DCDT & 10 entities, GCIS, MDDA 2021/22 Annual Reports

Meeting report

Opening remarks
The Chairperson noted the National Assembly Rules on virtual meetings applied. Microphones and cameras were to be off unless given permission by the Chairperson. Participants were not to unmute their microphones on a point of order until recognised by the Chairperson.

Ms D Kohler Barnard (DA) placed her disquiet on record that the Committee was dealing with all these entities in a single meeting. Some should have had a half-day if not a full day assigned to them. Secondly, it was using a document drawn up by a department it did oversight on. This was like allowing a matriculant to write their own exam question paper. Comparing the document to what the Auditor-General actually determined, there was a lot of cherry picking happening. In the future the Committee should revisit how this oversight was done.

The Chairperson noted what was raised. Firstly, the Committee had the time allocated to it for this BRRR process. Secondly, it had engaged on this topic before – the Department had oversight of the performance of the entities which it actively engaged. The role the Committee played came quite late. Of course we do isolate entities that needed special attention. It would add to its programme those that needed special attention to return for additional engagement. It had examples of when it had challenges with entities such as the SABC and specifically allocated time for that. It had enough time to cover that and this included giving civil society organisations the chance to speak on that matter. The Committee did the same with SAPO and USAASA. The Committee was balancing the time allocated for BRRR, while informing its programme on those entities that needed to return. With the number of entities the Department had, if each were to present for a day, it would take up half the month. It would rather prioritise those that needed special attention. By the end of the meeting it would have a sense which focus areas it needed to assess and address its programme accordingly.

This was the BRRR process; the SABC could return later to present specifically on its turnaround strategy progress. The Chairperson noted her concerns which were raised to improve the Committee’s work.

DCDT & entities 2021/22 audit outcomes: AGSA briefing
Ms Sibongile Lubambo, AGSA Corporate Executive: Audit, and Mr Andries Sekgetho, Business Executive for the Communications and Digital Technologies portfolio, presented.
Sentech - Inadequate accounting records to support the broadcasting digital migration (BDM) project remained a material finding on the predetermined objectives (PDO). Management was encouraged to improve the recording and reporting process via the assistance of internal audit and by getting additional systems and resources to manage the volume of information and record keeping.
DCDT - Obtained unqualified audits with findings. As reported in the previous year, management does not have adequate internal controls in collecting, collating and verifying the data related to the BDM project, which resulted in material findings on the reliability of the performance information. Management must improve internal controls, determine proper accountability and enhance oversight over the BDM project.
USAASA - Regressed to a qualified audit as the audit action plan it developed was not effective. Significant internal control deficiencies identified in the prior year, were not addressed during 2021/22. Effective audit action plan to improve internal controls must be implemented by management.
USAF - Remained an audit disclaimer mainly due to inadequate supporting documentation on BDM project and no controls over the number of set-top boxes (STBs) resulting in numerous qualification areas which were material and pervasive. Management must ensure proper record keeping and consequence management.
SITA - The audit remained qualified. Significant findings arising from submitted AFS indicated that the accounting standards were not applied properly. Refresher GRAP training is encouraged for key officials involved in financial reporting to improve quality.
NEMISA, ICASA & BBI - These remained unqualified audits with material non-compliance matters. These should be addressed to move them to clean audits by implementing preventative controls.
SABC obtained qualified audit opinion.
SAPO obtained an audit disclaimer.

Discussion:
Ms Kohler Barnard asked AGSA how they intended to deal with the fact that the concerns raised year after year were basically ignored. The Committee saw this time and again and the audit findings simply were not corrected. She did not see any CEOs or CFOs being held accountable. They earned huge amounts of money and yet time after time there would be massive material misstatements and the AFS incorrectly done. It was not up to the Auditor-General to correct these.

AGSA spoke about ensuring consequence management in each of these entities but one did not see any. The following year the Committee is told it was not introduced resulting in no consequences. The same people who spent millions or in some entities billions in irregular expenditure faced no consequences. They continued to work at their entities. What is the situation? What is the next step by the Auditor-General to ensure the findings are acted on?

Ms N Khubeka (ANC) said the Committee listened attentively as it had its own document package on monitoring the entities to check they were on the right track and where it could assist. The presentation was clear stating what the Department should guard against. These entities should focus on consequence management and irregular and fruitless expenditure. On the set-top boxes and BDM, it could see the Department tried to follow up. The Committee fully understood that some entities were affected by the performance of other entities. In its push for improvement, the Committee tried to determine if it was possible to reconfigure the entities and have fewer as it saw them repeating the same things. It appreciated those that managed to sustain their unqualified audits and those that had managed to plant their foot in the right direction such as the FPB. The Committee promised the Auditor-General it was not relaxing, they were monitoring so things were done properly and in an orderly manner. On consequence management, the Committee could not be silent about it, it would continue pushing so the entities can be on the right path.

Ms T Bodlani (DA) noted the Auditor-General recommendation that the Committee should be more stringent as an oversight body. The biggest concern was that the reports came to the Committee much later, in hindsight and things had already happened. From what the Auditor-General was saying, it meant the Committee should correct how it dealt with the Department and entity reports so it did not allow too much time to pass between reports. The onus was on the Committee to strengthen its role as an oversight body.

In this meeting, the Committee was to deal with reports in a way that did not do justice but would deal with them in a way that would be malicious compliance. This then meant that the cycle would continue on how it interacted with the Department as a Portfolio Committee. There was enough legislation to strengthen this. Politicians loved saying there would consequence management and heads should roll. When looking at the Auditor-General’s report, one did not get the sense that consequence management had taken place. When the Auditor-General made recommendations, was it not possible to make stricter recommendations? For example, if an official authorised R1.5 million for services and goods not received, to make recommendations for criminal charges. To hear the Department was dealing with this through disciplinary action that was not captured in the report, it meant that consequence management would fall through the cracks. Unless and until the Committee saw it happening, such reports from the Auditor-General would continue. People would know that there was really no punishment for the abuse of public funds.

Ms Z Majozi (IFP) shared the same sentiments that as a Committee, it was responsible for ensuring all entities were accountable for having so much irregular expenditure. At times they would explain what transpired. Now it was receiving reports on the SABC that there were times when the three-quotation procedure was not followed. The Auditor-General was present and explained everything that transpired in these entities. It was on the Committee to ensure people took accountability for their actions. It could not let it go as a Committee, because it would have failed at not overseeing all these entities. SABC was struggling to maintain itself. It could not be that staff were not following procedures with no accountability. This was a norm in these entities and people were used to doing that. As other Members said, it should start being strict and demand reports on why and how certain things occurred. The Committee should find out because when it received today's report it raised serious concern. It should take it up with the entities when they came to the Committee to report and these concerns should be raise with them.

AGSA response
Mr Andries Sekgetho, AGSA Business Executive, replied that most of the matters raised by the Committee were comments and inputs directed towards the institutions. The institutions would be well versed to provide answers. The good thing he identified was a common theme about consequence management. From a consequence management perspective, if one looked at irregular, fruitless, and wasteful expenditure, the Committee members knew that certain processes were required by the PFMA. Firstly, section 38 and 51 of the PFMA was very clear that the accounting officer or the accounting authority if one is a board member in an institution, should implement sound internal control systems which should prevent one from incurring fruitless, wasteful, or irregular expenditure. As with all things in life one did appreciate that things could go wrong. Legislation did allow for those particular institutions to say when something had gone wrong, there should at least be a system and process in place to identify those items of non-compliance. Once detected, it should ensure they were fully disclosed in the financial statements so that the consequence management process could then come in.

The process of detection and disclosure was paramount because one needed to know what was in the environment, fully account for it so one had a complete list of what should be dealt with. Once this was done, then the hard work began. One now had to conduct and complete those investigations. One must be perceived to be actively pursuing this. The only way to achieve this was to complete these investigations and disciplinary processes with the necessary speed required. If one looked at National Treasury instructions, there were guidelines on how institutions should deal with investigations and consequence management. They even assigned timelines. The average was three months deemed a reasonable timeframe to conclude an investigation or consequence management process, with certain nuances that should obviously be accounted for.

Some of the measures the Committee could implement to speed this up linked to consequence management and the repetitive nature of some of the findings. Some Portfolio Committees that AGSA had observed would ask management to come to Parliament and brief it on the details. Most institutions would just come and say they were "doing consequence management". However, some Committees would then ask who the official was, what the fruitless and wasteful expenditure related to, and when the consequence management process started. So the next quarter when it met the Committee again, a follow-up would be requested. The Committee would state it had three months to make progress in its consequence management process. It would request the follow-up action implemented since instituting its disciplinary process. The first quarter, it was given leeway to go back and institute. The second quarter should state how far it was in the process. By the third or fourth quarter, considering the National Treasury guidelines, it was well over the timeline and by then there should be progress. Management could be held accountable to say when. Was it doing enough? Was it doing it quickly enough? Was it implementing the necessary haste and speed to finalise that process? Unfortunately, it also meant that a Portfolio Committee should ask the management structures, accounting officers and board members out there, to give quarterly progress reports. What quality assurance processes had those reports been subjected to? In other words, is there an internal audit function that has adequately supported management structures or leadership in a portfolio to look at the accuracy, reliability, and credibility of that information? And was it reviewed by the audit committee which is the independent oversight structure of the governing bodies? Have they signed off on those submissions? Those would then clarify some of those roles in the accountability ecosystem. Everybody would know that their accountability was clear and personal. A Committee should check if the internal audit had not done its role, then the institution was presenting a document to the Committee that had not been quality assured.

Those were some of the levers that the Committee could pull to ensure that in-cycle or throughout the year that by the time these institutions came to report to the Committee on a quarterly basis, at least it would have some form of assurance on the numbers that they would be reporting. Otherwise, as mentioned by one of the Committee members, a year would pass and it would be too late again and then accountability would then suffer and it seemed like there was no improvement within the portfolio. If the reports submitted were not subjected to a rigorous quality assurance process, they pose a reputational risk for the Portfolio Committee as well. The Committee was charged with oversight in playing its role in the accountability ecosystem. If information was not quality assured, it puts the Committee at risk of making improper decisions or taking improper action. This was why AGSA included in its recommendations some of those key steps that the Committee should take.

On the rigour or veracity of its recommendations as an audit office, without making excuses, the big challenge it had was an audit office consisted of auditors, accountants by qualification, training and trade. For it to determine an element of criminality was a different skill set. When looking at how the Public Audit Act had been amended, as soon as it identified a transaction that seemed untoward and required further exploration and interrogation, it then had the material irregularity process which became more of a legal process. In that process when it determined that something had gone wrong and it was not getting the necessary movement or there was more to explore, it had the option to refer those matters to the relevant investigative bodies. These included the Special Investigating Unit (SIU), Directorate for Priority Crime Investigation (DPCI) being the Hawks, and the Public Protector.

The AGSA presentation covered one of the instances where it identified a particular transaction where it realised accountability would become an issue. The two parties involved were the Postbank and the Post Office – which the Committee would speak to later once it tabled its report –and AGSA could not figure out who should do what from a legal perspective. This was because they were separate entities, it was difficult to determine who would enforce consequence management. It then referred the matter to DPCI for investigation which was still ongoing and AGSA was engaging with it regularly. That was the best it could do in the process. It was certainly exploring all these other transactions that it picked up. It had separate conversations with management on further action to try and spur on the correct behaviour and change the culture. Hopefully in the cycle it would have more to report should that behaviour not have been corrected by management going forward.

A comment was made on the entities dealing with STBs but the comment was more about this portfolio’s strategic future intent on the reconfiguration of the portfolio to ensure it did not duplicate efforts. This was well noted and welcomed. It was hoped the portfolio could also streamline some of the strategic objectives it sought to achieve. The presentation noted coordination was required within the institutions operating in the environment to ensure that collectively they contributed towards the overall strategic intent when doing the performance information reflection.

Members were very correct and he supported the sentiment shared by them that the legislation did exist and the onus was upon the effective utilisation of consequence management. The PFMA was quite clear on the process. It was how management implemented it and how well it reported to the Committee and what it did to ensure it held them accountable in its overall accountability ecosystem.

Follow-up discussion
The Chairperson said slide 30 was quite clear on the recommendations that the Committee needed to incorporate in its BRRR. A bigger concern was slides 35 and 36 because it demonstrated that audit action plans were developed but did not get to be implemented. It would take AGSA’s advice on how it needed to pin down those who do quality assurance for reports to ensure accuracy. The reality was that some of these matters were repeat findings. On the quarterly reports received on the implementation of those audit action plans, the understanding was that preventative measures therefore had been put in place.

From its in-year monitoring, it did get reports on what the audit and risk committees looked at. In the interactions during the year, whether these were not picked up, what others would call early warning signs that people would not meet or committed to and interventions were made for them to comply. He thought this an area of interest because it would still have a proper discussion with the departments and its entities. The last point was that other than BBI and Postbank that had been sent back on the grounds that they had not presented. Is this the final audit on all entities or do we still have entities that are putting up an engagement with yourselves and could therefore alter the outcomes that we have? For transparency and consistency of information taken to the public it would be important to clarify that point. If it could speak to that it could help the Committee in making its recommendations so that it spoke to something that had been addressed and continue to recommend on it.

Ms Kohler Barnard found Mr Sekgetho’s presentation exceptional. She wondered if it was possible for him to draw up a document detailing the ways in which the Committee and the rights it had on holding these entities to account. The Committee said over and over lack of consequence management was an ongoing challenge and it did not see people getting fired. Entities did not look into where the hundreds of millions had gone, who they went to, where they went, who did not award the winning bid correctly. Were they related to somebody? How far could the Committee go? She thought Mr Sekgetho’s knowledge was encyclopaedic and perhaps it should consider asking him to compile a document of every right it had as a Committee. He was right that it could come back and bite the Committee. It knew things were going wrong in various entities and simply signed off on reports and moved on. Mr Sekgetho had all the knowledge and it should ask him for his assistance.

Ms Khubeka sensitised Ms Kohler Barnard that it also depended on the entities when it came to dealing with serious matters. Management in the entities needed to play their role. If there was anything that needed to take place then management should run with it. That was why the Portfolio Committee chased after the Department to find out if it was following up or not.

AGSA response
Mr Sekgetho noted the intertwined themes in the follow-up questions. He thanked Ms Kohler Barnard for her kind words. It was good that she saw when dealing with such serious matters and heavy topics on the process of accountability that there was some good that Office of the Auditor-General was doing so he appreciated the feedback on that. Luckily the briefing document would not entail too much work because there was an existing document that would require a tweak and update to make it more relevant to the particular institutions as Ms Kubheka mentioned. He liked that the document had certain roles assigned to the relevant people in the accountability chain and it had the pieces of legislation that told you your roles and responsibilities and what consequences there were. AGSA did welcome the invitation for an additional engagement so it would await a formal request on this. It would definitely welcome the engagement to touch base with the Committee on the measures expected from an operational perspective from the administration. And what some of the devices would be that would be available to the Committee to leverage and implement those to drive the correct culture and behaviour on this.

Mr Sekgetho agreed with the Chairperson that entities did actually table audit action plans, but did not implement them. The challenge was that when they come and report quarterly, further evidence should be sought. One might need to consider the truthfulness of the statements advanced during those presentations. Some things may take place in the environment that would require the entity to be agile and amend its initial audit action plan. Those should be communicated consistently and the Committee should be taken on board on the adjustments made to their commitments for the implementation of the audit action plan. The in-year monitoring of the entity reports should have other evidence provided by the assurance provider to indicate the truthfulness of what had been implemented.

The Office of the Auditor-General had some early warning interventions when it tried to engage with its auditees through the status of records review. As mentioned by Ms Kubheka, the environment needed to be conducive and have management support and buy-in where management actively wanted to improve the environment. It did have the status of records review which was where it went to an institution and did high level assessments on some key focus areas to give management a sense of some potential pitfalls they should deal with before it came for the audit. This would hopefully allow the entity to address these so by the time AGSA came in, those matters would be dealt with. It would be worthwhile for the Committee to engage the 12 entities in this portfolio and ask which of them were implementing the status of records review and at what point in time.

Once the Committee received that commitment that the implementation of the audit action plan was being done, it was welcome to call AGSA before the stage of final reporting. This would grant it the opportunity to conduct an interim audit to look at what management had done by that particular point in time. That could be worthwhile for the Committee to consider and AGSA could come and give its assurance on what was found or point to some material issues that the institution still had time to respond to and hopefully move in the right direction.

On the finality of the responses, it could have been a choice of words, but there were no outstanding engagements where AGSA still required to go back to management as each audit report had been signed and delivered to its auditees – the ones it discussed today. Those audit reports were then taken by management and put in the annual reports which had already been tabled on 30 September. There were no ongoing discussions; the audit was finalised as soon as those audit reports were signed off. He was proud to announce that the Office of the Auditor-General, given it was coming from late audits due to the impact of COVID-19, its management and audit teams could sign off the bulk of its audit reports on the legislative deadline of 31 July 2022 to enable this session on oversight and accountability processes.

The audit reports had been signed, sealed and delivered. There were no outstanding audit engagements. All the matters the Committee was engaging on were final and it could proceed to make informed decisions based on those audit reports. This included Broadband Infraco (BBI) and the Postbank. With the information it received in the briefing, the Committee could go ahead and plan its activities around that. The information was not going to change any time soon. The only remaining engagement would be to say to management it wanted to kickstart its processes going forward for the next year, look at and prioritise on some of those key issues that would have been stumbling blocks in the current financial year as mentioned earlier with the SABC. It had now agreed with it and as soon as it finalised its intervention on irregular expenditure, AGSA would try to get an early engagement and focus its attention on it so that it hopefully addressed that specific concern, by way of example.

The Chairperson thanked the AGSA and hoped the members had the opportunity to gain clarity on the issues. The Committee would be able to deal with the recommendations. He assured the office of the Auditor-General that it took its recommendations very seriously and would ensure that those that were responsible, in ensuring that these situations turned around, would be held accountable to what they committed themselves to. On its oversight role, it needed to plan and its content advisors would consider this so that in the report it would adopt, those recommendations were properly structured to reflect the views of the Committee. Initially it would have learnt from tracking resolutions where it emphasised the audit action plan reports at the time. It did receive those even in situations where the SIU was investigating. There had been a follow-up on those. What was being raised in the report was what concerned the members. Yes these audit action plans were being submitted, yes it did receive quarterly reports on implementation. When tested in the end some, had been found to be weak. In some situations it would recommend trading of people in exception to the accounting practice that was used. It thought it was making serious progress and the whole thing needed to be workshopped once again maybe using different methods to account. That was something it would pay attention to especially the report findings. It would take advantage of any opportunity for the AGSA to return and implore the Committee to do its work better. Sit would need to categorise the entities that it audited especially those that were trapped. The disclaimer of whether they were joining as new or been there for some time. The Committee might need to have quality time with them to turn them around. It would have to look at those because some of those entities were critical for the transformation agenda, particularly the nationalisation of some of the entities. Some of them formed the basis for the new envisaged entities that would be in the transformation agenda.

The Chairperson thanked AGSA and appreciated its willingness to clarify matters.

The Chairperson said Deputy Minister of DCDT Philly Mapulane had an added advantage because the Auditor-General presented before the Department and some of the points noted needed to be emphasised again on what it would have picked up. He hoped in the next 40 minutes he would be able to present with his team and emphasise the points that needed emphasis. He then handed over to the deputy minister for the presentation.

DCDT 2021/22 Annual Report
The Deputy Minister, Mr Philly Mapulane, agreed that the AGSA audit report is not painting a very good picture of the portfolio. The leadership will follow up on the issues flagged in the report. He noted the disclaimed audits and that others are working on improving; the findings on BDM; and the inconsistent reporting on performance targets. They appreciated the work of the AG in holding all of them accountable.

DCDT achieved 32 of the planned 35 targets (91%) with 91.9% expenditure against budget allocation. It received an unqualified audit opinion with matters of emphasis. The three targets not achieved were the switch-off of the SABC analogue transmitters; the framework for digital transformation and digital inclusion and the integrated plan for the National Strategic Plan on GBVF.

On the switch-off delay, the litigation in the Constitutional Court was recently concluded and it provided clarity on how the programme should proceed. Five provinces were already switched off and there were four provinces left. The 30 September had come and gone. The Department was assisting with fulfilling the STB applications and estimating the time required to complete STB installations. Thereafter the final switch-off date would be set. The Constitutional Court had affirmed that this was long overdue and need to be concluded.

The Deputy Minister explained the reasons for the other two targets being underachieved and for the areas of underspending. The underspending on compensation of employees was due to the critical unfilled vacancies of Director General and CFO which it was working on filling. The Presidential Employment Stimulus (PES) underspending had been permitted as a roll-over and it was working with BBI to start that project.

Acting DG Ms Nonkqubela Jordan-Dyani and Mr Omega Shelembe, DDG for ICT Enterprise and Public Entity Oversight, continued the presentation. Annual Performance of the entities were:
FPB targets - 15; Achieved - 10 (66.7%)
ICASA targets - 53; Achieved - 46 (86.8%)
NEMISA targets - 22; Achieved - 21 (95%)
USAASA targets - 6; Achieved - 3 (50%)
USAF targets - 12; Achieved - 6 (50%)
Sentech targets - 11; Achieved - 7 (64%)
SABC targets - 53; Achieved - 23 (43.4%)
SAPO targets - 17; Achieved - 3 (18%)
SITA targets - 19; Achieved - 11 (58%)
.ZADNA targets - 14; Achieved - 11 (79%)

Discussion
Dr M Basopu (ANC) appreciated the presentation and the general observation from all of them was that the set targets had not been met. The reasons were given for this, but what was not being raised was remedial action to ensure this did not happen in future, because targets could not be set if they were not met as this impacted the budget.

The second observation was the figures for revenue and spending did not tally, perhaps that would be explained, notably, the FPB. There were 53 SABC targets, it achieved 23, and did not achieve 20. It begged the question of what happened to the remaining 10. That needed to be explained. There were those institutions that performed even less than 60%. His proposal given the time constraints was to meet with them separately. SAPO revenue was R3.8bn yet its expenditure was R6.2bn - where did it get that other money? The USAF audit disclaimer was due to no supporting information available. Again it needed an explanation on why the information was not available.

Ms Z Majozi (IFP) was not sure if she would receive a response on the SABC. It achieved less than 50% of set targets. It had a net loss of R201 million. That did not make sense because it should have achieved at least 70% of its targets with that expenditure. She asked for clarity.

She raised a similar concern about entities not achieving their targets. It was very alarming. One would think that there could be a leadership crisis in these entities because of these results with the targets they set themselves. SAPO was a mess; government should decide what should happen to it. With the other entities like .ZADNA, it could see that they had achieved, but were not reaching total targeted performance. What might be the problem? Would the SABC still be able to complete its targets with such a loss? What was going to happen? It did not make sense.

Mr T Gumbu (ANC) appreciated the work done by Department, particularly in achieving 91% of its targets, the 100% transfers paid to the entities and that there was consequence management. On the entities, the regression in the performance of most entities was a worrying factor. If one looked at Sentech, its involvement in the BDM programme caused it to regress. Could this be an indication of capacity issues to execute this project?

Postbank was a springboard for a state bank. With an audit disclaimer, what guarantee will society have that it would be sustainable and provide much needed services to the people of South Africa.

Ms Kohler Barnard started with the MDDA. When these entities performed badly, she wanted to hear from the management of the entity what it had done about it. She also wanted to know who was to blame because as far she could see the CEO and CFO were to blame jointly. The Committee needed explanations from them. With R24 million under collection of revenue, it was difficult to imagine how they managed to do things that were reported. It had irregular expenditure of R49 million.

The Auditor-General repeated the catastrophe of the financial statements for the majority of these entities with a few notable exceptions. The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework according to the PFMA. All these entities had CFOs who all earned huge amounts of money. She did not understand how it was even vaguely possible that after so many years of democracy, it still had entities that did not know how to put together their financials. It was extraordinary and frankly heads had to start rolling. There was also the usual case of management not implementing proper record keeping and not producing regular accurate financial and performance reports.

On the Department itself, these days departments set targets they know they can reach; very seldom did they not reach the targets. When it came to the Auditor-General checking the targets there was virtually no information to corroborate the claims made. She read out loud the audit statement that read, “I was unable to sufficiently appropriate audit evidence for the achievement of 29 230 subsidised digital television installations coordinated and monitored in four provinces.” If there were no records that could be audited, how do we know that is true? If it was not audited internally and externally, the Committee should not buy it and of course AGSA had not.

The Auditor-General identified material misstatements in the annual performance report. A lot of these massive material misstatements were fabrications and lies. Once it alerted them to what they had done, they pretend it was a mistake and correct it. Why are they making those errors in the first place? She failed to understand this. Again, highly paid financial experts made errors and used the Auditor-General as some sort of kindergarten to pick up their errors. She found this absolutely extraordinary and inexcusable. AGSA could not find adequate internal control measures and the auditee did not have the information that it knew the Auditor-General would need.

On ICASA, it seemed to do okay initially, however there was an issue with the bid adjudication committee and it had to obtain reference letters from someone who was a relevant bidder. She wanted to know if that matter was cleared up. Was that service provider appointed? Did they receive the relevant letters?

She asked the Department to explain impaired receivables from non-exchange transactions of R87 million. There was an issue of management not taking appropriate steps to prevent the irregular expenditure of R33 million in accordance with the PFMA regulations.

She could not tell how many calls she had from service providers around the country that had not been paid and it would lead to businesses going bankrupt. For a government entity not to pay its service providers within 30 days was inexcusable – it destroyed lives. Management did not implement adequate controls to prevent non-compliance with laws and regulations. This was completely inexcusabl and the controls were just not there. This was a huge issue.

Medipos board of trustees tried for two years to get SAPO to pay over what it was taking from each staff salary for medical aid contributions. Instead of paying medical aid, pension fund, VAT, UIF, PAYE, SAPO just took that money and it went elsewhere. Considering this had been going on for some years, she had not seen any reference to this by the Auditor-General at any stage. But now the Post Office had racked up about R700 million in arrear medical aid contributions alone. There were employees who took it to court.

She had reported this to the Hawks as it was criminal fraud and it is currently investigating this. She wanted to know from SAPO management why the five trustees of the Medipos medical aid, who were appointed by the Post Office, were removed from their positions. Is it because you are now being held to account? All over the country people were receiving threatening letters, the daughter of a 94 year old woman with Alzheimer's received a letter demanding R190 000 which she did not have. The medical aid payment had been taken off monthly for 40 years but suddenly evaporated. These letters were countless. Cancer survivors were being told they may not have chemotherapy because that medical aid money had not been paid over. The medical aid had sent out these letters. The letters should have gone to SAPO management. She wanted to know who was responsible in making the decision to take that money instead of legally paying it over to the medical aid and other entities. When these people retired they would find that they had no pension, no UIF, SARS would be after them. There had been this bizarre activity going on that creamed off money that should be paid to these entities. She wanted someone to explain why it had been done and on whose authority because it was an extraordinary situation.

The Post Office was bankrupt. The medical aid was about to request R60 million from SAPO that the sheriff was to attach for removal. This kind of behaviour could not be hidden. Total liabilities were R4 billion so it was basically bankrupt. She did not know why managers were still in their positions she asked if management received an increase in salary for the current year, considering what happened. The Auditor-General stated it was unable to obtain sufficient appropriate audit evidence. This sentence was used over and over again as though nobody was managing anything and they were just taking their salaries. It was unable to obtain sufficient appropriate evidence for unclear control accounts and other receivables into billions of rands.

There was something extraordinarily fishy going on there. She was hoping the Hawks would find out who is behind it and where the money had gone. The Post Office was in a catastrophic state and the people who worked there and dedicated their lives to the Post Office were the ones who were being punished. It was a shameful situation. She had pages and pages of what the Auditor-General had to say. These mentioned effective steps not taken, the inability to pin down information, management making it impossible. A brief note by the Department frankly was not sufficient to highlight the catastrophe that was the Post Office – simply stating that it achieved three of its 17 targets was just a joke considering such catastrophic results. The Post Office really needed a huge shake up. For it to remove those five trustees from Medipos appointed by the Post Office, was iniquitous. She wanted it to explain that.

FPB accumulated a surplus of R46 million and assets exceeded the liabilities. It looked like finances had improved; it cut its expenses and improved its money in the bank with no fruitless and wasteful expenditure. This was one of the good outcomes of the day. There was a very strange amount that she wanted an explanation for which was the R2.8 million paid to former executives when they left. Do you give them bonuses when they leave? The investigation concluded that it was not fruitless and wasteful expenditure and should be written off. She did not know who did the investigation and assumed it was probably an internal investigation by the people who did it. This needed an explanation.

The Department did have a couple of targets that were unachieved but the explanations given were reasonable. She did not have a huge issue with that as it did achieve a majority of its targets.

SITA management needed to explain why the Auditor-General again was unable to obtain appropriate audit evidence to substantiate the recorded cost of sales transactions. This was the simplest of record keeping. There was also a revenue overstatement of R99 million. How does someone overstate revenue by R99 million? She could not believe that this was not intentional as it was an enormous mistake. AGSA said it was unable to determine the cost of sales by alternative means which was stated at R3.938 million. How is it possible that the Auditor General was unable to track it down? Expense transactions were recorded in the incorrect financial year. How was that possible? How do you enter something in the incorrect financial year? She did not know who was doing its books but found it extraordinary. This resulted in the overstatement of operating expenses by R134 million. This was not 120 rand; it was R134 million and nobody noticed. The Auditor-General was unable to determine the correct carrying amount of Property Plant And Equipment stated at R1.126 million. There was an incorrect amount and overstatement of Trade and other receivables of R165 million. What are you doing? It was inexcusable to have this kind of accounting presented to the Auditor-General. Cash paid to suppliers and employees was overstated by R253 million. This left her speechless. Material losses of R154 million were incurred because of losses on disposal of assets. Effective and appropriate steps were not taken to prevent irregular expenditure of R285 million. Fruitless and wasteful expenditure was R3.7 million – it basically threw it away. This was taxpayers’ money. It was not their private money. Someone had to answer for this kind of nonsense in departments.

.ZADNA did very well. There were not any issues besides a few targets not achieved but it was nothing to worry about. It received a clean audit opinion.

Sentech was not so marvellous, there were underlying reasons for certain things. There were some findings such as the expected credit losses of R82 million which was worse than the previous year. That was not looking marvelous; it should have been the other way around. The annual financial statements submitted for auditing were not prepared in the correct format again with material misstatements which it had to go back and correct. This gave the impression that its financial systems were not necessarily working. There were investigations into two staff members. It started in November 2019 but it looked as if in March 2022 the criminal proceedings were ongoing. What has been the outcome of that?

NEMISA did not have a clean audit but most of its targets were achieved. Again the financial statements were not properly prepared. Its financial officers need to be shown how to prepare the financial records. It was extraordinary. It had an accumulated surplus of R18 million and assets exceeded liabilities. It was not looking bad at all and only one target had not been achieved.

In many instances the audit findings that the same sentences that management needed to focus on. Lack of adequate oversight responsibility on the preparation of the financials, that was a big one. The CFO was supposed to oversee the preparation of the annual financial statements and it was not happening in any of these entities.

USAF had a lot of targets it did not achieve. In the audit findings there was a disclaimer of audit opinion. The Auditor-General could not find relevant audit evidence. Are you hiding it or are you too incompetent to show it? People should come to the Committee and explain what the situation was there. There was no consequence management against officials who incurred irregular expenditure of R17 million. It was as if R17 million meant absolutely nothing to people working in government entities.

The Chairperson asked Ms Kohler Barnard if that was her concluding point.

Ms Kohler Barnard said she absolutely needed to talk about the SABC which had R2.8 billion in irregular, fruitless and wasteful expenditure with a net loss of R201 million. It stunned her when an entity had a couple of millions in irregular expenditure but R2.8 billion was deliberate. She could not put it any other way. She asked if there was any consequence management for this.

Its financial statements were not prepared according to the PFMA. No steps had been taken against the officials implicated in the massive irregular expenditure. Security contracts were not given to the bidder who won but someone else, which was a R185 million contract. Did that go to somebody’s relative or friend? She wanted to know what that investigation was doing. There was also R2 million in rental expenditure for office spaces that were not occupied. She asked for the details of the law suits against it. She asked for clarity on pages 148 and 149 considering what she just said. It was a terrible financial situation it was in. She asked it to confirm if its HR Head had received a 20.31% increase in salary. Its Sales Group Executive received a 19.26% increase. The legal head received an 11.37% increase. The cost of executives in the board increased by 10.61% which accumulated to R49 million. The reason she asked this was because of the mass firings, retrenchments or constructive dismissals – however it wanted to phrase it. The recent offer to the staff that were left was between 0% increase for three years up to maybe 3% or not. Yet for some reason the people at the top had received massive increases. She wanted someone to justify that for her. Moving down to the rest of the SABC, not only did it need to be reminded it was wasting public money, but despite ridding itself of over 700 staff, payments to employees displayed an increase of 3% from R2.1 billion to R2.2 billion. How is that possible?

On its inability to secure or market new content, that was its number one mandate, to obtain and sell content to the viewers and listeners. During COVID-19 it literally had a captive audience and yet everybody was switching off. It was supposed to have turned this around and it was just not happening. She asked it to explain what happened. The Minister told her she had no right to know what its settlement was when it got rid of the Head of News because it was private between it and the person who left. But this was public money, there were no private little deals done with public money so she wanted that to be revealed. There were lots of questions that needed asking but the Chairperson wanted her to move on. She could spend a full day, which she hoped would come to go through these issues. The Committee was still waiting for the SABC briefing.

The Chairperson said Ms Kohler Barnard had covered a lot of ground.

Ms Bodlani said the amount of work Ms Kohler Barnard put into this report showed how much the Democratic Alliance was interested in providing a thorough oversight on all the departments. For her, the biggest issue coming across was on the BDM, it was cross-cutting in the sense that it touched on Sentech, SABC, ICASA, USAF and has had detrimental effects on all those entities. That was worrying as they were regressing because of their involvement with BDM. Her request was that while one appreciated the need for the country to be on par with other countries with technology, they should not neglect to address the consequences of not implementing the PFMA. Her request was to have a separate special meeting with all the entities impacted by BDM. The Auditor-General said that they did not have proper record management and proper management of expenses for BDM which allowed room for corruption and mismanagement. As implementation of BDM was so urgent, so many things were falling by the wayside because it was a matter of firstly complying with the court order and ensuring it used the BDM process to improve the economy and access to technologies for the poorest of the poor. It was really important for the Committee to engage further and thoroughly. She requested a face-to-face meeting if the Chairperson agreed. These virtual meetings were leaving it at a disadvantage on how it engaged colleagues on the other side.

There was a great concern that ICASA management did not implement adequate controls on compliance. There lots of reports of non-compliance by the Auditor-General. Now it had regressed even on payments which had gone from 31 days to 91 days.

On the material mismanagement of financial records, there was a leadership crisis in the entities. There was a sense that people could get away with murder when using public funds. People were expected to account. The phrase 'consequence management' had been used so many times in the meeting. Until there was consequence management, the Committee would hearing reports of millions wasted as if it was talking about cents when it was in fact talking about millions that should be used to improve the quality of life for South Africans. USAASA reported R17 million in fruitless and wasteful expenditure. Entities like USAASA, NEMISA, FPB, USAF and .ZADNA were small entities that were being neglected by the Committee and that meant it was creating a breeding ground for corruption to happen in those entities because its focus was on the big and problematic entities. It was being complacent in being an accomplice to that. It was important to keep an eye even on those entities that were performing well.

Sentech had an R82 million loss in 2021/22. In the last financial year it was R74 million. It was a lot of money for such an entity to report as a loss. This was millions in taxpayer’s money that could have improved the lives of South Africans. She asked for clarity on the role of community broadcasters with the losses reported by Sentech. She did not understand that it could have these massive losses and it was business as usual. When management was eventually given the platform to speak, despite the several millions they were paid, they would come to the Committee and Parliament and report these losses without consequences. This was sheer incompetence.

SITA was reporting an issue with property, plant and equipment. These were the small things that were not part of the core function of that entity. This was a distraction when an entity like SITA had the potential to thrive. If it was reporting that that it paid for goods and services that it did not receive or were not utilised, management should explain what consequences they were going to apply to this. The Auditor-General recommended that there be a refresher course for the key officials that dealt with finances. It did not make the same recommendation across the board. If people were being as incompetent as it was seeing in this portfolio then there should be an intervention because the last thing it wanted to imply was that this was deliberate corruption. Though she was tempted to say that it could very well be. She had spoken about the thriving entities falling through the cracks.

USAASA's audit outcome was a regression. This went to the point she was making that the matter be dealt with decisively.

SAPO had been in the red from 2018, USAF had been in the red since 2020. The Post Office had not tabled an annual report but it had been in the red. The Committee received these reports on behalf of the people that elected them to be part of Parliament – who were trusting them as Members of Parliament to speak on their behalf, to be their ears and eyes to ensure whatever money government put into these entities were reflected in the services they received. It was the Committee’s duty to ensure it was true to its mandate as Members of Parliament.

Ms Kubheka said she was sure the entities understood that the Committee was playing its oversight role. The Committee should also remember that there were entities that came with legacy challenges, especially SAPO that it was mentioning loudly. There were issues of legacy there. The Committee was trying to ascertain how best it could assist the SABC. Other entities like NEMISA also had these frustrations but now it was visibly trying to change the game and improve. The Committee should set its own targets for it to play its role. It had raised the audit action plans. An audit action plan should not be there just for the sake of it. The Committee could follow up on this. It needed to deal with the matter sharply.

The Committee was aware that several entities were affected by STBs and BDM. She agreed with Ms Bodlani that the Committee check on them in future to determine the challenges or if they were winning. On the other hand, it should not forget that this extra work was why the entities were regressing like Sentech which had been stable in the past with a clean audit. Right now, the Committee should assist the entities that had been affected. She agreed that the Committee needed to be harsh on those entities and the Department because they had regressed, especially the Department. However, the portfolio never ever had audit disclaimers, it had unqualified audits with findings, clean audits or qualified audits with findings. The Committee must check with SABC on the local content if it was winning or just swimming and was not going to make it. She asked for clarity there because it had received a bail-out.

USAASA was having the issue of whistleblowing which affected it and other entities. She hoped it was listening and would give some answers where it could manage. The Committee would continue to monitor and try to have the entities go back to where they were.

GCIS had provided good support during COVID-19. It had regressed a bit and it should try to find solutions to correct those material findings.

The Deputy Minister spoke of the Post Office of Tomorrow. The Committee was fully aware that it was also affected by the Postbank. They are with them. She was not being soft because the Committee was playing its role but it knew the circumstances and challenges with the entities trying to lift up their standards. The Committee would keep monitoring. It had opened its eyes, especially on compliance and control. All the internal structures such as the audit and risk committees were needed to assist the entities.

The Chairperson said he would allow the Department to respond while understanding it still had presentations from GCIS, MDDA, and the SABC turnaround progress report.

Deputy Minister Mapulane appreciated the Members for the questions they raised in the true tradition of a robust Parliament. He asked the entities to give their responses first and then the Director-General would respond to the questions for the Department. He suggested the SABC respond first then SAPO, Sentech, SITA, and the other entities. He asked everyone to be mindful of the time constraints and to be crisp, focus on the questions with no preambles.

SABC response
Mr Madoda Mxakwe, SABC Group CEO, noted the term of the SABC Board was ending on 15 October. In reply to the Chairperson, it had prepared a comprehensive handover plan that would be shared with the incoming board as part of their induction. The Committee wanted an update on the discussions SABC had been having with Sentech. There was need to give a sense where SABC was with the implementation of its turnaround strategy. There was an interest to understand where it was with the bailout utilisation. The executive team would cover this. The CFO would address questions on the finances and audit findings.

Mr Bongumusa Makhathini, SABC Board Chairperson, said he would take the first few questions, followed by the CFO followed and two other SABC board members. The achievement of the SABC was 52% on the predetermined objectives. The reason why there was a difference as Dr Basopu identified was because it used the indicators whereas the DCDT used the calculations based on targets. He thought this was where the variance was. On the question by Ms Majozi on the net loss, what the SABC set out to do with the turnaround plan, was that it was segmented into three different phases. The first phase was stabilisation which ultimately it did when it restored governance at the SABC. The second phase was business transformation to ensure it accelerated revenue growth whilst keeping all the biggest cost drivers low.

Ultimately, as it moved into the third phase which was the growth phase, this was where it wanted to do more than break-even but become profitable. The R201 million net loss indicated how it had reduce the net loss of the SABC year after year. Four years ago it had over R1 billion in net losses, the following year it moved to R800 million, then it had just over R500 million. Now it was standing at R201 million – which was a progressive reduction on net losses. That indicated the degree to which it was now moving closer to breaking even and being profitable.

It was important to highlight that the reason it had the net loss of R201 million was largely because of the acquisition of sports rights for the Olympic Games which on its own was an obligation from a public mandate perspective. If that were to be removed, the funds used to acquire those rights were about R122 million which constituted 58% of the total net loss. For it the focus was not just on reducing the losses but focusing on increasing revenue. It was visible that revenue grew by about R90 million which was 2% year on year. This was because of the marginal increase when it looked at the sponsorship revenue. Are we where we should be? Certainly not. Are we where we were fours years ago? Definitely not. These incremental improvements in all the key variances and principles indicated the degree to which it was working towards closing the gap on the financial stability of the SABC.

On the question from Ms Kohler Barnard on the increases received by top management, there were never any salary increases for any top executives at the SABC. On the group executive of sales, because he was key in driving revenue growth, that was sales commission that all sales employees were eligible for. The second point was the general manager for legal then applied and the due process was followed for his promotion to group executive legal regulatory and compliance, that was why there was a difference there. The other member did not receive any increase, the change in his total package was largely attributed to transitioning into the new leave dispensation that all employees went through in the past fiscal year.

On content, the SABC was not as agile as it should be when it came to the acquisition of content. Before the Board tenure in 2018, the SABC was given an exemption by AGSA where the organisation could procure compelling content as it saw fit at the time. Unfortunately that five year exemption ended around June/July 2022. It had been operating in a very difficult and constrained environment because even where it identified compelling content it needed to go through the laborious procurement processes in line with legislation and the regulations. Unfortunately, this could take as long as 12 months. It was well known that the producers in this industry were more agile and wanted to work with broadcasters that were very quick. Unfortunately owing to the provisions of the PFMA and Treasury regulations, it was not as agile as it should be. Most of the television producers on the various platforms of its competitors started at the SABC, but owing to the very stringent process, all the producers were not keen on waiting to engage through that process. That was the first part. What it could do was operate with all those difficult constraints so that it had the ability to acquire the necessary compelling content locally. In the past 12/18 months it procured the content that resonated with the audiences that spoke directly to the various target markets that it was looking to.

Ms Yolande van Biljon, SABC CFO, clarified that the R2.8 billion balance for irregular expenditure originated from as far back as 2011. It was around R2.6 billion in 2018. Management had turned its attention to the completeness of the register from 1 April 2018 to date which was what the Auditor-General was referring to earlier. At the time of finalising the audit report it still had about R200 million to verify to test for completeness as the Auditor-General indicated. As of today it had about R93 million worth of transactions left that needed to be verified to ensure the completeness of that specific period. It had been working its way backwards and therefore the qualification area was ring fenced to the opening balances as of 1 April 2020. The Auditor-General was meeting it later in the month to assess the further work that the SABC had done. It had started working on the period from 2011 to 2018 and would be sharing that with it. Its goal in consultation with Treasury as the third partner to this activity was to ensure this qualification area was concluded and addressed by the 2022/23 audit.

Irregular expenditure amounted to R91 million in 2021/22. It had decreased from over R600 million about five years ago. Of the R91 million, only about 23%, give or take R20 million, were instances in the current year. Everything else related to contracts and activities in prior periods often going back three or four years. This brought her to the point about the security contract. That contract was awarded in 2017. It had been the subject of an SIU investigation and was currently in the court process. Yes, it was flagged as a material irregularity as the Auditor-General indicated. The SABC would keep the Committee posted on the status of that specific matter. The SABC had abided by the SIU recommendations and would implement the outcome of the final court judgment on that.

On the office rental contract, it was a lease with occupied space, entered into in 2016/17. It had since ended that contract in October 2021. The contract had been the subject of an SIU investigation and that process was not as far along as the Mafoko Security contract. It was awaiting the special tribunal decision and the outcome would also determine the way forward on consequence management.

On the lawsuits against the SABC, a little more detail was visible on page 45 of the Annual Report which dealt with contingent liabilities. Those were also ongoing court cases. It had to disclose the potential financial exposure but it was very uncertain at that point that the financials would be concluded so it did not provide for it, but merely drew attention to it in the financial statements.

On consequence management, it had established and formalised a process for this about three years. She had indicated earlier how it dealt with the irregular expenditure (IE) balance. Currently it was pursuing 389 consequence management activities related to the R2.8 billion but focused on the last five years. It had the process around it automated and it reported on it monthly. It reported on it quarterly to the board and it was a regular discussion topic at its executive committee meetings. A lot of focus took place on this specific topic.

On IE in general it had a special project in place to deal with the completeness, investigations and the conclusion or following up on consequence management and reported to National Treasury on condonation requests. It was a temporary project team so it was struggling a little bit with capacity but they were dedicated to the topic and were focused on following the process and a topic like consequence management the attention it deserved.

On the audit action plan, it tracked the implementation and received updates monthly and team members were responsible for it. There were monthly follow ups on whether activities committed to had been implemented. In the finance team she specifically held her team accountable for not adhering to the target dates for implementation. It also had assurance activities on the action plan to reduce the potential for repeat findings.

On content, the SABC increased its spending on content in general by nearly R300 million in 2021/22. It was on target to meet its budget of R1.6 to R1.7 billion for 2022/23. In 2021/22 it brought 531 new properties onboard its various channels, about 350 or so were not movies which were included in the total. It was slowly but surely refreshing its content. It had been consistently utilising the specific allocation of the bailout in the last eight to nine months so it was on track with content revitalisation.

Later in the meeting Ms Majozi asked the SABC Group CEO for clarity about the staff member whose change in his total package was largely due to moving to the new leave dispensation.

Mr Mxakwe explained that the Committee will recall that the new leave dispensation was part of the SABC cost-reduction measures. It used to have a dispensation where employees could sell leave days and this actually pushed the compensation bill quite high. As part of the cost-reduction measures, it needed to do away with that. In doing so, it gave the employees an opportunity to sell all the leave days they had to ensure it did not continue going forward – so that was really what that leave dispensation was.

SAPO response
Mr Sipho Majombozi, SAPO Board Acting Deputy Chairperson, said there would not be any introductory comments due to the time. The questions would be directed to the CEO who could then martial her team accordingly. The CFO was also online. The questions that would be addressed were about the discrepancy in expenditure versus revenue. There was also point made on the clarification on the audit disclaimer. Ms Majozi made a broad point on the state of affairs. There could be a need to clarify Mr Gumbu's question on the Postbank and it being positioned to be a state bank; the question seemed to be directed to SAPO. Ms Kohler Barnard spoke on Medipos and the trustees and the CEO would deal with the question on salary increases. There was a confusion between Postbank which had not yet tabled its annual report and the Post Office which had tabled its annual report.

Ms Nomkhita Mona, SAPO Group CEO, acknowledged the promise made by Ms Kohler Barnard that there would be an investigation into SAPO. It welcomed this and wanted it to be on record that it welcomed any investigation into its conduct. If there were suspicions of any nature then they did need to be clarified. It was on the same page as the Committee on that. Having joined SAPO on 1 April 2021, she listened to the narrative that was almost always in the media. She was reminded of a brilliant talk given by one of her favourite storytellers, a Nigerian author who said there was something called the danger of a single story. In a single story the people were repeatedly told the same story until they believed it whether it was true or not. This led to the Medipos story, which would be explained, because it required explanation. In the same talk, the author said the danger of a single story created stereotypes. There could not be anything wrong with the stereotypes themselves, they could not be incorrect. The problem with stereotypes was that they were incomplete so everybody worked off a story that was incomplete. The last thing the author spoke to in her talk was about when one wanted to dispossess, whether it was a nation or a company or anyone, if one wanted to dispossess and disempower them one began telling their story from a second-hand perspective. This meant the genesis of the story was not revisited to identify where the problem started.

With SAPO, people could say that there was a new leadership and it did not know what is was doing. SAPO's problems did not start yesterday. Ms Bodlani said SAPO had been in the red for the last five years – the last five years had been the worst for SAPO, especially with how it managed the company, the contracts it signed, the commercial contracts it agreed to, which were detrimental to the business of SAPO. They worked for everybody else but SAPO. So it was damaged by the decisions it had taken. [She wanted to show one slide to give proof to what she was talking about but the slide was unable to the flighted by the Committee].

On the medical aid issue, SAPO's focus was that its employees were covered, it wanted that for all its employees. Some of its employees had worked there for over 30 years and it wanted them to be covered. A decision was taken at the end of March 2020. This was anecdotal to her because she was not there and joined SAPO a full year later. Its financials were becoming problematic so the decision was made not to pay medical aid. It was unclear whether this was negotiated with the trustees of the medical aid. She had asked for the minutes of such meetings and had not received them. She hoped she would have them by the time she came back to the Committee. The payments stopped in April 2020. When she joined SAPO, there were things that she said they just could not continue to do. It needed to make the right decisions which were ethical and moral. It notified Medipos that it wished to remove itself or stop participating as an employer group. It read its Medipos rules from 2020 to 2021/2022, it took advice as early as last year because this was not an overnight phenomenon. It knew there were five key areas that she focused on when she started at SAPO which she said that if they were not fixed they would catch up to SAPO. One of these matters was Medipos. It went to Medipos and negotiated with it from last year already. It took legal advice and took a decision that it would stop participating as an employer group.

Once an organisation stopped participating as an employer group, it no longer had the right to representation on the board which fell away; then it withdrew its five SAPO-appointed trustees from the board. All this was according to the Council for Medical Schemes Act and its own rules which SAPO had looked at. SAPO gave Medipos three months notice because its previous rules said so, it then said it did not need three months notice and SAPO could simply disassociate itself from Medipos immediately. It was now waiting for Medipos to return and advise it about CMS. It also confirmed its letter to say once it had disassociated, it did not need to give it new trustees.

The second matter she dealt with was in a meeting with SARS on 30 April 2021. It told SARS it owed it a lot of money. This predated some of the members and the board. SARS then said under those circumstances it had to pay what it owed. It then had a discussion to figure out a payment agreement with SARS. Since last November 2021 it had been under extremely difficult conditions with paying the UIF and SARS. Whatever was due to SARS needed to be paid because it told SAPO it should ensure the debt did not grow while they engaged on how it would pay the previous debt. There was still a huge debt owed to SARS, but since she joined and got involved in these matters it began addressing what needed addressing.

Nobody at SAPO received any increase of any nature for the last two financial years, not the senior managers and top executives. No increases had been paid and it did not see this happening in the near future or at least in the short to medium term. Instead, it took away allowances.

It did not have a management problem, there was just no management at all. In managerial positions, she was the only person with a contract of employment. It had an acting Chief Information Officer, CFO, it did not have a Chief Operating Officer, not even in an acting capacity. It did not have a HR Group Executive until two weeks ago when it decided if it did not bring the skills required on board they were all going to go down. It also went ahead and got a group executive for commercial sales who was on a short-term contract. The main reason it waited was because it was told there would be some money it would receive from the government at least to ensure it capacitated itself. It waited and waited and no funds were received and it realised that it was killing itself.

The Acting CFO was still doing his previous job where he reported to the CFO and that of another executive who had since left. It was trying to be jacks of all trades and trying to do everything which was a recipe for disaster. That was why there were problems. When one looked at it for what it was, it had people that worked there for over 30 years because people simply did not leave. The problem that came with that was the skills required at the time of their initial employment, now required new skills. It required people to be in sync with the new environment it was operating in and needed new people but the desks were full. It had 14 500 employees and they were not the right people. Those were the issues it was dealing with.

She was excited because they saw a future. It had a new strategy and was excited by it. It had already decided not to wait for the funding because government had also said that if and when it gave it funding it was not for it to do the things it wanted to do with it. It had to implement the strategy. That was where it was at this point.

She assured the Committee that the fruitless and wasteful expenditure was directly linked to the fact that it had no money. It did not pay some of its creditors, which resulted in interest and penalties which could be traced to the very last cent. When it had a little bit of money it went to them and asked for them to write off the interest and penalties and it would pay the capital. Some of them agreed and some did not. When looking at SAPO she asked for a holistic set of eyes that did not just look at the problem or events. She did not want to take up too much time and welcomed the opportunity to share what was happening and wanted the CFO to come in and conclude its submission.

Ms Kohler Barnard asked for clarity as Ms Mona said it paid money to the medical aid to ensure the medical aid would not be stopped but it had indeed been stopped. Was she aware that there was no medical aid currently? The sheriff of the court had gone and attempted to attach R60 million which apparently would go through on 14 October. Only once that money was transferred from SAPO to the medical aid would it be reinstated. Currently there were people in dire condition who needed chemotherapy and the like. They had all been cut off and had received letters saying they owed the medical aid thousands. In the previous annual report there was a specific account with R1.4 billion in it specifically for the protection of postal workers and retired postal workers should something happen to the Post Office. In the 2021/22 Annual Report she could not find it anywhere. Perhaps Ms Mona could tell the Committee where that money was.

On the question of the suspension, Ms Mona replied that Medipos wrote to its members saying it was going to suspend them in the event that SAPO did not pay it by the end of the month. There had been negotiations within negotiations then there were legal matters and they were talking via lawyers. It also tried engage Medipos. What it found was that when Medipos said it would suspend, it went to the sheriff and said that SAPO should pay R60.5 million and the sheriff said that even if he took everything off it would not be enough. Medipos then attached SAPO's bank account. The fortunate part about when Medipos did this was that there was enough money for that. The account was then attached. Because it did not have the money as it was money that should have gone elsewhere it then had to wait for the sheriff to collect the money. It seemed there was a disconnect between the Medipos lawyers on them giving the instruction because this happened on 30 September 2022. It then confirmed to Medipos that the money was there and she had proof that it was no longer in the SAPO account. It was sitting in a suspense account at the bank.

It told the bank to pay the funds over to which it responded it could not be told anything because SAPO was the account holder. She needed to get an instruction from the litigator to the sheriff and then he would tell the bank what to do. It kept giving this information to Medipos. It even asked the bank to give this information in writing to show what steps needed to be taken. The bank replied that Medipos should get its lawyers to instruct the sheriff who would instruct the bank on where to put the money. In its view, the fact that people were still suspended was an irresponsible act by Medipos. It wrote to it again on the evening of Friday 7 October and copied the Council for Medical Schemes (CMS) to show that the money had money been transferred out of SAPO’s account. It did have people who were terminally ill, she was aware of this and it did believe Medipos was acting unethically and thus needed to stop this. That was what the team was currently working on.

On the Post-Retirement Medical Aid (PRMA), SAPO, like all the other employees of the past, used to look after all its employees even retired ones. If someone worked for it and retired, they were entitled to medical aid until death. This practice was stopped either in 2005 or 2015, she was not sure of the date. It then said only those who were already in the system would be covered and therefore nobody else was entitled to PRMA. It was then given R457 million which was meant to be ring fenced to support those people and that money was put into an investment account which was still there so that the people could be supported. This money was only for post-retirement. When looking at its books, the Committee should also look at the fact that over time SAPO has always supported these people.

Every month the CFO would confirm the amount that only supported them. In essence if the Committee really wanted to look at this technically, these people would be the ones that were not owed money because it spent R1.3 billion on them in the last 11 years, but it was an organisation of integrity. The R457 million was ring fenced for their use and would be used for them, however this was a huge liability on its balance sheet. It was trying to clean up the balance sheet. One of the things she wanted to do was ensure it had a stronger balance sheet so it could trade like any business. It then made the decision to buy out these people so it was in the middle of that process where it has had two or three meetings. It was not doing it in-house and had outsourced it to companies that had done this before. They were now in the process of engaging with pensioners who were part of the scheme so that they could be given lump sums so they could look after themselves going forward and SAPO not having to deal with this liability. That was the process it was in with the PRMA.

When Postbank was separated from SAPO, it left with the reserves that were there and there was no compensation given to SAPO. SAPO was now saying that it gave birth to Postbank as a full subsidiary or division, it nurtured Postbank, had grown it, and when it left, it left with the reserves. SAPO asked who those reserves belonged to in the first place, but that question remained unanswered. It took this to its shareholder saying there should have been some form of compensation for the separation of Postbank from SAPO.

Ms Mona stated that it was not all doom and gloom and it was quite excited about a number of things, it did not like to announce plans but announce results that had happened. It had focused on cleaning up the mess, which it was still knee-deep in. It was trying to fix it so that it was not only dealing with superficial issues, but dealing with problems at the source so whoever took over could find the SAPO of tomorrow that every South African could be proud of.

Mr Lenny Govender, Acting Group CFO, said when it looked at SAPO’s financial loss of R2.2 billion for the previous financial year, it had come down year, it was reduced to R171 billion. It saw increased revenue of 1% and also saw the cost structure decreasing. Compared to the previous financial year, the staff force also came down through SAPO granting VSPs to the staff and 682 people left the organisation. When looking at SAPO the focus was to see how to improve the revenue and how to reduce the costs. There was monitoring on reducing costs that were not essential. It was managing the procurement side in reducing costs.

To add to what the CEO said about the PRMA, the cost for this averaged R10 million per month and R120 million annually. Employees who retired before 2005 qualified for this benefit. That did place a huge burden on its cash flow position to fund the R120 million.

On the audit findings it was fully aware that it was not where it should be but it had seen a reduction in the significant paragraphs of the AGSA report and also the A categories. The focus for this fiscal year was to see how it made a significant improvement in the audit findings.

Follow-up questions
Ms Bodlani thought the address made by the CEO really was a cry for help and she was hoping as a Committee it heard the CEO's cry for help. The CEO reported that there was literally no management at SAPO – she was the only one with a contract of employment and everybody else was in an acting capacity. If it was going to talk about turning the entity around where people did not have a sense of permanence it was asking for too much from those people. The Committee understood that the entity needed to provide some sort of direction for the money it received from government, but as Ms Mona correctly said, the historic issues were deeply entrenched. Working for SAPO was a real sign of patriotism and it was really career limiting. The Committee should appreciate people like Ms Mona who continued working at the Post Office even though for some people there was really no light at the end of the tunnel. Perhaps the Deputy Minister could give guidance on the Department’s plans to fill those vacancies. What lifeline does the Department have for this sinking ship?

The Chairperson said the Deputy Minister would come to that point. He assumed that the SAPO CEO and CFO had given enough facts. It took a bit of convincing for Members to realise that indeed there were other things that needed to be done including the appreciation of patriotism. The Deputy Minister would speak to this because it was also in the Auditor-General’s report in the recommendations on the commitment by the executive.

SAPO response
The Deputy Minister requested that they allow SAPO Board Acting Chairperson, as the board was the accounting authority and responsible for the management of the entity, to briefly update them as he knew it was in the process of recruiting, especially the executive.

Mr Sipho Majombozi, SAPO Board Acting Chairperson, commented that when one looked at Canada Post which had been doing very well until recently, the issues were actually similar to SAPO. Canada had a population of about 31 million and over 70 000 employees. He asked the Committee to compare this to South Africa’s population which was double with only 15 000 workers. Bearing in mind the universal service obligation that both institutions shouldered, the challenge was to move from a situation where the postal services were dominated by mail centricity which was what Canada grappled with like South Africa. With the rapid decline in ordinary mail, there was a need to digitise.

But then how do you do that? It could not wake up one morning and say it would digitize – it would certainly need the resources. The strategy was there and it just needed to be switched on without saying that everything would be on hold until there was funding. The CEO wanted to speak about motor vehicle licensing but time was a constraint. This was the effort of the executive. Personally, he had never been to the Post Office for motor vehicle licensing until recently. He found it to be a breeze and one only has to wait there for 10 to 15 minutes if at all. These was an indication of the space the Post Office could play into. It could add other government services into that space; but it obviously needed to ensure it fortified the infrastructure and the property was refurbished enough.

The Deputy Minister asked if it was possible to speak about the employment of executives.

Mr Majombozi said that yesterday it had a second round of interviewing CFO candidates. It did the last one two weeks ago but there had to be processes of vetting and so forth. It decided to call them in so that it could expose them to the actual financial benefits of the organisation. Taking a lesson from a previous experience where a highly qualified individual came in as CFO and was there for hardly three months and left. The SAPO board felt it would be unfair for it not to give these indications in a way that enabled them to decide whether they would accept or decline the position should they be offered it. Only yesterday did it do this with enough shortlisted candidates. It was actually surprised when the candidates said they could see the challenges and were still excited and would want to join because they actually saw what was needed. One of them even said it was different from what was heard in the press and therefore they were still available.

SAPO board therefore had a prayer at the end and said how it wished the on-boarding of a new CFO would happen after the Medium-Term Budget Policy Statement because it was pinning its hopes on a positive announcement. It trusted that this would be the case. From a stakeholder perspective, it was supported by the Standing Committee on Public Accounts. SCOPA came at SAPO with knives and daggers during its last interaction, but after everything was explained, it then said it understood the case. Normally SAPO did not enter the fray of mobilising or lobbying for funding but it could actually see where the issue was. That gave SAPO great encouragement in the same way as some of the Committee members saw it. Ms Kubheka registered the point that the issues were visible and the Committee was with SAPO and believed it could be rescued and Ms Bodlani hit the nail on the head on that one.

Sentech response
Mr Mlamli Booi, Sentech CEO, addressed the three questions raised on the performance of Sentech. The general comment was that it had regressed in audit performance and the question was whether or not this was the result of the BDM project it was doing as a multi-stakeholder project. It got involved in this project a year ago. In the last financial year it was setting up systems and rolling out the installation of the STBs. The question was if it received an unqualified audit with findings instead of a clean audit as a result of that project. Yes, the findings were related to the project. The resources were not in place at the time it started with this project. These were subsequently put in place and it was expecting different results in 2022/23 as it neared the end of this project in this financial year, which was the goal. The organisation was not regressing in this performance.

On the second question, Sentech definitely did not make a loss. In 2021/22, Sentech made a net profit of R119 million. He suspected the Members may have misread the financial statements about the possible debtors to Sentech which was the expected credit loss. It made accounting provision for debtors beyond 90 days and it had a set of debtors beyond 90 days which amounted to R86 million. In accounting terms it would call this an expected credit loss which meant there was a possibility that these debtors would not pay what was due. It was something it had to disclose. The question on that was if it had anything to do with community broadcasters. It definitely did because of the R86 million, about R82 million was the debt owed by the community broadcasters. In the last three months Sentech had been mobilising information meetings across the country to help these community broadcasters in understanding the services that had to be paid for. It acted in accordance with its policy in issuing warning notices to those that were not paying. Sentech was definitely not making a loss. It was making a profit and would continue pursuing being profitable as it was not funded by government. It had to raise its own funding therefore it would not survive if it made losses.

On the last question whether it had sufficient resources and why it was in the situation it was facing. With the current minor transition, Sentech was merging with BBI and that merger had caused uncertainty within the organisation which led to the exodus of most of its professional members. As an example, five years ago it had about three chartered accountants in its finance department; now it only had one which was the CFO. People were looking for greener pastures elsewhere because of the prevailing uncertainty. With the help of the shareholder, its target was to close on the acquisition and merger with BBI by the end of 2022/23. This was so that by the next financial year the legal issues would have been addressed on the amendment to the legislation to enable these two entities to merge to be the State Digital Infrastructure Company. He believed those were the issues raised and said the organisation was definitely not making losses.

The Deputy Minister thanked the CEO for his exemplary crisp response.

SITA response
Mr Molatlhegi Kgauwe, SITA Acting Managing Director, replied about the R1.5 million good and services not received and the consequence management. He confirmed it had already taken action against the official responsible who was already dismissed from the organisation. It was currently in the process of trying to recover the R1.5 million through a legal process.

On the material irregularity for the licences bought but not utilised, it was currently in an arbitration process with the service provider. The intention was to recover the funds spent on the unused licences. Definitely when it came to consequence management, SITA took it seriously and did try to act as quickly as possible so that it could recover the money and take action before the officials left the organisation.

On the R3.7 million on fruitless and wasteful expenditure, it was following the Treasury guidelines to address that. This involved an investigation to ascertain facts. Once it concluded that process it would take the necessary disciplinary steps against the officials involved.

On the material loss of R154 million on assets, this was not really a loss. It related to old assets that were not currently in use, in fact that they were not even functioning. These assets had to be written off as discussed with the Auditor-General. It had not written off assets in a long time, especially those that were not in use and non-functional. It was mainly an accounting loss and not a physical money loss in any way.

On irregular expenditure, it incurred R258 million in 2021/22. However, it related to legacy cases, recurring from previous financial years. What it did to stop the irregular expenditure was to come up with a proposal to try to consolidate the excess links. It already did the North West because it decided on a provincial kind of model. It was getting to the other provinces to ensure it could stop the irregular expenditure. It was confident that in the current financial year, it should be able to put a stop to the main contributing factor to irregular expenditure. Compared to the new cases, irregular expenditure had reduced quite drastically. Where it still had cases was mainly due to contracts that had expired. It had ramped up on early warning processes to avoid contract expiry whilst utilising the contract. Six months before the expiry of a contract, the official responsible would receive an early warning asking if it wanted to start a new procurement process or let the contract expire should it no longer need those services. It saw some benefits with the changes it implemented to ensure it could flag those contracts early.

It was disappointed with the audit outcomes, given that it had additional qualifications compared to the previous financial year. It had frank and constructive discussions with the Auditor-General to try and understand what could have changed in one year because the colleagues responsible for the audit last year were the same and the tools were the same. What the Auditor-General indicated was that it in the past it had allowed SITA numerous opportunities to make changes and resubmit information which it did not really allow in the period under review mainly because it resulted in it not addressing some of the root causes that were there. This contributed to the regression that was evident when compared to the previous year. SITA sat with the Auditor-General and tried to identify the root causes of all the qualification areas and developed an audit action plan. It has already started implementing the audit action plan. In the previous financial year, the 2020/21 audit was only completed in November/December 2021. This gave it three months to implement an audit action plan. In the current year it had sort of caught up with the normal timelines so the audit was already concluded and it already developed an audit action plan. It also started implementing that plan in consultation with the Auditor-General. It should have sufficient time to implement the plan. It was confident, especially with the frank engagements that took place with the Auditor-General, it should be able to make an improvement for the 2022/23 audit.

 It was also going to have an internal audit on the results of what had been implemented from the plan to ensure that if there were any corrective actions needed then they could be done before the Auditor-General arrived for the 2022/23 audit. It also agreed in principle with the Auditor-General that it would have a sort of interim audit where it would look at the opening balances and what happened in the year under review. This was ensure when it came for the final audit it would have sufficient time to respond to the voluminous sample sizes it normally requested. If it tried to do this in one go it would not have enough time to respond adequately to the Auditor-General. In short, it was definitely comfortable and confident that it should be able to improve on the audit outcomes by the next financial year. Where consequences needed to be implemented, that had been done and could be seen through the cases it dealt with through its loss control mechanism. He had tried to be as crisp as possible as directed by the Deputy Minister and believed he covered all the questions. If there were any questions that he missed he could always come back.

The Deputy Minister noted they were trying to rush because they were under pressure from the Chairperson to wrap up the responses. The quality of the responses should not be compromised but they had to be mindful of time.

NEMISA response
Mr Trevor Rammitlwa, NEMISA CEO, replied that the general concern was what AGSA had raised on the discrepancies in the annual financial statements and the performance information. In these two areas, what it was doing especially on the AFS preparation was ensuring the finance team was taken through advanced Generally Recognised Accounting Practice (GRAP) training, so that was currently underway. It was also in the process of appointing a CFO. It had an acting CFO who came at the tail-end of the financial year after its original CFO resigned. It believed that could have contributed to the challenges in the finance team, but it was working hard to close that gap.

On performance information, it had worked on strengthening the processes. Given the large volumes of people it was currently training, if compared with the previous years where it would train about 5 000 people, it had increased to more than 60 000 people. That challenged its verification process and ensuring that accurate and quality information went through. It had worked on its processes to improve that and was monitoring this on a quarterly basis to ensure it did not have these problems recurring.

USAASA and USAF response
Ms Chwayita Madikizela, USAASA Acting CEO, responded to the general comments and statements that were made on the regress of USAASA and USAF. There had been an improvement in USAF as in 2020/21 it reported 0% achievement and in 2021/22 it reported a 50% achievement – which was not good enough. The ability for it to change and amend its Annual Performance Plan (APP) during the third quarter allowed it to reflect on the work it had been doing and the monetary value it saw and the movement it saw on its financials to match the achievement of the entity or at least the activities it was busy with. In that case, that achievement had been demonstrated. It was rather late when it was requested by the Minister to change its APP because the work it was doing was not in line with BDM and broadband targets. This was reflective of its performance.

On USAASA’s regression, it CFO position changed hands at the beginning of January 2022. This meant new CFO was acting CFO at the time and only appointed in the first week of March and had three weeks to conclude the books and hand over financials to the Auditor-General. This was a difficult task as the incumbent came from the Department and did not have the exposure as a CFO in a State-Owned Enterprise (SOE). This had detrimental results. This did not mean that the incumbent was not compatible with the position, but entering a new space and achieving what he did was really surprising despite all the lack of systems it had in place. This led to some of the findings identified by the Auditor-General and pronounced in its management letter.

There were some incidents that really led to what was seen as a lack of consequence management. It had six employees directly linked to BDM that it suspended and it was now at the tail-end of the disciplinary committee proceedings. It would report accordingly when the time was right on the outcomes of that. This demonstrated that although the degree to which the entity suffered irregular and fruitless and wasteful expenditure and it did not seem like it was doing anything – there was some form of consequence management. It was in the process of finalising its refined guidelines on consequence management. This would cascade into the organisation once finalised. It was at the tail-end of that and was rigorously concluding these matters as new management. All these matters, including its inflated irregular and wasteful expenditure, had always been historical legacy issues that had been in the entity since 2014. These matters were also in the inception of the BDM programme which it was dealing with and it had reached some milestones towards the end of the first quarter of 2022/23.

USAASA was able to fully categorise its irregular expenditure, wasteful and fruitless expenditure. It went to the board for condonation because these amounts were in the hundreds of millions. The board had questions and it was in the process of refining that condonation report for submission to the board and thereafter approach National Treasury on that. These were matters that were presented and also had SIU reports but the entity never moved on those SIU reports that dated back to 2017 to 2019. It had now categorised this and was confident that what it presented to the board would be grant the necessary condonation.

The filling of key positions in USAASA remained a big challenge especially with the approaching dissolution. This made it difficult to attract requisite skills because even its contracts had unprescribed timelines. This resulted in a huge vacuum in all the positions. Only one executive was permanent and the rest were in an acting capacity.

BDM was one of the Auditor-General’s biggest highlights. All the matters raised were not new. Inventory control was a big challenge, however the entity was unable to commit to the procurement of an inventory tracking system. It previously procured a subsystem that was meant to do inventory control which it never did. That was a matter that was currently with the SIU; it was being concluded and action would be taken as soon as it received the final report from National Treasury and KPMG. A lack of inventory management contributed to its disclaimer.

To grant the Committee some assurance, USAASA, the Department and Sentech had been working very closely to define the right systems for this BDM programme because this was a programme like no other. She agreed with the Sentech CEO that it would make sense to audit this process only after the programme was done – yet it respected what the Auditor-General was saying. This was why it tried to come up with some systems to manage the numbers it was recording, reporting, paying. All of this had to do with putting in stringent measures in using public funds for the work it was doing.

Although it was a dire picture, she thought it was headed in the right direction with the systems it had put in place and the condonations it was putting in place. The filling of key positions would remain an issue until dissolution with only one permanent member in an executive position. These were the things it would report in its next sitting. It would also report on the suspended officials linked to BDM, that was a bit of consequence management it was engaged with. She wanted to give comfort to the Committee on what had been put in place based on its audit action plan.

The Deputy Minister noted that the order of responses to follow would be FPB, .ZADNA, DCDT Director- General and the ICASA Acting Chairperson would be last.

FPB response
Ms Zamantungwa Mkosi, FPB Chairperson, replied to the one question that was raised on the payments made to former executives. Those were settlement payments made in 2016/17 but they were only written off in 2021/22. The settlement payments were made because of legal action that ensued between the entity and those executives that were leaving. At the time the FPB Council made the decision that it was more prudent to settle those matters, considering the legal status and the costs for the organisation.

.ZADNA response
Mr Molehe Wesi, .ZADNA CEO, noted that the audit matter that was raised was due to it reporting that it had not met three of its set targets. With that said, .ZADNA had great ambitions, however because of circumstances already cited, it could not meet those targets. To provide reassurance to the Committee about the set targets – on the promulgation of the regulations, these were now sitting with the state law advisors having been taken through public participation. It was awaiting the feedback from the state law advisors. He acknowledged the support it received from the Department in achieving that.

The second target was to ensure it put the brand of .ZADNA out there. In its audit action plan so far, it had met and it could safely say it had exceeded the target set for the current financial year – considering it could not even meet the target the previous year.

On the target for integration for domain name registration, the three parties involved – which were .ZADNA as regulator, ZACR as the newly appointed registry operator and the Companies and Intellectual Property Commission (CIPC) – were working on finding a solution and stabilising the system. It was currently receiving registrations and was closely monitoring this to ensure it did capture some. It was still below what it intended as the target. It would address this by approaching mass media platforms including the SABC to see if it can run campaigns to attract more people to register their domain names though the CIPC platform.

ICASA response
Dr Charley Lewis, ICASA Acting Chairperson, replied that the audit issues raised were relatively minor. He wanted to indicate from the outset that ICASA took its role in relation to the public and the people of South Africa very seriously. It took the delivery of its set targets very seriously. It took financial compliance very seriously. This was reported and discussed regularly at Council. It was striving to ensure it also had a clean audit. He indicated its financial statements were generally in excellent shape. The misstatements were relatively minor and technical and was engaged with the Auditor-General on those. The CFO could provide further detail on that if required.

On the bid reference letters, what that essentially meant was it was ensuring proper compliance and what happened was it delayed the awarding of the bids concerned, hence that particular target was not met.

On the provision in the financial statements for impairments of R88 million, this was largely comprised of two amounts that were owing, one by the South African National Defence Force (SANDF) and the other by SAPO. Together they made up almost two-thirds of the full amount. The rest was made up of much smaller amounts.

On the R33 million irregular expenditure, 96% was from a lease agreement that it entered into in 2018/19. The loss control committee was engaged with that and it has engaged with Treasury to regularise that particular expenditure.

The 30-day payment on invoices was one it discussed regularly at Council. A lot of that related to invoices that were under dispute and had historically been logged as normal invoices. Together with the new CFO, it had put in place a number of measures to streamline and ensure proper accountability in the processing of those invoices. It had seen some improvement but was not yet satisfied with the results. Therefore it was currently putting further measures in place to ensure it met the target of paying all its invoices within 30 days. If anybody wanted further information, the CFO and acting CEO were in the meeting and could provide that information.

Department of Communications and Digital Technologies (DCDT) response
Deputy Minister Mapulane responded as the DCDT Acting Director-General was having network problems. He thanked the leadership of the entities as he knew they were rushed in their responses, but it was all in the interest of time. The Department wished it could have a couple of days so it could go through each entity and to be detailed about their performance and how it accounted but it was pressed for time. He thanked Mr Gumbu for appreciating the Department's performance which as at 91%. It was an improvement on its last performance. There were only three areas where it did not meet its targets which it explained. Nevertheless 91% was a good performance. It accepted the robust engagement that ensued and it was willing and ready to be held accountable as public representatives and as a Department.

He started with SAPO on the question of filling the vacancies of the executives. The board was assisting with this. Some of these positions it had tried to fill in the past, but because of the situation at SAPO, the people that expressed interest decided later on not to proceed. This presented a challenge. An example was the CFO who was recruited and only worked in the organisation for three months and resigned citing personal reasons. Despite this, it knew the person resigned because of the difficulty SAPO found itself in. Recruitment had been taking place. The CEO did say two executives had now joined who were recently recruited and it was busy recruiting the rest of the executives so that it could have a full complement.

He wanted to add context, not because the Department wanted to be prisoners of context, not because it wanted to emphasise what happened in the past, but because it gave a proper perspective of the challenges it was facing with SAPO. The Acting Chairperson noted these challenges were not unique to South Africa, these were challenges the postal sector was contending with globally. The South African Post Office had lost significant market share over a period of time because of the introduction of technology which had been rapidly evolving and it was unable to turn itself around to adjust and be relevant. If you ask yourself how many letters you send by post, it would be very few. You send correspondence via email and so forth. The Department knew the Post Office's primary role was communication through the sending of letters. Over time, that has since changed but there had not been a response to the market changes by the Post Office.

The Post Office attempted to turn this around immediately after it was placed under administration, and there was a recapitalisation by Treasury. There was also the appointment of a CEO who was said to be energetic and requested to be appointed and given space to turn the Post Office around. Unfortunately he did not, he failed to seize the moment, when the Post Office was supposed to be turned around and focus it on other opportunities that existed in the sector, it did not happen. There was a bailout that was never used so over time there had been that decline in its revenue. The Department said it this needed to be arrested and to do so, it needed to do an analysis and segment the market and identify what the market required of the Post Office. That resulted in the strategy, Post Office of Tomorrow, which was adopted.

The strategy spoke to turn the Post Office into a logistics hub, turn the postal networks into digital hubs and to be the authentic trust centre and many other things the Post Office should be. It was implementing that strategy but unfortunately there were historical issues. There was increasing historical debt which needed to be addressed. Without attending to that debt, there was no way it could turn the Post Office around. It had said this from the beginning on this platform and everywhere else that without addressing the legacy issues and debt, there was no way it could turn the Post Office around. If it could make interventions on that, it was positive that it could turn it around. It was working on the implementation of the strategy.

There were three key drivers of expenditure in the Post Office. The first was personnel expenditure at approximately 60% of expenditure which was untenable. It could not turn the Post Office around without addressing that. The second biggest expenditure item was its properties and then security which it was attending to going forward. It would be announcing what these exact plans would be coming to fruition very soon. What it needed to do was to get support from Treasury and it was really looking to the Medium-Term Expenditure Framework to assist it in making the necessary interventions. It believed the Post Office could be turned around and if it implemented the strategy it could definitely turn it around.

But it did not want to come to the Committee and paper over the cracks and present a scenario stating that all was well because it was not. Currently the Post Office was experiencing serious difficulties. It had an AGM with SAPO two weeks back and it was very frank with it. It was not happy about the Post Office’s performance, it kept declining. Last year it was 28% and now it had dropped to about 18% with only three targets achieved.

It was very frank with it and the leadership and said it was not happy about its performance. Irrespective of the financial challenges it was experiencing it was declining in performance and it did not inspire confidence to those that they would be approaching to request assistance. It had scheduled a meeting with the Post Office before the end of October where it would deal with all the issues raised by the Auditor-General, including consequence management. Ever since its engagement with SCOPA, there was bit of restructuring of committees put in place, which would look at the issues around irregular expenditure and overtime. Because of the many challenges that were there, things began to drop a little bit over time, so it wanted to discuss those issues. It wanted to establish concrete interventions that it would present to the leadership in the executive including even in the Cabinet so that it could attend to the cost drivers identified.

His colleagues had addressed most of the issues that he wanted to deal with. On BDM, context was also quite important. When the ITU decision was taken to migrate from analogue to digital, this region was given a timeframe to migrate. At some point South Africa was leading in that migration process but it dropped the ball over time. This was due to a number of issues, litigation being one. There had been the discussion on whether the STB should be encrypted or not – that was a technology discussion that took forever to be resolved.

Due to those issues, it dropped the ball. It was the last to migrate despite South Africa being the most developed economy in Africa. It was also a more complex economy than other African countries which migrated before South Africa. It was still grappling with the challenges of migrating. When the Minister came in, she grabbed the bull by its horns and led everyone and said it should migrate, it could not continue making excuses for not migrating. The Department members were told they were vultures as this was piloted only in three provinces, which were the smallest: Northern Cape, North West and Free State. The Minister said it would not pilot but would go nationwide. It needed to determine what STBs it had, what the need out there was in households. She said it should go on an aggressive campaign to talk to the people to go and apply at the Post Office to receive these boxes. There was a time when those boxes were just lying in warehouses costing a lot of money in storage costs.

Five provinces had been switched off and it was left with four. It accepted the Auditor-General’s critique which had been there even when the issue of the concord was being dealt with on the reliability of the information it was presenting. He believed it had already urged all the entities working together to share the information. USAF and Sentech had a target of R810 million, and the Department had the target of R840 million. This was something that needed to be looked at to standardise. It was a critique it accepted and would work on. That should not overshadow the fact that progress had been made. The concord had given a direction that this was urgent and there was a call for all indigents to come forward until 30 September 2022, which was a deadline that had since passed. As he mentioned in the beginning, the team was consolidating all the submissions with the view of advising the minister on how it could ramp up performance, grow Sentech and ensure the installer capacity was increased targeting the four provinces.

The Minister would engage all the stakeholders as determined by the court so it could determine the analog switch-off date. That was where it was and was confident the project would finally be concluded. There was no need for pessimism, it was of course making an impact. There was some information that was coming up on the loss of audiences as it related to the SABC, but thought this was temporary. At a later stage when it embarked on other programmes, the audiences would return to the SABC. Then it would conclude this programme. It could release the spectrum that it was much needed by everyone and the economy. He believed he should not go on and on, those were some of the issues he thought he should respond to. He knew the Chairperson had been putting pressure on them to conclude and was sure he would be happy that they were done.

Chairperson's summary
The Chairperson thanked the Deputy Minister and explained he had put pressure on the presentations because he wanted this discussion process to have time. So far, the responses have clarified some of the things. This way the Committee could leave the meeting knowing the facts and therefore design better interventions from its oversight.

In summary, it had dealt with the Auditor-General and DCDT and the entities had responded. What was quite clear was that the Committee would be interested in seeing those audit action plans responding to the Auditor-General recommendations. It should be remembered at all times that as it dealt with the audit reports, these were as of the end of March 2022. There had been work happening between then and now. The Department had been reporting correctly based on the Auditor-General’s report that there had been quarterly interactions. These other entities were led by the Department. When the Department spoke to those audit action plans it would also give the Committee a sense of whether it was turning the situation around or not. In no time it would be 31 March 2023 which would be the end of another financial year. Some of the repeat findings did occur because it took time to address them before the end of the next financial year. It was important to leave the meeting with that understanding.

SAPO, USAASA and Sentech raised a similar matter about the exodus of talent and skills because of uncertainty in those spaces. With SAPO it was the medical aid concern. The Auditor-General recommended it worked on filling those vacancies. He thanked the CEOs that spoke to these matters, the Committee did not make accusations or demands that went beyond what was reasonably expected. For example, the Committee did not say there was mismanagement when in fact there was no management positions filled. It addressed that while simultaneously appreciating those who overworked themselves in the spirit of patriotism.

Observing what was raised by the Auditor-General, the ongoing quarterly reports would have to be quite honest. They had to reflect what was done and if it met the requirements of what the Auditor-General would see as an improvement. It would categorise these entities and group them such as those involved in the ongoing BDM process that had repeat findings to address the matter. Those that were trapped in a situation where the auditors could not give an opinion except to disclaim, the Committee needed to spend time and look at those details and see how those matters were responded to and how the Department supported them.

USAASA was one of those examples. For those who had been in the Committee some time, when it was presented with the winding up of USAASA and changing USAF into a digital development fund, Members had always asked about the transitional measures so as to avoid the present liabilities. This entity had a role in the BDM which had timelines. One should ensure it is able to do that because appropriations had been made to USAASA. From the report it had, this was an area that needed attention. Like SAPO when it spoke to its vacancies with one permanent employee and the Committee did see whistleblower messages that circulate on how the institution was run, with one person doing more work. The transition plan by the Department must ensure all these things that needed to be addressed were addressed even in USAF – and were not taken to a new entity that was meant to be transformative. The Committee needed to return to that. It would have to review its programme. It did not erase the fact that there was this meeting was part of the BRRR but its work went beyond that compliance. It was about following up and changing the way the entities are.

The Committee accepted that the SABC would give the handover report to the new board. The Committee clarified that it was not the board and it would have been an error to give it the handover report but it needed to get the progress report. He wanted to make the ruling that in course of questions and responses, that matter would have been spoken to.

It covered the HR issues on what could have been infringements and why there were increases in other areas, so the SABC would have spoken to that. The Committee knew that in a handover report there could also be commercial sensitive methods which the board would have to be exposed to as it took over. He thought something was very important from that report and the response of the GCO, that the legislative constraints needed to be looked at urgently, irrespective of what happened in a transitional period. The operations of the SABC would continue even if there was a new board, business had to continue. On the constraints as explained, that task was not that of the SABC, but that of the deputy minister as the political leader of the Department and the Committee’s. This dealt with policy and legislation. This was also to ensure they came together in their official capacities and checked how far they were on those specific legislative changes that were proposed. From the reports it was clear it, it did not matter which board or executive it put, for as long as those constraints were there, they would be subjected to the same process. That was a reality they had to deal with.

Therefore if it was in its space, it also had to take responsibility as part of the support it gave to the SABC. He thought there were lessons that could be drawn that at a certain time there were exemptions given. How has the SABC performed in terms of acquiring content? At the time that was taken, what would have happened? Now that there was a temporary measure in place, irrespective of whether it brought improvement or not, it could therefore ascertain what needed to be the intervention. This could be done while it was looking at passing other pieces of legislation. This included looking at the PFMA and whether it allowed for agility in that regard. He thought this was a point that may not had been seen but thought the responses were beginning to tell it, that if this was not addressed then it did not matter who was there.

He would communicate with Committee members first to see how it would need to revise its programme. It would then take entities in different groupings and take a few at a time, especially where there were similar issues and engage beyond the BRRR matter. There was general appreciation that there were difficulties and strides being made a bit on those. This also meant those that needed to make the needed interventions, should do that. He was sure that when they returned they would be honest as was the case. That was the summary of inputs made by the Committee and the responses it received. Also seeing what other matters it could take forward as they related to the Auditor-General and what the Department and its entities would have been able to produce.

The Chairperson ensured that the Deputy Minister in the Presidency, Ms Thembi Siweya, had joined the meeting as that ministry was responsible for GCIS and MDDA. This was because the discussions needed a political leader to take responsibility in working with the entities to turn the situation around. He would give her space to make an introduction which was more of a political oversight for the GCIS and MDDA that had moved to the Presidency although the matters were cross-cutting. Members had the presentation and they had also listened to a presentation by the Auditor-General.

Deputy Minister in the Presidency opening remarks
Deputy Minister in the Presidency, Ms Thembi Siweya, acknowledged the good relationship it has with the Committee. Although it was happy with the GCIS and MDDA Annual Report, the pressure was on to look for more resources to be able to fill middle management vacancies so GCIS can live up to expectations. It was a daily battle to be on the forefront with no resources. She referenced the second pandemic of GBVF which GCIS had an important role to play as communicators but without being given a direct resource allocation for this.

GCIS 2021/22 Annual Report
Ms Nomonde Mnukwa, GCIS Deputy Director-General: Corporate Services, presented as Director-General Phumla Williams had to attend a Cabinet briefing. GCIS achieved 89% of its performance targets. It noted its achievements in its three programmes: Administration; Content Processing and Dissemination; and Intergovernmental Coordination and Stakeholder Management. It managed to keep the vacancy rate at 6.74% and reduced the top management vacancy rate from 75% in 2020/21 to 0% in 2021/22. Women representation at SMS level was achieved at 56%. She listed the audit findings and noted that they were not of a material nature. However, they speak to the need to beef up capacity and address the SCM constraints. Amongst its challenges, it noted its obsolete aging IT infrastructure and the need to increase the bandwidth. Of the GCIS budget, 31% goes to Brand SA and 5% goes to MDDA and this limits GCIS as it is left with crumbs to effect strategic communication.

MDDA 2021/22 Annual Report
Dr Hlengani Mathebula MDDA Board Chairperson was accompanied by the Acting CEO and CFO.
clarified that Ms Kohler Barnard must have been looking at the wrong entity as MDDA most definitely did not have a R24 million revenue under collection nor irregular expenditure of R49 million. The positive target performance was noted:
2019/20: 84% targets achieved / clean audit
2020/21: 89% targets achieved / clean audit
2021/22: 95% targets achieved / unqualified audit with findings for non compliance with laws.

It was currently in contestation with the Office of the Auditor General. AGSA differed with MDDA on the technical treatment of the Economic Development Fund (EDF) money given by the Competition Commission. It got a legal opinion which agreed with MDDA and the AGSA technical committee will take that legal opinion into consideration for 2022/23 so it hoped to be back to a clean audit next year. An audit action plan is in place to correct the audit findings and improve on internal controls. The one unachieved target - the most important target - was the sustainability model which was caused by the delay in the service provider procurement but it should be ready to implement in the 2023/24. Its way forward includes the sustainability model; its 20 year review in 2023; the MDDA Amendment Bill; to increase the sectoral digital presence and increase the community television footprint.

Discussion
Ms Bodlani said MDDA would celebrate 20 years next year. It should be deliberate in ensuring it did not become obsolete. She was a big fan of community radio stations as that was where her career started along with community newspapers. Times evolve and along with the Post Office, t the entities should be able to move with the times so they were responsive to the markets. They had to become relevant in the market because community communications was very important. They had to provide the latest technologies and ensure they were really responsive.

On the MDDA, in the morning it got a report from Sentech. She stood to be corrected and said it was could have been an operational issue where Sentech said community broadcasters owed it money. She guessed that some of the money the MDDA received from Sentech would be ring fenced. How far does the MDDA and Sentech engage in ensuring the one did not owe the other and the money was sent to the community broadcasters but did not filter through to the other? She said this was her speaking from a place of ignorance and wished to be educated on that.

She was really worried about the MDDA overhead costs. The R33 million bill for 42 employees was rather high especially if it was looking at least R4 million for the Office of the CEO. However, the Committee congratulated the MDDA for producing a report of this calibre even when seen as having instability from the outset. The ability to produce this report was really welcomed.

GCIS spoke about having no budget but approved an increase for officials. Was that not avoidable? She was not sure if she understood and asked for clarity. The Committee congratulated the GCIS on an 89% achievement. It had played a key role from the beginning of COVID-19 as a feed to the mainstream media. It was evident that mainstream media was unable to provide accurate information and graphics, but the graphics from GCIS were already there as soon as the President made announcements. This really helped the media to communicate the message. She congratulated GCIS on that. The irony was the Auditor-General saying it was not good at record-keeping despite being the custodian of government communications. Lastly, GCIS should tighten its belt so that it did not receive audit comments that there was poor adherence to supply chain management. All in all it welcomed the presentations.

Ms Bodlani asked GCIS if it could provide a status update on the broadcasting studios it had in Parliament. It had previously spoken about the studio technology being obsolete. This information might not be readily available, but whatever was available, for interest sake, she would appreciate.

Ms Kubheka thanked GCIS and MDDA. They knew where they had to make corrections because there were only a few targets they did not achieve. It seemed the audit action plans were in place and they were ready to make corrections. It was very easy for GCIS to sustain a clean audit. With the reasons it tabled, it was more difficult working towards a clean audit compared to sustaining it. She asked that it corrected the minor audit matters raised.

On the GCIS budget, the Committee continued to sensitise on this matter as GCIS was in a difficult position and the money it was motivating for was little. The Committee heard its appeal and needed to take note to see how best it could assist. That was why she was asking about BrandSA because it was beneficial for the budget but then GCIS was left with a small amount to continue with what it had to do. The Committee was expecting a lot due to its communication mandate. It appreciated it very much. It should take note that next year she wanted a clean audit and not an unqualified one with findings. It would continue monitoring GCIS and MDDA.

The MDDA Board Chairperson has explained the audit matter and the Committee would continue checking on the matter that needed correction and would be expecting a clean audit. The Committee was proud of GCIS and MDDA.

GCIS and MDDA response
The Deputy Minister thanked everyone for the presentations, comments and interactions. She did not pick up any questions but rather more comments. She asked the MDDA Acting CEO to speak on the question about paying the Sentech transmission fee to assist community radio stations. In some cases, MDDA funding also included that Sentech fee which of course was not enough. It had other platforms of engagement to look into how Sentech could introduce cheaper fees. Sentech was not funded by government.

On a lighter note she said the Committee reminded her of an African proverb that was in her native language, Tsonga. She spoke on behalf of the MDDA and said at least the Committee could see there was some work done besides the wrong perception that the institution was not working. It embraced the congratulatory remark from Ms Bodlani who she was impressed by the work it was doing. She assured the Committee that if given a longer time to present, it could tell it many of the things the MDDA was doing. She also appreciated Ms Kubheka saying the Committee would assist it, especially at the ministerial level on advocating for more money so the institution could work.

Mr Mzuvukile Kashe, MDDA Acting CEO, replied to the question raised on relevance. Indeed, relevance was of utmost importance, hence he said in the presentation that during its 20 year anniversary it wanted to take stock, look back, see what it had done, assess the markets, see what the latest technology was, and how it was going to move forward. The anniversary was something to remind itself how far it had come and how it could do things better going forward.

It had a good relationship with Sentech and had engagement. In the latest provincial table rounds it attended one or two together with Sentech and as two institutions they were trying to find each other. There was a misunderstanding from the communities and people outside the sector. When it funded an organisation for community registration it provided for the transmission fees, which were the fees MDDA paid to Sentech. As noted by the Deputy Minister, sometimes this was not enough so they had a debt to Sentech of about R1.2 million. With the funding approved, MDDA would only be able give them R800 000. This meant there would still be a gap which was a challenge because it became a liability for Sentech. When Sentech was not paid the difference; then it was raised as though MDDA had not honoured its side of the deal. Equally, there were other community radio stations that were not MDDA grantees which were also not paying Sentech, which again became a liability to Sentech, but was seen as an MDDA liability. On its own structure, when it funded these organisations it did not charge them the transmission fee. The R800 000 he made an example of earlier, would not go to the organisations but would go directly to Sentech. It had an MOU with Sentech to ensure all the money for transmission fees it approved for grantees went directly to Sentech; then it would try to deal with the liability in its books.

The challenge was that this was the lowest discount Sentech could grant and the community broadcasters could not afford that. For some it was about R20 000 to R25 000 and they would struggle to pay their presenters stipends as a normal living wage. It still had that challenge. Hence, it was presenting other measures like a sustainability model to ensure these organisations became sustainable. This was so they could have enough money to pay their transmission fees on their own without MDDA intervention. This was still going to be a challenge. It had been a challenge for the past three years now. It constantly came up that community broadcasters still owed Sentech and were about to be switched off. It received constant calls requesting intervention. In most cases it was unable to do so because it did not have enough money. Where it could intervene and with the funding it granted, it always tried to ensure it met Sentech halfway.

Dr Mathebula MDDA Board Chairperson, responded to the comments made by Ms Bodlani on ensuring it was not obsolete. A draft MDDA Amendment Bill that was currently being processed. The Bill intended to ensure that it catered for a different environment from the specific environment it had catered for at the inception of the MDDA 20 years ago. That Bill was intended to ensure it remained relevant.

On the MDDA overheads being out of kilter given the size of the organisation, it noted this but with the rider that sometimes good skills were quite expensive, but going forward it would ensure it attracted the necessary skills without breaking the bank.

On the funding it received, in addition to the USAF levies and the the government grant, the MDDA did its best to ensure the various broadcasters gave more than what was expected of them because they believed in MDDA’s mandate and the work done there.

On the concern about the regression from a clean audit, as he said there was a little mishap because it was a little exuberant in approaching the Auditor-General. It would have been a clean audit. He promised her that when it returned next year, MDDA should have its clean audit back and Ms Kubkeka could continue to be proud of the MDDA.

The Chairperson asked the Deputy Minister if she wanted to come in and give her closing remarks but the Deputy Minister said she did not have anything to say.

Ms Nomonde Mnukwa, GCIS Deputy Director-General: Corporate Services, replied to the questions on salary increments whilst there was no budget. She needed to report that during the budget process, National Treasury had guided that it could not effect any salary increments for all staff members. During the bargaining process, the increments for lower level staff were approved and Treasury gave the money to implement that. When the increments for SMS members were approved, Treasury did not give it refunds for that. Hence why it was where it was. It never spent money it did not have. It had to make adjustments within its own budget to accommodate that because it was an instruction it should implement. However, it discussed it with Treasury to give it an understanding of how this affected GCIS and how it was different from other government departments. Its budget was very small compared to other departments. It had requested Treasury that GCIS be reallocated that increment going forward. It was awaiting the budget allocation letter which would come around November/December. It would then see if its motivation was accepted.

On the studios in Cape Town, both the studios and the Imbizo Media Centre were obsolete and were not in use because they required physical refurbishment and a technological infrastructure refresh. On the amount needed for technological infrastructure refresh, it had motivated to National Treasury for that request and the estimated amount at the time was nearly R14 million. Treasury did not say no, but said it would take the process through the budgetary process. It hoped it would be fortunate and be allocated those funds. It had to motivate extraordinarily and advise National Treasury on the what the implications were for those studios and the Imbizo Media Centre being non-operational for the country and government’s reputations. It also advised on the investment already put in place. The physical refurbishment was still required, but within its own budget it was able allocate small amounts of money to refurbish it over the next three financial years. However, if National Treasury gave it funding it could reduce this to one financial year to implement it.

To Ms Khubeka, she said it strived as an organisation to really improve its performance in a holistic manner, both financial and non-financial. It did not take regress lightly. It would commit to doing all it could as management and employees to ensure it restored the dignity of the GCIS.

Chairperson’s closing remarks
The Chairperson thanked the MDDA and GCIS for their responses. The Deputy Minister did not have any further issues to raise. The Committee said as it did to DCDT, the first point was to observe the audit findings. For both the MDDA and GCIS, the consolidated reports were one page or half a page - this meant there were only a few issues they had to deal with in order to get back to where they were. The reasons were understood, but the Auditor-General made important observations and gave important feedback that most matters, including financials, were not really material. These were matters they could deal while improving assurance levels from yellow to green again. What was key was addressing a few things and if these bothered the Committee, Department, and ministry, then it spoke to legislation.

He heard the MDDA board chairperson elaborating on becoming relevant and the revision of the legislative framework. It was important to link that with what was taking place with DCDT on the pieces of legislation it was looking at. He raised this because Sentech was also undergoing a merger so it would need to look at transmission costs from that perspective. In the recent past, it had about 25 radio stations that were off air, not because of the MDDA, but there was always reasonable expectation that the MDDA would come into the picture and be able to clarify. ICASA spoke to the regulator challenges but as one looked at such amendments, one should look at whether the other side would have restrictions that would make it difficult to go in the direction it wanted. It was important to look at all those legislation revisions.

However, it was a reality that as it moved forward there could be problems with funding every community radio stations. This would mean categorisation that you helped at a certain level meeting the basic minimum requirements of a radio station but on other matters it needed to branch into self-sustainability. An example of a basic minimum requirement was having a radio station in each district, which linked well with the district development model.

The MDDA chairperson had made a commitment for a clean audit and the Committee would hold him to that. It should not compromise delivery because it was now upping performance each year. From 95% it should get closer to 100% whilst keeping a clean audit. Sometimes there was a disjuncture because there would be a clean audit but less delivery which impacted on the ground. Where there was delivery acceleration, sometimes irregularities picked up. He believed it could change that narrative and as it was possible to have 100% delivery and maintain a clean audit.

GCIS had done well but it was time the Committee faced the infrastructure challenge it identified which it had raised with the Committee several times. It would get to a stage of collapse if it did not act. This was government communications. Parliamentarians had an opportunity to make recommendations during these appropriations. He proposed Members took this to their party caucuses to see the importance of government communications and that the ongoing information gap in society was not something it could close overnight. People wanted to rely on factual information and GCIS closes that gap as many people did not have access to private media.

It was important they left the meeting with that understanding. As they came from different parties, it would be good that when the Committee BRRR report is presented formally in the House that they influence final recommendations on how resources are moved around. It would be sad if what had been working well such as the studios get closed down because of lack of resources for maintenance.

The Deputy Minister as political leader was present as the Committee wanted political responsibility on the matters it was raising. This was to ensure they were not just active matters in departments but the noise filtered through to Cabinet. A good start would be implementing a resolution that government communications got centralised beginning with communication budgets in the various departments. This should be coordinated by National Treasury making it easier than having the Deputy Minister knocking on the doors of the different departments.

It would better coordinate when Cabinet was in unison on the importance of government communications especially at a time when fake news is prevalent. It needed to be able to cross-reference as agile government communication could rebut fake news as was the case during COVID-19 lockdown. He wanted everyone to leave the meeting with that understanding. It would be looking at the audit action plans. However, it was almost at the end of the financial year. Surely they should have seen if their systems were back in order. Before the Auditor-General confirmed this, they should be confident they had turned themselves around.

Committee business
The Chairperson said the draft Committee programme had been distributed. However, it could not ignore that the Committee had just had an important discussion which meant there were those entities that may return. It would group those entities to address the matters raised in the discussions. That proposal still needed to be circulated amongst the members as well as feedback on the application that still needed to be sent through on the physical oversight visit. He mentioned the studios that were becoming obsolete on the Committee's watch. He proposed this in line with the draft programme, although it would need amendments to cover the matters discussed. He asked if that would be a proper guide.

Ms Kubheka supported the programme with the amendments stating it would lead with urgent matters. She asked for the oversight to be discussed.

The Chairperson saw in the chat that Ms Kohler Barnard indicated the same. He asked if there were any objections to adopting the programme with that understanding that it would amend accordingly on the entities that needed to return.

The Committee approved the Committee programme.

SABC Board appointments
The Chairperson gave an update on the SABC Board appointment process. There were challenges in obtaining information from the vetting process. The latest feedback was that from the 34 candidates submitted, seven were completed and the others were pending. There was a push to follow-up daily to get this information out. As soon as it received that, the Committee could proceed. He had consulted with Legal Services and looked at the Broadcasting Act and Companies Act. They could not make the appointment in the period remaining. They had advised the SABC Board Chairperson, the appointing authority and shareholder on the vetting delay. They all needed to push for this to happen to get the information, including the Leader of Government Business, because the matter was with another department. This would allow the Committee to proceed. The legal advice was it could not address anything that happened in the next few days before the current board term ends on 15 October 2022. Thereafter there would be two options. The first was that the board make delegations; the second being the executive members remain involved in operations on a daily basis. The matters that could not be addressed immediately were those the board had to decide on. The day-to-day operations of SABC could not be compromised. It did not want to compromise the Committee by making board recommendations then perhaps having to repeat this later on if the vetting was not successful ­– simply because it was not patient. It went to the core of trying to correct the institutions to ensure qualified people were there and assure society that they were cleared. There was the introduction of mid-term vetting in its advert in response to the state capture report on the role Parliament needed to play to ensure that board members did what was expected of them.

In his earlier summary, he indicated that in the question-and-answer rounds with the DCDT, the questions raised on the SABC turnaround would have been responded to. If those questions still needed to be pursued, then it would do so when the entity returned. The only thing it would have to do officially would be to issue its statement acknowledging the work of the SABC board. There were instances where there was unavoidable tension between Committee and Board but that was the nature of work considering where the SABC was – the work of stabilising, dealing with governance challenges which persisted historically. Looking at the SABC’s future, it could only conclude there would be reasons to have a handover report to the new board. It would start off on a far better base. This would be the first board in the recent past to complete its term in office. This involved the work of the Committee to ensure that these entities were stabilised. It should give the Committee more confidence that those unable to get out of tough situations like SAPO – if it was determined, the Committee should work with them to get them out to ensure one day services were returned to the people – because it did its oversight work, but also supported the institutions.

Meeting adjourned.