Update on implementation of corrective measures and Committee recommendations at DPWI; with Minister and Deputy Minister

Public Accounts (SCOPA)

15 March 2023
Chairperson: Mr M Hlengwa (IFP)
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Meeting Summary

In an in-person meeting attended by the newly appointed Minister and Deputy Minister of Public Works and Infrastructure, the Department of Public Works and Infrastructure (DPWI) briefed the Committee on its progress towards implementing corrective measures following the Beitbridge Border Post debacle. This included the Department’s progress in implementing recommendations emanating from the Committee’s own oversight, as well as the recommendations of investigations conducted by the Department and by the Special Investigating Unit (SIU).

The Department and SIU investigations into the matter resulted in 91 disciplinary referrals, 292 criminal referrals, and R1.4 billion in referrals for civil recovery. The implicated National Bid Adjudication Committee officials had been found guilty of the disciplinary charges against them, had served their sanctions, and had now returned to work. Disciplinary proceedings against three senior Department officials were still pending. The Department had also begun vetting all supply chain management personnel, including 253 officials in the 2021/2022 financial year, although there was a delay in obtaining clearance certificates from the State Security Agency.

In September 2021, Caledon River Properties and Magwa Construction were placed under restriction for a period of ten years. However, the companies had launched an urgent court challenge and the restrictions had since been lifted. At Treasury’s request, the Department’s Restriction Committee and Authority had been mandated to reconsider the matter, but there had been delays in constituting the committee. As recommended by the Committee, the Department had also conducted an internal audit to review its active contracts with Magwa Construction and Profteam, but the audit found no material non-compliance warranting termination of the contracts. 

The Committee expressed concern that the Department appeared to be blaming other institutions for its challenges, leading the Department to emphasise that it took responsibility for its difficulties and merely intended to highlight the interdependencies of its work. Members remained concerned about the deficiencies of interdepartmental cooperation, particularly between DPWI and the Department of Defence, given that further border-line infrastructure projects were currently in the feasibility stage. The Ministry requested the Committee’s assistance in coordinating between the Department and the security cluster on those ongoing projects.

Members also highlighted their persistent concern about consequence management. They were unhappy that implicated suppliers, including Magwa Construction, had not yet been blacklisted and continued to do business with the state. They also disapproved of the leniency of the disciplinary sentences handed down to public officials found guilty of misconduct, since those officials were often allowed to return to comfortable government jobs after serving their sanctions. The Committee would consider breaching that matter with the Department of Public Service and Administration or even with Cabinet.

Those lingering concerns notwithstanding, the Committee concluded that DPWI was progressing toward implementing corrective measures. Members agreed that DPWI should submit monthly progress reports in writing until its annual audit outcomes were released, at which point the Committee would re-evaluate the Department’s progress.

Meeting report

The Chairperson said that the purpose of the meeting was for the Committee to receive an update from the Department of Public Works and Infrastructure (DPWI) on the implementation of corrective measures that the Committee had discussed with DPWI in previous meetings. The Committee had been concerned about certain issues at DPWI, particularly in key areas of consequence management. The Committee hoped there would be new impetus in dealing with those challenges. Concern had also been raised about corruption in the organisation of state funerals, with the Auditor-General occasionally flagging concerns.

Opening remarks by the Minister
Mr Sihle Zikalala, Minister of Public Works and Infrastructure, said that DPWI welcomed the opportunity to appear before the Committee to ensure DPWI’s integrity. Noting that it was his first meeting with the Committee since his appointment as Minister, he said that DPWI was committed to ensuring a high level of accountability and transparency. Under the newly appointed executive, DPWI had made good progress towards implementing various programmes.

The Ministry was not naïve about the challenges at hand but it was working to ensure that all challenges were properly addressed. The new executive had inherited both the successes and the shortcomings of the former executive. The strategic aim was to consider many angles to address the shortcomings that had been flagged ­– such as in consequence management – while expanding on the progress that DPWI had made to date.

Financial management is key in any institution and should be at the back of impactful service delivery. The executive was concerned about DPWI’s previous audit outcomes and DPWI would do its best to avoid such outcomes in the future. DPWI would always be available to the Committee and would strive to provide the utmost transparency and accountability.

Briefing DPWI: Progress on Implementation of Corrective Measures
Dr Alec Moemi, Acting Director-General, DPWI, briefed the Committee on DPWI’s progress in implementing corrective measures and recommendations emanating from three separate investigations into fraud and corruption. Those investigations had been conducted by DPWI, by the Special Investigating Unit (SIU), and by the Committee itself. The DPWI and SIU investigations had resulted in 91 disciplinary referrals (including nine dismissals), 292 criminal referrals, and R1.4 billion referred for civil recovery, with R129 million already recovered. Three entities and their directors had been referred for possible restriction or blacklisting due to their involvement in fraudulent conflict.

In addition to providing an update on ongoing legal action, Dr Moemi provided a detailed update on consequence management procedures carried out in respect of officials implicated in misconduct, including the Director-General, the Special Advisor to the former Minister, National Bid Adjudication Committee (NBAC) officials, and DPWI officials. On 3 June 2022, all implicated NBAC officials were found guilty of the charges against them and sentenced to a final written warning and suspension without pay. Since DPWI’s last meeting with the Committee, the employees have served their sanction periods and have returned to work. Disciplinary proceedings against three senior DPWI officials were still pending.

DPWI continued to pursue blacklisting against the principal agent and main contractor to prevent them from doing further business with government. In September 2021, National Treasury placed both companies under restriction for a period of ten years. However, the companies appealed the restriction and launched an urgent court challenge. Treasury subsequently lifted the restrictions and the matter was referred to DPWI on 21 February 2022 – Treasury had asked DPWI to reconsider whether the restriction should be imposed. That request has been referred to DPWI's Restriction Committee and Authority (RCAA) for consideration, but there have been delays in constituting the RCAA. RCAA members had met to review their terms of reference on 27 January 2023; DPWI expected the RCAA to complete its review in March 2023 and to consider the Beitbridge matter thereafter.

Dr Moemi provided various other updates about ongoing DPWI processes to respond to the reports’ recommendations. Among other things, he said that:
• An updated and revised inter-departmental Memorandum of Understanding (MoU), seeking to clarify roles and responsibilities for the border-line environment, was currently with DPWI’s legal department for approval;
• DPWI had completed the phase-one feasibility study for the acquisition of various land parcels for three border-line infrastructure projects, but DPWI was concerned that recent correspondence from the Department of Defence (DoD) suggested a lack of “firm commitment” from DoD;
• DPWI had conducted an internal audit to review its ongoing contracts with Magwa Construction and Profteam, but the audit had not found material non-compliance warranting termination of those contracts;
• DPWI had begun vetting all supply chain management personnel, but the State Security Agency had issued clearance certificates for only 23 of the 253 officials who had been vetted thus far; and
• The Engineering Council of South Africa (ECSA) had concluded its own investigation and, in January 2023, had informed DPWI that it intended to charge three persons involved in the project; and
• DPWI planned to begin rolling out its new Infrastructure Delivery Management System on 1 April 2023.

(See presentation.)

The Chairperson said that the Committee had met with National Treasury a few weeks ago, but Treasury had not raised DPWI’s concerns about the ongoing process to restrict suppliers. The Committee should flag that issue, since the Committee was rigorously pursuing restrictions against individuals. Magwa Construction was a problem: it had been a “persistent presence” at DPWI for some years. That longstanding relationship had come to a head during the Beitbridge matter, which in turn had led the Committee to form the view that restrictions should be placed on individuals involved in mismanagement and corruption.

Ms A Beukes (ANC) noted that the implicated NBAC officials had returned to work upon the conclusion of the sanction period. What was the reason for the “soft landing” given to officials found guilty of grievous misconduct?

Dr Moemi replied that the investigations had been productive and DPWI had built strong cases against the officials involved. DPWI itself had recommended that the officials should be dismissed, since they had been found guilty of offences involving dishonesty and therefore had breached the relationship of trust between employer and employee. The disciplinary committee chairperson had not agreed with that argument and had handed down a different sentence, which DPWI had been the first to decry. Nonetheless, DPWI believed it had acquitted itself well in the disciplinary process.

Ms Beukes noted that slide nine mentioned correspondence between DPWI and DoD. Were there any other forms of engagement between the departments?

Dr Moemi replied that the former Minister, Ms Patricia de Lille, had held three meetings with the Minister of Defence: two with Minister Thandi Modise and one with her predecessor, former Minister Nosiviwe Mapisa-Nqakula. At the departmental level, there had been countless and continuous engagements between DPWI officials and DoD officials. DPWI could provide a full inventory of those engagements at the Committee’s request.

The Chairperson said that the regularity of DPWI’s engagements was one question, but another was whether those engagements secured a resolution. Where, specifically, was the snag?

Dr Moemi replied that, as mentioned in his presentation, DPWI’s repeated engagements had recently led to a written response from DoD. However, DPWI felt that the content of the response had “thrown a spanner in the works”. He hoped to provide a more positive update at a later date.

Ms Beukes noted that, according to slide 11, the RCAA’s work had been delayed because it had transpired that the chairperson of the RCAA was one of the officials cited in the investigation report. He had been subject to disciplinary action and the RCAA now had to reconstitute. How was that situation possible?

Dr Moemi replied that the individual had not been implicated in the case at the time of his appointment. As the SIU uncovered additional evidence, DPWI realised that the RCAA process was compromised. The chairperson had since been replaced.

The Chairperson asked who the problematic chairperson was.

Dr Moemi replied that he had been DPWI’s Chief Director for Supply Chain Management. He was later moved to a new position as Chief Director for Logistics and Assets.

The Chairperson asked whether he had not been charged.

Dr Moemi replied that the individual had been charged but had received a lenient sentence.

The Chairperson said that it was for this reason that the 2014 Cabinet resolution on vetting was so important regarding supply chain management. He expressed exasperation with the situation.

Ms Beukes noted that slide 11 mentioned that a consultant had alleged that “advance payment was sought based on the request of senior officials of the Department”. Had DPWI identified those senior officials? Were they still employed at DPWI?

Mr B Hadebe (ANC) said that DPWI’s progress should be welcomed because a new executive was in place and had inherited various challenges. The new executive should be given space to deal with the challenges facing DPWI. However, he said he was concerned about the “modus operandi” of Ms Melissa Whitehead, the Advisor to the former Minister. He had been a local councillor in the City of Cape Town when Ms de Lille, then the Mayor of Cape Town, had appointed Ms Whitehead as a director. He had personally uncovered and reported corruption in Ms Whitehead’s department, as a result of which Ms Whitehead had been found guilty in an internal disciplinary process. During that saga, Ms de Lille had not taken the relevant forensic report to the council.

The Chairperson said that because Ms de Lille was now a Member of Parliament, the parliamentary rules required that allegations should not be made against her without a substantive motion. He therefore suggested that Mr Hadebe should rephrase his point.

Mr Hadebe said it had been alleged that Ms de Lille had renewed Ms Whitehead’s contract without furnishing the Cape Town City Council with the relevant information. The “very same thing” had now happened again. It was very concerning and should be followed up. He had evidence at his disposal which pertained to the previous case in the local government. The Committee should seek advice on how to proceed. 

The Chairperson suggested that Mr Hadebe write to the City of Cape Town to obtain documentation regarding the disciplinary processes that the City had pursued against Ms Whitehead. The Committee could then obtain additional information from DPWI and notify the Department of Public Service and Administration to “flag” Ms Whitehead in future recruitment processes. As the Committee had noted before, public service was a “revolving door” for some individuals.

Mr Hadebe said that he was satisfied with the Chairperson’s suggestion.

On a separate matter, he noted that Dr Moemi had said that some employees had been moved to new responsibilities after they had served their sanctions and returned to work. He asked for more detail in this regard. How many officials had been moved and how many had retained the same duties? Why had some moved while others had not?

Dr Moemi replied that he had already mentioned one official who had been moved to a new position: Mr Raymond Naidoo, the former Chief Director for Supply Chain Management, had been moved to a “less sensitive” portfolio as Chief Director for Logistics and Assets.

The Chairperson asked whether logistics and assets were not also sensitive matters.

Dr Moemi replied that they were not as sensitive as supply chain management.

The Chairperson said that the Committee needed to take this question up with the Department of Public Service and Administration and possibly with Cabinet. When trying to effect consequence management, departments apparently found themselves constrained by labour laws. It was not sensible that an official involved in something like the Beitbridge corruption scandal could remain in a comfortable government job as a Chief Director for Logistics and Assets. The Committee heard about such issues whenever it dealt with departments’ disciplinary processes.  

Dr Moemi added that DPWI had also dissolved all the bid committees involved in the relevant contracts, so officials had lost their positions on bid committees.

Mr Hadebe asked whether the principal agent and main contractor were still doing business with the government, given that a referral had been made to Treasury. He thought that a provision could be invoked to prevent companies from doing business with the state while the blacklisting process was pending. Treasury had mentioned it in a previous meeting.

The Chairperson said that he was not “taking any particular comfort” from Treasury, but Treasury had made a distinction between restriction and blacklisting.

Mr Hadebe asked whether DPWI had therefore sought to restrict the relevant companies, since it was possible to invoke restrictions while blacklisting was still pending. Under what circumstances would DPWI seek a restriction? Whose prerogative was it to invoke a restriction?  

Dr Moemi replied that restriction had a lower threshold and could therefore be achieved more quickly, although compliance with the Promotion of Administrative Justice Act required that due process had to be followed in either case. In addition, blacklisting required Treasury involvement, while other departments could only effect restrictions. From the outset, DPWI had expressed and pursued its desire to blacklist the implicated companies. Treasury had put a restriction in place and the blacklisting had been in process. However, the companies had filed suit to challenge the process on the basis of common law principles like audi alteram partem. DPWI had been confident that the challenge would not succeed, but Treasury had been the primary respondent in the case because it had been the institution that effected the restriction against the companies. Treasury’s legal counsel had expressed concern that the first part of the companies’ challenge – an application for temporary relief – would likely succeed. On that basis, Treasury decided to withdraw the restriction temporarily. The withdrawal had restored the companies’ standing to do business with the state, even if Treasury’s intent was for the withdrawal to be temporary. However, Treasury and DPWI were currently preparing to fight the substantive legal challenge. They expected to do so successfully, in which case the restriction would be reinstated.

Mr Hadebe noted that, according to slide 16, the State Security Agency had issued clearance certificates for 23 officials as part of the vetting process. Could DPWI provide the precise dates on which it received those certificates? The Committee wanted to ensure there were no undue delays in the process.

Dr Moemi undertook to respond in writing.

Mr Hadebe noted that, according to slide 19, “all employees” had begun serving their sanctions of suspension without pay from 1 November 2022 and had returned to work when the sanction period ended. How many employees, exactly, had served suspensions?  

Dr Moemi replied that eight officials had been disciplined at the same time. They had all returned to work.

The Chairperson asked what had happened to the other five officials, given that 13 DPWI officials had been implicated.

Dr Moemi replied that two had been absolved and three others were senior managers.

Finally, Mr Hadebe applauded the speed with which ECSA had responded to DPWI’s request to investigate the directors of Magwa Construction and Profteam. He asked DPWI to outline the sequence of events to help the Committee to follow up with other professional bodies who were not acting with similar speed. Moreover, ECSA Council confirmed in January 2023 that three persons would be charged. It was now three months later – had they been charged?

Dr Moemi replied that he was not aware of the current status of the charges. DPWI would ask for an update from ECSA and pass it on to the Committee. He also undertook to provide the Committee with a full account of the sequence of events to serve as a benchmark.

Ms B Zibula (ANC) congratulated the Minister and Deputy Minister on their appointment. She asked why it had taken DPWI so long to finalise the MoU which clarified the respective roles and responsibilities of DPWI, DoD, and the Department of Home Affairs.

Dr Moemi agreed that there had been a delay. DPWI had experienced some “teething problems”. However, it has since acted decisively.

On the referral to the Department of Forestry, Fisheries and the Environment (DFFE) mentioned on slide 23, Ms Zibula noted that DPWI was still awaiting the outcome of the DEFF hearings. Was anything being done to push for the outcomes to be finalised?

Dr Moemi replied that DPWI had followed up with DFEE and had made submissions in November and December. DFFE had its own processes and timetable, but DPWI would follow up again.

The Chairperson said that the presentation suggested that everyone except DPWI stood to be blamed for DPWI’s challenges. That was not comforting: it suggested that the Committee would have to involve other public entities to solve DPWI’s problems, since the presentation implied that DPWI had done all it could do. What did DPWI take responsibility for?

Dr Moemi said that DPWI took full responsibility for the issues raised. At its last meeting with the Committee, DPWI had acknowledged the Committee’s concern that DPWI was falling behind on responding even to those issues which were wholly within its own purview. In the current meeting, DPWI had hoped to demonstrate that it had taken action on those issues. Other issues did depend on the cooperation of other institutions, but it was DPWI’s responsibility to engage consistently with those other stakeholders. As Minister Zikalala had said at the beginning of the meeting, DPWI also had a responsibility to be transparent with the Committee about the challenges it was facing. He apologised that the presentation had given the false impression that DPWI sought to blame other departments for its challenges.

The Chairperson said that DPWI wanted Magwa Construction to be blacklisted but the blacklisting had not yet been finalised. What was Magwa’s current status with DPWI? Was DPWI continuing to work with Magwa? The Committee had heard in the past that Magwa had been “pillaging” at DPWI for 15 or 20 years. On that basis, the Committee had asked DPWI to conduct a review of all historical contracts with Magwa. What progress had been made with that review? The longstanding relationship between Magwa and DPWI enabled Magwa to gain the Beitbridge contract in the manner that it had – Magwa had “agents” inside DPWI, so to speak.

Dr Moemi replied that DPWI had completed its internal audit of all contracts with Magwa, as outlined in the presentation, but it currently had no legal standing to prevent Magwa from doing business with the state. Once a restriction was put in place, DPWI would be able to initiate proceedings to terminate contracts.

The Chairperson said there had been little progress on the border-line project since 2020. The Committee accepted that there had been challenges with DoD, but that did not absolve DPWI from its own obligations.

Finally, he asked about the status of DPWI’s former Director-General. When the Committee had last met with DPWI, the matter had been before court – was that still the case? At DPWI, having senior positions filled only in an acting capacity was an entrenched norm. It was therefore difficult to hold any single individual accountable for fulfilling the responsibilities of a given role.

Dr Moemi agreed that leadership stability was a serious issue and that it was not ideal to have senior officials in acting positions. Since DPWI’s last meeting with the Committee, it had appointed three new Deputy Directors-General. Processes had been activated to ensure that other vacancies were filled.

Concluding remarks
The Chairperson said that DPWI was making progress in certain areas. He suggested that DPWI submit monthly reports on its progress in writing, unless a substantive issue arose requiring a meeting with the Committee. The Committee would also schedule a further meeting with DPWI if required upon the release of its audit outcomes. In addition, the Committee would table a final report on its engagements with DPWI. Nonetheless, the Committee remained concerned about DPWI’s difficulties in inter-governmental cooperation, including with DoD.

Ms Bernice Swarts, Deputy Minister of Public Works and Infrastructure, said that the Ministry, after its appointment the week before, had met with all of DPWI’s executive managers to get a full scope of the challenges faced by DPWI, including learning both what had worked in the past and what had not worked.

On the ongoing border fence project, she did not think that DPWI would “get anywhere” with DoD, given the content of its recent correspondence with DPWI. DoD was critical as the custodian of border safety but was saying that it did not have the funds to complete the border fence. She therefore suggested that the Committee summon all the relevant stakeholders, especially in the security cluster, to a joint meeting about the project.

She added that the current vetting process did not assist DPWI, especially given the number of vacancies in senior management positions. However, DPWI was committed to working with the Committee to resolve its issues.  

Minister Zikalala thanked Members for their commitment and patience. DPWI would not abdicate its commitments or its mandate. Moreover, DPWI would meet with the Minister of Defence to get a broader view and share an understanding of the mutual challenges faced in border management. DPWI would continue to report to the Committee to ensure accountability and robust internal consequence management.

The meeting was adjourned.

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