Deputy Minister on Department of Sport and Recreation Annual Report; Boxing South Africa Annual Report 2009/10

Meeting report

Opening Remarks by Chairperson
The Chairperson was proud of South Africa’s stunning performance t the Commonwealth Games in New Delhi. The country did not send a lot of athletes like other countries, but obtained 5^th position. He saw the President asking all South Africans to rally behind Banyana Banyana as they did with Bafana Bafana during the 2010 FIFA World Cup. He highlighted the importance of transformation and how it should have impact. The Portfolio Committee was looking for “value for money.” He informed the Deputy Minister that monies would be allocated according to expenditure. The vision of the Committee was centered around the Freedom Charter; looking at a non-sexist and non-racial society. This mandate had to be fulfilled in sports.

Deputy Minister on Sport and Recreation South Africa 2009/10 Annual Report
Deputy Minister Gert Oosthuizen said that South Africa was celebrating 16 years of democracy in 2010, yet more needed to be done in developing sports in this country. He was proud to introduce the Annual Report to Parliament with a clean audit report. The FIFA World Cup was a success and it changed the country for better. It was clear that all foreigners and locals felt something special about South Africa. Never before was there so much support for the national soccer team. The President of the country urged all South Africans to rally behind Banyana Banyana as they did for Bafana Bafana. The Department therefore saw the need to reintroduce Football Friday. The 2010 construction met targets and FIFA standards. The Department provided support to all the various stakeholders and participants. Many critics were skeptic during the buildup and thought the Department was going to fail. All these critics were silenced. Johannesburg ended up being the 4^th leading sports hosting city in the world while South Africa was ranked the 4^th leading sports nation. The closing ceremony was spectacular and the country achieved much more than the world expected. The country reached the 3^rd highest World Cup attendance and the year 2010 was a great success for the Department and the country.

It was the Department’s goal to see that as many people as possible had access to sport. Sports and Recreation should be used to achieve the New Millennium Development Goals. South Africans and the world saw how sport contributed to peace and nation building. The Department was aware of the Polokwane Resolution; it was making progress, but not as fast as they wanted. South Africa did well at the Delhi games by obtaining 5^th position and the Department was looking towards the London Olympics. The Department was focusing on “value for money” and wanted to make every cent count. However, it was sad to see the need, but the money was not there to address those challenges. Therefore the Department was asking for more money to obtain its goals and objectives.

Discussion
The Chairperson expressed his appreciation for the successes of the Department. He gave special gratitude to all members of the Portfolio Committee for doing the country proud. However, it was sad to see how many people from disadvantaged backgrounds struggled to get to stadia to watch matches. It was good to see how many people served as volunteers during the World Cup.

Mr M Dikgacwi (ANC) said it was difficult to see all the achievements of the Department in the report. It would have been great to see all the achievements highlighted in the report. The Department did not say anything about transformation. It seemed as if transformation was reversing in the country.

Mr C Frolick (ANC) was thankful for all contributions to the success of the World Cup. The Department reflected on the new focus on the Millennium Development Goals but did not reflect on the statutory report of 2007. He asked if the Department was on track. He agreed that the Department was silent on transformation and congratulated ABSA on speaking out on transformation in sport. It could have been more proactive and effective if the Department was raising those issues. All departments asked for more money, but the Portfolio Committee wanted to be convinced that the desired outcome was achieved.

Ms L Mjobo (ANC) was concerned that nothing was said about women in sport in the report.

Mr J Van Der Linde (DA) agreed that the World Cup was positive, but the cost for some local teams to use the stadia after World Cup was too costly. Intervention was needed to make access cheaper for local teams to use World Cup stadia. Multi purpose sport centres should be placed all over the country. He asked how much finance was used for fan parks and requested audit reports.

Ms T Sunduza (ANC) asked how the Department was dealing with transformation and disadvantaged people in sport. The Department had to show its commitment in dealing with transformation. The Portfolio Committee required more transparency if the Department needed more money. The main focus of the Department was on major sports such as rugby, cricket and soccer; she asked why there was less focus on other sports. The Department should do more in developing sports in rural areas. She asked why the Department was not approaching cosmetics companies to sponsor women sports codes.

Mr T Lee (DA) acknowledged that the World Cup success was a multiparty achievement. The Commonwealth Games in Delhi proved the success of individual sports. He asked how the Department could improve on team sports in South Africa. There was a huge problem with local government as sport finances were not used for its intended purpose.

Ms S Lebenye-Ntanzi (IFP) highlighted the urgent need to close the gap in sports development within urban and rural areas. She asked how the Department addressed the availability of funds from the National Lottery to non-government organisations.

 Mr L Suka (ANC) agreed that the slow pace of transformation should be a concern. He asked for the progress of the “indaba” implementation. The Department should find ways to work effectively with the Department of Education and Public Works in achieving its goals. He asked about the progress of the” wall of fame” for sports people in this country.

The Chairperson asked the Department not to respond to the question on the “hall of fame.” Former President Thabo Mbeki indicated that the government would not be able to do that. Businesses should be involved in achieving that mandate.

Response from Deputy Minister
Mr Gert Oosthuizen indicated that he would be responding to a few questions now, but would be back to respond to the rest. There was progress with transformation and the usage of the Lotto fund. Transformation had to catch-up and the Department was involved in discussions between Absa and South African Rugby Union (SARU). Catch-up programmes should be key in the meantime in addressing transformation. Gender issues and transformation should speak to all parties involved if they were to have the desired outcome. The first draft of the White Paper was already published. The Auditor General’s report indicated the Department was one of the most progressive within government. There was a backlog regarding schools and facilities in terms of the history of the country. The Department was working with the Department of Education and Public Works, and progress had been made. [Mr Oosthuizen had to leave because of international obligations and asked for more time to interact with the Committee].

The Chairperson replied that it was important to have a day of discussion with the Department. It was important for the Committee to have more information on what was happening in the Department. The issue of transformation had not been dealt with by the Department. He did not agree with the notion that facilities were the major obstacle in achieving transformation. The problem was much deeper than facilities. It was true that the Department was silent about transformation. The Committee had to talk to the Deputy Minister about this in the next meeting.

Department of Sport and Recreation 2009/10 Annual Report
Mr Vernie Petersen, the Director General of SRSA, presented the briefing (see attached document). He said that it was the primary mandate of the Department to develop and manage sport and recreation in South Africa. The Department focused on creating an environment that ensured that as many South Africans as possible had access to sport and recreation activities, especially those from disadvantaged communities. The Department had fulfilled its mandate by monitoring the construction of stadia to ensure both compliance with FIFA standards and meeting of deadlines; and facilitating the training of volunteers.

The Department faced challenges of overcrowded buildings and non-compliance with the minimum standards for accommodating people with disabilities. There was a significant increase in the allocation of the Division of Revenue Act (DoRA) grant. The allocation of Lotto funding to sport, without any input from SRSA, and the management of the Lottery Sports and Recreation Distribution Agency, remained a serious challenge. The Department linked the challenge of transformation to the lack of inadequate funding. It was important for the Department to maintain its building capacity in both the government and non-governmental organizations (NGO) in the process of sports development.

Ms Sumayya Khan, Chief Operations Officer, presented an overview of the Department’s programmes. She indicated that the purpose of the Sport Support Services was to support sport and recreation bodies and public entities, and report on its performance. Club development, scientific support, education and training served as other mediums of support. Mass participation included school sports and communities. A total of 4 million South Africans participated in the Mass Participation Programme. International liaison was focused on the support of nine major international events. It was the Department’s target to engage 100 municipalities in liaison, lobbying them to spend their funding on sport and recreation facilities; 164 municipalities were engaged during the year under review. Technical support was given to 81 instead of the targeted 100 municipalities and institutions. The Department created awareness of the 2010 FIFA Word Cup in all nine provinces through the coordination of mass mobilisation road shows.

Mr Makoto Matlala, Chief Financial Officer, presented the overview of the Financial Report. The Department spent 99.4% of its budget for the 2009/10 financial year. He gave a breakdown of the expenditure per programme and per economic classification. The administration was under-spending due to vacancies that were not filled. Under-spending in International Liaison and Events was due to the African Legacy projects which were not rolled out as planned. Under-spending in Facilities Coordination was caused by the poor response by coordinators from municipalities for workshops which were scheduled. Disciplinary steps were taken about irregular expenditure for transport services; Refentse Mining Tours where tender process was not followed; payment on finance lease on office equipment; double hotel bookings; payment made for a venue that was not utilised; and the Bokone Music tender where proper process was not followed. The action plan for irregular, fruitless and wasteful expenditure were the standing agenda item on MCC, the Audit steering committee, and Budget and Expenditure review committee meetings. Control measures had been enhanced and the asset register was updated on a monthly basis.

The Auditor General also raised other matters where there was non adherence to requirements. Three provinces did not submit their DoRA financial reports on time while six did not surrender their unspent funds by 31 May 2009. Four provinces received late approvals on their business plans. The Human Resource plan was not in place for the financial year under review. The Department undertook measures to address issues of non adherence by withholding funds and holding Heads of Departments (HOD) to account for the submission of reports. Deadlines were adjusted to suit the normal treasury deadlines. There were other reports under investigation on corruption in the supply chain management relating to procurement transactions and allegations of nepotism.

Discussion
Mr T Lee (DA) noted that the Department gave R2.7 million to Love Life. He asked what Love Life was doing with the money. The Director General mentioned that the Department would withhold the finances from provinces that did not adhere. Department could not withhold money from province; by doing that the Department would withhold money from the children. The Portfolio Committee wanted to go with the Department to visit provinces so that they could experience first hand what was happening. Transformation would only happen when the Department of Education was on board. Mr Lee was recently invited to speak at indigenous games event at Ratelgat and ask if the people of Ratelgat had been consulted.

Mr J Van Der Linden (DA) asked if the beautiful stadia that had been build an upgraded could be used for different sports codes. It was good to see the statistics on mass participation but more needs to be done to see programs up and running. Regarding school sports, it was his wish to see various sports codes been played from grassroots level onwards. It might be possible that provinces did not allocate enough finances to the rest of the system. It is important that all regions and kids are treated the same irrespective of their background and socio-economic status.

Mr G MacKenzie (COPE) noted that no leagues had been formed yet. He recently went to Kwamashu and saw the need for leagues in this region. He asked about the R2 million in irregular expenditure and about irregular tender processes.

Mr S Mmusi (ANC) asked how the double booking was possible and who was doing the bookings. He noted the resignation and transfers of 19 personnel on page 71. He asked what happened to those that had resigned and what prompted them to resign. He questioned whether people from the Department was visiting rural areas.

Ms G Tseke (ANC) said that the Portfolio Committee must improve interaction with the Department so that progress could be monitored. The Annual Report indicated one of the members who decided to resign. She asked what led to the resignation. She asked for more clarity on the Masters System plan and its approval on page 31.

Mr M Dikgacwi (ANC) said he did not see Caster Semenya been given the same recognition as other successful athletes. He noted that the Department did not meet all employment equity targets and asked when this would be met. He asked for more clarity on issues of leave and sick leave. The Department indicated that it advocated and lobbied 100 municipalities through visits, meetings and workshops to allocate more resources for sports and recreation facilities from the municipal infrastructure grant. He asked for the areas where this took place. Most problems identified in the 2008/09 report were still happening.

Mr L Suka (ANC) noted that the Portfolio Committee had one day to interact with the Department on this report before it would be made public. He did not think that the public would be happy with what had been done. He asked why the state of progress in the information technology directorate was 30% and why the human resource directorate was incomplete, as well as the marketing and communication directorate. The auxiliary services directorate was silent about its budget. Disciplinary action was taken against four departmental employees who had failed to declare criminal records. He asked what happened to those personnel. He asked about the costs involved for legal services and litigation. It was good to see an improvement in the employment of people with disabilities and he asked about the age of these employees. The output of the department was very minimal regarding issues the Auditor-General had identified.

Ms L Mjobo (ANC) said that it would not be viable for the Department to distribute documents via internet as this would affect people from rural areas. She asked how the Department was going to achieve its target of creating a good working environment for people with disabilities if it already experienced building problems.

Mr Frolick noted that provinces did not stick to the required timeframe. He asked what the Department did with the equipment after mass participation events. He asked how the Department was processing the application of foreign based players and coaches. The Committee needed a separate meeting on how they would deal with the issues surrounding the World Cup stadia. Transformation should be the centre of the Department’s activity because he had witnessed a systematic regression on transformation. He asked for more information on transformation on a broader level.

The Chairperson said that the Department and the Committee should meet on a quarterly basis so that they could respectively deal with all outstanding issues. He asked why Love Life could not receive money from other departments besides sports, because the money that the Department gave to Love Life could have been used elsewhere.

The DG replied that he had no power to decide whether Love Life should go, but he would push them as far as possible and focus on everything that is related to sports.

The Chairperson asked on the mass participation and its output on various levels.

On School Sports, Ms Rohini Naidoo, the Director of School Sport, replied that the Department questioned commitment from teachers and the role of the federation. The Department had met all federations except rugby. She suggested that this issue should be dealt with in the next meeting.

The DG replied that the Ratelgat indigenous games were a good way of promoting these events and he would like to see this expanded. It was difficult for him to respond to the games in Ratelgat, because of the level of interaction with the provinces.

Ms Sizani said that most screening took place before and after the person was employed. The Department dealt with those individuals who failed to declare criminal records. The Department was struggling to attract women in top positions. The leave indicated on the report was a cycled number of over three years. People in SRSA seldom abused leave.

The Chairperson was struggling to understand why the Department could not get women in some positions. He asked about the Department’s succession plan and how they addressed the issue. The government policy stated that there must be equal representation of men and women in all working environments.

Ms Lulu Sizani, Chief Director of Corporate Services, replied that succession already reflected in the Department’s Human Resources plan, but they were looking at an immediate plan.

On sports facilities and workshops with municipalities, Prof Paul Singh, Chief Director: Client Support, Liaison, Events & Facilities, indicated that he did not have the information at hand, but could make it available. The issue about foreign nationals should be done in a way to achieve equity. The Department had one dedicated member who dealt with the application of foreign nationals.

The DG said that he met with the Director General of Home Affairs and they had worked on a memorandum of agreement. The Department did a lot of work locally and internationally to protect the dignity of Castor Semenya.

Mr Frolick said that the president of SARU shared his frustration on the issue of “The Beast” Mtawarira. The issue was taken to the President of the Republic and then referred to the Minister of Home Affairs.

The Chairperson said that the gyms which were build in containers were completely inhumane and asked if these were the kind of gyms the Department was referring to, and wanted to know who came up with the idea. He asked why the values of SRA started with fairness and not with patriotism and dedication. The Chairperson wanted to see deliberate transformation. He questioned how facilities could be the major stumbling block in achieving transformation. Transformation was intended to be the core business of the Department. The Auditor General indicated an unqualified report with fruitless expenditure of R7.2 million: R 5 million in the prior year and R 2.2 million in the current year. He asked who the person was who made the double booking and who delegated that person. He also asked why people were not paid within 30 days.

Mr Matlula replied that some delays on payments were caused by technical problems.

The DG apologized for not being able to respond to all questions but he would do so at the next meeting.

Boxing South Africa (BSA) 2009/10 Annual Report
Dr Peter Ntagane, BSA Chairperson, introduced the BSA 2009/10 Annual Report. He apologized for the misunderstanding of including the turn-around strategy with the report and took full responsibility. He was thankful for the guidance received over the years and said there was a lot of dedication from the board to put Boxing on track.

Mr Loyiso Mtya indicated that he had been the BSA Acting Chief Executive Officer (CEO) for 19 months. He thanked Sports Recreation South Africa for the synergy created between Boxing and the Department. The Boxing Board inherited flaws which always caused it to run on a minus. It had to cut down on many items in its budget. The entity was still understaffed and duties had to be divided amongst existing members, while some fulfilled more than one function. The cost-cutting measures had been extremely successful.

Boxing in South Africa had become more competitive around the world and enjoyed recognition and respect by major international bodies. Two female boxers were crowned as South African champions. Boxing South Africa resuscitated its relationship with the National Lottery Distribution Trust Fund. There were various challenges facing the operational performance. Numbers in tournaments dropped due to the attention giving to FIFA World Cup. The low levels of literacy and communication amongst boxers was a huge challenge when it came to expressing themselves as well as understanding learning material. The entity encountered a lack of sponsorship and television exposure. There was a drop in development standards because BSA could not organise the Baby Champs Project. Recommendations had been made indicating that basic communication skills should be a training and development priority. An aggressive strategy had been developed to secure medium to long term service level agreements for sponsorships and television. The marketing strategy and its plans had to be developed and implemented. Boxing South Africa could perform well if it was given the support it needed.

Mr Talithani Khubane, BSA Finance Officer, presented the financial overview. The revenue target was R6,159 million and it actually achieved beyond its target by gaining R6,25 million. The expenditure target was R 6,159 million. In comparison, R5,304 million was spent. It had an unqualified audit report and its quarterly reports were submitted through SRSA. Appointing a fulltime CEO was a challenge and BSA could not fill this position under the constrained cash flow. This position would be filled in the 2010/11 financial year. The collection of sanctioned fees and reduction in debtor’s days were not achieved. If the sanctioning fees were not paid within 30 days, a follow up letter of demand was sent to the promoter. Boxing South Africa did not allow the promoter to stage another tournament if it was not paid without reasonable grounds. Development tournaments were only partly achieved due to the SABC financial crisis.

The entity did not view the audit report as clean, but as a step in the right direction. Boxing South Africa was a defendant in various lawsuits. The outcome of these lawsuits could not be determined and a contingent liability had been raised for this. Legal proceedings included R1,197 million in sponsorship; legal fees of R519 976; unpaid rental of R310 609; and unpaid service fees of R111 025. The total amounted to R2,138 610 million. Fruitless and wasteful expenditure amounted to R1,165 622 million as BSA failed to comply with its internal policies and procedures regarding dismissals, and did not pay its PAYE on time resulting in interest and penalties being levied. Material losses amounted to R37 244 as a result of shortfalls between cash received and cash banked. Boxing South Africa’s total liabilities exceeded its total assets by R3,711 819 million. One of the greatest challenges for the entity was non-compliance with regulatory requirements.

Discussion
Mr MacKenzie asked if the BSA provided medical aid for its members. The VAT liability did not look good on the report and the entity needed management accounts. He asked if the issue between BSA and SABC had been resolved, and if the entity was looking for sponsors.

Mr Suka asked for an explanation why the entity had an Acting CEO for 19 months. He asked for more information on the informal type of training that was given. He did not know what BSA’s opening budget was and saw no disclosure of salaries on page 34. He noted that R6.5 million was raised, but did not see any expenditure on this amount. The penalties occurred on VAT were too much and something was not right.

Mr Lee requested BSA to give reasons for wanting more money. He noted too many court cases and asked how the entity obtained an unqualified audit report. He noted eight non adherences to requirements and asked if BSA had dealt with incidents of corruption.

Dr Ntagane replied that BSA was in a process of hiring an auditor and it was slowly recovering its finances from SABC. He thought there was a misunderstanding about the role of BSA, because it did not run amateur boxing.

Mr Mtya responded that that the entity did not have money to pay a CEO. The process of employing a CEO was started but there were flaws. There would be a CEO present at the next meeting with the Portfolio Committee. It needed a budget that would run all its projects and payments for staff. The Going Concerns with SARS were historical and needed to be addressed. The R37 000 that was not accounted for was unacceptable.

Mr Khubane said the training noted in pages 15 -17 were mainly refresher courses. The Board members remuneration was disclosed on page 58 of the report.

The Chairperson asked how Dr Ngatane was going to deal with the issue of the CEO. Boxing South Africa had to go and headhunt one and a fulltime CEO should be appointed by November or December 2010.The entity should get its governance right because the Management Committee was a subcommittee of the board. It reported to the board and it did not make decisions. The Auditor General had raised matters of emphasis indicating the various lawsuits, and the fruitless and wasteful expenditure of the BSA. He asked why the entity did not comply on the emphasis of matters noted by the Auditor General. He asked why incoming finances were not deposited into the bank on the same day. He asked if the surplus of R2.2 million was cash or cash and liabilities. Boxing South Africa highlighted a shortfall in finances due to liabilities. This might be the reason why nobody wanted to invest in BSA. He asked why the board did not ensure compliance with laws and regulations. It seemed as if the board was not in control and that BSA was suffering from a lack of leadership. Issues from prior year had not been addressed and these obstacles had to be overcome.

Mr Dikgacwi asked for the timeframe of non-televising of boxing and how the SABC responded to this notion.

Mr Lee did not believe that some of the issues indicated in the Strategic Plan Overview had been achieved.

Dr Ngatane replied that there was a process in place to address the issue of the CEO. He could not disclose further details because of the presence of the Acting CEO.

The Chairperson asked who were present at the Boxing meeting in Welkom during April 2010 and how much was spent on the event.

Dr Ntagane replied that the BSA board was invited to the Boxing Conference. It was not involved in the financing and set-up because it was not the organiser of the event. The Chairperson was correct about the Management Committee. It almost seemed as if it took decisions by itself. He acknowledged that the BSA board made mistakes. The legal aspects were still ongoing. It inherited those aspects and the board did meet to discuss how it would deal with the issues.

The Chairperson asked for an outline of the litigation mentioned in the report.

Dr Ntagane replied that BSA was being sued because of members that were not paid. The matter was taken to court and settled. The ex-CEO who had resigned, Mr Dumile Mateza, had made agreements about premises without the permission of the board. The CEO had no legal right to enter into a contract like that and the board was still awaiting the outcome. The VAT issue where monies were not paid to SARS, was also inherited. The board would meet with SARS about an amnesty. The entity was working with the Department of Sport and Recreation in order to adhere to all deadlines. Boxing South Africa had no consultants working for the entity; using the term “consultant” might have been a technical error.

Mr Archie Jonas, a member of the BSA board, replied that the televising of boxing was severely affected by the internal problems at the SABC. Discussions were under way on how to deal with the televising of boxing. The BSA had to address the new SABC board to inform it about the negative effects of boxing not being televised. The board had to stretch itself due to the shortage of staff. The entity had reflected on all prior challenges and was finding ways to overcome those challenges.

Mr Mtya responded that he was working alongside the management of the SABC addressing issues related to the televising of boxing. The 2010 FIFA World Cup and problems within the SABC were the two major aspects effecting the televising of boxing. The intention was for boxing to continue to be televised on Friday, but also on Saturdays and Sundays. Boxing South Africa agreed with the SABC that they should look at a long term strategy for televising boxing.

The Chairperson noted that BSA was working hard to address the wrongs.

Mr Lee requested for a separate meeting with BSA where they would address all challenges and operational procedures.

The Chairperson emphasised the need for the proper way of dealing with operational procedures. The BSA Board was not appointed by Parliament and that was the reason it did not know some of its members or the operational effectiveness of the board. The Portfolio Committee only saw the members when they came to Parliament. The Committee should know about new board members and how appointments took place.

Mr Dikgacwi asked why BSA did not approach other broadcasting channels like E-TV if they experienced so many broadcasting difficulties with SABC.

Mr Jonas replied that board did not know how to reach the Portfolio Committee to inform them about its challenges and state of operations. The entity needed more interaction with those bodies that were overseeing the effective running of BSA.

Mr Petersen, the Director General, said that the board was appointed by the Minister of Sport and Recreation, and was accountable to the Minister. He wanted the Minister to elaborate more on this topic. Mr Petersen was struggling on how to deal with the ongoing concerns of the BSA, especially the financial issues. His major concerns were related to good governance and the appointment of a CEO. The Department did support BSA by sending staff to stabilise the effectiveness of the entity. He was "taking money back" from boxing because he did not see progress. The Department wanted to see a turn around in order to support boxing financially.

Mr Mtya agreed with the comments by Mr Petersen. However, this report was different from previous ones. There was progress; Mr Petersen might not be happy, but they were getting there.

The Chairperson said that the Department requested the appointment of the right people in key positions. This should be done urgently. Boxing South Africa had the backing of the Department if it did what was required.

Meeting was adjourned.