Department of Justice & Constitutional Development, Guardians Fund, National Prosecuting Authority: Interrogation of 2005/6 Audi

STANDING COMMITTEE ON PUBLIC ACCOUNTS (SCOPA)
31 January 2007
DEPARTMENT OF JUSTICE & CONSTITUTIONAL DEVELOPMENT, GUARDIANS FUND, NATIONAL PROSECUTING AUTHORITY: INTERROGATION OF 2005/6 AUDIT REPORTS

Chairperson: Mr T Godi (PAC)

Documents handed out:
National Prosecuting Authority Annual Report (available at www.npa.gov.za)
Department of Justice (DoJ) Annual Report (available at www.doj.gov.za)
National Prosecuting Authority Outcomes for 2005/06 and action plans
DOJ Publication and Tabling Schedule - Annual Reports as required by the PFMA

SUMMARY
The Department of Justice and Constitutional Development stated that due to the unfortunate shooting of Mr Alan MacKenzie, a key member of the delegation, the Department was unable to proceed properly with its presentation, and requested a postponement. The Committee agreed to postpone the interrogation of this report until 14 March.

Although the audit report of the National Prosecuting Authority had been unqualified, the Auditor General had raised matters of emphasis in regard to financial managements, non-compliance with National Treasury Regulations, donor funds, debt management weaknesses, the lack of clear definition on the duties of the accounting officer, the listing of the Authority as an entity under the Public Finance Management Act and the mechanism of funding. There was lack of clear policy and procedure on performance reporting. Members raised concerns and questions on the vacancy rate, quantification of the figures for recruitment, late finalisation of the reprioritisation process by the Department of Justice and Constitutional Development,  and who was responsible for this delay. Members asked if similar incidents would recur, and if they had resulted from poor planning. The non-compliance with regard to procurement, the details of the specific contract and the deviations from it were interrogated. Further questions arose in regard to vehicle leases, deviance from one donor agreement, whether staff were aware of processes, lack of debt management and monitoring and the role of the project teams described. The Committee were concerned with whether there was a process to address the governance issues. The disciplinary proceedings were criticised as taking too long.

MINUTES
Department of Justice and Constitutional Development (DOJ) & Guardian’s Fund: Auditor General’s Report for 2005/6
Advocate Menzi Simelane, DOJ Director-General, stated that the Department was unable to present fully due to the unfortunate shooting of Mr Alan MacKenzie, Chief Financial Officer, DOJ, who was a vital part of the team that was working on the issues to be discussed that day. The Department was very upset with the shooting and very worried about Mr MacKenzie’s condition. He asked the Chairperson if it was possible to reschedule the meeting at a later date.

The Chairperson explained that the Committee had been particularly anxious to meet with the Department of Justice at the beginning of the year. There were important matters that needed to be clarified. Having said that, however, he expressed his sympathy with the Department’s situation and agreed to grant a postponement to 14 March. 

National Prosecuting Authority (NPA): Auditor General’s report for 2005/6
The Chairperson indicated that although the audit report had been unqualified there were a number of areas of concern. He also asked the representatives of the NPA to give an indication of their positions. 

Mr Brian Graham said that he was the Acting Chief Executive Officer (CEO), and that Ms Marion Sparg (CEO) was on special leave pending a disciplinary hearing. Mr Graham said he had been acting in this position for three and a half months.

Mr Trent (IFP) asked Mr Graham to state what his official position at the NPA was before he became the Acting CEO.

Mr Graham said that he had been the Chief Financial Officer, prior to his appointment as the Acting CEO.

The Chairperson commented that the vacancy rate was very high, and asked how the NPA was dealing with the high vacancy rate.

Mr Graham replied that the NPA had employed a special project team that was being monitored on a weekly basis by heads of departments and business leaders. The task of the project team was to fast track the recruitment process through the HR processes. Since the implementation of the project, there had been a phenomenal success rate with the project, and this had enabled the NPA to clear up the amount of backlogs in applications, and the fast tracking of new applications.

The Chairperson asked Mr Graham whether it was possible to quantify the figures

Mr Graham said that it was possible to quantify the figures, but that at this stage they were not available. The NPA was able to provide the project team’s performance to date.

The Chairperson requested that a written statement of the amount of ground that had been covered by the project team’s performance, together with the figures, be forwarded to the Committee.

Mr Trent also recommended for that NPA also provide information on when they anticipated to have all the posts filled. Mr Trent asked Mr Graham to elaborate whether or not the number of posts indicated were actually funded posts.

Mr Graham noted Mr Trent’s recommendation in terms of the information required. He stated that all posts had to be funded in order to ensure that the NPA reached the level where it needed to be.

The Chairperson raised the issue of financial management pursuant to late finalisation of the reprioritisation process by the Department of Justice and Constitutional Development. He asked the Department to elaborate to what extent the late finalisation had compromised due processes in terms of the normal procurement practices.

Mr Graham stated that the issue arose due to the fact that there was a possibility of error in the procurement process. He said that the Auditor General (AG) was concerned with some of the issues regarding the procurement process, but had later indicated that he had been satisfied that matters were in order.

The Chairperson raised the issue of late reprioritisation, asking whether the delay came from the Department of Justice, or from the NPA.
 
Mr Graham stated that the responses to the reprioritisation matter were prepared jointly with the Department of Justice. Therefore when the Department of Justice appeared before the committee, their response would not differ from that of the NPA. He said that the delay was due to the fact that the Department of Justice was still determining whether or not there would be funds available for the NPA to use. The NPA received the funds at a very late stage, and this led to the implementation of a quarterly review programme, which aimed to prevent a similar incident from recurring. The NPA was expecting new reprioritisation figures, and this time the figures would be provided sooner than in the past.

The Chairperson asked whether the NPA was expecting a similar incident to that occurring in the previous year, when submissions were handed out on the last leg of the financial year.

Mr Graham replied that this was not the case, and that the NPA was not looking for funds from the Justice budget. This incident had only happened because the NPA wanted to provide the Department of Justice with a reprioritisation of the NPA’s own budget, and the figures provided were not substantial.

Mr Trent stated that he was glad to see that the reprioritisation process had begun, and asked the NPA to elaborate whether it had enough time to complete the process, given the fact that there were only six weeks left until the end of the financial year.

Mr Graham replied that the NPA was in the process of spending reprioritised funds within the NPA budget. The process began in December, and the NPA would not require additional funds from the Department of Justice.

The Chairperson stated that whilst it was a positive step that the reprioritisation process was happening, he would like to know whether the decision to reprioritise at such a late stage resulted from poor planning. If so, had the NPA been forced to create artificial needs in other projects.

Mr Graham said that he agreed with the Chair on the principle, but that there were unexpected circumstances that arose where bids were not placed before National Treasury. When this happened the bulk of the funds were sent to other areas of the NPA, in order to make up for the bids that were not placed before Treasury.

Mr Trent raised the issue of vacancies and staff. He argued that in terms of staff management, there was no point in dealing with the vacancies, while ignoring other aspects of the human resource management. He asked Mr Graham whether other matters were being attended to.

Mr Graham stated that the project team was working alongside the NPA staff, and hopefully this collaboration would result in fast-tracking of recruitment and improvement of skills. The NPA had also appointed a new person to head the human resource management, who would also be in charge of making sure that all staff adhered to the NPA’s policies.

The Chairperson asked Mr Graham to elaborate on the extent of the NPA’s non-compliance with regard to procurement.
 
Mr Graham replied that the non-compliance related to a specific contract, and it was not a general problem.

The Chairperson asked if it was this specific contract that led to the suspension of the CEO.

Mr Graham said that the CEO’s disciplinary hearing related to matters arising in the period between 2003 and 2004. Therefore the issues were completely unrelated.

The Chairperson said that the AG had identified three instances where there were deviations from that particular contract, and asked Mr Graham what he believed were the root causes of the deviations.

Mr Graham stated that the root cause was the result of a motor vehicle lease that was classified by the NPA as an operating lease instead of a finance lease. It was only at the last minute that it was discovered that the lease was incorrectly classified, which resulted in correct procedures not being followed.

The Chairperson noted that he found the assertion that no one at the NPA could distinguish between the two types of leases completely improbable.

Mr Graham said that every effort had been made to ensure that the procurement of the vehicles was made in a satisfactory manner. He said that the NPA discovered that it was being overcharged by the previous motor holding company, and was forced to seek an alternative once the lease ended. The NPA then entered a lease with an organisation, which already had an approved governmental contract, where it was decided that vehicles would be attached to the contract. It was also important to note that there was an extensive process of inquiry into whether the lease would be classified as a financial or an operating lease, and the NPA was informed by various sources that it could be both, as the procurement did fall into both criteria.

The Chairperson then stated that even though the procurement of the vehicles was cost effective for the State, the NPA should not allow such bending of processes as they could lead to situations where serious loses were made. He asked Mr Graham to elaborate on the measures that were in place to prevent such a transgression from recurring.

Mr Graham said that National Treasury had implemented measures. It had, late in 2006, published a practise rule late that allowed for the finance leases of equipment and motor vehicles to be supplied by one service provider. This was due to the fact that a finance lease was more economical than an operating lease.

The Chairperson stated that the NPA faced many challenges. Compliance with donor agreements was one challenge, and where deviations had been discovered in these agreements, this reflected poorly on the NPA.

Mr Graham stated that the donor agreement was merely an oversight, and that the NPA did not receive many donations. In this particular instance, however, the agreement came through the NPA’s bank account rather than Treasury’s account. There had since then been measures put in place to prevent such an incident from happening again.

Mr Trent said that there were a number of areas of serious discrepancies that the AG had highlighted. He asked whether staff at the NPA were aware of the correct procedures.

Mr Graham argued that in his view this did not arise through management being unaware of the procedures. Rather it was due to high staff turnover on the procurement side, and NPA had implemented measures aimed at curbing this. A project team had been placed in the procurement department in order to ensure that the procurement processes were followed in a strict and systematic manner.

The Chairperson stated that the issue of non-compliance was recurring. He asked whether the lack of monitoring of debt management was being addressed.

Mr Graham said that the issue of debt management had now been raised for the first time. The NPA had now identified the outstanding debts, in order to keep them up to date.

Dr G Madikiza (IFP) believed that there was too much emphasis placed on project teams, and asked Mr Graham to explain why the NPA needs a special project team to ensure that there was compliance.

Mr Graham responded that the task team was not placed to ensure compliance, but to speed up matters and rapidly provide staff with skills that would lead to compliance. The primary purpose of the team was to skill staff, rather than to undertake compliance itself.

The Chairperson stated that the NPA faced a management problem, and asked whether there was a process in motion to address the governance matters.

Mr Graham stated that there was a process in place, but that this had not been finalised. Finalisation was beyond the control of the NPA. Although the accountability issues remain clouded, there was still accountability in the NPA.

The Chairperson asked Ms Chohan, Chairperson of the Justice Portfolio Committee, to comment.

Ms F Chohan (ANC) stated that she was strongly opposed to the fact that the NPA did not fall under the Department of Justice. She argued that the NPA’s independence caused disparities amongst magistrates and prosecutors, and that the NPA had failed to provide clear answers on how it planned to resolve some of the issues raised by the AG. With regard to the CEO’s position, Ms Chohan stated that the disciplinary investigations were taking too long and essentially the CEO was taking a period of paid leave. This was unfair to the CEO, the NPA and the taxpayers.

The meeting was adjourned