ATC210528: Report of the Portfolio Committee on International Relations and Cooperation on conducting a Virtual Oversight visit on South Africa’s cash Missions and Missions with vacant land parcels and state-owned properties abroad, dated 26 May, 2021

International Relations

Report of the Portfolio Committee on International Relations and Cooperation on conducting a Virtual Oversight visit on South Africa’s cash Missions and Missions with vacant land parcels and state-owned properties abroad, dated 26 May, 2021

 

 

1Introduction

 

The Portfolio Committee on International Relations and Cooperation (the Committee), having conducted a Virtual Oversight visit on South Africa’s cash Missions and Missions with vacant land parcels and state-owned properties in Teheran, Iran; Luanda, Angola; Khartoum, Sudan; Juba, South Sudan;Havana, Cuba; Brasilia, Sao Paolo, Brazil; Windhoek, Walvis Bay, Namibia; Mbabane, Eswatini;Blantyre, Malawi; Zurich, Switzerland; Funchal, Portugal; Paris, France from 17 to 19 March 2021, reports as follows:

 

1.1Delegation

 

1.1.1Members of Parliament

 

1) Honourable T Mahambehlala (ANC) Chairperson Portfolio Committee on International Relations and Cooperation, and Leader of delegation

2) Honourable Mr TS Mpanza (ANC)

3) Honourable Mr BS Nkosi (ANC)

4) Honourable Mrs B Swarts (ANC)

5) Honourable Mr D Moela (ANC)

6) Honourable Mrs TRM Zungu (ANC)

7) Honourable X Nqola (ANC)

8) Honourable D Bergman (DA)

9) Honourable M Chetty (DA)

10)  Honourable TP Msane (EFF)

11) Honourable P Mulder (FF Plus)

12) Honourable KRJ Meshoe (ACDP)

 

 

1.1.2Parliamentary Officials

 

1) Ms L Mosala, Content Adviser

2) Mr L Sigwela, Committee Secretary

3) Mr D Madlala, Committee Researcher

4) Ms N Mooi, Committee Assistant

5) Ms A Macanda, Executive Secretary

 

1.1.3Department of International Relations and Cooperation representatives

The list of participants is attached.

1.1.4Representatives of the South African High Commissions and Embassies

The list of participants is attached.

 

1.2Background

 

The Committee conducted an unprecedented virtual oversight from the 17th to early hours of the 19th of March 2021, criss-crossing three (3) continents, ensuring accountability and service delivery by eleven (11) South Africa’s Missions abroad.The focus of the virtual oversight was on South Africa’s cash Missions and Missions with vacant state owned land parcels and properties abroad.Thistype of oversight was necessitated by travel restrictions because of the Corona virus pandemic.

 

It was a verification process necessitated by the qualified audit findings by the Auditor-General on the Department of International Relations and Cooperation (the Department) for 2018/19 and 2019/20 financial years. In 2018/19, the Department was qualified on cash and cash equivalents and on the completeness of the asset register, and in 2019/20 on unexplained receivables to the amount of R188 million. There was also a finding on Fruitless and Wasteful expenditure, caused by the upkeep of vacant state-owned land parcels and properties in various Missions abroad.The virtual oversight covered South African Missions in Teheran, Iran; Luanda, Angola; Khartoum, Sudan; Juba, South Sudan;Havana, Cuba; Brasilia, Sao Paolo, Brazil; Windhoek, Walvis Bay, Namibia; Mbabane, Eswatini; Blantyre, Malawi; Zurich, Switzerland; Funchal, Portugal; and Paris, France.

 

Some properties, such as in Eswatini, Namibia and Brazil were earmarked for accelerated maintenance and repairs for state use in 2020/21.

 

 

1.3Methodology of the Virtual Oversight

 

Due to the travel restrictions necessitated by the COVID-19 pandemic, the Committee resolved to instead conduct virtual oversight on identified South African Missions abroad. The Committee saw this as a nascent oversight model, something Parliament could embrace. It was believed that Covid-19 has taught the world to adapt and be innovative, hence the Committee resolved that its oversight work, beyond the borders of South Africa, would not be hampered by the situation created by the pandemic.However, the Committee also took into consideration the possibility that such Missions might also be in cities that are under lockdown restrictions, with limited or no movement allowed.

 

The cash Missions were expected to have their records ready on slides for the Committee to see and discuss. All the identified Missions had their asset register ready to be presented to the Committee during the virtual oversight.

 

The identified embassies were expected to video record the vacant state-owned land parcels and properties abroad well in advance. The images were shared with the Committee in its dedicated virtual oversight meetings. The identified Missions were requested to exercise caution and abide by respective lockdown regulations in their areas of accreditation, and seek a safe and allowed opportunity to video record the vacant land parcels and properties. This was meant to minimise the exposure to the virus.

 

1.4Oversight concerns raised by the Committee on International Relations and Cooperation

 

1.4.1     State of asset management at headquarters and in Missions abroad

 

As a result of the Committee’s oversight intervention, the Department made an effort to move away from using excel as an asset tool. The Department received approval from Treasury to procure an asset management software (Nettrace). The Nettrace tool was brought into use from 01 Nov 2019 after the Department went through the migration process. Internal audit performed proactive reviews in a form of computer assisted auditing techniques (CAATs) to ensure that migration of assets from excel to Nettrace was done effectively.This is expected to assist the Department in the management of immovable assets it is due to assume custodianship on.

 

The Committee was expected to verify the effectiveness of the cleanup processes aimed at ensuring the completeness of the asset register relating to both the movable and immovable assets. It wasto further assess the state of repair and how such vacant state-owned land parcels and properties abroad are currently looked after and maintained. Then the Committee would be in a position to recommend the course of action once the Foreign Service Act 2019 comes into force. It intended to determine the necessary elements that the Department should consider when creating a built environment team responsible for the state-owned land parcels and properties abroad.

 

1.4.2     Receivables

 

It was reported that the material misstatements in cash and cash equivalents that resulted in a qualification in 2018/19, were as a result of differences between the balances as per the cash book, and the balances as reported in the annual financial statements. The root cause was the lack of proper reconciliations between the cash book and the actual bank accounts/statements. Where there were differences, no one was tasked with following up. As a result, the Department had tofollow a process management to clear the qualification matter on prior year cash and cash equivalents. The matter was dealt with after consultation with the National Treasury.

To rectify the issue in the current year, a reconciliation of the cashbook and actual bank accounts were done. Management reconciled the cashbooks to the amounts of cash and cash equivalents as recorded in the Basic Accounting Standards (BAS) reflected in the Annual financial statements for 31 March 2019.

However, rectification of the prior year challenges brought about a new problem of receivables. The unexplained differences under cash and cash equivalents and petty cash were then moved to a suspense account under “receivables” called “disallowance and damages account”. In terms of the accounting standards, this account is used to investigate transactions which are not clear to management.

The differences that could not be explained amounted to R188 million (2018/19: R140million) which resulted in a material misstatement of the disallowance account under “receivables”, as it could not be verified. Management has now committed to conduct investigation on the unexplained difference and perform regular reconciliations in order to prevent similar issues in the future.

The uncorrected misstatements for cash on hand and investment foreign that was identified in 2018/19 audit of the Department, was reclassified to current receivables –disallowance and damages. The restated and current year amount in disallowance and damages could not be substantiated by supporting audit evidence.

 

The Committee intended to assess the situation of cash books in cash missions and the reconciliation processes of cash accounts and petty cash within the diverse multi-currency environment.

 

1.4.3.    Record keeping

 

This was one of the identified challenges of the Department and missions. There wasno daily reconciliation of transactions, to unpack receivables and payables. The audit outcome had proven that,specially cash missions, did not keep proper records on cash transactionsinformation on daily basis. Such transactions were not reconciled on time and important information needed to unpack the financial statements was often missing. It has instead been categorised as receivables and put under a suspense account.

 

The Committee intended to verify this practice that obtained in cash Missions. The Committee aimed to check the available banking and cash transactions.It also sought to understand the challenges experienced by these Missions, and determine what would assist the Missions and the Department to address record-keeping challenges.

 

1.4.4     Fruitless and wasteful expenditure

 

The Department incurred fruitless and wasteful expenditure of R1, 6 million in the reporting year. This was due to expenditure incurred for the upkeep of unoccupied state-owned land parcels and properties abroad, where plans to put the land and properties to better use were abandoned. There was also reported cancellation of services, such as cancellation of flight tickets and prior planned functions.

 

The Committee was further concerned that the situation has also created a number of fruitless and wasteful expenditure trends in the affected embassies. This has been because the affected South African Missions abroad have to continue paying rates as in water and electricity; engage temporary or full time security guards in some areas to guard the empty premises; and engage cleaning services on a regular basis, to keep the interior and exterior of the empty land parcels and properties in good state; in accordance with the by-laws of the cities they are located in.

 

The Department’s international property portfolio is reported to consist of approximately 127 state owned properties and in excess of 1000 rented properties[1]. It was reported that presently, the Department spends about R575 million per year on leases[2] in countries where it does not own properties. The Department has developed a property acquisition strategy, namely the private-public partnerships (PPPs) for the accelerated acquisition of state-owned accommodation via alternative funding mechanisms such as finance lease arrangements.

 

In response to the Committee’s recommendations, the Department’s new property management strategy was approved in August 2017[3] to provide for a mixture of rental and ownership. The strategy was meant for the purposes of the New York project, which has also failed. To reduce the cost of rental properties, the Department was in the process of drafting a plan to own properties in missions for office and residential accommodation. Accordingly, and for piloting purposes, the Department was in the process of purchasing a property in New York to house the country’s mission office and residence in the United States.

 

Since those that are vacant, still have to be maintained and security provided, the audit finding would linger on. As a result, the Committee has been calling for the recruitmentof people with relevant skills in the built environment, who would be responsible for the development of a comprehensive property management strategyfor the Department. Due to the large number of vacant properties and land parcels, the Committee is of the view that it might take a long time to address this issue when the Department takes over. The Committee is of the view that the Department should be ready to assume the full custodianship responsibility.  As a result, the Committee sought to see some of these properties on a video coverage, in order to determine the state of these state-owned land parcels and properties abroad to understand the extent of the challenge.

 

1.5Mandate of the Department of International Relations and Cooperation

 

The mandate of the Department has expanded due to global demands and the country’s role within that space. The Department is reported to be operating in a dynamic environment that encapsulates varying legislative and monetary regimes, which in turn, impact on its foreign policy operations. South Africa maintains diplomatic relations with countries and organisations through 125 missions in 106 countries abroad, and through the accreditation of more than 160 countries and organisations resident in South Africa[4].

 

The South African diplomatic and consular missions abroad are charged with implementing South Africa’s foreign policy to enhance its international profile, and serve as strategic mechanisms for the achievement of national interest. As widely argued by foreign policy analysts, a successful foreign policy can only be measured by how well domestic priorities are met through the country’s bilateral and multilateral involvement and engagement.

 

The Department is responsible for developing and maintaining bilateral political and economic partnerships in the various regions of the world. This is usually pursued through structured bilateral mechanisms such as bi-national commissions (BNCs), joint national commissions (JNCs) or joint commissions (JTs). These bilateral mechanisms remain important vehicles for cooperation and promoting South Africa’s national priorities as reflected in policy documents such as the National Development Plan (NDP). Through bilateral relations, the priority needs of Africa and the South are also pursued, and most importantly, these relations exist for the promotion of South Africa’s trade, investment and tourism potential.

 

1.6Mandate of the Portfolio Committee on International Relations and Cooperation

 

In terms of sections 55 and 92 of the Constitution of the Republic of South Africa 1996, the Committee is mandated to oversee and ensure accountability in the formulation and conduct of the South Africa’s international relations policy. Consequently, the Committee conducts oversight on the activities of the Department, including other activities carried by the Department and South Africa’s missions abroad; its missions abroad on; policies, legislation, financial spending patterns, administrative issues, and hold the Department accountable for its operations and functions. including other activities carried by the Department and South Africa’s missions abroad.

 

1.7Structure of the Report

 

This report serves to outline the virtual engagements of the Committee with 11 South African Missions abroad. The draft report covers the introduction which gives the background for the virtual oversight visit.  It also depicts the different constitutional mandates of the Committee and the Department which influenced the undertaking of the verification virtualoversight visit. The objectives of the virtual oversight visits are elaborated; and there is also a part on the conducting of the virtual inspection in loco in the identified 11 Missions for categories of cash management, asset register and vacant state-owned land parcels and properties abroad. There is a part for thematic issues discussed with the Missions; findings by the Committee and proposed recommendations to the National Assembly.

 

2Objectives for the virtual oversight

 

The Auditor-General’s report of 2019/20 financial year depicts that the audit outcome on the performance of the Department had remained unchanged compared to the prior year. The Department received a qualified audit opinion.

 

The Committee conducted oversight on the basis of the following:

 

2.1        To ensure that proper reconciliations are done, and proper records are kept of cash transactions.The cash Missions abroad contributed to the negative audit outcomes in 2019/20. Challenges with handling cash accounts and petty cash were identified. The unexplained differences under cash and cash equivalents and petty cash were then moved to a suspense account under “receivables”. The differences that could not be explained amounted to R188 million. This necessitated the Committee to virtually visit cash Missions.

2.2        To assess the status of state-owned properties abroad, establish their level of dilapidation, in order to determine the state of readiness by the Department to assume custodianship of state-owned land parcels and properties abroad, when the Foreign Service Act 2019 comes into force.

2.3        To assess the completeness of the asset register of movable assets. Through the process, the Committee would ensure that it is up to date, with codes, and the movable assets can indeed be verified in a Nettrace system.

 

3Key questions for the oversight

The South African Missions were asked to respond to the following themed oversight questions:

 

1. What circumstances led to reasons for the Mission to not operate a cheque account?
2. Who (position) is responsible for running the budget of the Mission, assisting the head of Mission?
3. Do those responsible for running the financial affairs of the Mission have the requisite experience for basic accounting practices?
4. Is the Mission aware of the Auditor General’s audit outcome for 2019/20 on receivables?
5. Did this Mission contribute to the AG’s findings in 2019/20 on receivables?
6. How often is reconciliation of the cashbook and actual bank accounts?
7. Doesthe mission experience unexplained differences under cash and cash equivalents and petty cash? How is this difference recorded, (in a suspense account under “receivables” called “disallowance and damages account)?
8. Explain how the mission maintains an updated record of all cash transactions.
9. Was the Mission able to send monthly reconciliations on time in during this financial year?
10. Does the Mission have a daily reconciliation of transactions, to unpack receivables and payables, if any? Such an example be put on the screen for the Committee to see.
11. Are there secure mechanisms to keep the cash for the Mission’s operations?
12. How complete is the Mission’s Asset register, is the Mission using Nettrace? Is it for both movable and immovable assets?
13. Does the Mission perform a monthly reconciliations of fixed asset register to the accounting system (BAS) to clean up the asset register?
14. Missions were asked to show the current storeroom of the Mission on screen.
15. Assess and verify the completeness of the asset register on both movable and immovable assets in the identified Missions;
16. Assess and verify that renovation projects are running in Windhoek, to salvage state-owned vacant properties abroad;
17. Assess the state of state-owned properties abroad, to determine the course of action needed when the Department assumes the custodianship of state-owned properties abroad;
18. Assess the completeness of asset register of tangible assets in identified Missions.
19. Observe some of these properties on a video recording, in order to determine the state of these properties to understand the extent of the challenge.

4Property portfolio of the Department

 

4.1Current status of land and property portfolio of the Department

 

The Department manages a portfolio of domestic and international properties. Expenditures incurred in the domestic portfolio include: unitary payments for the public-private partnership for the head office building; rental and maintenance costs for three state protocol lounges at the OR Tambo, Cape Town and King Shaka international airports; the costs of two diplomatic guesthouses; and the accommodation costs of United Nations agencies, the Pan African Parliament and the APRM and NEPAD secretariats.

 

All state owned properties are maintained annually from operational funds allocated to individual missions. The day-to-day property maintenance continues to be executed by missions and monitored by Head Office with specific key performance areas at both levels.

 

4.2The obtaining situation on the ground relating to state-owned vacant land parcels and properties

 

The Department has reported having 14 land parcels in the following countries:

New Delhi (India), Juba (South Sudan), Riyadh (Saudi Arabia), Kigali (Rwanda), Dakar (Senegal), Bamako (Mali), Mbabane, (Swaziland) and Gaborone (Botswana).

 

The Department furthermore reported owning vacant/unused offices and residences in the following countries:

-two in Blantyre (Malawi);

 -four in Walvis Bay and five in Windhoek (Namibia);

 -one in Banjul (the Gambia);

 -one in Sao Paulo and two in Brasilia (Brazil);

 -two in Bonn (Germany);

 -one in Zurich (Switzerland);

- one in Funchal (Portugal) and

 -one parking bay in Paris (France).

 

In this regard, the Department pointed out that it continued to engage with Public Works on the disposal of these properties whilst performing basic maintenance, security and cleaning services. Two properties, that is in Blantyre and in Windhoek are being rented out, while others remain unoccupied. Rates such as water and electricity connections, security, maintenance and cleaning services are undertaken by the Missions for all the properties.

 

Regarding unoccupied properties, the following reasons were advanced by the Department: The Government has downsized its diplomatic presence and also closed offices in Walvis Bay, Blantyre, Banjul, and in Funchal. The Department has also moved its offices from Bonn to Berlin and from Zurich to Bern. In the case of Brasilia and Sao Paolo; due to security considerations, the areas where the properties are situated have deteriorated and were no longer suitable as official residences for diplomats.

 

5Meeting with the South African Mission Teheran, Iran on 17 March 2021

 

Ambassador Vika Khumalo, introduced his team and gave a brief introduction of the location of the mission in Iran. He further gave an overview of the property and the state of its condition. He highlighted maintenance issues and said maintenance cost were high and the maintenance budget the mission receives was not sufficient.

 

Video footage of the property was shown. The Official Residence had visible cracks, and the basement had damp and damage on the floor. The Mission reported still having a challenge of locating the whereabouts of the title deed of the property since being donated to South Africa in 1978, by the former Shah of Iran.Both the chancery and the Official Residence were not secured, as there were no diplomatic security guards at the main entrances.There were foreign exchange challenges in Iran as a result of economic sanctions. The banks were not conducting business with foreign currency because of the restrictions; operating costs of the mission and all transactions have to be paid in cash.There were security upgrade recommendations which were made by relevant security agents of government, but the Department had not yet implemented the same.

 

The Mission is a cash and a hardship mission, due to the unavailability of most goods and services due to economic sanctions imposed on Iran. The Mission did not have a main bankaccount; it used cash through the generation of vouchers which helped the mission keep track of its cash. The Mission kept a registry where all receipts and withdrawals are recorded. In terms of the Mission’s cash management system, no one person had sole accessto the cashbox, and the Mission did not keep petty cash. Members were shown how the cash box looked like, and what procedure is followed when cash is issued.

 

The Corporate Services Manager is responsible for the assets, accounts and related matters. Challenges were noted regarding the asset register, there were assets which appeared on the register, but were not on the floor. This was explained to be due to a possibility of the code sticker having fallen off.The excel system was still being used to register assets. The Mission had recommended that unusable movable assets be disposed of, with no response as yet from the Department.

 

5.1Committee discussions

 

It was noted that, since 1978, the Official residence had no title deed as proof that it belonged to the South African government. It was asked what challenges emerged and how long the Department had been made aware of the non-availability of the title deed, and steps taken to date, to locate the title deed. The property was in need of repairs and maintenance, it also posed a health hazard due to the visible damp on the walls and basement. It was said the Committee has been saying, as long as the Department did not have a property management strategy that is implementable, the problems regarding state-owned properties would persist.

 

Clarity was further sought on how much money the Department gave the mission each month and how much the mission’s monthly expenditure was. Clarity was further sought around the cash box and who has the authority to sign off when cash is being taken out and how the mission reconciles after salaries and rent has been paid.

 

Clarity was sought on the process of vetting Locally Recruited Personnel(LRP’s) before bringing them on board. It was noted that it was really sad that after 40 years, South Africa still did not have a title deed. Clarity was sought around the issue of security and asked why there was no diplomatic security for the mission, the nature of challenges around getting security for the mission.

 

Clarity was further sought on the mission’s total allocated budget.It was asked why the mission still used excel for asset registry and not Net-trace system.The Department informed the Committee that all Missions would migrate to Net-trace. It was further asked about the total number of accountants the mission had. The Department was asked to explain the accounting system was in place for cash-on-cash missions.

 

It was noted that in 2015 the Committee visited Iran, and the issue of the title deed was discussed, it was 2021, and there was still no title deed. It was asked whether any steps were taken to acquire the title deed and whether the Department has assisted the Mission.

 

It was said the conditions of the property is unacceptable and is a health hazard. The Department was asked to present plans on how they would fix the damages.

 

Clarity was sought if the mission had a risk strategy to mitigate against discrepancies that might occur during reconciliations and whether the strategy had been approved by the Department. Clarity was further sought if the mission is one of the missions that were flagged by the Auditor-General as having non-receivables as receivables.It was further asked whether the Mission was aware of the Foreign Service Act 2019 and its very important provisions aimed at improving service delivery by the Department and Missions abroad.

 

5.2Responses by the Mission

 

Ambassador Khumalo responded thathe was not aware of the Foreign Service Act. He elaborated that the property was donated to South Africa by the then Shah of Iran, after the 1979 Iranian revolution. He said there were no records of attempts to get a title deed between 1979 till 2000. He said his predecessor started the process to acquire a title but unfortunately was unsuccessful. The process was restarted, and for the past two years have not been easy, however, the title deed would be received in the next two months. The property is however registered in South Africa’s name. He said despite maintenance plans in place, the allocated funds were not sufficient.

 

Ambassador Khumalo said the area where the property is has developed into a commercial area, heightening the need for security around the property. The mission has been trying to get security as the area around the mission has changed from residential to commercial and this has become a problem. A need has been identified for the presence of diplomatic guards at the entrance. He said access is another problem, and sometimes it’s difficult to exit the mission, because it would be blocked by cars. The Ministry of Foreign Affairs of Iran was approached about diplomatic guards. It undertook to provide diplomatic security on a reciprocal basis, that is, provided South Africa provides diplomatic security for their own Official Residence in Pretoria. In the meantime, the embassy is left with no security at the entrance. The Department does not provide security at the residence of the Ambassador of Iran in Pretoria, and hence they have also since withdrawn security at the chancery.

 

The Mission said there were 7 transferred diplomats to the mission and there were 12 Locally Recruited Personnel, who among other things, provide translation services. It was said all audit reports of the mission has been clean and that shows the cash management of the mission was in good hands. It was said funds were received on a quarterly and not monthly basis from the Department, after all salaries and other expenditures have been paid the rest of the cash would be put in the cash box and kept in a safe, the cash in the box mainly consist of dollars. It was said Net-trace is used by the mission as a verification method and assets are captured on both excel and Net-trace. The total budget for the mission is USD1 345 235 million, consisting of USD784 634 for compensation of employees and USD560 601 for goods and services.

 

The Committee resolved that the Department should urgently, within seven days, address the issue of reciprocal treatment regarding the provision of diplomatic security to the embassy. The issue of the title deed was regarded as crucial and that all efforts be made to access it. The embassy had hopes that perhaps they would access the title deed within the next two months.

 

6Meeting with the South African Mission Luanda, Angola, on 17 March 2021

 

Ambassador Ephraim Monareng introduced his team, saying there were 32 officers, comprising 12 transferred officials and 20 Locally Recruited Personnel (LRPs) stationed at the Angolan Mission. The Mission in Luanda has a vacant state-owned property (2000m2), which has a title deed awarded in 1973. The property was the Official Residence and has been vacant since 2008. Since then, the Head of Mission is accommodated in a rented place. The Chancery is in a rented place, and the transferred staff also live in rented properties. The head of mission then, had to vacate the premises due to lack of maintenance on the property. The property is in an advanced state of dilapidation, much as it is situated in a diplomatic enclave with the embassies of Brazil and Russia. The swimming pool is a health hazard, as it was last used 10 years ago. The Mission has employed a gardener for cleaning the very dirty and abandoned surroundings of the property. The ambassador stated that the Mission has on several times, advocated for acquisition of property as opposed to renting, as the latter was very costly. Currently, the Mission pays about R15 million annually on rentals.

 

In 2016, the Mission had also submitted a proposal for the renovation of the vacant state owned property, however, the Department had ordered that all the available capital budget be diverted to finance the New York pilot project. The Chief Director: Property Management visited on a tour in 2018 to assess the status of the vacant property, however, no action has been taken to date. A video recording of the vacant property was shown, a very big site with a huge but derelict state-owned property. The surroundings were very dirty, shrubs and trees grown all around. Inside the building, the standard built-in furnishings have been vandalised.

 

In terms of cash management, Ambassador Monareng explained that the Mission has a bank account, through which they receive all their funds on a monthly basis. Most of the Mission’s major commitments are paid through bank transfers, for control matters all cash and transfers are signed off by two signatures. The accountant counts cash on a daily basis to reconcile and confirm balances, in a very elaborate routine which ensures that every transaction is recorded and accounted for. Each office has a strong door and security guards remain outside the premises.

 

The asset register of the Mission was at 87% complete. The rented properties for transferred officials come furnished, and there are barcodes on assets, making them traceable.

 

6.1Committee discussions

 

It was said the state of the vacant state-owned propertywas really bad and was a bad reflection not only the Department, but on South Africa.It was observed that there was a pattern of neglect on state-owned properties in Missions situated in Africa, and it was questioned whether the same standards of safe and secure accommodation applied for those in Africa.

 

Clarity was sought on the Department’s plans with the properties in Angola. It was said the state of these properties was unacceptable, no human being should live in such conditions. It was further wondered why such a huge building would be left since 2008 to deteriorate, instead the Mission was paying R15 million per year for rentals. It was said if that was the face of South Africa out there, it was embarrassing and nothing but despair.

 

In terms of cash management, it was noted that with dedication, cash transactions could be managed as it was demonstrated by the Mission in Angola. The Mission was thus commended for maintaining balanced books without the use of technology.

 

The Acting Director General was tasked to submit a full report on the circumstances that led to the state-owned property being vacant since 2008, and left to rot. The Committee further said as long as the Department had no property management strategy, and has no property management unit, which would be responsible for all properties in the implementation of the Foreign Service Act, this will be a recurring nightmare. The Acting DG expressed her commitment to develop a report exploring what could be done to improve infrastructure in South Africa Missions abroad.

 

6.2Responses by the Mission

 

Ambassador Monareng said the budget for maintenance is not sufficient and the Mission has been in discussions with head office on revamping the place, COVID-19 and the reprioritisation of funds meant this was put on hold. The Mission has recommended renovations to the existing property, but money was diverted to New York. The building has been vacant since 2008. He agreed that Missions in Africa should be prioritised in line with South Africa’s foreign policy. The Mission was using Nettrace, and all assets were accounted for electronically. The Mission has an electronic account, but use cash to buy bottled drinking water.

 

7Meeting with the South African Mission, Khartoum, Sudan on 17 March 2021

 

Ambassador Cassandra Mbuyane-Mokone, DIRCO, said she recently arrived in Khartoum and has not yet had a chance to present her credentials to the President of Sudan. As head of mission, she introduced all diplomats stationed at the Mission. The Ambassador gave an overview of the current political climate in Sudan and also on COVID-19 regulations in Sudan. A presentation was given on the cash management of the Mission, for some time the Mission did not have a bank account because the banking system collapsed in Sudan as the country was under sanctions. The Mission collects cash from other Missions, and this is signed off by the accountants of all Missions involved. The last part of the presentation focused on the asset registry of the Mission. An overview was given of the property.

 

7.1Committee discussions

 

It was said that the presentation was not complete, most of the information requested by the Committee was not included in the presentation.

The Committee resolved that the mission present the following day.

 

7.2Responses by the Mission

 

Ambassador Mbuyane-Mokone said there are supporting documents which was uploaded into the system. She said the property the Mission is currently on is rented and was under the impression that photographs and videos were only for properties owned by the state.

 

8Meeting with the South African Mission, Juba, South Sudan on 17 March 2021

 

Ambassador Gordon Yekelo introduced his team stationed in Juba, that there were nine positions for transferred officials, however, at the time there were six transferred and eight Locally Recruited Personnel (LRPs). The Mission is in a rented property, with a monthly rental of R30 000. There is a prime land, which was standing vacant, despite it having been donated to the Government of South Africa in 2009. The abandoned land has since been occupied by illegal occupants due to the opening created by parts of the perimeter wall having collapsed on one side. Due to security concerns, the Mission had to relocate the Chancery a few times to a safer neighbourhood. In the Mission’s view, there was a need to rebuild the wall and build a state-owned property for the Chancery.

 

Since 2009, the Mission was in a rented property, which they had to leave in 2018, for a more secure environment. The Mission has signed a five-year lease, which expires on 31 May 2023. It was appealing that the Department should consider rebuilding the damaged parameter wall and construct a chancery on the available land would be cost effective.Photographs were shown to the Committee of the vacant land and its illegal occupants.

 

With regard to cash management, the mission reported having three bank accounts. Cash is withdrawn from these accounts by issuing a cheque and a letter signed by two signatories to the bank which would reflect the amount to be withdrawn. When returning to the office the money would be counted in the presence of the accountant, third secretary and the corporate services manager. The money would then be placed in a safe in the corporate services manager’s office. A further overview was given on how cash is dispensed at the Mission. An overview was also given on the asset registry, and the Mission was using Nettrace and excel in some instances.

 

8.1Committee discussions

 

It was said that the situation with the squatters on the vacant land was worrisome and presented a challenge to the Department and the Mission. Abandoning the donated land was seen as an embarrassment, and regarded as against the core valuesof the nation. South Sudan being a fairly new country, it was felt it would be difficult trying to get illegal occupantsfrom the land.

 

It was noted that what was shown by the Mission is an embarrassment, and it had surpassed everything the Committee had seen so far. The Acting DG was asked to explain why the land has been left in such a state after it was donated to South Africa by the South Sudan government. The Department was further asked to elaborate on development plans regarding the land; furthermore, the Acting DG wasasked how long South Africa has rented property in South Sudan and the cost of the renting.  Clarity was further sought from the Acting CFO on the number of templates used when handling cash.

 

8.2Responses by the Mission

 

Ambassador Yekelo responded, the land was donated to South Africa on a basis of reciprocity, with an expectation that South Africa would also donate land to South Sudan in Pretoria. South Sudan is currently in discussion with the Department on the matter. The Department had no development plan in place for the vacant land in Juba. He said other factors impact this, South Sudan is a fragile state and there were a number of internal conflicts. The Department has had to move its chancery a couple of times because of this instability.

 

The Mission is currently on a five-year lease which was approved by the Department, and the area was a bit more stable and safer, but expensive. The ambassador said the vacant land given to South Africa is quite big and a chancery and staff accommodation could be built there. The Mission would start to engage with the Department and start developing a plan. He said the squatters on the land should be the concern of the South Sudan government and security forces. The Mission could build a wall to stop people from entering the land and the Mission is prepared to do this if the Department availed the budget allocation for it. There was an incident of money that was stolen, as a sense of duty the then corporate service manager didn’t know what to do and decided to replace the money with his own. The Department investigated the case, and the culprit was caught, and the corporate service manager was repaid.

 

Ms Hlengiwe Bhengu, said there were four templates utilised when dealing with cash management. There is a cash book receipts which is used when money is received from head office. This was an electronic process which would immediately create a voucher after the cash has been documented on the receipt book. The voucher would be the second template. The cash register would be the third template which is used to allocate funds received. The fourth template would be the cash count certificate which must be completed every month, after which,there must be a correlation of the details in the cash register. She said cash must be counted on a daily basis.

 

Ms Losi answered that she did not have details on the land donation, but there was a reciprocal agreement between South Africa and South Sudan for the exchange of land between the two countries, so each country could build a chancery on these respective lands. South Sudan was donated land in Sunnyside, Pretoria and that is where their Embassy would be based. She said she planned to have a meeting with finance branch and the Department’s property management unit to develop a plan for the vacant land in Juba.

 

9Meeting with the South African Mission, Havana, Cuba on 17 March 2021

 

Ambassador ThaningaShope-Linney introduced her team of diplomats stationed in Havana. She said no foreign embassy in Cuba owns property and this was because of the country’s laws, private ownership of property is limited, so South Africa does not own the properties it’s currently occupying. She indicated that they occupied three properties, and the repairs were the responsibility of the Cuban government. However, due to the unilateral economic sanctions against Cuba, it was not easy to get renovation materials.

 

Video Footage and Photographs were shown of the properties in Havana, especially the movable assets, which were the responsibility of the Department. The appliances and utensils were very old, and also outdated, which probably would not even have parts to replace the broken/damaged appliances. The washing machine was very small and old fashioned, also shown were old sofas, fridge and worn-out beds.

 

The Ambassador said the Mission in Havana is not necessarily a cash mission, a presentation was given on the cash management of the Mission and details were discussed about the cash box and asset registry.

 

9.1Committee discussions

 

It was understood that Cuba is under severe sanctions and this might add to the state of the properties, but the Department still has a responsibility to make sure, Missions have adequate resources. The Department should try and prioritise addressing the dire situation highlighted by the Mission.

 

It was said the Mission in Cuba should have been top-notch as it is an important partner of South Africa. Cuba has been looking after South Africa since the days of Apartheid, but South Africa is neglecting Cuba. There was no excuse because Cuba has proper five stars’ hotels and good residential arears. The fact that the Department couldn’t even provide proper pots to the Mission was an embarrassment. There was a need for the Department to do a thorough assessment on movable assets.

 

It was said the issue of a property management unit has been raised by the Committee and the glove approach of the Department in its treatment of Missions would not work. Clarity was sought on when last the Department visited Havana and where the officials stayed for the duration of their visit. It was also said that the huge global footprint was overwhelming to the Department. Transferred officials were living in horrible conditions, whereas charity ought to begin at home. It was not right that people were subjected to hardships, it showed the Department cared less for its people and it was highly unacceptable. The need for a property management unit, separate from the Finance branch, and capacitated with personnel with built environment skills was again emphasised.

 

9.2Responses by the Mission

 

Ambassador Shope-Linneyresponded that sanctions made it hard to source for goods and services including material for maintenance. She said Cuban government does help Missions with maintenance issues, but this takes long, and COVID-19 also affected this. She highlighted that it was expensive in Cuba because of sanctions and the Mission was faced with a drastically reduced maintenance budget baseline, which she had been advocating that it be reviewed, as it was not sufficient. The Mission even has to entertain outside to avoid guests seeing the status of appliances and utensils being used.

 

The Ambassador pleaded that Cuba should be treated as having unique circumstances. They were not able to get three quotes as required; items were not easily available; appliances were not available; they would have to buy from neighbouring countries due to the sanctions restrictions. Mostly, Cuba is politically important to South Africa, and a strategic partner, the Mission should not be treated the same way as other missions which were not faced with these challenges.

 

The Acting DG reassured the Committee that she would do her best to prioritise the special needs of the Mission in Havana. She undertook to devise a project plan together with DDGs responsible with timelines, to urgently address the unique challenges for the Havana Mission. The Acting CFO explained that the procurement policy did not allow to procure in South Africa, however, the Department has to find a way to replace the old utensils being used in the Mission in Havana.

The comment by the Acting DG on ‘sanitising reports’ was regarded distasteful.

 

10Meeting with the South African Mission, Brasilia, Sao Paolo, Brazil on 18 March 2021

 

Ambassador VusiMavimbela, gave a brief introduction to the presentation highlighting the COVID-19 situation in Brazil and the associated restrictions. He introduced the members of the Mission who were in attendance. He noted that a number of the properties could not be shown due to the restrictions and security measures. He focused on three vacant properties, which have been empty since 2006. Some renovation works were undertaken in 2007, but not completed.

Video footage of the properties were shown.

 

The presentation outlined the status of the four properties in Brasilia, specifically the valuation, condition and vacancy thereof. The maintenance challenges were outlined and the Mission’s proposal regarding how to move forward with the properties.

 

Consulate General TinyikoKumalo presented a status report on the properties located in Sao Paolo.Video footage of the apartments were shown as well as photographs of the Chancery in Sao Paolo.Details of the properties and the condition was presented. The Mission’s view on ownership of the apartment was presented. He had recommended that the properties should not be disposed of, except for the apartment as it was fast deteriorating and the Mission was struggling to get a tenant. The apartment was been vacant since 2006-2018. A properly run asset register was presented.

 

10.1Committee discussions

 

It was stated that having heard the shocking stories relating to the pandemic and how Brazil had handled the situation in the beginning stages, it was good that the team was alive and safe. It was only hoped that team continued to keep themselves and their families safe amidst the pandemic.With regards to the building the Committee had been shown, that was in a very dilapidated state, clarity was sought on how long it had been vacant, and the reasons thereto, and whether there were plans to either refurbish or demolish and rebuild the house. With reference to the property in Sao Paolo that was said to have depreciated in value, it was asked what brought about the depreciation, and the plans that the Department had regarding that building. It was further asked whether they were using Nettrace for their assets, and how much was being paid for rented properties per annum.

 

A question was asked on what the Department’s plan was for the dilapidated property. The extensive damage and the illegal occupation was noted. It was noted that there were other consulates in the Chancery building and the banks nearby – however there were many floors in the building. Clarity was sought regarding other business conducted in the building, besides that of the other consulates.

 

There was concern that as long as the Department did not get its act together, when it came to the property management strategy, they would get to each and every country and find property had depreciated to the extent that no one would even be interested in renting the property.It was noted that the one building, in particular, was being vandalised and the foundation was moving from its original position, like ‘withcraft’ and fixed appliances were being removed. This was likely because there was no security. There were two buildings that were not in use and another one that was in use that they ‘sometimes maintained by cleaning it’.

 

It was noted that the Department did not know how many buildings they had that were being used and whether it was valuable to still have them. The buildings had been standing there since the 1970s, there needed to be a proper strategy in place.

 

With reference to the property that had been vacant since 2006, it was noted that it had been vacant for 15 years. Clarity was sought on what the Department has done regarding the proposals relating to that property, if it responded and its recommendations on the way forward. It was resolved that the Department provide a cost benefit analysis regarding options to own, rent or dispose of them, in cases where the properties had not been occupied for a long period.It was noted that the property development section was eitherincompetentorineffectiveor did not exist. It was said the Department should have desktop technology currently where all of the issues relating to each property was documented, it should be at their fingertips.

 

It was noted that the Committee was well aware of what happened with the New York Project. It was therefore important that the Department avails a report showing how much was being paid on rentals in each missions to ensure transparency.

 

It was noted that there were properties that were not being utilised to their full potential. In terms of the rentals that were being spent on some of the properties, as seen the day before, made one wonder why the Department decided to pilot the New York project. It was better to own the property than rent in cases where there was extended terms of tenure. It was suggested that the Department needed to appraise the Committee at a later stage as to what the property development sector of the Department was actually doing.

 

10.2Responses by the Mission

 

The Acting DG agreed that after the parliamentary recess, the Department needed to come and present its strategy. She agreed with the Committee that something needed to be done in that regard. She was told that there was an approved strategy and they were looking at what happened, why they were in this situation.

 

Ambassador Mavimbela responded that the property had been vacant in Brasilia since 2006. There were properties that they were rented out, they had eight leases in Brasilia alone. The total amount paid toward the leases was 82 000 Brazilian Real per month, which was R21 700 per month.

 

In terms of the plan for the vacant property and where they were currently, there were hard choices that needed to be made. The Chancery also needed urgent renovation. Recently, Headquarters was able to allocate money to renovate the Official Residence. There were two properties that needed urgent renovation, he realised the state of finances in the Department and government as a whole was not good. He suggested they prioritise the Chancery because it was the face of the Mission and the face of South Africa in Brazil. He suggested they consider disposing of the other property if the funds could not be made available in the short term. It was a painful thing to do, it was like selling ‘family silver’ when one did not have much silver. Of course, it was preferable to refurbish the property if the funds were available.

 

From what he had been briefed by his colleagues, having recently arrived there, there was a long history. This information could be provided to the Committee. There were quotations from different companies, as to the cost of renovations. All that information was at Headquarters and that was where the decision needed to come from.

 

The Supply Chain Manager in Brazil provided a history of the vacant property. The property was vacant since 2006. There was an incident where there was burglary in the house, the occupants of the house moved out as a result. It was a stand-alone house. There were security personnel who were responsible for safeguarding the property. According to the records, the security company was removed, subsequent to the occupants moving, due to financial constraints. The removal of the security company and the fact that the property was vacant attracted criminals and homeless people who slept inside the house. According to the records, there was some effort over the years to renovate the property, inviting various companies to do so.

 

The decision in terms of a way forward, as to whether they would renovate or dispose had not been made known to the Mission. The year before the Mission had invited companies to present, itheld a briefing session, but the companies that came, indicated that the terms of reference that were issued to them were not necessarily talking to the current condition of the house as the house was getting damaged. The Mission had written to Head Office to amend the terms of reference, so that it spoke to the current condition of the property. This would allow them to get companies that would be able to do a proper job. The Mission was waiting for a decision in this regard.

 

11Meeting with the South African Mission, Windhoek, Walvis Bay, -Namibia on 18 March 2021

 

Ambassador WMP Whitehead, Ambassador to Namibia, introduced the various members stationed at the High Commission. The presentation was then given about the 20 State owned properties in Namibia. 16 Of the properties were located in Windhoek and four of the properties were located in Walvis Bay. Ten of the properties in Windhoek and three of the properties in Walvis Bay were vacant. The presentation focused on the vacant properties and the condition thereof.

 

It was reported that the Portfolio Committee visited the Mission in 2018 and made recommendations. However, only the perimeter wall of the official residence was painted, other areas of extreme despair were still not attended to. This was despite that fact that the Chief Director: Property Management paid a visitfollowing the Committee’s oversight, and the Mission having made its own recommendations including renovating some properties for commercial use. In Windhoek, the Mission could accommodate all transferred officials, but the challenge is the level of dilapidation that the state-owned properties were currently in.Some of the transferred officials are in rented accommodation.

 

The piping infrastructure in properties in Namibia was regarded as archaic and in need of total revamp and replacement. The neighbours and the Mayor of Windhoek had expressed concern with the devaluation of properties around rundown the state-owned properties. These houses were built in the 70s, by the apartheid government, they were handed over to the democratic government in 1994. They have been standing vacant for more than 20 years. The Mission would engage services of two gardeners and cleaners for the vacant properties.Video footage was shown relating to the vacant properties that were in the worst condition.

 

The property situated at Richter street was a sight for sore eyes, a sad story of how the property has been left to deteriorate.The property’s overall condition is deplorable, as it was completely vandalised. It had no doors nor windows, all the finishing fixtures were missing; there was graffiti on the walls; it was evident that at some point the whole structure was set on fire. It had no fencing nor a wall around it, as a result, it was used as a thoroughfare to pass on to other parts of the area. The Committeewas informed that a temporary tenant was said to have vandalised the property when asked to vacate the same when it was earmarked for disposal. The walls and the overall structure of the property were still solid.

 

The Mission was complying with Nettrace asset register, and were at 82% level in completeness of the asset register.

 

11.1Committee discussions

 

The Committee requested that the Acting DG brief the Committee on the Department’s plans to attend to the situation. There were a number of vacant properties and there were staff that were renting. The Committee were shown some of the properties that were deemed to be the worst. There was another property shown, apparently by mistake which the Ambassador skipped when looking for a specific video. In his own view, that kind of property was conducive for living in. They may not have seen all the properties that were vacant but there were those that did not seem to be too bad for human use, it was not clear why were they not used.

 

It was noted that the report stated that the properties were in a poor state of repair and required renovation. Clarity was sought whether there was a report to headquarters, and if there has been any response, and whether there was any development plan aimed at addressing the rot on the properties.

 

It was a concern that some of the properties were reported used by illegal occupants, and a question was asked whether there was no security around those properties.

The Departmentwas urged to explore the legal consequences of using some of the properties for commercial purposes. It was also a concern that state-owned properties could be left to that level decay and neglect, tarnishing the image of the country in neighbouring countries. The extent of dilapidation of the viewed property was regarded beyond embarrassment. A full report was requested, on when and why these properties were abandoned, and a development plan to address these challenges. It was again stressed that it was not acceptable that the Mission was expected to effectively function without the necessary tools of trade, such as laptops, tablets and scanners.

 

It was stated that the Committee had pushed very hard for the Foreign Service Bill to be passed as an act. There was an urgency for the Act to come into force, as a Committee really needed to push for the implementation of that Act. The Committee also needed to push for the establishment of the Property Management Unit within the Department, separate from the Finance branch, and get a strategy on how to deal with state-owned properties.

 

It was highlighted that as much as they were dealing with vacant state-owned properties, there was a human element. South African personnel who were transferred to those Missions were exploited, they were living under squalor conditions because of those properties, the tools of trade they needed were not provided nor the conducive environment that they needed to operate in. The Committee needed to factor in those issues so as not to be seen as only concerned about assets. The most important asset was human assets and they were not looked after. The Committee had a responsibility to make sure that they addressed those issues. This was exploitation and ill-treatment of the highest order of their own human assets, The Committee could not allow it to carry on. The main culprit of the atrocities was the Department itself.

 

11.2Responses by the Mission

 

Ambassador Whitehead emphasised the need for humane treatment. He highlighted the inefficiency of the processes around the properties, specifically the administrative processes. It was felt like the personnel responsible for property management were slow or not doing what they are supposed to do, to assist missions faced with these challenges of vacant state-owned properties.Also highlighted were issues around the maintenance of the lift and lengthy process of going out to tender, how the prices changed during the tender period.

The Acting DG said the property management unit has been asked for a complete assessment of all state-owned vacant and occupied properties abroad.

 

12Meeting with the South African Mission, Mbabane, Eswatini on 18 March 2021

 

His Excellency Advocate Thokozile Simpamla, introduced the members of the Mission. The CorporateServices Manager made the presentation which focused on two state-owned properties and the conditions thereof. Six vacant properties were presented, five of which were located in residential areas and one in a commercial area, which was suggested as potentially suitable for the Chancery. Their asset register was then briefly outlined.

Video footage and photographs of the properties were shown.

 

12.1Committee discussions

 

It was noted that the size of the state-owned vacant land in Eswatini just showed lack of planning. The Department was asked to develop the Committee a proper property management strategy frompeople qualified in the built environment. It was further noted that, since the Committee came into Office, the minutes reflected how the Committee had requested over and over again to be presented with a property management strategy. A property management strategy that stated how many properties there were, and payment on leases. It did not seem as if the Department was prepared to give that information. It was said it could only mean one thing, someone was benefitting from rentals from the State’s funds and the current situation suited them very well.

 

It was noted that the properties and vacant land was bought by the Apartheid regime. When they took over government no one knew what was to be done with that land. The status quo remained, nothing had been changed meaning they were looking after assets of the Apartheid regime which did not benefit the current and future regime. There was a need for a project development plan related to the urban property, and thatthe Mission needed those two houses.

 

Clarity was sought how much the mission was paying for rentals as opposed to using their own properties. It was asked whether a cost assessment had been done in terms of renovating the houses. They were left vacant since 2012, a period of nine years, a way forward should be considered whether to renovate and rebuild. It was recommended a deadline be proposed. It was observed there was a need for a property management team made up of qualified people in the built environment. It was further pointed out that a date was set, after it was suggested the Committee set a due date that the Department could present the property management team to it.

 

The Committee needed a report on the option of renting versus abandoning the properties versus the cost of building. It needed a report that explored all of the options in relation to the properties in Eswatini.Specific information was needed to be provided about the properties, their location, costs, type of tenure and a development plan projection over four years.

 

It was stated that the crisis was that even the Mission itself did not know how much was spent on rentals.

 

It was stated that at least the Mission had mentioned the name of the official that had not been helpful, the Chief Director: Property Management, Ms Bernice Africa. It was observed that the Ambassador was being whispered to – where everything she said was being told to her by the person sitting next to her, it was clear the Ambassador did not know what was going on.

 

12.2Responses by the Mission

 

The Acting DG stated that they would do everything in their power to resolve the issues. Yes, the Committee was correct that the Department did not know the magnitude of all of what was happening. She still believed that they should be able to resolve the issues. There was nothing that could not be resolved.

 

The Corporate Services Manager stated that the rent for the Chancery was R1 590 000 per annum and it would have an escalation of five percent from the following year. The rentals for the transferred officials per month was R11 000 for the first secretaries, the Counsellors paid R13 000. The High Commissioner paid R25 000 per month.

 

Adv Thokozile Simpamla stated that that was what they paid. They could fix the house; it was a house that they would not want to get rid of. It just required refurbishment. If money was made available, they could develop a plan to revitalise the house so that it was habitable. Advocate Simpamla stated they had gotten estimates of the cost of renovating the house, but they had not received this back from the Chief Director: Property Management, to whom they had sent the request. If they could allocate funds for that, that would be excellent. She would like to see that by the end of her four-year term, having gotten there at the beginning of January 2021.In terms of the Chancery, there was about one hectare of land that could be identified to house a chancery. There was another plot that was vacant which was about another hectare, three or four houses for officials could be built on that property so that they maximised on the building property as opposed to leasing.

 

13Meeting with the South African Mission, Blantyre, Malawi on 18 March 2021

 

Mr AC Sigcau, High Commissioner to the Republic of Malawi, introduced the members of his team based in Lilongwe.The presentation elaborated that the two properties in Blantyre were 50 years old. The Chancery was in Lilongwe and thereforethe properties were about 3 hours’ drive away, in Blantyre, which made it very difficult to maintain. The properties were last valued in 2000. They were both rented out to a sowing company, which used one as a workshop and the other a storeroom. Cash oversight relating to the properties was also presented.

 

Videos of the respective properties were shown.It was stated that the properties were generally not in a bad condition, with the exception of one property where there was a problem relating to the roof. Some of the properties required some painting but nothing more than that.

 

The asset register was then presented, providing an overview of the 1506 assets and challenges relating to Nettrace the ICT programme used, specifically in the context of the poor broadband in Malawi.

 

13.1Committee discussions

 

Clarity was sough whether the Mission had made submissions to the Department on disposal options. It was asked that if the properties were rented out, whether the money was paid to the Department or the Mission.

 

It was noted that the Ambassador had said there was a challenge in moving from a rental to state owned Chancery, more clarity was needed thereto.

 

The Acting DG said it was the responsibility of the missions to dispose of property, but the High Commissioner said that they had submitted recommendations to Head Office so that they could get approval. The fact that the Acting DG needed to check who it was that received it, was even more alarming. The Department should have a separate property management unit division, as opposed to currently being within the finance division, –they should know who was receiving those reports on evaluation of state-owned properties abroad.

 

13.2Responses by the Mission

 

Ambassador Sigcau responded that the money was not paid to the Mission; it was paid to National Treasury through the Embassy. In terms of the ICT system -the problem was that they had a big issue with the network in Malawi which really slowed things down. Head Office had not allowed for things to be done manually so this was a big problem– they were on 3G, where South Africa was waiting on 5G.

 

In terms of the videos of the house in Lilongwe, they did have the videos but they were on a flash disc, they could share them with the Committee after the presentation. They had submitted recommendations in 2016 relating to disposal and the previous year for Blantyre.

 

The Acting DG stated that she had seen a trend with respect to the missions that had presented. At least the High Commissioner of Malawi was one of the few who had made recent submissions to Head Office. Generally, the Mission identified assets that ought to be disposed of and then there was a committee that sat, after that sitting, approval was given from Head Office. This was something she would follow up with the High Commissioner, as to who exactly they had dealt with at Head Office. They would then give a response.

 

14Meeting with the South African Mission Bonn, Germany on 18 March 2021

 

Germany could not present due to travel restrictions between districts due to pandemic related lockdowns.

 

15Meeting with the South African Mission, Zurich, Switzerland on 18 March 2021

 

AmbassadorDS Mthembi-Mahanyele introduced the members of the Mission who were based in Bern. The Mission was moved from Zurich to Bern, and the property was left unoccupied since then.The presentation focused on a vacant state-owned property in Zumikon, a municipality in the district of Meilen in the canton of Zurich, Switzerland. The state owned residential property was built in 1970 on the parcel of Cadaster in Zumikon. No major renovations have been performed since that time. Moreover, the building has been unoccupied for 20 years. The Mission took over the ownership of the property since 1 January 1996.The door frames and window frames need varnishing.The bathrooms were still in good condition, however they were very outdated. The plumbing might not be as functional as before because no one was staying there.The garden also required cleaning at least two times a month which costs approximately CHF2000(+-R32000). The Mission has no option but to abide by the Swiss standard when it came to cleanliness and environment.

 

It was reported that the Chief Director: Property Management undertook an assessment visit in 2018, however, since thenthere has been no response with respect to renovations needed, and refreshing of the lawn in the garden. She was reported in possession of the report on the assessment of the vacant property.

 

The Mission’s view wasthatthe property has become high maintenance though the return on investment was not showing. The mission suggested that it would be better for the property to be sold.

 

15.1Committee discussions

 

It was stated that the name of the Chief Director: Property Management kept popping up. The Committee asked whether she was in the virtual oversight meeting, as the Head of the Property unit. It was considered that she would be in a better position to provide answers to the Committee. It looked like she was the one who visited those Missions, ‘with a certain mission,’ and the Committee would want to know what ‘that mission’ was. It was askedwhy the property had been vacated for 20 years, and whether itwas no longer serving a purpose; – and the condition it was in when it was vacated.

 

The Acting DG stated that the Chief Director: Property Management was not present; she had been at the first meeting. She was on ‘special’ sick-leave since 17 March 2021. According to the Doctors Certificate provided, she would be coming back on 6 April 2021.

 

In the absence of the Chief Director, clarity was sought on who was the next in line. It was said that one of the problems with some of the sections in the Department, was the issue of having a one-person show. There should be no situation where the Committee would stop because an official was not around.

 

It was stated thatthe Committee was being informed now that a certain individual in the Department, in the form of the Chief Director: Property Management, received reports and nothing got done. She visited Missions, and nothing got done. It was not the first, or second time that her name was associated with non-delivery on recommendations made by various Missions in relation to properties. The same name came up when the Committee was in New York, she was also not available when needed to respond to pertinent issues relating to her work.

 

The Committee would like to receive the report in possession of the Chief Director: Property Management, and would require her to answer before the Committee on her role with regard to the report.

 

15.2Responses by the Mission

 

The Acting DG stated that the Chief Director: Property Management was not present; she had been at the first meeting. She was on ‘special’ sick-leave since 17 March 2021. According to the Doctors Certificate provided, she would be coming back on 6 April 2021.

 

Ambassador Mthembi-Mahanyele stated that it would be difficult to respond adequately to the question of why the property was vacated, because it was a historical reason. She apologised for that. In terms of their consular services, they shared them between Geneva and Bern.

 

The Acting CFO stated that her understanding was that the property in Zurich was for the Consulate General who was a director from Branch Finance. When the Consulate was opened in Bern, they closed the one in Zurich, and therefore that property became vacant.

 

The Acting CFOfurther stated that the Chief Director: Property Management had two directors that reported to her, one was responsible for state-owned properties and facilities management and the other was responsible for leased properties. She further explained that both directors were in the meeting and Ms Pat Roji had been appointed to act in the place of the Chief Director: Property Management from that day forward in her absence.

 

The Acting Chief Director: Property Management, responded to the question regarding the vacant property in Zurich, reiterating what was previously said regarding the Consulate moving to Bern. She stated that it was one of the properties that was earmarked for disposal.

 

She further responded that she did know of the report – she was then undergoing load-shedding and could not provide the details of the report. She was responsible for leasing specifically, so she did not readily know the details of that report. They would make the report available to the Committee the following day.

 

16Meeting with the South African Mission, Funchal, Portugal on 19 march 2021

 

Ambassador Ms MJ Gaoretelelwe to Portugal allowed her team to introduce themselves. The property is in Funchal city in Madeira island, Portugal, and was acquired in 1982. The Mission pays 146 Euros a month for its maintenance. It was situated in a prime area, though it was not easy for the Mission to visit the property frequently. The property was dilapidated and needed painting and renovation. The Chief Director: Property Management undertook an assessment visit to Funchal in 2018, and the Mission had recommended that the vacant property be renovated and rented out as a commercial asset. There has been no response nor action taken by the Department since then.

 

Photographs of the property were shown highlighting the structural damage to the property.

 

16.1Committee discussions

 

It was noted the presentation said that a report was sent to Headquarters in 2018 and that the Mission was still waiting for a response from Headquarters. It was asked whether there has been any response from the Department since the evaluation mission of 2018.It was further asked who the Chief Director: Property Management was, that came to the Embassy in 2018.

It was noted with great concern that the matters of maintenance and disposal of vacant properties were not addressed in all the Missions having such properties. It was observed that the Chief Director: Property Management, undertakes evaluation visits to Missions across the globe, but there has been stagnation in terms of implementation of property related recommendations from the affected Missions. This was gravely unacceptable, and she was seen as the most ‘incompetent’ property management personnel in the history of the democratic South Africa, who did not lose her sleep from the appalling conditions of the vacant state-owned properties abroad. In other missions, she was reported to have had clandestine meetings with service providers, apparently to benefit from the low hanging fruits, being these dilapidated state-owned properties.

 

The Acting DG needed to take note that the issues of maintenance and disposal of vacant immovable assets were not being taken care of within the Department. It was believed that, as indicated, the Chief Director who had visited the Embassy in 2018, was Ms Bernice Africa. The Committee could safely conclude that the state of the country’s properties abroad was not good.

In conclusion, the Committee stated that it would leave no stone unturned, regarding what was happening in the Department with regard to vacant state-owned properties abroad. It would make a follow-up regarding the commitments made by the Acting DG from the virtual oversight. The Committee hoped that by the time the Committee meets with the Department again, some of the issues would be resolved.

 

There was a common denominator across all the missions, the properties of the country had collapsed abroad. It was not clear what the property management unit was doing in the Department. Regarding the Chief Director: Property Management, the 6 April 2021 would come. It has been observed that she was always on leave when there was oversight, it was not new. This was not the last oversight, the Committee would continue with its work and visit all the missions. At least the Committee was able to ascertain what the Auditor General had said regarding the Department paying money toward unoccupied buildings all over the world, contributing to the increasing fruitless and wasteful expenditure.

 

16.2Responses by the Mission

 

Ambassador Gaoretelelwe stated that she did not think she had an adequate response to those questions, suffice to say that the Chief Director visited in 2018, and a site visit of the facility was undertaken. The Mission wrote a submission in 2017. Their recommendations were the same, that the property needed to be assessed by a professional so as to decide whether to renovate it and sell it, as a better commodity, or to rent it or sell it as it was. They paid basic garden services because they were avoiding heavy penalties from the Municipality of Funchal city. They were well aware of the economic situation in the country.

 

It was statedby the acting Chief Director: Property Management that as far as she could remember, the Chief Director: Property Management applied for the Mission visit, she was on a Mission visit to assess the state of the properties abroad.

 

17Meeting with the South African Mission, Paris, France (parking bay) on 18 March 2021

 

Ambassador Tebogo Seokolo introduced the officials of the Mission who were attending the meeting remotely due to the 6pm curfew instituted in Paris.

South Africa was reported owning two immovable assets in Paris, a war memorial museum and a parking bay. The Department of Public Works was reported responsible for the upkeep of the Delville Wood War Memorial Museum, situated in Longueval, France.This place is where the battalions of the South Africans Brigade came under withering German artillery fire, in their attempt to capture and defend the wood in July 1916. Both the wood and the South African battalions alongside the British troops, were almost completely destroyed.

 

After the war, the wood was purchased from the French owner of the land in 1920 by the South African government. The ground was left more or less as it was at the end of the war, and was replanted with young trees by the South African Department of Forestry.In 1984, a museum to the South African Forces was built in Delville Wood. This place, the site of the first major action on the Western Front by the South African Brigade, was considered a fitting place to commemorate all South African soldiers who fought and died during the First World War. The grounds of the wood were not cleared, and for many hundreds of soldiers, this wood remains their final resting place.

 

The Ambassador then gave specific attention to the only vacant immovable asset, being a single parking bay in an apartment building, acquired in December 1982. The parking bay was evaluated in 2012 at 42 000 Euros and they were currently paying 422,88 Euros per year toward it, as well as a further 209 Euros for rates and taxes. The Chief Director: Property Management was also part of the team that undertook the exercise.

 

Video footage of the location of the single parking bay in the basement of an apartment building was shown. It was a single parking bay, with a roller-up door.

 

17.1Committee discussions

 

Clarity was sought on how much the single parking bay had cost to purchase, and how far it was from the Mission.

 

It was stated that what was seen was an example of an inheritance from the racist Apartheid National Party, which was not changed when the current government took over power. The parking bay was bought in 1982 and an analysis was never done by that Department to see whether it was still necessary. It was beyond comprehension that the Missionwas keeping structures that were a legacy of the Apartheid racist regime that they did not utilise nor need, but they were still paying money into.

 

It was stated that paying R13 000 per annum for a parking bay was fruitless and wasteful expenditure. It was concerning that the Committee was needed to raise it as a concern. The Department should have identified this long before then.

 

It was not clear why the asset was valued at 42 000 Euros in 2012, and no action has been taken since then. The asset was not being used as it was too far from their place of work or residency, and it remained a redundant asset. It only made sense that it should be disposed of, and fortunately the Foreign Service Act 2019 provides for such eventuality. None of the officials could use it because it was too far from their place of work or residency.

 

If the Mission was to calculate an average of R13 000 per annum, over the last ten years, the Department had squandered an accumulative amount of R130 000. Seemingly, no one cared about spending that money. It was cautioned that officials should have a sense of accountability in their respective jobs.

 

It was unacceptable that from 2012 to 2021 nobody took action, having assessed thatthe parking bay was not in demand.

 

The Committee noted with shock that the Ambassador was not aware that there was now a Foreign Service Act which dealt with the issue around the responsibilities of the Department.

The Acting DG was asked to establish, in a report, why the single parking bay was not disposed of.

 

17.2Responses by the Mission

 

The Acting DG stated that it made sense that the asset would need to be disposed of at its current value, that would be an engagement they would have with the Mission.

 

Ambassador Seokolo stated that with respect to the value, they had tried to get the report regarding what was paid for the parking bay, but he was afraid they were unable to get it. The parking bay was located about 15 to 20 minutes away from the Embassy. It was in an upmarket area and therefore most of the residences were not located in that area, thus they did not use the bay. When the evaluation team of 2012 left, the understanding was that they would discuss the matter with the Department of Public Works in terms of the disposal thereof. It was beyond their scope as a Mission.

 

18.        Common findings

 

18.1      The state of decay and dilapidation of some state-owned properties abroad, has been left unattended over time, and without a follow up of resources by successive Administrations since 1994.

 

18.2      The situation has created diplomatic embarrassments, leading to representational and reputational risk to the image of the country in those places where these properties and land parcels remainvacant. This is because some of these properties and land parcels are donations made to the Government of South Africa before and after 1994.

 

18.3      The Committee is of the view that as long as the Department did not have an appropriate property management structure which will develop a strategy that is implementable, the problems regarding state-owned properties would persist.

 

18.4      Renting of properties for office and residential purposes by Missions abroad is one of the main cost-drivers on the budget of the Department.Some Missions are renting office and residential accommodation in countries where there are vacant state-owned land parcels and properties. The Committee has noted exorbitant rental costs paid for office and residential accommodation in missions with properties standing vacant for more than 20 years.The Committee has consistently recommended that the Department should look into acquiring/building own properties abroad instead of renting.

 

18.5      The Department’s international property portfolio is reported to consist of approximately 127 state owned properties and in excess of 1000 rented properties. It was reported that the Department spends about R575 million per year on leases in countries where it does not own properties.

 

18.6      The Committee has noted that many state-owned properties and land parcels stand vacant, and services such as security and cleaning still need to be provided. The Committee verified that the payment for the upkeep of vacant state-owned properties and land parcels abroad, was contributing to recurring fruitless and wasteful expenditure, as found by the Auditor-General.

 

18.7      The decay in state-owned properties and neglect of vacant land parcels abroad, has a causal link to the inappropriate organisational structure of the Department, where the Property Management function is located under the Finance branch rather than as a stand-alone specialist division, with appropriately qualified personnel in the built environment. The management of properties has not occupied the first priority in the plans of the Finance branch.As a result of the Finance Branch not focused on properties, the capital budget for renovations of some of the dilapidated properties, was inadvertently diverted to the New York Project in 2016, with no consideration to the needs of other equally demanding missions.

 

18.8      The property management strategy that was developed in 2017 was tailor-made for the public-private participation (PPP) model, and was targeted for the pilot project in New York, which has since failed. It could not be effective for the scale of vacant land parcels and state-owned properties in Missions abroad.

 

18.9      A litany of state-owned land parcels and properties, including a parking bay, were left vacant for periods varying from 5 to 20 years. These assets are located in prime areas.

 

18.10    The Committee has noted that the issue of vacant land parcels and properties abroad is a serious oversight issue relating to the Department and Missions abroad. The current Parliamentary Oversight Model has created serious oversight challenges for the Committee, as it has not allowed space for the Committees to conduct oversight abroad over the hot spots in this regard.

 

18.11    The Department needs a fit for purpose property management strategy, backed by a sound capital budget, and in-house built environment qualified personnel to manage and monitor state-owned properties abroad. The Foreign Service Act 2019, provides for the Department to assume the custodianship of state-owned properties and vacant land parcels under the responsibility of 125 Missions abroad.

 

18.12    The Chief Director: Property Management has criss-crossed the globe, to all the Missions which have vacant land parcels and state-owned properties, inspecting the scale of decay of these properties; and taking along to headquarters, reports of the highly frustrated Missions. However, there has been no evidence of responses or of following through with the recommendations aimed at rescuing the situation.It was on several occasions that her name was associated with non-delivery on recommendations made by various Missions in relation to vacant properties and land parcels.

 

18.13    Challenges were still noticed regarding the asset register for movable assets. Some movable assets were reported not on the floor much as in the register. Some Missions were still using excel for record keeping of assets instead of the electronic system of Nettrace.

 

18.14    Most Missions had devised workable systems to manage cash transactions. Those affected had to manually count and reconcile their cash books, and rely on cashboxes and safes to secure the monies.

 

18.15    The Title Deed for the Official Residence in Teheran, Iran, has not been secured since 1994 when the democratic government took over from the apartheid regime.

 

18.16    It became apparent that the state-owned properties needed to be assessed by a professional so as to decide whether to renovate, sell as a better commodity, or to rent them out or sell them as are.

 

18.17    The Corporate Services Managers were overburdened with responsibilities in the Missions relating to accounts, asset register and property management.

 

18.18    The decision to undertake a virtual oversight to identified Missions abroad is another milestone in the work of the Committee. The pandemic did not dampen the Committee’s appetite to discharge its mandate and ensure there is accountability and service delivery by the Department and identified Missions abroad. Similar virtual oversight visits would follow. Parliament could embrace the innovative approach to enhance the current Oversight Model.

 

19.        Conclusions

 

As a result of the neglect of respective mandates by both the Department and the Department of Public Works, there has been a resultant fruitless and wasteful expenditure around the upkeep of the vacant state-owned properties. A number of visits and official communication between the Missions and the Head Office in Pretoria, relating to the deteriorating rate of the properties has been noted. Nonetheless, there has been no evidence of a deliberate action to address the challenges with these properties.

 

The conditions of extreme neglect of the South African government properties abroad, are indeed a source of diplomatic embarrassment, and have caused a representational and reputational risk to the image of the country. The Department neglected its responsibility to either maintain or seek authority for disposal of unoccupied state-owned properties in identified Missions abroad.

 

In order for the Department to turn the situation around regarding the many derelict state-owned properties abroad, the property management strategy that is effective, has to be in place. The necessary human capital with relevant skills in the built environment should be a priority for the Department towards the implementation of the Foreign Service Act 2019.

 

20.        Recommendations

 

Having undertaken the virtual oversight visit to 11 South African Missions abroad, the Committeerecommends that the Minister of International Relations and Cooperationshould consider the following and report on progress within three months of adoption of this report by the National Assembly:

 

20.1      Separating the property management business unit from the Finance branch, and capacitating the new unit with people qualified in the built environment.

 

20.2      Developing a property management strategy focusing on effectively managing the huge portfolio of state-owned land parcels and properties abroad in line with the Foreign Service Act 2019.

 

20.3      Commissioning a professional to assess the state of all properties and land parcels so as to decide whether to renovate, sell as a better commodity, or to rent them out or sell them as is.

 

20.4      Developing a property management plan with a targeted budget, and timeframes for addressing the challenges presented by the vacant state-owned land parcels and properties abroad.

 

20.5      Developing a comprehensive report on number of rented properties for South African Missions abroad; how much each is paying per annum; and a turnaround strategy to curb the payment of exorbitant rental costs.

 

20.6      Acquiring property abroad as opposed to renting, for use by Missions abroad.

 

20.7      Investigating the non-delivery or non-implementation by the Chief Director: Property Management; of the recommendations from affected Missions regarding renovations or disposal of vacant state-owned land parcels or properties abroad.

 

20.8      Ensuring that all Missions use the electronic system of Nettrace for proper record keeping of assets.

 

20.9      Ensuring the implementation of bilateral reciprocal agreements relating to provision of land to build chancery for South Sudan and provision of diplomatic security for the Iranian Mission in Pretoria.

 

20.10    Ensuring that all state-owned properties and land parcels have title deeds, to guarantee exclusive ownership by the Republic. In this regard, ensure the title deed for the Official Residence in Iran is recovered.

 

20.11    Finalising the long standing processes towards the promulgation of the Foreign Service Act 2019.

 

20.12    Prioritising the special needs of the Mission in Havana and devising a project plan with timelines, to urgently address the unique challenges for the Havana Mission.

 

To the National Assembly

20.13    Recognising the dedication and innovation to find possible means to continue with oversight, including virtual oversight, to ensure service delivery to the people of South Africa.

 

20.14    Exploring the virtual oversight as a nascent oversight model which could be embraced to develop a hybrid oversight methodology workable even in the middle of a pandemic.

 

20.15    The Committee recommends that the Report on Virtual Oversight visit be passed.

 

Report to be considered.

 

 

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[1] Estimates of National Expenditure 2020

[2]Ibid

[3] Annual Performance Plan 2020/21, Department of International Relations and Cooperation

[4]Annual Performance Plan 2021/22, Department of International Relations and Cooperation