Alternative funding models for SANDF, mechanisms to contain CoE expenditure, cases of irregular, fruitless and wasteful expenditure within DOD; BRRR; with Deputy Minister

Meeting report

Attendance at meetings

The Acting Chairperson welcomed the Members and the presenters virtually, and the Members then deliberated for some time on the importance of attendance at Committee meetings.

Mr Thabang Makwetla , Deputy Minister, Department of Defence and Military Veterans (DODMV), was of the view that it was important to have Members present when presentations were being made because it helps with the discussions, and also avoids having the Department being asked to respond to the same questions in future meetings. The Committee played an important role of oversight, and the DOD respected the engagements with the Committee.

Mr M Shelembe (DA) concurred with the Deputy Minister's comments, and suggested that the Committee should meet the quorum before the meeting commenced, as this would mean that the discussions that were going to take place would be productive. He suggested that the meeting be postponed.

The Acting Chairperson suggested that Members should come with an agreement on how to move forward, and that the Committee should discuss the issue of the quorum in future.

Mr S Marais (DA) added that it was important to postpone the meeting until the Committee met the quorum to have a meeting.

Chairperson Xaba highlighted that there were six Members in the meeting, and that meant they met the quorum requirements.

The meeting commenced after Members had met the quorum requirement.

DOD on strategic plan to implement HR measures

Ms Sonto Kudjoe, Secretary for Defence, made the presentation on behalf of the South African National Defence Force (SANDF). The presentation detailed HR measures the Department was taking to reduce HR cost pressures.

The Committee heard that the DOD had reactivated the implementation of exit strategies -- the Mobility Exit Mechanism (MEM) and the Employee Initiated Severance Package (EISP). The National Treasury had welcomed the Department’s change in approach in dealing with compensation of employees’ (COE) pressure and the resultant irregular expenditure. Furthermore, the Treasury was of the view that the Department should quickly implement measures where it had discretion and did not require additional funding.

(See attached document for details)

Joint Operations division funding of additional border safeguarding initiatives

Admiral Bubele Mhlana, Chief of Staff, South African Navy, told the Committee that a proof of concept plan for the Border Safeguarding Optimisation Plan had been drafted after the Joint Ops Division became aware of the allocation in a letter from the chief financial officer (CFO) in September 2021.

He also told the Committee that the DOD had been working hard with other stakeholders to reduce border crimes.  

(See attached document for details)

The Acting Chairperson asked Members to engage with the presentations from SANDF.

Discussion

Mr Marais appreciated both presentations, but was not pleased by the fact that the border safeguarding presentation that was sent to the Committee was different to the one that had been presented. He raised concern about the lack of priorities when it came to making sure that security at the borders was improving. He asked if there was any use of high tech equipment at the borders to deal with border crimes, and also raised a question about corrupt soldiers who were deployed at the borders --  were there any measures to deal with these soldiers?

 Mr Marais was disappointed about the cost of employees issue because most of the emphasis was put on how money would be saved, but there had been no linkage to the figures that were given, and this showed that there was no indication to reduce the expenditure. The reserve force numbers would be reduced, but at the same the permanent force numbers would increase. This did not fit in the saving criteria, because more would be spent. The rejuvenation of the SANDF must be discussed and it must be done in the correct manner, because it could have a major impact on the age profile of the defence force's personnel. He asked if there had been an exit mechanism in place that had been implemented by the Secretary for Defence.

The Acting Chairperson asked for a comment on the funding of border safeguarding that had been shifted during Covid-19, and if there had been an increase in border crimes. She wanted to know the impact of the reduction in the HR budget, and how this was going to affect the morale of the SANDF. Was there a dedicated team working on the compensation of employees?

Chairperson Xaba sought clarity from the Secretary for Defence on the letter from National Treasury that had dealt with issues related to irregular expenditure.

Response

Ms Kudjoe said the compensation of employees had been a burning issue for the SANDF. The budget cut had affected HR, which meant that the SANDF had to write a letter to National Treasury asking for condonation. The over-expenditure on the compensation of employees dated back several years, and there were measures in place to deal with the issue. The DOD had been asked by the Committee to look for measures that would reduce the over-expenditure and it had done this internally, as the hybrid model was not efficient. Proposals were sent to the Committee on how the other areas within the DOD were affected by the measures that had been implemented, and the money to be saved was demonstrated. The consensus was that in a period of three to four years, the over-expenditure would have been dealt with. National Treasury had responded that they would consider the letter only on the basis that the DOD had implemented measures to cut the over-expenditure. There had been several efforts to make sure that the HR plan would not affect the DOD to a larger extent, and that there were alternative sources of funding. They were currently implementing the new measures because they were not expecting any funding from the National Treasury until they had implemented all of them.

Admiral Asiel Kubu, Chief: Human Resources, SANDF, added that the DOD had made presentations to the Committee on their plans and how they sought to mitigate some of the issues, and the Committee had been very supportive. The Department would make sure that they implemented the changes, and would update the Committee on their progress. The results would not be noticeable yet, because it would take time, so he pleaded with the Committee to be patient and give them time to work on the changes. The DOD had not rolled out all the interventions for now, but they were confident that everything would work out well.

There were a number of unemployed reserve force personnel, and one challenge was that it was not always a good idea for the DOD to rely on reserve forces. It would prioritise the issue of exit packages, but the current status was that there was no funding. However, with the help of National Treasury, they were hopeful that a solution would be found because they had been engaging with each other. The morale of the defence forces was affected by the decisions that were being implemented, and it was a difficult phase because there needed to be a balance. However, the DOD was doing its best to make sure no one was unemployed, because the country was already facing a high unemployment problem.

Admiral Mhlana told the Committee that the DOD had started to procure and implement the use of drones and cameras along the border lines so that they could have more visibility. They took into consideration what happened at the borders every single day, because they needed to make sure which system to implement.

The DOD was disturbed and embarrassed at the corruption involving soldiers at the borders, and there were measures in place to deal with the matter. Once the investigations were complete, the perpetrators would be brought to book. During the hard lockdown, there had been a large number of vehicles that had tried to smuggle counterfeit goods into the country, and the soldiers deployed at the borders had been able to deal with those matters.

Presentation on fruitless and wasteful expenditure

Admiral Mhlana dealt with the issue of fruitless and wasteful expenditure within the DOD. He said the investigation report on the 1 Military Hospital refurbishment had been received and handed over to the Hawks. The investigation into the irregular awarding of the contract on the DOD's asset management in 2015 had been completed, and was under consideration by the Department.  

(See attached document for details)

Discussion

The Acting Chairperson asked for clarity on the timelines provided in the presentation, because they were vague. She suggested this could be remedied by inserting a column that would cover the timelines. She also sought an answer on the current status of suspensions.

Mr W Mafanya (EFF) was concerned about blanket statements when it came to presentations from the DOD. The same issues had been recycled many times, and there needed to be a case study on the continuous decline of the DOD even after the assistance of other departments. There must be a turnaround strategy to deal with the issues. At the moment, it was sounding as if everything was being done for compliance purposes, because the issues had been repeated many times. He was worried that the same pattern would continue.

Mr Marais supported Mr Mafanya's comments, saying it was as if the Committee was going round in circles, and that there was a need for honesty from both sides. It was coming across as if the DOD was forgetting what it had presented to the Committee sometimes, and there was a need for reality checking.

Chairperson Xaba was of the view that the presentation did not reveal all the irregular and wasteful expenditure, because the Auditor-General had complained about qualifying the DOD on its lack of full disclosure, and the presentation was confined only to matters that had been finalised. The matters that the Committee was concerned with had not been dealt with. Accountability required the Department to account for everything, and not pick which things to present. The presentation was a mockery of accountability because it did not cover everything that was in the financials of the Department. The DOD was not willing to share all the information. He suggested that the Committee be provided a report on irregular expenditure so that they could check whether the Department was working on these matters.

Response

Ms Kudjoe said that when the Department wrote to National Treasury, it was in connection with the compensation of employees, and the response had been that the amount was not going to be condoned because National Treasury had to be assured that the Department was sticking to its HR plan and implementing it well. The DOD had carried out further investigations into the asset management contract issue, as well as the fuel matter, and the findings had been conveyed to the Chief of Defence and the Auditor-General. The Department would follow up on these matters and propose the implementation of consequence management, because National Treasury needed to see that there were measures that had been implemented.

Deputy Minister Makwetla said he appreciated the discussions and reports that had been presented to the Committee, and that the observations made by the Members were valid and fair. The DOD's challenge was that they had to do more with less because of the funding issues. Information shared with the Committee on the irregular expenditure was not comprehensive, and it was a challenge to tighten the Department so that more could be done. The reports had been prepared by the accounting officers from the Department, and the Committee had a right to question the findings. He added that the Ministry did not have an influence on how the reports were prepared.

There was a view that National Treasury was not satisfied with a number of issues with the DOD, and that the challenges must be addressed through a legislative framework and policies that dealt with the obligations that had to be fulfilled. The country needed to keep a permanent force of 75 000, and this decision had been taken into account because there was a need to rely on the reserve force. The reduction of reserve force hours had to be taken into consideration, because it may lead to a contradiction in regard to an understanding of the role of the reserve force. The intake of the Military Skills Development System (MSDS) cadets would happen only on a biannual basis, and this would have an impact on the rejuvenation of the force and how it was going to happen. The point that needed to be addressed was reviewing the reserve force and how younger people could be referred to the reserve force. The MSDS should not be a system were young people were recruited and made to enter the military as a full time profession, because the MSDS was a programme to provide skills to the youth so that after their training they could be employed in other sectors.

The border deployments issue was an ongoing one, and the DOD required money to spend on the systems and projects. The absence of the Special Defence Account made things difficult, because everything had to be procured within one financial year, and this was not sustainable.

The Minister would share more information with the Committee on some of the matters that had been raised by Members.

Consideration and adoption of Committee's 2021 BRRRs

The following Budgetary Review and Recommendations Reports (BRRRs) were considered and adopted by the Committee.

• The BRRR on the Annual Report of the Department of Military Veterans (DMV), dated 24 November, 2021,
• The BRRR on the Annual Report of the Department of Defence (DOD), dated 24 November, 2021.
•  The BRRR on the Annual Report of Armscor and the Castle Control Board (CCB), dated 24 November, 2021.

The meeting was adjourned.