Auditor General’s Report on declaration of Interests: resolution

Meeting report

STANDING COMMITTEE ON PUBLIC ACCOUNTS
28 March 2006
AUDITOR GENERAL’S REPORT ON DECLARATION OF INTERESTS: RESOLUTION

Chairperson: Mr T Godi (PAC)

Documents handed out:
Draft Committee Programme

SUMMARY
The Committee adopted its programme and the minutes of a previous meeting. It would invite the Departments of Housing and Transport and some of its agencies, the Compensation Commissioner, the South African Weather Services, South African Maritime Safety Authority and the Road Accident Fund to deal with some problems that were being faced. There was a possibility that the Aviation Authority might be called to a hearing. There was a view that it was pointless to invite the Road Accident Fund to a hearing given that the Fund had always appeared before the Committee. Perhaps it was time to tell the management of the Fund to get their house in order. There was also a suggestion that disciplinary action should be taken against the management of the Fund if necessary.

The Committee also dealt with the resolution by Mr Trent in relation to the alleged non-disclosure by Members of Cabinet and certain designated officials. The Committee disagreed with the following:

- That it should call on the Ministers and Deputy Ministers who did not disclose their interests and memberships in companies and close corporations to make a written submission to the Committee outlining a) why they did not make the requisite disclosures, b) what was the nature of the business in which they had an interest, c) whether the business was currently trading and when last the business had traded, d) whether the business currently did or had ever done business with an organ of the state.
- That it should refer any cases to the public protector where it was found that Ministers or Deputy Ministers had opened themselves up to conflicts of interest by participating in a concern that did business with an organ of state.
- That it should call upon all provincial Committees on Public Accounts to implement similar enquiries into the disclosure of interests by MEC's and other government role-players that might fall within the provincial mandate, and to submit a report to the national Standing Committee on Public Accounts outlining findings as well as proposals.

The Committee agreed to call on the Public Service Commission to outline its plans for an investigation into non-disclosure of interests by senior government officials who were not bound by either the Executive Members Ethics Act or the Parliamentary Code of Conduct, and to outline its proposals for ensuring that in the future disclosure requirements were better complied with by government employees.

MINUTES
The Auditor General (AG), Mr S Fakie, attended the meeting.

The Chairperson took the Committee through the agenda for the day. The Committee adopted the agenda and the minutes of its previous meeting.

Report back of Groups
Group 2 Report by Ms L Mashiane (ANC)
Ms Mashiane said that the Group had dealt with the following items: motivation for hearings and categorisation. It had been proposed in the previous week that there should be hearings on the Department of Housing and the Compensation Commissioner for Occupational Health Diseases. The dates for the hearings had not changed. There was a further discussion on the Department of Housing and it was decided that the hearing would be divided into two phases. There would be a hearing at a political level where the AG, all Chairpersons of Public Accounts Committees of all provinces and provincial Auditor Generals (should the AG deem it necessary) would be required to attend. At this meeting the Committee would strategise on the route to take in terms of hearings. It was realised the list of people who might come could add up to 45 people. It was important to look at the cost factors of bringing all those people to the hearing, the role they would play and how much time would be needed for the hearing. This was still work in progress and the Group would decide whether all those people were needed.

The second report was on the Compensation Commissioner. A motivation had been tabled and agreed upon by the group. The group had categorised the Commissioner as category A and a hearing had been proposed for the 2003/04 and 2004/05 annual reports for the following reasons: The Compensation Commissioner was given a disclaimer by the AG for 2003/04 and got a qualified report for 2004/05. The reasons for the audit opinion were that the financial control system in place was inadequate; the accounting records relating to levies were incomplete and inaccurate; six percent of the compensation claims files could not be presented for auditing and there was non-compliance with section 40(1)(i) of the Public Finance Management Act (PFMA). She proposed that Chairperson of the Board and the Accounting Officer should be present at the hearing to respond to questions on governance and financial management. The proposed date for the hearing was 10 May 2006.

On the categorisation of reports, she said that Justice, Correctional Services and Parliament were categorised as B. The 2004/05 Social Development report was also categorised as B and questions would be provided before Parliament rises.

Mr V Smith (ANC) said that the Committee had agreed that there should be a hearing on the Department of Housing. There was a need to be sensitive about the matter. There was no need to create the impression that the national government was encroaching on provinces. He appealed to the media not to destroy a good initiative by reporting that could be read as national government imposing on provinces. Media reports had created unintended tension between the national government and provinces.

Mr E Trent (DA) was glad that Mr Smith had raised the issue because there was need to look at the invitation of the other Chairpersons of Committees on Public Accounts along the lines that the Committee had invited Portfolio Committees when having hearings. The Committee had been requesting the AG to conduct a performance audit and he had done just that. Most of the budget of the Department of Housing was given away to provinces by way of conditional grants. The hearing would be a wonderful opportunity to get all the role players together and perhaps the Committee would get something out of it. The Committee wanted to have a positive approach of solving problems in the Department.

Group 1 report by Mr P Gerber (ANC)
Mr Gerber said that Group had resolved to ask the AG to investigate the phenomenon of unfilled but funded posts in public entities and departments. The AG should also conduct an investigation on the guidelines in parastatals in relation to remuneration and all bonus aspects. The group had motivations for two hearings: the South African Weather Services (SAWS) and the Department of Transport and some of its agencies.

The SWAS had been part of the Department of Environmental Affairs and Tourism before it had became a public entity on its own. It had encountered stormy weather since then as it was out of the control of tender regulations and departmental rules. There was a need for hearings because there were inadequate controls to monitor progress made in relation to donor funded projects; the budget was not submitted timeously and title deeds of land were not transferred to the agency. There were also weaknesses in internal controls. The AG and the Accounting authority of SAWS would be required to attend the hearing.

The Department of Transport was categorised under A. A hearing was proposed for the 2003/04 and 2004/05 annual reports for the following reasons: the contract for the production of credit card format drivers' licenses; the breakdown of internal controls that had led to wasteful and fruitless expenditure and other matters that the Committee had been concerned with for some time. The Department had a big budget of R6.1 billion. Some of the Transport Agencies would be required to attend the hearing. South African Maritime Safety Authority (SAMSA) was responsible for the safety of boats in the sea. SAMSA had not tabled a report since 2000. The Road Accident Fund would also be present for failure to address issues that the Committee had raised in the past. The South African Rail Commuter Corporation should also attend the hearings. There was a possibility that the Aviation Authority would be required to attend the hearing. The Director General of Department, Accounting authorities of the various entities, Chief Financial Officers, Chairpersons of Audit Committees and the AG would be required to attend the hearing.

Mr D Gumede (ANC) said that the Committee should prioritise the Department of Labour and the Unemployment Insurance Fund for consideration.

Mr Pierre said that the UIF had always appeared before the Committee. The issue was whether it was worthwhile to have them for a hearing. Would it not be better for the Committee to go one step further and come out very strongly against them. The situation could not continue as it was. The further step would be to say to the management that there were serious problems.

Mr Gumede said that the matter should be thoroughly considered and the Committee should explore possible options before taking the issue further. The Committee might want to engage the AG before concluding on the course of action to take.

The Committee agreed that the Working Group should be given time to further discuss the issue.

Mr Trent agreed that the Group should look at the issue again and investigate if disciplinary issue could be recommended. The PFMA made provision for disciplinary action under certain circumstances and the Committee could recommend such action if appropriate.

Mr Smith was sensitive to the Committee predetermining the outcome of the hearings. Mr Trent was saying that the Group should consider disciplinary hearing. He was saying that with no malice. The history of the Committee was that such statements pre-warned people that the Committee wanted to talk to and also created sensationalism. At the end they defeated the purposes of the hearing. The Committee should not tell the Group what to do. He hoped that the Committee would discuss its method of work during the workshop because it would be useful going forward.

The Chairperson said that the Group would look at issue in consultation with the AG and report back to the plenary

Update of programme
The Chairperson said that the Programme had not changed since the previous week.

Programme for the Workshop
The Chairperson took the Committee through the programme for the workshop that would take place on that and the following day.

Request for the Committee to act on the basis of report of AG on alleged non-disclosure by some Ministers, Deputy Ministers and other designated public servants
The request for action was as a result of the following statement by Mr Trent:

"Noting the January report of the Auditor General on the DECLARATION OF INTERESTS BY MINISTERS, DEPUTY MINISTERS AND GOVERNMENT EMPLOYEES, and in the interests of transparency and the rule of law, we find ourselves deeply concerned about potential conflicts arising from nondisclosure on interests by role-players in government.

As such I propose that Scopa adopt a formal resolution to take the following action steps:
1. To call on the ministers and deputy ministers who did not disclose their interests and memberships in companies and close corporations to make a written submission to Scopa outlining a) why they did not make the requisite disclosures, b) what is the nature of the business in which they have an interest, c) whether this business is currently trading and when last the business was trading, d) whether the business does or has ever done business with an organ of the state.

2. To refer any cases to the public protector where it is found that ministers or deputy ministers have opened themselves up to conflicts of interest by participating in a concern that does business with an organ of state.

3. To call upon all provincial Scopas to implement similar enquiries into the disclosure of interests by MEC's and other government role-players that may fall within the provincial mandate, and to submit a report to the national Scopa outlining findings as well as proposals.

4. To call on the Public Service Commission to outline its plans for an investigation into non-disclosure of interests by senior government officials who are not bound by either the Executive Members Ethics Act or the Parliamentary Code of Conduct, and to outline its proposals' for ensuring that in the future disclosure requirements are better complied with by government employees".

Mr Gumede said that the citizens of the country should thank the AG for the report and Mr Trent for his vigilance and desire to contribute in the process. The Committee should look at what had already been done in Parliament in relation to the matter and the scope of the report. The scope of the report was 2003/04. This would help the Committee separate what was in the media from what was in the report. The media had it that some Ministers had not disclosed that interests and among them were Ministers who had recently been appointed. Such Ministers were not included in the AG's report. There was a mix up in the communication channels. The Ethics Committee had already dealt with this matter and fined some of the Ministers in 2005. Some of the issues did not involve financial interests per se. The companies were there but Ministers did not have financial interests in them. The code of ethics was concerned with financial interests. The Ethics Committee would deal with the report in the near future and hopefully the AG would attend the meeting. Whatever the Committee wanted to do should be done in support of the work that the Ethics Committee was doing. There was no need for the Committee to engage in its own separate process. The Committee could strengthen the Ethics Committee by giving it any input it had. The Speaker had tabled the matter to the Ethics Committee and such Committee should be allowed to continue with its work.

Mr Trent said that the Committee should understand that the issue was at the heart of good governance, accountability and transparency. The current government had to its credit that those measures were introduced. The game should be played according to the rules. He said that there was a little bit of understanding about the motion he had proposed to the Committee. The motion was not asking for an investigation. He agreed that there was miscommunication and confusion in the media. The motion sought to call all Ministers who had not disclosed their interest to come to the Committee and disclose them. The matter would then be referred to the Public Protector if there was any infringement. The Committee would not have to undertake any investigation. Mr Gumede had referred to the fact that the Ethics Committee was dealing with the matter. The Ethics Committee was only a Committee of Parliament and the issue went beyond Cabinet Ministers and covered MECs and public servants. The Committee should ask its provincial counterparts to ask their people to account. The Committee should also ask the Public Service Commission (PSC) to outline its plans to investigate non-disclosure by senior government officials who were not bound by Executive Members Ethics Act or the Parliamentary Code of Conduct. The report of the AG made certain recommendations which the AG believed would strengthen the whole accountability process and reinforce the required ethical behaviour. The disputes between some Ministers and the AG should be dealt with by the AG and not the Committee. The AG was capable of dealing with them. He would not have issued report like this without giving it due consideration.

Mr D Maluleke (ANC) said that the Joint Rules of Parliament were clear. The Rules provided that Joint Committee of Ethics and Members’ Interest should implement the rules of conduct for the Assembly and permanent Council members. The issue was being dealt with at an appropriate forum. One was not talking about mismanagement of funds which would have required that the Committee consider the matter. He proposed that the Committee should leave the appropriate forum to deal with the matter.

Mr Smith said that Mr Trent was saying that the Committee should call upon the Minister and Deputy Ministers to make a written submission on their declarations to it. It was not the business of the Committee to receive declarations of interest. The Ethics Committee was dealing with issues and would forward the matter to the Public Protector should it deem it necessary. Mr Trent had also suggested that the Committee call upon its provincial counterparts to follow the AG and submit a report on their finding to this Committee. The Committee could not dictate to another sphere of government because that would create unnecessary tensions. Mr Fakie had said it on Radio that other spheres of government should look at what was happening in national Parliament and take it upon themselves to initiate their own processes. All clear thinking people would take it upon themselves to conduct their own investigations. He fully agreed that the Committee should ask the PSC to outline what it was doing to ensure that civil servants declared their interests. This was within the Committee’s purview.

He had problems with the fact that the matter had been floating in the media for two weeks before it was referred to the Committee. His understanding was that the Chairperson was the Committee’s spokesperson in relation to matters that concerned it. However, when reading the media one would find statements that had been attributed to certain members of the Committee and some political parties. The Committee had two choices: either to work in unison or work along party political lines. The Chairperson would be spokesperson for the Committee should it decide to work in unison. He suggested that the Chairperson should be Committee’s spokesperson on any matter concerning it. Members of the Committee should be allowed to engage the issues only after they had been processed in the Committee. Failure to do this would lead to a temptation for the ANC to rebuff Mr Trent in the media or the DA to rebuff the ANC in the media. At the end parties would spend much time engaging each other in the media and not in the Committee.

Ms Mashiane said that the Committee should wait for the Ethics Committee to pronounce on the matter and see what course action to pursue. The Committees could not deal with the matter simultaneously. The Public Accounts Committee was not even sure as to what decision the Ethics Committee would come to.

Mr T Madikiza (UDM) agreed with Mr Smith. There was no need to duplicate efforts.

Mr H Bekker (IFP) concurred with Mr Smith to some extent. He disagreed with him on the issue of speaking one’s mind in the media. Members of the Committee should be allowed to comment on any matter once it had been reported in the media because it was in the public domain. Members of the Committee were politicians and should not be restricted to a strict code. However, if matter was dealt with in confidence then members should not go over to the media.

The Chairperson said that the issue of how to interact with the media would be dealt with in the workshop.

Mr Trent said that he had been a Chairperson of the Committee for seven years. There was a fundamental difference between information given to the AG in confidence at a briefing and a document that was in the public domain. He found it strange that Mr Smith was saying that the Committee should discuss this matter internally but still opened the issue while the media was in attendance. He said that the Chairperson had approached him and asked if the matter should be discussed and he had agreed. He said that he did not want to throw the baby out with the bath water. He hoped that all Ministers were innocent because it was not good for the country to find that these things were happening. The Ethics Committee was dealing with the matter and he had no problem with that because it was capable of dealing with the matter. If AG did not intend this to be a public matter why did he conduct the investigation in the first place? There was no intention to dictate to the provinces. The intention was to establish if the document had been tabled in the provinces, because it specifically referred to them. If they did not have the report, it would be important to know how they were dealing with the matter because their people were mentioned in it. He was happy that the Committee had supported the recommendation that the Committee should ask the PSC to investigate the declaration of interests by designated government officials. Provinces should be alerted to the report.

Mr Gerber said that now that the Committee was waiting for the Ethics Committee to complete its processes, it should refer the report to Portfolio Committee on Trade and Industry. South Africa had one of the best Deeds Offices. The whole property industry would collapse should anything go wrong in the Deeds Office. The report seemed to indicate that there were problems with Companies and Intellectual Property Registration Office (CIPRO). CIPRO should be called by Portfolio Committee on Trade and Industry to come and account. There were many CK1 and CK2 forms just lying around not attended or captured into the system and this was very dangerous situation. Some of the forms had been signed by members who had ceased to be members of close corporations.

Mr Fakie said that the report had not been tabled in provincial legislatures. He was not sure how provincial legislatures would deal with the issue in their provinces. The Office of the AG had worked very closely with the Public Service and Administration who were the custodians of making sure that rules and regulations were complied with. They had clearly indicated that corrective measures would be taken. In relation to asking the PSC to investigate the declaration of interests by designated public servants, he said that the Commission would table a report shortly and it might be better to wait for the report and consider it in conjunction with AG’s report. He confirmed that he would engage with the Ethics Committee on 5 April 2006 and CIPRO would be invited to the meeting. The Committee might want to wait for the Ethics Committee to pronounce on the matter and see what role it would play after that.

The Chairperson asked what the timeframes of the report were as this might have an impact on the decision taken by the Committee.

Mr Fakie replied that he had engaged with the PSC’s Commissioner who had indicated that the report would be tabled by the end of this week. The Commissioner had also publicly said that the report would be released.

Mr Trent said that there was no harm in adopting resolution four even if the Commissioner was going to table a report. The resolution and the report were not mutually exclusive.

The Chairperson agreed that the two were not mutually exclusive and the Committee would entertain the report as and when presented to the Committee.

Invitation to Seminar on Oversight responsibilities of Legislatures for Budgets and Public Accounts Committees
The Chairperson said there was an invite for Parliament to send four delegates to a seminar that would take place in Berlin, Germany. The Committee was expected to provide two delegates and the Joint Budget the remaining two. He asked the Committee to make a determination in terms of who should attend the seminar.

Ms A Dreyer (DA) suggested that there should be one member from the ruling party and another from the official opposition.

Mr Madikiza concurred but asked which was the official opposition?

The Chairperson said that Ms Dreyer meant to say that one member from the ANC and another from the DA.

Mr Madikiza said that the other representative should be from the opposition and not a particular opposition party.

Mr T Mofokeng (ANC) asked if the number included the Chairperson or if the Chairperson would be a third member of the delegation.

The Chairperson said that only two members from the Committee were required.

Mr Mofekeng said this Committee was different from other Committees especially when it came to selecting people to go on overseas trips. He understood that there was a procedure that gave the ANC or ruling party a higher percentage. The Committee had never gone on a trip as a Committee. The problem was that some members would never go out. Another problem was that there was a need to be gender sensitive when choosing the representative.

Mr Dreyer said that there was just a suggestion that the Committee and the Budget Committee should each contribute two representatives. The Committee could come with a counter suggestion and say that it should send all four delegates or at least three as a compromise. The Joint Budget Committee was not really an oversight body. The Standing Committee on Public Accounts was the primary watchdog or oversight body.

Mr Maluleke said that the Committee should not lose sight of the fact that this was an invitation from another government which was picking up the tab. There was no way of controlling the matter. The Committee had two subcommittees and people who chaired them,. He suggested that those two people should go to the seminar.

Mr Gerber said that the invitation allowed the invited institutions to nominate more than four delegates and the excess number would be placed on a reserve list. They could be considered in case other institutions not use their full quota. The Committee could inform the host of the seminar that it would like to send more that four participants.

Mr Trent proposed that the Chairperson should sit with Chairperson of Joint Budget and look at the best composition of the participants.

Mr G Koornhof (ANC) said there was a formula that had to be applied. The persons who would make the decision should refer to the formula when deciding who to send to the seminar.

Mr Gumede said that the decision would also depend on the nature of things that would be discussed in the seminar. The Chairperson of Committee should be considered for the trip. The second person could be one of the coordinators.

Some members agreed with Mr Gumede and there was none who indicated his disagreement with him.

The meeting was adjourned.