Report: Commission for Gender Equality (CGE) Forensic Investigations
DRAFT REPORT OF THE AD HOC COMMITTEE ON THE COMMISSION FOR GENDER EQUALITY (CGE) FORENSIC INVESTIGATION
Report of the Ad Hoc Committee on the Commission for Gender Equality (CGE) Forensic Investigations, dated 19 April 2011
The Ad Hoc Committee on the Commission for Gender Equality (CGE) Forensic Investigations reports as follows:
1.1. The Acting Speaker established the Ad Hoc Committee on the Commission for Gender Equality (CGE) Forensic Investigation on 19 October 2010. The National Assembly ratified the decision on 26 October 2010.
1.2. The Committees mandate is to consider and report to the National Assembly on the following:
· The Auditor-General of South Africa s Report to Parliament on an investigation at the Commission for Gender Equality . (The Report addresses allegations of financial impropriety, maladministration and improper conduct at the Commission for Gender Equality).
· The Report of the Public Protector on an investigation into complaints relating to misconduct and maladministration in connection with the affairs of the Commission for Gender Equality .
1.3. The Committee was to report by 26 November 2010 but given the limited time available it requested that this deadline be extended. The Committee is to report by 31 March 2011.
2. Composition of Committee
2.1. The following members of the National Assembly were appointed to serve on the Committee:
Dlulane, Ms B
Holomisa, Adv. SP
Malgas, Mrs HH
Ramodibe, Ms DM
Sibanyoni, Mr JB
Smith, Mr VG
Snell, Mr GT
Tlake, Ms MM
Van Wyk, Ms A
Duncan, Mrs P
Robinson, Mrs D
Rwexana, Ms SP
Lebenya-Ntanzi, Ms P
Paulse, Mrs S
3.1. The Committee requested the Auditor-General South Africa (AGSA) and the Office of the Public Protector (OPP) to brief it on their investigations at the Commission for Gender Equality (CGE). The CGE also reported on its implementation of the recommendations that emerged from the investigations. The Committee asked the AGSA and the OPP to submit a supplementary report on progress made.
3.2. The National Treasury was requested to brief the Committee. The presentation addressed its assessment of the CGEs internal control environment, its role where there were allegations of financial misconduct, and its suggestions for the CGE in this regard.
3.3. In proceeding with its work, the Committee had regard to the following:
· The Auditor-General South Africas Report to Parliament on an investigation at the Commission for Gender Equality , October 2010.
· The Report of the Public Protector on an investigation into complaints relating to misconduct and maladministration in connection with the affairs of the Commission for Gender Equality , 27 September 2010.
· Presentations from AGSA and OPP on their respective forensic investigation reports relating to the CGE.
· A presentation to the Committee by the CGE on progress made on the AGSA and OPP reports.
· A presentation to the Committee from National Treasury on the AGSA and OPP reports.
· Representations from CGE staff.
· The Committees deliberations.
3.4. The approach of this report is to give a brief summary of the presentations made to the Committee, highlighting key findings and recommendations, as well as progress made and remaining challenges. This is followed by the Committees response and its recommendations. Copies of the reports and the presentations referred to in paragraph 3.3. can be obtained from the Committee Secretary.
3.5. The Committee received a letter from the former Chairperson, Ms N Gasa, dated 24 January 2011, in which she requested an opportunity to address the Committee on the findings of the OPPs report relating to her. The Committee, however, did not accede to the request as it related to matters that were sub judice on account of a court case involving Ms Gasa.
4. Key findings of the Auditor-General South Africa and Public Protectors reports
4.1. As previously mentioned, the Committee requested the Auditor-General South Africa (AGSA) and the Office of Public Protector (OPP) to brief it on the findings and recommendations of their investigations at the CGE. The OPPs investigation focused on issues of good governance, while the AGSAs investigations dealt with concerns relating to the CGEs financial management. Both investigations related to the 2007/08 and 2008/09 financial years.
4.2. The AGSAs investigations highlighted that there were:
· Irregularities in the Commissions bank accounts.
· Irregularities relating to travel expense claims of commissioners and the former chairperson.
· Irregularities with financial lease contracts.
· Fraudulent activities in the Commissions payroll system.
· Unjustified refunds or back pay to Commission employees.
4.3. The AGSA commented that its findings flowed mostly from non-compliance with the Public Finance Management Act 1 of 1999, and National Treasury Regulations, as well as non-adherence to internal policies and procedures. The findings also highlighted inadequate planning and weak monitoring and oversight by the CGEs leadership to ensure performance, compliance and ethical behaviour. During the time under review, the CGE operated in an environment that was high-risk and susceptible to fraud.
4.4. The AGSAs investigation report was presented to the CGEs management for input and comments on 21 April 2010, as well as to the plenary on 12 May 2010. The former Chairperson was also provided with an opportunity to respond and was furnished with specific findings relating to her on 4 June 2010. In June 2010, the CGEs management responded that it had noted all the recommendations and committed itself to implement corrective measures. Management further stated that the recommendations would be included in the Commission's turnaround plan to be implemented during the 2010/11 financial year. A final response was also received from the former chairperson on 30 June 2010.
4.5. The AGSA recommendations included that the CGE:
· Needs to comply with laws and regulations relating to its finances.
· Should address transfers that the Auditor-General could not verify, including holding the relevant officials to account.
· Should establish a proper framework for the delegation of authority.
· Should ensure that the contractual processes with its service providers are managed effectively .
4.6. The OPPs findings highlighted the following:
· The CGEs enabling legislation is outdated.
· Vacancies among commissioners require filling.
· The position of the Chairperson had been filled in an acting capacity for some time now.
· Two commissioners had been appointed as joint Chief Executive Officers. This was unlawful, irregular, and constituted maladministration. The expenditure incurred by the two commissioners might constitute irregular expenditure and might require investigation in terms of National Treasury Regulations.
· The CGE had not effectively implemented the findings of the OPPs 2008 report into various allegations made against it, as well as the recommendations contained in the report of the National Assemblys Ad Hoc Committee on the Review of Chapter 9 and Associated Institutions (31 July 2007).
· Issues relating to personnel practices and human resource management need addressing.
· Approximately R4 million was spent on an organisational diagnostic process but without tangible results.
· A lack of capacity and skills in the CGEs finance department required urgent attention.
· There is need for guidelines/policy arrangements to regulate the relationship of the Commissioners and Secretariat.
· The CGEs policy framework is outdated.
· The CGEs housing allowance was a cause of many complaints.
· No progress had been made regarding the implementation of the Occupation Specific Dispensation (OSD) for CGE staff members.
· No performance assessment of the staff had taken place in the 2008/09 financial year.
4.7. The Public Protector met with the CGEs Acting Chairperson, Commissioners and the Acting Chief Executive Officer on 14 January 2010 to discuss the investigation. The former chairperson of the CGE, Ms N Gasa, approached the OPP in connection with the investigation on 11 May 2010. The response included a request that Ms Gasa submit any information that could be of assistance to the investigation. In her reply, dated 3 June 2010, Ms Gasa requested a meeting with the investigator assisting the Public Protector. Her request was granted and she was invited on 1 July 2010 to indicate a suitable date for the meeting. According to the report she never responded to this invitation.
4.8. The OPPs key recommendations were that:
· Parliament amends the CGEs enabling legislation to bring it in line with the Constitution and the CGEs organisational requirements.
· The National Assembly facilitates the process necessary to ensure that the vacancies in the CGE are filled as a matter of urgency.
· National Treasury investigates irregular expenditure incurred by various officials as well as by commissioners acting as CEOs for appropriate action, if required.
· National Treasury investigates fruitless and wasteful expenditure incurred relating to payments to consultants appointed for the organisational diagnostic process and that, if required, appropriate action is taken.
· The CGE urgently implements the recommendations contained in the OPPs previous reports, as well as those contained in the report of the Ad Hoc Committee on the Review of Chapter 9 and Associated Institutions.
· The CGE expedite arbitration processes relating to the organisational diagnostic process.
· The CGE audit the skills, qualifications and experience of its staff.
· New staff are appointed and inducted.
· The capacity of the CGEs finance department is increased and skills development occurs.
· There is compliance with the relevant regulations and policies that impact on staff development, salaries and benefits.
5. The CGEs progress report on the AGSA and OPP reports
5.1. The CGEs Chief Executive Officer (CEO) reported that the following had been done to address the AGSAs recommendations:
· The ten bank accounts opened without following National Treasury Regulations were closed. The call account has also been closed.
· An electronic funds transfer system has been set up to ensure that no payment in excess of R2000 is made by cheque.
· A new supply chain management unit has been established and has been functioning since December 2010. A supplier database has been created. The alleged lease agreement for laptops had been converted to a sale agreement.
· The CGE is currently documenting processes to address issues of internal control, reliability and to ensure that there are proper delegations of authority.
· A cell phone policy had been put in place to curb expenditure.
· Mechanisms had been put in place to prevent future abuse of flight bookings.
· Matters relating to the former Chairpersons travel expenses are sub judice on account of there being a court case involving her.
· Disciplinary processes have been recommended against certain officials relating to irregular and unauthorised expenditure.
· The CGE also reported that compliance with certain of the OPPs recommendations might have direct legal and financial implications, for example, apologising may be construed as an admission of guilt.
· The CGE has asked to meet with National Treasury to discuss irregular expenditure relating to the two acting CEOs.
· The matter relating to the organisational diagnostic process involving Four Rivers is subject to arbitration.
· The CGE has begun a skills audit of its staff.
· Unfunded positions where proper appointment processes were followed have been regularised, but positions where standard recruitment processes had not been followed needed to be resolved.
· Induction programmes had taken place and steps are being taken to ensure that this becomes standard practice.
· Capacity in the finance department has been improved through the appointment of appropriately skilled staff.
· A policy to regulate interaction between Commissioners and the secretariat is still an agenda point.
· A process to review and improve the CGEs policy framework has begun.
· The CGE had noted the recommendation relating to the OSD but uncertainty remains as to whether the CGEs legal officers job profile fits the OSDs definitions.
· The CGE had not conducted performance assessments as no performance tool was in place at the relevant time and no performance agreements had been signed.
· Detailed action plans were provided to the Committee that included deliverables, timeframes and progress made.
6. Progress reports from AGSA and the OPP
6.1. The Committee asked the OPP and the AGSA to submit a progress report on remedial action undertaken by the CGE. Both informed the Committee that although there had been progress in some areas, challenges remained.
6.2. Specifically, the AGSA highlighted that:
· Issues related to amendment of policies and putting in place of delegations had been addressed.
· The CGE had now implemented the process of electronic funds transfer and was no longer writing cheques.
· Ten of the eleven bank accounts, including a call account had been closed. A supply chain unit had been created.
· A policy on cell phone use at the CGE had been put in place.
6.3. The OPP informed the Committee that:
· The CGE was examining its policies and regulating its employment practices.
· The CGE has also begun work on its policy framework.
· A skills audit of staff has been done.
· It did not appear that the CGE had acted on the Public Protector's 2008 report.
· The appointment of a Chief Financial Officer has still to be finalised.
· There appears that there is still no policy to guide relations between the Commissioners and the secretariat.
· The appointment of a consultant as the CEO still needs investigation.
· There is no clarity as to whether CGEs staff members qualify for the OSD.
· Outstanding performance assessments for staff have not been done.
· Various staffing issues have not been addressed.
7. Presentation from the Public Finance Division, National Treasury on the OPPs and AGSAs findings
7.1. National Treasury highlighted that the Chief Executive Officer (CEO) of the Commission is appointed in consultation with the Minister of Finance but this procedure was not followed. Specifically, the appointment of two members of the CGE as chief executive officers was unlawful and irregular. Expenditure incurred during the period of the appointment might constitute irregular expenditure and should be investigated by National Treasury. The National Treasury has sought legal opinion on the above matter but is not certain that the monies can be reasonably recovered. It recommended that the proper procedures are put in place to prevent this from happening in future. The expenditure should also be reported to National Treasury as irregular expenditure, with a request that the amount is regularised.
7.2. Also, the appointment of a consultant as CEO and accounting officer appeared to be unlawful and irregular. The relevant person was not employed as an official of the CGE at the relevant time. Again, expenditure incurred in the period of the appointment might constitute irregular expenditure and should be investigated by National Treasury pending a legal opinion on the matter.
7.3. The OPP had referred to R4 million spent on an organisational diagnostic process with no tangible results. The National Treasury requested the CGE to provide documents to demonstrate the value derived from the diagnostic process. If it is unable to do so, National Treasury recommended that the CGE take the necessary steps to recover this money.
7.4. The importance of a proper corrective plan to address the irregularities identified by the AGSA was highlighted. The Office of the Accountant-General is to assist with monitoring the implementation of this corrective plan and to report to the CGEs management on a regular basis. Any irregular expenditure should be reported to National Treasury.
7.5. There has been some progress. AGSAs audit findings had improved from a disclaimer in 2008/09 to a qualification in 2009/10. The importance of filling management positions was emphasised, as most findings could be addressed with the appointment of appropriately qualified people. An internal audit section and audit committee is in place. That most management positions remain vacant is a concern.
8. Presentation from the CGE staff
8.1. The CGE staff representative explained staff members concerns. These included the following:
· There are vacant commissioner posts (The Commission on Gender Equality Act 39 of 1996 provides that, in addition to a Chairperson, the CGE should have between seven and eleven commissioners. At present there are six commissioners. This means that at least two more commissioners are required to comply with the provisions of the Commission on Gender Equality Act 39 of 1996).
· The CEO had met only with the management committee and not with staff members.
· Training and staff development needs were not being addressed. Staff members within the research units of the Commission do not have proper resources to enable them to perform their duties efficiently and effectively.
· There is a lack of proper communication between the CGEs National Office and the provincial managers.
· The annual programme of action has never been implemented and there is no follow-up on the one that is presently adopted.
· Issues relating to staff members benefits had not been addressed.
· The new cell phone policy had not been communicated adequately to administrators.
9. Committees observations
9.1. The Commission for Gender Equality is established in Chapter 9 of the Constitution as a State Institution Supporting Constitutional Democracy, to promote, among others, gender equality. The Constitution provides for its independence, and other organs of state must assist and protect it to ensure its independence, impartiality, dignity, and effectiveness. It is to assist the CGE that the Committee makes the findings and recommendations that follow.
9.2. The Committee has duly considered the findings and recommendations of the Auditor-General and Public Protector contained in the reports. The Committee was told that there had been some progress, but remains cautious in accepting this, especially after learning from staff members at the CGE of problems at the CGE. Overall, the Committee believes that there are a great many challenges to overcome, especially relating to the CGEs corporate governance and leadership.
9.3. It is also greatly concerning that there have been previous investigations and reports, which reflected similar concerns to those contained in the reports that are presently before the Committee. However, the Committee learnt that in most instances, the corrective measures suggested in these reports have not been taken up by leadership.
9.4. Similarly, many of the problems raised in the reports were identified in the report of the A d Hoc Committee on the Review of Chapter 9 and Associated Institutions to the National Assembly in July 2007 and are not unique to the CGE. Many of its conclusions and recommendations, specifically those relating to the need to address outdated enabling legislation, to ensure the timely appointment of commissioners when vacancies arise and to establish clear lines of command and authority, particularly among commissioners and the secretariat, remain pertinent. To the best of the Committees knowledge, the only recommendation that the National Assembly has adopted led to the establishment of a parliamentary unit to co-ordinate all interaction between the National Assembly and the state institutions responsible for strengthening democracy.
9.5. The Department of Women, Youth, Children and People with Disabilities should introduce legislation to Parliament to amend the Commission on Gender Equality Act 39 of 1996 in order to bring it in line with the Constitution of the Republic of South Africa , 1996, and with other legislation, such as the Public Finance Management Act 1 of 1999. Section 119 and 120 of the interim Constitution of 1993 provided for the establishment of a Commission on Gender Equality. The Commission on Gender Equality Act of 1996 regulates matters incidental to the establishment of the Commission by the interim Constitution. Furthermore, section 187 of the Constitution of the Republic of South Africa , 1996, provides for the powers and functions of the Commission. There have been numerous proposals to amend the Commission on Gender Equality Act to insert the provisions of the repealed sections 119 and 12 of the interim Constitution where applicable in the Commission on Gender Equality Act and to bring the Act in line with the provisions of the Constitution. The Committee strongly urges that the necessary amending legislation is introduced expeditiously. It is also important that, as far as possible and where appropriate, the amending legislation take into account amendments to the enabling legislation of other state institutions supporting democracy, for greater consistency and uniformity.
9.6. The number of commissioners is less than the prescribed minimum. The Commission has six Commissioners presently, all of whom are appointed in a full-time capacity. This is fewer than the prescribed minimum: The Commission on Gender Equality Act provides that, in addition to the Chairperson, there should be between seven and eleven Commissioners. Of these, a minimum of two and a maximum of seven should be appointed in a full-time capacity. The Committee is of the view that the vacancies undermine the CGEs operations.
9.7. It is clear to the Committee that the CGE faces many operational challenges and is especially concerned about its capacity to implement the turnaround strategy presented to it. For this reason, the Committee believes the plan needs close and regular monitoring.
9.8. The Committee notes the concerns of staff members. Their concerns provide valuable insight as to what is happening on the ground at the CGE. However, the Committees mandate is limited to the reports before it. It believes that the matters raised could be referred to the Portfolio Committee on Women, Youth, Children and Persons with Disabilities to be addressed.
9.9. The Committee learnt of specific matters where non-compliance and non-adherence to the Public Finance Management Act 1 of 1999 and the relevant National Treasury regulations created an environment conducive to financial transgressions. In addition to internal disciplinary proceedings against the official responsible, the Committee suggests that, where appropriate, the CGE consider laying criminal charges against official(s).
9.10. The Committee notes the National Treasurys comment on the importance of ensuring managerial positions are filled with appropriately qualified persons. It is pleased that the position of Chief Executive Officer has been filled but urges that the appointment of a Chief Financial Officer is expedited. This is of particular importance as a lack of capacity in the financial department has been identified as contributing to the findings. Other key management positions should also be filled urgently.
9.11. The Committee is especially dismayed that there has been little progress in establishing clear lines of command between Commissioners and the Secretariat. Again given the importance of ensuring that governance at the CGE is strengthened, the Committee suggests that this is attended to urgently.
9.12. The Committee notes that the former Chairperson of the Commission for Gender Equality, Ms N Gasa, did not take up the opportunity to address the Public Protector. The report of the Public Protector, therefore, did not have the benefit of Ms Gasas side of the story.
The Committee recommends that:
10.1. The Commission on Gender Equality Act 39 of 1996 is revised expeditiously to bring it in line with the Constitution of the Republic of South Africa , 1996, and the Public Finance Management Act 1 of 1999.
10.2. The National Assembly urgently facilitates the process of filling the vacancies within the Commission. The appointment of the new Commissioners must be in line with the revised Commission on Gender Equality Act 39 of 1996.
10.3. The National Assembly considers the report of the A d Hoc Committee on the Review of Chapter 9 and Associated Institutions to the National Assembly, dated 31 July 2007.
10.4. The CGE incorporates the recommendations of the AGSA and OPP reports in its turnaround strategy. Progress reports should be submitted to the National Assembly quarterly.
10.5. A policy guiding relations between Commissioners and the CGEs Secretariat is clarified within three months of this report being considered and the policy is submitted to the National Assembly.
10.6. The CGE ensures that vacant positions in management are filled without delay.
10.7. The concerns of staff members at the CGE are referred to the Portfolio Committee on Women, Youth, Children and Persons with Disabilities for further consideration.
10.8. The Public Protector affords Ms Gasa another opportunity to be heard, and thereafter report to the National Assembly.
10.9. The National Assembly is updated on the progress relating to the court case involving the former CGE chairperson.
Report to be considered.
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