The new Minister of Tourism, Patricia de Lille, in her first appearance before the Portfolio Committee briefed it on the future of the SA Tourism-Tottenham Hotspur Football Club deal, the disbanding of the SA Tourism (SAT) board and to explain her recent decision about a three-man temporary board. The Committee asked the Minister to respond to several matters that they had learned about via the media.
Some Committee members urged the Minister to fire two of the three SA Tourism interim board members because their selection posed a "reputational risk." The selection of millionaire businessman Vincent Mntambo and former DA MP Tim Harris of Wesgro drew criticism from the Committee. Due to the unlawful sponsorship draft agreement with Tottenham Hotspur, the Minister disbanded the previous board. The deadline for the call for nominations for the permanent SAT board is 6 June 2023.
The Department of Tourism (DOT) gave a briefing on its 2023/34 Annual Performance Plan and budget. In response Committee members claimed that there is disconnect between what is written down in the plan and the actual reality on the ground. There were questions about the Tourism Equity Fund court case, the infrastructure projects, the forensic report on past projects; and DOT oversight over Development Bank of Southern Africa (DBSA) as implementing agent.
The Chairperson said that the Minister would speak about the developments at South African Tourism as they had seen from the media. The Department Annual Performance Plan would follow. She also asked the Minister to introduce her new team to the committee.
Minister of Tourism, Ms Patricia De Lille, committed to prioritizing the work of the Portfolio Committee and encouraged the Committee to contact the Department for any information they may need. The Minister has been reading and consulting with stakeholders in the industry. Last Thursday afternoon she had a meeting with the South African Township and Village Tourism Association (SATOVITO) and she is pleased with the progress they are making.
The Minister introduced her team which consisted of the Director General, four Deputy Directors General, the Acting CFO and support staff. She explained that shortly after her appointment on 6 March 2023, she met with numerous stakeholders in the industry to understand the status of South African tourism. Her presentation explained the work she had done within the Department thus far; this included the proposed Tottenham Hotspur FC sponsorship deal and matters pertaining to the SAT board.
Tottenham Hotspur FC Sponsorship Deal
On 22 March 2023 she wrote to the SAT Board chairperson, referring to the 31 January 2023 board resolution to enter into a partnership deal with the Tottenham Hotspur Football Club. She informed the chairperson that she had obtained legal advice from senior counsel that the Tottenham deal is unlawful and invalid because of the following reasons:
- It is a procurement event which does not comply with section 217 of the Constitution; Treasury Instruction three of 2021/22 in terms of the Public Finance Management (PMFA); and SA Tourism's own SCM Policy.
- The deal amounts to a sole source procurement for which the requirements have not been met; and / or it amounts to a significant partnership or “similar arrangement" with Tottenham, or it is the commencement of a significant business activity, a transaction for which my prior approval is required in terms of section 54(2) of the PFMA.
- And that there is considerable doubt whether the Tottenham deal was budgeted for as envisaged in section 53 of the PFMA. If not, expenditure on the deal would be irregular or unauthorised within the meaning of those terms in the PFMA.
She requested the SAT chairperson confirm if the deal had been formally cancelled, whether: the Board regards the deal to be a form of sole source procurement or a significant transaction and if the Tottenham deal been budgeted for in the 2022/23 budget. If not, the Board was requested to explain why the expenditure on the deal was not unauthorised or irregular within the meaning of those terms in the PFMA. She gave the Board until 29 March to respond.
Prior to her media briefing on 24 March 2023, the SAT Board chairperson wrote a preliminary response on the matter, stating that no deal has been signed and that it was merely a proposal.
In that media briefing, she advised SAT to rather stop what they are doing and scrap the proposed deal, taking into consideration the tough economic climate we find ourselves in.
The SAT Board chairperson responded in detail on 29 March 2023 that the Board would no longer proceed with the transaction nor will it seek the concomitant requisite approvals for the transaction.
On 30 March 2023, she issued a media statement that the proposed deal had been stopped.
Matters pertaining to SAT board
On 6 April, she again wrote to the SAT Board chairperson, requesting reasons why she should not dissolve the Board in terms of Section 16(3) of the Tourism Act, three of 2014.
In it, she made reference to: the conduct of the Board in the Tottenham Hotspurs football club transaction and the composition of the Board in terms of section 13 of the Tourism Act
She further referenced the contents of a letter dated 16 March 2023, received from the acting CEO of South African Tourism, wherein the acting CEO makes serious allegations against the Board and some of its members and consequently requests her to dissolve the Board.
The Board had until 18 April to respond to her letter. She have received no correspondence as to why she should not dissolve the Board. Subsequently eight Board members out of eleven including the Chairperson, resigned. This left the Board unable to quorate.
On Friday 21 April 2023, in terms of Section 16(3) of the Tourism Act and by way of a Government Gazette, she formally dissolved the Board.
At the same time, she appointed three people to oversee the Board until such time that the full Board would be appointed. The three interim members are Mr Tim Harris, Ms Kholeka Zama and Mr Zwelibanzi Mntambo. The appointment gives the interim Board full powers conferred by the Tourism Act on the Board, implicit in section 16(3)(b), which provides that the appointees may manage the affairs of the Board.
The Minister added that according to section 63 of the Act, she could dissolve the board by way of a notice in the gazette and appoint a new board in accordance with section 13. That is the process being followed by advertising for nominations to the board for the next month. If the board is dissolved, the Minister may defer the reconstitution of the board in the notice dissolving the board or by any subsequent notice in the gazette appoint one or more persons; on such conditions – as the Minister may deem necessary – to manage the affairs of the board until the appointment of the new board. While the department gazetted the dissolution of the board, three interim board members were appointed to avoid a vacuum that would result in SAT’s inability to function.
The Chairperson pointed out that releasing the advertisement on 23 April until 6 June meant that DOT is in contravention of the Act which states that an advertisement should not be put out for more than 30 days, as the advertisement would be out for a month and 13 days. She recommended that DOT looks into that to avoid being in contravention of the Act. The undertaken process to dissolve the board was welcomed as the board was incompetent and yielded no noticeable results, despite having more than 30 meetings in a period of three months. She asked for clarity on the names the Minister had gazetted because there were two gazettes that the Ministers had signed. Two different chairpersons were mentioned, which conclusion is public.
Mr A Matumba (EFF) referred to section16(3)(b) to question how the interim board was classified because the Act does not speak of an interim board, instead it states that one or more persons are appointed and on such conditions the Minister may deem necessary. There are conditions that the Minister may deem necessary to manage the affairs of the board until the appointment of the new board; what are those conditions? He asked how the interim board could have full powers of the board as confirmed by the Tourism Act. Which section gives the interim board full powers?
Mr Matumba pointed out that Mr Zwelibanzi was gazetted as the chairperson but the emailed letter to introduce the interim board members to the SAT executive management, had Mr Tim Harris noted as the chairperson. What informed that decision? He was worried how two board members were from WESGRO and Tim Harris had served under the Minister in Cape Town; he is also a politician who is highly invested in SAT. For example, last year Tim Harris wrote an email to SAT asking for funds for the World Surfing League for Graham Stapelberg. Given that he is already involved in SAT, it would be a conflict of interest for him to serve on the board. How is it that people who served in another organization are coming to serve on the board?
Ms H Ismail (DA) asked on what basis the three appointed members to manage the SAT board were appointed. Were they granted full powers and on what criteria were they appointed, were their qualifications considered and what are the specifics that were used to appoint them? Can the Committee be advised on what the serious allegations referred to by the COO at the time are and could clarity be provided on the 30 days; is this not a contravention?
Ms P Mpushe (ANC) agreed with the Chairperson about the dissolution of the board. She also welcomed the move on Tottenham Hot Spurs. The Minister stated that she had forwarded a letter to the board and had not received a response; instead eight board members resigned which left only three board members. Why did the Minister overlook the three remaining members? Were there any requirements in the letter that affected all board members or were the members expected individually to respond to the correspondence?
Ms Mpushe questioned why the presentation was seemingly silent about the Acting COO’s conduct and role in terms of section 24 and section 26(a)? She was glad to hear there was an advertisement for the appointment of the new board. The Act states clearly that the Minister should ensure that the appointments have a broad geographical representation. What led to the Minister’s decision to focus on the Western Cape instead of trying to strike a balance as suggested by the Act? What will DOT do differently to provide effective oversight over SAT given that the person appointed by the previous Minister was not appointed in accordance with the Act and was not performing his duties? Will the DG have a role to play in monitoring and overseeing the funds transfer to SAT especially considering the past experience? A SAT CFO was appointed merely to ensure that the Tottenham proposal became a success and was in line with the law on the convening of meetings to approve budgets for programmes without any paper trails or reports.
Mr M De Freitas (DA) commended the Minister for her decisions thus far which would benefit SAT. He presumed the interim board term will end when the new board is appointed. Having read the letter from Mr Themba Khumalo, then Acting SAT CEO, the style of writing and tone were inappropriate, despite the information being correct. Why were these issues not presented previously and if they were presented before the Minister’s tenure, does she know why nothing was done in advance before that? It is inappropriate to politise oneself as was done in the letter. Answers were not expected from the Minister as she is not the author of the letter in question. How is it that the board was dysfunctional; officials were not working well? Was the Minister’s predecessor unaware of these serious allegations and if they were, how was nothing said about it?
Mr De Freitas asked how the Tottenham deal reached the stage it did. This is the question the Committee has been asking in previous meetings. How did it get to a stage where people travelled overseas? If the Minister does not have an answer, the presumption is that she will investigate. There seems to be a lot of confusion about the proposal to amalgamate Brand South Africa and SAT – this does not seem right with numerous stakeholders; there may be a political tussle between the Presidency and Tourism – but is this being pursued or is it just an idea?
The Chairperson reminded the Minister about the review of service level agreements and asked if DOT would do that. There is uncertainty if DOT would be fit to do that because at some point the DOT accounting officer was absent for three months and the DDG was acting DG and there were difficulties in terms of effective oversight over SAT. There is uncertainty whether there would be desirable outcomes if responsibility for the service level agreements is put on the Tourism DG.
The Chairperson remarked that the appointment of Tim Harris and Mr Zwelibanzi borders on reputational risk and conflict of interest. Mr Zwelibanzi is in the top 30 of the country’s billionaires and the list is public. Tim Harris has been harassing the staff members of that entity, reminding them that he is the chairperson. The process followed should have been to introduce the appointed people to SAT staff for them to be able to work in unison, has this been done? The presentation should have included an update on the moratorium on the appointment of executives which has an impact on the audit findings. The audit report stated that the SAT vacancies are a hindrance to the progress and the effective implementation of SAT programmes. There are a number of vacancies at SAT – there is no CEO, COO, company secretary, marketing officer and one other. If you put a moratorium on the appointment of these executives, how will the institution function? When can the moratorium lifted? The appointment processes were about to be concluded but have been put on hold, which is problematic as DOT seems to be moving back and forth. In its oversight, the Portfolio Committee is expected to guide SAT and DOT in the work they do. Of 54 million South Africans, how were the three appointed? Why not 9 or 13? The Act provides different options and highlights that there must be geographical diversity, people living with disabilities, young people and there is no such reflection in the three that have been appointed; they are all old people.
The Minister said that she received assistance from the State Attorney and senior counsel with the interpretation of the Act. Section 16(3)(a) says that the Minister may dissolve the board by way of a notice in the gazette and then appoint a new board in terms of section 13. The process to appoint the new board was started by advertising in terms of section 13. The part in section 13 that states the board members need to represent demographics, race and gender is yet to come – the advertisement is the first step to get to that process. Section 16(3)(b) says that if the board is dissolved in terms of (a), the Minister may defer the reConstitution of the board and in the notice by which the Minister has dissolved the board or by any subsequent notice in the gazette, appoint one or more persons with such conditions that the Minister may deem necessary to manage the affairs of the board until the appointment of the new board.
The Minister explained that there are two parallel processes, one being the advertisement of the new board and the second being the Minister exercising the powers in the Act to appoint one or more persons with such conditions that the Minister may deem necessary. These actions were done to ensure that is no gap while advertising and appointing the new board. That is the legal advice received about proceeding legally. Last week Wednesday, DOT wrote to the management of SAT to introduce the new board. She and the DG would have a physical meeting with the SAT management and executive once the Acting CEO is back from New York.
On the advert being more than 30 days, there had to be a consideration of the number of holidays in April and the Act says the advertisement must be for at least 30 days, the notice must specify a period of at least 30 days for nominations to be submitted to the board.
To clarify about the different chairperson names – in the first meeting which Mr Mntambo was unable to attend due to commitments, it was proposed that Mr Tim Harris would be the chairperson. What needs to be done, which DG has already started doing, was to make corrections from Mr Mntambo to Mr Tim Harris and the DG is currently undertaking that process.
The Minister spoke about the reviewal of the SLA. SA Tourism was asked to provide a copy of the operational plan and business plan for the current financial year, which they did not have and had to be given a week to put together. The operational plan is important for the Portfolio Committee and the Minister so that they can see what has been budgeted for and what the outliers are.
Looking at the Tottenham deal and its processes, there was no clear operational plan or clarity on the R1 billion that would be spent over three years as shown in the budget. It would be interesting to provide the Committee with the operational plan and the business plan to see what exactly the plans are for the funding transferred from DOT. There is a DOT representative on the board who accounted to no one – there is no report about any feedback to DOT about what transpired on the board. When anyone goes to represent DOT, they must have a mandate from DOT.
On the oversight of the new board, the Minister plans to ensure that the DOT representative is given an agenda before attending the meeting. The DG and Minister will discuss it and will say how in terms of the Act and roles and responsibilities of SAT, the matters should be discussed. The Act is very clear the board should meet four times a year, not 37 times in 6 to 8 months. The board will keep to that arrangement of meeting four times a year and in between the board meetings, DOT will also monitor the implementation of the SAT plans. It is the duty of the DG as the accounting officer to report in terms of the PMMA, but in building these things into the SLA, key deliverables for every quarter will be included.
There is room for improvement looking at the procedures and processes followed for this appointment. It became clear that there are things wrong. For instance, the previous board started the process to appoint a CEO for a five-year term. That board made a recommendation to the then Minister for the appointment but that never happened. Instead, when the new board came in, it decided to ignore the previous board’s recommendation and start a new process. That process was only started in January 2023 when they then advertised for a month and wanted to do the shortlisting and appointment in February. There is also an acting COO, acting CFO, there are many acting positions but the Minister had to firstly study the SAT organogram to ensure that any post advertised or filled is in terms of the actual approved organogram. There is currently a lot of unhappiness amongst the staff as people would move from one position to another without following process. In filling those positions, it is the duty of the board to advertise. There are extras there that are not part of the organogram approved by the Department of Public Service ad Administration and then the adverts will all go out at the same time.
As the executive authority, there is an instruction from Cabinet that all vacant posts must be filled and to stop having acting positions running for more than a year. After ensuring the posts are in terms of the SAT organogram, the Portfolio Committee will be forwarded the advertisements that must go out. What is put in the advertisements should be what is needed in those posts. Some advertisements are written to suit specific people. She asked for two weeks to give the Committee an update on this.
The reason for the moratorium is that South African Tourism has 11 international hubs all over the world and some of the contracts have come to an end or are about to come to an end so the Minister will meet with all the hubs. She has advised them to give her an opportunity to evaluate the value add of these hubs across the world. She asked them to explain their responsibility there which is to do destination marketing – to market South Africa as a destination. When looking at destination marketing, you find that SAT, DOT, BrandSA and their entities across the world all do destination marketing. The Tourism Business Council of South Africa (TBCSA) also does destination marketing.
On the amalgamation of SAT and BrandSA, the Minister was told it was a Cabinet decision which is not true. In fact, in August 2022 the Cabinet sent that decision back and it was withdrawn. There is no official position, although the minister had a meeting with Minister Ntshavheni in the Presidency who is also looking at BrandSA and GCIS. They agreed that there is no feasibility study about the value it will add to bring the two entities together. When looking at the role of both entities, both of them are problematic and their amalgamation would only create a bigger problem.
The Minister – with Minister Ntshavheni – will do the feasibility study and costing to see how it will assist them with destination marketing. In the next six months, the two Ministers will bring a report to Cabinet.
On the Tim Harris and Wesgro question, the DG and the Minister have agreed that they need three skills: finance, governance and tourism. They have consulted widely within the tourism sector, and there are experienced people who refused to participate in board duties in efforts to protect their reputation. The people they did get to agree to serve on the board – was for a period of no more than three months, which is why they immediately advertised on the 23rd. That was the process followed. They consulted widely with the industry and those were the names that they were able to come up with. They did not focus on where people were coming from, but they looked at the three key skills they needed: finance, tourism expertise and governance.
The Minister mentioned having received a 16 March letter about serious allegations against the acting CEO. The Minister cannot investigate sexual assault allegations as this should be done by the board, as the CEO is accountable to the board. All of those allegations will remain allegations until they are tested. After writing to the board on 6 April to respond to these numerous concerns, eight of the 11 board members resigned. The three remaining board members are assumed to have also resigned because the board is not functional. The Department is bound to communicate with the board members through the chairperson who was the first person to resign. Thereafter, the company secretary made contact to find out whether they could send letters to the respective board members which they agreed to do.
The Minister noted that the DG has a role to oversee that the PMFA is followed which will be against a set criteria of what should be measured. What are the reports that the DOT representative on the SAT board must bring? In terms of spending, there will be a quarterly report about what money has been spent on. This is quite a big organization. If you look at destination marketing, every year worldwide there are 13 trade fairs: the UK, the US, Spain and other parts of the world. One started yesterday on the first of May called Arab Travel Market, the modus operandi of how people decide to go there and there is no question about what the budget is going to be, there are now procedures put in place to ensure that there is an application for people to travel and they don’t appoint themselves to travel. The Department of Tourism agrees with sending 6 SMMEs to the travel market so they can get exposure. When travelling to Durban in a week or two from now, 120 SMMEs will be sponsored to expose their goods and products there. Considering that SAT had 11 opportunities to market, when going there, what will be the outcome and value of going there because it is an investment? The trip that has just been approved costs over R700 000 for SMMEs for five people from SAT and support staff. This is one example of the importance of an operational plan so that investments made from destination marketing can result in returns.
The current board will end with the appointment of the full board. The composition of the board in terms of section 13 will be followed, it clearly states what the Minister must do and how it should be done; the Act will be followed accordingly. The Minister has no opinion about the letter from the CEO being inappropriate as the matter must be dealt with by the board, if necessary. There are no specific enquiries into SAT, the focus is on the systems that are in place so that it can function; existing assistance is being amended. The Minister separates herself because her role is to appoint the new board; the role and function of the board is clearly spelt out in the Act. It is the board that will deal with executive management issues, with oversight from the Minister and the Portfolio Committee but there needs to be clarity on how the Minister does not interfere too much in SAT.
The Minister said that the letter from the Acting CEO is appropriate and procedurally correct because the Minister appoints the board. When problems arise, the CEO has the responsibility to report to the Minister and the Minister has to act. It was also brought to the Committee’s attention that the letter was addressed to the previous Minister and she did not act on it. The letter was not politicized because sexual harassment is not politicization. It is a fact that there is an occurrence that happened at SAT and this was correctly brought to the attention of the previous Minister.
Minister De Lille asked if she should proceed with looking at the allegations contained in the letter from the CEO. The allegations were there for the attention of the Minister and some of them have been acted upon, firstly through the dissolution of the board, secondly through demanding answers which resulted in the chair’s resignation at that time. Some of the things raised in the letter from the Acting CEO resolved themselves and there is little to be done.
It would be incorrect to say the previous board decided to ignore the recommendations on the CEO appointment which they found there. On 29 November 2022, it was reported to the Portfolio Committee that the previous Minister did not sign off the recommendations of the previous board on the CEO appointment; hence a new process had to be started over in January. What would be the reasons for the reversal of a process which had no discrepancies because the appointment process for the SAT executives were done by an external entity and that entity would have been above board? The advertisement process was done in 30 days in January and shortlisting was in February. The process should be allowed to unfold for the CEO because reversing the process will have a bad reflection on the incumbent and delay the progress as guided by the Auditor General submission to the Portfolio Committee. There cannot be a moratorium on a process that is already conclusive, if the shortlist was done in February then SAT which was undertaking this process should be allowed to conclude and look into the other vacancies.
Follow up discussion
The Chairperson advised the Minister to consider the shortcomings that have been raised about the two people who have been appointed to the SAT interim board. Both Mr Tim Harris and Mr Mntambo should be replaced because of the conflict of interest, bordering on reputational risk. is It is unacceptable to have Mr Mntambo reporting evidence that shows there are emails traced back to January when Tim Harris was demanding approval on deals. They must be replaced with immediate effect. There is recycling of the SAT board as Mr Mntambo was once a member of the board. What is the rationale behind this recycling and the appointment of a billionaire to SAT? Were there no other qualified people to run it because that entity requires stability and a suitable mix of skills, experience and persons in sufficient numbers for it to properly function. It is imperative that the process to appoint a new board commences urgently. The advertisement is said to be there but it has not been seen thus far. It would be prudent to be specific about the newspapers the advert was in, when and nominations will close. The SAT organogram is available, unless the Minister plans to review the SAT organogram. The organogram should not hold processes back. The National Tourism Information and Monitoring System (NTIMS) needs to be established by the Minister as stated by the Act, which has not been done since SAT was founded.
Mr H April (ANC) raised concern about gender inequality on the board. The process seems like a pick-and-choose and failure to remove the two, specifically Tim Harris and Zwelibanzi Mntambo. There must be additions to rectify the current imbalance on the board. As a response to Mr Freitas note about being part of an opposition party, the Portfolio Committee serves as one, and there should be no differentiation between opposition and majority party. Additionally, the two people in question were appointed in haste.
Mr De Freitas asked if the Minister had confirmed that the proposal to amalgamate of BrandSA and SA did not get to Cabinet level. Does this mean there will be an eventual amalgamation? Is there going to be one place where all marketing will take place?
Mr Matumba reiterated that the Act is there so that the Committee can do an oversight and there must be clear accountability. Section 16(3)(b) says to appoint one or more persons with such conditions as the Minister may deem necessary. There must be conditions when you appoint a board to manage affairs until the new board is appointed. There must be terms and conditions in place that the Minister would have put in place. What are these conditions that the Minister deemed necessary? After stating they had advertised to look for people, how is it that people who both have a direct link with the Minister were appointed? Additionally, there is a similar problem to Tottenham Hotspur where one of the appointees was pushing SAT to fund the World Surfing League, which is exactly something which should be avoided. The previous Minister kept hiding behind lawyers which is a spiraling route to take. Issuing money on a quarterly basis will be unfair, rather given SAT the money and do an oversight – otherwise the DG will avoid oversight. However, giving money quarterly will affect SAT’s ability to budget properly. Also there is no youth there. Yyou cannot talk about tourism which includes the fourth industrial revolution without including the youth. It is counterproductive to talk about tourism to a person like Mr Zwelibanzi Mntambo who does business in mining. There is no relationship between him and tourism.
Ms Mpushe said she is disappointed if there will be no merger between BrandSA and SAT as the merger was geared toward both their roles in marketing SA tourism. However, she looks forward to the engagement between the Minister and Presidency so that there can be enlightenment about the merger. It is high time that a CEO is appointed for stability purposes. With the conflict of interest with the three appointed people, why are they given full powers if the Act requisites are not applied? Given the experience the Committee had with the previous board and previous Minister, the conditions mentioned should allow DOT executive to have full powers. Giving full powers is concerning where the Act has not been attended to. Both Tim Harris and Kholeka Zama are linked to Wesgro which indicates a conflict of interest. On the disqualification of board members, the Minister should find a clause in the Act that would rid her of these people.
Ms Ismail asked for clarity on there being no operational or business plans. When will these be available to the Committee so they can do an efficient oversight? The quarterly reports going forward is a smart move so there can be a baseline to have effective oversight. On the hubs being evaluated, can the Committee get a full report back on the hub evaluations – what they are doing and what essential service or asset do they offer?
Ms L Makhubela-Mashele (ANC) added input on the three-member board. She noted the Minister said the DG will write to correct the gazette which states Mntambo as chairperson. The gazetted chair is Mr Mntambo. This appointment of the two chairs should be looked into because one correspondence says Tim Harris and the other says Mr Mntambo. On appointing the CEO, the CEO should be appointed by a full board as having a three-member board prejudices the candidate. If the advert ends in June, the process begins in July and then there should be a fully fledged SAT board which looks into the appointment of the CEO. The many acting positions within SAT have destabilized the institution. Perhaps not allowing the process to be handled by a three-member board, the process will be beyond reproach. Granted that the Act allows the Minister to appoint more than one person, perhaps the Portfolio Committee should agree to add two more names, to have a board with at least five people, to avoid the current concerns being bring brought to the attention of the Minister, who found SAT in an unstable position, with numerous challenges stemming from the instability of the executive. The previous executive brought a lot of instability to the institution. Adding two more people would increase the number of people available to advise the board chairperson where necessary for the next three or four months while a permanent board is appointed.
Ms Mpushe mentioned that the merger of SAT and BrandSA was initiated by the previous Minister. The current Minister can follow up on what has transpired. She disagreed about an agency being allowed to make appointments. The Department should try to prevent falling into the trap of outsourcing appointments. The permanent appointments should be done as soon as possible. There is dissatisfaction about the two people who have been appointed in the interim by the Minister.
Mr April said that full powers should not be given to the interim board. What is the rush to grant full powers?
The Minister noted that the Chairperson had asked if the NTIMS must still be established. DOT had informed her that the National Tourism Information and Monitoring System was gazetted on 21 February 2020 in terms of section 6(1) of the Tourism Act of 2014 and it was Notice 102 of 2020. The purpose of these regulations is to regulate collection, recording, management, analysis and dissemination of information and data on tourism in order to monitor developments in tourism.
In response to the Chairperson asking if it had been established, the Minister said it was gazetted so it must have been established by the previous Minister. However, she would check on it although she had received this information from DOT.
The Chairperson mentioned that this was then half-information because the Act clearly states that the Minister must establish that. On 7 February, there was no response from DOT, yet today there is a response.
The Minister replied that she has learnt that DOT has a very checkered history and there seems to have been many unresolved problems from the past. A suggestion would be to have a list of past unresolved Committee concerns so they can be dealt and which have prevented DOT moving forward. The Constitution ensures separation of powers between the judiciary, parliament and the executive and the roles and functions are clearly defined. If an Act gives the executive that authority, the executive has no choice but to exercise that authority. The Minister asked to not be compared to her predecessors as she has more than 15 years of experience. She respects the wishes of the Committee. She will consider their concerns but not take instructions. She looks forward to working with the Committee, without character assassination.
On appointing more people, the Minister can consider this as the Act allows it. However, there must be an agreement that the task and power of the Minister is in the Act to decide who. If there is no agreement on that and two members are appointed only for the Committee to not be happy with that, it will not serve any purpose. Four members of the previous board resigned on a Friday and on the Saturday, four new board members were appointed. The Committee was rightfully unhappy as there was a disturbance in the composition of the board in terms of gender, race and representation.
All inputs from the Committee will be considered. The moratorium on executive appointments was placed to familiarize herself with the processes followed because the board has to get the concurrence of the Minister. If the Minister does not concur with an appointment, she has the right to decline, hence she wants to familiarize herself with the existing appointments. The Committee currently has more information from SAT than she does. She believes that the information used is credible, which is why she listens to it and considers it. There are less than 14 months left in the current administration, she still has the task to ensure that the SAT 2022/23 Annual Report is presented. The Medium Term Strategic Framework and Annual Performance Plan have less than 14 months to be implemented and those five year targets of the Sixth Administration should be prioritized. The SLA agreement with SAT is very important because it will be used to measure implementation.
The Ministers added that the advertisement was in the Sunday Times and the Committee Chairperson was sent a copy of the advert. The three people appointed to the SAT interim board were vetted by SSA.
The Chairperson summarized what the Minister had been saying.
Department of Tourism 2023/24 Annual Performance Plan (APP)
Mr Victor Tharage, DOT Director-General, presented on priorities and risks:
- Inability to meet the Tourism B-BBEE Sector Code targets to facilitate radical economic transformation within the tourism sector
- Inadequate infrastructure planning and implementation
- Inability to create enabling legislative and regulatory environment for tourism development
- Key markets access to South Africa constrained due to limited aviation and visa capacity especially following COVID-19 Pandemic (not within their control)
- Poor brand reputation and potential visitors’ perceptions about safety of Destination South Africa.
- Negative effect of public health emergencies due to global outbreaks, extreme weather events, national disasters and climate change
- Decline in supply side products and services following COVID-19
- Delays in the implementation of the Tourism Transformation Fund
- Ineffective contract management
- Monopoly and collusive practices by suppliers
- Inadequate project management
- Inadequate alignment between the Department's strategic priorities and SAT.
Economic Reconstruction and Recovery Plan (ERRP)
The tourism sector has a contribution to make on these ERRP priorities: Infrastructure; Mass public employment; Skills development; Green economy interventions; Gender equality; Inclusion of women and youth.
The Chairperson reminded the DG to be explicit if previous targets were achieved as he presents and what their achievements are in each programme. There seems to be a lot of complaints, and not enough deliverables.
Mr Tharage replied that details on the targets will be provided and they cautiously speak as to prior performance because they are currently being audited and want to avoid misleading Parliament.
The Chairperson pointed out that the agenda said DOT would present the annual performance plan (APP). The APP performance indicators has been presented before which is why deliverables are important for the presentation.
Mr April was concerned that the DG stated they would “cautiously present” as this was not the first time the APP was presented to the Portfolio Committee. What is the purpose of the meeting? Should the presentation not provide feedback on the DOT deliverables and the plans??
The DG explained “cautiously” saying DOT would be sharing information about the 2022/23 financial year that has not been audited, making the information unreliable. Deliverables and what has been achieved in 2022/23 is not part of the APP because of the unaudited information.
The Minister asked if the Committee would like a presentation of the previous financial year performance, a report could be presented if it were noted that the information is unaudited.
Ms S Maneli (ANC) stated that presenting unaudited information would be a waste of the Committee’s time.
The Chairperson made an example of Programme 2 which stated the facilitation of initiatives for regional integration. Has that been achieved? Does answering such questions need an audit?
Ms Makhubela shared that the structure of the presentation was confusing.
The Chairperson said that the presentation was on the programmes which were undertaken and implemented by DOT. The presentation must represent the successfully implemented projects. The programme input must have an output. Will DOT wait for audited outcomes for each programme? This report is from the first to the fourth quarter; each quarter has an implementation plan. DOT should be able to report the progress made, even without an audit.
Mr Tharage explained that the 2022/23 information would be submitted to the AG for auditing on 31 May. DOT would return to Parliament in August to report on the 2022/23 performance and that would be audited and thus legitimate information.
Mr Matumba said DOT should still trust and report on unaudited performance. For example, the report shows a budgeted R662 000 for Platfontein Lodge. The Committee wants an update on the money put into that and what was achieved. This does not require an audit and will delay oversight about future budgeting. Another example is Manyane Lodge with a R90 000 000 and R37 000 000 has already been spent there for nothing. An update can be given on what the money was spent on without an audit. The same report submitted to the auditor can be presented to the Committee so they can do their own oversight. There is no law prohibiting that an unaudited report is shared.
DOT APP continued
Ms Rhulani Ngwenya, DDG: Corporate Management, presented Programme 1: Administration performance indicators and targets for 2023/24.
Ms Aneme Malan, DDG: Tourism Research, Policy and International Relations, presented Programme 2: Tourism Research, Policy and International Relations.
Ms Shamilla Chettier, DDG: Destination Development, presented Programme 3: Destination Development.
Ms Mmaditonki Setwaba, DDG: Tourism Sector Support Services, presented Programme 4: Tourism Sector Support Services.
Mr Mohith Maharaj, Acting CFO, presented an overview of the 2023/24budget.
The Chairperson complimented the presentation but had a couple of concerns. In light of the BRICS Summit and the warrant of arrest for President Putin - which will likely not materialize - what has DOT done to showcase the country? What are the hubs abroad doing to ensure that the country is showcased to all BRICS countries before they arrive?
The report refers to the Grading Council which is misplaced and supposed to account to the Minister of Tourism, not SAT. It must account to and be established by the Minister of Tourism. There are officials that need to be appointed by the Minister after the composition of the grading council. The chairperson has no information about there being a chief quality assurer or assurance officer of the council, as the Committee has limited access to it. Who is this grading council? How did they emerge? Who established them? The tourism complaints officer is something that has never been heard of. There needs to be consideration of these things as they are in the Act.
What is reflected in the presentation is contrary to what is happening on the ground. Destination development on the ground is not there. In Limpopo and North West, the allocated money has not been used on the ground. The project either needs to be reviewed or assigned to someone else who will successfully run the programme to benefit the intended beneficiaries. There are blank columns in the presentation, why is this? If the 30 day target is not met, this needs to be accounted for.
In the last APP, there were unmet targets such as the training of youth in the tourism hospitality programme which was not implemented in six provinces, women based enterprise programmes were never undertaken, the upliftment of women in tourism in rural areas was not undertaken and the transformation goals were never achieved. Why do these programmes keep reappearing on the APP, despite never being achieved? Is it for the purpose of compliance? All Destination Development projects that have collapsed are dumped at DBSA. The Portfolio Committee has decided to summon DBSA to account for all the projects dumped on its doorstep by DOT. All these infrastructure projects do not physically exist. How will the presented projects be achievable if they were not achieved in the previous APP? The term of the previous tourism policy review panel ended in 2022. When will a new tourism policy review panel be created? COVID has passed and should no longer be used as an excuse. There must be accountability and responsibility taken for actions.
Mr April said that it important to understand the APP and budget because it is difficult for the Portfolio Committee to agree to the budget when there is no information about what was done in the past financial year. How will the Committee know how to guide DOT on what is realistic? Committee oversight visits indicated that there is an extreme disjuncture between what is reported on paper and what is on the ground. This makes it difficult for the Committee to discuss the APP. For instance, millions of rands were spent on non-existent programmes.
Mr Matumba said that there is TBD (to be disclosed) on the project construction dates, which is put there to ‘manage’ the Committee because the construction date was way back and money was spent on nothing. For instance, for Platfontein Lodge, money was spent previously which is why it is in the report. The Department has a culture of spending money without having a product to show. R9.3 million was spent in Chakuma but there is nothing there; then they are told that there are open cases. Was oversight done by DOT itself? The DG’s relaxation about the accounting of DDG on these projects is concerning because the same people who failed to execute projects are not held accountable. The projects need to be broken down in an annexure detailing how much will be spent and who will be responsible for it and not have everything combined into one block. The Committee needs to do oversight per item but the items are not detailed there.
On industry-driven transformation, the tourism transformation council expired last year. How does DOT claim to have an unresolved problem that should have been solved a long time ago? Overseas companies dominate the industry, how can they drive transformation? It cannot happen. Part of the money documented to go to SMMEs goes to international companies. There was an event organized by SAT where SMMEs had the same complaint; being unable to enter into business because international companies such as booking.com. What is the DG doing to move the IP of Journey to SAT to eliminate the money spent on research? They will benefit SMMEs this way and allow them to participate.
In North West, it is difficult for SMMEs to access the outside market because buyers concentrate on booking.com, Trivago which focus on big businesses, disadvantaging SMMEs. What is the DG doing to move the IP to SAT? With community projects, what are the green-field and brown-field projects where they match with investors? There are farms that have been visited that are fronts for investor benefits. What are the two investments that DOT is assisting? There is a cultural village project in Vembe where a lot was built without consulting the community with no consequences for management.
Ms Makhubela raised that the Committee did not get a report on the progress of the White Paper project, could the Committee receive a glimpse of what is in the review of the White Paper so it can be included in the Committee legacy report. The Committee has highlighted a few sections of the Tourism Act it wants reviewed, that drafting process was not brought to the Committee because of the many changes in the executives which derailed the progress of this process. Before the term is over, could the Committee be given an opportunity to add input on what in the Act should be amended. Even SAT which takes 67% of the Tourism budget has loopholes where the Act limited the scope of the Committee and DOT oversight. In programme 3, given the crisis on the ground in most provinces the Committee visited, would it be possible to review the masterplan? You cannot continue to spend resources on projects that collapse before they even begin operating. DBSA has tried to rescue the collapsing projects and will likely fail, leading to a recurring theme of failing projects with no value for money spent. Could the approved tourism masterplans be reviewed to separate projects that are likely to succeed and those that will not? There is a project where approximately R37 million has been spent but there is no value to it. That entire project should be demolished as it is already a failed project in the making.
Ms Makhubela requested a full report on the EPWP projects that are funded so the value of the money can be understood. On events and leisure, she noted gigs where DJs throw a party and are funded. Not to discourage this initiative but this could result in money spent that cannot be accounted for. Perhaps this can be reworked for there to be value of money linked to tourism. The Tourism Safety Monitors programme needs to be enhanced and there should be an increase in the target for the number of tourism safety monitors because every tourist wants to visit areas where they feel safe and there has been a positive effect with tourism safety monitors in hotspots. The Committee is like a spectator with its oversight. How can the oversight model be restructured to ensure that money is better allocated to programmes and their problems?
Ms Maneli asked about the number of young people being trained under Programme 4 and if the training certified? Does this help young people to be placed in employment if there is a need for placements? Will the skills provided enable young people to be employable in the long term?
Ms Mpushe wished that the Committee would have more time to do oversight visits to the areas noted in the APP. What is the progress on the Tourism Equity Fund? On the EPWP, figures are mentioned; what are young people being trained for? On work opportunities created, could the Committee get details on what has been done? On DBSA, there are a lot of undocumented issues and the Minister should tread lightly. GTech issued a report that identified infrastructural flaws where projects were funded without an EIA. There is an investigation to be done and there has to be consequence management. These are huge amounts and there is no way for DOT to follow up. In North West, furniture was stolen and nine cases opened but there is no proof of this. Stakeholders and beneficiaries are not consulted when construction is undertaken. There is already an outcry due to DBSA bringing in their external constructers which leads to deserted infrastructure; then there is no value for money. What is the current GDP contribution of tourism? With money disappearing, the economic growth of the country through this department will never materialize. There are people who should face consequence management. Allegedly there is an investigation report with the DG who is also not ‘aware’ of it. There have been no reports on this.
Minister de Lille said that she had been reading through the agreements and has raised concerns around tourism infrastructure. She has indicated that DOT needs to lead first with DBSA because her initial assessment showed that even though millions have been spent on DBSA, there are some projects that have not been started and these should be reviewed. On 27 March, a new agreement was signed with DBSA without consulting the Minister. A letter will be written to the DG and DDG to ask for more information. The Department was supposed to put together a project support committee consisting of development-build environment skills. A tourism person cannot have oversight over an infrastructure project. The list of infrastructure projects has been sent to Infrastructure South Africa to do an audit; it is a mess. DBSA is not the only implementing agent in DOT. The letter to the DG and DDG will require a list of infrastructure projects that have been allocated to each implementing agent that include project name, location, description, budget and stage of implementation.
An MOA was signed between DBSA and DOT on 20 November 2020. There is no contract management system in place in DOT for these contracts to be managed and implemented. The Minister asked for a month to make an assessment of every project. Even in the APP, the TBD means To Be Determined which means there is nothing there. On the Tourism Equity Fund, there is R1.2 billion which has been stuck in a court case since 2021. The government lost Part A of the application because the ruling against the Minister was that the Minister’s announcement was outside existing legislation. Part B of the application does not even have a date. The DG and Minister called senior counsel representing DOT and the State Attorney for the latest update on the case. The legal counsel representing DOT and the State Attorney advised that chances of success in Part B are low because DOT did not operate within the existing legislation. Based on that advice, they agreed to settle the legal action to free up the R1.2 billion. The Minister then issued an instruction to counsel to settle the matter which was then settled on 26 April, meaning that the lawyers will work out the costs. AfriForum and Solidarity have also agreed to settle. The plan is to free up that money to use the Tourism Equity Fund to drive transformation.
The rest of the issues will be addressed by the DG. In terms of the Government Immovable Asset Management Act, DOT is not allowed to spend national funding approved in Parliament on provincial and local government assets; provinces must use their own money to fix their own tourism assets.
On the tourism safety monitors, the tender has not gone out for the service provider and there are problems that the DG has dealt with. There should be a process to review the content for the training of tourism safety monitors. This is a programme that can be scaled up; the provinces must also put money into this to scale this up substantially. The review will also look into whether this is accredited training to ensure it can be used in the future for further job creation. The Portfolio Committee’s Budgetary Review and Recommendations Report of October 2022 has been very helpful and in a meeting with DOT, the Minister suggested a programme of action implementing what the Committee requested in its BRRR.
The Chairperson said for the infrastructure, maintenance and beautification programme implemented in five provinces, there should be a detailed list for each province. The eThekwini Metro Ntambalala report needs to be made available. There is a township and rural tourism support with a minimum of one event per township, where are those townships and what events are these? Perhaps when in Durban for the Indaba, there will be an opportunity to visit the Ntambalala resort and eThekwini resorts cited. If DBSA is not the only DOT implementing agent for DOT, what are the other ones? There are nine vandalism cases reported against no one and money has been squandered.
Mr Tharage noted that DOT came to Parliament last year where the DG presented the forensic report outcomes and an update on the follow-through which included the case numbers reported to SAPS at the Sunnyside Police Station. These cases are under investigation by the Hawks. There are meetings with the head of the Hawks to find out how far they are with those cases. Those matters were taken to the State Attorney and a request made to brief an attorney who would follow through and recover the money. There are State Attorney reports detailing the progress of this cases. Following the retirement of the State Attorney, the transferal of the cases was affected and had to be started over.
There were also aspects reported about disciplinary hearings against officials who were identified in the report as people who had cases to answer. One of those cases has been concluded. Cases are currently taking place but the DG would not mention names. These are being engaged actively to deal with these matters. For example, processes are in place to follow through on the huge losses incurred in 2018. The difference between the GTech and the forensic reports is that the forensic report goes into detail about the losses, whereas the GTech does not. Each case is considered and there is detailed evaluation of whether it would be affordable to continue with them. More details will be provided about some of the projects and their feasibility.
There has never been a presentation on the matter of Journey which was raised by Mr Matumba. The DG decided not to go into detail on a matter about a private company without the express consent of the company. There are risks in speaking about the company on matters that are not directly pertinent to DOT. The matter is being managed by the Department of Trade, Industry and Competition. This specific project arises from the National Industrial Participation programme which is managed by DTIC.
The Chairperson was concerned about the information the DG was not disclosing. He asked if this meant there was less information known by the DG.
Mr Tharage replied that it was not his place to disclose certain pieces of information.
The Chairperson asked if DOT contributed nothing to Manyani.
Mr Tharage replied that this was not the case, DOT contributed and there is internal consequence management taking place and there are processes that are with the Hawks. The matter about Chakuma was reported to the police and the investigation was concluded; the matter was taken to prosecution. The reason for delay was one of the people involved was terminally ill and unfortunately passed, and the prosecutor responsible for the matter also passed. These matters are being followed through.
Ms Malan replied that two meetings are being planned at the official level to prepare for the policy-level meeting. With the BRICS programme, they requested an outreach programme for BRICS.
Mr Tharage added that as part of the Indaba there would be integration of BRICS to make the continent a part of the development.
The Chairperson asked if that was all that the DG had to say. At what point would DOT integrate their activations with those of SAT?
Mr Tharage explained that SAT is DOT’s entity and DOT focuses on the policy side while SAT focuses on the activation. The oversight is done by DOT related to policy and SAT does the marketing.
Ms Setwaba acknowledged that there are blank columns in the targets for tourism awareness. When the 2023/24 APP was being finalized, they were already headed for the Easter campaign and towards the end of Quarter 4, they would be able to see returns. In the 2024 APP, the four campaigns will have been properly planned in Quarter 4 2022/23. The training is accredited. The training modules are taken from SASSETA for the monitors, the chefs programme, food and beverages, wine and food safety quality assurance programme with CATHSETA. The tourism sector human resource development strategy started in 2017 and coming to an end in 2027, is used to select them. It was preceded by a skills audit that ensured these were skills necessary to close the gaps.
Ms Chettier said that DOT has presented the outcomes of the GTech report previously, as well as the projects and their challenges to the Portfolio Committee before. There was a request to provide a list of maintenance project sites in each province and that list can be provided. The Department is working on the various modalities around events that they will support and once completed those can also be provided to the Committee, and the individual report. There are a number of projects that are implemented in partnership with its provincial and national entities. The maintenance programme that has been rolled out to national parks is implemented in partnership with SANPARKS which is the implementing entity. There are other projects implemented in partnership with various entities, such as SANBI. The tourism masterplans that we have done are broad, sweeping large scale plans. What has been done is take the masterplans and look at specific projects that are taken to the next level of planning. Those concepts are what get integrated into the Destination Development Marketing so they are part of the overall implementation of the DDM. The work on the masterplan was completed two financial years ago and the work on concepts was completed in the last financial year. There is nothing preventing DOT from providing those concepts on Ntambalala to the Committee. Quarter 1 targets are consultations with provinces and organizations to finalize when those events will be taking place.
Mr Tharage assured the Committee that the list and details of event localities would be submitted. The Department has taken notes on how it should not be about hosting gigs, but about facilitating tourism. The original idea was for there to be big events that would take place, not necessarily in remote areas, where there are investors interested in townships. For example, the bulk of what used to be B&Bs around Vilakazi Street has now been turned to student accommodation. The owners, most of whom are elderly, are benefiting from NSFAS that guarantees an income stream for their provision of accommodation to students. There is the plight of a big facility like Soweto Hotel at Walter Sisulu Square largely utilized by the taxi association, and not necessarily as busy as it was intended to be. How can it be ensured that these investments put into those areas are able to be assisted by cushioning them in this economy? Those are some of the things DOT is working on to ensure people move from one area to another and spend money there. There are many challenges with some of the project beneficiaries. There are sites where there are development facilitation discussions that are agreed on until beneficiaries change their minds. When doing site visits, the Committee would need details about the challenges on the ground to fully understand the situation with each project.
The Chairperson said that the masterplan was a suggestion and the response does not answer the concerns because the projects collapsed before they could be implemented. The Committee expects a submission on everything that was requested by the end of business 3 May. The most important aspect raised by the Committee is not in the report instead there are blank columns on domestic tourism. The Committee had asked DOT to submit a plan on reimagining domestic tourism in South Africa because domestic tourism in the country can contribute to GDP, if city to city tourism would be promoted. On safety monitors, DOT said that it would have to sign an MOU with SAPS because safety and monitoring of safety needs are particular skills and only SAP can provide that for safety monitors so they can also self-protect while looking after tourists. Hopefully, all requests will be submitted on time.
The Chairperson adjourned the meeting.
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