The Special Investigating Unit (SIU) gave an update on its investigations into housing corruption in 5 provinces: Limpopo, Free State, Eastern Cape, Mpumalanga, and Gauteng. The SIU told the Committee that its investigations uncovered and indicated endemic corruption, maladministration, and malpractice in the DHS, as there is evidence of the abuse of emergency procurement which was mostly evident in the PPE procurement. It is important that as part of the PFMA amendment, the checks and balances in emergency procurement are tightened up. There has been an overlap between disaster management and COVID-related procurement, ignorance of procurement policies, general poor record management, and delays in handing over documents, but in the main, the fact that the Department did not get value for money shows that there is poor project management.
The SIU said it is in the public interest that consequence management happens even though in many instances when officials see that investigations are happening and outcomes are incoming, they are quick to resign.
The Committee expressed concern about the timelines in which the cases are concluded by the SIU and were gravely disappointed that the Department was neglecting its primary responsibility of doing checks and balances and monitoring projects to ensure that they are implemented fully and according to the law. The Committee also questioned the blacklisting process undertaken by the SIU, the Department, and National Treasury, expressing concern that the same companies that transgress against the state also get appointed by the state in other forms, whether as individuals or new companies. Members said the presentation spoke volumes about how the government is undermined by officials tasked to protect the citizens. The national department should monitor norms and standards because it gives directives on how things should happen, and the provinces and municipalities should be addressing issues of implementation from those norms and standards. Members also called for a special meeting with the Department to discuss matters raised by the SIU.
The Deputy Minister said people cannot wait for houses for 20 years and then get given Temporary Residential Units (TRUs). The TRUs are built in dire situations such as disasters and they are not meant to be up for more than two years. The Department does not encourage the provinces to build TRUs because they are not sustainable and are not up to the standard of basic housing, even though the people may say appreciate them when they receive them. Contractors must only be given funds to build proper houses for people, and TRUs should only be for emergency situations.
On the performance of the City of Tshwane on the Urban Settlements Development Grant (USDG) and Informal Settlements Upgrading Grant (ISUPG), the Department told the Committee that the Metro was allocated R5,36 billion reported as of 31 May 2023 and spent R4,5 billion which equates to 85,4% of the total available funds. A total of R200 million was stopped and reallocated to during the 2019/20 financial year to other metros with performing projects (Buffalo City and City of Johannesburg). During the 2020/21 financial year, an amount of R100 million was reallocated to the Metro after funds were stopped from Metros with underperforming projects. There were no rollovers approved for the period under review.
The amount that reverted to National treasury amounted to R208 million as of 30 June 2022 (R198 million 2019/20, R7,1 million 2020/21, and R2,3 million 2021/22). R278 million was initially reported as spent during the 2019/20 financial year whereas they were actually transferred to a trust account of attorneys to acquire land. The Metro did not succeed in acquiring the land as the Province had already intervened and that resulted in the funds being refunded to the Metro by the Attorneys and as such, National Treasury’s approval was required to utilise the funds during the 2022/23 financial year.
The Committee wanted to know the measures that the DHS has in place to deal with emergency procurement in provinces and municipalities because there seemed to be discord and was concerned about the number of permanently destroyed households and the slow interventions made to address them.
It was noted that the Committee has an upcoming oversight visit to the City of Tshwane and it must take the information it received in the meeting to that visit so it can ask the City to present detailed information because the Department provided an overview of the expenditure patterns. What should be of interest to the Committee should be the water and sanitation allocations to projects in the parts of Tshwane that are already affected by Cholera.
The Chairperson welcomed the members, the Department, as well as the Special Investigating Unit (SIU), acknowledging the presence of the Deputy Minister of Human Settlements, Ms Pam Tshwete, and the CEO of the SIU, Adv Andy Mothibi in the meeting.
A moment of silence for meditation or prayer was observed.
The Chairperson asked for a mover for the adoption of the meeting agenda.
Mr A Tseki (ANC) moved for the adoption of the agenda and was seconded by Ms M Makesini (EFF).
Apologies were noted.
The Chairperson said the Committee would deal with outstanding items from the previous term in the meeting, as it could not convene a meeting with the SIU in the previous term as the SIU team had notified the Committee of its other commitments.
She notified the members of the passing of the wife of the Limpopo MEC, whose memorial service was to be held shortly. As a result, she would request Mr Tseki to chair the meeting, as she would be driving to the memorial service. She would not exit the meeting but would rather let Mr Tseki Chair the meeting to avoid distracting herself and the Committee.
Special Investigating Unit (SIU) Briefing
Adv Andy Mothibi, Head & Chief Executive, SIU, thanked the Committee for accommodating the SIU team during the constituency period, noting that the day the Committee had requested to meet with them could not be possible, as they were meeting with the Standing Committee on Public Accounts (SCOPA).
Mr Leonard Lekgetho, Chief National Investigations Officer, SIU, said the SIU received a request from the Premier, Mr Stanley Mathabatha on the 9th of July 2020, to investigate certain allegations regarding procurement during the national state of disaster at the Provincial Department of Co-operative Governance, Human Settlements & Traditional Affairs (“COGHSTA”). In this allegation, COGHSTA appointed an implementing agent, the Housing Development Agency (“HDA”) for the establishment of transitional residential areas.
The Limpopo Provincial COGHSTA identified a number of densely populated informal settlements in the Limpopo Province which made it difficult to practise social distancing. COGHSTA prioritised two informal settlements, Talana Hostel, and Burgersfort Ext. 10, which required urgent attention in the form of a partial relocation. On 08 May 2020, COGHSTA appointed HDA as an implementing agent. The HDA appointed a service provider, Aventino Group CC, to construct 192 TRA’s. The contract value was R12 372 672.00, and an extension of scope was approved for an additional amount of R 3 019 531.03. The total contract value was R 15 392 203.03.
The SIU did site inspections on 10 September 2020 and found at Talana Hostel that all 40 structures were built. On the Burgersfort Ext.10 site, no structures were complete, there were only half-built structures. A total payment of R 2 577 640.00 was made to Aventino from 1 April 2020 up to 15 October 2020. No further payments were made to Aventino. Aventino committed fraud by misrepresenting the facts about its professional team to be used in the tender. Five professional team members denied having any knowledge or involvement with Aventino.
The matter is currently at Tribunal. The SIU and Aventino reached a settlement agreement in August 2022, and the SIU attorney is still awaiting an outcome from the Honorable Justice Naidoo to issue the court order. On 23 March 2020, the SIU made three disciplinary referrals to the HDA against Bid Adjudication Committee and Bid Evaluation Committee members. An enquiry was made with the HDA for the status update on the matter and the SIU is still awaiting feedback.
Mr Lekgetho also provided details on the SIU investigations in the HDA Eastern Cape, the Eastern Cape Department of Human Settlements, Mpumalanga DHS, Free State DHS, as well as the Lepelle Northern Water and Gauteng DHS.
Ms Makesini said it seemed as if there was no cooperation between the SIU and the Eastern Cape DHS and wanted to know the number of structures that were built in Duncan Village. When the Committee visited Duncan Village, there were issues where the people occupying the houses were not the rightful beneficiaries, and the Department was unable to provide the number of people occupying the houses because they were threatened. In some cases, in the Free State, contractors’ contracts ended while they were still under investigation, did this mean the cases also expired with their contracts? How was the SIU dealing with such cases and how were they planning to recover the lost funds?
Mr C Malematja (ANC) said the SIU investigations took long to the extent that when they reached their final stages, a lot of people had forgotten about the cases. He wanted to know why the SIU investigations took so long because the matters that were being discussed happened during the COVID-19 pandemic. It seemed like nothing had been done since the period and there was nothing that could be referenced to the work of the SIU in the communities. He asked about the four of the six officials who decided to leave their HDA contracts and wanted to know what was done about the four officials.
Does the SIU fully prepare for the arrests they make to ensure that they recover all the necessary people, documents, and resources to avoid losing cases because of a lack of information? There were clear indications of criminality in the 10 keys process, especially because money was spent but no structures were built. Why was the SIU taking too long to make arrests on cases where there was clear criminality involved in Mpumalanga?
Mr Tseki was disappointed with the outcomes of the investigations and noted that when the ANC fought for the country’s democracy, they had principles that they wanted to uphold, the principles of a democratic, non-racial, and prosperous nation. The prospective prosperous South Africa meant that everyone in the country would benefit from the outcomes of democracy. However, the people who are expected to safeguard the prosperity of democracy are failing.
The Department must answer where it was when all the corruption happened because it has the duty to manage the resources that are granted under its leadership. The Committee must hold a special meeting with the Department so it can explain how such corruption happened under its watch.
Mr L Mphithi (DA) was shocked and disappointed at the representations received in the presentation by the SIU and noted that it had been clear for a long time that several provinces were able to manipulate the process of emergency procurement to illegally take funds that belong to the people of South Africa. This issue must be investigated further by the Committee because the legislative guidelines were clearly not being followed in emergency procurement, especially in the Eastern Cape where four service providers were appointed irregularly. Them getting reappointed after the irregular appointment shows that no one cares about how they were appointed to deliver the services.
Mr Mphithi wanted to understand how the four service providers were reappointed to another contract whilst an investigation was ongoing on their irregular appointment. Regarding the civil recovery process, he wanted to know how four of the six officials left their employment at the HDA and what would happen to them because it seems like they left because they knew that they would be exposed for their doings. Does their departure from the HDA free them from facing any consequences for their actions?
He wanted to understand whether the settlement agreements meant that Aventino would repay the money that was allocated to them for the services they failed to deliver. Does the settlement agreement mean only the repayment, or does it also mean there will be further consequences for the company? The report from the SIU was damning and reflected that the Committee needs to investigate how the Department follows its processes because it seems that the people of South Africa are not being respected by the officials and that should not be accepted.
Dr N Khumalo (DA) wanted to know how long the SIU had to wait for the court order in the case of the Limpopo HDA. Had the Department considered blacklisting Aventino regarding their case and had the Department ever successfully blacklisted any service providers for failure to provide the required services?
Ms N Sihlwayi (ANC) said the presentation spoke volumes about how the government is undermined by officials tasked to protect the citizens. The national DHS is the one that should monitor norms and standards because it gives directives on how things should happen, and the provinces and municipalities should be addressing issues of implementation from those norms and standards. People have been undermined and dehumanised by the service providers as there is no value for money and no value created on the ground.
She asked for a consequence management report on the number of officials that were disciplined by the DHS nationally, provincially, and locally and in the HDA in all the provinces. There seems to be a sequence of officials undermining the people of the country. Are the service providers still operating in and around the country? They are supposed to be blacklisted and the officials are supposed to be arrested because they are criminals. The Committee needs to hold a special meeting with the Department so that it can tell the Committee how the country got into its current state and why its officials continue to undermine the people. The Department must tell the Committee why the provinces and municipalities are not monitoring projects with the national Department. Lastly, she asked the SIU to make proposals on the future administering of projects by government departments.
Adv Mothibi said according to the SIU’s verification, 578 structures were built in Duncan Village, and in terms of the allegations, the SIU’s focus was on the regularities of the procurement process. If there were any illegal occupations, the Department would have to deal with that according to the applicable law, but if they need the SIU’s assistance, the SIU would be available to assist them. When the SIU conducts its investigations, it also identifies the inherent risks that it would need to deal with or those that it experiences.
Amongst others, the SIU would experience areas where documentation is not provided on time or is missing or reported to be missing, so the SIU puts mitigating measures in place to ensure that the missing documents are recovered so that the investigations are not compromised or unduly delayed. In several instances where the documents are not produced on time, the SIU invokes the powers that are in the legislation that enables SIU work, and in most cases when they do this, the documents are produced speedily.
The SIU ensured that the cases are investigated as speedily as their complexity, and the investigations that were done during the PPE investigations were unique, but the SIU turned it around as speedily as the public expected. The President issued a proclamation instructing the SIU to give six weekly reports different from all other investigations they did, and the SIU complied with the requirement. As part of the six weekly reports to the President, amongst them were the completed focus areas of the investigations.
Although the proclamation reads ‘R23 of 2020’, the nature of SIU investigations is that when they kickstart any investigations, they receive new allegations in the process of investigations, meaning there are allegations that they kickstarted in 2020, but in 2021, they received new allegations that fall under the same proclamation. The SIU is on the public record saying it has turned around most of the cases as speedily as possible and final reports have been submitted to the President. As part of the qualifications of those final reports, the SIU said should any allegations arise, it will continue to investigate them under the same proclamation.
In all the investigations that the SIU presented to the Committee, the HDA Limpopo investigation is completed, one HDA investigation in the Eastern Cape is completed and another has some issues that need to be finalised. Free State DHS investigation is completed, and the Free State Asbestos case was also completed. All these cases were included in the presentation for the purpose of being comprehensive to the Committee.
The accounting officer who left, because the contract expired before disciplinary actions were taken, is a challenge that the SIU had pointed out on numerous occasions to the DHS to ensure that if officials move to other government departments, they can be tracked. In the case where employees leave their places of employment before disciplinary actions are taken and they do not move to other government Departments, by law, they can only terminate employment relations and disciplinary actions cannot be taken against a person who is not an employee. However, if there is civil litigation, the SIU cites them so that if they have been party to the state losing money or being prejudiced, they are included as part of the civil litigation so that the state can recover from them. They also do not escape criminal prosecution.
Regarding cases taking too long to reach prosecution, the SIU raised the issue in 2017 to the National Prosecuting Authority (NPA) and since they entered a new memorandum of understanding (MoU), they are beginning to gain traction on the issue. For the SIU to be able to deal with the impunity and the scourge of corruption, consequences must kick in and must be monitored so that they can be implemented effectively.
Since the President proclaimed the Special Tribunal that kicked off in 2019, there is a speedier process of civil litigation ensuring that cases are recovered speedily. In Gauteng, there is a case that the SIU filed with the High Court, but it is still not finalised, but they acknowledged that, and it is part of the reasons they started the process towards the proclamation of the Special Tribunal. There are still two court rolls that the SIU is dealing with in the Special Tribunal and the High Courts. The SIU engaged the Minister of Justice and the Judges Presidents on the High Court side, and on the Special Tribunal side, the Special Tribunal precedent is clear that matters should be turned around as speedily as possible. Settlement has been reached with the Special Tribunal on the matter and the SIU is waiting for the matter to be turned into a court order from the Special Tribunal.
Regarding blacklisting, the SIU agrees that it has not received adequate attention from the state institutions, specifically the DHS and National Treasury because the companies that are involved in wrongdoing are not expected to be doing business with the state. There are rules that need to be followed in the process of blacklisting, but the process must be sped up in the interest of enforcing appropriate consequence management.
The SIU made observations in the investigations and has done its best to ensure that it provides the results quickly, but the investigations continue to uncover maladministration, malpractices, corruption, and a need for systemic recommendations to improve the system. The SIU can make proposals relating to the future execution of contracts of this nature and has made lengthy recommendations in the process of amending the Public Finance Management Act (PFMA) that is run by National Treasury. Regarding the number of officials that have been disciplined, the SIU can work with the Department to find out if actions have been taken in the referrals that were made.
Ms Zodwa Xesibe, Regional Executive Manager: Eastern Cape, SIU, said the four companies that were involved in the Department were the same companies that were involved in Buffalo City Metropolitan Municipality. The SIU made referrals against them and they are still involved in the Human Settlements space where irregularities have been found. The SIU has already referred two criminal referrals against one company and the other referrals are being packaged. The SIU assisted a Head of Department who made a submission to the SIU that her signature was forged in some of the documents that ended up awarding the contracts to the four companies with the criminal referral in that regard. After that process is done, the SIU will refer the matter of the companies to National Treasury for blacklisting, but they will also rely on the criminal aspects of the investigations to be able to action the blacklisting.
Adv Mothibi said the investigations uncovered and indicated endemic corruption, maladministration, and malpractice in the DHS, as there is evidence of the abuse of emergency procurement which was mostly evident in the PPE procurement. It is important that as part of the PFMA amendment, the checks and balances in emergency procurement are tightened up. There has been an overlap between disaster management and COVID-related procurement, ignorance of procurement policies, general poor record management, and delays in handing over documents, but in the main, the fact that the Department did not get value for money shows that there is poor project management.
TheChairperson said in the area of strengthening the system, particularly on disaster management, the President requested the Auditor General of South Africa (AGSA) to do real-time audits during implementation. Would the SIU consider working with the AGSA in that regard? The Committee had previously invited the Department to speak on the blacklisting processes, and the Department also stated its frustration with the process because National Treasury’s process takes too long, which opens the risk of the companies changing their names and directors and being employed by the Department in the future.
How does the Department work with the Department of Public Administration to ensure that blacklisted officials and entities cannot work with the state again? How does the SIU ensure that it is able to engage with the Premiers of specific provinces where there are issues and how does it deal with jurisdiction problems?
Adv M Masutha (ANC) said out of frustration, the AGSA initiated the Public Audit Amendment Act to strengthen and give more teeth to the findings that it makes which require consequence management and where consequence management in terms of auditees has been lacking. To what extent has the AGSA been able to utilise the SIU’s mandate, having identified some of the shortcomings through the audit process by way of referral to ensure that actions are taken by the SIU?
Regarding blacklisting, he said in the past, the SIU would make findings that require civil recovery and consequence management by the auditee or the Department or entities, who had the responsibility to monitor whether actions were taken by the auditee? It seems as if there is no mechanism that gives feedback to the Presidency to show that all the work has been done by the relevant authorities that were sanctioned through a Presidential Proclamation. Who takes the responsibility to oversee the different parallel streams of work to ensure that they eventually converge into a common outcome in that regardless of what the institution had to do in a specific case, the final comprehensive outcome is unified?
There was a meeting that was convened of the relevant entities to say they do not have synergy because there is no common citation system of cases, for example, when a matter is referred to the SIU, they have their own way of coding the matter for purposes of identifications, and this is the same for other investigating agencies, even though this may be the same case. It is not possible to link the investigations between the different agencies and following up on cases becomes a challenge. Has there been any progress in finding mechanisms to ensure that there is synergy between the investigating agencies?
Regarding blacklisting, Adv Masutha was not convinced that there is a clear system that is transversal and well-coordinated because it is unclear whether the blacklisting is against the businesses or the individuals, but even if it is of an individual, they can still tender through proxies on a new corporate platform in which they would be running behind the scenes. How fireproof and how comprehensive is the backlisting system to ensure that the same crooks are not recycled back into the system through false pretences?
Mr Malematja said the work that public representatives do should be self-explanatory to the public and should not be difficult to understand because once it is difficult to understand the public loses confidence. In the blacklisting recommendations to National Treasury, do they go to the extent of recommending the revoking of a contractor’s or project manager’s operating license?
Adv Mothibi said the issue of the abuse of procurement processes during emergencies has reared its head because it has always been there. In Lepelle Northern Water matter, when it started there was an emergency situation that was displayed, but the SIU found that there was no emergency, but rather an abuse of procurement processes. As part of its recommendations, the SIU recommended improvements in the checks and balances and procurement processes. For example, they recommended that it should not be the same person who sends out a request for a quotation, receives it back, and processes it to the appointment because that is a risk where the abuse happens. There should be clear checks and balances.
The SIU engaged with the AGSA and they are pleased that the President asked them to do real-time audits as it was evident during the KZN floods that the tight monitoring or audit yields positive results. The SIU has been part of the United Nations Office on Drugs and Abuse creating a framework that state parties can use to improve procurement during emergency situations. The SIU will send the paper to National Treasury to take into account when they improve the procurement processes. The AGSA and the risk managers have a very important role to play in doing risk assessments from the onset of projects and procurement assessments and monitoring risks in real-time.
More often and conventionally, the audit processes have been after the fact even if risk management was done and the monitoring has been lagging. In terms of investigations, if allegations are reported the SIU will work with the AGSA to ensure that they are investigated as speedily as possible. Although the reports are ultimately submitted to the President, the outcomes do not wait for the report to the President. If there is evidence pointing to civil litigation that must be taken, the SIU attends to it immediately, and this also applies to blacklisting.
The blacklisting process needs to be reviewed and improved because it has its own legal process. When a company is referred to be blacklisted, it is referred to the accounting authority of the state institution of the Department because they are the ones who appointed it as a service provider, and National Treasury is included because it is on the central database. This is so that it is dealt with holistically from a company perspective to ensure that it is blacklisted and monitored so that it does not get business. The SIU also went further to ensure that the directors are blacklisted because the natural persons belonging to the juristic person crop up elsewhere in another company. When blacklisting directors, you ensure that you can trace them wherever they crop up. However, there needs to be a way to deal with the directors cropping up using aliases or proxies.
The matter of the officials who go to work in other government departments was taken up with the Department of Public Service and Administration (DPSA) and they have been very helpful in that regard. Although this phenomenon is prevalent in most of the state institutions, it also happens a lot in municipalities and at the local government level. The national Department of Cooperative Governance and Traditional Affairs (COGTA) and the DPSA have also been brought in to keep an electronic system to be able to keep these officials in the system. There also needs to be an improvement in the vetting system to check if an individual has done wrong in another department.
Regarding the identification of systems improvement and informing the Premiers, Adv Mothibi said the SIU meets with various Premiers of provinces from time to time to present its work and its outcomes including the systemic recommendations that it makes. They refer them to the accounting authorities and executive authorities which are the political heads of the departments and they speak on the systemic recommendations that they sent to the departments.
The SIU is aware of the Public Audit Amendment Act that was brought forward, particularly regarding consequence management, and the SIU has an MoU with the AGSA that they refer matters to the SIU so it can take them forward according to its legislative mandate. There has been traction since the question of the gap between the investigating agencies was raised and the Presidency put in place a mechanism in place to ensure that referrals are monitored in the departments, NPA, etc. Firstly, the SIU reports are sent to the accounting officers and authorities by the President, and in the covering letter, he wants feedback on what the departments have done based on the reports.
That mechanism will go a long way in terms of monitoring the system and also dealing with the interconnectedness of the referrals of the investigating agencies. The SIU legislation also needs enhancements so that it can deal with the peremptory nature of the referrals it receives. The SIU has put through its recommendations to the Department of Justice and is hoping the amendments will be put through at the appropriate time.
It is in the public interest that consequence management happens even though in many instances when officials see that investigations are happening and outcomes are incoming, they are quick to resign. The unfortunate part is that the law does not give the accounting authority to refuse the resignations.
Adv Mothibi and his team were disconnected from the meeting.
The Chairperson said they must submit the rest of their response in writing to the Committee and asked Mr Tseki to chair the meeting as she was attending the memorial service of the Limpopo MEC’s wife.
Mr Tseki asked the Department to preamble their presentation with a five-minute response to the presentation from the SIU and then proceed with the presentations.
Deputy Minister’s opening remarks
Ms Pam Tshwete, Deputy Minister of Human Settlements, said the DHS would brief the Committee on interventions made in the provinces affected by floods. She said the effects of climate change have forced the Department to make drastic changes in the standard procedures used to respond to disasters. The first change was to ease the Provincial Emergency Housing Grant and the Municipal Emergency Housing Grant as of the 31st of March 2023. These grants were replaced by the Emergency Housing Response Fund which commenced on 1st of April 2023 and the measure was taken to shorten the response time to disaster situations, as the response time to disasters was a major concern. The Department realised that disasters caused by climate change are here to stay, more especially in KZN.
The second presentation would be on the City of Tshwane’s Urban Settlement Development Grant (USDG) and the Informal Settlements Upgrading Grant (ISUPG) for the Medium Term Strategic Framework (MTSF) performance from 2019 to 2024. As at the 31st of March 2023, the funds allocated to the Metropolitan Municipality seem to be doing very well, but this is not translating to the work on the ground, meaning the financial and non-financial performance are not in sync. The Chief Financial Officer of the Department would speak to this variance between the two during the presentation.
Briefing by the Department of Human Settlements on the intervention made in provinces affected by floods
Ms Lucy Bele, CFO, DHS, introduced the delegation from the Department, noting that the Acting DG was in Cape Town as the Department was summoned by SCOPA. She said the findings presented by the SIU were concerning because they are mostly on procurement, supply chain management (SCM), emergency, and disaster. However, the good news was that when the AGSA realised that the Department will be implementing the Emergency Housing Response, they will be doing a real-time audit to check if the Department is doing things right so that it can intervene where necessary.
The introduction of the real-time audit will assist the Department to do better and the Department learned from the prior year’s recommendations from the AGSA. After the abuse of COVID funds and the SCM, a new instruction note called Enhancing Compliance, Transparency, and Accountability was introduced, and the Department will be taking on that instruction note in the current financial year going forward.
Mr Thabang Motake, DDG: Emergency Housing Unit, DHS, presented the interventions made by the Department in the provinces affected by floods. The presentation highlighted the impact of the disasters per province, the number of affected households, the interventions made per affected province, financial and roll-overs report, lessons learned, and the improvements needed on the interventions.
On the lessons learned, he said there is a realisation that any construction-based solution such as ABTs will still need the department to guard against the following:
- Lack of availability of land
- Slow development planning processes
- Business forum disruptions
- Community objections
There is a slowness of the intervention process when there is non-responsiveness by Provinces and metropolitan municipalities. There is also a crippling effect on the intervention when there is a lack of capacity to implement emergency interventions. The Department must emphasise the importance of continuous improvement and transparency and the importance of research and innovation to improve disaster responses.
Briefing by the Department of Human Settlements on the Urban Settlements Development Grant of the City of Tshwane for 5 years, including projects performance and delivery
Ms Bele said the Metro was allocated of R5,36 billion reported as of 31 May 2023 and spent R4,5 billion which equates to 85,4% of the total available funds. A total of R200 million was stopped and reallocated during the 2019/20 financial year to other metros with performing projects (Buffalo City and City of Johannesburg). During 2020/21 financial year, an amount of R100 million was reallocated to the Metro after funds were stopped from Metros with underperforming projects. There were no rollovers approved for the period under review.
The amount that reverted to National Treasury amounted to R208 million as of 30 June 2022 (R198 million 2019/20, R7,1 million 2020/21 and R2,3 million 2021/22). R278 million was initially reported as spent during the 2019/20 financial year whereas they were actually transferred to a trust account of attorneys to acquire land. The Metro did not succeed in acquiring the land as the Province had already intervened and that resulted in the funds being refunded to the Metro by the Attorneys and as such, National Treasury’s approval was required to utilise the funds during the 2022/23 financial year.
The National Treasury approved USDG unspent funds amounting to R278.8 million granted in line with the initial approval letter dated 22 April 2022 and the for the same purpose regarding the same letter issued by the National Treasury. The reason for the approval was to address the disaster that affected the metro during the 2018/19 and 2019/20 financial years.
On the ISUPG, she said there was no stopping and reallocation of funds for the City of Tshwane in the 2021/22 financial year, however, R112,103 remained unspent during this reporting period. There was no additional funding for 2021/22 and for the current financial year 2022/23. An amount of R112,103 million was reverted to National Revenue Fund (NRF) and there was no approved rollover of funds for the 2021/22 and 2022/23 Financial Years.
Ms Makesini sought clarity on the R278 million that was reported as used in 2019 and then was reported to be back in the coffers of the Department. Regarding the disaster report, she received a report last week that Amagala in O.R. Tambo, where temporary shelters were built, and people did not accept them. What is happening with those houses? Are they temporary projects that will be restructured and reallocated to the people? How many success stories are there of the monies that were sent to the Eastern Cape and the KZN by the DHS for the flood disaster relief? What is the progress regarding the assistance to the people of Kopanong in Jaggersfontein that were affected by the floods? How many houses have been built in Kopanong Municipality as it stands?
Mr Mphithi wanted to know the measures that the DHS has in place to deal with emergency procurement in provinces and municipalities because there seemed to be discord. What is the Department’s process to verify that the financial status of a municipality gives the department confidence to allocate its funds? To simply make an allocation because there is a municipal manager, or an accounting officer does not sound sufficient. Municipalities are plagued with underspending and misallocation of funds so what has the Department done to intervene in that regard?
Mr Tseki asked if the Tshwane presentation was not supposed to be presented by the City of Tshwane and was also concerned about the number of permanently destroyed households in Gauteng.
Mr Z Mkhize (ANC) said the Committee has an upcoming oversight visit to the City of Tshwane and it must take the information it received in the meeting to that visit so it can ask the City of Tshwane to present detailed information because the Department provided an overview of the expenditure patterns. What should be of interest to the Committee should be the water and sanitation allocations to projects in the parts of Tshwane that are already affected by Cholera. The question that should be asked by the Committee is whether what triggered the Cholera outbreak was a well-maintained system that broke or a system that was already dysfunctional, but no sufficient intervention was made. The Committee should take advantage of the information it received so that it can use it during its oversight visit to Tshwane on Friday.
Ms Bele said the Department was requested to brief the Committee on the performance of Tshwane and what they provided was just a brief overview of the information, but when they go to the council chambers and sit with the City of Tshwane, the members will have an idea of how the spread of the budget was done, where the money was allocated and how it was used.
When a grant is transferred by the national Department to a province to a metro it is considered a transfer, but when a province or metro transfers a grant, it is considered an expenditure. For example, when the Gauteng DHS transfers money to the HDA, it is reflected as an expenditure in their account because it has gone out of their system even though the money has not been spent, and is somewhere else. DHS had a meeting with Treasury and discussed the possibility of having a transitional guide to record DHS projects because DHS uses other organs of state to implement its projects.
The situation in the City of Tshwane happened in the year when the city had to buy land for Mamelodi residents to move from where they were. Tshwane took the funds and transferred them to the trust fund for the lawyers to procure land, but instead, the lawyers did not procure the land. When Tshwane checked their books, they realised that they had the money within their trust fund, and they requested the money back and that was done. The DHS is trying to prevent such problems from occurring in the future as it agreed with National Treasury that when they report on funds that are within other organs of the state, they must reflect that money is available and is not an expenditure.
The DHS visited Gqeberha on Tuesday, where the Minister invited all the local and district municipalities with their provincial DHS MEC, mayors, and other officials. The resolution from that meeting was that the DHS must go back to places like O.R. Tambo and do an audit on the number of people who are not assisted, as well as the number of people who have been living on TRUs and give feedback to the Minister within two weeks.
Last week, Ms Bele joined the relevant KZN MEC who was handing out a house to a pensioner who was living in a mud house that was destroyed by the floods and the woman appreciated the work that was done by the provincial Department in helping her. In terms of the 342 and the April disasters, the success story was the Department’s ability to move the people to rental accommodation within a short period, even though there were some challenges. The Department is proud of its ability to remove people from dangerous areas during natural disasters.
The Deputy President oversees the Jagersfontein matter, and last week he met all the affected Departments and gave them an ultimatum on what they must do on the matter. The DHS was told that the mine said it will take care of the houses that were affected and is assisting them with temporary accommodation. The SIU said there is an accounting officer at Jagersfontein that is working with the AGSA. The SIU also has an MoU with the AGSA for it to refer investigations to the SIU. The DHS meets with these forums and the provinces regularly; however, they cannot control what happens behind closed doors because there is a tendency for them to do things that were not agreed upon.
Regarding underspending, the Department is working on measures hence this year, it ensured that before it approves the plans, it tightens the approval of the business plans. When the USDG was formed it was a supplementary grant, and Tshwane did not want anything, so the DHS said when they submit the business plan for either ISUPG or USDG, they must submit their procurement plans and project plans, or else the Department will not accept their plans. For the current financial year, the DHS is looking at the plans before it can approve the funds for projects. The DHS is also doing the same for the provinces and not just the metros.
Deputy Minister’s concluding remarks
Deputy Minister Tshwete said people cannot wait for houses for 20 years and then get given TRUs. The TRUs are built in dire situations such as disasters and they are not meant to be up for more than two years. The Department does not encourage the provinces to build TRUs because they are not sustainable and are not up to the standard of basic housing, even though the people may say appreciate them when they receive them. Contractors must only be given funds to build proper houses for people, and TRUs should only be for emergency situations.
Deputy Minister Tshwete thanked the Committee for its invitation to the meeting and appreciated the Committee giving them an opportunity to gather the information they needed.
Mr Tseki thanked the Department and the SIU for availing themselves at the meeting and for the information provided and allowed them to exit the meeting as the Committee continued with its internal matters.
The Committee could not adopt its committee programme and outstanding minutes because it did not have a quorum.
The meeting was adjourned.
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