Sixth Report of the Standing Committee on Public Accounts on the Government Communication and Information System, dated 15 November 2006:

The Standing Committee on Public Accounts (SCOPA), having considered a request by the Government Communication and Information System (GCIS) relating to the Sixty-Ninth Report of Standing Committee on Public Accounts: Unauthorized Expenditure: Government Communications and Information Systems, dated 24 May 2006 and subsequently adopted by the National Assembly on 12 September 2006, reports as follows:

1. Background to Sixty-Ninth Report of SCOPA

1.1 The SCOPA recommended that the amount of R1 698 400 million owed by Mr Kotane be written off from the books of the GCIS.
1.2 The recommendation further states that the High Court Judgement against Mr Kotane should continue to apply until such time that the 30 year period lapses.
1.3 The writing off of the debt should also be done in accordance with the National Treasury Regulation 11.4.1 which states that “The Accounting Officer can only write off debts owed to the State if he or she is satisfied that all reasonable steps have been taken to recover the debt and the debt is irrecoverable”. It further states in 11.4.3 that “all debts written off should be disclosed in the annual financial statements, indicating the policy in terms of which the debt was written off”.

2. Background to GCIS request

2.1 The original debt amount of R1 698 400 million increased in the books of the GCIS due to accumulated interest.
2.2 The actual amount reflecting in the books of GCIS as at 27 October 2006 is R3 578 703,31. The interest, being greater than the original debt, amounts to R1 880 303, 31.
2.3 This amount excludes other debt which has since been accumulated due to the legal costs of the Department of Justice who were pursuing the recovery of this debt. This amount has been recorded as a debt in the books of the GCIS. This was meant to be recovered from Mr Kotane.
2.4 The legal costs accumulated due to the legal processes undertaken by the Department of Justice to recover the debt amount to R110 038.67
2.5 The total debt as a result of the unauthorised expenditure then amounts to R3 688 741. 98.
2.6 The implication of effecting the decision of the National Assembly as adopted on 12 September 2006 would imply the writing off of the debt of R3 688 741.98. According to Treasury Regulations a debt can be written off against a savings of a department. The GCIS is therefore required to have a saving of R3 688 741.98 to be able to write off the debt.

3. Request by GCIS

3.1 The GCIS in consultation with National Treasury, approached the SCOPA to waive the interest accrued.
3.2 The GCIS further requested SCOPA to grant permission to write off the capital debt over a two to three year period.

4. Committee decision

4.1 After considering the request the Committee approves the waiving of the interest accrued on the books of the GCIS relating to the principal debt and the legal costs incurred by the Department of Justice.

4.2 It furthermore agrees to the request by the GCIS to write off the debt of Mr Kotane over a two to three year period provided that this does not violate National Treasury regulations.

Report to be considered.