Housing Subsidy Allocations in Provincial Departments: hearings

PUBLIC ACCOUNTS STANDING COMMITTEE (SCOPA); HOUSING PORTFOLIO COMMITTEE
14 June 2006
HOUSING SUBSIDY ALLOCATIONS IN PROVINCIAL DEPARTMENTS: HEARINGS

Chairperson: Mr N Godi (PAC)

Documents handed out:
Auditor General’s Report on Findings Identified during a Performance Audit of Approval and Allocation of Housing Subsidies at Provincial Housing Departments – January 2006

SUMMARY
The Standing Committee on Public Accounts requested both National and Provincial Departments of Housing to attend and explain the issues raised by the Auditor General in his Report on findings identified during a performance audit of the approval and allocation of housing subsidies in the provincial departments. That Report had highlighted a number of irregularities across various provinces and at Head Office relating to the Housing Subsidy Schemes. These included problems with personnel, filing systems, processing systems, failure to comply with Division of Revenue Act and Public Finance Management Act, inability to produce files, and fraudulent transactions. The Report analysed and compared the National and Provincial responses. The Report noted that the Minister had appointed a Joint Steering Committee with quite specific terms of reference.

Questions were posed by members of SCOPA, the Portfolio Committee on Housing and SCOPA Chairs of Provinces. Questions included the current capacity levels, whether capacity referred to numbers or ability, the methods for processing and allocating subsidies, new measures to improve systems, the loss of documents, the link between databases to check the applications, and the supervisory role of the national department. Many questions were posed on the fraudulent applications, particularly in relation to age and means test questions, the reasons why problems persisted after 1994, and the monitoring systems used by the national department. It was apparent that even non-managers were able to override the system, thus avoiding the checks and balances, and several questions were asked about who was able to do so, whether there were records kept, how many overrides were linked to fraud, and the number of investigations and prosecutions arising from the fraudulent transactions. Finally members addressed the role and functioning of the Joint Steering Committee. The Chairperson expressed his Committee’s concern about the Auditor-General's Report and the manner in which questions had been answered at the hearing, and stated that SCOPA would now draw up a resolution for tabling in Parliament on the basis of the answers provided.

MINUTES
The Chairperson stated that this meeting was held as part of the SCOPA's oversight role, to consider the performance audit conducted by the Auditor General (A-G) on the approval and allocation of Housing Subsidies by the National Department of Housing (NDoH) and the provincial departments (PDoH). The Committee wished to receive answers from anyone able to give them and to seek clarity, which would form the basis of the report to the National Assembly.

Mr Z Mkabile (Chair, Scopa E Cape) asked for details on the state of capacity at NDoH and PDoH, the forms of training undertaken, the budget allocation, and what had been done to address the problems raised by the A-G.

Mr M Dlabantu (Deputy Director General (DDG), NDoH) stated that there was a lack of capacity for the HSS system. At the national level there was direction as to how to deal with information management. There were two systems, the database and the Housing Subsidy Scheme (HSS) system, needing to be addressed; PDoH would access the database and use the interfaces. At various levels modules were introduced and workshops were run with assistance of CSIR and SITA.

Mr Mkabile did not feel that this answer had addressed his question and asked for specific responses on skills.

Mr Dlabantu replied that the level of skills would vary across the provinces. The administration was actually performed at provincial level. Assessment was provided as part of the application process and assistance was also given to municipalities where capacity was a problem. The Department had allocated initial capacity building funding to assist.

Mr Mkabile still did not feel that this had answered his questions but undertook to raise the matter later, under plans for the future.

Mr T Bonhomme (SCOPA) pointed out that the Report had raised some very serious issues. He asked for an explanation on how the allocation of salaries was implemented, as there seemed to be far too many loopholes. He asked for explanation on how loopholes had arisen, and why they were not detected during the pilot phase. He commented that remedial action needed to be taken to ensure protection of taxpayer’s money.

Mr Dlabantu replied that he felt it necessary to explain the context. The HSS system was introduced in terms of the Housing Act, when the NDoH was to manage the administration of subsidies. Initially the Provinces were allowed to use their own systems, and these developed simultaneously with the implementation of the programme, including manual systems, spreadsheets and other methods. Because of the manual systems it was not easy to detect misrepresentation of facts. This would not be possible until one system was set up, implemented nationally. When that was set up and the data was being captured, the problems were identified, and some of the interfaces were detected during internal audit evaluations, which included the assessment of how the system worked. NDoH had now put in a strategy, which included levels of engagement with various sectors. Therefore the problems could be attributed to the systems being used.

The Chairperson asked for clarity on the role of NDoH in supervising the nine provinces.

Mr Dlabantu replied that the decision to institute one system had resulted from knowledge that there were problems. The database was the key system.

Ms T Tobias (SCOPA, ANC) asked when the new system had begun, and whether there would be an unqualified report from the Auditor General on it the following year.

Mr Dlabantu replied that it was introduced in 2000, and implemented in phases.

Mr Mkabile (E Cape SCOPA) pointed out that the irregularities had continued into 2003/4, and that the internal controls had been unacceptable.

Mr Dlabantu explained that the phasing in process had led to problems. Weaknesses were picked up as the system was piloted and developed, but the administration of subsidies was running concurrently with development of the system. The A-G had identified information in the system that had only been identified as incorrect during the post-implementation stage. Information had, of necessity, to be put into the system without being checked and only later was it possible to identify and update the incorrect information. The only information that could be picked up when the system was implemented related to people who made false representations. Until the interface was fully operational, there remained a problem, and it must be remembered that the systems were phased in by stages.

Mr G Madikiza (SCOPA, UDM) asked how the misrepresentations were picked up if the application forms were missing.

Mr Mkabile added that it seemed that inadequate measures were taken during the application process, and that PDoH had not responded to some of the A-G’s questions. He asked why access control was not implemented, as there were several contraventions of the Public Finance Management Act (PFMA), and enquired what the levels of staffing were.

Ms J Downs (Chair, Scopa KZN) stated that the previous questions had raised a broader question on the process. She asked how the means test was done, other than for government officials, and in particular how the tests were conducted in respect of the general public and at municipal level.

Mr Dlabantu replied that the A-G’s Report on private sector applicants had identified misrepresentation relating to levels of income. NDoH was looking at methods of dealing with this. All applications relied on means tests and the challenge lay in the degree to which NDoH could check the information and the steps in implementing that. A task team was looking at developing policy, including methods to verify and corroborate the information.

The Chairperson commented that the thrust of the A-G’s Report was that he was unable to obtain and view source documents. He asked for comment on the problems.

Mr Dlabantu answered that these were filing problems. At the initial stages of implementation, files were held at provincial offices, and there were different systems of accessing files, which included purely manual systems. There had been some difficulties in capacity training skills, which would have to be implemented centrally. This was an area of continual building at provincial level and NDoH was addressing the issue.

The Chairperson asked if Mr Dlabantu was saying that the people employed were lacking in skills.

Mr Dlabantu said that his response referred to the dispensation where there was misjudgement, or where the provinces had experienced difficulty because they were not linked to a central system. After the centralised system was introduced, the skills and capacity also became a centralised issue. The misrepresentations were something that NDoH would deal with.

Mr Mkabile asked whether NDoH had studied the Report in detail, because the A-G was referring to filing of application forms. It was clear that application forms were requested, but not supplied and the question was simply why, and what was the state of affairs in the provinces.

Ms L Mabe (Chairperson, Joint Budget Committee of the National Assembly) stated that it would be reasonable that forms at the provincial level would be stored properly. She asked why copies were not kept; alternatively, if they had been destroyed, then this must be stated.

The Chairperson added that filing of documents did not relate to systems implemented. This was a straightforward and basic action.

Ms T Tobias pointed out that the A-G had identified the losses as a trend and suggested that if no answer could be given now, then a written response must be provided.

The Chairperson believed that either NDoH or PDoH would have to give an answer during the meeting.

Mr E Trent (SCOPA, DA) believed that the questions were quite simple and he was worried that simple answers were not being provided.

Mr Dlabantu responded that provinces would need to respond to the loss of files at that level. However NDoH had given the provinces the means to capture the details.

The Chairperson then asked the provinces to inform the Committee what problems had been experienced with the files, and why they could not be found.

Eastern Cape PDoH responded that there was a filing system but it had challenges, since after the scheme was developed, three offices were integrated into one and the files were moved. That had led to some misfiling between Port Elizabeth, East London and Bisho. When the problems with fraud were identified, 229 cases were handed over for prosecution and it might be that some of the files were with the prosecuting authority. The East London office was now busy with verification of all applicants.

Western Cape PDoH reported that there were two reasons for files having gone missing; firstly the move of office premises, and secondly a flood in the filing room which had damaged or destroyed files. 69.3% of all files requested were provided to the A-G.

The Chairperson commented that a 30% inability to provide files remained a high figure.

Free State PDoH acknowledged that the filing of the Housing Subsidy files was problematic. On the present audit 59 of the 69 files requested were missing. 42 of the 59 missing files were located at the conveyancers’ offices. Files did move from one office to another and this caused problems.

Mr V Smith (SCOPA, ANC) commented that the A-G had already reported that the filing systems were shambolic, and he suggested that any province disputing this should inform the Committee so that this could be recorded in the Committee’s report.

Kwazulu Natal PDoH stated that of the 323 files requested, only 9 were not traced.

Mpumulanga PDoH stated that the office in Witbank worked well, although the office in Nelspruit did require some improvement as it had inadequate storage space. In answer to a specific answer from Ms Mabe whether all files were safe, PDoH confirmed that there was a system, but that the space issue needed to be sorted out in Nelspruit.

Ms Mabe commented that this did not answer her question. All the provinces had some filing system; the question was whether it was fully effective. She asked specifically whether every file in Mpumulanga was safe.

PDoH Mpumulanga conceded that some files were missing in Nelspruit because they had been misfiled.

Mr V Smith stated that most of the previous comments had been directed to skills. He wished to raise another issue. Subsidies worth about R30 million had been awarded, post 2004, to government officials who should not have received them. By this stage the new systems had been implemented and should therefore have identified the fraud. He asked whether this was merely picked up on a random sample, whether this was prevalent, whether the figures were accurate, and why these problems, which clearly arose from administrative fault, had occurred.

The Chairperson asked whether this was a skills problem, since an applicant must be screened and ascertained as falling within the criteria.

Mr Dlabantu stated that this was a skills problem. Post 2004 there had been significant policy adjustments and therefore the position would not have been the same as pre-2004. One of the policy adjustments related to the subsidy barrier. The bands of subsidy were removed as qualifying criteria, and after 2004 there would need to be a further analysis to determine whether an applicant would be excluded or whether he would qualify.

The Chairperson pointed out that the A-G Report related to precisely that period, after introduction of the new criteria, and that despite the apparent harmonisation of provincial and national systems, the irregularities had persisted.

Mr Dlabantu stated that there were two issues – firstly the policy, and secondly the skills. Capacity and skills levels differed in the provinces. Training was provided in the use of the systems, and assistance was provided to the provinces in training when the systems changed.

Mr Shauket Fakie (Auditor General) clarified that the Report had addressed both systems and other issues, and it was true that the interface of systems had caused a problem. However, when an application was submitted, it was often not properly verified. That had nothing to do with the systems because it was purely a manual process, relating to skills. The systems part of the process would commence when the data was captured from the forms on to the system. Filing was a problem, because the lack of audit trail contributed to weaknesses in the systems and processes; it was impossible to verify the information captured if the source document was not available. The level of correctness and completeness of the form, and how the PDoH officials conducted their jobs was one problem, and the misrepresentation of certain people simply compounded the problems. Officials would have to ensure that a proper vetting process was in place to identify blatant misrepresentations.

Mr E Trent noted that the provinces were spending money allocated through the conditional grants. The A-G Report had also identified non-compliance with Division of Revenue Act (DORA). He commented that it was surely the function of NDoH to ensure that the PDoH complied, and had suitable capacity. If not, NDoH should take remedial steps.

Mr I Kotsoane (Director, NDoH) confirmed that NDoH had the responsibility to ensure that DORA was complied with, but he felt that equally the provinces were ruled by the same prescripts. He submitted that as much as NDoH was required to ensure compliance, then this Committee should also ensure that PDoH complied with DORA.

Mr M Seloane (Chair, Gauteng SCOPA) believed that since the NDoH apportioned the funding, it was the responsibility of the Director General to ensure proper compliance, and he would be equally culpable if they did not.

Ms T Tobias pointed out to the Director General that he was the accountable officer for whether the funds reached provinces, and must therefore ensure that PDoH utilised the grants properly. She asked how NDoH and he personally monitored expenditure patterns in the provinces.

Ms L Mabe also commented that it was unacceptable for the DG to suggest that the Portfolio Committee should be responsible for ensuring that provinces performed their jobs under national government.

Mr E Trent commented that according to the A-G Report, systems had been put in place by the Department, which were outside the control of the provinces, and that the systems had failed. There were a large number of systems breakdowns cited. The grant system had been operational since 1994, and he queried how it had taken ten years to put a reliable system in place, and why the provinces had not been given the proper tools to implement policy. This was the main function of NDoH and he was disappointed to see that it had not been performed correctly.

Mr Dlabantu responded that there had been changes in the intergovernmental and fiscal relations and transfers, of which DORA was a major instrument. NDoH had dealt with challenges at policy levels. For the last three or four years the structure had changed to deal with this, but with the best will in the world it was unlikely to be able to produce 100% efficiency and delivery. Cost and economics remained a problem. Red tape strictures, accountability at line function level, and other issues were challenges. He conceded that it may not have been wise, in hindsight, to have phased in implementation of the systems, but in fairness the issues raised by the A-G had already been identified as problems in the sector. Decentralisation was a major problem, and the processes had to fit within the existing resources available. There were time delays between processing and capturing information, and the systems did have some inherent weaknesses. This could have been different if NDoH had centralised from inception.

Mr M Fakir (National Treasury) commented that the conditions of the housing grants were quite broad. Systems for financial management took place at the micro level, but the macro level involved business plans, undertaken as part of the IDP process. One of the requirements set out was that there should be adequate capacity for effective project management. At the micro level, the A-G had identified gaps, and there would need to be more work and deeper thinking to address the problems. National Treasury had put significant funding into capacity, so NDoH was not short of funding to address these issues. For instance, during the current MTEF, an amount of R50 million was available, rising to R94.8 million in the next financial year. The conditions of the grants did allow for efficiency and performance measurement, and the budget had addressed this.

Ms L Mabe commented that DORA gave some leeway for development of skills, and she enquired why this had apparently not happened despite funding. She asked how it was possible that approval be given of the subsidies before the information was properly processed.

Mr Mkabile asked for specific figures how much had been spent, how much was not spent and assurance that the skills development budget was being properly managed.

Mr Dlabantu replied that skills had not always fallen within DORA, and the R50 million related particularly to the management of the implementation process and related matters. As municipalities were accredited so would NDoH provide initial capacity and equipment to allow them to continue. Most of the funding had been spent in the last year and it was anticipated that there would be full spending this year. As regards capacity and related matters, MinMEC had already looked at the challenges of delivery and it had been proposed that there must be provision for the provinces to upscale their delivery and own inspection, supervising and monitoring. Provision was also made for the up scaling of operational expenditure.

Ms J Downs (KZN Scopa) commented that SCOPA had held its hearing already in Kwazulu Natal. A problem had been identified in that the province could capture information, but could not run reports or access the PERSAL system without referral to National Treasury. She believed that the system of housing subsidies should surely allow for access to reports once the information had been captured, so that there could be comparison of ID and PERSAL details. Similar problems apparently existed in respect of municipal employees. Whilst it was true that this could not be done so easily for private applicants, this could surely be implemented for government employees.

The Auditor General responded that ID numbers and age had been the focus of investigations in respect of all applicants. Only in relation to salaries had the A-G focused on government employees. The current system operated on the provincial office receiving the form, checking against the HSS system, which would, overnight, upload data and run a data match for validity of ID documents, checks against the Deeds Office to ensure that no other properties were registered in the applicant’s name, and so forth. The Head Office system would then send the information back, and there would be a system decline for any faults. It was possible for the provincial officer to override the decline, and that was where the majority of problems arose. Anything overridden was not again referred to NDoH, and there did not need to be any motivation noted for the override.

Mr Smith referred to pages 35 and 36 of the A-G’s Report. The A-G had reported that anyone in the PDoH was able to override the system and alter data already captured and that caused a problem from a financial and separation of powers perspective. NDoH, in its responses to the A-G, had said that all staff members were permitted to override because of lack of capacity. Mr Smith did not understand how someone lacking capacity would not be restricted from undertaking certain work, but even given the power to override. He was most disappointed that responses like this could come from NDoH.

Mr Trent added that the private sector took the override of computer systems very seriously, requiring at least one senior member of staff, and often more, to perform the override. Mr Trent queried why NDoH had stated that it could put in place systems for provinces. He asked why the problems had not been identified long ago and action already taken.

Mr Kotsoane responded that capacity in the NDoH was being up scaled, but that in respect of the provinces, training programmes on the systems were conducted, and needs of provinces assessed on a regular basis. When the problems of override were highlighted in the Report, NDoH asked CSIR to address the issue and try to close the loopholes, and to ensure that NDoH could be alerted to any override or manipulation of information.

The Chairperson asked if this meant that the loopholes were still in existence at the moment.

The Deputy Director General replied that the system did have access control requirements, but when the rules were not followed then there was a problem. It was necessary to allow for an override, as it would be necessary to be able to make corrections, but some provinces had cited lack of proper capacity as the reason why the overrides were needed. The task team of NDoH was considering a total block, alternatively some alerting mechanism when a non-standard entry was made.

Ms A Dreyer (DA, SCOPA) commented that manual overrides seemed to be common practice. This was a problem not of systems, not of capacity, but of attitude. The checks and balances were provided by NDoH for valid reasons and the practice whereby overrides were allowed simply invited corruption.

Mr Dlabantu repeated that it was necessary to have an override system to prevent blockages. However he concurred that this could cause problems if the provisions to access the override were not properly followed.

The Chairperson stated that there was no doubt about the need for overrides in certain circumstances, but the Committee wished him to address the issue at a practical and not a conceptual level.

Mr Mkabile asked if there had been any disciplinary action taken against those officials who had accessed these subsidies, as they should have been easy to find. He enquired whether the level of corruption could be quantified.

Mr Dlabantu responded that there were some provinces that had taken action. There was a process of quantification that had been undertaken by JSC and this was under way. The National Office would still quantify the issues when all investigations were referred to it, after finalisation at the provincial level.

The Chairperson stated that it was clear that the Department was in the dark. They had only become aware of problems after the Auditor General's findings.

The Director-General stated that there were deficiencies and they would be dealt with. Part of the process would involve an up scaling of capacity.

Mr M Seloane, (Chairperson, Gauteng SCOPA) commented that NDoH should be able to monitor the provinces, and that a system should be in place to ensure that funds transferred were monitored, used effectively and efficiently, so that the PDoH could comply with DORA. However, he pointed out that some of the issues related to fraud, whilst others related to matters that could have been avoided through proper training in advance. Many of the matters highlighted were untoward and unnecessary.

The Chairperson stated that it was clear that NDoH had not been able to discharge its responsibility towards provinces.

Mr S Cachalia (Limpopo SCOPA) stated that a report was available in Limpopo on fraudulent subsidies, which indicated about R50 million in fraud. NDoH, in his view, should act closely with PDoH and attempt to recover excessive subsidies and cancel those that were improperly obtained. He perceived a lack of commitment and seriousness in discharging duties. He wondered how long NDoH would attempt to rely on “problems of capacity”. Losses had occurred simply because officials and NDoH had not monitored the position correctly.

A Free State SCOPA representative hoped that the lessons learned from this meeting would help to overcome weaknesses. No overriding of systems should be permitted without correct coding and referrals. There was a need to consider disciplinary action against those perpetrators. He asked also what specifically would be done in regard to addressing the problem of database systems that did not communicate properly with each other.

Ms P Ngwenya (Mpumulanga, SCOPA) asked how it was possible, if NDoH was linked to Home Affairs databases, to grant subsidies to those under 21.

Mr Dlabantu replied that this had sometimes happened because of the time lapses and some were only picked up on running additional checks. A programme had now been developed guiding the provinces in how to deal with matters. He responded that although 21 was stated as the minimum age, there were also some exceptions.

Ms Ngwenya and Mr Soloane were not satisfied with this response and asked for the precise criteria.

The Auditor General read out the conditions, which were in summary that a person must be 21, or, if under that age, legally able to contract, being married or divorced. He confirmed that the problematic applications had been those where people under 21 did not meet the criteria he had stated.

Mr H Bekker (IFP) asked why lack of skills had been cited as reasons for the problems. Any employee at NDoH or PDoH must show a certain level of skill, and it would not take substantial training to instruct someone how to verify an applicant’s age. If not, then questions must be asked whether the employees were validly employed. The same would apply to the filing clerks. In this regard he asked whether there was correlation between corruption and files lost. He thought that this showed lack of discipline, because if a person was responsible for a particular subsidy, and the subsidy was approved by a senior official and Head Office, then Head Office should institute proceedings to recover any moneys incorrectly paid from the staff members. He believed that NDoH could not “hide behind” the arguments of capacity in regard to the screening processes.

Mr B Pule (UCDP SCOPA) asked what NDoH meant by “capacity and skills” – whether lack of capacity meant that there were people without expertise, or insufficient numbers, or lack of knowledge in the work areas. He commented that those managing to manipulate the system often possessed quite sophisticated skills.

Mr Kotsoane commented that it was a combination of numbers and know-how. Although he himself was new in the department, he was aware of issues about the systems and monitoring. The current systems did allow provinces to access reports and to indicate where overrides had happened. It should then be possible for corrective measures to be taken after analysis of why the override had occurred. He would advise his colleagues to take their responsibilities more seriously and analyse the reports better.

Ms Mabe commented that the A-G Report had commented that 25 850 subsidies were multiple subsidies, but NDoH had denied that this was so, stating that the properties were in different villages, sections or numbers. She could not see that this answer was completely truthful.

Mr J Minnie (Director: Information Management, NDoH) replied that the system had allowed for double subsidies if a person qualified for a top-up, consolidation or addition or relocated to another area. Since the last rollout of the HSS system in August 2005 the system had been amended. Although it did allow an override and entry of another subsidy, there must be a full recordal.

Mr G Koornhof (ANC, SCOPA) commented that the A-G Report had presented a number of findings. He felt that NDoH’s engagement with all the issues was not up to standard, and that some of their responses had not addressed the nub of the questions. The Report had already been available in January, and he wondered if NDoH was aware of the seriousness of the situation. He asked if NDoH had a special investigation unit, the scope of its work and the success rate.

Mr P Gerber (ANC, SCOPA) raised the question of the Deeds Office searches, which, since 1998, had been undertaken by NDoH. He asked how this was done, since the Deeds Offices were not linked centrally, and whether there was any possibility of checking the subsidies granted from 1994 to 2004.

Mr Minnie responded that the Deeds Office in Pretoria would upload information regularly from other offices, and this was used to run a programme against all Deeds Offices to check records. Any discrepancies would be picked up and reports sent back to the PDoH. A special database existed for subsidies prior to 1998 and this required an additional search, which had proved effective. Any problems identified had been referred to the Registrar of Deeds so that amendments could be effected.

Mr Gerber indicated that the subsidies were mostly granted in respect of land, but that additional amounts were available for buildings. About 157 000 individual subsidies had been approved, worth R3.1 billion. He asked if NDoH checked to see that the buildings had been erected, or whether the funds were not still lying in trust accounts of agents or attorneys.

Mr Dlabantu responded that NDoH had engaged with the provinces on the Report, but where provinces had made responses to the A-G those would have to stand in his report. NDoH had set up an investigative unit recently but outside investigators were also dealing with some matters. A number of cases involving corruption had already been handed over to law enforcement agencies but as yet there were no details available on success rates. On the question of trust accounts, he suggested that this information be verified and a written report made to the Committee.

Mr J Gelderblom (Chair, Western Cape, Scopa) commented that the subsidy scheme was a national initiative and therefore the responsibility of NDoH. In November 2005 the Minister of Housing had proposed that a Joint Steering Committee (JSC) be created. He enquired what it had done, how many times it had met, and whether the reports were on track.

Ms L Mabe (ANC) queried if the Department had basically been saying that the Auditor-General had not been telling the truth with regards to page 37 of the Report.

Mr Minnie clarified that the system did allow double subsidies, but where it was intended to enter this information, then this must be reflected, with the reasons why there had been an override

Mr V Smith (ANC) confirmed with the NDoH that the CFO was appointed in an acting capacity only, and expressed his concern that the internal audit department of the Department had been very weak. He commented that this should not have taken eighteen months to correct and requested the Director General to give his urgent attention to the matter. He also suggested that the Portfolio Committee should undertake continuous oversight on the NDoH and the PDoHs so that these problems should not drag on further. He believed that SCOPA had heard sufficient on which to draw a resolution. He felt that further questions were simply going over the same ground.

Mr Trent agreed. He pointed out that thirteen items had been highlighted in the Report. He pointed specifically to the JSC, which was appointed on 2 November 2005 and asked how many times it had met, what its function had been, and whether it had done what the Minister had asked.

Mr Dlabantu replied to Mr Trent and to previous questions to the effect that the JSC was to be a multi-departmental task team, set up to deal with certain areas. The structure had been set up and nominations were called for in March. The Task Team had met once and had started to break down the duties to be performed and the monitoring action to be taken. Because the provinces had different approaches, it had been agreed that the PDoHs could appoint independent expertise, such as forensic auditors.

Certain progress had been made on the housing subsidy schemes. In answer to the questions on the subsidies allocated to deceased people, he stated that a programme had been developed to guide the provinces. NDoH was also examining how to restructure the process of housing delivery to ensure that certain steps were taken. Problems of reliability of data and updating of incorrect data were being considered and improved. Risk perspective was also under examination. The deadline for the JSC’s report had been set at December 2006 and it was hoped that this would be achieved and the work would be finalised by the end of the year.

Mr Trent also enquired why KwaZulu Natal, in the pie charts, had reflected so highly above other provinces (pages 28, 30, 32 and 34 of the A-G’s Report).

 Mr S Makama (Gauteng SCOPA) considered that the NDoH response on disciplinary action was not sufficient. He must surely be aware how many people had been suspended and asked whether he had communicated with the MECs in various provinces. He pointed out that it had been more than six months since the Report had been published. He was also worried about the discrepancies in the figures reported upon, and queried how this had affected the housing backlog, and how this might have impacted upon spending.

Mr B Pule suggested that a detailed response should be given in writing. However, the Chairperson, Mr Gumede and Mr Smith believed that the report of the Committee must be drawn on the basis of what had been stated during the meeting. If it was considered that further answers were still required, then this fact must be included in the report.

The Chairperson stated that no further questioning could be entertained; the members must deduce from the deadlines mentioned in the A-G’s Report whether the NDoH and JSC had complied properly with the mandate, since they had stated that they would only be able to respond fully by December 2006.

Ms Z Kota (Chairperson, Housing Portfolio Committee) stated that she had welcomed this meeting. It was clear that there were various challenges to be addressed. This was not the first time that the Report had come to her Committee’s attention but the Committee were assured that work was in progress to correct the faults reported. She believed that a reporting in December 2006 was very late and her Committee would have expected the bulk of the queries in the Report to have been dealt with at this meeting. 94% of the budget related to conditional grants to provinces. If this kind of challenge existed, it made it far more difficult for government to make funding available. However, she had confidence that the new Director General and his team would be able to ensure, together with the provinces, that matters were properly handled.

The SOPA Chairperson stressed that it was a very serious matter when a Department was called before SCOPA, since it was an indication that matters were not in order. He appreciated and understood that the Director General had only just started in his position, and he would have to show how quickly matters could be turned around not only to deal with the subsidies but also to address and report, in due course, upon the quality of housing built, and what NDoH was doing to ensure value for money. He mentioned that stability at director level was an issue in government departments, and the question of strategic leadership of departments was vital to achieve government objectives.

The Chairperson found that the skills questions asked were worrisome, especially the link of lack of capacity with corruption. The Committee had regrettably not received the sense that NDoH appreciated the severity of the problem. The indication that some of the employees were deliberately overriding systems was critical and needed urgent attention. The Committee was not completely satisfied with the answers given; they had been too generic and some basic questions had not been addressed, either because the Director General was too new in the post, or because other members had not been adequately prepared or had not fully appreciated the existence and severity of the problems. NDoH would have to ensure that it performed correctly at all times as the State machinery must serve the interests of the people. If it became self-serving this was not aligned to the broader political vision of the country.

The Chairperson stated that the JSC had issued deadlines and the interim report was supposed to have been produced by November 2005. However, the JSC was still talking about its constitution, terms of reference and other side issues. This regrettably did not give a sense that it was up to speed with the magnitude of the problem, nor that it was dealing with it in the way needed.

Finally the Chairperson advised the Director General that he faced many challenges, that SCOPA was anxious to see NDoH and PDoHs address and overcome those challenges. SCOPA would now be writing its resolution and recommendations on the basis of this meeting.

The meeting adjourned.