report on the two villages.
She concluded that it had been a pleasure to chair a Committee that raised issues in an orderly manner, where there had been no raising of voices and insults. She hoped that this continued as Members played their roles, remembering that South Africans had put their trust in them to defend what was correct.
The meeting was adjourned.
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