Limpopo progress on Covid-19 Expenditure Audit
15 March 2022
- LPG: AGSA Covid-19 Report
- LPG Report Presentation
- LPG: Management of Covid – 19 Funds
- Limpopo Second Special Audit Report
Departments from the Limpopo provincial government met with the Committee in a virtual meeting to present the Auditor-General’s findings on their Covid-19 expenditures, as well as the measures they had implemented to address the concerns raised.
As the Committee was advised that for some aspects, specific details could not be given, Members questioned the lack of availability of information, and why the departments would attend the meeting without being prepared for it. It was then decided that the meeting would continue and that discussions would be around information that the departments could present, and that any further details required would be prepared and presented by the departments at a later stage.
Discussions were focused on how the Covid-19 relief funds were used, and the criteria the Department of Social Development had made use of when deciding who would qualify for relief benefits. The spending of these funds was reported on, with specific figures being shown in the presentation documents.
The Department of Education presented on the progress they had made in addressing the Auditor-General of South Africa's (AGSA’s) findings. They were asked about the processes followed for selecting suppliers, and how they made sure that the selected ones met the procedural requirements. Members wanted to know why the outlined requirements were not being followed, and how the risk of fraud in the process had been mitigated.
In the area of human settlements, the Department was asked about the various projects currently in place to provide citizens with decent housing. It also had to answer on the various projects in place, including the free-standing stands they had acquired, as well as any land they had bought. They were asked if any of these projects and upgrades included hostels, or if they had been made to accommodate families.
The Chairperson welcomed the Limpopo delegation, led by Mr Seaparo Sekoati, Member of the Executive Council (MEC): Finance, to the meeting. The Committee had previously met with Limpopo on 18 August 2020, and this meeting was a follow-up. This meeting’s focus would be the Auditor-General of South Africa's (AGSA’s) special report, as well as the Special Investigating Unit's (SIU's) recommendations.
There had been a special apology from the Premier, as well as the Minister and both Deputy Ministers, who were attending a Cabinet meeting.
Provincial Treasury overview
Mr Gavin Pratt, Head of Department (HOD), Limpopo Provincial Treasury, gave a background summary to provide context for the presentations to follow. This was because the reports were high-level, so context was needed.
The AGSA’s report was very specific for the various departments, so those would be shared by the representatives in the meeting. The municipal report was a more general report and reported matters on a percentage basis. An example was the percentage of municipalities included in the investigation, instead of mentioning the specific ones included. Treasury did not have access to those details, but they had been shared with each municipality so they could respond appropriately.
They would report on the Covid funds allocated to them, and how these funds were used. The Treasury presentation would report on the specifics in a future meeting, if they were having one.
Ms H Mkhaliphi (EFF) asked why the report was not detailed. The Portfolio Committee expected departments to bring details when presenting, so a fair analysis could be made.
The Chairperson responded that MEC Sekoati had mentioned that the details were there, but they were still in the process of interacting with AGSA.
MEC Sekoati confirmed that the information was there. The AGSA favoured a report that did not provide specifics, so a more detailed one was still being drafted.
Mr Basikopo Makamu, Limpopo MEC: Co-operative Governance, Human Settlements and Traditional Affairs, confirmed this and mentioned that some of the information around the departments' responses to the AGSA’s recommendations was what they were still collecting.
Mr A Matumba (EFF) echoed that the departments needed to go back to get specifics so they could do oversight. They should have got that information before the meeting so the Committee could understand their presentations. To continue with the meeting would be “to do an injustice to the Committee.”
Ms D Direko (ANC) added that the Department’s actions were unfair. It was not the first time they were meeting with the Committee. They knew that they needed to present specifics. They knew what was expected of them and had attended the meeting while unprepared, and this was undermining to the Committee.
Mr K Ceza (EFF) shared this sentiment.
The Chairperson interjected. Comments around the continuation of the meeting had been allowed to draw a line between municipalities and the departments. The Committee would know the details lacking only once the departments had presented, so they needed to be allowed a chance to do so.
The Committee had a right to ask questions and receive responses. The MEC’s presence showed that an effort had been put in for the meeting by the departments. Departments also needed to be ready for the oversight meetings. The AGSA’s audit had included provinces as well as departments, so information about both was needed for oversight.
He suggested that the MEC present first, then they would pick up on any gaps, determine responses and set timeframes for responses.
Management of Covid-19 funds
MEC Makamu presented on behalf of the Department of Co-operative Governance, Human Settlements and Traditional Affairs. The presentation showed how the Department had spent money allocated for Covid-19 relief. It focused on the provision of PPE, as well as the informal settlements programme.
Challenges and interventions were a further discussion point, including poor quality transitional residential units (TRUs) and an investigation into management misusing these funds. Arrests of corrupt individuals had been made, and some matters were still under investigation.
(Please see the presentation document for more information)
Provincial Treasury on the AGSA report on covid-19
Ms Ennie Tema, Chief Director: Municipal Finance, Limpopo Treasury, presented a report on the municipalities’ management of the Covid-19 funds and the assistance provided by departments to municipalities to implement the recommendations of the AGSA.
This included a summary of the allocation of funds to the municipalities, as well as how much of these funds had been spent. It also addressed the AGSA findings and provided solutions implemented for each of the findings.
(Please see the presentation document for more details.)
Department of Education on special procurement for Covid-19 essentials
Ms Khathutshelo Dederen, HOD, Limpopo Department of Education, had connection issues, so Ms Polly Boshielo, Education MEC, continued the presentation for her.
This presentation highlighted the issues raised by the AG, namely the registration deadlines for suppliers being close to the award date, which might affect them being able to deliver, as well as some suppliers not being VAT vendors.
The Department of Education justified their view that registration dates did not have an impact on suppliers’ ability to deliver. They confirmed that selected suppliers met the VAT registration requirements, and this had been checked before selection.
(Please see presentation for further details.)
Department of Health on AGSA’s second special audit report
Mr Matome Mawasha, Deputy Director-General: Corporate Services, presented on behalf of the HOD of the Department of Health, who was sick.
This presentation included AGSA's findings and recommendations, and progress made by the Department on contract procurement and management, internal control deficiencies, and the recording, storage and distribution of PPE.
(Please see presentation attached for further details.)
Department of Social Development on AGSA report
Mr Desmond Mahopo, HOD, Department of Social Development, presented the Portfolio Committee's report on AGSA's findings and recommendations.
This included the reprioritised budget towards the health response and relief of social-economic distress, the budget used for PPE, the procurement of PPE, food relief and psychosocial support.
The presentation detailed the PPE items ordered and how much was paid for them. It also detailed how much was spent on food security programmes and the challenges faced by the public. A major issue was the increase in gender-based violence (GBV) in communities.
(Please see presentation document for more presentation details.)
Ms P Xaba-Ntshaba (ANC) asked the Department of Social Development why not all who had qualified for the R350 relief grant had received it. The president had announced this grant and people had registered for it, but not all of them had received it. It was the same with the food parcels organised for the people. What criteria had been used to determine who would receive the grant or food parcels? People who really needed the relief were not receiving it. Some had received it for only one month, after being registered for over five months.
In Johannesburg, food was distributed at night using wheelbarrows and thus used to destroy people’s lives. Was the food reaching the people who needed it in Limpopo?
Why had the Department underspent? The population needed this money and registered people had not received the grant. Some had received for only one month, yet reserves were reported. Clarity was needed on what would happen to that money.
Ms Mkhaliphi agreed with the wheelbarrow comment, as some people had not received parcels even though they were in need. According to the report, Limpopo prepared had 29 250 social relief of distress (SRD) parcels to the value of R35.1 million without providing proof of an approved list of beneficiaries that the order was based on. This was against the procedure that stated that SRD orders must be based on an approved list of beneficiaries.
How did the department deal with the fraud risk based on the orders placed, as they did not have an approved list of beneficiaries when the order was placed, as the need for these parcels could have been inflated? Did the agency honour the AGSA’s recommendation for them to investigate anomalies in the distribution of food parcels?
Spending of R668.5 million on Covid procurement by the provincial government was considered extravagant by the public. The province had the second-lowest number of Covid cases in the country, so was there an explanation of the justification given by departments on the spending? Would it take another two years for the Committee to receive a response on these matters?
Officials had been arrested following investigations by the SIU into the Talana hostels. The public had assisted in questioning the spending on the hostels. What had happened? Could a political head share their understanding of what was happening, as it had been only officials who had been arrested, but no political heads had been held accountable? Were there more people who were going to get arrested?
Was there a proper plan on how to get rid of informal settlements? It should not be that intervention happened only when there was a social disaster like the Covid pandemic before action was taken. Given that taxpayer money was available, why were there no plans in place to dignify black people with housing so they could feel like residents in the country?
Ms Mkhaliphi referred to the Department of Education and said the MEC had mentioned a concern by the AGSA about suppliers. Why did the AGSA have a problem with them? Had the Department satisfied themselves with the suppliers meeting requirements, or had they fallen into corruption when seeing a chance to do so? There were still schools without toilets in the province. This was for children. What were they doing to address such things?
The money was there but it was not being used to help the people who needed it. This was why the continuation of this meeting had been questioned earlier. The Committee needed details to provide sufficient oversight.
Mr Matumba asked whether the Talana hostel was being upgraded, or if they were demarcating stand-alone stands.
The AGSA had found a disregard for legislation and management legislation. Had there been any consequences? It seemed like only a circular had been issued, instead of management facing consequences. What had been done to disregard supply chain management (SCM)? Was it reported under s32 of the Municipal Finance Management Act (MFMA)? How did the provincial government apply the MFMA on the disregard of SCM legislation? The departments should not only state that they understand matters, but also provide reasons to show their understanding.
Relating to the job creation mentioned under expenditure by the Social Development Department for food distribution volunteers, how could volunteering be called a job? What was the hiring method for these people, and how much were they paid? How long did they work for? Were these food distribution posts advertised?
He asked the Education MEC if Covid had affected the classroom performance. If it did not, why did Limpopo perform so poorly when the results were released?
Mr Ceza said that people were drawing water from a dirty river. Water tanks had supposedly been installed. The area had no economic activity and there were no roads. How were resources distributed, as there were no roads?
How was the lottery money used to build a sports field, since the project had failed? There was no sports ground, even though money had been allocated.
He asked what the Department of Human Settlements had done to return lost money. Where were the new structures being built located? How far were these structures from the hostels? What economic activities existed to help people fund their lives? The Committee could not make determinations because the reports did not detail how much was spent or on what.
Ms Direko raised the issue of a lack of accountability. The Constitution had oversight requirements for departments. The presentations had limited details of monetary values for Covid services provided. Her expectation was that they would be briefed on the details of expenditure incurred, and what it was for. How much had been incurred as wasteful expenditure for each department, and was there any consequence management? Were there any disciplinary processes, and any financial recovery plans? Had these plans been implemented?
Social development had indicated that GBV cases had increased. What lessons had the Department learnt during the Covid period? What had contributed to the cases increasing? What had they done to deal with the issue?
Were there any discrepancies in the procurement of services that they had made? If any, what actions had been taken? How many cases had they dealt with? How many of those were in progress, and how many had been concluded? Some state resources had been used incorrectly, and corruption had occurred. Oversight was to rule out any corruption that had occurred. It was also to prevent repeating any mistakes that had been made.
Mr G Mpumza (ANC) asked the Department of Health about the recommendations that were made by the SIU, which they were now implementing. What were the recommendations?
The AGSA had found a contract for hand sanitisers that was R20 000 above what was approved by the accounting officer. The AGSA had recommended consequence management against officials, but the Department had reported that they were in the process of rectifying the matter. How did a rectification process relate to the consequence management recommended by the AG?
How much had they budgeted to implement the housing plan? Inadequate shelter had existed for people to be able to adhere to pandemic requirements. Was the Department planning on implementing a plan to provide housing to the people who had been provided with temporary housing units?
MEC Sekoati responded by addressing the issue of political heads not being charged directly. Reports had to be accepted as they were received, and not amended to include any involvement by politicians. Politicians were not always involved where there was corruption. He could confirm this, because he was a political leader in the portfolio that had overseen the project. Any involvement of politicians would be reviewed in the SIU investigation that was still ongoing
The Department was not waiting for a disaster to come. They had plans in place to address the challenges faced by the citizens. The presentation had deliberately showed progress on the Talana project, as the plan had already existed before the project. They were upgrading adjacent land to deal with construction. The Department had multiple projects currently under construction, and they had not been implemented just because of Covid. Details on the informal settlements that were being upgraded would be provided. Informal settlements were caused by people wanting to move closer to economic activity, usually in the town or cities. The government was facing a challenge of people wanting to move closer to towns, even after having homes built for them in the areas that they were from.
His understanding of the alarming SIU report was that they had had good intentions, but the people meant to execute them had other intentions. As a result, arrests of those specific officials had been made. Companies submitting to Treasury should be made aware of the Treasury requirements in future, to prevent such cases.
Regarding the R15 million that was used, a correction was needed -- the total that was going to be used was R15.2 million, according to the budgets. Talana was the only one constructed, as the MEC had issued instructions to halt Ext.10 construction after facing challenges. The only amount that was used was the R2.5m. The rest of it was saved and was not used to pay anyone. The SIU had recommended that they make civil claims to recover the money that was sent to them. They had written to Treasury to make sure that the appointed company had been blacklisted.
Hostels were for males to live in while working away from their families. SRU sites would be to house families and allow for economic activity.
He would be misleading the Committee if he tried to answer the question about the water from the dirty river. They would investigate the issue. The manner it was raised involved roads, so he would talk to his colleagues and return with a response or solution.
MEC Boshielo responded on behalf of the Department of Education and said there had been no AGSA findings in the first report. In the second report, it had made recommendations that they had implemented. They had made progress with the pit latrines. This matter had not been part of the findings, so they had not presented fully on it, but progress had been made. The 215 mentioned by the Department would be completed by the end of April.
She was not aware of lottery money but would find out about it and then report back to Committee.
Mr Mawasha responded on behalf of the Department of Health on why consequence management had not been implemented. The process for procurement had been followed, and they had saved the Department money because they had procured at a lower price than the one on the quote. It would discourage employees to be punished for errors made in reporting when they made a saving.
Mr Mahopo responded on behalf of Social Development and said the Covid-19 pandemic had challenged them and their current systems, especially in relation to the database of people who needed housing. Many lessons had been learned from the pandemic. It had shown the need for the development of food relief frameworks and standard operating procedures which were aligned to Covid 19 protocols. The beneficiary criteria were to identify households that qualified to receive the food parcels. The income in a household must not exceed R3 600. This included all forms of income, including grants and salaries. They had also considered households with vulnerable children who needed support, working with municipalities to identify these households.
They had established distribution teams to manage the distribution of food parcels. The food budget had been 100% spent. The allocated budget was not enough, so they had collaborated with the private sector. Even after that, not all registered households were assisted. The spending of R1.3 bn was because no procurement processes were in place. The budget was later committed to other small items. Priority was given to victims of disaster. The hiring method applied for job creation focused on existing volunteers who were working at the centre. They were paid R2 040 as a stipend at the time for period of six months. The criterion was proximity, so those who were close by were employed. The positions were not advertised, as there was no way to advertise them.
Regarding the GBV issue, contributing factors were discovered by the independent investigative bodies to be people being confined, a lack of income and a lack of employment. Not being used to being confined was the main cause of GBV. This was why some of the shelters were identified, and they were also able to provide psycho-social services to those who were affected.
A technical committee was able to develop a monthly plan aligned with the national strategy framework on GBV, and it was being implemented. The Department made use of social media to raise awareness against matters like substance abuse.
Ms Xaba-Ntshaba asked about the volunteers. How many had been used? What was their time in and time out? Generalising led to not being able to hold departments accountable.
Mr Ceza said that the presentation had detailed the challenges that they faced around the poor quality of the TRUs and poor workmanship. In terms of section 67 of the MFMA, before transferring funds of the organisation to a company outside of the sphere of government, the accounting officers must be satisfied that the said company had the capacity to deliver. The Department had complied with the requirements.
Mr Matumba said he had not received an answer from the MEC as to whether they were building hostels or stand-alone stands. Based on the allocated and spent funds, had the spending resulted in value? Did it result in the Unemployment Insurance Fund (UIF) being paid? Was this reported? It was not in the report, and this information was needed to provide oversight.
Mr Mahopo said that volunteers assisted across all the centres. They recruited had 832 volunteers. Their working times were guided by non-profit organisations (NPOs) as they were under NPOs. They determined the length of their contracts in accordance with their policies.
They had received value for money because the constitution provided for access to food, and this was what they had delivered. South Africa was faced with that as well as access to healthcare, and this went hand-in-hand with having access to food.
The MEC addressed the family units built in Seshego. These were not hostels. They would be enough to house the families of those working around the area. They were also currently upgrading the stand-alone units. This was in the area around where the hostels had been built.
Those who were registered for the R350 grant were meant to receive it within three months. SASSA oversaw that process, but they were not present to give details. He also detailed the criteria they followed for choosing volunteers. They were South Africans between the ages of 18 and 35 who were unemployed, with proof that they were from a poor household earning less than R3 600 per month.
MEC Sekoati said they had taken note of the areas they needed to provide information on. Moving forward, they would be in a position to provide the required information. Once given a format for their presentation and what they needed to cover, they would prepare adequately. The information they had shared should be enough to provide them with a base to understand what had been happening.
The Chairperson thanked the Members for attending the meeting. Oversight should be everybody’s business. They were public representatives, so the questions were on behalf of citizens. Members expected reports to be specific about responding to matters that had been raised. Written responses to those issues raised by Members were needed, and timeframes must be included.
The meeting was adjourned.