Independent Development Trust Annual Report 2005/06

PUBLIC WORKS PORTFOLIO COMMITTEE
25 Ocotober 2006
INDEPENDENT DEVELOPMENT TRUST ANNUAL REPORT 2005/06

Chairperson: Mr F Bhengu (ANC)
 
Documents handed out
Independent Development Trust (IDT) 2005/06 Annual Report (www.idt.org.za)
IDT presentation: Part1 & Part2

SUMMARY
The Independent Development Trust gave a briefing on its 2005/06 Annual Report. The IDT had received an unqualified report for the fourth year running. Certain matters that the Auditor General had emphasised were being attended to. A hacker had managed to fraudulently transfer  R9,7 million from the IDT bank account and this was being investigated.

Members asked about construction companies using women only as a front in order to get contracts from the IDT. Members felt that not enough emphasis was put on the needs of youth. youth. Members were concerned about the millions of rands which were transferred from the IDT's accounts while the offices were closed. They also asked questions about the monitoring of projects.

MINUTES
Ms Thembi Nwedamutswu Chief Executive Officer, Independent Development Trust (IDT) gave members a briefing on IDT's 2005/06 Annual Report. The briefing covered the following topics: Compliance Report; Overview of its Changing Mandate; Poverty Debate Issues, Approach to Development; Its Business Model; Its 2006/08 Strategy; Its Budget Concerns and Decisions; Review of the 2005/06 Expenditure; Review of Strategic Objectives and Targets. The role of the IDT in the development sector had changed. She discussed IDT's view on poverty and the need for it as a development agency to bridge the gap between those support institutions with resources - donors, government and the private sector - and the target population that needed those resources.

Its 2006/08 strategy aimed to sharpen its products and services, deliver measurable sustainable development outcomes (rather than outcomes) and boost the quality of its analysis of indigenous development. Its four strategic objectives were to add value to the national development agenda through comprehensive programme management services, establish and maintain strategic partnerships to enhance development outcomes, to enhance the delivery and absorptive capacity of development institutions and to gear all of the resources of the organisation towards excellence in delivery. She noted that the IDT had received an unqualified report from the Auditor General for the fourth year running. Certain areas, such as reconciliation of programme accounts, needed improvement and were receiving attention.

The Chairperson wanted to know if Project Consolidate did not address the lack of capacity.

The CEO replied that the Department of Provincial and Local Government (DPLG) has said that Project Consolidate had been rolled out, however the Department of Public Service and Administration did not have the capacity to implement it. For this reason, IDT was in discussions with DPLG.

Prof Edith De Vries, Group Executive, Business Development Unit of IDT told members that R4 million worth of transactions had been done on one day. The IDT is aware that there are risks involved when handling that amount of money. The Auditor General had raised some concerns about the financial statements, but did not qualify their report. The concerns raised by the Auditor General were being attended to. The IDT did not encounter any material losses as a result of criminal conduct during the year. However there was a fraudulent transfer of R9.7 million, which took place on the 24 December 2005. It was established that the transfer did not take place from the IDT's premises but was done remotely. The South African Police, the Scorpions and First National Bank's fraud investigation unit was investigating the matter. An insurance excess of R250 000 needs to be paid to recover the money. A previous service provider had lodged a claim against the IDT, however the IDT had a counter claim of R1,4 million as the service provider owed money to the IDT.

The CEO requested that they meet again to present IDT's First Quarter of 2006/07 results and 2007/09 Corporate Plan. Prof De Vries added that presenting the corporate plan earlier in the year would assist the Committee in having an idea as to what to expect when the annual report is presented.

The Chairperson agreed  that it would help the Committee, especially when the annual report is being presented to the Committee.

Discussion
Mr J Blanche (DA) asked if the IDT had come across any companies that were using women as a "front".

The CEO replied that there has been an instance where fronting was discovered. The contractor had subsequently been blacklisted. This is one of the reasons why there is a partnership with South African Women in Construction

Ms N Ngcengwane (ANC) wanted to know how closely the IDT worked with the Construction Industry Development Programme (CIDP) and what the success rate was of the IDT programmes in communities. She also asked if the IDT works with other departments and how projects that are implemented are monitored.

Mr S Bhebhe, Acting Chief Operations Officer of IDT, replied that each project is monitored from the time it starts through to its completion. From time to time the project is monitored to see if they are on track. Each project is under the management of a cluster manager who sends reports in on a monthly basis. Once a building has been completed, the IDT needed to assess how the building is being utilised.

The CEO replied that they have a very good working relationship with the CIDP. 

Mr S Opperman (DA) asked how far the IDT is with reaching its objective of halving poverty by 2014. Also was there any progress with the investigation into the fraudulent transfer?

Mr T Moir, Acting Chief Financial Officer for IDT replied that the R9.7million fraud was committed outside of the IDT. Someone had copied the IDT system and accessed the FNB account. The money was then moved to 12 different accounts. A comprehensive investigation then followed. No proof was found that a computer on the IDT premises had been used. The police had told the IDT that this was not an isolated case, other businesses have also been targeted. All indications are that there is a syndicate behind the fraudulent transaction. The South African Police have followed all leads, but none of the leads pointed to the transfer been an inside job. At this point it was difficult to say when the case will be finalised.

The CEO commented that only R1.1 million was withdrawn from one of the 12 accounts. The accounts where the money was moved to have been frozen and the IDT is in the process of recovering the money.

Mr N Magubane (ANC) wanted to know what would cause the IDT to have a rollover.

Mr S Bhebhe replied that some projects are run over a period of three to five years. The IDT would receive the money for the project in one lump sum. This money would not be seen as a roll over for that financial year. If money has been allocated to be spent in that year and it is not, that would be a rollover.

The CEO commented that the implementation of a project is slow.

The Chairperson left the meeting and Mr L Maduma (ANC) took over as Acting Chairperson.

Mr Maduma asked if a database of companies who had been found to be fronting, had been created.

Mr Bhebhe replied that it was difficult to find out if a contract was using women only as a front. However in cases where they have blacklisted a contractor, there had been a clear indication that the contractor was fronting. It was difficult to find out if contractors were fronting especially if they were not registered. Should a contractor not be registered they will be referred to the CIDP.

Prof De Vries commented that they are in the process of reworking their agreement with South African Women in Construction (SAWIC).

Mr Maduma said that IDT had focussed their interaction on SAWIC, however children and youth also needed to be focused on.

Prof De Vries replied that one could not come up with a plan to eradicate all poverty alone. As an organization, the IDT could not do everything.

Mr Maduma replied that the Committee was not saying that the IDT's interaction with SAWIC is wrong, however that is not the only sector affected by poverty.

Prof De Vries replied that they have decided to focus on women as the Umsobomvu Fund focused on the youth.

The Acting Chairperson wanted to know what has been done in communities to help alleviate poverty and not what has been to empower women.

Mr Bhebhe replied that they do have programmes aimed at alleviating poverty, which focused on youth and women.

The Chairperson commented that it is a concern that the IDT is building schools. He felt that the Acting Director General for Public Works should look into this.

Mr J Blanche (DA) commented that if money was allocated for a project, it should be put into a trust fund, so that there would be no rollover in the financial statements.

The Acting Director General for Public Works, Mr Z Ntsaluba, commented that National Treasury would monitor all infrastructure projects, however this would only be implemented in 2007/08.

The Chairperson commented that the R9.7 million that was transferred from the IDT account was a great concern to members. Surely only the person who had developed the system, would have known how to hack into it.

The meeting was adjourned.