Material Irregularities in the Human Settlements Portfolio; Consequence Management in Transgressions Cases by Provinces; with Deputy Minister

Meeting report

AGSA briefing on material irregularities within the human settlements portfolio

Mr Tshepo Shabangu, Senior Audit Manager: Human Settlements Portfolio, Auditor-General of South Africa (AGSA), took the Committee through the presentation.

The presentation highlighted that there were 266 material irregularities on non-compliance and suspected fraud. This had resulted in 240 material financial losses amounting to R14.34 billion; nine instances of misuse of a material public resource; three causing substantial harm to the general public, and 14 causing substantial harm to public sector institutions.

So far, 79 of the material irregularities have been resolved. 75 appropriate actions had been taken, and 32 appropriate actions had not been taken. There were 23 recommendations included in the audit report, with eight referrals to other investigating bodies.

The presentation further highlighted the call to action, which was the accountability ecosystem for role players and human settlement.

(Please see presentation attached for further information)

DHS on consequence management in transgressions cases by provinces

Ms Lucy Bele, Chief Financial Officer, Department of Human Settlements (DHS), took the Committee through the presentation.

As of 30 August 2023, the Free State, Gauteng and the Western Cape provinces had spent below 30% against their 2023/24 Human Settlements Development Grant (HSDG) annual allocations, with risks of an inability to spend their entire allocations by the end of the 2023/24 financial year. The Minister and the Members of the Executive Council (MINMEC) resolved that consequence management be implemented against these provinces. On 28 September 2023, underperformance letters were sent to these three provinces, with requests for submission of their respective recovery plans, which were duly analysed by the DHS. As of 30 November 2023, there was a subsequent slight improvement in the Free State and Gauteng’s performance. However, the Western Cape’s poor performance persisted, with only 47% expenditure of its allocation, whereafter the January 2024 tranche was initially withheld from the province, with the subsequent stopping of a portion of the R250m of the HSDG due to the persistent poor performance. This was approved by the National Treasury and gazetted on 16 February 2024. The R250m stopped from the Western Cape was reallocated to Limpopo province.

The presentation provided detailed information on the provinces’ responses to the implementation of the AG's September 2023 recommendations on identified material irregularities for 2022/23 transgressions, and provincial information on contractors that had defaulted on projects and the resulting consequence management implemented.

(Please see presentation attached for further information)

Discussion

Ms S Buthelezi (IFP) said that the termination of contracts based on poor performance prolonged the estimated completion time of the projects, which also had financial repercussions for the sourcing of new suppliers and extending the period of completion of projects. What measures did the DHS have in place to curb as many financial losses as possible with the hiring and firing of suppliers across all the affected provinces? Over the years, it has been seen how long-term contracts with non-performing suppliers at Eskom have heavily and financially impacted the entity. What policy did the DHS have in place for contractors guilty of non-performance, or those in breach of their contracts that extended beyond the scope of simple contract termination? Were these contractors permanently removed from the DHS’s database?

Ms M Makesini (EFF) said that her question was about the contractors that had to leave, and the issue of 30%. What measures did the DHS take to avoid a similar situation? It was not the making of the contractors, but rather the conditions that forced them to leave. What measures did Gauteng or the DHS have to ensure that the issue of 30% was not going to affect other contractors when they came through to implement the project they had acquired?

Adv M Masutha (ANC) followed up Ms Makesini's comments on the 'construction mafia,' and said this was a complex nationwide challenge that went beyond just human settlements. When he was still in office, there was a specific challenge involving building a magistrates court, which was 70% complete. At the time, he was unsure whether it was the mafia construction phenomenon, or whether it was a whole community reaction to this grievance, that construction contractors came into an area with their own staff from elsewhere. For instance, if Gauteng did work in the Northwest, people in the Northwest would say that they had capable construction companies locally and ask why they had been overlooked. There would then be all of these standoffs. So, what has been learned to manage this? Had a national strategy around this been developed? If so, how effective has it been? The capabilities of contractors were being questioned.

The capabilities of contractors should be assessed well before issuing contracts because, at the end of the day, time is lost. Funds were being returned to the fiscus. There were also unspent funds in other provinces. The Committee had never been taken deeper into an understanding of why these widespread unspent funds were returned to the fiscus. There was now a clearer picture -- that it was not just about the capacity of the departments, but the value chain further down when it was sub-contracting work of the state to private players in the spirit of economic empowerment. If it encountered serious capacity issues downstream, what lessons had been learned, and what strategies were used going forward? Was it just going to be a routine repetition year in and out, 30 years down the line? At some point, there had to be reflection to ask what the alternative overarching strategy was to respond to these macro challenges that affect not only one department, but all departments.

This term was coming to an end, and the piece of the overall puzzle had to be here. The AGSA emphasised irregular expenditure, whether related to capacity, fraud and corruption, outright theft or negligence on the part of those responsible for public resources. This was the picture that was being painted, but the DHS was painting a whole different picture which reflected the inefficiencies in the value chain down to the contractors, and the walking away of contractors. The DHS had previously painted a picture of the provinces' lack of capacity, and funds being returned to the fiscus. What about the issues of sub-contractors' failures to implement projects? At some point, there had to be a holistic picture of the full spectrum of issues that resulted in a province ending up either not delivering, engaging in wasteful expenditure or simply retaining funds.

Last week, there was a discussion about the accreditation of municipalities that were supposed to deliver on some of these projects. He was not sure why the presentations were confined to provinces, because it created the assumption that national was fine. If the goal was to focus on provinces, he understood. Previous presentations reflected how provinces were struggling with municipalities that either just did not have the capacity or political will to deliver projects. He gave an example of the situation in Mandela Square municipality. In the whole of the Western Cape, only Cape Town was accredited, and it seems as if it was a nationwide challenge of municipalities, including big metros, not having accreditation or if they did, it was at an elementary level stage two as opposed to stage five. What overall capacity was being viewed in this portfolio? Was the capacity of the national down to the municipalities? Did it look at the delivery of mandates and the challenges of sub-contractors? A comprehensive assessment must be done to establish if there was overall capacity to deliver or not on this crucial mandate. If it was not acknowledged as an overarching challenge, could it say strategically in the white paper how it was planning to turn this around in a major way, and perhaps link it up with the National Development Plan 2030? It could not wake up in 2030 and be in the same position as 30 years ago. If there was an opportunity to look at this more comprehensively rather than in a piecemeal fashion, it should be done.

Mr M Tseki (ANC) appreciated the fact that these two items on the agenda had been scheduled for the meeting. The challenges that were being raised here were caused by people not doing what they were supposed to do. On a scale of one to ten, how did AGSA rate the performance of the DHS? This rating should be based on the DHS itself, and not other departments. Could AGSA rate the DHS for taking accountability for action? The presentation referred to the accounting officer, political officers and everyone involved who was not taking accountability. On slide 11, dealing with the accountability ecosystem, item two stated that executive authorities and leadership (President and premiers), Parliament and legislatures, their committees and coordinating institutions, should work together to identify common indicators that lead to irregularities, losses and harm; insisted that accounting officers and authorities address any identified irregularities; and should monitor the progress made in resolving them. This was the Committee of Parliament, and not the Committee of the President and the Premier. There was a separation of powers, and it should be rectified. Everyone had to play their role.

He said that he could only sympathise with a contractor about quantum changes if the contractor was given a five-year contract, and every year, there was an agreement on how much was going to be done in 12 months. 100% of the job that was agreed to should then be completed in that 12 months. If there was a quantum change, that contractor qualified because it would have done what it was mandated to do in the first 12 months. If given five years, many contractors would do their work by the fourth year. Perhaps the DHS did not impose any penalties for poor performance. If penalties were not given or there was an increase in the quantum, reasonable reasons would have been agreed upon during the signing of the contract. If this contractor did his or her job according to the contract on an annual basis, why -- when the quantum increases -- did that person not qualify? Unintended consequences could be managed, depending on tactics and strategies. The strategy should be about transforming human settlements and the general sustainability of human settlements. Some activities and functions were really showing the weaknesses of the tactics applied by both the DHS and the contractors. All of these issues emanate from forums, agreements and law enforcement. If agreements were clear, there would be no need to fight.

Dr N Khumalo (DA) said that the DHS’s plans to prevent financial losses were something that had been covered. The material irregularity in the North West indicated an overpayment of a contractor/service provider when it was initially advertised for a certain amount. The case had been referred to the South African Police Service (SAPS), so what was the purpose of the investigation when it was a known fact that somebody had paid a service provider extra? For instance, why had R5m extra been paid to a service provider? There should be processes to deal with such employees, because it was misconduct. Why was the case sent to SAPS? Was the province unable to institute consequences when it was a known fact that the work was for R20m, but R25m was paid?

She welcomed the resolved material irregularities in the Western Cape and Gauteng. It was encouraging to see some of the concerns being addressed. She had experience of being an executive in one of the metros, and her understanding was that there was a handover period for when a new accounting officer was appointed. Did the AGSA have to wait for this delayed time? What was the handover process at the DHS? Normally, work was halted or slowed down because there was a new accounting officer, but ordinarily, there would be a handover period to avoid those sorts of delays with issues that had to be addressed.

She found the reduction in the scope of work for contractors worrisome. Contractors did come across unforeseen challenges. To what extent did the DHS believe that this related to people’s right to decent shelter? There had been an agreement at the beginning of the year and then halfway through the year, it was not going to deliver 20 houses, but only five houses, because of the reduction in the scope of the work of contractors. She wanted to understand the prioritisation of citizens when such decisions were being made. How far was the particular action regarding the issue of reallocation of funds? To what extent did people who were hired to deliver houses but failed to do so, held accountable? There were accounting officers year in and out, yet people in the provinces and metros were unable to get houses when there was an allocated budget to do so. The same contractors were reappointed, or their contracts were extended -- their contracts were not terminated. Some contracts had been terminated in the Free State, but it was not happening across the country. She wanted to understand to what extent the prioritisation of people’s right to decent shelter remained a huge concern.

Adv Masutha said that he had a follow-up question about consequence management. It had been said that provinces were independent and had to be encouraged to take action against their own. This was understandable. He thought that the role of MINMEC was precisely to deal with issues collectively, where equals met and openly reflected on these issues and agreed on interventions. He asked for clarity on this.

He raised an issue of the AGSA now having powers under the Public Audit Amendment Act to make referrals to other state investigative and law enforcement agencies. He asked to what extent that system yielded results, and when there would be prosecutions, Special Investigating Unit (SIU) investigations and asset forfeitures. Last week, there had been an issue with Tshwane dating back 18 years, and they had not succeeded in achieving a prosecution. Some people had died before anyone could be prosecuted for outright fraudulent conduct, and then the Department of Public Service and Administration (DPSA) would say that there was not enough evidence. To what extent was the AGSA able to give guidance to prosecutions and DPSA investigations and support so that those capacities could be brought to bear in investigations? When it came to prosecutions, the National Prosecuting Authority (NPA) or the DPSA would say that there was insufficient efficiency to prosecute, and therefore, there should be a prosecution-guided investigation so that the police could not say that it did not have the capacity or enough evidence. Sometimes, the NPA would also say that what was provided by the police was not good enough for prosecution. The gap between these different institutions should be closed.

Ms N Sihlwayi (ANC) asked for clarity on the five Eastern Cape officials facing consequence management. Had the process gone to finality? Had the officials been disciplined and taken out of the DHS, or was it still in process? Regarding the process plan, some areas needed to be addressed, and lawyers should be there to assist. As an oversight board, the Committee should be interested in knowing at which stage the consequence management of these five officials was.

In the North West, 26 projects had been terminated. There was a process plan for project implementation. There had been meetings with the communities to inform them of the projects, and they got really excited. Project management and implementation was not always an easy thing. It could take a year for value to be created on the ground. The implications of 26 projects being terminated were huge for government and communities in terms of benefits, service delivery and timing. The timing was not right, especially for government going into elections. Government should have a process of informing people what the immediate interventions for these terminations could be. This would help to ensure that houses were being built for people. The issue of elections was always attached to a political role, but that was a government programme. What efforts were involved with the national department or province not to terminate services that had been promised to thousands of people?

The Chairperson welcomed the presentations, and applauded the work done to resolve the material irregularities. She shared the same sentiments as Dr Khumalo. Contracts should be tightened to ensure that those responsible could not say that they were in an acting position, and therefore could not make decisions. There should therefore not be this process of delay or someone saying that they were new and needed to be given a chance. This was not convincing. There were officials under that person who might have the necessary information. This was a systematic issue, and should not be a personal matter. Adv Masutha had raised important factors about the overall capacity of the DHS to deliver its mandate and the inclusivity of the entire value chain. She was not sure if the provinces were not the culprit. There were sometimes issues of 30-day payments to contractors that were not paid, which might have caused the non-performance and ultimately, termination. She asked that more details on this to be provided. Sometimes, officials could play their own dirty games, which led to the frustration of transformation itself.

There was the issue of finances. There was a responsibility to deliver houses, but also to take cognisance of the fact of whether contractors were empowered. The financial institutions should come on board and make resources available for contractors to implement projects. Sometimes, contractors get frustrated because no resources are given to them to implement these projects. After 30 years of democracy, how could the financial institutions contribute towards the failure of contractors to perform? Had such an analysis been done? If not, it should be done. It would motivate even the DHS to see the necessity of finalising the Human Settlements Development Bank. This should be done to ensure that there is enough capacity in the system to build houses or to transform the construction industry.

Information on contractors should be shared, especially those that have not performed. This would ensure that these contractors did not find themselves involved in other government projects in other provinces. There should be a reason for terminating contractors' contracts. As part of disciplining the contract, the contractors should be informed that if they did not perform properly, the contract would be terminated and they would not be able to obtain any government work, particularly for human settlements or in other areas of government. This depended on whether it was the fault of the contractors or the lack of finances which characterised the transformation agenda of this country. This would make the transformation easier.

She asked Ms Bele to explain the reduction in the scope for contractors. Was the scope being reduced to assist them in achieving the goals? If not, what happens to the target and the processes of appointment? Did this not contribute to a delay? Was there a system to reduce the scope of a particular contractor? For instance, a contractor had finished a job and could therefore assist in other projects without being appointed, or going through the processes of appointment. What would then be the implication in terms of legislation? She asked about MINMEC and ensuring that through the division of revenue or contract management, agreement could assist in curbing those financial losses.

Responses

AGSA

Ms Corne Myburgh, Business Unit Leader, said that the AGSA was not in a position to give a rating on how successful the DHS or the sector was in executing its mandate. In previous presentations for the Budgetary Review and Recommendations Report (BRRR), the AGSA had indicated the performance of the DHS. There were some instances where indicators in the portfolio were unlikely to be met. These indicators included several houses or title deeds, where the AGSA had indicated that there was a risk that the portfolio would not be in a position to achieve those indicators. When it came to the material irregularity process, it was a legal process and there could be severe consequences against the accounting officer of the Department, or board in terms of an entity, when actions were not implemented. It was important to also follow a fair process. If there was a change in the accounting officer, the actions that might have been committed previously, such as what needed to, or were expected to, be implemented, one would often have to consider whether the person might have been in the Department or the entity. One would consider the circumstances, whether it was necessary that the notification be reissued to allow the new incoming accounting officer to apply his/her mind, and how to proceed with the material irregularity. The timeline remained that the accounting officer must respond within the regulated time, so all of this was assessed and then the monitoring would start. There was also this fair process but there were also the commitments where the accounting officer could be held accountable.

Since implementing the material irregularity (MI) process, public bodies have been identified to enter into agreements for referrals of material irregularities, where the mandates were more appropriate. On 8 March, it had been indicated that 12 MIs had been referred to public bodies like the SIU and the Department of Environmental Affairs (DEA). There were a number of these instances out there, and there had been some success. The agreement was currently being reassessed, to see how processes could be enhanced. There had been feedback and timeous responses. From her personal experience, some of the MIs in another portfolio had been referred to the SIU, and contracts were terminated, money was recovered, and further losses were prevented. There was a benefit to this relationship with public bodies. The mandates were executed to ensure that bigger efforts were made to prevent financial losses. There were definitely successes, and the agreements with public bodies would be reassessed to see which lessons could be learned to enhance future relationships.

Mr Shabangu said that Mr Tseki's recommendation about the accountability ecosystem had been noted. He also noted the comment by Adv Masutha about the presentation reflecting only the provinces and not the national departments. He said that the national information could be included.

DHS

Ms Bele responded to the questions about the termination of contracts. She said the Preferential Procurement Policy Framework Act published in January 2013 stated that every organ of state had to develop their own procurement policies. It had even gone through the MINMEC, and the DHS then shared good practices. It looked at the provinces that were doing well. The DHS made use of other structures, such as a chief financial officers' (CFO's) forum, which looks at procurement as a whole. It looks at the challenges when it comes to the construction of houses. Some of the provinces were using turnkey contractors. A tender and a big contractor would be appointed, and if there was a financial muzzle, the big contractor would appoint sub-contractors. For instance, the Limpopo province had gone to the Northern Cape province to learn good practices. The Northern Cape was doing well with delivering sites, and no contracts had been terminated there, so the Limpopo province went there to see what was being done differently. Some provinces appoint professionals, like project managers and different contractors per project.

Why were there terminations? For example, the DHS went into a tender to get a panel for the temporary residential units for disasters/emergencies. All the people who applied had met the minimum threshold. Work was allocated in the Eastern Cape and Kwazulu-Natal. These were big contractors that had to start work, but one sent a letter saying that they had received the appointment letter, but that their cash flow would not be able to carry the project. If one looks at the material irregularities, one can see that this happened a few years ago in the Free State. The contractors would ask for an advance because they were not financially stable, but National Treasury did not allow this. Sometimes, the DHS examined the financial state of the contractors and the turnover would be there, but when the work was supposed to start, the contractors would say that they did not have enough cash flow. Advance payments were irregular in nature. Most of the provinces would go with the big contractors that were doing well. The sector was guided by the Office of the Chief Procurement Officer (OCPO).

There were clear steps that had to be followed when appointing a contractor. There was a service level agreement (SLA) that every contractor would have to sign. It was drafted by the legal unit, and the SLA sets out what one party is supposed to do when the other party does not fulfil its obligations. When one party was in breach of the SLA, it would look at the reasons for the underperformance with MINMEC. The contractors should then develop a recovery plan.

She agreed with Mr Tseki about multi-year contracts. For instance, a contractor should deliver 500 units in the 2024/25 financial year. She also agreed with Dr Khumalo's sentiments. There were project consultations where the communities and the councillors were involved. Contractors were issued a notice when there was a breach of the SLA. If, based on the agreement, the contractor was not delivering, there should be a recovery plan. The termination of a contract was used only as a last resort. There was blacklisting by National Treasury, and there was no way that the service provider would be able to do business with the state. After the contract was terminated, there was a handover so that the project did not remain hanging. For example, in the North West, contracts were terminated but there had been a handover to a contractor that could absorb the balance of the work. So, when a matter went to MINMEC and there was a recovery plan, it would identify the contractors that would be able to absorb the additional work. This was what the Northwest had done, despite the 19 terminated projects shown in the presentation. In terms of performance, the North West was doing really well.

When funds were reallocated, National Treasury had to be aware of a contractor that could absorb that additional funding. If a contractor was not doing well from a cash flow perspective, then there would be a reduction of scope. This would happen when contractors say that they would not be able to deliver 500 units when the financial year ends in two months. The scope would be reduced and given to a contractor that could absorb it. The DHS did not want there to be a blocked project. It did not take money from Mpumalanga. The scope gets reduced, and work gets reallocated to other contractors who are in a position to absorb additional work.

She spoke about the reallocation of funds and gave an example of the Western Cape. The DHS came to the Committee to reflect on the R1.3 billion cut mid-year. National Treasury had given reasons for cutting the budget, such as not spending 100% and having no commitments. When there was non-performance or underperformance, a recovery plan should be submitted. The Western Cape had submitted a recovery plan, which indicated that because of the changes that were happening, the Western Cape was not going to commit to the funds or spend. One could not say that there was going to be consequence management against these officials. The reasons that the Western Cape put forward was the organisational change. The DHS within the Western Cape was embedded, and was no longer a standalone department. It was within the Department of Infrastructure. The merger that happened resulted in some of the officials within the DHS moving to other departments while other officials were absorbed. This process had taken longer because of the re-establishing of committees and agreements with municipalities. There was now this new department that had to address most of the findings by the AGSA because of the merger. The recovery plan was honest in stating that it would not be able to absorb or spread the entire allocation. MINMEC had looked at the recovery plan. It had already lost funds back to the fiscus. The recovery plan was clear and honest, and what was happening was understood. The question was whether the funds should stay within the province, because the Division of Revenue Act allowed that if one anticipated an underperformance in either of the programmes, it was allowed to act. These issues were deliberated at the MINMEC level on whether funds should stay or move. Funds from Limpopo were allocated to the Western Cape. Limpopo now had a system in place, and they had contractors working. All the issues in the Western Cape had been ironed out.

There were quarterly review sessions with the technocrats, where all issues were discussed. Yesterday, the issue of the construction mafia had been shared. She agreed with Adv Masutha that the issue of the mafia was getting out of hand. The Department was aware of what happened to the colleague in the Western Cape. It was not an issue of human settlements, but the whole construction environment. She gave an example of the City of Tshwane, and how this issue had moved away from just construction but now included the restaurant chain. The security cluster was looking into the matter. The Cabinet or the security cluster would be able to come up with an alternative strategy because the matter was not just for human settlements, but for others. The Departments of Basic Education and Transport had the same problem when it came to infrastructure. It was a big matter that needed assistance.

She agreed with the Chairperson’s sentiments that when a new accounting officer came in, there should be no ‘before my time’. When accounting officers were appointed, he or she could not say that issues were ‘before my time.’ As soon as the accounting officer was appointed, he or she inherited everything. These accounting officers would be dealt with. This was where the Department had learned about the BRRR and the material irregularities for the first time in the MINMEC. This was where accountability took place. It was checked by the Minister, the embassies, mayors and municipal managers, because they all attended. Therefore, if material irregularities do not stop, reasons should be given, along with timelines and details on whether any consequence management took place. There was also a CFO forum which specifically dealt with all the CFOs on audit matters. She agreed that there should be consequence management for officials.

The issue of overpayment in the North West had two legs -- there was the service provider and the official. The reason why it went to the SAPS was because of the other leg. If there was an overpayment to a service provider, one needed to collect and get the money back. On the part of the Eastern Cape, five officials had received consequence management, but what exactly was done? The Eastern Cape had said that the five officials had received written warnings. However, written warnings had stages. These warnings sit in the employee's file to say that if the same transgression was committed, that employee would be terminated.

Referring to the issue of the overall capacity of the Department, she said that it was not within the capacity of human settlements to implement the projects. The problems came from planning. Overall, there was not an integrated planning. Yesterday, at a technical MINMEC, Gauteng said that the reason why projects were happening in the non-metro areas was because the HSDG allowed for bulk construction. In the metro areas, there were grants. The metros were supposed to come with the bulk, and then the top structure would come in. The challenges came when there was no integrated planning between the national sector departments, the metros and the provinces. The project would not move because Gauteng would say that it wanted to come up with 1 000 lockups in the City of Tshwane, but those lockups needed bulk. This meant that the City of Tshwane must be part of the planning, because the funds must be allocated. The Department of Water and Sanitation, Department of Transport and sector departments would be needed. The capacity was there, but the issue was with the planning. If there was integrated planning for projects, there would not be blocked projects. Most of the blocked projects were presented in bulk. Houses could not be finalised because there was no bulk, or whether it was water or electricity. All of these things were related to integrated planning, and if that was implemented, projects would go far, especially with the district development model. The government needed to sit down and plan together.

Deputy Minister's comments

Ms Pam Tshwete, Deputy Minister of Human Settlements, apologised for being late to the meeting, as she had had an urgent meeting regarding the Eastern Cape and the Buffalo City protest. She had missed the presentation, but had managed to hear the questions from Members. The responsibility of the national Department was to give provinces funds, and then to monitor it. The contracts of the provinces also had to be monitored. The Committee always tells the DHS to monitor.

She apologised for bringing gender into this, but said that women contractors were better than men contractors. She had seen at the round table that women contractors finished the job given to them.

The 30-day payments were being monitored closely. A contractor could not be paid without providing the right documentation. There must be an inspection to ensure that the work was done, and then payment would be made.

When the Minister joined the DHS in 2021, the first thing she had done was to unblock the blocked projects. Some projects were abandoned for various reasons, including not being given money. Some of these contractors were coming back, and payment would be made. She also did not understand that consequence management for some officials was only written warnings. Warnings were given to people who did not come forward, but not to people who had taken money or were involved in corruption. She would make a follow-up with the premier in the Eastern Cape. Although names had not been given, a stand must be taken.

The national Department always got into trouble because the DHS had to answer for all the people who were not doing their work. The DHS would do a follow-up on the issues that had been raised by AGSA, as well as by the Committee in this meeting.

Some people invaded houses and then rented those houses out. Once the land had been identified, everything must happen at the exact time, because people were invading houses, although they were not part of the group that did not have houses. Measures were being put into place to ensure that those who were invading illegally were taken out. People were disrupting the government deliberately. The DHS listened to all the issues that had been raised. She had seen several houses in Queenstown that were not given to beneficiaries. Once a house is built, it must be given to the beneficiary as soon as possible. These illegal invasions or occupations happened because the houses were not immediately given to the beneficiaries.

Concrete decisions should be taken to stop all of this corruption happening in these provinces. Sometimes the DHS was not paying the contractor on time, and then the houses were invaded. She agreed that there must be integrated planning. Some people were not using the district development model, still working in silos and not working or planning together.

Follow-up discussion

Adv Masutha said that some of these issues needed strong political leadership. Some people would never want a promotion because they were at a strategic point where they had to do critical signing for a contract to be approved, or a payment to be made. These people did not want to be promoted because they knew this was "where the dance happens." If people were experiencing difficulty with officials before the signing of a payment, they should bring it straight to his office so that these people could be identified and dealt with decisively within the Department, as well as those that they collude with within the private sector. The right medication for this cancer of corruption must be applied, otherwise it would continue to fester and fester like a wound which would end up rotting the whole leg. The agencies and departments should put their heads together to decide how best they could collaborate to set up people to monitor some of the staff's activities. If lifestyle audits on strategic people in the supply or value chain had to be done, so be it. He gave an example of when he was still working with the justice department, and there was a state attorney who was getting away with murder. He vowed not to leave that portfolio without getting the person prosecuted. The person was eventually nailed and successfully removed. If effort was put in, nobody could be beyond that. He urged the DHS to collaborate with the AGSA and other public institutions to strengthen their response to these matters. Things could be achieved only if people were prepared to fight the good fight, and put their heads together.

The Chairperson commented that this had been more of an input, rather than a question. She asked if the DHS wanted to say something about this issue.

Mr Tseki asked if the AGSA could empower the Committee, which was currently doing oversight of the DHS. The report had not been satisfactory regarding the Department. There were some loopholes. He had asked the AGSA earlier to rate the compliance of the DHS in terms of the rules, regulations and policies of the state. It seemed as if the AGSA was scared to rate the DHS’s performance. There were repetitive issues that were raised by the AGSA every year. The Committee had empowered the AGSA about what needed to be done when there were repetitive wrongs, but it seemed as if nothing was happening.

Responses

AGSA

Ms Myburgh said that there was concern about the repeat findings year on year. The earlier statement of there being a risk that the portfolio would not meet their indicators was an indication that there had not been responsiveness towards the risk, and that could impact the portfolio. If there was a reflection of the accountability ecosystem, where there were several role players and each role player had a responsibility to play this role, the picture would change and there would be more impact on the DHS and the provincial departments. There needed to be a clear vision of what had to be done regarding planning together, ensuring there were strategies and policies and that there was consequence management.

Many things were happening, such as monitoring reports and what was going to MINMEC. Decisions were made at MINMEC, and the AGSA saw how that was followed through. There were coordinating ministries and departments that also looked at the action plans, performance, coordination and responsiveness, especially towards the findings. AGSA had raised a concern with these repeat findings, and was therefore broadening its reach to give insights and enhance recommendations so that the people who were responsible for implementation were continuously better empowered, so whether there was a material irregularity, a financial loss or a fiduciary duty that was not being executed, AGSA would follow the material irregularity process.

At the end of the day, the answer sat in the accountability ecosystem. However, there had been an outcry from citizens regarding the provision of houses and services that the portfolio was mandated to do. This could be addressed only if all the role players in the accountability ecosystem were doing what they were supposed to do in terms of their allocated mandate, and working together. The AGSA was committed and willing to collaborate, and would share insights and empower all role players so that everyone could work together.

Deputy Minister

Deputy Minister Tshwete noted the issues raised by the Members. She thanked the Committee for all the inputs, and wished that the provinces were present to hear this wisdom. She noted the comments about collaboration, and said most of the issues raised here involved the provinces.

She said the Minister was bold enough to make decisions. Since the Minister joined the DHS, she has been making decisions. The DHS would start with the AGSA, and ensure its recommendations and concerns were conveyed. It would continue to speak with the provinces. After the Minister joined the DHS, there had been some stability. In the Free State, there had been problems, but the report now reflected that both the Eastern Cape and the Free State were improving. Members had been worried about these two provinces, but during the MINMEC assessment, it reflected that these two provinces were doing their best. All measures should be implemented, and the DHS would work together with the provinces, but it was sometimes difficult. The DHS would continue to intensify its monitoring role. While it could not regain the time lost, it would ensure that the impact of poor performance on the fiscus was minimal. All of these issues would be raised with the Minister, and the DHS would talk to all the provinces.

Chairperson's concluding comments

The Chairperson thanked the Members for their input, and the AGSA team for availing themselves to update the Committee on the implementation of the material irregularities findings. This was probably the last meeting to deal with these issues. Next week, the Committee would be dealing with the Legacy Report that would inform the Seventh Parliament. The Committee had learned a lot. The information would help the Seventh Parliament to be able to understand or improve the work of committees, and as Members of Parliament. She appreciated the work that had been done. The Seventh Parliament would follow up on the issues raised, such as action plans, root causes of challenges, and strengthening the accountability mechanism as a portfolio.

Government had MINMEC, where they coordinate and they make themselves accountable together as a sphere of government. It would be important for even the portfolio committees to do the same, because the committees would be able to assist one another to ensure that there were no repeat findings, as the AGSA had indicated.

The Legacy Report would be used to workshop those who were succeeding them, so that they did not lose sight of the outstanding issues or take issues further to strengthen the accountability ecosystem, as it would assist the AGSA to do its work better.

She asked Deputy Minister Tshwete to convey the Committee’s gratitude. She thanked the officials for doing their level best to be effective and to become better. There had been a lot of improvement and one could see the light at the end of the tunnel, even though it was distant. All the outstanding issues would be reflected in the Legacy Report to ensure that the incoming committees took these issues further.

Although Parliament was rising, the DHS should not be relaxed but should continue to do its good work and ensure that there was a recovery in the provinces, such as what happened in the Free State, and all the other interacting areas which needed the DHS to support and assist them. This should continue so that the next financial year could be better. All the action plans should continue to be monitored to determine whether the root causes are being addressed. It should close the gap towards the systemic issues that affect the performance of the sector. The transformation of the sector should continue, and communities should be prioritised. Houses should be given to the beneficiaries to improve the lives of people. This would contribute to advancing a better life for all, which was what government had been striving to achieve.

Consideration of minutes

The Committee considered and adopted the minutes of 28 February.

The Chairperson said the last meeting would be on 27 March, after adopting the Legacy Report. The Report would be distributed as soon as possible so that Members could go through it and provide their input.

The meeting was adjourned.