Department of Community Safety Audit outcomes & 2019/20 Annual Report

Meeting report

NOTE: The session between the Committee and the AGSA, at the beginning of the meeting, was closed to the public.

Discussion

Mr D America (DA) wanted to know if the risk that had been identified by the Department in relation to the safety operational plan was a result of resource constraints and due to the weakening economy, and what its impact would be on the full operationalisation of the safety plan.

Adv Yashina Pillay, Head of Department (HOD): Department of Community Safety, said that in the past the Department had its own deliverables, strategic objectives and indicators in its annual performance plans (APPs) that were linked to its constitutional mandate. However, with the launch of the safety plan by the Premier, the Department was expected to take on a different type of role that was not necessarily 100% matching with the current indicators it had set for itself. There was therefore this risk, because the Department had to deliver on the full safety plan. The Department had in the past not fully completed the transformation and modernisation process, which would have seen its structure fully aligned to the Community Safety Act and other legislative mandates it had to perform. That was why this had been identified as an emerging risk.

The objective of the safety plan was to halve the murder rate within ten years. For the Department to deliver on the plan, it had to do things differently. It had to take a repurposing and realigning process so that it was fully aligned in terms of budgeting and organisational structure in order to deliver on its mandate. It also had to reprioritise its budget to ensure it was realigned to the plan. Currently, it was being fully institutionalised into the indicators and APPs of the Department.

Ms D Baartman (DA) remarked that the audited APPs of the Liquor Authority from 2016 to 2020 were talking of new targets, while the 2021 to 2022 medium term expenditure framework (MTEF) was talking about percentages of targets to be reached. She therefore wanted to understand how the new targets were measured and what the evidence gathering was in the particular indicators in order to check the output.

Adv Laetitia Petersen, Acting CEO: Western Cape Liquor Authority, said a number of the indicators reported previously had changed considerably to the percentages of applications considered within the required time, to measure the actual performance of that indicator. That was the reason why they had been changed and indicated as new during the 2016/17/18 financial years, when these indicators were not in the form they were in currently.

Regarding evidence gathering, she said evidence provided for the 2019/20 financial year had recorded all the decisions that had been considered, captured the dates of the applications when they were enrolled, and the date when they were considered. A variety of information had been captured from the signed minutes of the Tribunal when it made decisions during its sittings. For the current financial year, the evidence in relation to the specific indicator was a system-generated report. The coming into existence of the Tribunal Management Tracking System had allowed them to provide system-generated reports as evidence for the specific indicators.

Ms D Nkondlo (ANC) wanted clarity on the matter relating to the location of the Liquor Authority, because it had not been mentioned in the annual report and it had been said it was under review. She also asked when the posts of the chief executive officer (CEO) and chairperson of the Liquor Authority were going to be filled, and if the gender profile of the Liquor Authority Board and senior management had been taken into consideration by the Authority. Lastly, she asked if the Liquor Authority Board had enough capacity in terms of audit skills, because one member of the Board had been attending nine audit committee meetings.

Mr Ronald Kingwill, Deputy Chairperson: Western Cape Liquor Authority Board, explained that the location of the Liquor Authority was referring to an initiative that was in a White Paper on Alcohol Harms, where it had been recommended that this was a legislative matter. It had been further stated it was important to have an independent liquor body, especially when looking at the challenges facing the liquor industry, but the matter was left to be decided by the Premier.

Regarding vacancies, he said most members had resigned due to work pressures. As a result, the profile of the Board had to be changed. The replacement of the two members had dragged on to the current month, and those who would be appointed would attend only one meeting because the new Board’s term commenced in mid-March, and that process would be handed over to the Standing Committee.

He had been appointed by the Minister to take the role of the acting chairperson in order to sign all the necessary documentation. They were trying to attract an appropriate candidate the CEO position, though the process was taking time. The short-listing process had taken place, and the individuals were currently being evaluated. Once all the hurdles were covered, the best candidate would be appointed soon.

Regarding the gender profile, he said every appointment was looked at carefully. There had been resignations by some male senior management team members, and they would be replaced by female candidates.

Concerning capacity within the Board, he said many audit committee meetings had been attended by him as deputy/acting chairperson. One member who had been in the audit committee had resigned. Because of the structural changes to the Board and independent external members, he (Mr Kingwill) was seen as the continuity member from the previous Board, and had to close the gap, as he had expertise accumulated from being a member of various audit committees for 15 years. That had been good value to the Board, and he assured the Committee of the independence of the audit committee while he had been an ex-officio member. The Board was now down to five members and there had been a spread of capacity and a match of skills and availability of existing Board members, and they had managed to get the job done.

Mr M Kama (ANC) said his concern was around the attendance of meetings by the Ethics and Risk Enterprise Committee members, where the accounting officer and risk management officer had attended only one meeting. He also wanted to know if the financial sustainability of the Liquor Authority, which had been identified as a risk, had been properly addressed, and if it had not impacted on the outlets in the regulated environment. Lastly, he wanted some clarity on the emerging risk of the operationalisation of the safety plan because there had been a reduction in the number of Law Enforcement Advancement Plan (LEAP) officers.

Adv Pillay responded that the Department was doing oversight on LEAP officers and managing the funding to the City of Cape Town. It had been announced that 3 000 LEAP officers would be deployed. However, due to budget constraints, the Department would be able to fund the City for the deployment of only 1 000 officers over the MTEF period, and it had provided funding for the initial 500 officers to be deployed. The Department was finalising the budget and business plans for the deployment of the additional 500 officers with the City. The Department had a clear monitoring tool, in which the City provides it with weekly updates of LEAP officers’ deployment. There was a business plan in place, where five priority areas had been identified for the deployment and roll-out of the next 500 LEAP officers to murder locations -- these areas had been identified together with the South African Police Service (SAPS), and the LEAP officers were working closely with SAPS. There was a steering committee in place that meets weekly with the deployment committee, made up of the Department’s senior management team and the City of Cape Town. The Department was establishing 11 area-based teams in 11 priority areas linked to the City’s law enforcement deployment, and a further five area-based teams would be established within the five district municipalities to cover the entire province. She assured the Committee the Department had close communication with the City, and there was constant monitoring taking place at all levels.

Ms Linde Govender, Chief Director: Management Support, Western Cape Department of Community Safety, explained that the dates for enterprise risk management meetings were set up-front for the year, but there had been unplanned occasions where members could not attend on a specific date, but there were always persons seconded to attend on their behalf. In terms of the process, there were always risk assessment sessions with the enterprise management prior to the meetings, where the relevant chief directors were part of the engagement. The meetings were minuted and reports were shared after meetings, and registers were filed electronically post meetings. This was to ensure that everyone was part of the meeting and discussions and for accountability purposes, so that everyone had knowledge of what had been discussed to ensure feedback.

Mr Simion George, Chief Director: Security Risk Management, Western Cape Department of Community Safety, referred to the financial sustainability of the Liquor Authority, and said the key aspect of the White Paper on alcohol regulation was that the cost of regulation was borne by the industry. The challenge was that the base from which the Liquor Authority had been operating was very low. This meant the fee structure was low. The increment that would be asked for would be considerable, and the counter to that was that the percentage would be high. Taking into account that all the licences were considered to be under one umbrella -- whether it was a small operator or a large profitable one -- the licence fee had been the same. The challenge had been on how to raise funds for the Liquor Authority. This was a continuing challenge. A number of representations had been made last year during Covid-19, because many businesses were affected by economic realities, and going forward the question was how one could reach a point to ensure that regulation was covered in totality by the industry. The argument, of course, was that this would be revisited in the legislative programme. The Minister would be able to consider the models in order to draw distinctions between various licence categories in terms of outlet size, to determine fee payments and to ensure regulation in terms of enforcement of liquor licences and the regulation of outlets. The income generated would carry the operations of the Western Cape Liquor Authority.

Ms P Bans (ANC) asked for an update on the broad-based black economic empowerment (BBBEE) risk report identified by the Auditor General; (AG), and also on the progress report of 1 January 2020 regarding the implementation of the BBBEE.

Mr Moegamat Frizlar, Chief Financial Officer (CFO): Western Cape Department of Community Safety, responded that this was a transversal funding that had been raised by the AG regarding the BBBEE certificates in regard to procurement expenditure, but in terms of a request from the Standing Committee on Public Accounts (SCOPA), the report would have been submitted to the Committee as it was. The issue had been included in the annual report of the Department, in compliance with the Act.

Mr America wanted to know if the Liquor Authority’s fraud and corruption policy was different from that of the Department. He also wanted to understand if the lease for the building expiring on 30 March 2020 had been renewed with the lessor, and if the terms and conditions were the same. He also asked if unallocated deposits had been identified, and what had happened to them, because some depositors might not provide the necessary reference.

Mr Kingwill said the fraud and corruption policy was based on the Western Cape government’s policy, and was approved by the Board of the Western Cape Liquor Authority. There were no changes in the fundamental principles.

Adv Petersen explained that opinions for the Western Cape Liquor Authority had been received from the provincial treasury and provincial legal services for the conclusion of the new lease. A first addendum to the original lease -- for the conclusion of the new lease – had been concluded for the extension of the lease with the current landlord from 1 April to 30 November 2020, and there was a clause in the lease agreement which made provision for the escalation rate. Due to the supply chain management (SCM) process that was in its final stages, the process for the new lease was being finalised, starting from 1 December 2020 to 31 March 2021.

Mr Sandiso Gcwabe, CFO: Western Cape Liquor Authority, informed the Committee that the unallocated deposits amounted to R1.3 million. If none of the depositors came to the Authority to account for their money and three years lapsed without a follow-up on that amount, it would lapse in terms of the Prescription Act, which gave depositors no claim on the amount. The amount would be recognised as revenue once the prescription period lapsed. Many of the unallocated deposits were related to applications that prospective licence holders tended to lodge with the Authority when they paid the amount up front, and at the time they did not know which reference to use, but upon the lodgment of the application and the person came with proof of payment, then the authority was able to allocate it. However, if that did not occur within the prescription period or it lapsed, then that amount or allocation became revenue for the authority.

Mr Kama wanted to establish at what point the R130 million allocated for 2019/20 had been adjusted, because it had been earmarked for law enforcement with the City. He wanted clarity regarding debts written off on salary over-payments, and asked for clarity on contingent liabilities, because there were no legal cases as of March 2020.

Adv Pillay explained that the Premier had made an announcement of 3 000 LEAP officers, but due to fiscal constraints as well as affordability, the Department had been able to allocate funding to the City amounting to only R130m for the 1 000 officers. That was the initial allocation, progressively over the MTEF period, for the Department to continue and sustain the deployment of the 1 000 officers.

Mr Frizlar said the salary over-payments related to a level 5 employee who had left the Department at the end of the financial year and had failed to alert the Department about the reasons for leaving. The employee had been paid, and the Department had to recover the money from the individual as a debt. Salary over-payments were sometimes a leave over-payment, and this would get picked up afterwards -- that the person had already taken his allocated leave for the period and the Department would reclaim that leave as leave without pay. These were salary over-payment cases that did happen.

With regard to legal cases, he said there had been 11 cases as at end of March 2020.These had been referred to as a contingent liability, because until a person’s application in terms of the process was approved, they could not recognise the expenditure or any action that related to it at the time. These were the cases under review, and the Department recognised them as a possible liability contingent on the outcome of the applications.

Ms Bans asked for details on the two political office bearers mentioned in the annual report. She wanted to know the number of vehicles received and those that were disposed, and the reasons for this. Were the vehicles were given back to the Department of Transport, or were they bought during the year under review?

Mr Frizlar explained that the two political bearers were key management personnel. The former Member of the Executive Council (MEC), Mr Dan Plato, had left the Department and been replaced by Mr Alan Winde. The vehicles had been procured through a transversal contract for Amorok vehicles donated to various districts and local municipalities and the City, in support of establishing K9 units in those identified areas.

Ms Nkondlo wanted to understand why there had been a steep increase in irregular expenditure, because a big portion had to do with investigations and contraventions around personal protective equipment (PPE).

Mr Frizlar explained that this had happened during lockdown level 5, in the latter half of March 2020. The Department had had to procure PPE for frontline staff at Tygerberg Hospital and other hotspot areas. Regulations from National Treasury were not clear, so the Department had gone out to find items and the AG had found the prices were inflated. That had followed a process of condonation by the Head of Department (HOD).

Resolutions

The Committee resolved to request further information from the Department regarding the R130m allocated for the recruitment of LEAP officers, and that the Committee had to get an update from the Liquor Authority concerning the Board and senior management equity issues.

The meeting was adjourned.