DIRCO & ARF 2019/20 Annual Reports; with Deputy Minister

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International Relations

26 November 2020
Chairperson: Ms T Mahambehlala (ANC)
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Meeting Summary

2019/20 Annual Reports

The Committee received briefings in a virtual meeting from the Department of International Relations and Cooperation (DIRCO) and the African Renaissance Fund on their annual reports for the 2019/20 financial year.

DIRCO received an unqualified audit opinion for the third consecutive year. During the reporting period, the Department achieved 22 (68%) of the 32 annual targets set in the Annual Performance Plan. The low rate of performance is mainly due to a variety of factors such as scheduling challenges of high level engagements as well as circumstances beyond the control of missions.

The Department spent R6.310 billion in 2019/20, which represents 97% of the adjusted appropriation. The expenditure is lower by less than 1% (percent) in comparison to R6.370 billion spent in 2018/19 financial year.

The ARF has achieved a consecutive unqualified audit opinion without findings. During the 2019/20 financial year, the ARF processed R63.4 million in disbursements towards humanitarian assistance, the promotion of democracy and good governance, prevention and resolution of conflict and human resource development in Africa

The Committee asked for the Department to account for R188 million in a suspense account which it had identified in its annual report. From the briefing on the audit outcomes, the challenges identified were irregular, fruitless and wasteful expenditure. The Committee concluded that the Department needed to strengthen its financial management, internal controls and implement consequence management. It also raised concern over unoccupied properties abroad and missions that were not assisting citizens abroad.

Other issues raised by Members included the vulnerability of the Department’s information technology system, terrorist activities which were moving closer to South Africa’s northern borders, the role of the African Union’s Peace and Security Council and the African Standby Force, and South Africa’s stance on the United Nations Charter.

Meeting report

Chairperson’s introductory remarks

The Chairperson said the Committee was meeting in the midst of international developments which would have a bearing on South Africa’s foreign policy -- from the Presidential elections in the United States of America, the elections in Tanzania, the Ivory Coast and Burkina Faso, with others to follow towards the end of the year. Increasing developments had emerged in the first world, where rigging and vote stealing had been found. This was not happening in an African country, where these so-called democracies believed it was a norm in Africa that a defeated candidate was bound to contest elections.

She said that they had taken note and appreciated the fact that Ms Thandile Sunduza, Consul General in South Africa’s office in Los Angeles, was making an early impact on her arrival in that part of the world. The Committee commended her for having been unanimously nominated by the LA area Chamber of Commerce to the position of 2021 vice chairperson, and 2022 chairperson, of the diplomatic and commercial officers’ group. South Africa benefited from her role. The incoming leaders were carefully nominated to ensure the prestige and momentum of the group initiative continued. The Committee looked forward to her leadership on behalf of the country in the coming year.

The annual report was a very important feature of the performance trajectory of the Department. It was a strong monitoring tool, which showed whether the Department had taken into consideration the oversight interventions of the Committee and the audit outcomes of the Auditor General (AG). It demonstrated whether the Department was improving its performance. At the 9 October 2019 meeting with the audit and risk committee and AG, it had been identified that the root causes for the qualified opinions was the non-implementation of the audit action plan. Not much ground had been covered to redress the situation. Inadequate capacity in the audit branch had been identified as a serious concern. The audit findings on cash and cash equivalents had been found to be an issue because of a lack of the required capacity in the finance branch. The basic accounting required to reconcile what was in the cashbook and what was in the bank statement had been lacking. This was another pointer to the lack of capacity in the finance branch.

The Committee had recommended a skills audit process in the finance branch. It had also become apparent to the Committee that the recurring operational challenges involved the finance branch. There were continuous findings of lack of knowledge, poor performance and a lack of necessary skills. The Chief Financial Officer had expressed the view that he did not agree with some of the findings in the AG’s report of 2018/19. The Committee had been dismayed as to how he would then be able to assist the Department to turn around the root causes of the operational challenges.

It had transpired at the same meeting that some contracts with service providers were irregular. One such contract involved BT Communications, for which the CFO had been charged but found not guilty. The question was what had to happen with that irregularly awarded contract. It had been noted that most of the irregular expenditure was caused by contracts that had been extended without approval from National Treasury.

At the same meeting, issues involving cash and cash equivalents had been picked up from 2013/14. The submission of financial statements and misstatements had also been identified in 2013/14., and the CFO, by coincidence, had also happened to act in that office in 2013/14. At the 13 October 2019 meeting, the CFO had explained to the Committee that the challenges with cash and cash equivalents were the result of capacity constraints. It was asserted that corporate services managers who dealt with the finances of missions abroad ascended to this branch when arrived back at DIRCO, and they often lacked the necessary skills. However, it had been noted that the branch had not yet trained the officials required. This had also been highlighted in the report of the AG that the finance branch needed to be capacitated.

The CFO had challenged the findings of the AG on the New York pilot project. She urged the Department to pay attention to the Committee’s recommendations in the oversight report on the New York project involving R188 million which had already been spent. The finance branch was contributing to the root causes of the qualified audit opinion in 2019/20. The lack of capacity in the finance branch contributed to the negative audit outcome. She noted that National Treasury was advising the Department on this issue. The application for the R188 million should have been accompanied by a thorough analysis by a competent accountant.

She commended the Department on its persistent and positive outcome in the performance report. It was interesting to note the difference in the manner in which it was managing the performance information, which was better than its annual financial statements.

Over the two years in the United Nations Security Council, South Africa had handled its membership very well. The Committee hoped that its chairperson was receiving the necessary support from the Department under Minister Naledi Pandor.

DIRCO briefing on its 2019/20 annual report

Mr Kgabo Mahoai, Acting Director-General: Department of International Relations and Cooperation (DIRCO), provided a brief outline of the report.

Ms Delores Kotze, Chief Director: Monitoring and Evaluation, DIRCO, took the Committee through the presentation noting DIRCO received an unqualified audit opinion for the third consecutive year. During the reporting period, the Department achieved 22 (68%) of the 32 annual targets set in the Annual Performance Plan. The low rate of performance is mainly due to a variety of factors such as scheduling challenges of high level engagements as well as circumstances beyond the control of missions.
Programme One: Administration
Corporate management:
-Most of the Human Resources (HR) targets were met except for the target related to the filling of vacancies, which could not be met due to the ceiling placed on the Compensation of Employees’ (CoE) budget.
-The Department could not maintain the vacancy rate within the national average of 10%, due to the shortfall on the COE budget. All vacancies were declared unfunded. As a result the vacancy rate was at 12.3%, as at 31 March 2020
-ICT did not meet its 2019/2020 strategic targets. There were delays in the acquisition of Infrastructure modernisation imperatives and computers. 

Diplomatic training, research and development (DTRD):
-The DTRD targets were met except the total number of training programmes as a result of the impact of the precautionary measures implemented in Q4 in response to the COVID pandemic.
-73 out of 85 training programmes were delivered for DIRCO officials and other spheres of government

Finance and legal:
-The 100% compliance with the 30-day payment period target was not achieved only 83.6% compliance with the 30-day payment period.
-100% (698) legal services, advice and assistance provided

Programme Two: International Relations
Structured bilateral mechanisms:
- During the reporting period a BNC was held with Nigeria and the two Presidents deliberated on areas of cooperation for political, diplomacy, defence, security, economic and social
-There were BNCs with Asia and the Middle East, the Americas and Europe

High-level engagements:
-23 high-level engagements with African countries undertaken

Economic diplomacy:
-South Africa’s economic diplomacy in the region (Asia and Middle East) is focused on reducing SA’s trade deficit in the region and to promote the export of value-added manufactured goods
-The United States remains one of South Africa’s biggest single contributor of development assistance and continues to support the fight against HIV/AIDS and tuberculosis under the President’s Emergency Plan for AIDS Relief (PEPFAR)
- Western Europe continue to be SA’s major partners, providers of development assistance, Foreign Direct Investment (FDI) and tourism
- The Nordic and Baltic countries are very important cooperation partners for South Africa in the fields of Trade and Investment, Tourism, Agriculture, Defence, Transport, renewable energy, Skills Development, Oceans Economy, Science, 4IR and environment, green growth and agriculture
- South Africa and Cuba have a joint Technical Support Programme (SACTSP) in the area of human settlements

Programme Two: Regional Integration (SADC)
SADC:
-South Africa actively participated in SADC Electoral Observation Missions to Botswana, Malawi, Madagascar, Mauritius, Mozambique and Namibia.
-South Africa submitted a Country Report on the implementation of the Revised Regional Indicative Strategic Development Plan (RISDP) (2015 -2020).
-President Ramaphosa, as SADC Facilitator to the Kingdom of Lesotho, continued to actively coordinate efforts in addressing peace, security and political stability in the Kingdom, with progress report submitted on 16 August 2019.  This role of the President continues
- SADC Council of Ministers had a virtual meeting on 18 March 2020 and deliberated

Programme Three: International Cooperation – System of Global Governance
-As a member of the UNESCO Executive Board, South Africa advanced the country’s interests on a range of resolutions and articulated the country’s positions on advancement in education, culture and science.
-SA attended the Regular Session of the Economic and Social Council High Level Political Forum (HLPF) where the main focus of the session was the presentation of South Africa’s Voluntary National Report on SDG’s
- At the Session of the Human Rights Council, South Africa supported 21 resolutions by either voting in support or joining consensus and abstained on five country specific resolutions
- South Africa participated at the 42nd Session of the Human Rights Council (HRC), South Africa joined consensus on 37 resolutions, voted in favour of eight resolutions
- South Africa prepared for and participated at the Session of the UNGA 74 General Debate (High-Level Segment
- South Africa participated at the UNESCO General Conference and the national statements delivered articulated South Africa’s positions on advancement in education, culture and science
- SA participated in the G20 Leader’s Summit where the overall balance of the Osaka Leaders’ Declaration signifies a successful G20 summit. SA received endorsement of G20 Leaders
Programme Three: International Cooperation – Continental Cooperation  
- South Africa participated at the Mid-Year Coordination Session of the AU Executive Council
- During the 33rd Ordinary Session of the Assembly of the AU, President Ramaphosa committed to advancing and promoting gender equality and women empowerment during SA’s Chairship, both in terms of Agenda 2063 and Beijing+25
- South Africa continue to support peace and security to advance peace and security in Africa

Programme Three: International Cooperation – North-South Cooperation  
- The Tokyo International Conference on Africa Development (TICAD) Plenary Session delved on a number of strategic issues that will contribute effectively to the advancement of National Interest, African Agenda and the South Positions

Governance structures (audit and risk management)
-The Department has, on an annual basis, reviewed and updated its Risk Management Policy, and developed the Risk Management Strategy for the implementation of the policy.
-The Risk Management Committee and Audit Committee consisted of independent external persons.
-The Department implemented and maintained a Fraud and Corruption Prevention Policy and Strategy, which is reviewed on an annual basis in line with its risk-management framework

Health and safety:
-With the advent of the COVID-19 pandemic, extra safety measures have been implemented to prevent the spread of COVID-19 in the workplace.
-The COVID-19 Steering Committee, comprising of management and organised labour, was established to deal with COVID-19 health and safety protocols, and advise the Director-General on safety measures to be implemented.
-The on-site clinic continued to render first aid services to officials injured on duty and make the necessary referrals for further medical attention

Mr Caiphus Ramashau, Acting Chief Financial Officer, DIRCO, took the Committee through the financial performance of the Department for the financial year under review. The Department spent R6.310 billion in 2019/20, which represents 97% of the adjusted appropriation. The expenditure is lower by less than 1% in comparison to R6.370 billion spent in 2018/19 financial year. The Department managed maintained its spending within the reduced budget allocation in the implementation of the Annual Performance Plan. This was attained through the implantation of cost saving measures, such as revision of rental norms and standards, reduction on the international travel and doing more with less through the introduction of efficiency in the operation of the missions.
However, the Department had to navigate the impact of the budget cut experienced on the compensation of employees, which unfortunately, has resulted in the expenditure exceeding the budget ceiling by R246 million. Conversely, the Department’s effort to delay the placement of officials to missions abroad for December 2020 placement cycle was not sufficient in containing the spending within the main division of the vote. As a result, the high spending on compensation of employees constituted unauthorised expenditure and contributed to the low levels of liquidity and requires attention going forward. The Department’s inherent risk of foreign exchange rate fluctuation remains a challenge as the department’s obligation in respect to the SA’s commitment are levied if foreign currencies whilst the budget estimates are projected in Rand.  Thus for the period under review the department had to proposed virement of funds to the value of R47 million to meet SA’s international obligation through the engagement with National Treasury. Consequently, discussion with National Treasury and South African Reserve Bank are underway in finding mitigating strategies to this inherent risk.

The 2019/20 expenditure trend analysis is as follows:
-Programme 1 expenditure is R1.294 billion in 2019/20, which represents 76.2% of the adjusted appropriation. The expenditure is lower than R1.355 billion spent in 2018/19, which represents a decrease of 4%. The decrease in expenditure is mainly as a result of delays in implementation of the Infrastructure Plan as well as delays in the acquiring of Information and Communications Technology (ICT) services as was initially planned in the 2019/20 financial year.
- Programme 2 expenditure is R3.313 billion in 2019/20, which represents 108% of the adjusted appropriation.      The overspending which resulted in unauthorised expenditure was experienced on COE due to a COE ceiling implemented by National Treasury which  does not cover the total cost for the filled positions as well as the depreciation of Rand against major foreign currencies which impacted expenditure incurred in missions abroad. The 2019/20 expenditure is lower than R3.377 billion spent in 2018/19, which represents a decrease of 2%. The decrease is mainly due to the implementation of cost-containment measures, as well as the postponement of the transfer of officials to missions in the December cycle as a measure to contain costs in relation to the compensation of employees.
-Programme 3 expenditure is R541 million in 2019/20 which represents 100.5% of the adjusted appropriation. The overspending which resulted in unauthorised expenditure of R2.6 million was experienced on COE due to a COE ceiling implemented by National Treasury which  does not cover the total cost for the filled positions as well as the depreciation of Rand against major foreign currencies which impacted expenditure incurred in missions abroad. The 2019/20 expenditure is higher than R526 million spent in 2018/19 which represents an increase of 3%. The increase is due to expenditure relating to SA’s election to serve as a non-permanent member of the United Nations Security Council (UNSC) for the period 2019 to 2020.
-Programme 4 expenditure is R289 million in 2019/20, which represents 96.7% of the adjusted appropriation. The expenditure is lower than R353 million spent in 2018/19, which represents a decrease of 18%. The decrease is due to the expenditure relating to the hosting of the 2018 Brazil, Russia, India, China and South Africa (BRICS) Summit.
- Programme 5 expenditure is R871 million in 2019/20, which represents 96.5% of the adjusted appropriation. The expenditure is higher than R759 million spent in 2018/19, which represents an increase of 15%. The increase is due to the increase in South Africa’s membership contribution to the SADC

2019/20 audit outcome:
-Movable tangible capital assets – the Department has managed to resolve the prior year qualification by migrating from excel asset register to Nettrace asset management system, performing 100% asset verification. The Internal Audit Unit performed proactive reviews in a form of computer assisted auditing techniques (CAATs) procedures during asset clean-up process.
-Cash and Cash Equivalents – the Department has managed to resolve the qualification by performing monthly reconciliations. Cash and cash equivalents were adjusted while misstatements were reclassified into current receivables, disallowance and damages. These exercises were embarked upon to isolate transactions for investigation purposes and to properly account for those transactions in line with the departmental financial reporting framework guide

Unauthorised expenditure:
The Department incurred unauthorised expenditure of R246 968 000. This is due to a COE ceiling which does not cover the cost for the filled positions in the Department. Measures to reduce cost on compensation of employees are being put in place.

Irregular Expenditure
The Department incurred irregular expenditure of R217 034 000 which 88% (R191 379 031) of the amount emanates from multiyear contracts which were awarded not in compliance with supply chain management processes  but whose services were still being rendered to the Department. The irregular expenditure decreased from R298 016 000 in 2018/19 to R217 034 000 in 2019/20, which represents a decrease of 27%. In the majority of the cases investigations have been conducted and finalized. The Department is in the process of implementing the recommendations pertaining to consequence management.

Fruitless and Wasteful Expenditure
-The Department incurred fruitless and wasteful expenditure of R1 625 000 in the current year. This is mainly as a result of time lapse between the outgoing Head of Mission and the incoming Head of Mission and this result from the challenges of securing suitable and cost-effective accommodations abroad
-The fruitless and wasteful expenditure decreased from R2 712 000 in 2018/19 to R1 625 000 in 2019/20, which represents a decrease of 40%.
-All reported fruitless and wasteful cases have been assessed in line with the fruitless and wasteful expenditure framework and no liability was determined.  The next step will be to recommend that the amount reported be written-off.

African Renaissance Fund 2019/20 annual report

Ms Dineo Mathlako, Head: African Renaissance Fund (ARF) Secretariat, took the Committee through the presentation.  The ARF has achieved a consecutive unqualified audit opinion without findings. During the 2019/20 financial year, the ARF processed R63.4 million in disbursements towards humanitarian assistance, the promotion of democracy and good governance, prevention and resolution of conflict and human resource development in Africa.
Members were taken through the Independent Boundaries Commission Project, the In Transformation Initiative, Lesotho Peace Process, Southern African Election Observer Mission, Namibia drought-relief project and the annual African Woman Dialogue.
The presentation then looked at the performance of the ARF programmes for the financial year under review and financial performance.

[see presentation attached for further detail]

Discussion

Mr G Hendricks (Al Jama-ah) commented that the DIRCO annual report “blew him away.” He was very impressed with all the Department was doing, and commented that this was the kind of information that it should make available to the public. People should know about this, but they did not. He had been a Member of Parliament for just over a year, and none of the key features of the report had ever captured his imagination as they did now. He complimented the Department on spending the R6.3 billion very well.

He commended the Department on their amazing work on the situation in Western Sahara. He called for an early referendum so that the world could know whether the people wanted their independence from Morocco or not. He was sure that South Africa would continue to highlight the commitment the United Nations had made regarding Western Sahara.

He appreciated the fact that Saudi Arabia, Qatar and the United Arab Emirates would now be visa free, and that it would help a lot with promoting tourism and would be good for the economy after the pandemic. He asked whether it was reciprocal, especially with Saudi Arabia. This would mean that Muslims going on pilgrimage would not need a visa, like the Americans and British people, as it was in the days of apartheid, because there were formal links. Muslims used to get their visas on arrival.

He was very happy that the Department was monitoring Vision 2063, when there would eventually be a United States of Africa, with the highest levels of social and economic advancement. It looked as if the Department’s eyes were on the ball all the time.

He added that ties with the Indonesian consulate needed to be strengthened.

The Chairperson advised Mr D Bergman (DA) to remove his face mask if he was not in a public place, as he was not clearly audible.

Mr Bergman responded that he was in an aircraft.

The Chairperson said that for him to be in the meeting while sitting in an airplane compromised the meeting.

Mr Bergman said that unfortunately he had to fly home, and was doing the best he could to be present at the meeting. He expressed concern about the diplomats who were being sent home now. Some of them were suffering from co-morbidities, yet they were still being asked to return home. This was a risk to their health.

He raised a concern about the vulnerability of the Department’s information technology (IT) systems, based on questions raised in previous presentations, and the Director General (DG) had alluded to it in this presentation again. With what was happening up north, it was a concern. They were opening themselves up to far more vulnerabilities than what they had wanted to believe. With the African Union and the United Nations Security Council positions that were held, he suggested that it would be useful for the Committee to get a presentation on those positions to establish what had been achieved in the year as part of the scorecard.

It was also evident that during the COVID-19 lockdown, the Department had given up on some of the missions’ activities, such as job creation projects. There did not seem to be missions that were actually assisting people. He referred to the missions in the United Kingdom and the United States, where there had been complaints that people could not access consulate services currently. He asked the DG when it could be expected for those missions to open fully in terms of consulate services, while understanding that the United Kingdom was in a lockdown situation. However, there could be services rendered either online or via Pretoria, or there could be another way to guide people through Germany. They needed to be a little more creative in the way people were guided.

There had been talk for a long time about closing some of the missions, not just the political ones. There had been attention on matters like derelict properties in Namibia, generators to deal with load-shedding in electricity-rich Belgium, and empty lots in Senegal. He said that it was time for them to work together to create a proudly South African presence abroad.

The Chairperson said she was tempted not to allow Mr Bergman to have another round of questions, as being in the meeting while in an airplane was out of order.

Mr B Nkosi (ANC) commented that the Department needed to be commended on its performance report. His only issue was around governance. He asked the DG why risk was a sub-committee of the audit and risk department, and why it was chaired by the deputy chairperson of internal Audit and Risk. This generally violated the enterprise-wide risk management or risk strategy approach. He commented that he would focus on the financials of the Department, and asked why it had submitted annual financial statements with material misstatements which had to be corrected before they were agreed to or sanctioned by the AG. This indicated and led to issues that the Committee had continually raised about the finance department.

He commented on his concern regarding the public diplomacy and protocol programme in programme 4. What amount had been allocated for Radio Ubuntu, because his view was that they were not getting value for money with that programme?

He accepted the explanation that irregular expenditure would continue if the issues had not been corrected. He had heard the DG say that the matter was going to be addressed in this current financial year. He asked the DG to report regularly on the efforts to resolve the irregular contract management, specifically in respect of the contracts identified by the Department. He suggested that it also required forensic investigations to discover the root causes of why the contracts had been entered into, and why they had continued.

He said the unauthorised expenditure problem involved education. Why had they reclassified something they were not able to give concrete, documentary evidence for, in the hope that they would then not get a qualification? In the end, what the Department had done had also resulted in a qualification. However, he had heard now that Treasury had indicated that the creation of the suspense account in no way resolved the matter because it was still there and had to be investigated. He welcomed the fact that the Department was engaging in forensic investigations into the matter.

The Department should report on a continuous basis to the Committee on the unauthorised expenditure referred to. They should also do a cost benefit analysis. If R188 million for which there was no documentary proof was being written off, what was the cost of the Department deploying an accountant at all those missions to assist them to do the reconciliations on a daily basis so that they would not have this issue and having to write it off? It would continue if they did not act on the issue. He asked the DG to provide the Committee with an audit action plan for the 2018/19 and 2019/20 financial years.

Mr D Moela (ANC) welcomed the Chairperson’s opening comments. He agreed with Mr Nkosi on the issues that he had raised, as they were issues that had been raised before. He asked the DG who was managing finance and who the accounting officer was, because they used different titles in the ARF compared to Department, especially in the finance branch. He asked the DG whether he agreed DIRCO did not have suitable officials to perform functions in the finance branch, or to provide reasons if he did not agree.

He asked the DG how many times the Committee asked him about consequence management. The DG always provided reasons for why consequence management had been delayed, but those reasons did not suffice. It seemed as if he was undermining the Committee on matters of consequence management. They had raised the matter with him many times before. The DG was still failing to explain what action they had taken, but instead came to the meeting and did not provide a proper explanation. He asked him to provide a report on what actions the Department had taken on consequence management. It was not correct for the Department to raise issues with the Committee and then not to implement the solutions to them. He claimed that if the Department was struggling to make decisions on consequence management and failing to run the Department, then the Committee should take disciplinary action against the Department. Most of the problems, according to the audit report, came from the finance branch, which had been raised by the Committee already. He asked the DG to explain what the problem in the finance branch was.

Mr Moela lost connection, and the Chairperson commented that she would return to his discussion points once his connection was stable again.

Ms B Swarts (ANC) welcomed the Chairperson’s opening remarks, which had covered the bulk of what the Committee was discussing. Her question was directed at the recurring qualification on the financial statements from the Department, which demonstrated weaknesses in its financial management. When government had introduced accountability in through the Public Finance Management Act (PFMA), it had set out to enhance the capacity of heads of departments as accounting officers by providing for the appointment of chief financial officers and other properly qualified senior middle managers. As a Committee, they had repeatedly raised the issue of competence and relevant skills and knowledge within the finance unit. This had not been acknowledged, and had been allowed to persist in this Department. Why had DIRCO not recruited accountants and financial managers with the requisite accredited qualifications? Why should the Committee not conclude that the Department was not serious about cleaning up its finance unit with properly qualified personnel accredited to our nationally accredited authorities such as the South African Institute of Chartered Accountants?

When the Committee had conducted oversight of this Department for the first time, they had alluded to a notion of “two bulls in the park,” meaning that there was no mutual respect between the Chief Financial Officer (CFO) and the accounting officer. This was affecting the performance of this Department. She raised this matter because she could pick up that there seemed to be no regular reporting to the accounting officer on early warnings about audit matters.

What was the Department’s honest view on this assessment? When the Committee looked at the audit qualifications, they could not really hope that in the next audit they were going to get anything better because there were officials who had got titles stating that they were state accountants, when they had only passed Grade 12. There was no chartered accountant in the core of the Department itself, so the Committee could not expect miracles.

Mr T Mpanza (ANC) commented that he could not agree more with Mr Moela and Ms Swarts in saying that the Chairperson, in her opening remarks, had really set the tone for the meeting and had highlighted issues that needed to be addressed decisively. It was high time they dealt with the issues honestly. He wished he could be like Mr Hendricks and commend the Department on all the things he had mentioned, but having been with this Committee since the beginning of the term of office of this Department, he did not know whether he could say exactly what Mr Hendricks had been saying. Of course, as the Chairperson had always said, credit must be given where credit was due, and one should criticise where criticism was deserved. When it came to programmes 2, 3, 4 and 5, the Committee needed to give credit. On programme 1, however, since they came into office, they had been grappling with this programme, which dealt with information communication technology (ICT) and finance, among other issues.

This was the longest presentation the Committee had ever had, but he did not think it could be convinced by long sentences and long presentations. He was convinced by an outcome-based presentation rather than an activity-based presentation. He thought the Department was becoming an activity-based organization, where they had adopted the strategy of coming up with long presentations with fine details, but even if that was the case, the problem still remained, as pointed out by Mr Moela. The elephant in the room was the finance section and there was a big problem with that section. All the problems that the Department had came from that section.

Of course, there were also the risk management and project management unit (PMU) issues. The Committee wanted outcomes. They did not want an activity-based organisation where they were working the normal 8am to 5pm days, but the Committee did not see the outcomes at the end of the day. He appealed to the Chairperson to ask the Minister and the DG to help the Committee in dealing with the matter of the finance branch.

He also addressed the consequence management issue which the Committee had raised time and time again. He requested that when the Committee returned next year after the recess, they should not be getting the same type of presentation, as they had had that type of presentation many times before and were not seeing progress. He asked that they see real intervention and people with qualifications and requisite skills being put in place, along with consequence management. When they returned for the next term, the DG and Minister should provide a presentation on what they had implemented, not always just identifying the problems.

Who was dealing with the compilation of the financials in the Department? The question was critical, because the ARF was always performing very well when it came to audit outcomes. Where was the problem? The Committee needed to know who was dealing with the financials in the Department so they knew which person or section was problematic, and why they were not learning from the sister section that was with them in the Department. He stressed that the Chairperson had hit the nail on the head with the matters she raised in her opening statement, and those should be the matters they forwarded as a Committee to the Department to be addressed one by one and responded to.

Ms T Msane (EFF) commented on the matter of the ARF, and said that the Committee had been told that there were no observers in Malawi but in the fourth quarter report they received, an amount of R121 742 had been processed to observe the elections in Mozambique, Botswana and Malawi. Why were there was no observers in Malawi? Could it be a political stance -- that South Africa did not want to be found in a country which had elections which had been declared null and void by a court? If money was processed for observing of those elections in Malawi, what had happened? She noted that South Africa received $8.4 million from United States Aid for International Development (USAID). She asked whether the Department was aware that one of the main goals when the United States provided international aid was to diminish the threat of communism by helping countries to prosper under capitalism. Apparently in 2020, USAID stood for promoting American prosperity through investments and expanded markets for US exports to countries where they provided aid. How had South Africa benefited from with such aid, if it did not involve more poverty and being in debt to America? What was at stake if South Africa continued to receive this aid?

She said the Committee had been told that the African Union Peace and Security Council (AUPSC) wanted to form a special unit to deal with terrorism, but it had not been told what the AUPSC had said about states which use military and state forces to silence citizens. She asked for direction, as a Committee, on the real reason for the formation of the African Standby Force (ASF). Was it not to deal with such injustices in the first place? What had been South Africa’s stance when the decision was taken to form a special unit to deal with terrorism on the African continent?

The United Nations General Assembly (UNGA) was turning 75, and the Charter had been signed in June 2020. Under the theme that the future the Committee wanted and the UN they needed, was reaffirming a commitment to multilateralism, she asked the Department what South Africa’s stance was in regard to this Charter, because none of the reforms that African states had put forward were implemented or changed in this Charter, especially in the three main organs under the UN. South Africa was taking over the presidency in December of the UN Security Council (UNSC). What were the urgent plans to be implemented by South Africa? What were the plans South Africa was planning to implement during its presidency in December 2020?

When the DG had made the presentation before his officials, he had highlighted that under irregular expenditure, contracts were being terminated, which the Committee appreciated. However when the CFO had presented, he had said the Department was implementing recommendations. Were the recommendations the cancellations of those irregular contracts? How much would those contractors charge the Department for breach of contract in claims of damages? Was the Department going to return and say they had cancelled the five irregular contracts, and this was how much the contractors were charging the Department for claims in damages and for breach of contract?

The report showed that there had been R1.625 million in fruitless expenditure. When the CFO was presenting, he had said that the fruitless expenditure was due to challenges in securing suitable accommodation, but the AG’s report had said something else. The Department was referring to its own challenges of securing suitable accommodation, but the AG was not saying that.

On the HR matters, she asked that the Department provide a list of all the positions occupied by South Africa on all international bodies. This was because the Committee had been given a list of what the Department thought was strategic, but they did not know what the Committee wanted and what the Committee considered as strategic.

Mr M Chetty (DA) said clearly the Department managed to convince Mr Hendricks, but it had failed to baffle the Committee when dealing with its shortcomings for the past year. He agreed that by giving the grand presentation, they somehow thought they could lose the Committee in the translation. Why had it intended to write off the R188 million without any supporting documents? This was in the AG’s report. He would have expected the Department to give the Committee those answers. This proved the incompetence or lack of accounting skills that the Committee had raised. The fluctuating, volatile exchange rate was over. The Committee was sick and tired that every time there was a problem with over expenditure in this Department, the first excuse provided was that it was due to the volatile and fluctuating exchange rate. The Department needed to unpack and explain to the Committee which portion of the volatile exchange rate had contributed to the over-expenditure.

One of the biggest challenges in this Department was its record-keeping. The example was that there was no record keeping of transactions from the missions. They should be reconciled monthly. How was it that when the monthly reports from the missions reached the Department, the finance branch did not bother to reconcile them? This showed arrogance, because they knew there was nothing for them to answer to. Every single time this Department was asked to explain things, it gave the same excuses.

Today, in the House, the Deputy President had also been very clear that the departments must start making regular payments on time. With the 30-day payment rule, why was it that the Department managed to achieve only 83.6% of this target? What was the hindrance preventing it from achieving 100%?

On the matter of misconduct, there was an item that was described as “Other.” What did this refer to? Was it sexual harassment, or what was it? He noticed that they had mentioned fraud in the presentation, but under certain other charges it was just listed as “other,” and that was too vague for the Committee.

His next issue referred to the report and recommendations received from the AG. Last year, the Committee had been told that accounting officers should ensure that action plans to address audit outcomes were developed and implemented before the start of the interim audit. The elements of this action plan had been spelt out in detail, including consequence management for officials involved in transgressions, ensuring compliance with legislation and making sure that all procurement processes had been subjected to review prior to approval. DIRCO also had to ensure improved communications between the missions and the head office to avoid instances where there were contradicting information supporting annual financial statements, as was evident in the audit of cash and cash equivalents and receivables, and prepare proper monthly reconciliations between the accounting records and the fixed asset register.

He directed the Committee’s attention to what they were told last year by the Department, regarding the disregard for compliance with legislature, and raised the matter of the prevention of unauthorised, irregular, fruitless and wasteful expenditure, as money was not used nor invested. This year, the Committee had been told there had been no material non-compliance. He read out a list from last year’s AG report and compared it to the current year to back his assertion that nothing much had changed. No matter how fanciful the Department could make its presentation and impress Mr Hendricks, it would not have the same effect on the Committee.

He expressed his concern regarding the contracts that the Department was still retaining, even though they had been identified as illegal and irregular. They had been extended, which had also resulted in most of the irregular expenditure. How was it that the Department had failed to act against or terminate those tenders which had been irregularly extended?

Mr Moela provided his last comments that had been cut short by his unstable connection. He asked that the DG help the Committee by informing it what was happening regarding the extension of the contract for computers. Who had been responsible for extending that contract without approval? He commented in the vernacular that the finance branch was rotten, and was doing nothing. He asked what the required qualifications to be employed as a state accountant were.

The Chairperson commented that the R180 million, with no documents supplied to account for it, had been reported to the Portfolio Committee by the AG, and the Department had decided to pretend as if it had not happened. The Department had been unable to explain the R188 million to the AG. Since it wanted to write off the R188 million, had the executive authority of the Department approved the write off, because they were the only ones who could sanction that. What informed the write off? The AG had reported to the Committee that there was R247 million in unauthorised expenditure. How could unauthorised expenditure occur when there was an accounting officer at DIRCO?

There was also something called the suspense account, which she asked the Department to explain to the Committee. Who had the responsibility in the Department to produce and prepare credible statements? Why was the Committee still receiving reports of misstatements from the AG? The AG had reported that some of the irregular expenditure that had emerged in the Department was because of properties abroad remaining unoccupied for three to nine months a year. Why were there unoccupied properties abroad? What was going on in this Department? She also repeated the erlier question what was the ARF doing that the Department could not do to achieve clean audits?

DIRCO’s response

Mr Mahoai responded that the Department had taken note of the concerns raised in the meeting.

Regarding the matter of the R188 million that the Committee had referred to, he assured the Members that he was not sure how the issue of writing it off had come up, but he would find out how it had. What the Department would want to report was that management had made an adjustment and indicated that there was evidence to support a particular amount, which was the original R208 million, When R20 million was subtracted from this, the R188 million transaction that the Committee was referring to had become the issue. That had been put into the suspense account, as at that time of reclassification there had been no available evidence to substantiate it, and therefore at the time of the audit, the finding was that it was a limitation of scope, as the AG had alluded to -- not having sufficient audit evidence to support it.

He assured the Committee that there was no talk of a write off. A write off was done in such circumstances, but in their case, they were not saying that. The Department had asked their internal auditors to look at the matter and assess it as an assurance provider, coming up with recommendations on how best to address it. It had been too late into the audit, and therefore nothing was found. Normally, they would have asked for more time to check things, but they had felt it would be better to allow the outcome and now that they had noted the findings, they had overcome some of the issues that had led to the audit opinion of the previous year. The preliminary assessment that the internal auditors had immediately done upon getting these findings, was to look at the root causes, and they had been able to confirm the root causes that the AG had pointed out. These were the weaknesses in the internal financial control systems, especially those relating to the foreign cash transfers to missions abroad, including the recording thereof, to which the Members had alluded.

Another root cause that was looked at was the ineffective or weak record-keeping process. The Department was confirming these matters in the audit report and what the basis for the qualification was. The Department was not isolating this matter because it was the only issue, but rather because it affected the audit opinion. As a result, the internal auditors had told the Department the best way to handle this was to embark upon a forensic investigation. He linked the matter with what had happened last year. The AG had recommended that the Department should do an investigation. The first step they had taken, before they complied with the audit action plan, was to ask the AG through specialised audit firms, to conduct this investigation. The reason was that the Department realised that it was a unique area, and they felt the AG was the most appropriate institution to get to the bottom of the matter. They had communicated as such in October last year by writing to the AG, who had then looked at it and followed up. Unfortunately, after repeated checks, the AG had confirmed in the middle of February that they felt they would be conflicted by being the ones that were investigating the matter. It had been too late for the Department to do anything, yet they had continued to work with National Treasury to try to do what was possible. The ultimate result was that they could not go far enough, because this was not the only amount in question on a cash-and-cash.

As recommended by the internal auditors, they had drafted terms of reference and had tested the market. The only dilemma the Department had was that when the AG was not able to conduct a physical verification of assets, they could easily get audit forms in the overseas countries and get them to do that immediately for them. The Department did not have that privilege, because they had to do competitive bidding. They had spent more months trying to obtain a service that could assist them, rather than dealing with the matter at hand. This matter of R188 million, as reflected, was a transaction to the Department. Until the investigation proved whether it was a real amount or real money itself, they would not be able to confirm it themselves. They had attempted to test the supply chain market to obtain a company that could assist them to do the investigation. He confirmed that the Department was going to work very hard to ensure that the investigation was done by the deadline of February to give themselves time before the end of the financial year to address this finding. He knew of other auditors, when they had a situation like this, would request extensions and would not deal with the matter so that they could have a good audit outcome.

He responded to the question on the R245 million of unauthorised expenditure, and how it had arisen. He explained in his opening remarks that it accounted for the compensation of employees, which the Department had overspent in programme 2 and programme 3. These were the two programmes which were in missions, and as a result the wage was far below the existing human resource establishment. The Department was in a very precarious situation, in which they wished they had employees only in South Africa, as then they could do something about it. They had submitted proposals and recommendations to Cabinet to consider closing some of the missions. There were processes that needed to be followed when missions were closed, so it would not immediately become easier to deal with the situation after that. It would depend heavily on how they engaged with those countries. The financial realities dictated that this had to be followed up on.

On the matter of who was responsible to produce statements, it was the finance branch. The ultimate responsibility was with the accounting officer, but it was a delegated matter. The AG would find certain errors, but at the time of preparation they thought it was right, and in their own assessment in hindsight they would find those misstatements. The majority of them had been dramatically reduced. Their aim was to get a clean audit, but they had just missed it by obtaining an unqualified audit. They had delivered when the Committee demanded accountability on asset management, and he expressed his belief that other things would also be done during their tenure.

There was no contradiction between what he had said, what the CFO had presented and what the AG had said about unoccupied properties abroad. When the Department rented a property for the incumbent of the head of a mission as a resident for four years, the assumption was that immediately after that one finished, the other one who had been nominated would come in and occupy that property. Due to the market conditions in different jurisdictions in other countries, to go back and look for properties may be too cumbersome and frustrating, and they ended up spending more money than when renting. Sometimes missions felt that it was easier to keep the property at that time and for someone to take over. There were also factors that were beyond the Department’s control, such as delays in receiving agreements, the processing of credential letters or security clearances, which meant that there could be a house that remained unoccupied in the hope that it would be occupied. It was a situation that was really a problem.

This was not the only source of fruitless expenditure. Ticket cancellations also fell under fruitless expenditure. It should be recalled that during the year under review, especially towards the end, there was not much travel like in the previous years, which was why it looked like being a fruitless expenditure trend. The Department was working on options and modalities of avoiding situations such as this without compromising the possibility of acquiring the properties. Perhaps locally it would be easier to find a place, because local systems were known to them here, but there were various issues just to procure a rental abroad.

He addressed the Chairperson’s questions on what the ARF was doing that the Department could not do itself. The ARF was a public entity as per schedule 38, which was an accounting system. The ARF’s operations were manageable because they were not as diverse as the Department’s. The projects were straight forward. Equally, the team that prepared the financial statements was supported by the CFO, and the Department was working with them to ensure that those matters were addressed. The circumstances may not necessarily be the same.

He responded to the question on performance reporting. Performance reporting was non-financial by nature, which meant its dynamics would be different, but there were mechanisms that the Department used to ensure that the audit was unqualified. It was an area of audit that the Department had managed to master since its inception. When the AG had introduced the audit of performance, the Department had had discussions and workshops with the AG, and they had been able to craft their performance targets and indicators, and were able to understand how they should be reported. Since its inception three years ago, the Department managed it because they were able to fully grasp it from the beginning.

He addressed the matter of consequence management. In his opening remarks, he indicated that there were three issues to be dealt with from last year’s annual report. Two of the issues that had qualified the Department had been assets, and cash and cash equivalents. The third issue was the handling of irregular expenditure with the implementation of consequence management. The Department felt that by the end of the financial year, when the audit cycle commenced, they would have done justice to all three areas at the same time. Circumstances had dictated otherwise. Previously, the corporate management branch did not have an acting Deputy Director General, and they had had to use one of the senior managers in the Department to support the labour relations branch, and other units in human relations to assist them with the reports that were assessed as part of the framework from National Treasury. The work had been performed by members of committees -- it had not been individuals, but many people. Some of the irregularities could have been coming from the office of the DG itself. They were able to identify which cases did not warrant a full enquiry because of the nature of what was presented, and had isolated them, and indicated those that would require a disciplinary enquiry. They hoped they would then have a multiple panel system. As at this reporting period, they have not made progress, but they had not stopped. He said one of the referred cases had been given to the DG because it had been identified to be looked at. They had done so and looked at the facts. There were two tests, procedural fairness and substantive fairness. These were the kind of elements that they dealt with.

He addressed the question of diplomats returning with co-morbidities. He confirmed that they did have such cases, and DIRCO had sought advice from the Department of Health, which had consulted with the ministerial advisory council and given them advice on how they could go about it. These diplomats were coming from countries where there had been a second wave, and South Africa was not in the second wave yet. International travel had been opened, and the Department’s assertion was that they should be allowed to travel back home because they had scientific advice that it would not be risky for them to travel.

He addressed the vulnerabilities in the Department’s ICT systems briefly. When the Department did the new annual performance plan (APP), they had included a digital strategy implementation plan through the ministerial task team. They had lined up all the relevant activities that should be followed, and were hopeful that as it was processed, it would be undertaken. Currently, they had entered into several agreements with various service providers to deal with the security aspects. There were two companies that were leasing computers to the Department. That had ended. Unfortunately, in the period under review, they had been terminated and there would no longer be any threats because they were no longer there. The irregular tenders that were awarded had been terminated. They had awarded the contract to a new service provider instead. They still had one agreement that they had not terminated yet. They had to deal with this in a different way because the requirement for condonation was that there must have been an investigation, and someone had to be held liable and must have had disciplinary action taken against them. All of that needed to be produced as evidence to National Treasury for condonation. They were struggling with terminating the agreement because it was a service that needed to be continuous.

On the question of the missions abroad that were not assisting people, he committed to investigating the matter further. In some countries where there were lockdowns, it was difficult to determine whether their own people were not helpful, or whether there were circumstances beyond their control. In the cases where frustrated people called the head office, they did resolve the matters.

He addressed the question of why the risk committee was a sub-committee of the audit committee. There was a public sector risk management framework guiding the Department, and it encouraged a free flow of information between these two governance committees. One flowed into the other, which was why the deputy chairperson had been placed as the acting chairperson for that duration, because the term had expired and the policy stated that the chairperson of the risk management committee should be external, and therefore they had been bound to get one of the members to assist them to oversee the committee. The risk management framework did indicate that a symbiotic relationship was needed while still maintaining separation so that the one did not overshadow the other.

He addressed the question on why the Department had submitted misstatements that had had to be corrected. In the process of auditing, they hoped that the correct thing was done. The AG was an external assurance provider who called to attention what was not correct and advised them to correct it. As the Department attempted to improve, they would ensure that they eliminated most of the errors.

Mr Clayson Monyela, DIRCO Spokesperson, said that the genesis of Ubuntu radio was that when he joined the Department, they were given a mandate and it became clear that the diplomacy mandate, both domestic and global, was how to reach the international audience on a daily basis while not utilising a lot of money because the budget was not sufficient. The issue was that they did not have the budget that was required to have a presence globally, and to try and influence people as they communicated South Africa’s foreign policy, its postures, objectives and milestones. When he joined the Department, DIRCO already had an existing, fully fledged, fully furnished radio studio that was not being utilised. They could then utilise this existing facility and structure and execute this global mandate. Online broadcasting was a real option to them. It was very cheap. When the radio station was introduced, they were spending roughly R4 000 a month on audio streaming costs, which was cost effective, and there was a lot of value being derived from just spending R4 000 a month. With the passage of time, that monthly cost had escalated to R7 000, and given the value that they derived from it, it was worth spending the R7 000.

Another factor was that they did not have to hire a big team or extra people to form a separate unit. DIRCO employees who were part of the diplomacy branch had the skills -- some of them had a background of working in radio and were able to undertake the task at no extra cost. They had people who were willing to become volunteers for the station. They had decided that they had a formula that would deliver the desired result, not just for the Department, but for the entire government because they could also make the platform available for other departments that had content that was relevant for their audience. It was a platform that could be used by the entire government to assist in communicating information that the government wanted to disseminate to the public.

There was a question as to how much the Department spent on programming and staff. The station was staffed and manned by DIRCO employees. There was no extra cost for programming or staff. That was another saving that would not be found at any other radio station. It was a formula unique to Ubuntu Radio, and that was why the Department had gone for the option -- because it was very cost effective. On the question of the value of the radio station, the Department would submit a report that unpacked the listenership figures for Ubuntu Radio, because it demonstrated the value that South Africa, the Department and the government was deriving from the minimal investment that had been put into setting up the station. The Committee would see from the numbers they would send to them, that there were listeners in almost all the regions of the world, and small countries that they would not consider as having an interest in what was going on in South Africa.

There were very few South Africans who could tell them what the foreign ministry in Canada, Russia, India or Kenya had communicated to them. If one visited their website, there were statements, some of which may have been from press conferences, but that message reached a limited audience. The advantage of having a platform like this, where it was unmediated, was that there was no asking programmers of another station or producers to give them a slot -- it was available 24/7, it covered all the major events of the Department and the country, and it was broadcast live.

They also used podcasts. If South Africa was awake while other countries were sleeping, they could wake up the next day, go on to the website or their social media platforms, click on the link to the podcasts and listen to content they had put out a week ago, or even yesterday. They saw value in that because people were exposed to content reflecting the work that the Department’s diplomats were doing around the world. They believed there was value that was being derived from this platform, firstly because it was cost effective and secondly, it gave them access 24/7 to influence the international audience, because that was what they sought to do.

Mr Mxolisi Nkosi, Chief Operations Officer: DIRCO, responded to the question regarding the Africa Standby Force. He reported that progress had been made in getting the ASF ready. The inauguration of the first AFS continental logistics base was held in Douala in Cameroon. The base was said to boost the AU’s capacity to provide logistical support to peace supporting operations. The AU special technical committee on defence, safety and security had declared the ASF fully operational following the Amani Africa II field training exercises that South Africa had been honoured to host. The AU had also carried out command post training exercises to boost the military policies and civilian components of the multidimensional AFS. In 2007, the AU heads of states, as well as the Peace and Security Council, had mandated a team to verify the readiness of the various regions in terms of the operational issues in order to identify gaps and challenges and to provide recommendations in this regard. The assessment following this very intensive and rigorous process was that significant progress had been made, particularly in West Qatar, in the SADC region and in the east African community, in establishing their regional standby forces. Progress must still be made in central and north Africa. They were lagging largely because they had been afflicted by conflict, particularly in the Central African Republic, the Sahel conflict, and in Libya. A further assessment would be made at the forthcoming extraordinary summit of the AU on “The Silence of the Guns” on 6 December.

He responded to the question of the AU Peace and Security Council, and how it dealt with matters of terrorism. For this term, South Africa was not a member of the AUPSC. Lesotho, from the SADC region, holds membership of the Security Council on behalf of Southern Africa, and thus South Africa did not participate in the deliberations, or in the activities of the AUPSC. This committee’s participation was based on the principle of geographic spread, to ensure that there was reach and balance and that there was rotation amongst members. AU instruments on terrorism, starting with the protocol relating to the establishment of the Peace and Security Council, as well as the Convention on the Prevention and Combating of Terrorism, provided a continental framework.

These instruments reaffirmed that terrorism in all its forms and manifestations constituted one of the most serious threats to international peace and security. Indeed, any acts of terrorism were criminal and unjustifiable, regardless of their motivation, wherever and whenever they were committed.

Last month, the PSC of the AU met and adopted the communiqué on the impact of foreign terrorist fighters on peace and security in Africa. The PSC expressed its deep concern about the growing threat of terrorism to peace and security in Africa. This was observed in the northern Mozambique regions. This posed a major threat. It increased radicalisation and created conditions for violent extremism, as well as creating conditions for the influx of foreign terrorist fighters, which was undermining AU efforts to end violent conflicts and to achieve sustainable peace and development on the continent. In this regard, the PSC had decided to dedicate an annual session to assess progress in the continental efforts in combating the scale of terrorism, radicalisation, violence and extremism, as well as to end the influx by foreign fighters, who were coming from Syria, Yemen and other parts of the world into Africa.

Linked to this, he responded to the question on what DIRCO were doing about protecting the rights of people on the continent. They continued to utilise all forums. They were seized with the question of the promotion of democracy and good governance on the continent. They took advantage of all forums to advance the promotion of transformative leadership and the promotion of the implementation of the AU Declaration on Democracy, Good Governance and Elections. At the UNGA 75 session in September, the President had reiterated Africa’s position on the reform of the UN, which called for a minimum of two seats in the permanent category to be given to Africa, and further calls for Africa to occupy five seats in the non-permanent category, with the right of veto. Africa was represented by the Committee of Ten in the negotiations that were called the intergovernmental negotiations (IGN), in New York. Sierra Leone was the chair of this committee. The other members were Algeria, Congo, Equatorial Guinea, Kenya, Namibia, Senegal, Uganda and Zambia. Southern Africa was represented by Namibia and Zambia in this Committee of Ten.

He responded to the question on the Presidency of the Security Council. South Africa’s second and final presidency during its current term as an elected member of the Security Council would be next month, and this would also be the final month of its two-year term in the Security Council. This would be a convergence of three key elements -- the chairing of the AU, the presidency of the UNSC, and the final month of the AU’s ambition to “silence the guns” on the continent. The key focus of their presidency for December would be to use the opportunity to emphasise the importance of the implementation of the women, peace and security agenda, post reconstruction and development, the peaceful resolution of conflict, and championing the cause of children and the youth in armed conflicts.

They also hoped that they would preside over two high level sessions. It was planned that the President would preside at a summit level Security Council meeting on 4 December. They had already sent invitations to all members of the Council. So far, the responses had been positive. They hoped for a high-level of participation and engagement that would be presided over by the President. The other high-level engagement would be at a ministerial level, and would focus mainly on sustaining peace and security sector reform.

A DIRCO official responded to the question on the types of misconduct referred to in the annual report. There had been 12 cases of misconduct. The way the Department’s template was structured, it focused on fraud and theft, contraventions of the Public Finance Management Act (PFMA) and gross dishonesty. They also had six cases which were categorised as other – three cases of unauthorised absence, and two cases of insubordination, and one case of abuse of authority.

The Committee was also advised on whether the missions in the United States of America were still assisting their consulate members to assist citizens. The missions had confirmed that they were continuing, and all information was on their website, because most of their activities were done online because there was a lockdown. Otherwise, all services were continuing as expected.

Regarding the support South African gets from USAID, particularly in health, involved dealing with HIV/AIDS, and this support had been offered for over 15 years to assist at schools, sometimes also in water development projects. Every year they met with the America embassy and the related agencies to assess the work done and the progress, and appreciated the outcomes according to the plans which had been approved.

Mr Ramashau responded to the question of the Department’s lack of financial management capacity, and acknowledged that there was need for improvement and learning in terms of new ways of doing things. The challenge was that most of the transactions were carried out in the missions, and DIRCO had not been monitoring their compliance and considering how they needed to upskill the officials that were responsible for financial transactions, which at the end of the day were consolidated into to the preparation of the financial statements. When the AG received the supporting documents, they would find discrepancies which then led to the misstatements. The Department was committed to improving those areas.

Mr Mahoai referred to the reciprocal waiving of visa requirements, and said there was no reciprocity. South Africa had initiated the waiver process for international interests, but so far there had been no reciprocity from those states.

He said that during the fourth quarter reporting, the Committee had highlighted the matter of non-achievement of 100% payment of invoices within 30 days, and had directed that it needed to be investigated. They had since investigated, and the report had just been submitted. The most important finding was that the transactions involved only two service providers. Some accounts or bills may not have been processed either because the person who had to verify them had not been able to do so on time, or there was a delay in the whole process itself. This was a report that the Department would have to share once they had the overall findings, which they believed involved problems that could be overcome. He committed to submitting the audit action plan, as per the Committee’s request.

Regarding consequence management, once the processes had been undertaken, they would share the reports on the progress with the Committee.

On the request that the Department should provide a full list of all South Africans in international organisations, he agreed that they would work it out and submit it to the Committee.

He responded to the question of why the Department had not recruited and appointed accountants and finance managers with the requisite qualifications. Even if that were to happen, for the past three to four years, the Department had not been able to recruit. They had not missed an opportunity to do justice to that. They had performed an internal skills audit which the Committee had felt was deficient, but it had been done through the Public Sector Education and Training Authority (PSETA), which was dealing mostly with middle to lower levels. They were still looking at just dealing with the finance function, outside of this public service-related process. He committed to sharing the report in due course.

He gave an assurance that the Department was serious about beefing up its finance unit, and was not undermining the Committee. It was this Committee that had suggested recommendations and directed the Department to reach some of the milestones for which they wanted to give credit.

He said the CFO and accounting officer had a professional relationship. Both roles operated in accordance with the responsibilities that the regulations and the PFMA prescribe. On the matter of accredited chartered accountants, it was one of the areas that they were looking at. They were looking into how they could get qualified personnel in the future, or improve the qualifications of their own accountants. They were satisfied that they had seen some improvements in most of the things that they were supposed to be doing.

The Chairperson commented that for a minute, the Director-General sounded like a broken record because the responses that he gave in the meeting were not new responses to a number of issues which had been raised by the Committee. They did not know what the DG was protecting at the expense of the Department, and at the expense of everything else that was going wrong in the Department, where he was supposed to be the accounting officer.

Follow-up discussion

Mr Mpanza agreed with the Chairperson. He said that this response was not conclusive, and the Committee could sit in the meeting indefinitely. It may be a work in progress, but the Department must not leave the meeting with the impression that the Committee was happy with the responses that they had been given. In the interests of time, the Committee would accept what had been provided to them, but they still have a long way to go and they would be engaging in the years to come until the issues they raised were addressed to their full satisfaction.

Mr Nkosi asked for the audit action plans to be delivered to the Committee within a month. 

The Chairperson confirmed that there were audit action plans that had been made available to the AG, so they would receive those from the AG and it would not take a month. They had been requesting the audit action plans for months now.

She said she wanted the Department to put it on record that the Committee, after the presentation by the AG, had taken an official decision that they were going to refer all the millions of Rands that were unaccounted for by the Department to Parliament in writing very soon, or immediately after this meeting.

The AG’s report had been a true reflection of what was happening at DIRCO. Some of the things the AG had recommended, long before the Committee had, were the issues of consequence management, and skills capacitation in the finance branch. The accounting officer was failing the Department in South Africa and in other countries, due to his lack of decisiveness. The ball was in his court. If he wanted this Department to improve in its entirety, he had to perform the work decisively.

The meeting was adjourned. 








 

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