Update on establishment of Ethics & Compliance, Infrastructure and Consequence Management Unit & legal cases involving DPWI and PMTE; with Minister

Public Works and Infrastructure

24 August 2022
Chairperson: Ms N Ntobongwana (ANC)
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Meeting Summary


The Department of Public Works and Infrastructure (DPWI) met with the Committee to update it in a virtual meeting on the progress of the Ethics and Compliance, Infrastructure and Consequence Management Unit, and litigation cases against the Department.

Some of the Committee Members were concerned about a large number of managerial positions within the Unit, which was criticised as being very top-heavy. The need for the Unit was also questioned, as it was felt that ethics and compliance should be the responsibility of upper management within every department. The DPWI, however, assured the Committee that the independence and technical expertise of this Unit would ensure the ethical conduct and compliance of all departments. It would also advise, educate and empower line management to perform their duties effectively.

The Department said it would end the monthly lease agreements to reduce expenditure. The overcharging by private landlords had already been recovered.

The litigation report was criticised as being too technical. The Committee wanted to know the names of the companies and people who had laid claims against the DPWI and the Property Management Trading Entity (PMTE). They also wanted details of the nature of the claims. The DPWI confirmed that they had the names, but the meeting was open to the public, and some of the more personal information may be too sensitive to share.

Members expressed concern about the number of dormant litigation cases that may negatively affect the other parties involved. There were too many cases for the State Attorney to handle. The DPWI was in the process of establishing an alternative dispute mechanism so that minor issues could be settled without going to court.

There was a general consensus that the number of vacant funded posts was unacceptable, considering South Africa’s high unemployment rate. The Department was advised to fill those positions as quickly as possible.

The Committee also expressed concern over the slow pace of projects and the number of uncompleted projects. The DPWI confirmed that they were targeting the causes of the delays and trying to find solutions to the problems involving the "construction mafia."

Meeting report

Progress on establishment of ethics and compliance unit

Mr Lwazi Mahlangu-Mthembu, Acting Deputy Director General (DDG): Governance, Risk and Compliance, Department of Public Works and Infrastructure (DPWI), said the Committee had requested the DPWI to provide a progress report on establishing an Ethics and Compliance, infrastructure and Consequence Management Unit. The need for the Unit had been included in the ten essential interventions, referred to as the “ten principles,” during 2021/2022. The Unit’s functions included risk assessment, risk management, designating ethics officers, establishing a Governance and Ethics Committee, and managing employees seeking remunerative work outside the public service (RWOPS). The presentation asked the Committee to note that the process to establish the newly configured ethics and compliance unit was underway.

The presentation also included an update on vacant positions in the Governance, Risk and Compliance (GRC) branch. Full capacitation of the GRC branch had not yet been achieved. Most of the vacant posts were unfunded, with only six funded vacancies. The presentation recommended that the Committee note the review of the composition and status of the GRC branch.

Litigation cases involving DPWI and Property Management Trading Entity

Mr Christopher Makgoba, Legal Advisor, DPWI, said the Committee had requested the Department to present an update on all litigation cases involving the DPWI and the Property Management Trading Entity (PMTE). He gave an overview of the litigation management in the Department and a summary of all active, dormant or finalised litigation cases. The summary included all regional offices as well as the head office, and identified a total of 39 dormant cases in the regional offices’ workbooks, and 32 in the head office workbook. The summary included possible causes of dormant litigation matters, as well as measures to address dormant litigation cases.

An expenditure analysis found that the expenditure as of 30 July was approximately R9 598 379, which had been processed in favour of the Department of Justice for the State Attorney throughout South Africa.

Minister Patricia de Lille said the Department had ended monthly lease agreements to reduce expenditure. The overcharging by private landlords had already been recovered. She suggested that a new system be implemented, where all invoices for leases were published in a single-entry point and were visible to all.

(For detailed information, please consult the presentations).


The Chairperson thanked the Minister and the Department for their presentation, and invited the Committee to discuss the two presentations.

Ms L Shabalala (ANC) saw a connection between good governance and a capable state. She believed that filling the vacant posts would strengthen good governance. Good governance went hand in hand with positively impacting the community. Job creation should be emphasised.

She criticised the presentation for being too technical. They had been presented with statistics, but lacked a narrative. She suggested that the meeting be closed so that the Department and the Committee could discuss sensitive cases. The Committee was unaware of who was involved in the litigation cases. She recalled two previous claims against the Independent Development Trust (IDT) in Durban. Only one of the cases had ended up in court and dragged on. That may be the reason why there were so many dormant cases. People did not have enough money to continue suing the state.

She did not understand the information about the private law firms that had been appointed. How much had been paid to private firms, despite access to the State Attorney? She stressed the importance of being informed about ongoing cases so that the Committee did not have to find out through information in the news media.  

Ms S Graham (DA) recalled an oversight visit to offices rented by Correction Services in Port Elizabeth. The lease had been renewed for three years. However, the Justice Minister had said they were moving out in 2023. What was the update on this?

She questioned the need for the Ethics and Compliance, Infrastructure and Consequence Management Unit. Upper management should be responsible for overseeing what is being done. Was management capable? Were checks and balances in place? She also thought the Unit was top-heavy, and had too many management positions. Why did the Unit have so many directors? Who was going to do the actual work? Management should be adequately trained to enforce compliance. She suggested that the Department implement a targeted approach to find and fix the underlying causes of issues.

She also had several questions about the second presentation. Civil servants who faced disciplinary action sometimes resigned before the process was finalised. They may then apply for different positions in different departments. Was the Department keeping track of these cases?

What was the description of a dormant case? How could a case move from dormant to closed? She was concerned that the Department intentionally dragged its feet on claims so people or companies could no longer afford the litigation cases. She had heard of a company in the Eastern Cape that owed R18 million. However, they had not been paid and had had to close the shop. How could the Department address the causes of dormant cases? The State Attorney was overworked and could not move forward with all cases. This negatively affected the other party. Did the Department have alternative dispute mechanisms to deal with more minor issues? She wondered how much was being spent on private firms. Was a mechanism in place to ensure that when litigation was raised by an official, the official was held responsible for costs?

Ms M Hicklin (DA) agreed that the structure of the Ethics and Compliance, Infrastructure and Consequence Management Unit was very top-heavy. Who would approve employees' appointments, and to whom would the upper management positions report? She wondered whether the DPWI and people within the Department were being capacitated to ensure compliance and good governance. She further stressed the importance of filling vacant posts, as the gaping holes might leave the Department vulnerable to leadership vacuums.

She referred to an instance when Minister De Lille had admitted to the public that her Department was in utter chaos, which had affected other departments. After the presentation, Ms Hicklin agreed with the above statement. There were a large number of cases against the Department. The Committee needed to assess if the DPWI had successfully reduced the number of claims. Measures to reduce the number of cases within the Department needed to be tightened. Management within the Department had to be capacitated to become a trading entity, not just a management agent.

She approved the proposed alternative dispute measures.

Mr W Thring (ACDP) referred to Slide 5 of the presentation on litigation cases involving the DPWI. There was a claim for R107 000 for goods and services that a state employee had rendered. That indicated that things were slipping between the cracks, since state employees were prohibited from doing business with the state. Why were the proper checks and balances not put into place? He asked about the R33 million claim with poor merit. What was the reason for this claim? What was the total value of claims with poor merit against the Department?

He supported the principles of the Ethics and Compliance, Infrastructure and Consequence Management Unit. However, he was sceptical that the unit would achieve its objectives. These units were at risk of being captured and failing to conduct their work without favour or prejudice.

Ms S van Schalkwyk (ANC) thought establishing the Ethics and Compliance, Infrastructure and Consequence Management Unit was an excellent idea. She hoped that all the efforts would bear positive results.

She was worried about all the vacant funded posts. Despite South Africa's high unemployment rate, these posts had been vacant for a prolonged period. Why were these posts not being filled?

She wanted to know the period for a case to be considered dormant. She had noticed a low number of finalised cases. What was the Department doing to improve these numbers? The number of outstanding claims was concerning. Was the Department financially able to pay these claims? She was in favour of alternative dispute mechanisms.

Ms A Siwisa (EFF) found the presentation on litigation cases somewhat concerning. She brought up an instance where a case file had been lost and never recovered in Mmabatho. The file might have got lost because it took too long to finalise cases. Was that the only time a file had been lost?

She noticed that the outstanding cases went as far back as 2007. It appeared that the Department did not have the capacity to deal with all the litigation.

She asked for clarification on the meaning of a "poor merit" case. Was the poor merit against the Department or the accusers? The dormant cases were also worrying, because they appeared to drag on indefinitely. Would they ever be finalised? What steps were taken against people who resigned while there were cases against them?  

In the presentation on the Ethics and Compliance Unit, she noticed a lot of incomplete projects. The Department was running at a loss because of these unfinished projects. She added that the GRC had already been established in 2017, but was not yet fully capacitated to deal with governance, compliance and ethics. Would the Ethics and Compliance, Infrastructure and Consequence Management Unit be able to deal with those responsibilities effectively?

The Chairperson agreed that the Unit was essential. The big question was whether or not it could ensure compliance.

South Africa had a devastating unemployment rate. Therefore, the funded vacant posts needed to be filled as soon as possible.

She shared other Members’ concerns regarding dormant cases. The COVID-19 pandemic has negatively affected many businesses, especially small to medium-sized entities. The cases for some of these businesses were lying dormant, and they often had to close their doors.

She appreciated efforts by the DPWI to implement a multi-pronged strategy to deal with cases before they went to litigation. This would be especially beneficial for small businesses. She suggested that the Department keep a register that showed defaulted contractors.

DPWI's response

Minister De Lille said the Department had the names and faces to add to the cases. The names were not included in the presentation because the information might be sensitive.

The Department of Public Service Administration (DPSA) approved the Ethics and Compliance, Infrastructure and Consequence Management Unit in 2016. The Department was allowed to appoint officials only according to the approved structure from the DPSA. She recommended that unspent money from vacant funded posts be transferred to this Unit.

She questioned whether it was possible to look at all the litigation cases and identify those with a poor chance of success. She felt that the Department sometimes defended cases just to defend. The alternative dispute resolution would help reduce the number of cases that went to court because the Department could decide to defend cases only where they had a strong chance of winning.

The PMTE had been established as a property trading entity generating income. The perpetual state of qualified audits and the Department’s overdraft bank account prevented it from reaching its objectives. The Department had plans to return to profit-making through a project that would be discussed the following week.

The Department was reorganising the PMTE. However, most of the time was spent sorting out the leases. A new senior counsel employee would start on 1 September. They would work together to compile a report with all the additional information requested by the Committee.

Mr Mahlangu-Mthembu addressed questions about the Ethics and Compliance, Infrastructure and Consequence Management Unit. He claimed that the independence of this Unit would ensure its effectiveness. It would bring an overall level of independence, assurance and regulation. He did not believe that upper management in the Department could perform the Unit’s functions. The Unit was aware of constant changes, and management might not have the technical expertise to deal with all the incidents. However, the Unit would still advise, monitor, and empower line management on all updated regulations.

Mr Makgoba agreed that the presentation should have been more personal, and they needed to attach faces to the cases. Unfortunately, the presentation was only a summary of the findings, and some of the more in-depth information was sensitive and could not be shared publicly.

The DPWI did not appoint any law firms directly. Private law firms could be appointed directly only by the State Attorney. Private law firms could be appointed if the case was too complex, or there was a conflict of interests, or the case was in a remote area that did not have a State Attorney’s office.

He confirmed that a record of disciplinary actions did exist. If people wanted to move to a new department, the record detailing why they had resigned and been disciplined would be forwarded to their new departments. If they rejoined and worked for the state, they may still be charged with any previous cases against them. The DPWI did not actively deal with disciplinary actions. He recommended the Committee talk to Labour Relations for more information.

Mr Makgoba agreed that dormant cases were a challenge to the Department. Cases were dormant if there had not been any movement for over 12 months. There had been engagements with the legal officer in Kwa-Zulu Natal to close dormant cases. They had looked at the period in which a case had been dormant, and may remove it from the litigation workbook to reduce the contingent liability. The file was not destroyed, just shelved. He also agreed that the slow movement of cases negatively affected small businesses. That was one of the reasons why a new system, which embedded alternative dispute mechanisms, was being implemented. Challenges around quantifying claims were still being worked out. Expert reports were necessary in these cases.

He addressed the concerns around the responsibility for decision-making that resulted in litigation matters. The Department, along with the GRC, would recommend a further investigation if they noted negligence on behalf of the decision-maker. The report may lead to disciplinary action. Several employees had already been charged.

The State Attorney had a limited capacity to deal with dormant cases. That was why the private attorneys provided additional capacity for the Department.

He confirmed that he knew about the situation in Johannesburg, where an employee was doing business with the state. The DPWI had been unaware that the state employee was involved in their contracted private business. That invoice had been withheld. The matter was being investigated to determine who exactly had been involved.

On slide 14 of the presentation on litigation cases against the DPWI, there was a claim for R211 million. The plaintiff claimed that a fire that originated from a state farm had been uncontrollable, damaging their farm and the entire property. However, this claim has been disputed. The investigation showed that it was improbable that the fire had originated from the state farm. Some accusers were opportunistic and tried to get access to government resources.

Members of the Committee were curious about the number of claims from sister departments. The responsibility sometimes belonged to the DPWI, but the Department should demonstrate all the steps they had taken to avoid litigation issues.

A structured maintenance plan from the DPWI would be complicated from a legal service point of view. The facility management branch could look into it and report to the Committee. 

Mr Makgoba said the lost file was indeed a concern. It was impossible to determine if this missing file was merely accidental or intentional. Luckily, only one file had been lost. The Minister had to make some interventions at the Labour Court to produce a new file. The matter had been postponed.

The Department would be able to provide the names and further information about the contractors they had used. For general information, the supply chain management (SCM) department managed custodianship.

There were several challenges around incomplete projects. The challenges included poor performance and inexperienced contractors. If contractors provided poor performances, their contracts were terminated. Some contractors developed contractor development programmes, where sub-contractors were employed with the desire to learn. Therefore, the Department could not ban all the contractors who did not perform well in a learning situation. Blacklisting contractors came with its own set of challenges.

He defined what was meant by good and bad merits. When cases were opened, they needed to be assessed to determine whether there was a case to defend. Good merits meant that they had a good case. If the Department had poor merits, the DPWI would quantify claims against them and then pay them out.

There were several causes for civil cases. Most of the disputes could be dealt with through alternative dispute measures. These measures were faster, cheaper, and created a friendly environment.

National Treasury kept a register of defaulted contractors. The record was consulted before appointing a contractor. However, companies still had a way to manoeuvre around the checks and balances involving documents and conflicts of interest.

Follow-up discussion

The Chairperson said that the contract of a suspended person might end while waiting for cases against them to be resolved. What happened to the money owed to them if the employee was suspended without pay and his contract ended?

Ms Hicklin followed up by asking how long an employee’s name would remain on the register detailing the nature of the disciplinary actions. Were those lists universally available? officials convicted of committing an offence within the DPWI should not be allowed to go to other departments.

Ms Graham said that the Department itself did not pay for any legal services, so cases were being taken to court and then lost. This had cost implications for the Department. Was it taking on cases just because it could?

The "construction mafia" placed immense pressure on businesses. Companies may have been held to ransom by the construction mafia, resulting in delays and additional costs. A contractor's poor performance may not necessarily be their fault.

DPWI's response

Minister De Lille responded to concerns about the repeat findings and targeted interventions. The Department had quarterly meetings with the external auditors to identify remedial actions to be implemented. She would write down these actions and send them to the accounting officer. The Public Finance Management Act (PFMA) was clear on the role and function of the accounting officer. The biggest problem was the resistance to information technology (IT). The Department employed a new Chief Information Officer (CIO), put out a tender to digitise the immovable asset register, and applied for an expert team to digitise the entire enterprise planning system.

She said that no government employee got suspended without pay.

Mr Makgoba said that suspension without pay occurred when an employee had undergone a disciplinary process, and had sanctions against them. When an employee successfully challenges a paid suspension, the suspension would be set aside, and the employee could return to work. When an employee has been dismissed, the process may go through the bargaining council and then the labour court, for the employee to get reinstated.

He was aware of the construction mafia. Local business people in Port Elizabeth complained that they were not considered for sub-contracting. The DPWI would appoint a contractor from another province. Those contractors would bring their sub-contractors, and the local people would not benefit. The tender was awarded, with the list of sub-contractors verified and confirmed. Contractors had used other sub-contractors that had not been vetted. He admitted that there could be instances that had not been reported, but they were working on it.

Contractors that experienced delays through no fault on their part could launch an application for a time extension, and factor in the costs. The contractors would not be punished or penalised if the application was accepted.

He was unsure of the state of the register of employees who resigned midway through a disciplinary hearing. He needed to confirm with Labour Relations, and provide a report to the Committee.

Mr Mahlangu-Mthembu confirmed that issues around the construction mafia had been discussed in the Government Communication and Information System (GCIS). He was a part of the State Capacity and Institutional Development Clusters, which prioritised these issues.

The Chairperson thanked the Department for demystifying some of the Committee’s concerns. The Committee would follow up on questions that had not been answered. She asked why only one Telkom Tower had been finished. Was it still the same company being used to construct the building? She requested that the Department elaborate on the issue at a later stage.

The meeting was adjourned.


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