In a virtual meeting, the Committee met with the Department of Public Works and Infrastructure (DPWI) to receive an update on progress with the implementation of corrective measures following the Beitbridge border post fence debacle, and the ongoing processes to effect the Committee's recommendations, and those arising from the investigations of the DPWI and the Special Investigating Unit (SIU).
In the first presentation, the Department provided a detailed timeline of the events, starting from the declaration of a National State of Disaster in March 2020 to fight the spread of COVID-19, and the DPWI commencing the repair and replacement of a 40km section of the Beitbridge border post fence, which had been identified by the Department of Defence (DOD) as a hotspot for illegal immigration. Due to various concerns raised about the cost and fitness for purpose of the fence, the Minister had requested the Auditor-General to conduct a forensic audit in April 2020. The Minister had requested that all payments be stopped and for the DPWI's governance, risk and compliance branch to investigate the procurement and all the processes followed concerning the construction of the fence. The investigation identified a lack of planning, procurement irregularities, non-compliance with supply chain management (SCM) prescripts, poor quality of materials used for construction, as well as excessive project costs.
In June this year, all the implicated national bid adjudication committee officials were found guilty of the charges against them. The sanction report had imposed a final written warning and suspension without pay to all the employees because there was no irretrievable breakdown of the relationship of trust, dishonesty on the part of the employees, or any evidence of employees benefiting from the project.
The Department provided detailed feedback on how it had responded to the SCOPA's 13 recommendations. It reported that in the 2021/22 financial year, its anti-corruption unit had concluded 30 investigations, resulting in 42 officials being referred for disciplinary measures, and ten criminal referrals to the South African Police Service for possible fraud and corruption offences. It had commenced with civil recovery processes to recover R4.397 million, and three entities and their directors had been referred for possible restriction/blacklisting due to their involvement in fraudulent conduct.
Reporting on its debt situation, the Department said that at the end of August, municipalities owed it R5.524 billion, and the amount outstanding on state-owned properties was R2.79 billion. A list of significant disputes and potential financial losses was provided for various departments, which indicated that the total loss was R7.424 billion. There had been interventions at the Property Management Trading Entity (PMTE), covering such areas as interest charges, billing agreements, a request for intervention by National Treasury and the ministry, and the involvement of the Forum of South African Directors-General.
The Chairperson requested a list of the departments indebted to the DPWI, and was told that it was owed R9.2 billion by at least 15 government departments in Feb 2022.
In a third presentation, the Department provided figures for different regions, detailing the irregular, fruitless and wasteful expenditure of the Property Management Trading Entity (PMTE), as well as the reply of each region. Figures were provided for the unresolved 2020/21 audit matters under assessment.
The Committee was particularly concerned about the Beitbridge border post. Members asked what measures the Department would implement to prevent the same issue from recurring and ensure that officials followed the proper procedures. The Committee enquired about the training of SCM officials, the professionalism implemented, and whether professionalism involved visiting the regions. The Committee was also concerned about how far the process of appointing a new restriction committee was, and the financial implications of all the appeals taking place.
The Committee asked whether there were any arrangements between the DPWI and the DOD to address the Beitbridge problem. Members were also concerned about the blacklisting of companies and the lack of urgency to address the issues. The Chairperson said it was unacceptable that the person who had been delegated to report to the Committee in the absence of the Minister and the Minister's advisor, was not present, and asked the Department to locate the Chief of Staff to log into the meeting. The Department reported back that the Chief of Staff could not be located. Questions were also raised about contracts related to occupation, non-occupation, delayed occupation and property-related agreements, with a specific focus on the refurbishment of the Telkom Towers building.
DPWI briefing on implementation of corrective measures
The Chairperson welcomed the Department of Public Works and Infrastructure (DPWI) to provide a presentation to the Committee on the implementation of corrective measures and the ongoing processes to effect the Committee recommendations, and those arising from the investigations of the DPWI and Special Investigating Unit (SIU).
Mr Imtiaz Fazel, Deputy Director-General, DPWI, said that following the declaration of a National State of Disaster in March 2020 to fight the spread of COVID-19, the DPWI had commenced repairing and replacing a 40km section of the Beitbridge border post fence, which had been identified by the Department of Defence (DoD) as a hotspot for illegal immigration. Due to various concerns raised about the cost and fitness for purpose of the fence, the Minister had requested the Auditor-General (AG) to conduct a forensic audit on 20 April 2020. On 25 April, the Minister requested that all payments be stopped, and requested the DPWI's governance, risk and compliance (GRC) branch investigate
procurement and all processes followed concerning the construction of the fence.
The investigation commenced on 25 April, and identified a lack of planning, procurement irregularities, non-compliance with supply chain management (SCM) prescripts, poor quality of materials used for construction, and excessive project costs.
On 3 June 2020, the DPWI appeared before SCOPA, at which the Committee sought more clarity on the border fence procurement project and the investigation. On 25 August, the Department appeared before SCOPA again on the Beitbridge investigation's findings. SCOPA had conducted an oversight visit from 4 to 6 September, and had made certain findings in this regard. On 4 September, the DPWI, the Presidential Infrastructure Coordinating Council (PICC) and the SIU briefed the Portfolio Committee (PC) on Public Works and Infrastructure and SCOPA on the findings of the investigation.
The DPWI appeared before SCOPA again on 6 October, where progress on recommendations from the investigation reports was presented to the Committee. On 17 November, the SCOPA report on its oversight visit to the Beitbridge border post from 4 to 6 September was released, with recommendations that the Department needed to respond to.
On 2 February 2021, the DPWI had appeared before SCOPA on the Beitbridge investigation, at which progress on the recommendations from the investigation reports was presented to the Committee. On 11 May, it appeared again before SCOPA, where progress on recommendations from the investigation reports was presented. On 30 November, the DPWI presented another progress report to SCOPA.
On 22 February 2022, the DPWI appeared before SCOPA to present the Department's progress in addressing material irregularities, including those related to the Beitbridge Border fence project. At this meeting, SCOPA Members provided additional recommendations to the DPWI. On 24 February, the state concluded its case in the disciplinary proceedings against the majority of implicated DPWI officials. On 8 March, the Special Tribunal handed down its judgment on the matter between the SIU/DPWI (applicants) and Caledon River Properties/Magwa Construction (respondents). The judgment stripped the contractor, Magwa, and principal agent, Caledon River Properties, of any profits arising from the Beitbridge border fence project. In May, the disciplinary proceedings against the majority of implicated DPWI officials continued, when the implicated officials responded to the state's case. The hearing concluded on 10 May. Parties submitted closing arguments on 27 May.
On 3 June, all implicated National Bid Adjudication Committee (NBAC) officials were found guilty of the charges against them. Mitigating and aggravating arguments were due on 10 June by the employee party and 20 June by the employer party, whereafter sanctions would be handed down. The employee parties submitted their mitigating arguments requesting a lenient sanction short of dismissal, based on their personal circumstances. However, the employer submitted aggravating arguments, calling for the sanction of dismissal, given the seriousness of the charges, the amount involved, and the conduct of the employees.
The chairperson had delivered the sanction report, imposing a final written warning and suspension without pay to all the employees on the basis that there was no irretrievable breakdown of the relationship of trust, dishonesty on the part of the employees, or any evidence of employees benefiting out of the project.
The employees had accepted the sanction through their attorneys, and the Acting Director-General had been informed of this. Approval was awaited to give effect to the sanctions, as well as the dates thereof. After consideration and in consultation with the Minister, the Acting Director General would provide the decision of the Department.
Implementation of SCOPA recommendations
Mr Fazel reported on the progress in implementing the SCOPA recommendations:
The Memorandum of Understanding (MoU) is reviewed to clarify the roles and responsibilities of the Department of Defence, the Department of Public Works and Infrastructure, and the Department of Home Affairs.
The updated MOU to clarify roles and responsibilities for the borderline environment was submitted to the Department of Defence (DOD) on 13 August 2021. DOD had requested that other stakeholders be included in the MOU (i.e. Department of Agriculture – for foot and mouth disease). The DOD also proposed that the document be converted to an implementation protocol agreement. The updated MOU/Protocol Agreement was currently with DPWI Legal Services for approval of the revised content.
To support the DOD in developing an integrated borderline solution, a request for information (RFI) was commissioned by the DPWI on 28 March 2021. The RFI closed on 26 April, and 16 proposals were received. The bid evaluation committee completed the evaluation of bids in June. Three bids were compliant with the terms of reference of the RFI. Compliant bids were submitted to the DOD in July, to be incorporated into the final specifications for border fences. The DOD indicated in a meeting held on 11 November that engagements were taking place internally, and they would confirm the submission date of their approved specifications by 25 November. To date, the DOD has not submitted its approved specifications owing to ongoing internal engagements with various DOD divisions.
The Phase 1 Feasibility Study reports were submitted to the DOD on 1 and 2 March 2022, respectively. In the same communication, the DOD was requested to submit a user asset management plan and capital budget funding confirmation to implement the Phase 1 Feasibility Study report recommendations. The communication also reminded the DOD of their outstanding user specifications, which were key for the DPWI to complete the Phase 2 Feasibility Study reports for the planning, design, construction and maintenance of the borderline infrastructure projects. In August 2022, the DDG: Governance, Risk and Compliance (GRC) alerted the Justice, Crime Prevention and Security (JCPS) cluster to the delays from the DOD in responding to these matters.
All physical defects are rectified in line with all applicable regulations.
A technical condition report has been finalised. As the fence, in its current form, was not fit for purpose and in material non-compliance with specifications, the Department had decided not to undertake any repairs on the fence, as it would constitute wasteful expenditure.
Legal action is taken against implicated companies, and processes to recover the money paid are set in motion.
The SIU launched an application on 23 September 2020 to freeze the service providers' bank accounts. The Tribunal made an order by an agreement that the service providers would not make any further claims for payment from the Department, that the service providers would settle any proven claim, and that the SIU would institute by a pre-determined date proceedings to set aside the contract.
The SIU received correspondence from the NPA in March 2021 indicating that the matter had erroneously been referred to the National Director of Public Prosecutions in Polokwane. The matter was transferred back to the Director of Public Prosecutions' office in Pretoria. The matter was now with the police, and the SIU met with the lead investigator on the matter for a briefing session. The lead investigator from the police had made contact with the DPWI to retrieve all the original records. The Department provided the police with the records on 22 July 2021. As a result, thereof, the lead investigator was able to register a criminal case on 22 July 2021 at SAPS Pretoria-Central. The investigation was still ongoing.
Recovery of funds:
On 17 November 2020, the SIU instituted legal action against Caledon River Properties (Pty) Ltd, trading as Magwa and Profteam cc, with the Special Tribunal. The application was opposed, and the matter had been enrolled to argue jurisdiction, which was raised as a point in limine. The matter was heard on 26 January 2021 in the Special Tribunal. The Tribunal, on 25 February, dismissed the respondent's points in limine, and the matter would proceed without any appeal. On 9 March 2022, the Special Tribunal judgment was handed down on the matter. The judgment stripped the contractor, Magwa, and the principal agent, Caledon/aka Profteam, of any profits arising from the Beitbridge border fence project. The judgment of the Special Tribunal was appealed on 19 May by the contractor and principal agent. Their appeal was dismissed with costs on 7 September.
The Department writes to National Treasury requesting it to blacklist and monitor the principal agent and main contractor from doing business with government, in terms of Regulation 14 of the Preferential Procurement Regulations, 2017.
The matter was served before the Restriction Committee & Authority (RCAA) on 28 August 2020, after which the RCAA sought detailed evidence contained in the investigation report to enable it to continue its business. The Department was compelled to delay the release of this information and to reconstitute the composition of the RCAA, recognising that the chairperson of the RCAA was one of the officials cited in the investigation report and was subject to disciplinary action. This was also delayed to allow the Department to initiate and advance disciplinary processes before releasing the investigation report to third parties, to protect the confidentiality of the information contained in the report.
On 11 February 2021, the Department approved the final charges against the officials. It formally reconstituted the RCAA to exclude from membership of the committee any person who may have a conflict of interest. On 12 February, the matter was tabled again with the RCAA and all the relevant reports and supporting evidence were provided to the committee to enable it to conclude its work.
The RCAA met on 4 May 2021, deliberated on the matter, and resolved that the contractor and principal agent be recommended for restriction to National Treasury (NT). Due process had been followed, and the referral to the NT was submitted on 7 May. National Treasury wrote back requesting several documents from the Department, and the chairperson of the RCAA provided the information during the week of 14 -16 July 2021. Both companies were placed under restriction by the NT in September 2021 for a period of ten years. They had appealed, but while the Department and the NT were still addressing the appeal, the companies had launched an urgent court application to challenge the restriction of their companies and to review the decision of the NT. National Treasury had issued the companies with letters to this effect, and part of the court application was then abandoned. The NT subsequently uplifted the restriction imposed on both Magwa and Profteam and referred them back to the Department on 21 February 2022. NT had requested the DPWI to reconsider the matter and decide whether the restriction was to be imposed or not. The request from NT was referred to the DPWI's Restriction Committee and Authority for consideration.
The several contracts that the principal agent and the main contractor have with the Department are terminated with immediate effect.
The DPWI's internal audit unit reviewed the current contracts of Magwa Construction and Profteam on a sample basis (tabulated in the following slides). The audit of these contracts (excluding the Beit Bridge border fence, which was subject to its own investigations) had been concluded. Based on the work performed and reviewed under the procurement processes and site visitations, the audit report concluded that, based on the sampled audited sites, there was no material non-compliance finding by the principal agent and the main contractor noted that warranted the termination of these contracts. Feedback had been reported to SCOPA previously, and the findings and recommendations were being followed for implementation.
A graph reflecting values for the following SCOPA recommendations was provided:
The several contracts that the principal agent and the main contractor have with the Department are terminated with immediate effect.
A process of vetting all supply chain management personnel is initiated.
All reasonable steps are taken before monies owed to the state can be written off as irrecoverable.
The Department had placed a moratorium on payments to the service providers. On 9 March 2022, the Special Tribunal judgment was handed down on the matter. The judgment stripped the contractor, Magwa, and principal agent, Caledon/aka Profteam, of any profits arising from the Beitbridge border fence project. The judgment of the Special Tribunal was appealed on 19 May by the contractor and principal agent. Their appeal was dismissed with costs on 7 September.
Consequence management against all implicated officials is carried out with adequate sanctions.
Disciplinary action was taken against section 12 employees. Two of the 13 implicated DPWI employees -- the Director-General and Special Advisor to the Minister -- were employed in terms of sections 12 and 12A of the Public Service Act 1994. In this regard, the Department did not deal with their disciplinary processes.
The Presidency was managing the disciplinary action against the Director-General. On 9 September 2020, Minister De Lille wrote to the Presidency, informing of the findings and recommendations of the Beitbridge border fence investigation. The Minister had advised the SCOPA Chairperson on 16 April 2021, requesting that the Acting Minister in the Presidency, Khumbudzo Ntshavheni, be called to update the Committee on this progress disciplinary matter.
The State Attorney was managing the disciplinary action against the Minister's Special Advisor on behalf of the Minister of Public Works and Infrastructure. The Minister served a letter to her Advisor, Ms Melissa Whitehead, in September 2020 informing her of the intended charges following the findings of the Beitbridge border post report. Ms Whitehead acknowledged receipt of the letter. The Minister requested the State Attorney to appoint the initiator and chairperson for the ensuing disciplinary process. The State Attorney had appointed an initiator and chairperson. The initiator had prepared draft charges against Ms Whitehead. The Minister interacted with the initiator on 9 December 2020, 27 February 2021, and 1 April 2021, and met with the initiator and State Attorney in December 2021 to finalise the charge sheet against Ms Whitehead. The initiator's charge sheet was now finalised and would be served by 30 March 2022. Hearing dates would be set for April 2022. The chairperson and counsel had been appointed. The chairperson was expected to convene the meeting by mid-July. The Minister was waiting for a report from the chairperson.
Regarding the disciplinary action against NBAC officials, on 24 February 2022, the state concluded its case against the majority of implicated DPWI officials. In May, the disciplinary proceedings against them continued when the implicated officials responded to the state's case. The hearing concluded on 10 May, and the parties submitted closing arguments on 27 May. On 3 June, all implicated NBAC officials were found guilty of the charges against them. Mitigating and aggravating arguments were due on 10 June by the employee party and 20 June by the employer party, whereafter sanctions would be handed down.
The hearings of the senior DPWI officials were scheduled for 4 - 6 May 2021, but these were postponed at the first sitting due to the failure of the legal representative of one of the officials. However, the Department argued that the matter should proceed, and the hearing was held on 5 May 2021.
During the hearing on 5 May, one of the official's legal representatives, Kambonani Cooper Incorporated, served the chairperson and the Department with a court application to, amongst others, set aside the investigation report and the disciplinary inquiry.
The DPWI had since deposed the founding papers for a review of the chairperson's ruling postponing the hearing sine die, and submitted the papers to the State Attorney for service on the respondent and filing at the Labour Court. The chairperson of the disciplinary hearing was served with the Labour Court application on 29 November 2021 in Bloemfontein by the State Attorney (Kimberley), and the application was served on the attorneys for the DDG: Construction Project Management (CPM) in Johannesburg on the 2 February 2022 by the State Attorney (Pretoria).
The employee party, acting through his attorneys, served and filed a notice of intention to oppose, and his answering affidavit on 6 June 2022 was replied to by the Department on 13 June. The State Attorney had since applied for a hearing date with the Registrar of the Labour Court.
10. Investigation reports are submitted to SCOPA on 31 December, and thereafter monthly progress reports are also sent to the Committee.
The Department appeared before the Committee on 3 June, 25 August and 6 October 2020, and 2 February, 11 May and 30 November 2021, and provided the progress updates to the Committee. The Department submitted progress reports to the Committee in February, March and May 2022.
11. SANDF deploys optimally to perform its mandate of border management and security.
The DPWI had engaged the DOD on the need to increase their presence on the borderline in terms of their constitutional obligation. This included Ministerial interaction on 4 April 2020 and 26 January 2021. The DPWI's DG further sent a letter to the Secretary of Defence on 27 April 2020 requesting the DOD to intensify patrols, and indicating the withdrawal of private security appointed by the Department. The DOD addressed this matter. The Minister of Public Works and Infrastructure would again raise the issue during the envisaged meeting with the new Minister of Defence.
Cases of improper conduct to be reported to SAPS:
The GRC and SIU investigations of allegations of corruption and fraud had resulted in 91 disciplinary referrals (nine dismissals), 292 criminal referrals and R1.4 billion referred for civil recovery. R129m had been recovered, R378m was in court/summons issued, and R466 million had been referred to the Asset Forfeiture Unit (AFU).
In the 2021/22 financial year, the GRC department's anti-corruption unit (ACU) had concluded 30 investigations, resulting in 42 officials being referred for disciplinary measures, and ten criminal referrals to SAPS for possible fraud and corruption offences. Through the State Attorney, the DPWI's Legal Services had commenced with civil recovery processes to recover R4.397 million, including claims for fruitless and wasteful expenditure, irregular expenditure and fraudulent claims. Three entities and their directors were referred for possible restriction/blacklisting due to their involvement in fraudulent conduct.
Protection of national key points and their insurance status:
The DPWI wrote to the SCOPA Chair on 2 March 2022, noting that the DPWI was subject to the Public Finance Management Act (PFMA) and therefore had to abide by the associated Treasury regulations. The Chairperson had requested a list of the departments indebted to the DPWI. At least 15 government departments owed the DPWI R9.2 billion in February 2022.
To address the AG's findings for the year 2020/21, the Department revisited the entire population of awards to ensure there was full compliance with local content for reporting to the Department of Trade, Industry and Competition (DTIC). This work has been concluded. All SCM heads were required to submit monthly compliance certificates confirming full compliance with local content policy. Probity audits were done to ensure that local content requirements were part of the tenders. SCM practitioners had to ensure that the latest updated list of designated sector commodities published by National Treasury had been consulted, and that bid specification committees were informed to incorporate this into the tender requirements. The Department's procurement plan made provision for capturing all local content awards to facilitate ease of retrieving information for reporting purposes.
Referral to Department of Environment, Forestry and Fisheries (DEFF):
The Department obtained the environmental authorisation (EA) in November and December 2020 for all the RSA/Zimbabwe sections -- the Madimbo, Mapungubwe and Mpumalanga corridors – for the planning and design of the maintenance and/or upgrade of the patrol roads and fencing on the borders between RSA, Zimbabwe and Mozambique, as part of the long term borderline infrastructure solution.
Report to the Council for the Built Environment and Engineering Council:
The principal agent failed to act in the interests of the Department, and accordingly breached their fiduciary duties towards the DPWI. This was evident in their initiating and certifying a progress payment when no progress had been achieved on the project, and overseeing the development of an overstated bill of quantities that placed the Department at risk of financial abuse and exploitation. It was therefore recommended that their conduct be referred to the Council for the Built Environment (CBE) and the Engineering Council of South Africa (ECSA) for further investigation. As a result, the DPWI referred the matter to the Construction Industry Development Board (CIDB) on 6 October 2020 for further investigation. The Department also submitted the complaint to the ECSA to investigate the directors of Magwa Construction and ProfTeam on 11 February 2021. ECSA acknowledged receipt of the departmental complaint on 11 February 2021.
The recommendations covered the following aspects:
- Training and awareness;
- Quality control;
- Infrastructure Delivery Management System (IDMS)
- The DPWI concluding an MOU with the National School of Government on 18 December 2020 to facilitate training courses for personnel development within governance, administration and, in particular, SCM.
The Professional Service branch in DPWI had developed a training strategy that aimed at professionalising not only SCM officials, but all officials in the value chain of core infrastructure delivery and property management functions of the Department. Engagements were also held with National Treasury concerning professionalising SCM. Several bid committee (Bid Specification, Bid Evaluation, and Bid Adjudication) training sessions had already been conducted and rolled out throughout the Department. Various other training interventions in aspects of SCM and financial management had also been rolled out in the Department. Mandatory training on irregular expenditure was currently underway for all officials. Further, in areas where certain weaknesses had been identified, focused training sessions had been planned as part of the preventative controls.
Controls were constantly being reviewed by internal audit, and where weaknesses were identified, the controls were strengthened and then reevaluated. As part of enhancing efficiencies and compliance within the core infrastructure delivery and property management functions of the Department, the implementation and rollout of the IDMS were underway. In this regard, a new operating model, associated business processes, and 30 standard operating procedures (SOPs) have been developed in full alignment and compliance with the IDMS and the Framework for Infrastructure Delivery and Procurement Management (FIDPM). All material had been made available on a single repository on DPWI servers, and the process would commence on 1 April 2023. The implementation plans had to be revised to incorporate International Standards on Auditing (ISA) Sustainable Infrastructure Development Symposium (SIDS) methodology as part of portfolio planning.
As part of the IDMS implementation, SCM processes and SOPs had been developed in line with the FIDPM, which primarily focuses on governance decision-making points, alignment, and functions to support good management of infrastructure procurement and delivery. The DPWI wrote to the SCOPA Chair on 2 March 2022, providing a tabulated summary of the funds owed by client Departments at that time.
DPWI's debt performance
Mr Mandla Sithole, Chief Financial Officer (CFO) and Mr Morris Mabinja,DDG: Real Estate Management, presented the debt performance report for the DPWI.
The Department said its average spending monthly was R876m, and the average recovery was 60 to 90 days, resulting in R10.1b outstanding. Graphs were provided reflecting the numbers for the debtor's balance trend in four categories -- leases, capital, municipalities and rental (state-owned properties) for 2019 to 2022. As at the end of August, the municipalities owed R5.524 billion, and the amount outstanding on state-owned properties was R2.79 billion.
A list of significant disputes and potential financial losses was provided for various departments, including Transport, National Treasury, the Independent Police Investigative Directory (IPID), Human Settlements, Defence, Basic Education, the Department of International Relations and Cooperation (DIRCO), the DOD, Sports, Arts and Culture, Health, and the Department of Correctional Services (DCS). The total loss was R7.424 billion.
There had been interventions at the Property Management Trading Entity (PMTE), covering such areas as interest charges, billing agreements, a request for intervention by National Treasury and the ministry,
and involvement of the Forum of South African Directors-General (FOSAD), with DG to DG and CFO to CFO meetings.
Because of the interest charges, some clients had paid to avoid fruitless expenditure, while others had requested a write-off. AGSA would be following up with all clients. The billing framework agreement required advance billing for all portfolios, resolution of disputed claims within 30 days, and stopping paying for the services for all disputes and non-settlement of outstanding claims. However, clients were reluctant to sign the agreement.
PMTE's 2020-21 irregular, fruitless and wasteful expenditure
Mr Chris Lombaard, Executive: Programme Management Services, Independent Development Trust (IDT, provided a brief presentation on the fruitless and wasteful expenditure for PMTE. Figures were provided for Cape Town, Kimberley, Polokwane, Bloemfontein, Pretoria, Umtata, Port Elizabeth and Durban. The assessed irregular, fruitless and wasteful expenditure figures were provided, as well as the reply of each region to SCOPA. Figures were provided for the unresolved 2020/21 audit matters under assessment.
(See attached report for details)
Ms M Siwisa (EFF) enquired about the Beitbridge border post. She said the Department had issues with officials not following the protocol required for projects. The Beitbridge project had resulted in a loss for the Department. What measures would the Department implement to prevent the same issue from recurring and ensure that officials follow the proper procedures in a project and that principal agents and contractors follow the proper mandate? No one involved in a contract should take any shortcuts because it would cause a loss for the Department.
Her next concern was about the training of SCM employees and the professionalism implemented. She asked whether professionalism for the Department included doing paperwork in an office only, or actually going to regional offices to do evaluation and monitoring to ensure that things went according to plan. It was important for people involved in projects to follow the legislation relevant to the project.
Her final concern was the appointment of the new Restriction Committee & Authority (RCAA). She said that since the term of the restriction committee had lapsed, it required an extension. She asked how far the extension of the committee was, or when a new committee would be appointed, especially because the Beitbridge border post had not yet been finalised.
Lastly, she asked what the financial implications were of all the appeals that were taking place which concerned the Department.
Ms A Beukes (ANC) asked when the last communication regarding the border post had taken place with the DOD and their response. Were there any arrangements between the DPWI and the DOD, such as a joint task team to address the problem?
Her next concern was about the blacklisting of companies. She said the timeframe of the blacklisting process was concerning, as it seemed as if there was no urgency to address the issues. Whilst the blacklisting process was still ongoing, those companies were still doing business somewhere. She referred to the recommendations of SCOPA on local production. Compliance certificates were received from SCM heads every month, and she asked what the current percentage of local production was. Lastly, she asked whether the disputes relating to municipal services were about the village systems, or the amounts categorised by the municipalities.
Mr Fazel said that the Department had implemented measures to mitigate and prevent a recurrence of the Beitbridge border project. This was evident in slide 27, presenting the infrastructure delivery management system. The Department sought to implement a standard operating policy for serious procedures pertained to every participant in the infrastructure delivery value chain, beginning with client departments when requisition infrastructure, specifying their duties and responsibilities, and the DPWI itself with an extension to landlords and contractors. The infrastructure delivery management system had been developed as a solution to secure internal control and prevent a recurrence of the Beitbridge border experience.
To address the professionalism and paperwork concerns, on 1 April, the Department introduced a new regime for managing regions. There were 11 regions and a head office in Pretoria. There was always a risk that regions run on autopilot, while the Department was housed in Pretoria. The Department had introduced a new regional matrix based on the principle that all DDGs had a line of sight over every region. The DDG for construction used to be responsible for policy and construction only, and those 11 regions worked under the regional manager. With the new system, the DDG for construction would be responsible for construction in all 11 regions, with the assistance of a regional manager. This principle was called the "line of sight." The role of a regional manager has also been changed. The regional manager was responsible for governance and facilitation in all the regions, and consultation with the head office. This had been introduced to reach the level of professionalism and to respond to issues in a real way that compelled officers in all regions to get involved at the project level.
He said that the debates over who owed who should really be resolved. As Mr Sithole had indicated, the money the Department owed was putting public works under financial strain at a DG level. From a realistic point of view, some departments would not be able to retrieve funds to pay the debt. It was important to have bilateral communication at the DG level so that settlements could be made, with the involvement of the Treasury. The Department had a 70% settlement with the Department of Health which they had disputed and sought to write off by other means, but the Department had banked the 70% in cash.
The restriction committee was in the process of being reconstituted. The new committee members had appeared before the DG. The DG merely had to sign off, and then the process could be concluded concerning the two companies involved. The companies had previously been restricted, and an appeal had been submitted to the Treasury asking them to reconsider the committee's decision. The aim was to complete the process in a short time, perhaps this month. The DG had been requested to conclude the process of appointing the new members.
The financial implications of the Beitbridge border post were that it was initially a contract of R38 million, of which the Department had paid R21 million. In April 2020, the Minister placed a moratorium on all further payments, which had locked the project at R21 million. The SIU tribunal had reported that no further profits should be made on the project. In a criminal case, it was submitted that the R21 million was made as an advance payment. The case was premised on the fact that both the officials of the DPWI, and the principal agent, had made misrepresentations to the Department to facilitate the advance payment on the grounds that goods would be delivered on-site. Advance payment was necessary, when in fact no goods were delivered and no work started at the time. There was also a criminal case of fraud against all those involved in effecting the advance payment, which the Department was seeking to recover via the tribunal, which had ruled that no profits should be made on the contract. However, there was an appeal in the High Court on this matter.
The DPWI had done all the site clearance work in the major areas of the borderline to enable the construction of a border fence. The Department had also visited the market to seek potential solutions for a border fence. It was in an advanced position to support the DOD with its mandate.
Mr Sphamandla Ngcobo, Assistant Director: Demand and Acquisition, DPWI, sitting with Mr Bassie Kgasoane, Chief Director: User Demand Management, DPWI, said it was necessary to recognise the regular invoices for infrastructure. The joint task meeting with the DOD was on 31 March 2022, and there were regular meetings with the border national authority structures under the Disaster Management Act (DMA). There was also a meeting between the Ministers on 2 September, and a letter had been sent to the accounting officer. There was also an engagement with the JCPS cluster on 18 August. All these engagements stressed the importance of outstanding user specifications to complete public works and other requirements for the Beitbridge border post.
Mr Sithole said there were different reasons for the disputes by the clients, particularly the DOD. Clients were questioning fluctuations in invoices, and the DPWI had explained that usage in a particular month would be different from the previous month, and that it depended on the usage by a client. There were instances where a municipality would estimate and do meter readings. Another dispute that the DOD had was about multiple invoices. The Department had explained that there were different bills provided that accounted for different utilities. Some bills were particularly for water, others for electricity and some for other services. Other clients had raised disputes over occupation of premises, arguing that they were not in occupation. The dispute was difficult, because a client may dispute that they were not in occupation at the national level, but regional offices may confirm that they were in fact in occupation. The process was tedious and caused delays on the Department's end.
Absence of delegated official
The Chairperson asked why the person who had been delegated to report to the Committee in the absence of the Minister and the Minister's advisor, was not present. He said that the Committee understood that the issue of the DG had been taken to the Presidency, but there had been a heightened veil of secrecy in so far as the processes around the Minister's advisors were concerned. It was important for the delegated person to be present. The issue had been too long-winded without anything sustainable being achieved, and without any consequences.
Mr Fazel said that the Department would engage with the Minister about the absence of the delegated person, because they were section 12 employees who fell outside the scope of the Department. He apologised on behalf of the Minister's office. He said he would request the Minister to write a written response regarding the section 12 employees -- specifically the advisor and the now-retired DG.
The Chairperson said that was not the issue, and the apology was noted. The issue was that a Chief of Staff had been delegated but was not present.
Mr Fazel said that the Department would attempt to locate the Chief of Staff to log into the meeting.
The Chairperson said no apology had been received, so the Chief of Staff needed to log in. Hiding behind written submissions was not acceptable and the apology system could not be abused
Mr S Somyo (ANC) enquired about contracts related to occupation, non-occupation, delayed occupation and property-related agreements. He referred to the contract involving the Department of Human Settlements, which was disputing a contract worth R50 million based on the date of occupation and the consultation between the departments. There seemed to be a distance between the contracting section and the user departments, which had opened up an area for dispute. When a contract for a building had been signed, the date on the lease agreement was usually the date of occupation. This was the user department's responsibility, and disputes about the appointment date put the contract's capacity in question. He asked what the Department could do better, because paying for a building already being occupied contributed to wasteful expenditure.
Mr Mabinja replied that the issue with the Department of Human Settlements was a historical situation that had originated in 2009. All contracts had specific commencement dates, and it had been ten years since the specifics of the contracts had been reviewed. The commencement date was the date of occupation. No specific date was placed on contracts anymore, and it had averted similar situations from recurring.
Mr Somyo asked if it was a Telkom building that had never been occupied, despite a payment made in terms of contractual relationships. The government was bleeding due to financial challenges. The Department was showing an inability to pay for services because there were non-payments by user departments. If operating in such a loose environment continued, how would this situation be averted? How would some form of sustenance be guaranteed, because the impact would be huge at a municipal level?
The Chairperson requested for the SIU to speak after the response.
Mr Mabinja said that with Telkom Towers, there was never an arrangement that the SAPS would immediately occupy the building. There were about six different phases in which Telkom Towers was to be refurbished and customised for the user department, the SAPS, to take occupation. In phase 1, there was an agreement on how the project would unfold and which units would take occupation from Pretoria and other buildings. The process had its challenges, but the occupation had now taken place. Other phases would unfold too, because there was money that had to be spent and planning that needed to take place.
Mr Batho Mokhothu, Deputy Director-General: Construction Management, DPWI, aligned himself with what had been said about the Telkom Towers and the multiple phases. The Telkom North building had been successfully completed and SAPS occupied the building. There were multiple buildings in the complex. The phases had been placed in line with the migration plan set up with the SAPS. The Department was currently planning for the information technology (IT) building, and the necessary needs have been communicated. Leases would be released for the IT building. In terms of the other phases, engagements with different partners were taking place using the refurbishing operating transfer model (ROT) so that the Telkom Towers project could be completed as soon as possible. The main reason the ROT was opted for was because of the funding limitations in the fiscus, requiring the Department to engage with the private sector to ensure that it could fast-track the Telkom Towers process.
Mr Fazel said that the Chief of Staff could not be located, and requested that he be allowed to ask the Minister for a written response.
Mr Somyo asked if it would be possible for the Department to furnish a detailed report on the phases concerned and the financial support of construction and the refurbishments related to occupation and contractual related points, the time of the occupation, and the total occupation of the entire plan.
Adv Redibone Lebopa, Principal Forensic Investigator, SIU, said that the Unit was embarking on several litigations through the Tribunal route. These were ongoing and had the support of the Department. The SIU had discussed the systematics of the internal control they had to implement, and consider for implementation, to ensure there was no recurrence of the same issues.
The Chairperson asked about the interactions with the DOD, and whether there had been a response to meeting requests and whether there had been cooperation from them.
Mr Ngcobo said that the requests had gone unanswered. Where meetings had taken place, they had received the response that internal discussions within the DOD and various departments were taking place to find the best way to support and assist the DPWI with its planning.
The Chairperson asked if all written submissions could be sent to the Committee by Wednesday.
Mr Fazel said the Department would comply.
The Chairperson said that the Committee was left with very little comfort regarding progress on the issues arising out of the report, and the manner in which the matters around the ministerial advisor were communicated only heightened frustration. It fed into the view that there was no political or administrative will to deal with this matter, and they were labouring under the false hope that this matter would be swept under the carpet. The scandal of the Beitbridge border post corruption, including the allegations of the participation of the ministerial advisor, indicated that there was no movement in this regard, but everywhere else. The Committee still did not have clarity on the nature of the instruction that the Minister gave. This indicated some ministerial protectionism of those in the office, and those advising. The Committee would hold this view until the Department moved with the necessary speed and urgency to bring the matter to a logical conclusion and report back to the Committee. It baffled the mind that the basic element of consequence management was non-existent in this Department. The Committee noted that the DOD had not been forthcoming, and planned to follow up. Because there were border security areas, particularly the areas the DDG was referring to as the most vulnerable areas, interaction with law enforcement was required on matters referred to.
Mr A Lees (DA) said that he supported the proposal that submissions should be sent by Wednesday. He suggested that if the deadline was not met, the Committee should write a letter of demand or a robust letter to the leader of the Department to receive the documents.
The Chairperson confirmed that the suggestion was acceptable.
The meeting was adjourned
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