Minister of Transport on PRASA state capture allegations; SAMSA & ATNS audit challenges
14 November 2017
Chairperson: Ms D Magadzi (ANC)
Audio
Minister of Transport on PRASA state capture allegations; SAMSA & ATNS audit challenges 2
Minister of Transport on PRASA state capture allegations; SAMSA & ATNS audit challenges 1
Documents
Public Protector State of Capture Report
Meeting Summary
The Minister of Transport was invited to give an implementation update on the 2015 Public Protector “De-railed” Report. Members of the Committee were disappointed that all PRASA board members, including the chairperson were absent at the meeting as the questions asked by the Committee required answers from the functional heads of PRASA rather than the Minister.
Minister Maswanganyi explained in logical sequence the efforts made by the Office of the Minister (previous and current Minister) to ensure the implementation of the Report. In summary, some of the Report recommendations had been addressed and an implementation plan drafted by the Minister and the Office of the Public Protector this month. An interim board had been constituted though they had yet to appoint a Chief Executive Officer and the authority of the CEO to sign off projects had been temporarily transferred to the board. An outstanding update on the Report by PRASA was awaited from Treasury. PRASA had appointed Werksmans Attorneys, a private investigation service provider, costing about R148m against the instruction of National Treasury that contracts above R10 million in PRASA should be directed to Treasury for forensic investigation.
The Minister noted that the Department has a plan to spend about R8b to improve Metrorail and provide functional rail transport in the Western Cape, this included plans to protect Metrorail property from vandalism.
The Acting DoT Director General said the work of Treasury was done and a draft report had been sent to PRASA for comment. Treasury is now looking at the comments from PRASA and thereafter will issue a final report. Treasury investigated more than 100 contracts at a cost of R25 million.
The Committee engaged the Minister in a robust discussion. They asked why PRASA engaged the services of private companies when the State had capacity to conduct the investigation at a much lower cost; if there was a budget for the appointment; who approved the appointment; if the appointment of Werksmans was legal; if the appointment received approval from Treasury as stipulated in the guideline that contracts worth more than R10 million must be submitted to Treasury; if PRASA was functional; how many service providers were appointed; what the Department was doing to assist PRASA implement the Report; why PRASA continued to spend more money on the investigation when it could put the money into service delivery. However political parties differed about the private investigation into corruption, with the opposition claiming that the millions were well spent because ultimately billions would be recouped from legal action against corrupt contracts.
The Committee met South African Maritime Safety Authority (SAMSA) Air Traffic and Navigation Services (ATNS) because both had failed to submit their annual reports to Parliament on time.
• SAMSA failed to submit information requested by the Auditor-General for the final audit at the time required. The interim audit had serious findings. Measures were taken against officials. Key people who were implicated had resigned at a crucial time when submission of information was needed for the final audit.
• ATNS had regressed from its usual clean audit to a qualified audit opinion in 2016/17. ATNS made an effort to reopen the audit, but approval was not granted by the Auditor-General. Both entities stated that they had put measures in place to avoid future occurrences.
Meeting report
The Chairperson said Parliament had instructed the Committee to look into existing challenges that impacted on the ability of the Passenger Rail Agency of South Africa (PRASA) to deliver on its mandate. The Committee would like to know how far the Department had progressed in the three years since the Public Protector identified issues at PRASA. The Committee was aware that PRASA has a new board. The Committee was aware that there were challenges on some trains that were purchased by PRASA. The Committee believed the Minister would be able to tell the Committee the critical things that had been implemented and the challenges in delivering public transport to South Africans. The Committee would like to know the progress on investigations which were made into the issues raised by the Public Protector. She noted the apology from the PRASA board chairperson.
Mr L Ramatlakane (ANC) said the apology from the PRASA board chairperson was not in order because it was the first time that the chairperson would have appeared before the Committee and it was not right to present an apology. He emphasised the need for the board chairperson to be present at the meeting. He asked if there was a board representative at the meeting.
The Chairperson asked and realised there was no PRASA board representative in the meeting. She said the Minister would talk about the Public Protector Report.
Mr T Mpanza (ANC) said the absence of all board members should be registered as a source of concern. He would like to check if there was anyone from the board at the meeting
Minister of Transport progress report on “De-railed” Public Protector Report
Mr Joe Maswanganyi, Minister of Transport, said the Department was at the meeting to recall the progress on the implementation of the Public Protector Report. He confirmed that the board was not present at the meeting but he had spoken to the board earlier and it was still processing some of the requirements of the Portfolio Committee of Transport.
The Public Protector issued a Report in August 2015 and he spoke on the remedial actions taken as an executive authority to ensure that the Report was implemented. The expectations as indicated in the Report were for the Ministers to take cognisance of the findings on unethical conduct and maladministration by PRASA relating to the irregularities mentioned in the report; to ensure that the PRASA board considers the Report and where appropriate acts in terms of section 84 and 85 of the PFMA; ensure that the PRASA board considers the maladministration and improper conduct and take appropriate disciplinary conduct and include oversight of PRASA as a state owned enterprise in monitoring the implementation of the recommendations.
The Public Protector Report directed the board chairperson to ensure that the board would take cognisance of the findings and improper conduct by Mr Lucky Montana and other people at PRASA, ensure that appropriate disciplinary action is taken against the responsible officials where appropriate and to evaluate the effectiveness of its internal controls so as to take corrective measures to prevent future occurrence. Again, that the PRASA board considers amending the R350 million threshold value policy for opening the bidding process of procurement of goods and services and reports to National Treasury and the Accountant General particulars of the alleged financial misconduct. Also, PRASA should support National Treasury in conducting forensic investigations into all contracts above R10 million.
On the Minister’s part, the Minister wrote a letter to the PRASA board chairperson on 9 September 2015. He read the content of the letter to the Committee. The letter stated the recommendations of the Public Protector Report and stipulated that a response, which included the remedial actions to be implemented on the recommendations, should be returned by the board by Friday 11 September 2015. The board responded on how it would investigate all the issues raised by the Public Protector about irregularities in procurement and the procedures that would be followed in ensuring the implementation of the report. All suspicious transactions above R10 million in the awarding of contracts would be referred to Treasury.
Treasury had started investigations and indicated that it would hand over the investigation report to the Department of Transport (DoT) and Public Protector when the investigations and findings are concluded. The Public Protector recommended that officials with conflicts of interest must appear before the disciplinary committee. The AG and Treasury are working on identifying officials guilty of conniving with service providers against the supply chain policy and the names of the officials would be attached to the report findings. DoT and the Public Protector had agreed on an implementation plan for the remedial actions on the “De-railed” Report.
The Minister summarised the actions taken on the Report recommendations by the Office of the Minister (the past and current Minister), Public Protector and PRASA as follows:
• The Minister took cognisance of the report, wrote to the PRASA board chairperson on the Report recommendations, and acted by writing to the Office of Public Protector on 8 October 2015, explaining how the remedial actions would be accomplished.
• A consolidated progress report from the PRASA Acting Group CEO was received by the Office of the Public Protector and the Office of the Minister on 14 June 2017.
• A reminder was sent to PRASA by the Office of the Public Protector on 5 July about the outstanding remedial actions. As at the time of this meeting, the Public Protector was still awaiting the outstanding report on the outstanding remedial actions. The expected outstanding report should be an update on remedial actions taken on the review of existing policy or policy provision on managing conflict of interest among employees and board members and a detailed update on the suspended employees. The latest reminder sent to PRASA was on 16 October 2017.
• An implementation plan was agreed upon between that Minister and the Office for the Public Protector on the "De-railed" Report on Thursday, 9 November 2017. The PRASA board chairperson had indicated that the priority of the board was the investigation recommended by the Public Protector. The Acting Group CEO was still busy compiling the report. PRASA had appointed many service providers after the “De-railed” Report and had not clarified to DoT which of the service providers was engaged to conduct investigation. DoT was working on expediting the investigations in PRASA and would ensure that its sticks to the timeframe agreed on with the Public Protector. The Minister also committed to the implementation of the remedial action plan.
Discussion
Mr Mpanza said it was apparent that enough ground had been covered by the Committee, former Minister and the PRASA board to ensure the implementation of the recommendations of the Public Protector. The Minister, Board, Group CEO and Chief Procurement Officer had all been interacting with the Public Protector to establish the deadline for the implementation. The progress report should be noted and it was good that the Minister had met with the Public Protector. The Committee should respect the progress and request an update as agreed with the Public Protector.
Mr Mpanza noted the appointment of more service providers and expressed concern for the many investigators involved in the PRASA issue – the AG, Treasury, and private investigators – and asked when PRASA would be able to commence delivery service to South Africans. He asked what the state of PRASA was, he asked if it was functional or if functionality was awaiting the investigations. The earlier the investigations were concluded, the better because the Committee would like to see an entity that is fulfilling its mandate.
Mr Ramatlakane said the people that ought to answer the critical questions were not in the meeting. It was the board that could answer most of the questions asked by the Committee. The Minister would be asked the questions despite not being the functional head. He asked who appointed the service providers, if it followed a proper process and if there was money to pay for the services. The last time the Committee engaged PRASA, it did not have a budget for all the legal expenses. Further appointments, despite the concerns raised by the Public Protector, were a concern to the Committee. They would need to have a further meeting with PRASA so that it can state the way forward. The last time the Committee met with the board, it realised that about R150m had been paid to Werksmans Attorneys for investigations which falls under irregular expenditure.
Mr Ramatlakane recalled that in the last discussion with the board, it was agreed that any contract above R10 million should be investigated. He asked when Treasury would be ready with its report on the investigation. There was a need for feedback on when the investigation would be concluded. He asked which of the investigations were handed to the Hawks and how many are with the Hawks, because Hawks was not mentioned in the presentation. Certain provisions of the PMFA would have to be implemented. There was a fight between the PRASA board and the Hawks. He asked how much had been paid to the Hawks. The Committee was told that at the end of July 2017, Werksmans would be disengaged. He asked if they had been disengaged or were still working for PRASA.
Mr M De Freitas (DA) asked why only two PRASA board members had transport expertise. What the previous PRASA board chairperson said to him publicly and privately is that the Minister encouraged him to resign. He noted that the previous Hawks team was removed and a new team put in place and the new team had not done any work. The non appointment of a CEO was contrary to PRASA’s progress and caused more deterioration. PRASA has no board that can sign off on its financial statements and no one was ready to take the responsibility for that.
Mr De Freitas asked that if there was a genuine will to investigate, why the reluctance to use the documents in PRASA’s possession. It was interesting that members of the Committee are reluctant to say how much had been earned from the investigations. He argued that R148m spent on private investigators was fruitful because it had helped Treasury to recover R2 billion in refunds.
Mr G Radebe (ANC) expressed disappointment at Mr De Freitas for supporting the appointment of private investigators. He was surprised about the appointment of a private service provider. Time had passed and it does not make sense that money was spent on investigation rather than fixing PRASA. He asked if the appointment was budgeted for, and if the appointment followed a proper procurement procedure. R150m could provide the state with about six sets of passenger trains rather than using the money to pay private investigators. The appointment of private service providers further emphasised State Capture, which meant the undue benefitting of private organisations from public enterprise. He has the confidence that the Minister would give a reliable report. The Committee cannot expect the Minister to appoint a CEO if there was no board.
The Chairperson said it was not fair that Mr Radebe replied to the questions raised by Mr De Freitas
Mr Radebe apologised to the Chairperson.
Mr Ramatlakane said the Committee had been requesting the forensic investigation report. There had been complete resistance from the board in providing the report to the Committee. He asked if the forensic reports exist, and if they had been completed. A number of cases had gone to court against PRASA which PRASA had lost, and PRASA was asked to pay the money. He asked if these companies had been paid. What will happen with cases that were said to be going to court by the previous board? He asked what would happen to the locomotives trains purchased by PRASA. He asked how many service providers had been appointed, if the appointment was done by a proper board that had the competence, who appointed the services providers and if the appointment would be condoned having breached the new guideline that contracts in excess of R10 million must pass through Treasury.
The Chairperson said the Public Protector had raised a problem about the number of security companies appointed by PRASA. She asked if the security companies are still working for PRASA and how many are there. An upfront payment was made by PRASA without proper bidding process. She asked if the money paid in this transaction had been returned. She asked how far PRASA had progressed in recovering money from cases it won. It was critical that the Werksmans Report should be given to the Committee. The Public Protector said Treasury had the capacity to investigate PRASA and the appointment of Werksmans was illegal. Did Treasury approve the appointment of Werksmans and other companies? She asked if DoT got value for the money it invested in the appointment of Werksmans as an investigator.
Minister Maswanganyi said he agreed with the Public Protector and the Public Protector had appointed an officer to work with DoT to ensure the implementation of the “De-railed” Report. Some investigators were appointed to check if erring officials should be disciplined as per the Public Protector recommendation that officials found guilty must be disciplined. He had indicated to the interim board that in filling the vacancies, the position of CEO and other executives should be prioritised.
DoT had put a PRASA turnaround strategy in place. The interim board would implement projects that had stalled due to the absence of an accounting authority because the Acting Group CEO has a limit. The board would have to make approvals so that Metrorail would be fully functional. About R8b would be spent to improve Metrorail in Western Cape. The rail carriages that were burnt would be repaired and walls would be built as a demarcation between communities and the railway lines in some areas in the Western Cape to prevent vandalism by community members. He also mentioned the recapitalisation of the signalling system. He had inspected some areas with serious challenges and assured repairs would be done because there are funds provided for the repairs. There are efforts to ensure functional rail transport. He had visited some of the places with rail transport challenges. There was a serious challenge from vandalism.
The Minister said that despite vandalism, DoT understands its responsibility to ensure availability of transport for citizens. He had spoken to the police to reinforce security for Metrorail. There was no budget for the appointment of service providers and the Public Protector had instructed that there should be forensic investigation into contracts above R10 million. There was a need to explain why PRASA acted contrary to the guideline. There was no reason to appoint private investigators when the state had the capacity to do the investigations. When the investigation report is ready, he will speak to the relevant people to ensure that the report is made available to the Committee, because he would not like to interfere with the process. He would direct the Acting Director General to check the number of investigations given to the Hawks. The Hawks should not be discredited. They are not incompetent and the PRASA board being an executive organ had no authority to instruct the Hawks on how it should do its work.
The Minister said Mr De Freitas was wrong because the new PRASA board members were competent. The board chairperson was a senior legal counsel, who had been appointed as a judge from next year. Two other members had a PhD in Transport Economics and a PhD in Engineering Management and most of the members had postgraduate qualifications. It is not only qualifications in transport that would be considered but qualifications in different fields such as legal and finance which are necessary to carry out the mandate of PRASA. The previous board had members who had only a matric qualification. The new board positions was advertised and DoT followed due process in recruiting the board members. He had never encouraged anybody to resign. R2 billion has not been recovered, contrary to the statement made by Mr De Freitas. There were a number of court cases. A company that manufactured trains took PRASA to court, it lost but the judgment was appealed and DoT must wait for the law to take its course. It was not possible that the Acting PRASA CEO had no authority to sign anything as indicated by Mr De Freitas, because anyone in an acting position has a designated authority to sign in the position that he acts. DoT should not continue to use the company that was appointed irregularly. The continual engagement of these service providers must not be defended by the Member of the Committee.
The Minister said irregular appointment must be avoided and Members should not use double standards. Anyone appointed irregularly must restore the money collected to PRASA. Several investigators were appointed and this may lead to the loss of important PRASA documents. Also the privacy and security of people were compromised by handing out important personal information of staff to private investigators.
The Minister said about 13 locomotives were being manufactured in Spain and seven were completed in Spain. A Swiss based company bought the previous company that manufactured the trains. Money had been paid for the locomotives and they were seeking legal advice on the handling of the trains. Money had also been spent on manufacturing a new set of hybrid trains. PRASA would have to account for how many service providers were appointed and how much was paid for those services. The audit report from the AG was ready but nobody could sign it off prior to the board appointments but the board can now sign off the AG's report. The court cases where PRASA had been taking to court or PRASA had taking service providers to court would be brought before the Committee. There was an investigation into the appointment of the service providers. The PRASA board was processing the Werksmans Report.
Mr Mathabatha Mokonyama, Acting DoT Director General, said the work of Treasury was done, and a draft report had been sent to PRASA for comment. Treasury is now looking at the comments from PRASA and thereafter will issue a final report. Treasury investigated more than 100 contracts at a cost of R25 million which explained the time taken by Treasury. The final report would be made available to Parliament as soon as it is available.
Mr M Shelembe (NFP) said the Minister had referred to improvements done to a station which was vandalised. He asked if there was information on the causes of vandalism to avoid future occurrence.
The Chairperson said the Minister said Mr Shelembe should endeavor to come on time so that he can get the full detail of the presentation as the question asked was covered in the presentation.
Mr De Freitas said one of the PRASA board members was already sitting on two other boards. The employment of incompetent people was the work of the government that the Minister works for. He asked what investigation was taking place because if the Werksmans investigation had continued about R7 billion would have been recovered. He asked when a full time proper board would be appointed.
The Minister responded that vandalism is a problem related to criminality and sometimes the PRASA staff are attacked by armed criminals in the course of performing their duties. There are cartels that sell copper wire while some are looking for drainage materials or to steal the machine installed for ticketing. DoT was jointly dealing with the case with the chief security officer. The interim board would be replaced with a permanent board subsequently. Members of a board should not only be technical people but know other aspect of operations. He emphasised that the board members are interim and the full members would be elected as soon as possible. He deferred on the statement made by Mr De Freitas that the members of the board are not qualified. He was not consistent in his statement as he initially said one member of the board was qualified and then said two members, also he said that R2 billion was recovered and then said R7 billion.
There was a back and forth argument between the Minister and Mr De Freitas (1.52 to 1.55.29)
The Chairperson said the Minister and Mr De Freitas must avoid argument so that the meeting does not degenerate into a quarrel.
The Minister said there was no need to justify PRASA spending on private investigators as Mr De Freitas had done. He would have reported if R7 billion had been recovered. The AG Report would be brought to the Portfolio Committee unedited. No service provider had been hindered from doing its work.
The Chairperson thanked the Minister
Mr Ramatlakane said the Committee had requested that the investigation be accelerated. PRASA was asked to show the budget if it has to appoint service providers. The budget was not presented, yet PRASA illegally appointed Werksmans, this being a deviation from the guidelines given to PRASA. R148m was a milking of the state by Werksmans which would not be condoned by the Committee. 118 contracts were investigated by Treasury for R25m. The Acting Group CEO was not part of the process of signing the contract with the service provider. The Committee wanted law enforcement to look into the case and making arrests were important. Mr De Freitas should not speak for the Committee but he should speak for himself.
The Chairperson thanked the Minister, and said it should hasten the completion of the investigation report to the Committee. The Committee would like to see a situation where there is compliance as indicated by the Public Protector, especially in supply chain management. The Committee was surprised when Werksman was appointed to do what the state could do. It was a cause for concern that the information of individuals was scrutinised by private entities. People's privacy was compromised. She requested that the Minister should say his last words on the matter.
The Minister replied that as a Department, it was committed to account to the public, Parliament and all organs that promote democracy. The reports would be brought to Parliament and no report would be hidden and he would ensure that all reports are delivered. He would expedite work on the report. Reports on court cases would be submitted and the cost of engaging the service providers would be brought before the Committee.
Mr Ramatlakane said he had seen a tweet now that said that the Minister lied and Mr Ramatlakane cheered for corruption. He did not cheer for corruption and he said that the reporter was being economical with the truth. He did not know at what point in the presentation that the Minister had lied. If that were true, the Minister would be guilty of misleading the Parliament. It was an abuse of the social media.
The Chairperson said the Committee needed to make a decision on how to handle PRASA.
The Chairperson noted that the Committee had called in those entities that did not submit their annual reports so that it can know the way forward. SAMSA and ATNS, along with the AG, were invited to provide clarity. The SAMSA board chairperson had submitted an apology for his absence but he had never appeared before the Committee. The SAMSA delegates should forward the concerns of the Committee to the board chairperson. If the trend continues the Committee was in the position to withhold the allocation of the entity. She invited the board representative to make his presentation.
South African Maritime Safety Authority (SAMSA)
Mr Mervyn Burton, SAMSA board member, said an official letter had been written by the board chairperson to the Committee. There were many challenges in SAMSA. There were several challenges with the submission of information for the audit. The head of supply chain management left at a crucial time and there were a number of other issues. He invited the CEO to give more information on the subject.
Mr Sobantu Tilayi, SAMSA Acting CEO and Chief Operations Officer, noted that SAMSA did not submit information for the audit report at the time required but the audit report was submitted in the first week of November. There was a completed Annual Report that was yet to be tabled. SAMSA was coming out of a difficult time and some drastic measures were taken against a few officials. A lot of disciplinary processes were completed and some were on the way to correct the state of affairs at SAMSA. The entity also had to contend with the resignation of key people at a very crucial time which was towards the time for the submission of information for the audit.
The Chairperson said the COO was talking in parables. She asked for an explanation of what happened and why the disciplinary processes were undertaken and what were the real critical issues of SAMSA.
Mr Sobantu Tilayi said that the interim audit report by the Auditor General for the 2016/17 financial year, had a few issues stemming from the outcome of the audit.
The Chairperson asked Mr Tilayi to state what the issues were.
Mr Tilayi said no issues were found in the revenue unit but the bulk of issues were found in the supply chain management. Key officers including the Chief Procurement Officer (CPO) resigned due to the findings. These people were key to the preparations for the audit and this led to the inability of SAMSA to complete the Annual Report for 2016/17. A team was put together to provide all the outstanding information required by the AG to help in completing the audit report. The audit report had been completed although beyond the time stipulated by the AG.
Mr Phumlani Myeni, SAMSA Chief Financial Officer, said although the entity took its responsibilities seriously, the challenges encountered made it impossible to conclude the Annual Report on time. For some time SAMSA had more liabilities than assets in the past. It was now a going concern. Also, although the matter had been resolved, there was a time when SAMSA did not have a fully functional board and was unable to make important decisions. The risk that emanated from that history brought about a lower materiality framework because AG would also like SAMSA to mitigate its risk. Two thirds of SAMSA revenue was generated from third parties. The interim audit did not provide sufficient evidence for the AG to make an audit opinion. He also made reference to SAMSA officials that had left the organisation after they were implicated in wrongdoing and how their departure affected the timely submission of the Annual Report as stated by Mr Tilayi. SAMSA was only able to produce its Annual Report at the end October.
The AG representative confirmed that the final audit report had been submitted by the Auditor General and there was a struggle with receiving information needed for it from SAMSA.
Discussion
Mr Radebe asked what information was not supplied to the AG so that the Committee could understand the situation because there was also a case of insufficient information in the 2015 report. He asked SAMSA to explain in detail the challenges it has with Transnet. There is a particular process when a person resigns and he asked if the employees that resigned did inadequate handover, and what was the action of SAMSA.
Ms S Xego (ANC) said the presentation was an indicator that something was wrong at SAMSA. She asked if SAMSA did not see this challenge coming because a functional audit unit should indicate the problem earlier than when it was detected.
Mr Ramatlakane asked what the implications of late submission by the entity are. What measures was SAMSA putting in place to avoid a repeat of this? It was not good to be reactive but rather be proactive by using necessary preventive mechanisms. It was important to avoid a repeat in future because it embarrasses the Committee.
Mr Moyahabo Raphadu, SAMSA Company Secretary, replied that SAMSA reported to the Committee in May 2016 that the CEO had resigned. The board commissioned a forensic investigation and findings were made. Subsequently, some officials were found accountable and the CPO, head of legal department, head of strategy all left the organisation and the tenure of the internal auditor was about to expire. A CPO who was appointed without the board’s approval also left. SAMSA was without internal auditors for a while. Lack of capacity was responsible for the delay in submission of the Annual Report.
Mr Tilayi said SAMSA gets its revenue from shipping activities which it receives monthly. The money is often paid in monthly in arrears. SAMSA is required to show that the revenue collected by Transnet National Ports Authority (TNPA) on behalf of SAMSA was complete. The challenge was due to a revision in the audit samples chosen and which requires information that should be collected from the National Port Authority. It was an evolving process but the process had been updated to avoid a future repeat of the problem. The measures are put in place to ensure that SAMSA gets all its revenue from TNPA. There was a lack of cooperation from the CPO and some other challenges such as irregular expenditure and the appointment of the internal auditor. The CPO was disgruntled and the handover process was not adequate and because of the situation, she could not be recalled to obtain clarity. The problem arose as a result of attitude and not management inadequacy. Disciplinary action had been taken against staff implicated in the problem. The head of the audit support team was one of the staff that resigned.
Mr Burton said in 2015 said there was a board IT committee where the CPO reports to the board. The CPO reported on the matters required but the audit showed that many things were not done contrary to the claims of the CPO. A measure for continual reporting had been put in place to check the situation.
Mr Radebe said the CPO and other SAMSA members that had left after the forensic audit, should be handed over to the Hawks for proper follow up.
The Chairperson said the exit of the staff after a forensic investigation shows that they had something to hide and she recommended that their cases should be followed up by SAMSA.
Ms Madidimalo Singo, Senior Manager: Auditor-General South Africa, said AGSA was working on assisting management to deal with its challenges. There is a plan to engage the entities quarterly to monitor if the audit findings are being worked on by the entities.
The Chairperson wondered if SAMSA was getting out of the challenges. She thanked them.
Air Traffic and Navigation Services (ATNS)
Adv Edwin Matane Mphahlele, ATNS board chairperson, explained that ATNS submitted its Annual Report but it was discovered material information was not included as indicated in Section 51(c) of the Public Finance Management Act (PFMA). ATNS achieved an unqualified audit in the last two years but obtained a qualified audit in 2016/17. The integrated Annual Report was submitted on 31 August 2017. ATNS was obliged to search for the truth and deal with it. Another Annual General Meeting (AGM) was planned to deal with the audit findings.
Mr Thabani Mthiyane, ATNS Chief Executive Officer, said the entity had received a clean audit during the past seven years. Submission was made to Parliament before the AGM, when the shortcoming was discovered. ATNS wrote to the Auditor-General to reopen the audit, but the opportunity to reopen the audit was denied by the AG. The main causes of the qualified audit opinion were how assets were classified by ATNS and irregular expenditure. A team had been put together to look into the asset register and another internal audit would be done early next year. It had also strengthened its consequence management. The CFO and Secretary were held responsible. It had replaced the CPO and CIO and is appointing a new internal auditor and it is looking at getting assistance from external organisations. The Annual Report might not have reached the Portfolio Committee but it was submitted on time – although ATNS made an attempt to withdraw it, that was not granted by AG.
Mr Thamsanqa Zikode, AGSA Business Executive, said ATNS appointed its own auditor which was approved by the AG. Correspondence was received from ATNS and the AG did not approve the withdrawal of the audit report. There is a plan to engage with the organisation frequently to avoid shortfalls at the end of the year.
Discussion
Ms Xego said she was not referring to ATNS specifically but reminded the Committee of its recommendation that DoT must do oversight over its entities. Whenever there is a challenge in the entities of DoT, the Minister must work at stabilising it.
Mr Radebe said ATNS retrogressed because it became relaxed. It should look inwards and ensure that the situation does not repeat itself. The Minister should work with the board to ensure that challenges are addressed.
Mr Mpanza appreciated the intervention of the AG such that it would not wait until the end of the year but address the problems as they occur. There was a need for the entities to be proactive rather than being reactive. He asked if the team put together by ATNS to address the challenge was a temporary or permanent team. He asked if there were personnel in charge of asset management. Does the team consist of internal staff or consultants? If they are consultants, ATNS should consider using internal staff because the Committee discourages the use of consultants.
Mr Moshabe Ndlovu, ATNS Chief Financial Officer, said the issue was a technical aspect of asset management. The team is made up of eight specialists who are internal ATNS staff members.
The Chairperson said the Committee should be able to accept the ATNS Report and would receive SAMSA Report when the process is concluded by Parliament. SAMSA had been having challenges for the past two years but ATNS had been an exemplary entity which had slipped and they hoped it would recover. She thanked the AG for the plans to assist the entities. She appreciated the ATNS efforts on consequence management. There was a need to hand over erring staff of SAMSA to the law enforcement agencies. The Committee would decide on how to deal with PRASA.
The meeting was adjourned.