Environment Portfolio Audit Outcomes; DFFE & MLRF Annual Report 2021/22; with Minister and Deputy Minister

Meeting report

Ms Tyhileka Madubela, Committee Secretary, asked the Members to nominate an acting Chairperson because Ms F Muthambi’s (ANC) internet connection was unstable, and she was driving.

Ms N Gantsho (ANC) nominated Mr P Modise (ANC) as acting Chairperson.

Ms S Mbatha (ANC) seconded the nomination.

Mr P Modise was elected as acting Chairperson.

Apologies were received from Mr N Singh (IFP).

Ms Gantsho proposed adoption of the agenda for the meeting, and Mr N Paulsen (EFF) seconded.

The acting Chairperson asked the Committee to comment, consider and adopt the draft fourth term Committee programme.

Mr D Bryant (DA) said that in the meeting scheduled for 25 October, the follow-up briefing should also include the DFFE. It was important that the Department be prepared, and that the two Ministers from the Department of Public Works and Infrastructure (DPWI) should be present.

There was no objection to the fourth term programme.

AGSA briefing on DFFE portfolio's performance

Mr Eugene de Haan, Deputy Business Unit Leader, Auditor-General of South Africa (AGSA), gave a summary of the DFFE's achievements against its annual targets, as reported in its annual performance report for 2021/22.

The DFFE, the South African Weather Service (SAWS), the SA National Parks (SANParks), the SA National Biodiversity Institute (SANBI) and the Marine Living Resources Fund (MLRF) had achieved 61%,79%, 87%,92% and 56% of their targets respectively. Five of the Department's nine programmes had not achieved a minimum of 70 % of their performance targets. Programmes 7 and 8 were the only programmes audited in the 2021/22 financial year. Programme 7 had achieved 57 % of its annual planned targets, while Programme 8 had achieved 71 %. A significant portion of Programme 7’s expenditure was for goods and services under waste tyre management. Programme 8’s achievement exceeded the extent of payments made within the programme. The percentage of waste diverted from the landfill sites was one of the key targets that were not achieved under Programme 7.

Performance planning

The SAWS had submitted their reported performance without material misstatements.
The SANBI and SANParks indicators and key targets in the annual performance plan (APP) were not clear and specific.
The reported performance for certain indicators at the DFFE and SANParks was not supported by verifiable evidence, and was therefore not considered credible.
Under Programme 7, AGSA reported that the DFFE did properly report and account for the ability of the Department to reduce and manage waste in the country. The Department did not report on three of the four targets to measure waste diverted from landfill sites that were removed during the midterm review. There was a material misstatement on the number of tyres processed, inadequate contract management and delays in the payment of depot owners.

The overall audit outcomes of the portfolio had remained stagnant, with only the DFFE receiving a qualified audit.

The DFFE's irregular expenditure amounted to R5.6 billion. AGSA said 98% of the irregular expenditure was due to a matter identified in the 2018/19 financial year audit affecting awards made from the 2017/18 financial year. As most of these contracts were still in place, the expenditure continued to be incurred, resulting in the Department’s irregular expenditure not reducing significantly.

(Please consult the presentation for details of the recommendations made by the AGSA).

Discussion

Mr Bryant said that it was unfortunate to see the Department was still scoring a qualified outcome. Why was there a slightly better outcome this time, considering the significant challenges the Department encountered? He was concerned about the current approach regarding investigations and the delays that were caused by the implementation of consequence management -- could some of the outstanding cases be expedited by the DFFE to ensure that there was progress? One had to be cognisant of the fact that while officials continued to operate over a prolonged period of time, it was important for the Portfolio Committee to make sure that it conducted proper oversight during its limited political term. It also had to ensure that consequence management was carried out without delays.

Ms Mbatha said she was interested in the independence of AGSA. It was expected to establish a framework to enable the identification of the significant threats to its independence and objectivity, and the application of controls to mitigate them, as well as providing guidance for staff. A familiarity threat existed if the auditor had a personal relationship with the employees of the client institution. She said that section 92 of the Companies Act required the rotation of the auditing team after a tenure of five consecutive financial years. What standards did AGSA employ to manage the familiarity threats? For how long did the members of the AGSA audit the Department? When was the AGSA audit team due for rotation or withdrawal? She said that the Government Gazette of May 2021 provided auditing standards and also referred to principles published by the International Organisation of Supreme Audit Institutions (INTOSAI). Their code of ethics provided an example of circumstances under which personal interest may impair independence or objectivity of staff members. What systems were in place to manage the personal interest of the auditing team? Did this system manage employment interests by the AGSA or the auditee? How did unsuccessful candidates impact the independence of the audit report?

The Chairperson asked AGSA whether they were satisfied with the audit action plan submitted. She also asked if the mechanisms for unauthorised, irregular, fruitless and wasteful (UIFW) expenditure were in place, and whether the AGSA had attempted to utilise the amended Public Audit Act (PAA) provisions.

Ms C Phillips (DA) said that she agreed with her colleagues that the DFFE must implement consequence management against the current employees, otherwise they would just be allowing people to carry on and get away with whatever they were doing.

She said she had asked on numerous occasions for information on the air quality monitoring stations, but had never received a proper response. She could assume that the air quality monitoring stations that had been mentioned were not actually working.

She was concerned about the contract for the transfer of vehicles on the Working On Fire programme. She had asked who owned the vehicles, and no one had mentioned that the vehicles were in the process of being transferred to the service provider, rather than staying in the Working On Fire programme. She was glad that these issues had been highlighted, and was looking forward to the Department explaining when they came to present.

Mr Paulsen said that he was also concerned that the DFFE did not apply strong consequence management, asserting that there were people who were getting away with some serious illegalities. He asked how a good audit report translated into better departmental performance in terms of their deliverables. Due to their underperformance, the DFFE had been responsible for many job losses and the run-down of once vibrant coastal fishing towns, ghost farm towns, and decimated harbours. How could one ensure that there were different imperatives to ensure that DFFE was doing its work, other than just ticking boxes? How could they revive those coastal fishing communities?

Mr Modise asked AGSA whether the audit action plans had been sufficiently followed to the letter, and whether the Department had sufficiently implemented the recommendations. He commented that it would just be a futile exercise to consistently make audit plans and review them if they were not being implemented. Did AGSA not think it would have been prudent or proper to set time frames with the recommendations regarding particular irregularities?

AGSA's response

Mr De Haan said that AGSA had identified that the DFFE had to account for financial statements starting from 1 April going forward. An expert from the AGSA and DFFE had come to conduct some evaluations and offer recommendations. The DFFE had achieved more indicators under Programme 7 of the DFFE’s annual performance report (APR). However, one needs to take into account the reliability of the achievements in terms of the audit report, as some of the Programme 8 indicators could not be verified reliably. Therefore, the DFFE needed to ask itself what systems could be implemented to ensure consistent and reliable reporting of Programmes 7 and 8. He said that the AGSA did not audit all the programmes -- instead, they scope in specific programmes for specific years. Hence, this year the audit outcome was based on Programmes 7 and 8. Focusing on one programme consistently throughout the years, one would find that internal controls would be implemented, and the programme would improve. However, one would find that there were some material deficiencies when shifting to other programmes. The AGSA used to audit Programme 4 in the past, and had chosen to scope in Programmes 7 and 8 to check if the methods and frameworks prescribed by National Treasury had been implemented correctly. Although the DFFE had performed better in achievements, material deficiencies (unreliable indicators) should be noted in some programmes.

He said that one of the reasons AGSA recommended different strategies for consequence management was because, in cases involving irregular expenditure, it might be difficult to execute consequence management on officials who had left the Department a few years ago. They had therefore advised the DFFE to look into more recent cases where they would be successful in implementing consequence management through recovery, or by holding specific staff accountable.

He said auditing standards required the AGSA to ensure objectivity and independence as ethical requirements for the whole audit team. The AGSA had a five-year rotation period applicable to key audit members. A key audit member was an executive/senior manager that could significantly influence the audit report outcome. The key members of the current audit team for the DFFE had not yet reached the five-year deadline. He would not even be there next year as an executive. There were different layers of quality assurance when a review was made to ensure independence and objectivity, and to ensure that the team had the necessary skills and competence to execute their mandate. The key members had different roles. For example, one would prepare the document, while another one reviewed, and the other members would check key specifications. This meant that if some of the sections were high risk areas, such as irregular expenditure, the rating of cash and banking, they got reviewed by all the key members. There was also an independent review process, where a person who was not part of the audit team went through the key specifications (methodology, ethical requirements, accounting and auditing standards), and signs. After the signature, he would also recheck if all the necessary requirements had been met, and then it got signed off.

He said that the post-audit action plan was tracked and developed by the audit committee, and was reported to the accounting officer on a quarterly basis. The accounting officer would then give feedback to the executive authority. There had been a reduction in the qualification area regarding the DFFE’s financial statements. The post-audit action plan had not been really successful, but AGSA had identified a recurring qualification matter regarding irregular expenditure. Although it had not been 100% effective, it had been effective in reducing the qualification areas. Some of these issues were complex and were not resolvable in one year. One could see that for the past three years, the DFFE had decreased its irregular expenditure. It was noticeable that the current irregular expenditures of the DFFE were through contracts. Overall, he thought the DFFE was moving on the right track, and he stressed that the post-audit action plan yielded results -- one should just make sure that the root cause was properly identified, and that it should not be a symptom of non-compliance.

The AGSA and DFFE conducted a workshop highlighting the concerns encountered during the audit process. The DFFE had crafted a new audit plan and the AGSA had reviewed it, and would offer insights shortly. It had scrutinised the large area of fruitless and wasteful expenditure, and they were engaging the Department on a couple of matters. They noted that there were some non-compliance matters, and problems with the definition of material irregularity. They now needed to check if the non-compliance had resulted in a loss.

He said the AGSA had not audited the air quality monitoring programmes this year. Maybe this question should be posed to the DFFE to check how they complied with the specific programmes and targets. AGSA could reconsider the scope next year upon DFFE’s agreement. AGSA was aware of Working on Fire and the matter regarding the transfer of assets.

He stressed that a clean audit did not confirm service delivery or whether the DFFE was executing its mandates. It confirmed that whatever they presented to the Portfolio Committee was true, fair, accurate and complete. A clean audit would mean they had unqualified financial statements with no material mistakes and non-compliance on audit performance. It just meant that the Portfolio Committee could rely on the report submitted by the DFFE to make informed decisions.

He added that the AGSA had gone one step further by adding more value to the DFFE by scoping in specific areas within the APP. The key messages were highlighted in the presentation regarding waste management, specifically the depots and tyres. It was not viable to audit all the programmes in one year from a financial and time perspective. For next year, the AGSA would focus on something else, and if there was something that the Portfolio Committee felt needed to be audited, AGSA would focus on it.

Mr De Haan said that the AGSA had signed the DFFE’s report for the first time this year, 13 days after the legislated date. For the last two years, the audit report was signed off in October 2021 and on 24 December 2020. A late signed-off audit report gave the DFFE a limited time to implement any audit action plans. The ideal time for the DFFE to draft the audit plans should be within two months after the AGSA has signed off on the audit report.

Mr Jacob Rakosa, Audit Manager, AGSA, said that the AGSA had agreed with the accounting officers that there would be proper workshops with the Department. The engagements would commence next week. Previously, the AGSA used to look at the audit action plans to review and evaluate the impact of implementation before the interim audit. Proper feedback was given through the cost review process to minimise issues in the final audit. Unresolvable issues involved capital work in progress, where the DFFE would require a specialist to assist.

He highlighted that before 2018/19, the DFFE had not disclosed any irregular expenditure. The engagements were meant to reduce issues and encourage the AGSA to follow up on consequence management issues.

Follow-up discussion

Ms Mbatha commented that Mr De Haan had said that Mr Rakosa had been promoted to the management position, which meant that he had been with the Department for more than five years. The audit report referred to the 2016/17 financial year. She wanted to know why the irregular dealings were going backwards, because they were in 2022/23 -- were they not supposed to be considering the current financial year? Who were the auditors in 2016/17? Why was there no proper audit done in 2016/17? She was worried that if AGSA was not corrected in the way they audited the Department, the Portfolio Committee would get confused and consider the DFFE failing in executing their mandates. When a person is in a position for a long time, one often finds friction between the employees and the auditors. The managers became terrified and did not perform correctly because they feared they would be charged if they overspent or underspent. There was a need to correct the relationship between AGSA and the DFFE so that they became neutral and did not take sides.

The Chairperson said that she was glad that the audit action plan issues had been addressed, and commended the DFFE on successfully implementing and submitting their plan. However, the DFFE failed to achieve an unqualified audit outcome due to irregular expenditure caused by the improper procurement of contracts in the previous years. She said that material deficiencies cut across all the entities of the DFFE. Was this because they lacked capacity in terms of chief financial officers? What was the root cause of the material misstatements across the Department and its entities? How did the audit outcome remain stagnant when the Minister at some point had said that the DFFE was working on improving its audit performance?

Mr De Haan said that the senior manager for the 2016/17 audit team was Mr Daniel van Wyk, and the executive manager was Mr Andries Sekgetho. Mr Rakosa started auditing for the DFFE as a manager in 2018/19, which made this year his fourth year. He has held an executive management position only since 2020/21.

He said that the DFFE used to account for their transfer payments on goods and services differently in the past. When the AGSA reviewed that process, there were a lot of disagreements between them, because they were not in line with National Treasury frameworks. Transfer payments did not go through the supply chain, because they were just a payment from the DFFE to its entities or implementing agents within a specific framework. The disagreements led to National Treasury’s involvement. The AGSA method had been approved by National Treasury and had weakened the relationship between the AGSA office and the previous teams. The relationship had been repaired, but there were still matters that the two parties disagreed on.

He said that AGSA's policies and requirements regarding international auditing standards required the audit team to be rotated. This was not the only portfolio they audited, so if there were higher risk areas in the other portfolios, teams were changed regarding skills and experience. They were always governed by the five-year rule.

Mr De Haan said that the audit action plan was effective to a degree, but was ineffective in resolving specific qualification areas. The DFFE was stagnant from 2021/22, but not in terms of a four-year overview, so he had brought additional details to show that the qualification areas were decreasing. The CFO positions had been filled, so he would not quote capacity as a root cause for financial misstatements. There had been a challenge regarding filling positions, and although some had been filled, and it also required time for people to get some footing and build in the required controls.

The financial misstatements were mostly due to an unmonitored accounting system within some areas of the Department. For instance, if one had commitments on one's financial statements that were not accounted for in the accounting systems, they would be scheduled outside. This was when the internal controls would start breaking down, and this required attention because it was not an automated process system.

He concluded that the CFO needed to pay attention to the accounting schedules and ensure they were included in the accounting systems to avoid material errors. He reiterated that the Departments were encouraged not to prepare their financial statements just once annually. The probability of a Department not getting it right was greater when its financial statement was completed only once a year. It should do it at least quarterly or bi-annually to practice and identify issues that could affect the final submission.

Ms Mbatha asked what would happen if audit team members applied for positions with auditees and were unsuccessful. How was potential conflict managed?

Mr De Haan said that AGSA tracked team members that left and went to an auditee. There was a specific requirement of a six-month cool-off period within the AGSA internal policies for a key audit member. It was challenging to enforce it from their side, but it was something they were working on. A non-key audit member was allowed to join an auditee. AGSA was a trading institution that supplied many chartered accountants through the profession. They would like to retain most of the skills, but they also saw their skills strengthening public sector finance in the entities, local municipalities, or government departments.

DFFE's annual performance report 2021/22

Minister’s overview

Ms Barbara Creecy, Minister of the DFFE, greeted everyone and said she was accompanied by her Deputy, Ms Maggie Sotyu. They had agreed that it was important to attend today’s meeting because they were fully aware that there were important matters to account to the Portfolio Committee.

She thanked Mr De Haan and the team for a very balanced report on their relationship over the past years. They had been working together to sort out the difficulties in these departments. She referred to the considerable amount of work done over the years. She was pleased that the entities had managed to retain their unqualified status and reduced matters of emphasis in some instances. The Department did not have the luxury of being able to sit and cry in a corner. They had to start working on the remedial measures after the audit outcome. The DFFE would present today what they were doing about the findings from the AGSA. There were details on consequence management, and the Department was of the view that when dealing with irregular expenditures in the billions, one needed to prioritise that section. It was those billions that they were trying to clear that had resulted from contracts awarded in the previous term”.

The Minister said she agreed with the AGSA that the Waste Bureau was not fulfilling its mandate. The Recycling and Economic Development Initiative of South Africa (REDISA) was liquidated in 2017, and the Department took over its functions. She was not in a position to explain why the Department thought that was the best option then. It had not been a satisfactory course of action, so they had prioritised working to remove the function from the DFFE. They would allow other service providers to engage in this function. They had had to implement a patchwork solution with the transporters, the depots and suppliers -- but it was only a patchwork, not a solution to the problem.

The Minister said that the Working on Fire issues were complex and the recovery process could lead the DFFE into court action, which they would explain to the Portfolio Committee.

Performance of DFFE and entities

Ms Nomfundo Tshabala, Director General, and Ms Andiswa Oyama Jass, CFO, presented the annual performance information on the DFFE. Its overall performance for the financial year was 68%, and only three programmes had performed over 80 % -- that was Programme 4 (climate change, air quality and sustainable development) and Programme 7 (chemical and waste management).

(Please consult the presentation for detailed information on performance per programme.)

2021/22 DFFE Audit Outcome

The AGSA expressed a qualified audit opinion with qualification on irregular expenditure and immovable tangible capital assets.

See presentation for further details

Ms Sue Middleton, Deputy Director General (DDG): Fisheries Management, and Mr Wickness Rooifontein, CFO, delivered the presentation on the MLRF. The overall performance of MRLF was 57% for the financial year. It had recorded a R13 million deficit, and irregular expenses of R432 000 had been incurred.

The audit outcome of the MLF was maintained as an unqualified opinion with findings on compliance to laws and regulations compared the last year. The AGSA assessed the financial viability of the Fund as good.

See presentation for further details

Discussion

Mr Paulsen said that the online processes regarding the Fishing Rights Allocation Process (FRAP) were fraught with problems, resulting in unsuccessful applicants. Some applicants would apply for three species, and only one application was approved with the same document and guidelines. The rejected document would be cited as corrupt and/or it would not be accepted due to non-payment, although the applicant had paid thousands in application fees, and had proof of payments. How could one have confidence in systems like that when there were so many errors? The system had been proven to be faulty, yet some people were successful in obtaining fishing rights. Was the online system tested? How much did it cost, or was it a wasteful expenditure? Was the system responsible for approving applications, or was it just used to consolidate applications? The system was supposed to receive, vet and allocate points to the applications, but it seemed that online systems were just being used to upload the applications. He added that it was unfair to use a system that was never tested, because many people had lost their livelihoods. He asked how R100 million could be sent back to National Treasury by a department with many issues. What could one do about the people who did not spend the money allocated to their programmes to improve the lives of the people?

Mr Bryant said he agreed with the suggestion by the DG to move away from partially achieved targets. The Department must state only whether a target was achieved or not. They needed to be much firmer so that targets not achieved were not marked as partially achieved. Was there a breakdown of municipalities failing to comply and plant the targeted number of trees? Was there any intention to work with the Department of Cooperative Governance and Traditional Affairs (COGTA) or any available groupings to address the issues surrounding the planting of trees? Could the officials provide a bit more context on the incomplete disclosures? Where in the Department did this take place? How widespread was this, because it had been an ongoing challenge?

Was March 2023 the target for full completion of consequence management processes, or was it a date to begin the process? Who would be heading the internal consequence management team? Would it be an independent individual? He was concerned there might be conflict of interest if the individual was from the DFFE. Would there be an audit of the FRAP, including the online application process, to ensure that there were no bureaucracy and administrative issues?

Ms Phillips said that the Portfolio Committee required answers regarding the Working On Fire programme, despite court processes. She had asked the questions before it even went to court. Was it only the current contractors' vehicles going to the service provider? What had happened to the previous contract vehicles? Where had they been sold? Did they still belong to Working On Fire?

She asked for information on all the air quality stations monitored by the Department, rather than the one in Rustenburg. Had criminal cases been opened regarding the vandalism and theft at the air quality monitoring stations? If so, could the Committee get the case numbers or information on any of the processes?

She asked what happened when the officials in the Department resigned. Was there any way to prevent them from round tripping and getting a job in a different government department? It was not fair and right that the officials could move on and get re-employment.

She was concerned about the reports on the counts for rhinos and African penguins. The Committee needed to take action, instead of sitting and waiting for the report. They were losing these animals. Referring to slide 6, she said the sale of confiscated seafood had been finalised only in 2021, and wanted to know what had been happening to the confiscated seafood before that.

Ms A Weber (DA) said she understood there was a problem with the tenders, but some of the tender processes had gone out in April and were already in the middle of October. Nothing had happened in the last year or nine months while they waited for tenderpreneurs to get appointed fairly and legally. Could the Minister and her team look into these tender processes? How many trees had been planted? Who got these trees? She alleged incidents where a municipal official would sell the trees for up to R1 000 instead of distributing them to the ward councillors.

Mr Modise asked about the numerous delays in submitting reports by the industries involved in implementing the Ocean Master Plan. What was the DEFF going to do to ensure no delay? What mitigating measures were being exercised?

He congratulated the MLRF for maintaining their unqualified audit opinion, and advised them not to relax but to continue improving. Why had R99 million of Operation Phakisa been returned to Treasury? Operation Phakisa had been expected to assist with job creation. How could they rectify this? He appreciates the decline in the deficit, but stressed that a R13 million deficit of taxpayers' money was a lot, and could not be comparable to the deficits of previous years.

The Chairperson said that matters arose when the Committee met with people regarding forestry management. What was the time frame for registering fire protection associations? How many fire protection associations was the DEFF anticipating after the finalisation of the National Veld and Forest Fire Amendment Bill? She asked about the DFFE plan to preserve and improve the state-owned indigenous forest and plantations. How would they utilise them, and also prevent them from being seized?

She asked the Department why they were removing frozen posts when they reported the vacancy rates. Were they planning to fill those 310 vacant posts? The Chairperson said that the low employment of people with disabilities had been a concern. She said that from 2020/1 to 2021/2, the actual number of people living with disabilities had increased from 62 to 65, but was the increment of 2% of people living with disabilities a result of more staff members disclosing? Were there new appointments, or was the percentage driven partially by the reduced total number of the staff complement?

Under biodiversity and conservation, the target of donating 5 000 game animals to previously disadvantaged individuals and communities had been missed due to approval delays. The recommended measure was to complete a memorandum of understanding (MOU) with the Department of Defence (DoD) and public entities to unlock donations of more animals. How would an MOU with the DoD unlock the game donation?

The Chairperson advised the chemicals and waste management department to send the Committee a copy of the status quo report on food loss and waste across the value chain. She asked the DFFE to report on the volume of the confiscated fisheries resources in storage, the amount auctioned and the market value. How did they deal with decomposed stored abalone? Could they report on the progress of cases referred to the police under consequence management?

DFFE's response

The Minister said that most of the questions would be answered, but there would be some questions that the team would respond to in a written format.

She said that the FRAP was involved in an appeal process, and the procedural and substantive fairness of the process would have to be considered for each and every application. It may not be possible to answer some of the questions posed by Mr Paulsen to determine whether subjects of the appeal process were fairly or unfairly allocated fishing rights. A significant team had been mobilised to deal with this process. They had had extensive discussions in their previous meetings where underperformance issues were dealt with, and Mr Paulsen was unavailable at that meeting. She said that underperformance and returning money to National Treasury was unacceptable, because the DFFE faced difficulties in service delivery.

The first Working on Water tender had not been responsive. The AGSA presentation explained that the way supply chain management had been implemented, particularly in environmental programmes, had led to irregular expenditure in the past. The DFFE had been required to conduct a competitive process under the Expanded Public Works Programme (EPWP), which should be discussed someday. If one had service providers in rural areas, they may not be adequately equipped to participate in a government tender process. That was the reality the Department had been confronted with, so they had had to take emergency measures to ensure that the clearing of alien invasive species continued, and had to extend the existing contract. There was a need to discuss the appropriate competitive bidding process in the rural areas, but not at today's meeting. They also needed to discuss whether the DFFE had proper policy documents to implement EPWP programmes.

Ms Middleton said it was premature to respond about the FRAP, as indicated by the Minister. The online system cost the MRLF R2.8 million for the IT system. The FRAP had been subjected to an independent audit, and the service provider was a qualified audit company. The Minister had extended the FRAP to allow more people to apply online, given some technical glitches experienced in December. The independent audit firm was comfortable with the extension of FRAP, and it had been certified as a free and fair process.

Referring to the delay of the service provider to process, market and sell the confiscated fish and fish products, she said most of the products were frozen and kept in the DEFF's stores under strict and tight security conditions. A new service provider had been appointed and the stock was beginning on to the market in batches.

She agreed that it was totally unacceptable to return unspent funds to National Treasury, when these funds were meant to create jobs. The Minister had indicated some technical difficulties, including finding a service provider through a procurement process to roll out those jobs. The MLRF had taken a turnaround route and employed people directly, rather than through a service provider. Positions had been opened, including Working for Fisheries and catch data monitors in four coastal provinces, and cleaning and security staff at the fishing harbours before the peak of the fishing system (before December). The DEFF hoped to have sorted out all the issues and would not need to return funds to National Treasury for the next financial year. The R13 million deficit had been the depreciation write-off on assets -- it was not a cash item cost.

Ms Flora Mokgohloa, DDG: Biodiversity and Conservation Management, confirmed the MOU had been delivered to the secretary of the DoD in August. In the interim, the branch had prepared SANParks to support the public entities once the translocation-related issues had been resolved. There were some challenges regarding the declaration of foot and mouth disease (FMD) in some areas of the country, affecting the whole country. The MOU would be signed off during this hunting season, meaning the cheques and payments could be issued only in March 2023.

She said that the biodiversity management plan (BMP) for black and white rhinos was completed and discussed with various stakeholders. They had identified existing gaps to be considered in completing the new BMPs for white and black rhinos in March 2023. She also confirmed that the branch was working with SANParks and SANBI to work on a rhino integration conservation recovery plan for the country. They had completed a stock take and dealt with conservation issues as an implementation of the five species recommendations from the Inquiry Committee.

Ms Nonhlanhla Mkhize, DDG: Environmental Programmes, confirmed that vehicles for Working on Fire had been purchased under the previous seven-year (2014-2021) contract. The Department had started a process to transfer the vehicles bought under that contract to the DFFE's name. It had sought legal opinion in instances where the vehicles were disposed of within the context of the 2014-2021 contract, to recoup the funds.

Mr Tlou Ramaru, Acting DDG: Climate Change and Air Quality Management, said that cases had been opened concerning the vandalism and the theft at air quality monitoring stations controlled by the SAWS. The collated information would be provided to the Department accordingly. They had made a provision for all government-owned stations in the previous meetings. These stations reported to the South African Air Quality Information System (SAAQIS), which was freely accessible to the public. Further, the SAWS application provided the status of the air quality monitoring stations.

The Minister asked Mr Ramaru to send a link to Ms Phillips so she could look at the information anytime she wanted.

Mr Tlou Ramaru confirmed that he would send her the link.

Dr Ashley Naidoo, Acting DDG: Ocean and Coasts, said they were working with the aquaculture technical services and an in-house economist to relate to the industry regarding the ocean economy and statistics. The branch had completed the penguin counts at six major colonies. There were about 10 000 penguins, representing a 5 % decrease from last year's count.

Ms Pumeza Nodada, DDG: Forestry Management, said that the branch had a breakdown of the statistics of the trees bought and planted by municipalities. The information would be made available. The branch had established a National Greening Forum which comprised numerous stakeholders, including municipalities and government departments, to account for how many trees were bought and given to the municipalities and different stakeholders on a quarterly basis. The stakeholders also provided the branch with the location where they had planted the trees to create a proper database. The Forum also allowed them to track donations or funding from different role players to achieve the planting of two million trees.

She said that the registration of the Fire Protection Association (FPA) had a 90-day turnaround time, and confirmed that the branch had not received any new registrations in the recent past. There were currently 217 FPAs registered, and the branch was in the process of assessing their functionality and to help it to establish what kind of assistance these FPAs required for compliance. The branch would have discussions with dysfunctional FPAs to check if they could be incorporated into other FPAs, or if they still wanted to be separate, and how they related to the umbrella FPAs at the provincial level.

The branch had embarked on fast-tracking the transfer of the plantations through a master plan. The plantations were categorised in terms of their requirements for finalisation of the transfer process, and what kind of mechanism would be used - either through a listing process via Section 27 of the National Forest Act, or through section 29 that catered for community agreements. The first priority would be given to about 8 000 hectares of the plantations which would be finalised within the next six months. The second priority would be finalised within 15 months from today, to ensure that the targets of the master plan were met, and there was production for the community to benefit from.

Ms Mamogala Musekene, DDG: Chemicals and Waste Management, said that the branch team was consulting with the Council for Scientific and Industrial Research (CSIR) regarding the draft strategy for food loss and waste management. The draft would be published in the Government Gazette for consultation in the next quarter.

Ms Mmamokgadi Mashala, DDG: Corporate Management Services, said that the branch utilised the vacant funded posts to calculate the vacancy percentage. The branch would then look at the funds available for that particular post within specific timeframes. There was a need to fill the current frozen posts. They had indicated to the Committee that they had received approval in terms of the structure at the end of April, and were currently in the process of implementing it. Some of the frozen posts had been repurposed and would be filled when they had savings.

She said that the DFFE had improved from 1.17% to 1.7 % of people living with disabilities, which had been affected by the integration of the two branches (forestry and fisheries). A strategy involving awareness sessions had been implemented to encourage people to disclose their disabilities, and there had been an increase in the number of actual heads disclosing their disability.

She said that processes had already been implemented to deal with consequence management, such as corrective counselling through training and normal disciplinary processes, depending on the type of cases.

Ms Jass, the CFO, said that the incomplete disclosure meant that the Department had never had a credible register for irregular expenditure in the past. The DFFE had had to restart the process to redevelop the register and accurately report the required information.

The AGSA had identified a contract from the 2018/19 financial year that was not included in the register, so it could not be confirmed. The DFFE had managed to register the contracts for the current financial year. The AGSA had flagged this because the opening balances of the irregular expenditure register were not complete and required further work. The audit action plan had been put in place to ensure that the DFFE reviewed and registered everything that was recorded as non-compliant from the past. The plan also ensured that the DFFE had a credit audit register before even reviewing the financial statements for the third quarter. The DFFE was establishing an internal control directorate that would report directly to the CFO and review the identified internal control deficiencies. The directorate would create a link between the DFFE, the CFO's office, AGSA and all the external assurance providers.

The DG said that the cases were reported to the South African Police Service (SAPS) through the director of risk and fraud prevention, and they had quarterly sessions with the SAPS. The last report given to the DFFE was that all the cases were still in progress.

Follow-up discussion

The Chairperson asked the DG what she meant when she said the cases were "in progress." The Department would be given the status of a case -- whether there was prosecution or not, and if the case had been finalised. The Committee did not want to be told that matters were in progress while nothing was happening. This matter came from the previous financial year.

She asked again about the volume of confiscated fishing resources and the amount auctioned, including their current market value. These issues had been in the media, and they could create new avenues for supplementing the funds of the Department.

She was concerned about the targets set under Programme 2, where the performance had declined from 92% to 75 %. At what stages were those cases, and at what stage was the current conviction rate of the cases referred to the National Prosecuting Authority (NPA), because these were the matters where the Committee should be attending hearings and receiving reports?

Last year, this Committee resolved that the DFFE and its entities must develop a unified awareness programme to reach out to rural and township communities about careers and bursary opportunities in the environmental sectors, which was done by a number of different departments. Why was this resolution not honoured? Why were they operating in silos and thus excluding the communities?

Mr Bryant said that Ms Nodada had made a commitment to provide the Portfolio Committee with information about the municipalities that had failed to plant trees that had been provided to them. Could he confirm that she would share the information with the secretariat as soon as possible?

The DG asked the Department to respond in writing to some unanswered questions, such as the cases referred to the SAPS, and the volume and value of confiscated fish resources.

The Chairperson thanked everyone for attending the meeting.

The meeting was adjourned.