In this virtual meeting, the Committee was briefed on the Ease of Doing Business Bill, the Socio-Economic Impact Assessment System (SEIAS) by the Department of Planning, Monitoring and Evaluation (DPME), and on financial misconduct in the public service for the 2019/20 financial year by the Public Service Commission (PSC).
The Private Member's Bill sought to ensure that businesses could overcome the binding and systemic constraints of government on businesses, to ensure they could operate in a business-friendly environment, to level the playing field for all businesses, to close the gap between different sizes of businesses, and to cut red tape for businesses when interacting with government. It also sought to address service delivery, registration of property, financing, trading across borders, markets, enforcement of contracts, and the administrative cost to comply with regulatory burdens and procedures. It proposed the establishment of an administrative unit to assist government and regulatory bodies to achieve these objectives. The principles of the Bill were globally agreed on, and their implementation would be a stimulus for the small business sector, which was the engine room of South Africa’s economy.
Members wanted clarity on whether the Bill would affect the mandates of other departments, and also suggested that it was vague in addressing the costs associated with its proposals. The Committee agreed it would allow Members to take this Bill and the DPME’s additions to their various political parties so that they could receive a proper mandate, as it was not something that could simply be agreed on and for a decision to be taken, without taking it through the proper channels. It requested responses to its questions in writing.
The PSC reported that of the 159 national and provincial departments, 155 had submitted financial misconduct reports, the exceptions being the State Security Agency (SSA) and three North West province departments. Of the 155 departments, 61 had reported a total of 530 completed disciplinary proceedings for the 2019/20 financial year. R517 million was involved in the completed disciplinary cases of misconduct, of which R51 million involved national departments, and R466 million provincial departments. The Department of Education in the Eastern Cape had accounted for R404 million of this amount.
A total of R6.6 billion had been incurred in unauthorised expenditure, R127 billion in irregular expenditure, and R2.7 billion in fruitless and wasteful expenditure. In 3 595 cases of irregular expenditure, no disciplinary action had been instituted in 3 206 of the cases, and it was mostly senior management service (SMS) members who were implicated. The PSC said there was a serious concern that irregular, fruitless and wasteful expenditure was increasing, yet there were no consequences, and employees were cleared of charges.
Members questioned the consequence management process, as employees could continue committing wrongdoings within a department, and the very same department would investigate them. They asked when law enforcement agencies would be involved, as employees were not fired for committing offences. They argued it was clear that some people were more equal than others, because SMS members received minimum sanctions compared to lower level employees.
The Committee raised concern that the amounts involved in irregular and fruitless expenditure involved billions of rands, yet many citizens did not have roads and housing while the implicated employees played with taxpayers’ money. The manner in which departments dealt with these matters was concerning, because as long as they continued with this non-compliant attitude, the Committee would continue to receive similar bad reports in the future.
The Committee proposed inviting the Special Investigating Unit (SIU), the Hawks, and the South African Police Service (SAPS) to inform it on the cases of maladministration and why those cases did not make it to court, because it was evident that something very wrong was taking place.
The PSC responded that the Committee’s proposal to invite the law enforcement entities to engage was very important. It would start interacting with the SAPS, the SIU and Hawks to bring these specific matters it to their attention, and check whether they formed part of the investigations they were involved with.
The PSC said the Portfolio Committee should view it as an ally to deal with the performance of departments, in the same way that the Auditor-General (AG) viewed the Standing Committee on Public Accounts (SCOPA), as this could strengthen its role as a Commission to hold departments accountable.
Welcome and apologies
The Chairperson welcomed all Members and officials to the virtual meeting. He checked with the Secretariat whether there were any apologies.
The Secretariat said there were no apologies from Members. He noted one apology from Ms Khumbudzo Ntshavheni, Acting Minister in the Presidency: Planning, Monitoring and Evaluation, and one from Adv Richard Sizani, Chairperson: Public Service Commission (PSC).
The Chairperson noted the two apologies and commenced the meeting.
On 26 February 2021, the Speaker introduced and referred, through the Announcements, Tablings and Committees (ATC), a Private Members’ Bill -- the Ease of Doing Business Bill -- to the Committee. It would be introduced in this meeting by Mr Hendrik Krüger (DA), Shadow Deputy Minister of Small Business Development. The Committee would make a determination on the desirability of the Bill at a later stage. After it had received and read the Bill, the Committee would extend an invitation to the Office of the Presidency, since it was comprised of the Socio-Economic Impact Assessment System branch, to provide an input on the Bill, and guidance where necessary.
The Public Service Commission (PSC) would present an overview report on the financial misconduct in the public service for the 2019/20 financial year.
Ms M Kibi (ANC) noted Ms R Lesoma (ANC) would be late for the meeting.
The Chairperson noted the apology and asked for any other apologies.
Ms Thembi Siweya, Deputy Minister (DM) in the Presidency for Planning, Monitoring and Evaluation, said Acting Minister Ntshavheni indicated she would join the meeting late, as she was on a flight.
The Chairperson noted the DM’s addition.
Dr L Schreiber (DA) raised a procedural matter on the agenda which indicated that the Committee would deal with the motion of desirability for the Bill straight after the presentation. He questioned whether procedurally this was something that first needed to go to the caucuses of the various parties once the Committee received this presentation, so that it could get a mandate on whether it wanted to proceed with this motion. He requested the Chairperson to consider postponing that decision to the next meeting so that Members could get an opportunity to ventilate these issues and take it to their respective caucuses. It would not take a long time out of the Committee’s next meeting, but this was to cover it in terms of procedure.
The Chairperson thanked Dr Schreiber. He confirmed the Committee was going to do exactly what Dr Schreiber requested. He clarified the Committee was not going to delve into that item on the motion of desirability as it was going to suggest the motion Dr Schreiber proposed.
Dr Schreiber said he supported this.
The Chairperson invited Mr Krüger to commence the presentation.
Ease of Doing Business Bill
Mr Krüger thanked the Chairperson for the opportunity to table the Bill before the Committee. He explained the Bill was to address the triple challenges facing South Africa. Successful small business development and the creation of a business-friendly environment were key to addressing inequality, poverty and unemployment. Members should understand that to start and run a successful business in South Africa was very difficult, as the country ranked very low on the Ease of Doing Business world index. He said there were many debates on this index, but this was not the debate today. The Bill was not only about reducing red tape, but also to give the government an opportunity to create a business-friendly environment. The Bill also sought to address service delivery, registration of property, financing, trading across borders, markets, enforcement of contracts, and the administrative cost to comply with regulatory burdens and procedures. He supported change, and referred to two images of himself in 2016 and 2020, which showed change was possible in his weight loss journey. He said change was possible, as he had experienced it for himself.
Purpose of the Bill
When he designed this Bill, he was focused only on small, medium and micro enterprises (SMMEs) in the challenging journey to try to make sense of the environment it found itself in. This was why he first thought of the purpose, before putting this Bill together. He referred to it as the “why-factor” -- he had questioned why he wanted to introduce a Private Member’s Bill of this nature. He said it was important for him to ensure this Bill received political buy-in, as it was not about any political points. The Bill was about small businesses and transforming the environment in which it had to do business.
The main focus when this Bill was put together was to ensure businesses could overcome the binding and systemic constraints of government on businesses, to ensure businesses operated in a business-friendly environment, and to level the playing field for all businesses. There was still a massive gap between big business, small business, informal business, township business, rural business, and the local woman on the street -- for example, selling apples. He emphasised that this must be fixed and that this Bill would attempt to address that. The focus was also to cut the red tape for businesses when interacting with government.
Mr Krüger said the principles of this Bill were globally agreed on, and that the implementation of this Bill would take small businesses, which formed the engine room of this economy, forward.
The debate on red tape and ease of doing business existed since 1994. He explained the introduction to the Bill, as outlined on slide 3, and said his dissertation concluded that red tape disabled the environment in which SMMEs had to operate.
He had looked at the best practices in the world and concluded that for the Bill to work, it required all the points listed on slide 4. A service-delivery mindset was very important, as it was one of the big issues, besides red tape, that hindered small businesses. It also required the use of the Fourth Industrial Revolution (4IR), and the principles of this revolution, to measure the importance of the Bill.
He referred to a page in the Bill that referred to calculating the cost of red tape. The model used -- the standard cost model -- was a very straight-forward calculation to work out the cost of red tape. This was why he had included the quote in slide 5, “if you can’t measure it, you can’t manage it.”
Contents of the Bill
Mr Krüger explained the objects of the Bill, and said there was a difference between red tape and a business-friendly environment, where red tape was part of a business-friendly environment.
He outlined the contents in each chapter as indicated on slide 7. Chapter 2 addressed the establishment of an administrative unit to manage the entire regulatory impact assessment process, as the process was an important part of this Bill.
Chapter 3 provided for the evaluation of new regulatory measures, and clause 9 provided for a mapping exercise. If Members were interested in knowing more about the mapping process, he was willing to discuss it, as mapping a regulatory measure was quite an interesting process -- how and when to test if there were any burdens for anyone.
Chapters 11 and 12 had the same mapping exercise, but prepared for self-regulatory bodies because sometimes, especially in South Africa, those bodies also manufactured red tape and businesses were at times head-on with self-regulatory bodies due to the red tape that hindered them from taking the process forward.
He clarified that the actual Bill was about four or five pages long, and it was easy to read.
Consultations were held widely when the Bill was in its development stage. He referred to pages 30-32, where literature on everything in connection with this Bill had been studied. A lot of research had been done, and Members could read through the references if they were as passionate about business as he was.
Proposed way forward and conclusion
Mr Krüger said the Portfolio Committee on Small Business Development should be consulted with. He proposed it should be invited to this Committee to get its inputs on the Bill and on the Department of Small Business Development (DSBD). He also proposed that business chambers should be invited to the Committee to get their input and to discuss the Bill. He emphasised the importance of the Bill for the survival of small businesses, and for ensuring it was to their benefit.
He said that regulatory burdens were not simply about procedures, as service delivery was also part of it, and service delivery was governed by legislation. If service did not take place, it would become a regulatory burden.
He reiterated that small businesses were the engine room of the economy, and that change was a reality. The business community needed change now, and the Ease of Doing Business Bill was the change.
The Chairperson thanked Mr Krüger and invited the Presidency to make an input and provide guidance where necessary.
DPME on Socio-Economic Impact Assessment System
Ms Pulane Kole, Head: SEIAS, Department of Performance Monitoring and Evaluation (DPME), thanked the Committee for the invitation, and Mr Krüger for the presentation. She was joined by her colleagues, Ms Gaynore MacMaster and Mr Ntokozo Mbatha, who were part of the SEIAS Unit in the Presidency.
Ms Kole took the Committee through the presentation outline, and said the SEIAS was an ex-ante policy analysis tool aimed at strengthening policies and laws. It was thought provoking, interactive, independent, and multi-dimensional as it did not focus on one aspect of socio-economic sectors, but rather looked at how a particular policy, proposal, or legislation would address the challenges vulnerable groups faced. She referred to the triple challenge of poverty, unemployment and economic growth, as well as inequality including the spatial rural/urban dynamics, capacity, skills, and ethical issues. She explained SEIAS was not applied after developing a bill, as SEIAS would have to be applied at the early stages of identifying a specific problem.
The SEIAS Unit, unlike what was proposed in the Bill, did not do impact assessments on behalf of departments. The departments imitated the process, because they were the custodians of the laws they developed and they had a better understanding, but the Unit provided analysis and ensured there was no subjectivity in terms of decisions that were made.
Ms Kole provided examples of the evolution of the Regulatory Impact Assessment (RIA) on slide 4.
The SEIAS had been introduced in 2014 when the Unit was established within the DPME. There was approval that all policies, bills and regulations had to be subjected to the SEIAS, with an official implementation date of 1 October 2015. The SEIAS had been institutionalised in departments with over 608 policy proposals that had gone through it. Ministers, even when doing regulations which did not go to Cabinet, were taking the lead to ensure the SEIAS was applied when doing regulations. Ministers had indicated they would not publish regulations without the SEIAS, and they would not approve those them without it being done. Cabinet had collectively agreed that it would implement the SEIAS.
When the Department reviewed the SEIAS template, the Cabinet had also approved the changes that were effected in it, as well as the manual, and had collectively implemented the SEIAS.
Ms Kole it was not about dealing only with regulatory measures or primary and secondary legislation, but the President, with his Cabinet, was in the forefront of addressing some of the impediments that affected businesses. For example, in the 2019 State of the Nation Address (SONA), he had indicated that policy impediments must be removed, and the ease of doing business must be improved. Some of his work was to assent to the Electronic Deeds Registration Bill becoming law so that it could improve some of the indicators of the ease of doing business. The President was at the forefront of ensuring, for example, the reduction in the turnaround time of the issuing of water use licences and improving visa regulations. With the new Operation Vulindlela, led by National Treasury and the Presidency’s Office, it was leading on some of the structural economic reforms, such as in the water, energy, transport, visas and telecommunication sectors.
Broadly, these issues would benefit business and the broader society. The focus was not only on these elements, but also on the revitalisation of the rural and township economy, facilitating investment and infrastructure to support economic growth. Those were the strategic and impactful, priorities that the government was working on.
Key SEIAS issues
The focus was on broader issues, not only on business, because the DPME understood the interrelationship between businesses, households, and forms of government. A conducive environment for businesses therefore required households to have income so that they could purchase from businesses, otherwise they would not be sustainable. All other aspects of society needed to be looked at, not only business, and if they created a favourable environment for businesses, it would create jobs and contribute to taxes in the country.
Some of the key issues were to focus on broader issues and to assess whether it was necessary to regulate or not through the SEIAS process. The Department supported the view that credible evidence should be used for research and the analysis of alternatives to address socio-economic challenges.
Consultations with various stakeholders were of great importance. For example, in terms of the SEIAS templates, the Department assessed estimated costs and benefits, but it also provided opportunities to external stakeholders to indicate how a particular piece of legislation would affect its work as as business or a stakeholder, and what the potential risks were that came with a particular law. If departments did not accept the comments, the DPME would questioned their position as a department in addressing the concerns that had been raised by the public.
Ms Kole said Bills had to be narrated in the form of a policy where all the challenges and all the policy principles were outlined. As a public policy was written, it would indicate what areas needed to be regulated, otherwise the policy would not be enforceable. It should be supported by resources, and it should look into issues of budget prioritisation and opportunities for innovation, because the government was financially constrained.
The DPME believed in continuous improvement and in capacitating departments.
One of the challenges facing some of the policy practitioners was the quantification of the policies and laws. The Department made arrangements with some members of the academia to assist with various models of quantification, and also to look beyond a term of office at the implications of the policies.
The Department was initiating a process with the Department of Justice and Constitutional Development (DJCD), which had been approved by Cabinet. It to look at obsolete legislation and initiate a process of repeal or review it so that it could be regarded as deregulation, especially on that related to businesses. It was also currently working with the DPME and other departments to reduce the turnaround time to finalise bills so that it could have a shorter turnaround time without compromising the contents and the quality of its policies.
Comments on Ease of Doing Business Bill
Ms Kole thanked Mr Krüger and the team for putting together the Bill.
On the institutional arrangements, the Bill encroached on the mandates of other departments, such as the DSBD and the Department of Trade, Industry and Competition (DTIC), as it made the Minister in the Presidency responsible for these areas. The other issues were around the separation of powers between Parliament and the Executive. For example, if Members of Parliament (MPs) and Committees were submitting Private Member’s Bills to the RIA Unit, it raised questions around what would happen if there were different views on the findings around the regulator impact statements, and what the implications were if the Members did not follow the RIA process, as required by this Bill. It also needed to assess a holistic approach to red tape. This did not happen only at the national level, as other functions, according to the schedules of the Constitution, involved provinces and municipalities, such as the issuing of licences. One could therefore not address it only at the national level -- there were the holistic implications of addressing red tape in the provinces and municipalities through their various by-laws and other processes.
In terms of functions, the Bill took away the current responsibilities of impact assessment from departments and it expected the RIA to undertake the regulatory impact statements. Ms Kole said the Department received a large number of bills from ministries, and she questioned how the RIA could do the statements for all the bills that were coming through. Evaluations should be strategic on how red tape reduction contributed to businesses, as opposed to the reduction of red tape in terms of a percentage. It should be mapped into a bigger picture to indicate, for example, that after red tape was reduced by 25%, businesses were sustainable, and could show that those businesses created additional jobs and contributed to the economic growth.
The Chairperson referred to the suggestion that had been earlier that the parties represented in the Committee should take this input by Mr Krüger, and the additions by the DPME in the Presidency, back to their principals for guidance from its principals. He asked Members if they were in agreement with this suggestion.
Members called out their support.
Mr Krüger asked if he could make a comment on the Department’s presentation.
The Chairperson agreed he could do this after Members had raised their questions.
Ms M Ntuli (ANC) welcomed the presentations. She said the Committee was very pleased to acknowledge people such as Mr Krüger, who was concerned about the entire community. It was clear the government was at work, and the Committee therefore welcomed the presentation. After the presentation on the Bill, she agreed Members should go back to their principals and their caucuses to look at it more closely and discuss it at a later stage.
Ms R Lesoma (ANC) agreed with Ms Ntuli, and welcomed and appreciated the work and the time on the Bill. She had questions for Mr Krüger, and it would be his decision to either respond during this meeting or in writing so that he could be explicit in his responses.
On examination of the Bill, she had noticed it suggested a stand-alone approach. Did this suggest that there should be a fully-fledged department -- investing and redirecting money to establish a new department -- or retaining the existing one as per the presentation by the Presidency’s Office?
She said some Members felt that the Public Service Wage Bill needed to be managed. With this proposed Bill, what would be its implications on that notion?
Would the Bill encroach on the mandate of other departments such as Treasury, the DSBD, as well as the Economic Department, in view of the international treaties that had been signed as a country. She questioned whether the Department should be mindful of this.
The Bill seemed to be haphazard, as it did not cover the multi-disciplinary responsibility that the Bill sought to address. She asked how this would be managed.
On the object of the Bill, she said it mentioned the SEIAS did not sufficiently address the cost of red tape. However, after the DMPE’s presentation, her question on this had been covered.
She commented that Mr Krüger would not have introduced this Bill if thorough research had not been done. She assumed there had been a fully fledged public consultation process. She asked Mr Krüger to share the comments with the Committee of the people who had been consulted through his own research process.
She said Members would apply their minds to the Bill and engage as the Committee in the next meeting so that they did not cloud the process.
Ms M Kibi (ANC) said some of her questions had been covered by Ms Lesoma. She supported Dr Schreiber’s proposal for Members to consult with their principals.
She sought clarity on section 4 of this Bill. It mentioned the Minister responsible, but the definition did not prescribe which ministry would be responsible for the implementation of the Act. The Bill further proposed the establishment, as Ms Lesoma raised, of a regulatory impact assessment unit. Would this not be a duplication of roles and responsibilities with what the Presidency’s Office was currently doing? If the Bill proposed establishing a unit, would this not contribute towards the unresolved crisis of the Wage Bill that the government was currently grappling with?
She supported Ms Lesoma’s proposal for written responses, and extended her appreciation for both presentations.
Ms R Komane (EFF) welcomed the presentations. She concurred with Dr Schreiber’s proposal.
In line with the Bill, together with the principles, she asked what had informed the developments of this Bill.
Considering the reduction of many bills, she asked if Mr Kruger thought more effort needed to be put into the capabilities and capacity of the State, for it to be able to deliver on its policies and programmes. In her view, this appeared to be a duplication, because there were almost the same roles and expectations depicted in this Bill as in the Office of the Presidency. She asked if this could be looked into to see where there were any duplications, so that it could be well positioned. However, the response to her question on what informed the Bill would assist her to understand and to make a clear distinction.
Mr J McGluwa (DA) thanked both entities for the presentation. He suggested Members should apply their minds to both of these Bills, because in his view, it was not business as usual. This proposal came at a time when there were currently around 10 million people unemployed, and two million jobs had been lost during Covid-19. For him, what had been presented highlighted the implementation of structural reform in terms of how the Presidency had put it. That reform should entail the release of constraints on economic growth for South Africa. Members were aware there were reports that things were not good and even pre-Covid, businesses confidence had been very low. He said both presentations had the potential to create jobs.
On the reform issue, in view of the Bill introduced by the Presidency, it was evident that there had already been attempts in 1998, but it recently had a recovery plan. In line with Mr Krüger’s presentation, it actually had a recovery plan for electricity, bulk water, and the visa regime, including digital communication. If Members assessed and unpacked what was happening systematically, it raised the question around whether the country had played its role to have independent power producers in place. He said this needed to be answered.
On digital communication and the allocation of spectrum, he said it was in the news that it was currently involved in litigation. He asked if targets were being met regarding this Bill. Fortunately, this did not involve ideological differences -- it was a plain and simple issue that should be implemented by government.
He said there was a problem with capacity, and a complete lack of implementation. In view of the reform structure before and post Covid-19, it was important to question whether the Vulindlela Operation had worked, as the unemployment numbers had increased. The fact was that people had to rely on the state for social security and so forth. The Committee needed to define the commitment by investors, as commitments had been made by investors, and a roundtable was held in November 2020. For the Committee to play its oversight role, it needed to ask itself those questions and it required answers to them. If it defined what those commitments were, the Committee would then be able to do its oversight.
Mr McGluwa agreed with Ms Lesoma’s suggestion, and proposed that the Committee create a platform where Members could send their questions to be formulated and directed to Mr Krüger from their various stakeholders, and to assess the extent that these Bills were connected to one another, and what could be changed in the current Bill instead of creating a new one.
Ms C Motsepe (EFF) said she supported the proposal for Members to take this to their various organisations so that they could receive a proper mandate. This Bill was not something that could simply be agreed on and a decision taken, without taking it back to the proper channels.
She asked for clarity on the reduction of the red tape and its negative impact on SMMEs. Was the red tape not caused by the lack of a better policy, coordination and coherence amongst government departments?
In the memorandum on the object of the Bill, it had been mentioned that the Presidency’s SEIAS did not sufficiently address the cost of the red tape. Were there any evidence-based studies that led to this conclusion?
The Chairperson thanked Members for their questions. He noted that Mr Krüger had mentioned there were views from other stakeholders he had consulted with. He asked Mr Krüger to respond in writing to the Committee on those stakeholders he had been in contact with in the process of drafting this Bill.
Mr Krüger said he would gladly respond to that question and would send it to the Secretariat, as wide consultation had been conducted with other stakeholders. He asked the Chairperson if he could have an opportunity to respond to the questions which had been directed mostly to him.
The Chairperson responded that he should respond to the questions in writing. Mr Krüger should send the responses to the questions to the Committee’s Office of the Secretary.
Mr Kruger said he had a few comments to make on the questions. He asked if he could make the comments.
The Chairperson responded that his comments should not be the responses to the questions.
Ms Komane interjected. She said it would only be fair to maintain the Committee’s proposal, which was also supported by the Chairperson, that Mr Krüger should respond in writing, as he might be tempted to make follow-ups on the comments he would make. She said Mr Krüger should send his responses to the Committee in writing, and the comments should be included in those responses.
The Chairperson agreed with Ms Komane. He requested Mr Krüger to respond in writing.
Mr Krüger said he would do that. He clarified that there might have been a misunderstanding on his position in Parliament, as he said Members had addressed him as “Mr” and were perhaps unaware that he was an MP, and that he had served on the Small Business Development Committee for seven years. He noted he wanted to make this clear. This was simply an additional unit in the Department.
The Chairperson interjected. He said Mr Krüger was doing exactly what the Committee said he should not do. He reiterated Mr Krüger should respond to the questions raised in writing.
Mr Krüger requested to leave the meeting, as he had to attend another meeting.
The Chairperson agreed that Mr Krüger could leave. He invited the PSC to present.
PSC on public service financial misconduct
Mr Mike Seloane, Commissioner: Integrity & Anti-Corruption, Public Service Commission (PSC), said he would present on the financial misconduct within the Integrity and Anti-Corruption unit. He was joined by Mr Matome Malatsi, the Deputy Director-General (DDG): Integrity and Anti-Corruption, PSC, who would present on some issues.
The report was on the finalised cases of financial misconduct in the 2019/20 financial year. The PSC did the analysis on the number of cases that had been reported, the number of cases that were pending, and the number of investigations that were still taking place around financial misconduct. It had also assessed the amounts of money involved in the cases, and how much was being recovered on an annual basis around the finalised cases.
He handed over to the DDG to commence the presentation.
Mr Malatsi said slide 3 referred to the legislative basis that required the accounting officers in all national and provincial departments to report completed disciplinary proceedings on financial misconduct. Members would be aware that management of financial resources was one of the key topical issues in public administration.
He took the Committee through the objectives of the report, and said the PSC had added the consequence management aspect to the unauthorised, irregular, fruitless, and wasteful expenditures that had been disclosed in departments’ financial reports in their annual reports.
Completed disciplinary proceedings reported
He described what departments submitted on a quarterly basis to the PSC, and how they responded in providing it with information. Of the 159 national and provincial departments, 155 had submitted reports, while the four that had failed to submit were the State Security Agency (SSA), and the Education, Health and Office of the Premier departments of the North West Province. All of these organisations had been engaged by the PSC to instil the importance of compliance with the law.
Of the 155 departments that submitted responses, 61 reported on completed disciplinary cases which would be reflected on. The remaining 94 departments reported that there were no completed disciplinary proceedings on financial misconduct, as they were still busy with many of the other processes leading up to that.
He unpacked the completed disciplinary cases referred to in slide 6. Of the 61 departments that reported, there were 530 completed disciplinary proceedings for the 2019/20 financial year.
The types of financial misconduct on completed disciplinary proceedings included:
-202 cases of misappropriation and abuse (of telephone pin codes, misuse/damage of state vehicles for personal gain),
-94 cases of irregular expenditure,
-71 cases of theft,
-63 cases of fraud,
-55 cases of gross negligence,
-32 cases of fruitless and wasteful expenditure, and
-13 cases of corruption
Slide 8 indicated the salary levels of the people involved. Level 5, which accounted for the highest number of cases, included people at the lower levels, whose roles involved requesting quotes and interacting with administrative processes, for example. Middle management included levels 9 to 12, and involved people who managed operations around supply chain management (SCM), logistics, and payment of suppliers. Level 13 to 16 was referred to the senior management service (SMS), who were the people who took decisions. There were about 57 SMS personnel who were implicated and whose cases were completed.
Mr Malatsi expressed a concern that out of the 530 completed cases, only 57 included those of SMS members. This indicated that the members were not being held accountable for failure to ensure that appropriate internal controls were maintained.
Outcome of completed disciplinary proceedings
There were 392 cases of guilty findings, 87 cases were not guilty, five had resigned, and 45 cases withdrawn. The PSC had a system of due process where, after an investigation, employees would present themselves if they were implicated, would state their case, and then an independent and impartial chairperson would rule on the guilt or not, as it depended on what was presented.
The “discharge” bar on slide 12 referred to dismissal from service, which accounted for 57 cases, including four who were SMS members. These included members who were the decision-makers --those who managed the implementation of policies, the laws of the land -- and they were the ones who needed to account for this financial misconduct because they managed operations within different areas. Final written warnings accounted for the highest number, with 92 cases.
Slide 13 indicated that the national Department of Social Development reported 17 completed disciplinary proceedings pertaining to fruitless and wasteful expenditure. and misappropriation and abuse, in which the employees were found guilty but no sanctions were imposed.
Criminal proceedings instituted
Slide 14 illustrated what had been reported for criminal investigation, as financial misconduct was regarded as criminal conduct. 80 cases had been reported for criminal investigation and 43 departments had reported that no criminal action was instituted.
Slide 15 indicated R517 million was involved in the completed disciplinary cases of misconduct. It was important to note that while the national departments accounted for R51 million and the provincial departments accounted for R466 million, the Department of Education: Eastern Cape had reported financial misconduct involving R404 million. Disciplinary action was undertaken against the official, and a sanction of demotion was meted out because the person was at a director level.
Recovery of money
It was reported to the PSC that R469 million may not be recovered from the completed disciplinary proceedings for various reasons. This comprised of R19 million in national departments, and R450 million in provincial departments. One of the reasons was that services were rendered to a department, but the proper procedures were not followed. The R450 million in the provincial departments that may not be recovered included the R404 million in the Eastern Cape’s Department of Education, which the department had indicated as “no loss to the state”.
Slide 17 illustrated the total amount of money that was recovered. Of the 530 completed cases, only R1.1 million was recovered, which Mr Malatsi said was very concerning.
Disciplinary proceedings not completed
Slide 18 reflected the cases that were not completed in the 2019/20 financial year. A total of 592 disciplinary proceedings were not completed, of which 369 cases were in national departments and 223 in provincial departments. Of the national departments, it was important to note that Department of Defence was still busy with 282 cases that were not yet completed.
Fraud was reported as the highest type of financial misconduct not completed, with a total of 264 cases. Theft was the second highest type, with 86 cases, and fruitless and wasteful expenditure was the lowest, with 14 cases not completed.
Slide 20 reflected the list of reasons for the non-completion of disciplinary proceedings. Mr Malatsi explained that this regulation required that within 30 days, once investigations were finalised, there must be a disciplinary proceeding that would be finalised swiftly. Most of those reasons would not be acceptable, while others would be that an investigation was in progress. The financial misconduct types included cases where all the documentary evidence was available, and it should not take a person a long time to finalise. However, some of those amounts were huge, and this required an extensive and thorough investigation. He explained that the “application for Nolle Prosequi in process” on the slide meant that there was a process where the prosecutors had indicated they would not prosecute a person.
Employees on lower salary levels accounted for a high amount of financial misconduct, while the SMS level had lower financial misconduct cases. Slide 23 indicated that this low number at the SMS level could be ascribed to disciplinary action not being instituted against SMS members who had committed financial misconduct.
Slide 25 reflected the common sanctions imposed. For the 2019/20 financial year, the most common sanction imposed was final written warnings, followed by written warnings, and then a combination of sanctions, the most common of which included a final written warning and a suspension without salary.
Mr Malatsi said there was an issue with reporting on financial misconduct for criminal investigations and prosecution. There were areas where departments did not indicate criminal proceedings instituted, where the PSC required details of that information, and what happened where no criminal action was instituted.
Trends on recovery of money
In comparison to the previous three financial years, a total of R470 million that may not be recovered was reported in 2019/20. This amount was ascribed to a case of irregular expenditure amounting R404 million, that was mentioned in the Eastern Cape’s Department of Education, that may not be recovered because the department had received the services and action had been taken against the official involved.
Mr Malatsi said that when departments reported to the PSC, there was a sense of discomfort on the low rate of completion of these cases. When the PSC monitored the amount involved, it sought to go to the financial statements disclosed by departments in their annual reports to ascertain how much was disclosed and what action the department had taken. The first step was discipline, the second was to open a criminal case, and then recovery.
How did the PSC manage this consequence management? It had three categories: unauthorised expenditure, irregular expenditure, and fruitless and wasteful expenditure.
A total of R6.6 billion in unauthorised expenditure was disclosed in departments’ annual reports in the 2018/19 financial year. National departments accounted for R2.8 billion, and provincial departments accounted for R3.7 billion. The PSC approached departments to provide information on what it had done with these amounts, and received responses on 38 cases on unauthorised expenditure. Of the 38 cases, disciplinary action was instituted in three cases, and employees were found guilty in two of them. In the third, the department indicated that internal controls had been strengthened. This indication did not explain the outcome of the disciplinary process. In the remaining 35 cases, departments indicated that no disciplinary proceedings had been implemented. The reasons for those were provided, which was what it was still investigating.
The PSC observed that there appeared to be no consistency in the determination of unauthorised expenditure. This was evident in the response from the department of the Civilian Secretariat of Police, whereby procurement irregularities were classified as “unauthorised expenditure,” whilst the classification should be “irregular expenditure.” He clarified that irregular expenditure was where there was non-compliance with the applicable prescripts.
A total of R127 billion was accounted for in irregular expenditure in the annual reports of national and provincial departments for the 2018/19 financial year. This total was comprised of R19 billion in national departments and R108 billion in provincial departments.
Mr Malatsi said it was very concerning that there were 3 595 cases of irregular expenditure in national and provincial departments. This was mostly due to non-compliance with SCM processes, which comprised 93% of cases. The breakdown of the rest of the cases was outlined in slide 34.
Non-compliance with SCM processes was a topical issue, because this was where most of the PSC’s budget in the public service was dispensed. The non-compliance involved the list that was reflected in slide 35.
Slide 36 provided a summary of what was happening in the 3 595 cases of irregular expenditure. Of this total, no disciplinary action was instituted in 3 206 cases, because in 1 599 cases, the investigation was still in progress, and in 1 607 cases, investigation had not yet started. Mr Malatsi noted there was very slow progress in dealing with these matters -- for example, there was evidence that a case would start in the first year and would be finalised only in the fourth year.
The important point was that investigations must be instituted within 30 days after it had been confirmed that irregular expenditure had been incurred. He said that the legal framework was not being complied with. In 487 cases, the irregular expenditure was mostly at the SMS level, followed by middle management and the lower levels.
Mr Malatsi clarified it was important to note that the huge amounts on irregular expenditure did not necessarily mean that these amounts were all lost to the State. There were instances where departments reported that it had received the services, although they had not followed the applicable prescripts.
An amount of R2.7 billion in fruitless and wasteful expenditure was disclosed in departments’ annual financial statements. The amount was comprised of R1.4 billion in national departments, and R1.3 billion in provincial departments.
Departments reported 1 081 cases of fruitless and wasteful expenditure. There were people who claimed that ex-employees were responsible for the fruitless and wasteful expenditure. These cases mostly involved damage to state vehicles (43%), and 21% of cases involved non-compliance with SCM procedures, irregular payments, negligence around cellphones and laptops, human resources (HR) irregularities, cancellation of events, and issues around catering. Much still needed to be done in departments, and the National Treasury hosted training sessions from time-to-time on how these things should be managed. However, it appeared as if the picture was not improving.
Of the 1 081 cases of fruitless and wasteful expenditure, disciplinary action was instituted in 277 cases. Disciplinary action was not applicable in 55 cases, which meant that after investigations those people were cleared from being charged. No disciplinary action was instituted in 628 cases.
Financial misconduct committed by SMS members
Mr Malatsi said the consequence management section of the presentation made it evident that SMS members were mostly implicated in irregular, unauthorised, and fruitless and wasteful expenditure.
Misdemeanours, particularly the irregular expenditure in SCM, involved members of the SMS because they signed off on all the processes that had to take place. Within the SMS level, salary level 13 committed the most financial misconduct, and there were no completed disciplinary proceedings at level 16.
He said the number of completed and non-completed disciplinary proceedings on financial misconduct reported was far from what was actually happening in departments. In view of the high amounts involved, such as the 530 cases completed and the billions of rands involved, it was evident that there were disparities in the transgressions in comparison to the action that was taken.
The PSC noted the high amount of unauthorised, irregular, fruitless and wasteful expenditure.
Reports on financial misconduct submitted by departments to the PSC appeared to merely ensure compliance with the requirements stipulated in the Public Finance Management Act (PFMA), because when the PSC assessed the annual reports and compared them to what had been reported to it, the picture was very concerning.
The period within which investigations of misdemeanours were completed was concerning, because they took years, instead of within a 30-day period as prescribed in paragraph 28 of the National Treasury Irregular Expenditure Framework.
The lack of departments implementing consequence management timeously against the perpetrators would worsen the already bloated number of cases and the amount of unauthorised, irregular, fruitless and wasteful expenditure. Once action was not taken and there was a lacklustre approach towards swift action that had to be taken, officials would realise they could get away with it, When it took four to five years to conclude a case, and they would start to take chances. This emphasised the need for swift action.
Mr Malatsi said accounting officers of departments should ensure that effective and appropriate disciplinary action was instituted against employees. That was why this Committee should be able to explain and promote the measures it had put in place to mitigate against this picture of rising irregular expenditure and financial misconduct cases.
The PSC requested that when departments reported, they should provide accurate information so that it could analyse it and focus on where the problem was identified. It could also propose measures and interventions to departments to implement frameworks in a particular manner, because commissioners occasionally interacted with executive authorities (EAs) and the PSC when it conducted awareness-raising in departments.
Mr Malatsi concluded the presentation, and handed over to Mr Seloane.
Mr Seloane emphasised that the Commission was seriously concerned that it appeared that accounting officers and EAs of departments were not taking financial misconduct seriously because the amounts involved were huge and yet the recovery was very insignificant, and secondly, unauthorised, irregular, and wasteful expenditure was increasing while few officials were charged for all those expenditures. Senior managers and SMS members were supposed to be the custodians of the resources in terms of PFMA, yet some of them were found on the wrong side of the PFMA in this regard. This was of serious concern, as they were the people who were supposed to ensure that the resources were safeguarded properly. Cases of unauthorised, irregular, fruitless and wasteful expenditure were rising, and the amount of money involved in irregular expenditure was around R127 billion. One could imagine what that amount of money could do if it was used for other activities, such as the National Student Financial Aid Scheme (NSFAS), roads, sanitation and police stations. He emphasised that this was something that needed to be looked at seriously.
The amount of money that may not be recovered should be understood in context. For example, if a building was procured for R400 million without following tender procedures, if tender procedures had been followed, it might be found that the same building could have been bought for R220 million, this would mean that the department would have been overcharged R120 million, and a lot could have been done with this money.
He clarified this was what the report highlighted. He thanked the Chairperson and handed back to him.
The Chairperson officially welcomed the Deputy Ministers to the meeting and apologised for not acknowledging their presence earlier. He invited Members to raise questions.
Ms M Ntuli (ANC) welcomed the presentation by the PSC and commended it for its honesty in revealing all the wrongdoings. She had a serious concern that irregular, fruitless, and wasteful expenditure was increasing, and the clear problem was that there were no consequences and employees were cleared. This was a serious problem, as it involved taxpayers’ money. What were the initial charges? If the initial charges indicated they had conducted a crime, at what point were law enforcement agencies involved if these irregular and wasteful expenditures still increased because everyone was getting away with it?
She questioned how employees could resign after being charged. That may be fine, but they would not be entitled to a pension, and no processing of their finances until the matter was finalised. She said this matter could be discussed repeatedly, but no one was being charged, arrested or held accountable. She questioned the role of Correctional Services, as so many employees committed wrongdoings. Why were they not arrested? Were there no policies that addressed these criminal matters? If there were no policies, when would these policies be formulated?
If the Committee was told no money was recovered because the service had been provided, who had provided the service? The charges did not indicate the service had been provided, as they referred to the wrongdoings. If something wrong was done within the department, what should be the outcome? What was the purpose of an internal investigation when people could continue committing wrongdoings within the department -- and the very same department would investigate them? When would law enforcement agencies be involved? She said there was no report that indicated the number of employees that had been fired. Why were people not fired for committing wrongdoings? There was also no report that indicated the number who were in jail. Why were people not arrested? These misdemeanours involved billions of rands, and yet people did not have roads, housing and so on, as employees were playing with taxpayers’ money.
Ms Ntuli said the sophistication applied by departments in this matter was concerning, because if it continued doing these things, the Committee would continue to receive such clumsy and bad reports in the future. She questioned what the policies stipulated and if there was no strong policy that addressed this, as it meant there was no governance.
Mr McGluwa said during his previous engagement with the PSC, there had been numerous complaints that it could not bite as it did not have any teeth. At one point he had described the PSC as a “toothless dog”. It was now reported that the Commission had gone to court and opened a case against those individuals.
It had been stated that departments in the North West province, and even the SSA, had failed to submit reports. He asked the PSC to provide the reasons for this, and if no action had been, the Committee should summon those accounting officials to a meeting to answer for this.
In the North West province, the Head of Department (HOD) of Public Works had been suspended for two years, and he wanted to know the status of this suspension and why this HOD was still getting paid. He proposed that the PSC provide the Committee with a provincial breakdown on the action taken by the departments, and those who were doing a breakdown of officials who had not declared their interests, as well as whether action had been taken against them.
The PSC had submitted a report on the newly appointed HOD of the DSD in the North West province. It had reported that in 2019, it was found that the person involved did not have the required qualifications, as they had only a matric. Mr McGluwa clarified that this position required an National Qualifications Framework (NQF) level 8, yet the North West province claimed that this person was qualified. He asked for a report on this matter.
Ms Komane said this report made her very emotional. She did not want to claim the PSC was toothless, but there were departments that did not comply with the completion of the disciplinary proceedings, which was very concerning. What was being done, because this report indicated there was no will to complete these processes? What were the reasons for this? She was tempted to say it depended on people’s positions and who they knew, for them to be cleared of charges.
Why was the gross negligence and abuse of public money not regarded as a criminal offence, because it was taxpayers’ money that was involved, and people were wasting it? Was the PSC comfortable with the one case where the department indicated it was strengthening its policies? If it was not comfortable with the department’s report, what was it doing, because what was the point of the policies if people were still committing acts of misconduct. What had been done to prevent that misconduct?
The report indicated R127 billion in irregular expenditure, yet people were cleared and there was no action at all from the departments in many instances. Most of it involved SCM non-compliance. What was the consequence management in view of what was happening, because the PSC clearly indicated where the irregular expenditure derived from, yet there was little, if not nothing, that had been reported on consequence management? She asked what the Committee should comment on all these reports.
What had been the PSC’s interventions? The sanctions for financial misconduct were very minor, especially in comparison to the offences committed by SMS members. Was this because the misconduct was committed by the senior management? These were the very same members who imposed harsher sanctions on the lower salary levels. Was it because the SMS members held senior positions and were connected. It was evident in many instances in the departments that those at lower levels had harsher sanctions, and it was not clear what had led to them, yet billions of rands were lost due to irregular expenditure by people who were entrusted with senior positions, but who received minimum sanctions. What was happening, who was fooling who? It was concerning because those sanctions were minimum, and there was still a huge number of SMS members who were not held accountable.
It should be recorded that as long as this protocol was in place, it enabled the same perpetrators to resign and be cleared of misconduct involving the money of taxpayers. The Committee received these reports, but had nothing tangible to deal with. It could merely interrogate, but there was nothing it could do. She questioned whether the PSC was toothless, and whether it was her duty as a Member of this Committee to hold those accountable, as the Committee was aware that the irregular expenditure had happened.
On slide 13, in the case where officials had been discharged in terms of the sanctions imposed on them, what had happened with regard to the money involved in their misconduct? Perhaps it was a matter of people’s connections and how they played their cards, because it was evident that many officials committed wrongdoing, yet they were discharged and the money was lost, despite the misconduct.
She said there were officials in the DSD who had repaid money even if there was no record of misconduct against them, yet in some other departments, light sanctions such as final written warnings were imposed on those who had been found to be guilty. Where was the fairness in this matter? What was the role and intervention of the PSC?
The report on North West hurt the most, because she was from this province. The Committee should not expect reports from departments and the provinces when the North West province, even in the Office of the Premier, had failed to submit its non-compliance reports on time. What was happening? In a province with a suspended HOD who had received money every day for two years, the disciplinary proceedings were not even concluded. She echoed Members’ sentiments that the Committee should start to request accountability.
Ms Komane said there was a time when the Committee had celebrated when the current Commissioner of the PSC had briefed it on a very good plan and recommendations. Now was the time for the Commissioner to execute, and for Members to regain the confidence of the people who voted for them by no longer allowing taxpayers’ money to be spent recklessly because there was no accountability.
Regarding the R404 million regarded as no loss to the State, she said it was time that departments stopped misleading the Committee, or anyone else, as there had been misconduct. These departments would deny that there was misconduct and redirect the Committee, because they did not want to hold people accountable. These departments would then claim there was no loss to the state as a way to deny the misconduct. She emphasised that the Committee should hold people accountable and should not succumb to the statement that there was no loss to the state, because this had been effected on the basis of wrongdoing. The Committee should not condone this, and it should not celebrate when it was reported that there had been an application for condonation from the department because there was no loss of money to the state.
Ms Lesoma appreciated the report presented by the PSC, and said the Committee was always shocked when it received such reports and presentations. She recalled that in September 2020, the Committee had received the same report and had requested the details and agreed there were entities it needed to invite. The Committee should also reflect on whether it had implemented all the decisions it should have taken and promised itself. On the same day, the Department of Public Service and Administration (DPSA) had taken the Committee through a presentation on the unlawfulness of government officials doing business with the government. It had indicated it had set up a unit to support government departments and provinces to ensure disciplinary processes were fast-tracked. It was now almost nine months later, and she questioned whether it was now the right time to find out about experiences it had encountered in assisting the provinces, and if the provinces were also assisting.
It was unfortunate having to indicate that the Committee did not have the tools nor the capacity to measure whether the principle committees that those departments reported to had the prerequisite and expected expertise to do their financial oversight. She proposed that Parliament, through its support services, should indicate what support it could provide to the Committee so that it could ask the right questions and make the right decisions when it engaged with the departments. The Committee already had research support and a content advisor, but it needed to do more because in late 2019, immediately after the Committee’s establishment, it had a common agreement that it would ensure fewer departments appeared before the Standing Committee on Public Accounts (SCOPA). Similarly to SCOPA’s work, the Committee dealt with current issues across all government departments. While it was a powerful committee, it was not exercising its powers in terms of its mandate, informed by the departments it did oversight on.
Ms Lesoma said she had started to appreciate that the PSC was similar to the Auditor-General of South Africa (AGSA) because it could not motivate or conceal what it reported on, as the situation was evident to see. It was important to note that it was informed by its powers in Chapter 10, section 196 (4)(b)(d)(e) of the Constitution. For her, section 196 (e) was critical, because it empowered the Committee to call the responsible Executive Authority to come before it. She had observed that in some instances it had done this, and while there had been some shift, it was an issue of being consistent as a Committee, and of following up thoroughly with the responsible departments or EAs.
She said the Committee should agree that if cases were not addressed, which was one of the things pending for this Committee, it should commit to invite the South African Police Service (SAPS), as it did not attend when the Committee met with the PSC. The Committee should invite the Special Investigating Unit (SIU), the Hawks and the SAPS to inform it on the cases of maladministration and why those cases did not make it to court, because it was evident that something very wrong was taking place.
The Committee should also have a meeting with the Department of Defence, to which the military reported, so that it could get a better understanding of the cases that were finalised and concluded before the military court. What was its relationship to the standard mainstream court? She said the money and the decisions that it took was allocated by the Committee through budget votes. It must therefore inform the Committee what had happened to the responsible general or person in terms of ensuring the money that was mismanaged could be recovered, so that the Committee could get a better understanding.
After the Committee has invited all those departments, it must also invite the DPME and the Department of Cooperative Governance and Traditional Affairs (COGTA) to get some lessons. She recalled the Committee had agreed it would invite the DPME jointly with COGTA to get lessons and instil confidence in value adding, in terms of invoking section 100 in some provinces, as well as sections 138 and 139 of the Constitution. If it did not add value, it made the situation worse where this Committee could assist.
Ms Lesoma said she had made three clear proposals so that the Committee could be seen to be taking this matter very seriously because it was angry, exhausted, surprised and shocked, but those departments must come to account. She said the Committee should use this opportunity during the recess to call all these departments even if it meant it had to engage for the entire week.
Dr M Gondwe (DA) also expressed her concern over the large sums involved in irregular, unauthorised, fruitless and wasteful expenditure. The PSC had correctly stated that it needed to rid the public service of unethical employees, but this had to happen now and not any other day, or it would find its coffers completely depleted. How would it ensure departments meted out harsher sanctions, especially when the nature of the financial misconduct involved huge amounts of money?
She referred to the 530 completed disciplinary proceedings, and the fact that public service employees were found guilty in 392 of these proceedings. This indicated that departments were implementing the relevant codes and procedures, but the implementation was not enough, as it required more than implementation of these disciplinary codes and procedures. She emphasised it needed decisive action to be taken against the implicated public service employees, because financial misconduct -- whether it was fruitless and wasteful expenditure or the inappropriate and abuse of government funds -- had significant implications.
The PSC had indicated it engaged the legislature around the three non-compliant North West departments. What had been the response from the legislature on this matter? What about the SSA?
She had noticed a trend with the SSA, because the last time the Committee met and interacted with the PSC earlier this year, it had indicated that the SMS members did not even submit their financial disclosure forms. She emphasised this was a trend in the SSA -- to not comply with the PFMA and the Treasury regulations. In the last meeting, they had argued that they thought they were excluded from this because the nature of their job was so clandestine and secretive. The Committee had then pointed out that financial disclosures pertained to the person and not necessarily to the entity they worked for. She said this trend should be stopped, and it must be addressed. The PSC had also indicated it had approached the Inspector General of Intelligence (IGI) around this issue, and the IGI confirmed it was obligated. She did not believe any government department should be above the law, irrespective of the kind of work it did.
The presentation had indicated that employees of the Department of Social Development were found guilty in the 17 completed disciplinary proceedings, but no sanctions were imposed because the concerned expenditure had been recovered. How did that happen? The point was not whether or not the money could be recovered -- the point was that there had been financial misconduct, and in this instance, there was misconduct that had to be dealt with. What was the PSC’s response when the Department reported this? Did it make the Department aware of the fact that it was about the act and the principle that financial misconduct must be dealt with, because whether or not the money could be recovered did not take away from the fact that there had been an act of financial misconduct in this instance.
Dr Gondwe said she was concerned that no criminal action was taken by government departments for financial misconduct that involved criminal activities such as corruption, fraud and theft. These were criminal activities. and it went beyond financial misconduct as it was criminal, and it had to be dealt with. This was where law enforcement agencies needed to be brought in to remind these departments that it was on a completely different terrain in that sense.
The amount of money involved in completed disciplinary proceedings for financial misconduct was R560 million for the 2018/19 financial year, and she was concerned that it was often the provincial departments that accounted for most of the money that was used either in a wasteful way or in a way that constituted financial misconduct. The PSC had reported that the Eastern Cape provincial department accounted for R404 million of this amount. She was unsure how it could continue on this trajectory, as it was crippling the country financially.
A total of 592 disciplinary proceedings were reported as not completed, and 282 of these resided with the Department of Defence, which Ms Lesoma had also touched on. She believed this was attributed to the fact that the Defence Force was subject to a military-orientated system of discipline which must be looked into and addressed, because it was affecting the proper process of the disciplinary proceedings.
The annual reports of the national and provincial departments reflected the R127 billion in irregular expenditure, and once again it was the provincial departments that accounted for majority of this amount, with R108 billion. Did the public service employees involved in SCM understand what they were doing, because something was terribly wrong? The public service should not have incurred R127 billion for irregular expenditure, R6 billion for unauthorised expenditure, and R2 billion for fruitless and wasteful expenditure, because the country could not afford it. The fiscus was already under so much pressure and strain, and this was adding to it.
Dr Gondwe proposed that perhaps the PSC could come forward to indicate the powers it would like to obtain, because the Committee had done this with the Office of the AG. She was certain the Committee could also assist in this instance to give the PSC teeth to bite effectively, because it needed to bite.
Inkosi R Cebekhulu (IFP) questioned why the sanctions were not the same for the lower level employees as those for the senior level ones. He said this prompted him to go back to the quote in the Animal Farm book that indicated “some animals were more equal than others.” He said this indicated that some people were more equal than others in the department.
He questioned how those involved in the fraud, irregular expenditure and other misconduct, felt when they drove around and saw homeless people sleeping under bridges and people in informal settlements living in unbearable conditions. Winter had arrived, and there would be many reports in the news of these informal settlements burning and people losing their identity documents (IDs), and the few assets they had managed to collect and save in those shacks. He said that as long as people were treated differently, it would indicate the theft that was happening in the government departments was glorified. He hoped the relevant departments responsible for investigating and bringing cases before the court of law in the country were aware of this. This should be exposed to bring those who had been involved to account for what they were doing. Billions of rands had been misappropriated, and he felt the pain when people were suffering whilst government employees lived in lavish houses and drove fancy cars, and they did not care about seeing their own people living in those terrible conditions. A lot of people were living in the dumpsites as scavengers because they retrieved what had been thrown in the refuse simply to get something to eat, while all of those departments mentioned did not see a problem and had no pain for those people.
He said South Africa should not be in this current state, and he hoped the people employed in those positions would be the ones to look after their brothers and sisters who had been disadvantaged by the government.
Ms Motsepe said people resigned and left with their charges, but nothing happened. She was very concerned that no arrests had been made, and provinces and departments had failed to submit reports, but nothing happened. How could people play around with the country’s taxes as they pleased, and no action was taken against them? When would these criminal offences be taken seriously? What must really happen in the country when senior members were more involved in the crimes than the lower employees? When would the Committee step up and fight this crime and stop senior officials from doing business? The Committee was tired of repeated receiving the same reports. She emphasised that action must be taken, as the Committee was tired of this situation. She concurred with Inkosi Cebekhulu that some were more equal than others.
Mr M Malatsi (DA) said there were two things the Committee could possibly do in this matter. One of those would require the assistance of the PSC, because his main concern was that those individuals who were the lead actors in these transgressions often did not leave the public service and disappear elsewhere. Some of them people got rehired in different spheres of government, and this was where his concern was. It was about time that the Committee looked at measures that could be implemented on the re-employment prospects of people who had been found guilty, whether of financial mismanagement, or whatever the misappropriation of funds had been in their previous positions. This could prevent them from getting another opportunity to continue their careers in the public service, where they could risk replicating that behaviour because they were aware that once employees were investigated, they could stay for as long as they wanted because they still received all their employment benefits. Once a case approached finality, people would leave strategically, and then they had a cooling-period of a few months, and they would eventually get rehired in some municipality or provincial department, or even in the national government. This was an opportunity for the PSC to work towards building a database of all these individuals, the nature of their cases, the sanctions in each case, and where those individuals were located in the public service, especially those individuals where some of the monies could not be recovered or the cases could not be closed because they had left. This could assist the Committee to track these individuals in the public service and take prior action, because while they were in the public service system it had the opportunity to implement the corrective and punitive measures, regardless of whether they had left a particular department and moved to another provincial department in a different capacity.
He said Ms Lesoma’s input had been very constructive, and many of her proposals would be useful to the Committee. The Committee must rightfully lament the rot, but it also had a bigger responsibility to ensure that, with the information presented before it, it could plan in such a way that it could remove the roots of this rot and prevent it from recurring. He did not want to sit throughout his term, and every financial year he would get shocked and angry at the growing figures whilst these individuals re-emerged elsewhere and continued to receive salaries at the expense of taxpayers.
The Chairperson said the Committee should adopt what Ms Lesoma had proposed. He was unsure if time would allow it to do so now, but it must convene a meeting with COGTA and those people who were causing harm in the public service.
He invited the PSC to respond.
Commissioner Seloane said Ms Lesoma had summarised the position very well. He stressed that the role of the PSC was twofold. Firstly, it was to account to the Committee on the work that it was doing on a daily basis, and secondly, to provide information that should be used by the Committee and other portfolio committees to exercise oversight over the departments because they were providing information on a quarterly and annual basis. The PSC’s role was to provide alternative information, oversight information, on what a department had missed so that Parliament could hold the department accountable. What Ms Lesoma was indicating was that perhaps departments’ accounting officers, the Ministers and Members of Executive Councils (MECs) should be called to account on the information that the PSC had raised.
In response to Mr Malatsi about some of the people resigning and then finding themselves in other provinces or departments, he said there was a gap in law in the sense that once an employee was not found guilty, it could not be captured in the Personnel Administration System (Persal) that the employee had been found guilty. If a person resigned and joined another department, the PSC could strengthen the rules by ensuring that before any department appointed an official from any other department, in the verification it could check whether there were any disciplinary hearings pending against that official. If this aspect could be strengthened, officials would not be able move around to different provinces or to different departments.
He clarified it was not the PSC that must arrest or hold departments accountable. The PSC’s role was to identify the information, and where departments lacked in accountability, the PSC would bring the information to Parliament to follow through with holding those accountable. He agreed that lamenting about this would help, as the power remained with Parliament who could call the departments, the EAs and accounting officers to account for the misdemeanours.
He said he had left the rest of the questions for Mr Malatsi to respond to. The main point was that similarly to SCOPA, the Committee should view the PSC as an ally to deal with other departments in the same way that the AG viewed SCOPA to deal with departments. This was what needed to happen so that it could strengthen its role as a Commission, with the Committee, to hold departments accountable.
DDG Malatsi said he would start with Inkosi Cebekhulu’s question -- that it seemed there was a different treatment of wrongdoers, which had also been highlighted by other Members. He said there were harsher sentences at the lower levels, but as the levels increased, it would become evident that final written warnings and so forth were imposed. The PSC did not condone all of this. The labour relations dispensation that was applicable sometimes allowed people to bring in lawyers, which mainly manifested itself at the SMS level where firstly, cases were dragged out, and secondly, the cases resulted in lesser sentences because of stronger representation. However, wrong was wrong. The PSC’s disciplinary framework contained all the sanctions listed as an alternative, or they could also be implemented in a combined manner. As a democratic dispensation, when it concerned due process, it was the responsibility of the chairperson who listened to a case to decide on it and to impose a sanction. However, the PSC agreed that these issues were very serious and very depressing.
On people resurfacing in other sectors, he said it was prevalent in the sense that people who had committed wrongdoing in municipalities would still be found in very important positions in national departments. In this instance, investigation reports were required to follow them wherever they had gone so that disciplinary action could be taken against them. He clarified that this was an interim measure, and it needed to be supported by a system that would indicate who had resigned from a department and where they had resurfaced. The reality was that the risk would repeat itself and these people would recommit what they had committed in their previous employment.
The DPSA was busy with the Technical Assistance Unit (TAU). He had noticed the appointments had been made and people had started working. With that unit in operation, most of the proposals from this Committee -- for example, on keeping a database of all transgressors in disciplinary matters -- would be possible, based on the one presentation he had seen from the DPSA’s TAU section.
Ms Lesoma’s proposal was very important, and the PSC would start interacting with the SAPS, the SIU and the Hawks on these specific matters. He confirmed the PSC was interacting with them, but on other issues. The PSC would bring this to their attention and check whether it formed part of the investigations they were busy with.
In response to Dr Gondwe on the North West's non-compliant institutions, the PSC would report the matter to the legislator for the legislator to hold the MEC and the HOD accountable. In addition, the resident commissioner had met with the respective MECs to indicate that this non-compliant attitude was not acceptable, and that they should comply with the law as stipulated. On the SSA, he confirmed the last time the PSC was there it had raised the same issue. However, after the engagements with the SSA, the Minister had acknowledged the Department had not submitted the financial disclosure framework, which it had now submitted. It had indicated that it would always inform the Department when its financial misconduct was outstanding. The PSC would engage with the Minister to adopt a similar approach with the financial disclosure framework.
On the R404 million irregular expenditure in the Eastern Cape, he said the department explained that R369 million had been authorised, and was paid to schools for whatever operations they were engaged with. However, the director had exceeded that amount up to R404 million, which was declared irregular. The director implicated had been disciplined but not dismissed, and was demoted to a lower rank.
Mr Malatsi apologised for presenting this depressing report, but the PSC was doing so to empower the Committee and Parliament to hold departments accountable. Once it did this, it would see improvements in trying to mitigate and reduce this kind of financial misconduct.
The Chairperson thanked the PSC, and said the Committee should follow Ms Lesoma’s suggestion so that the Committee could be seen to be fulfilling its role. It would have to take those proposals forward in dealing with these matters.
Consideration and adoption of minutes
The Committee considered and adopted its minutes of 12, 13 and 26 May 2021
The Chairperson thanked all Members for their attendance. He said he would have a discussion with Ms Lesoma on her proposal so that the Committee could take it forward to address the problems in the PSC, and to assist the Commission.
The meeting was adjourned.
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James, Mr TH
Cebekhulu, Inkosi RN
Gondwe, Dr M
Kibi, Ms MT
Komane, Ms RN
Kruger, Mr HC
Lesoma, Ms RMM
Malatsi, Mr MS
Malomane, Ms VP
Maluleke, Ms B
McGluwa, Mr JJ
Motsepe, Ms CCS
Ntuli, Ms M M
Schreiber, Dr LA
Sibisi, Mr CHM
Siweya, Ms RT
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