The Portfolio Committee met on a virtual platform for briefings from the Mhlatuze, Sedibeng and Overberg water boards on their 2019/20 annual reports. The teams were led by the Deputy Minister of the Department of Human Settlements, Water and Sanitation.
The Mhlatuze Water Board had obtained a clean audit with no findings in 2019/20. Under-performance was around budget expenses and a lack of capacity to conduct projects, but that capacity had been boosted following the appointment of a technical director and technical staff. An objective for the future was to reuse waste water and reduce the amount of waste water, currently at 34.8 million m3, that was pumped into the sea. Four environmental impact incidents had taken place, but the environment had been repaired. The Board remained a going concern, with a gross profit of 64%. Cash reserves had increased over the year and liabilities had reduced. uMkhanyakude District Municipality had agreed to repay its debt and had begun to do so. Four cases had been opened with the South African Police Service in connection with previous irregular expenditure.
The Overberg Water Board was a small water board that had obtained a clean audit report, but a number of challenges faced it, including the tariff model that did not include a capital levy, ageing infrastructure, a low customer base dependent on bulk drinking water supply, and the fact that two-thirds of the pipeline network was asbestos. Gross profit had increased slightly, but the cost per unit of water was high at R18.07, while the average tariff was low at R9.62, and was not fully recovering the cost of running the business. The Board was struggling with technical services, as it was too small to attract top quality technical expertise, but it had a new contract with the Hessequa and Theewaterskloof regional municipalities, together with the Department of Public Works and Infrastructure, to supply the prison facilities in those municipalities.
The Sedibeng Water Board introduced a caretaker chief executive officer (CEO), as the incumbent had succumbed to Covid-19. It had posted a gross revenue of R2 billion in 2019/20 and a net profit of R108 million. Direct operating costs stood at R1.7 billion. However, it had enormous debt and owed Eskom most of the outstanding debt. Debtors days stood at 911, and the organisation was implementing water supply restrictions to non-paying municipalities, having written to the Minister asking her to secure the intervention of National Treasury. Irregular expenditure of R1.1 billion was under investigation, as was fruitless and wasteful expenditure amounting to R831 million.
Members were concerned that the situation at Sedibeng Water Board had not improved, but had become worse. Was the Board financially viable? How was it going to address that issue? It was owed R1.4 billion, so was it financially viable to carry out its mandate? Why was there such a huge gap in gender representivity, as only 15% of the personnel at the executive level were female? Had any consequence management been applied to the officials responsible for the irregular, fruitless and wasteful expenditure incurred? Had Sedibeng implemented the findings of the Auditor-General? If not, why not? Did the Department think the Sedibeng Water Board would ever recover -- and what should be done if it were unlikely to recover? If it could not recover, who was to blame?
There were few questions for the other water boards. At the Overberg Water Board, why had there been irregular expenditure of over R130 000 relating mainly to non-compliance with National Treasury regulations in terms of appropriate procurement processes? Why had the Mhlatuze Water Board's expenditure of 2019/20 shown an irregular expenditure of R823 000? Was the Department considering including a draft tariff methodology and standard so that the process of applying tariffs was properly regulated?
The Chairperson welcomed Members of the Committee and requested a moment of silence for prayer or meditation in the face of the pandemic. She offered condolences to all those who had lost their loved ones, and to the chairperson, board members and officials of the Sedibeng Water Board, who had lost their chief executive to Covid-19. Her thoughts were also with all those who were hospitalised.
The Chairperson also prayed for the soldiers, and for the looters to be put behind bars. South Africans had the capacity to talk to one another, and should do so.
Members asked that the Committee pray for the country which was burning. They spoke about the differences between poor people looting and politicians getting involved in the current unrest.
The Chairperson asked for apologies, and moved on to the agenda.
She welcomed the Deputy Minister for Human Settlements, Water and Sanitation, David Mahlobo, the members of the water boards, and the Department of Human Settlements, Water and Sanitation (DHSWS). She asked that the presenters adhere to their time slots of 30 minutes.
Deputy Minister's opening remarks
Deputy Minister Mahlobo introduced the three water boards that were to present that day:
- Mhlatuze Water Board, led by Ms Thabi Shange, Board Chairperson, and Mr Swaswa Nthloro, Acting Chief Executive Officer (CEO);
- Overberg Water Board, led by Mr Razeen Benjamin, Chairperson, and Mr Phakamani Buthelezi, CEO;
- Sedibeng Water Board, led by Mr Sphetho Siyengo, Chairperson of the Board, and Mr Toto Molobye, Caretaker CEO.
Each Water Board would present for 30 minutes, and then Ms Deborah Mochotlhi, Acting Director General (ADG), DHSWS, would conclude if necessary.
The Deputy Minister requested the water board chairpersons to present their overviews in two or three minutes, and that the CEOs take no longer than 25 minutes, including the financial reports, so that there would be time for engagement with the Committee.
Mhlatuze Water Board on its 2019/20 Annual Report and Financial Report
Mr Nthloro introduced Mr Stefan Botha, Strategy and Business Development Manager, who made the presentation on behalf of the Mhlatuze Water Board. He apologised for not being appropriately dressed for a meeting with the Portfolio Committee, as he had not been aware he would be on video.
Mr Botha was pleased to inform the Committee that after qualified audit reports in 2016/17 and 2017/18 and a qualified audit report in 2018/19, the Mhlatuze Water Board had obtained a clean audit with no findings in 2019/20, having submitted the annual report on time, despite the Covid-19 pandemic. The overall performance of the Water Board, as measured in June 2020, stood at 66%. Under-performance was around budget expenses and a lack of capacity to conduct projects, but that capacity had been boosted following the appointment of a technical director and technical staff. An aim for the future was to reuse waste water and reduce the amount of waste water, currently at 34.8 million m3, that was pumped into the sea. Four environmental impact incidents had taken place, mostly relating to disposal of waste at sea. The technical breaks had been addressed, and the environment had been repaired. The Mhlatuze Water Board continued to run the Jozini Water Treatment Works for the uMkhanyakude District Council, servicing 134 000 households.
The Mhlatuze Water Board remained a going concern, with a gross profit of 64%. Debtors’ collection days had been up at 50 days, but was now down to 38.29 days. Staff remuneration costs represented 28% of the budget. Return on assets was at 10%. It was a healthy entity. Most of the money came from bulk water sold to municipalities and industry. Revenue also came from waste water. Cash reserves had increased over the year, and liabilities had been reduced. uMkhanyakude District Municipality had agreed to repay its debt and had begun to do so. There had been no new financial irregularities picked up in the past two years, thanks to the strong financial controls. To date, four cases had been opened with the South African Police Service (SAPS) in connection with previous irregular expenditure.
Overberg Water Board on its 2019/20 Annual Report and Financial Report
Mr Benjamin, Chairperson, said he was grateful for the rain in the Western Cape. He was joined on the virtual platform by Mr Buthelezi, CEO, Mr Norman Mudau, CFO, and Mr Anthony Lotz, Acting Chief Operations Officer (COO).
Mr Buthelezi said that the Overberg Water Board was a small water board, but he assured the Committee that it could expect great things from it. The Auditor-General (AG) had provided a clean audit report, but there were a number of challenges facing the Board:
- Accounting records had not been maintained appropriately;
- There was no internal audit in place to strengthen internal control within the organisation;
- The tariff model did not include capital levy;
- Ageing infrastructure;
- Low customer base;
- Two-thirds of the pipeline network was asbestos;
- The Board was reliant on surface water, despite the challenges of climate change;
- It was reliant on Eskom as sole energy supplier; and
- The Board was predominantly providing bulk drinking water.
Gross profit had increased slightly due to inclusion of the Department of Public Works and Infrastructure (DPWI) project, although payment by the Department was overdue, while net profit margin had decreased slightly due a decrease in the volume of water sold. The cost per unit of water was high at R18.07, while the average tariff was low at R9.62, and was not fully recovering the cost of running the business. The available cash was able to cover current liabilities 1.07 times. The Board was struggling with technical services, as it was too small to attract top quality technical expertise, but had a new contract with the Hessequa and Theewaterskloof regional municipalities, together with the DPWI, to supply to the prison facilities in the regions.
The Overberg Water Board Annual Report of 2019/20 showed that the internal audit function had been established through an outsourcing mechanism, that the irregular expenditure had been investigated, and consequence management was being applied.
Sedibeng Water Board on its 2019/20 Annual Report and Financial Report
Mr Siyengo, Chairperson, introduced Mr Molobye, who was the caretaker CEO of the Board following the death of the CEO, who had succumbed to Covid-19. The Acting Chief Financial Officer (CFO) was Ms Nobathembu Mpetsheni.
Sedibeng had posted a gross revenue of R2 billion in 2019/20 and a net profit of R108 million. Direct operating costs stood at R1.7 billion. The employment equity profile showed gender representivity at 15.38% at the executive level. Diversity at the senior management level stood at 76.92%. The organisation had filled 53 permanent and contract positions, and staff turnover was at 0.78%.
The service area of Sedibeng spanned more than 100 000 km² across three provinces - the Free State, North West and Northern Cape. Debtors' days stood at 911, and the organisation was implementing water
supply restrictions to the non-paying municipalities. The organisation had written to the Minister asking her to secure the intervention of National Treasury. Overall, the organisation had spent 107% of its budget. A qualified audit report had contained material findings on some of the objectives relating to definitions and measurement.
Irregular expenditure of R1.1 billion was under investigation, and R 779 978 in irregular expenditure had been incurred in the 2019/20 financial year. Sedibeng Water had incurred irregular expenditure relating to procurement using fewer than three quotations due to the location of operations and the limited number of suppliers in rural and peri-urban communities willing to supply. The investigations were in progress. Fruitless and wasteful expenditure under investigation amounted to just over R831 million.
Sedibeng Water Board had entered into debt service level agreements with the municipalities in the Northern Cape and Mahikeng local municipality in the North West. It had informed the Minister of the non-paying municipalities, and she was communicating with the Minister of Finance in order to impose section 216 of the Constitution with regard to the withholding of equitable shares from defaulting municipalities.
Financial viability and sustainability remained a huge concern.
The Chairperson thanked the Deputy Minister and the three water boards (WBs). She invited Members of the Committee to respond to the presentations.
Ms M Mohlala (EFF) addressed her question to the Sedibeng WB. It had received a qualified audit for 2019/20. Instead of the situation improving, it had become worse. The organisation was collapsing. Was the Board financially viable, with a ratio of 1:3, whereas a healthier ratio would be 1.5? How was the Board going to address that issue?
She noted that Sedibeng WB was owed R1.4 billion, with the number set to increase to R7.9 billion. The WB faced a serious problem with respect to debtors and creditors. It owed R2.9 billion to suppliers, which was expected to increase to R7.1 billion, with Eskom being its biggest creditor. It was not sustainable. Her question was directed to both Sedibeng and the DHSWS: was the Water Board financially viable to carry out its mandate?
Ms Mohlala asked the Overberg WB about the nature of its investments that were generating substantial interest. Why was there irregular expenditure of over R130 000 relating mainly to non-compliance with National Treasury regulations in terms of appropriate procurement processes?
She asked the Mhlatuze Water Board why the expenditure of 2019/20 showed an irregular expenditure of R823 000, because bids were not advertised for a prescribed time period. She asked for details. Why had that happened?
Ms Mohalala asked the DHSWS if it was aware that some Boards were considering asking for a draft tariff to boost income. Was the Department considering including a draft tariff methodology and standard so that the process of determining tariffs was properly regulated?
Ms S Mokgotho (EFF) directed her questions to the Sedibeng WB. The presentation showed that gender representivity was 15.38%. Did that mean that 85% of the employees were male, or vice versa? Why was there such a huge gap in gender representivity when employing employees? The budget for administration was R208 million, but the entity had spent only R173 million. Why had only 62% of the allocated budget been spent? The entity had incurred irregular expenditure of R1.1 billion in the current year, and also fruitless and wasteful expenditure of R248 million -- was there a plan in place to remedy the situation going forward to address such a waste of tax money paid by the majority of the working people of SA, who expected their money to be used sparingly and diligently so that services reached them? Had any consequence management been applied to the officials responsible for the irregular, fruitless and wasteful expenditure incurred?
Mr R Mashego (ANC) was experiencing load shedding, and was very difficult to hear. He said he was comfortable with Overberg and Mhlatuze, as there was a plan for each and progress was being made. He asked the Department about Sedibeng WB. How could only 15% of the employees be women in 2021, and the entity reported it as if it were normal? He doubted that the entity could be struggling to find capable women. The Board approved appointments, so what had allowed Sedibeng WB to make such appointments? He assumed that Sedibeng had reported to the Department before it had reported to the Portfolio Committee, but it was failing. He understood that the Board was owed money but it, in turn, owed others and would continue incurring costs.
He said that a responsible Department would have pushed the panic button and put Sedibeng on a programme. The Board might win a tender, but it was not the Board’s "birthright" to get the work because it existed. There were others who could also do the work, but the Department continued to give Sedibeng WB work. He saw some light when it came to the other two Boards that had presented. People there were working hard, even though there were municipalities that were struggling to pay, but the reports of those Boards showed that they were dealing with the situation.
The Chairperson welcomed the presentations, and concluded that Mhlatuze and Overberg had done their best, although they could still do more. She was, however, of the opinion that things had become worse since the interim board had been appointed at Sedibeng WB. There had been a media show that had presented the corruption in one of the areas. She agreed that the Department should explain what programme it had put in place to assist Sedibeng. Did the Department think Sedibeng would ever recover, and what should be done if it were unlikely to recover? In their last presentation, Sedibeng had said that it would close shop. However, it was still surviving. Had Sedibeng WB implemented the findings of the AG? If not, why not? If Sedibeng could not recover, who did the Acting DG think was to blame?
Deputy Minister Mahlobo suggested that the Department should respond to the questions about what it was doing as a shareholder in respect of the viability of the Sedibeng WB. He admitted that there were some difficulties, but he reminded Members that the WB authorities had to serve the poorest of the poor. At the beginning of the Covid-19 pandemic, the stakeholder had been aware that some WBs would need some kind of support.
The Chairperson reminded the Deputy Minister that there were also questions for the Overberg and Mhlatuze WBs.
The Deputy Minister agreed there were other questions that the team would be responding to.
Ms Mochotlhi, ADG, DHSWS, said that the Department was aware of the challenges in the Sedibeng WB, which had resulted in the Department assisting it in various ways. Sedibeng had an interim board that she believed was making a difference. The process of interviewing for a permanent board in Sedibeng was under way, and the names would shortly be submitted to Cabinet.
One of the ways the Department was assisting Sedibeng WB was its involvement in the Covid-19 project. A chief executive had been appointed, but unfortunately he had passed away. The appointment of a permanent board had also been seen as important, but that had been delayed. She did not believe that all was lost, as the appointment of the board would soon be finalised and the interim board was not a bad team and would help Sedibeng WB to deal with the situation. She noted that the Sedibeng WB was owed a lot of money, because it serviced the poorest parts of the country. One of the issues to be addressed was the non-payment by municipalities. One of the proposals was to give equitable shares from municipalities to the water boards, and that might improve the financial viability of the Sedibeng WB.
Regarding employment equity, Ms Mochotlhi said that the Department, despite being the shareholder, was not part of the process of appointing staff. It got involved in such processes only by invitation. She added that not even the top structure of the Water Board became involved in appointment processes. The Department could consider making it policy that it had oversight of the implementation of government policy in the water boards, such as in employment equity.
Ms Thoko Sigwaza, Acting DDG, DHSWS, reminded the Committee of the history of Sedibeng and how it had inherited poorly performing water boards in North West, such as the former Botshelo Water Board, which had collapsed because of non-payment by municipalities, following which the staff had been transferred to the Sedibeng Water Board. The Namaqua and Pelladrift Water Boards had also collapsed, and staff were transferred to the Sedibeng WB. The impact of transferring those staff members had made it difficult for Sedibeng WB to deal with the staffing issue. Furthermore, Matjhabeng local municipality could not afford to pay the money that it owed Sedibeng WB. One had to remember that the municipalities had had a negative effect on Sedibeng WB.
A number of internal meetings had been held on the topic, and it had been determined that the Department needed to focus on the financial sustainability of the WB. There had also been meetings with the National Treasury and the South African Local Government Association (SALGA) on the issue. Sedibeng WB was preparing a due diligence report that would look to its future growth strategy and how it could emerge from the situation that it was facing.
Deputy Minister Mahlobo asked that the other questions on Sedibeng WB be addressed.
Ms Sigwaza said that the Department monitored the quarterly reports and worked with the Board in a number of situations, issuing notices of non-compliance, etc, and assisting with the annual report and corporate plan.
Mr Siyengo, Chairperson, Sedibeng WB, said that his two colleagues from the Department had covered what he had wanted to say. It was true that the entity’s debtors -- the municipalities -- did not pay Sedibeng, but it could not force payment by municipalities as it did not have the money to pay lawyers to take municipalities to court, nor could it purchase gadgets to restrict the water flow where payments had not been made. Crucial positions such as the CFO and COO positions, which were critical to the organisation, could not be filled as there was no money to commit for the appointment of those people.
A crucial question was related to the debt ratio of 1.3, but the entity had been unable to pay its short-term obligations, hence the debt ratio was 1.3 and Sedibeng was unable to use its assets to service its current debt. That was a serious challenge to the liquidity of the entity. He added that it had received a loan from the Department which had provided some relief in terms of operational requirements.
Mr Siyengo asked the Acting CFO to explain the R1.1 billion in irregular expenditure. The opening balance of about R450 million had come from the irregular expenditure of the previous year, and R700 million from the 2019/20 year, but that did not change the fact that the irregular expenditure was increasing. He also asked her to explain to Members the difference between irregular expenditure and fruitless or wasteful expenditure. In some instances, it was the inability of the Board to service the SA Revenue Service (SARS) and others. It was not a case of the Board stealing money.
He also requested Mr Molobye, the HR executive currently acting as the CEO, to explain the situation in respect of the 15% gender representivity, because if that was indeed the case, it was shocking in this day and age.
Ms Mpetsheni said that the entity had received R139 million from the Department in mid-April 2021. It was also working closely with the Department in terms of the section 41 reports. The Board had earlier that day attended a meeting with SALGA, the National Treasury and the Department to discuss the entity’s inability to collect the debt it was owed. It was possible that there were deeper reasons as to why the Sedibeng WB could not collect debt from the four municipalities.
She added that the money from the Department had been used for operational purposes and to pay suppliers that were threatening to take the WB to court, or to shut down electricity, which would then impact on service delivery. The remaining funds were being kept in an emergency account.
She explained that the R700 million in irregular expenditure in 2019/20 was largely a result of the dysfunctionalities of the organisation. She described how the projects received from the Department resulted in non-compliant procurement on the part of Sedibeng WB.
Explaining the difference between irregular expenditure, and fruitless and wasteful expenditure, she said that the latter was expenditure that should not have been necessary. In the case of Sedibeng, the large majority of fruitless and wasteful expenditure was the interest that the organisation was having to pay to creditors due to late payment. She added that of the R246 million owed, 95% was owed by the Department. The total creditors' book amounted to R3.6 billion.
Mr Molobye confirmed that only 15% of the senior staff members were women, but he pointed to the many vacancies at that level of the organisation due to the number of people who had left. He admitted that gender representation at senior level had always been a challenge to the organisation, because the corporate offices were not located in a city where there were facilities such as schools. Where women were employed, they would stay just long enough to obtain adequate experience before moving back to join their families in the big cities. However, the plan was to get to almost 50% of women at the senior level. Five senior management positions were vacant, and filling them appropriately would change the figures substantially. However, he pointed out that even the recently filled chief executive position had gone to a male because of the requirement of experience. However, the situation had been identified as a challenge, and it was being actively addressed.
Mr Benjamin, Chairperson of Overberg WB, thanked Ms Mohalala for her insightful questions regarding the Board’s investment and the irregular expenditure. He reminded the Members that the CEO had been appointed in late 2018, and the Board in 2019, so there had been very little time to ensure that controls were efficiently effected, but the investment was there in case of dire need. In 2018/19, irregular expenditure had stood at R2.9 million, but it had been brought down to R130 000 as a result of the implementation of new policies and ensuring that all expenditure was tested by the internal auditor and in quarterly reviews.
Mr Buthelezi, CEO at Overberg WB, said that the money had been invested in a call account at Investec Bank for emergency situations, and also to offset times of financial difficulties. The irregular expenditure was a result of the heritage contracts that were still being sorted out. The Auditor-General had said that insufficient mechanisms were in place to manage procurement, and also that a proper investigation should have been done into ensuring that the particular company, Xylem, was a sole supplier. The difficulty was that the supplier provided a guarantee only as long as the Water Board was making use of its services. Secondly, if the contract was broken, there would have to be a period without water supply -- but water supply was a constitutional issue. The other challenge was that there was no other repair and maintenance service provider in place that had been appointed via a due process. Since then, Overberg WB had instituted a fair and transparent process for a short duration, but would be doing so for a longer duration.
Deputy Minister Mahlobo asked the Department if the Acting DG had responded to the question about tariffs.
Ms Sigwaza said that the Department’s norms and standards had been approved in 2002 as part of section 11 of the Water Services Act. The norms and standards had been revised, and were being circulated for approval. The latest norms and standards also included drought norms and standards. Some water boards were already implementing the new standards, as the Minister had powers to approve where a water board motivated for the drought tariff.
The Deputy Minister said that all questions had been responded to, but added that the Sedibeng WB leadership had to take decisive action, and it was not adequate to say that it was being addressed. The entity had to be compliant with the law, or action would be taken. He asked the Acting DG of the Department and the CFO to look at the matter of the Department owing money to the water boards, and said it had to pay any money owed immediately. He noted that support had been offered to the water boards.
He also said that attention had to be paid to the debts owed by municipalities. There was a lot of pressure on the Boards not to stop the supply of water, but one had to acknowledge that the debts, such as that owed by the Matjhabeng municipality, were simply not sustainable. Some municipalities had completely collapsed.
Despite the problems in Sedibeng, he was very pleased with a lot of the work being done, especially at the Sterkfontein treatment works, and much of it was back on track. There had been some disruption at Harrismith and places like that, but government was keeping an eye on it.
He reminded Members that the clean audit for Overberg was not a small issue, and had to be celebrated. Responding to the Chairperson’s concern about the Department’s ability to maintain oversight and its early warning system to intervene timeously, the ministry would work on the audit action plan and ensure that oversight was tighter and the intervention was more timeous.
The atmospheric water solutions were small but helpful, and when Covid-19 was no longer an issue, he believed that the Committee should visit the sites of the innovations to support South African solutions.
Mr Nthloro responded to the question of irregular expenditure at the Mhlatuze WB. In 2016, the entity had gone out on tender and had not advertised for the 21 days as required. A retention amount of R823 000 had been paid in the 2019/20 financial year, and that was why the entity had had to disclose the irregular expenditure. The appropriate consequence management had been applied to the responsible officials, and all had since left the employ of the Mhlatuze WB. Systems and controls were in place to ensure that that did not happen again.
Deputy Minister Mahlobo said that wherever anyone had not followed the laws, that person had to account.
There being no follow-up questions, the Chairperson acknowledged the presentations.
Mr Mashego raised his hand and was permitted to pose his questions.
He asked the Deputy Minister whether Sedibeng was a going concern, and whether the Deputy Minister was comfortable that he could live with the Sedibeng situation. He was not convinced that it was a viable concern but the Deputy Minister was living with Sedibeng on a daily basis and he might have a plan that could change the situation. He asked that any such plan be shared with the Committee. He was comfortable with the other water boards, but asked for re-assurance on Sedibeng.
Deputy Minister Mahlobo said that he had tried to respond to the question in a diplomatic way. Sedibeng remained a going concern, although he had issues about its liquidity. Having money in the bank to deal with expenses over a 90-day period was a challenge. The WB served a unique constituency of three provinces, and had clients that were in a very bad shape. There were issues of governance, and it had to be able to perform a turnaround. The Department needed to engage with the provinces of the Free State and North West, where the municipalities had not paid. Without support, Sedibeng would not survive. He said that it was necessary to monitor Sedibeng, as well as other water boards.
Ms Mohlala asked when the concept of regional utilities in respect of water boards would be finalised?
Ms Sigwaza said that the concept was a policy position that had been approved by Cabinet in 2013, and the Department was working on the concept that each water board would have gazetted boundaries and would become a regional entity. The main challenge was that the Bill containing the necessary legislation had not yet been passed. The Department was waiting for the legislation to be passed.
The Chairperson said that irregular expenditure and fruitless expenditure had to be brought under control by attaching it to a person, and there being consequence management for that person. The Department had to assist entities under its control that had financial challenges, and had to develop plans that responded to those challenges. The recommendations of the AG were non-negotiable. The Department had to work with Sedibeng on the recurring audit outcomes, as it was accountable. It had to ensure that there was a plan to address the AG’s management letter.
She acknowledged that the interim board at Sedibeng had tried to deal with the situation, but DHSWS had to work with the interim board, although the Committee encouraged the Department to appoint a permanent board. Magalies Water Board had an interim board but had a clean audit, so it was not just about the board. The board had a critical role to play, and the DHSWS should not undermine the entity but work very closely with it. The Department should report on a quarterly basis on the implementation of the audit outcomes, as financial management was key.
Deputy Minister Mahlobo agreed that the Chairperson was correct and that, as a shareholder, it was necessary to ensure that the institutions were functional and did not collapse in the hands of the Department. There had been a lot of movement in the executive at Sedibeng. Magalies had a strong executive despite the interim board, and that was why the Magalies WB had done well. A revolving door did not lead to a successful organisation. The Department would do everything necessary to stabilise the situation, without fear or favour.
The Chairperson thanked the Deputy Minister and his team. The meeting was adjourned and would reconvene at 14h00 the following day.
The meeting was adjourned
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