Department of Rural Development & Land Reform Annual Report 2010/11: hearing with Deputy Minister
The Department of Rural Development and Land Reform (DRDLR), accompanied by the Deputy Minister, appeared before the Standing Committee on Public Accounts (SCOPA) to account for the findings of the Auditor-General on their financial statements for the 2010/2011 financial year. The Department had received a qualified audit opinion from the Auditor-General in respect of Tangible Capital Assets and emphasis on matters for a restatement of corresponding figures; significant uncertainties; commitments; and fruitless and wasteful expenditure. SCOPA engaged the Department on these and other critical inter-related matters such as compliance with laws and regulations and internal control investigations. Of primary concern was the recurring problem of tangible capital assets and the failure of the Department to produce an updated and complete immovable asset register (the basis of the Auditor-General 's qualified opinion). SCOPA noted that the cut off date for the submission of land claims had been on the 31 December 1998, yet 14 years later many claimants were still awaiting the settlement of their claims. The land issue was an emotive one and carried tremendous cultural value and it was unacceptable that the country had landed up with a system where there was so little accountability. The Department's explanation was that the former Department of Land Affairs had been a successor to various state departments before 1994, and they had to start creating a land register from scratch. Since the establishment of the DRDLR, significant progress had been made in terms of the surveying of state land and the verification and registration of land owned by the state and they were attempting to complete the process by the end of 2012 and not in 2013 as had been originally planned.
SCOPA had serious concerns about the Auditor-General's identification of significant uncertainties related to the land restitution process of the Land Claims Commission, as reflected in the contingent liabilities disclosed by the Department. Claims instituted against the Department amounted to R1.172 billion and were subject to the outcome of legal proceedings. The Department's explanation was that, although a database for land claims existed, it was not comprehensive and it did not track every stage of the land restitution process and because of this and other serious limitations, it was difficult to predict and make provision for liabilities. The challenge was at which precise point to determine when a commitment had been made on behalf of the State. Landowners had taken them to Court on the basis of an offer to purchase and there had been adverse judgements against the Department. SCOPA was perturbed by the prospect of escalating contingent liabilities and warned the Department to take steps to mitigate against this happening.
SCOPA queried an amount of R642 million in respect of projects older than three years which had been included in the Department's commitments due to changes of restitution settlement options; community, tribal and family disputes; and untraceables claims. The Department explained that in the past the Land Claims Commission decentralised delegation in terms of negotiating and signing of Sale Agreements with landlords and a number of agreements were signed at a provincial level which exposed the Department to risk. No credible records were kept and the allocation by Parliament to settle restitution claims exceeded what had been made available in the financial year. The Minister made the critical decision to centralise negotiations and approval of claims to circumvent the recurrence of these problems.
SCOPA addressed the Auditor-General's finding that the Department had incurred fruitless and wasteful expenditure of R73.406 million as a result of interest paid as compelled by the court on late settlement of land purchases. The Department's analysis set the figure at R66.928 million. It emerged that the amount had been condoned in the current financial year as they had conducted a departmental investigation and found that no one could be held responsible. The Department's defence was that Regional Land Claims Commissioners had previously been delegated to sign sale agreements and these were sometimes problematic in terms of the perceived commitment made by the State and claims could not be settled because of circumstances that occurred after the sale agreement. The conclusion of the claims was also a lengthy process and by the time it reached the national office, the budget was exhausted. Most of the interest was accrued as there was no money for the payment at that stage and they had to wait for the next financial year's budget. SCOPA found these explanations unacceptable as the system was created by people and thus someone was responsible. The leadership had the responsibility to ensure that there were systems in place that did not incur unnecessary costs. They questioned the legal framework of the restitution process and whether there was a policy gap.
SCOPA noted the negative findings of the Auditor-General on the Department's compliance with laws and regulations which included non-compliance with the Public Finance Management Act (PFMA); Senior Managers who had not signed Performance Agreements; and inadequacies in criminal record, academic qualifications and citizenship verification checks. It was emphasised that in the DRDLR, it was important to have people with high standards of ethical management, especially when it came to the alienation of land.
SCOPA noted the number of investigations concluded in the year under review and currently underway which related to procurement, tenders, fraud, land reform projects and other matters and the investigations in progress under Proclamation of the President. The speedy finalisation of these investigations was necessary. It was very unsettling to have a Department where there were that number of investigations pending. Of further concern was the lengthy suspension of officials and protracted disciplinary hearings. Concerns were raised on internal control mechanisms and the absence of an approved fraud prevention plan. SCOPA identified challenges in the Information Technology environment and the Department informed them that they had embarked on a turnaround strategy to address this matter.
The Deputy Minister gave context to some of the challenges the Department had experienced in recent years and the direction in which they were moving. Poor accountability in the past had been the result of an almost semi-autonomous Land Reform Commission that worked outside of the budget framework and took decisions with no cognisance of the availability of resources in the Department. They had made commitments that had led to the many court cases resulting in the fruitless and wasteful expenditure of R66 million and the findings on contingent liabilities. His understanding was that they were hardly talking about court cases any longer, due to the reorganisation of the Department and the setting up of appropriate systems to improve accountability within the framework of the available resources.
There were also intense meetings with the executive management and leadership and they had fast tracked the appointment of key strategic posts in the Department. They had appointed a Chief Information Officer; appointment to the Chief Security Manager post was being finalised; they were creating an internal research unit and they were taking the advice of the Audit Committee on risk compliance, fraud prevention and other internal control measures. This was a mid-term re-organisation of a new DRDLR and the initiatives were the result of the new Director General taking responsibility for what had to be done, with strong support from the Minister. There was also corroboration underway with the Technical Advisory Unit in the National Treasury.
The pressure being put on the Department to bring forward the date for information capturing to the end of 2012, rather than 2013, related to the work that was emerging from the National Reference Group on the Green Paper which required the finalisation of the audit, so that it would have greater impact. The Deputy Minister noted the Department's commitment to expediting land claims. In the past four weekends, they had paid out millions of rands in financial compensation. They had privatised this undertaking and the claims were finalised due to the availability of resources that had been budgeted for and the realisation of the urgency required to deal with this matter. They were fast tracking the research process of checking the validity of the claims and the verification of beneficiaries. In the new financial year they would fast track technology systems and use young people from the National Rural Youth Service Corps (NARYSEC) project for data capturing and capacity from other provinces.
Opening remarks and welcome
The Chairperson welcomed Mr Lechesa Tsenoli, Deputy Minister of the Department of Rural Development and Land Reform (DRDLR), and Mr Mduduzi Shabane, Director General of the Department, and his delegation. Mr Tsenoli registered an apology from the Minister, Mr Gugile Nkwinti, who was unable to attend due to an unavoidable change in his schedule. He asked to be excused early from the meeting due to a matter of urgency relating to his accommodation.
The Chairperson noted that the importance of the DRDLR could not be over-emphasised in a range of contexts that gave rise to its existence and its mandate. SCOPA had interacted with the Department in March 2010. The present engagement involved some of the same issues and was for the purpose of exchanging information and obtaining an understanding of the challenges the Department faced so that they could make appropriate recommendations. The Chairperson encouraged the Department to be forthright in its responses as it impeded the work SCOPA had to perform, if information was not forthcoming or misrepresented.
Dr D George (DA) noted the apology from the Minister and the Deputy Minister's need to leave the meeting early and asked for further clarity on their reasons as SCOPA's function was to question the political heads of the Department. The Chairperson responded that there was an unforeseen meeting of the presidential coordinating structure that morning. Mr Tsenoli explained he was moving into state accommodation after an overnight hotel stay, noting that SCOPA discouraged unnecessary hotel stays by parliamentarians. The Chairperson said that at a political level, there was some understanding of the issues that would be raised and their commitment was needed to address them. The Chairperson noted that SCOPA members had been allocated focus areas to direct the engagement with the Department on critical issues.
Tangible Capital Assets
Ms A Muthambi (ANC) recalled that SCOPA had met with the Department on Tangible Capital Assets and other matters in March 2010. Tangible Capital assets had been an issue in the Department's Annual Reports since 2008/09. It recurred in 2009/10 and in 2010/12 they had received a qualification from the Auditor General (AG) for Tangible Capital Assets. Could any improvement be expected in the near future? If so, how soon was this going to happen? Ms Muthambi noted that the qualification was for un-surveyed land that was not recognised in the financial statements. 2,870,711.31 hectares was unaccounted for. Who was responsible for this? Why had they allowed the status quo to remain as it had?
The Director General, Mr Mduduzi Shabane, responded that it was, indeed, a qualification that had recurred. The reason, as they had stated in the past, was that the former Department of Land Affairs had been a successor to various state departments before 1994, and they had to start creating a land register from scratch. The process had been tedious and time consuming but they had made significant progress in terms of the surveying of state land and the verification of property owned by the state. They had presented the Portfolio Committee on Rural Development and Land Reform with a plan and progress report on how they would ensure that the Asset Register was completed. They were in the process of ensuring that the land in question was surveyed and registered. There were various assets whose ownership they had to confirm and capture accurately in the database. The original plan was to complete the exercise by 2013, but because of pressure from the political heads and oversight bodies in Parliament, the instruction was for them to determine if the timeline could be moved from 2013 to 2012. They were in the process of capturing all the known assets and ensuring that they were surveyed and registered and on the Asset Register. They were hoping to submit a plan to the Minister and Deputy Minister by the following week.
The DG acknowledged that, as the Accounting Officer, he was responsible. Resources had been made available to the Chief Surveyor-General of the Country to lead the Department in ensuring that this exercise was completed.
Ms Muthambi asked if there were timelines for the process? He had identified who was responsible and that resources had been made available. What next?
The Director General responded that the timelines were for 2013 as stated earlier, but the recent instructions had been that the Department must come up with a plan to complete the exercise by December 2012. They had been asked what resources they needed and what support the Chief Surveyor-General needed from the Department. The Chief Surveyor-General would have to formulate a plan on whether it could be completed in this timeframe or not.
Ms Muthambi noted that the AG had acknowledged the Department's efforts in updating the Immovable Asset Register. However there was still not sufficient and appropriate information to satisfy the need for the completeness of the properties recorded in the immovable asset register as disclosed in note 34 to the financial statements (page 83 of Annual Report). Why were documents not provided as noted in the AG's report? (page 46 of Annual Report)
The DG thanked Ms Muthambi for noting the AG's acknowledgement that progress had been made. In the past, the AG could not express an audit opinion on what the Department had presented. In the 2010/ 2011 financial year, the Department had an Asset Register in place for the first time. There were several challenges, but they were in a better position than they had ever been to provide the required information and this was indicative of significant progress made in projects undertaken by the Surveyor-General.
The Chairperson said that the question was: ' why were documents not available?' What were the problems and had they been attended to?
The DG responded that the problem related to a specific number of properties. 6117 properties had been captured differently in the Deeds Office Register and had not been completely verified against the asset register at the time the AG had completed the audit. The exercise had now been completed and all the land parcels had been verified, those that belonged to DRDLR had been determined, identified, and captured and those that did not were referred to the relevant departments.
Restatement of Corresponding Figures
Ms Muthambi referred to the Restatement of Corresponding figures identified in the AG's Report (page 46 of Annual Report). The corresponding figures for 31 March 2010 had been restated as a result of an error discovered during the 2010/11 financial year and this had been disclosed in note 34.3 to the financial statements. (page 84 of Annual Report) Who was responsible for this error? What had been done to prevent this from recurring in the near future?
The DG provided the background to the occurrence. The Commission on the Restitution of Land Rights processed restitution claims. Claims that were valid, were settled in terms of the Act and the land transferred to the successful claimants. In recent years, there had been a number of successful claims where landowners did not dispute the validity of the claims. However, in the process of finalising the claims, disputes amongst claimants were occurring. As a result, if the Department could not proceed to settle the claim and they ended up having challenges from the landowners. The land was then acquired by the Commission and was registered in the name of the State, while the Commission tried to resolve the Disputes. In the past, the Commission had not declared this land and as a result it was never captured on the system. This problem had been there for some time and they had since corrected this. The Commission could not acquire land and not capture it and not alert the Department that it had acquired State land. Control mechanisms had been put in place to ensure that the land was transferred to the State while disputes were being resolved.
Ms Muthambi referred to the AG's identification of significant uncertainties (page 46 of Annual Report) with reference to the Contingent Liabilities disclosed in note 20.1 of the Department's Financial Statements. (page 77 of Annual Report) Claims instituted against the Department amounted to R1.172 billion and were subject to the outcome of the legal proceedings. She was mindful of the Department's explication of the huge amounts involved, but it was not satisfactory, especially the explanation that, although a database for land claims existed, the database was not comprehensive as it did not track every stage of the land Restitution process. She noted that the Department had started an electronic document management project which was focused on identifying; scanning; capturing of Land Reform and Restitution project files. Why did the Department not provide for liabilities? If the Department had so many land claims, they had to make provision for this, as it was a legal requirement. What were they doing to address the matter?
The DG admitted upfront that this had been a serious challenge, which had been quite difficult to resolve for some time. Various actions had been undertaken at a ministerial level to assist in ensuring that there were proper control systems. With regards to this specific issue, it related to the processes of the Restitution Commission. The challenge was at which precise point to determine if the claim constituted a contingent liability. From the time when a claim was lodged certain steps had to be taken. Before it was processed it had to be gazetted; it had to be validated; the landowner had to be informed and the consequent steps followed. It was difficult to draw the line and say when they had made a commitment on behalf of the State. The gazetting of the claim in itself did not always mean that the Claim was valid and would be settled. Landowners would then argue that the State had made a claim on their property and argue that from that point they had stopped investing in their land. There had been cases where landowners had taken them to Court on the basis of an offer to purchase. They would argue that the State had gazetted the land and thus had to proceed to the logical conclusion and finalise the claim. If the Court found their case valid, simply on the strength of an offer to purchase, the Department had to settle. This court action resulted in the contingent liability, as it was unforeseen and no provision had been made for the settlement.
The Chairperson asked at which point a claim was gazetted. What did it mean to have a claim gazetted?
The DG replied that it happened at the beginning of the process, once there had been a preliminary investigation to ascertain that there was a possibility that the claim was valid. There was then an obligation to inform the landowner that there was a claim on the property. Landowners could then dispute the claim. If there was a disagreement and they could not resolve the problem, there was a provision in the Act to take the matter to Court to determine the validity of the Claim. This had also caused a number of problems and there had been adverse judgements against the Department.
The Chairperson noted that the validity of the claim was thus not a matter of historical record but a legal process as well. He commented that, from the explanation, it seemed there were a lot of uncertainties and open-ended interpretations along the way that led them to where they were. He speculated on whether there was a policy gap.
Ms Muthambi referred to Commitments as stated in note 21 to the financial statements of the Department (page 78 of the Annual Report) and queried an amount of R642 million in respect of projects older than three years, which had been included in this figure. The reason given for this by the Department, was that it was due to changes of restitution settlement options, community, tribal and family disputes and untraceables claims. The Department had noted that interest might be charged on settlement of some of the claims in terms of the Public Finance Management Act (PFMA). Ms Muthambi said this was a problem as it involved R642 million. Why had the Department allowed this to happen? How did they plan to address the issue?
The DG responded that the context of the problem was that in the past the Land Claims Commission decentralised delegation in terms of negotiating and signing of Sale Agreements with landlords. As a result, a number of agreements were signed at a provincial level. Unfortunately, at that time, no credible records were kept which meant that at some point the Department became exposed. A certain amount had been allocated by Parliament to settle restitution claims but the claims exceeded what had been made available in a financial year. Since then, the Minister had decided to centralise decision making in as far as making commitments for the Land Claims Commission.
The Chairperson summarised that decentralisation had been the wrong approach and that the problems, to a large extent, related to the way the Commission was administered and managed in the provinces and this had led to the present situation.
The DG agreed and said that the Minister had come to the same conclusion and taken the decision to withdraw delegation and approve everything centrally, so that the Department was not exposed further. The two critical decisions were to centralise negotiations and approval of claims. Before matters went to the Minister, there was a Quality Committee that examined each and every claim before they were forwarded to the Minister, even those that were deemed to qualify for restitution.
The Chairperson said he understood that the Commission did not have permanent National Commissioners.
The DG confirmed this and said that as part of addressing these problems, in late 2010, the Department decided to rationalise the functions of the Commission. The Commission had been established in terms of the Restitution Act and not in terms of the Public Service Act and there had been a thin line to the Accounting Officer of the Department and the Commission had been almost semi-autonomous. The Minister decided that the Commission would report directly to the DG of the Department and that there would be a new Commission created with a Chief Land Claims Commissioner at National office, a Deputy Chief Land Claims Commissioner and a Regional Land Claims Commissioner. In the provinces they would have Chief Directors, appointed in terms of the Public Service Administration Act. They had done this and by the end of the current financial year they would have a new Chief Land Claims Commissioner, a Deputy Chief Land Claims Commissioner and a Regional Land Claims Commissioner.
Fruitless and Wasteful Expenditure
Ms Muthambi referred to the AG's finding that the Department had incurred fruitless and wasteful expenditure of R73.406 million as a result of interest paid as compelled by the court on late settlement of land purchases (page 47 of Annual Report). Who was responsible for this and what steps had been taken?
Ms Muthambi referred to the reconciliation of fruitless and wasteful expenditure as disclosed in note 27.1 of the Department's financial statements and drew attention to the closing balance of R76.730 million reflected as fruitless and wasteful expenditure awaiting condonement (page 80 of Annual Report). Why was this amount awaiting condonement?
Ms Muthmabi referred to the analysis of the fruitless and wasteful expenditure for the same period as disclosed in note 27.3 where the balance was recorded as R73.406 million (page 80 of the Annual Report). She noted that departmental investigations were in progress. Could they update SCOPA on the status of the investigations and on all the issues she had raised? The Annual Report had been signed by the Minister in September 2011 and there should have been significant progress since then.
Ms Irene Singo, Acting Chief Financial Officer, DRDLR, said the condonement was in relation to the Treasury Regulation Guidelines that stated that if there was fruitless and wasteful expenditure, a proper investigation should be conducted. If it was proved that someone was culpable, then disciplinary action had to be taken and if not, it could be condoned by the person who had that authority. Their analysis showed that almost 95% of the fruitless and wasteful expenditure related to the court challenges and interest paid on court orders of the Commission. During the period under review, investigations had been in process to establish if anyone was responsible for the fruitless and wasteful expenditure.
The Chairperson wanted more clarity on the land restitution process and how it resulted in the State being taken to court, if they took too long to pay once they had informed a landowner that they wanted to purchase his land. What was the legal framework for someone to say that you said you would buy my farm but you did not pay within the timeframes. Either it was bad legislation or it was a spiteful farmer. How, in the process of acquiring land, did the State end up paying interest that could be legitimately enforced by the Courts? What was the nature of the legislation?
The DG referred the question to Adv Vela Mngwengwe, Chief Director: State Land Administration, DRDLR.
Adv Mngwengwe responded that, as the DG had explained earlier, there had been Regional Land Claims Commissioners delegated to sign sale agreements. Often these sale agreements were not ready to be submitted to the Minister for settlement and when they were submitted there were questions around it. Others were submitted and approved by the Minister, but subsequently, it could not be transferred to the entity involved because of issues that had arisen. As a result of all of this, payment was delayed and they got taken to court. The transfer of land to the State was a measure adopted to circumvent this problem. The trend had been that claims could not be settled because of circumstances that occurred after the sale agreement had been signed.
The Chairperson noted that the issue of condonement of fruitless and wasteful expenditure was of serious concern to SCOPA.
Ms Singo said that condonement was just a word that Treasury used and the Department had to show the details in their reporting framework.
Ms Muthambi noted that SCOPA was aware of Treasury's regulations on condonement. She clarified her question by stating that there appeared to be a contradiction between what the Department was saying and referred to their reconciliation of fruitless and wasteful expenditure where they had stated that they were awaiting condonement for R76.730 million and their analysis where they referred to disciplinary action/criminal proceedings and departmental investigations which were in progress (page 80 of the annual Report). Condonement should take place when they found that no one could be held responsible, yet they had stated that they were they awaiting condonement on the fruitless and wasteful expenditure. What was the Department doing to recover the money?
The Chairperson noted the reference to investigations and asked how far they were to date.
Ms Singo explained that the phrase 'Disciplinary steps taken/criminal proceedings' had just been the heading. In the case of the investigations, a lot of them related to restitutional activities and they were condoned in the current financial year, as they could not find anyone responsible, specifically. In the case referred to. In respect to the duplication of payment to a beneficiary in a land reform project, an investigation had been completed by the Special Investigating Unit (SIU). Officials had been suspended but she did not have the details at hand.
Ms Muthamba wanted confirmation that interest paid as compelled by the court had amounted to R66.928 million and the Department was reporting that there had been a departmental investigation and no one was found responsible for the R66 million.
The Chairperson confirmed this understanding.
Ms Muthambi was not satisfied with the conclusion that there had been no wrongdoing and as public representatives, SCOPA wanted to scrutinise the report dealing with the matter.
The Chairperson asked if they could have the report that went into the details of what transpired. Based on the DG's earlier explanation on decentralisation, the problem was that at regional level, officials were committing the Department and when claims were processed at National Level, there were question marks and debates. How had they analysed what resulted in R66 million of fruitless and wasteful expenditure? Was that for a number of cases over a period of time?
The DG said that they would provide the report.
Mr Vusi Mahlangu, Acting Deputy DG: Land Reform and Administration, said that because of the tedious nature of settling the claims, officials on the ground would work on projects for long periods of time before they concluded the sale agreement. By the time it reached the national office, the budget was exhausted. Most of the interest was accrued as there was no money for the payment at that stage and they had to wait for the next financial year's budget. It was difficult to say who was responsible as it was a systems issue.
The Chairperson said the system was created by people and thus someone was responsible, individual human error happened. Costs had been incurred needlessly and the DG and the Minister had the responsibility to ensure that there were systems in place that did not incur unnecessary costs. The current Minister had changed the system because the State was suffering unnecessary financial loss. The critical question was if those responsible at that time did nothing wrong. The Chairperson expressed his frustration and said it could not be explained away by attributing it to a systems problem.
Ms Muthambi said she had reason to believe that somebody was responsible and money had to be recovered as people had been given responsibility.
Ms Muthambi referred to the duplication of payment made to a beneficiary, which involved R93 000. What was the progress since then on the matter?
The DG responded that, without going into specific details, he could report that the President had signed a Proclamation to investigate all Land Reform crimes throughout the country. The investigations were ongoing and there were four officials in the Department who were not only suspended but were also facing criminal charges currently. The SIU was continuing with their investigations countrywide and additional affidavits had been made against the officials.
Ms Muthambi said those were separate processes and asked if the Department had conducted their own disciplinary process.
The DG agreed and said that when they became aware of the incidents, they suspended the officials and had a disciplinary enquiry parallel to the criminal investigation and there were internal disciplinary processes that were ongoing.
Ms Muthambi asked for an update on the suspensions.
The DG responded on the suspensions of the four officials and said that, unfortunately, the chairperson of the disciplinary committee had passed away in 2011 and they had to start the process over again with a new chairperson. They had not been able to dismiss anyone as yet.
The Chairperson asked if these were the four officials of the Overberg project.
The DG responded that they were not and it was beyond that and there was an across-the-board investigation.
Ms Muthambi noted that the lengthy turnaround time for disciplinary action was of concern and queried the tendency for officials to be given suspension on full pay.
The Chairperson asked if the officials were suspended.
The DG apologised as he had mixed up two separate issues. There were investigations that were ongoing generally on the grants and disciplinary action had been taken and attempts were underway to recover the money. He asked Mr Ricus Van Rensberg, Director: Internal Audit, who was responsible for forensic investigations, to respond directly to the questions raised.
Mr Van Rensberg said an investigation had been conducted and concluded and they recommended disciplinary action against the officials, which the Human Resource (HR) management had to implement. They had also advised that the money be recovered from the beneficiary that received the money and if that was not possible, then the money had to be recovered from the official.
The Chairperson asked how many people and cases they were talking about.
Mr Van Rensburg said he was referring to the Overberg case specifically.
The Chairperson referred to the four officials the DG had alluded to and asked whether they were undergoing the disciplinary process and if they were on suspension or if they were still working full time in the Department.
Mr Van Rensberg replied that in the cases the DG had alluded to, all the officials were on suspension and had been charged criminally as well.
The Chairperson asked when they had been suspended and for how long.
Mr Van Rensberg replied that it had been close to a year. Disciplinary action had commenced about three to four months after their suspension but there was a disciplinary battle taking place. As stated by the DG, the chairperson had been changed and the suspended officials were presenting legal technicalities to postpone processes.
The Chairperson asked at which stage they were in the disciplinary process and commented that the criminal case was not in their hands. Had they started to deal with the substance of the case or were they still dealing with technicalities and procedures.
Mr Van Rensberg replied that they were dealing with the substance of the case.
The Chairperson asked if there was any indication of how long it would take. The concern was that people were on suspension for a year on full pay. There had been an instance in the Department where someone had been suspended for two and a half years. Did it refer to the current suspensions?
Mr Van Rensberg replied in the negative and said the disciplinary process was a legal process that had to be followed. There had to be due process and he could not say how long the proceedings would take. It would depend on whatever technicalities the defence brought on board.
The Chairperson commented that they had seen more serious disciplinary cases in other departments that had taken quicker to resolve.
Ms Muthambi asked if the Department reviewed all their disciplinary actions and requested a list of all officials that had been suspended, the time period and the money involved. This was a key responsibility of the DG and SCOPA had seen more serious cases that had been resolved in less time. If officials were suspended for nearly a year, then they had problems.
The Chairperson expressed his concerns around time periods for suspensions and disciplinary action and commented on the use of technicalities by officials to complicate the disciplinary process.
The DG responded that it was unfortunate that the cases had taken as long as they had. On face value, when they looked at the evidence, it was thought that they could simply dismiss the implicated officials but they even had to battle to justify their suspension. The officials had used their own lawyers to fight suspension. The legal system had allowed them to delay and prolong the matter and the Department had to follow the country's labour relations regime.
Ms M Mangeni (ANC) noted that the Department was taking long to resolve its legal issues in comparison to other departments, and wondered if the DRDLR had a weak legal section. She referred to the suspensions and asked who the officials and Commissioners were, especially the Regional Commissioners. Could they have the names? She raised her concerns about the duplicate payments made to people. It had happened that people had been paid once and not twice or thrice but officials had appropriated the money. She referred to what had happened to the Champagne community, where only a few were paid and they had been told that the Commissioner would be suspended. Was the Commissioner suspended? She was concerned about this and also about what had happened in the Overberg Project. How was a person paid twice?
The Chairperson asked who were the officials involved. Were they Regional Land Claims Commissioners or officials? The investigations should establish if the duplicated payments went to the community or was pocketed by the officials. There had been a case in Mpumalanga and he asked if it had been finalised.
The DG said that the point made about the labour relations capacity of the Department was correct but they had appointed someone very senior to deal with labour relations issues. None of the Land Claims Commissioners were still on the system and their contracts came to an end in March 2011 and were not renewed by the Minister and they had hired new people.
Ms Mangena queried whether the Commissioners who had been relieved of their duties, still received their salaries until their contracts came to an end.
The DG responded that they had received their salaries as the Department had not conducted investigations against them and they had therefore not been found guilty of anything. He was not saying there was nothing wrong.
The Chairperson confirmed that the Commissioners had left because their contracts ended.
Mr N Singh (IFP) said that the land issue was a very emotive one and it had been in the State of the Nation Address (SONA). One did not get a sense as one was listening to the responses that there was a sense of urgency on the side of Government and the Department to deal with the claims expeditiously. He referred to the Land Claims Commissioners and asked if the basic problem was the fact that they were all appointed on contract. They had virtually been on a go-slow, as the longer they took to process claims, the longer they were employed.
Mr Singh noted that claims had last been lodged on the 31 December 1998, which was 14 years ago. Could the Department tell them how many claims, which had been lodged, had still not been gazetted? His information was that in KwaZulu-Natal there were 2000 to 3000 claims that had not been gazetted. Why was there this inordinate delay?
Mr Singh expressed his serious concern about the contingent liabilities and reminded the meeting that the Finance Minister was presenting the budget the following day. The country needed to know where it was, what was its revenue and what was its expenditure. Did the Department have any idea how much the possible liability to the State was for claims that had to be settled or might arise. It was a legitimate question, as it had to be known whether it was R50 billion or R100 billion, as it would have an impact on the fiscus. Whilst one could understand that there could be different valuations and there could be time delays, was there seriousness in getting to grips with the issue?
Mr Singh referred to the suspensions of officials and asked whether there were perhaps more than four officials who were involved. It was known that Directors and Senior Directors had been buying Golf Estates and shopping complexes and there were cases that had been opened. How far had those cases come?
The Chairperson said that the questions on the investigations would be held back for later when they would focus on Investigations.
The DG responded on the contracts of the previous commissioners and said that the new appointees were being employed on a permanent basis. Unlike previously, they had secure job tenure and they had to perform. The number of outstanding claims was one of the challenges that the Minister had to deal with and that was why he had made an intervention and had withdrawn delegation from the provinces and had realigned the Commission to report directly to the Department to improve accountability. The Commissioners had been unable to say exactly how much claims were outstanding, and how many had been gazetted. The DG reiterated that there had not been a proper asset register thus they could provide information but they could not vouch for the accuracy of the statistics. Hence they were currently busy trying to get accurate statistics and a proper asset register and they were converting to an electronic document system.
The Chairperson asked whether he did not think it was scandalous that people had submitted their claims more than ten years ago and the Department was still not able to say that this was what had been submitted to them and this was what was outstanding. Maybe it was a reflection on the Department and maybe it was a reflection on Parliament, but what a let-down it was for the people out there. They Department had admitted to the weaknesses of the IT system since an electronic system had not existed when they began and therefore it was difficult for claimants to ascertain how far their claim was. They had lost their land in very pitiful and heartbreaking circumstances 40, 50 and more years ago and they were promised that there was a process whereby they could get back their land. These were the actual victims who were hoping to go back to their land where they grew up, before they died. And now they were seeing the years being wasted without them having any knowledge of where the process was. It was not acceptable that the country had landed up with a system where there had been little sense of accountability for so long. The weaknesses of the system reflected on government and all of them as they had co-existed with the system and the gap between where they were and where they should have been was enormous.
The DG agreed and said the Department was hugely embarrassed and the officials present took full responsibility of the situation and were determined and committed to doing all to correct the situation as soon as they could.
Mr S Thobejane (ANC) was concerned that the Department had only commenced with disciplinary action against the suspended officials mentioned previously after four months. What was the legal framework for disciplinary action?
Mr Thobejane noted that the Accounting Officer one way or another had acknowledged that he did not have the capacity to implement what the PFMA required him to do. He had admitted that the legal section had not performed optimally and had only recently been improved by the appointment of a senior official with the necessary skills. Why had he operated without the necessary capacity in the year under review?
Mr Thobejane stated that he was not impressed by the response of the Department on fruitless and wasteful expenditure. They themselves had failed to take effective and appropriate steps to prevent it from happening and this could not be condoned. The R73 million was a result of this failure and the excuses made about the system and the budget was not acceptable and the Accounting Officer should have set up an effective system. If they could not identify the persons responsible then the Accounting Officer had to take responsibility.
Mr Thobejane asked if the Department could tell them how many claims there were at the cut off date for submission of claims on the 31 December 1998. Could the Department give the assurance that they would not be cheated on by people saying that they had submitted their claim but they had not received a response as yet? There were claimants who had not received an acknowledgement or any response from the Department, so how sure were they that they were not investigating claims by default from persons who had not submitted on time and had sneaked in their submissions?
The Chairperson said the sneaking in of claims was not a problem, the problem were the ones that were lost.
The DG responded on the disciplinary action. The legal requirement was that it should take place within 60 days. Precisely, because of the poor capacity of the Department, there had been a time lag and delay in instituting the necessary disciplinary steps.
Mr Thobejane asked what the capacity constraints were that led them to move from 60 days to 120 days.
The DG replied that the person who had been in charge of labour relations had been a Deputy Director, but they had realised that they needed someone at a higher level, at the level of a Director with the requisite competence and experience to deal with these matters. By capacity they were referring to the number of people and the level of seniority in relation to the number of the disciplinary actions, hence the realisation that what they had was not enough to deal with the challenges they were confronted with.
Mr Thobejane said the Accounting Officer should acknowledge that he had failed in what the PFMA had tasked him with, which was to set up the appropriate systems. Could he admit clearly that he had no capacity to do what the PFMA required as was responsible for putting systems in place that were equal to the challenge.
The DG responded that he had conceded this and he had alluded to a number of areas where the Department was found lacking. There were problems that were unacceptable and those who were present took responsibility. What was important was that they had identified the weaknesses and had done something about them as they had done with problem areas that had been identified by the AG and their own internal audit.
Dr George asked Mr Shabane how long he had been DG of the Department.
Mr Shabane replied that he had been DG since 1 November 2010.
Dr George referred to the R66 million of fruitless and wasteful expenditure for interest paid as compelled by the Court, which represented a huge contingent liability moving forward. His understanding of responsibility was that the DG was responsible for making sure that the Department operated and systems worked. He noted that the DG had used the word 'we' when he had conceded responsibility. Did he not mean ‘I’?
The DG conceded that as Accounting Officer he could not but take responsibility irrespective of how long the problems had been there. He noted that he had identified the problems and something was being done about them.
Dr George asked the Deputy Minister if he was going to take steps against the DG for the failure that he was maybe party. How would SCOPA be convinced that the system actually did work so that they did not end up with the contingent liability as indicated by Mr Singh, because potentially, it could be an enormous amount of money?
The Chairperson said the Deputy Minister would address that matter at some point. He noted that the DG had been in office since November 2010, which was four months of the reporting period, and he had to react to the situation he found in the Department.
Ms T Chiloane (ANC) said some of her concerns had been covered by the previous speakers. She referred to the suspensions and noted the explanation that the Chairperson of the disciplinary committee had passed on and they had to start the process from the beginning. Did the Department not have a backup memory to prevent them from having to start afresh?
Ms Chiloane referred to the proclamation on investigations made by the President.
The Chairperson asked her to defer her question to when they addressed the issue of investigations.
Ms Chiloane responded that her question also covered the suspensions.
The Chairperson said they would be focussing on investigations and related matters later and she would have the opportunity to raise the issue then.
Ms Z Balindlela (COPE) thanked the DG for being honest because in the AG's report there was, indeed, a serious indictment on the leadership. She referred to the AG's finding that the Accounting Officer did not ensure that the Department had maintained an effective, efficient and transparent system of control, regarding performance management. A further finding by the AG was that the Accounting Officer did not take effective and appropriate steps to prevent and detect irregular expenditure and fruitless and wasteful expenditure. (page 48 of the Annual Report) These and the other findings of the AG which directly implicated the DG, reinforcing the ultimate responsibility the Accounting Officer had to take for the state of the Department.
Ms Balindela wanted more information on the skills audit as they had indicated that they had trained 340 women to be professionals and 24 as legislators, senior officials and managers (page 153 of Annual Report). As far as she was concerned, the skills that were shown there did not relate to the problems that they were faced with and she wondered what they would be doing to address this. There were many people already trained as indicated, but it did not look as if the training had helped the Department.
The Chairperson said the DG could answer the questions later.
Compliance with Laws and Regulations
Dr P Rabie (DA) said he appreciated the attendance of the Deputy Minister and noted that strong leadership should be provided by the Ministry as the Department was of vital importance. There was tremendous cultural value attached to land by people as their ancestors were buried there and the real frustration that he had encountered in rural areas was unbearable. They were sitting on a time bomb and the sooner they rectified the unacceptable situation the better.
Dr Rabie said that the AG's Report was very unsettling and one of the negative findings was that the Department had not adhered to the PFMA. The figures furnished in the financial statements were questionable and it was unsure how accurate they were. Dr Rabie noted that the vacancy rate had increased from 18% to 25% and quite a number of the senior management had resigned including the former DG and the Senior Director for land claims. Were the former DG and Senior Director for Land Claims under investigation? Quite a number of the senior management had failed to sign Performance Agreements. How many had failed to do so and had they been given a timeframe in which to complete it? This was the crux of the matter. If officials regarded themselves as above the law, then there were bound to be the problems that they had in the Department. The situation could not continue and if capacity could not be found, then they should replace key officials to perform the tasks that were required of them.
The DG responded that the former DG and former Chief Land Claims Commissioner were not under investigation.
The DG conceded that the problem with the signing of Performance Agreements was a big one. However there had been a huge improvement and about 90% of senior mangers had signed Performance Agreements. There had been communication to those that had not signed to inform them that it was obligatory for all senior managers to sign Performance Agreements. There were disputes in two cases and it was not likely that the Performance Agreement would be signed and one of them was subject to a disciplinary enquiry.
The Chairperson asked what was the nature of the dispute.
The DG replied that the dispute was about the official being transferred from one section of the organisation to another and he was refusing to sign. He was saying that he had been transferred against his will and therefore he was unwilling to sign the performance agreement, as he would be committing himself to the transfer.
The Chairperson asked if they were going to transfer him back to his original position.
The DG said that the facts at his disposal suggested that even though they had tried to resolve the problem by transferring him back, he had refused this.
The Chairperson expressed his consternation by asking what kind of senior managers they had in the Department.
Dr Rabie said that the AG's Report had noted that criminal record checks and citizenship verifications was inadequate and questionable (page 49 of Annual Report). Was this very common in the Department?
Was there a system in place in the Department to eradicate this? In the DRDLR, it was important to have people with high standards of ethical management, especially when it came to the alienation of land.
Dr Rabie referred to the 18 investigations currently underway in the Department, which related to procurement, tenders, fraud, land reform projects and others. When did they expect to get clarity and finalise these particular investigations? It was very unsettling to have a Department where there were that number of investigations pending. Was it possible for the DG to furnish SCOPA with a tentative date when they could be presented with the findings?
The DG responded that there were a few cases that were identified where the system of verification was slow in terms of determining criminal records, but it was not widespread. There were a few cases where there were breaches and they had beefed up their internal security management and delegated authority to conduct the vetting of lower level posts. The vetting of senior management posts was sent to the relevant State agencies. They were building their own capacity internally to improve on the vetting of all employees who were involved in procurement and in the management of any critical information. In the past this was overseen by a Director but due to its importance, they had upgraded this to a Chief Directorate where they would have strong capacity to assist them with criminal record investigations and vetting. The DG asked Mr Van Rensburg to answer the questions on the investigations.
The Chairperson said that they would deal with investigations in the next focus area.
Internal Control Investigations
Ms Balindlela said she had already indicated in her previous statements that the AG had identified the issue of the leadership and that the DG had not supported the internal control process and other speakers had added to this.
Ms Balindlela said a further issue of importance was skills development and the training needs identified by the Department and the number of people who had been trained (page 153 of Annual Report). One of the things that was lacking from the internal control was the internal audit unit. What was the DG doing to strengthen the internal audit unit? Could he indicate how many sittings of the internal audit there had been? Who were the people who were part of the Internal Audit Committee?
The Chairperson invited the DG's response on the internal control unit and the Internal Audit Committee, before they proceeded to addressing the issue of investigations. How functional were these two critical structures?
The DG responded by introducing the Chairperson of the Audit Committee, Mr Khulekani Buthelezi. The DG said that he could confidently say that they had a competent Internal Audit division in the Department. It was not always the case and they had been building capacity systematically. Under the former Department of Land Affairs, some of these units had not been properly staffed, even the key good governance sections like the Internal Audit and Risk and Compliance. They had not built the security needed and it had not enjoyed a high profile. Over the last two and a half years, there had been changes in this particular area. In the past, it had been a directorate without strong capacity and they had relied a lot on consultants and had outsourced most of the work. They were gradually building that capacity and they could say that they had a fairly competent internal audit division currently. Similarly the Risk and Compliance team was being beefed up. They were taking the advice of their internal Audit Committee, that they had to strengthen their Risk and Compliance unit and they had agreed to do that. The Audit Committee met every quarter as agreed in their Charter and there were also follow-up meetings. They had established a Risk and Compliance Committee that was chaired by one of the members of the Audit Committee and they brought the weaknesses in the system to the attention of the leadership and advised them.
The Chairperson asked to hear from the Chairperson of the Audit Committee as the challenge generally was not the ability of the internal audit to raise issues, but Management's response.
Mr Buthelezi responded on the effectiveness of the Audit Committee and said that it was a very strong committee, which was performing according to its mandate. There were areas, which the committee was uncomfortable with, and they raised these concerns at their meetings and with the Accounting Officer. They had escalated some of the issues to the Minister with whom they had a session and there was a report that they had prepared for the Minister in October 2011. Key concerns included Corporate Governance; control deficiencies which were not timeously identified; strategic and operational planning; performance information management; human resource planning and management; Information Technology (IT); and record management processes (which included classification, filing, storage and custodianship, and electronic records). The DG had responded to IT challenges the Audit committee had identified by appointing a new Chief Information Officer (CIO) and this area needed full attention as systems were just not working
The Audit Committee had numerous meetings with the former DG on Risk Management and the response had been very slow. After they had raised the issue with the new DG, there had been some improvement. It had to be stated, in his presence, that there were inadequate fraud and corruption prevention strategies. They also had concerns on the turnaround times on labour related issues and they continued to raise these issues with the DG. Compliance Management was red flagged by the Audit Committee and they had identified processes, which were inadequate. Financial management, in general, was an issue they had raised this with the Minister as well.
The Audit Committee has seen improvements and commitment from management to address these issues. The Audit Committee had monitoring mechanisms in line with their oversight responsibility, in place and they had scheduled special meetings to ensure that they saw progress, but in some areas this was slow.
The Chairperson indicated that members could ask their questions on the investigations.
The Deputy Minister requested to be excused after he made some preliminary comments on the issues that had been raised thus far. He said that the Ministry would respond fully to the questions raised by SCOPA as soon as possible.
The Chairperson acceded to this request.
Comments from the Deputy Minister
Mr Tsenoli assured the meeting that the political heads took the work of SCOPA seriously. The Minister had already had interaction with the Auditor-General around a number of issues. There had been a series of actions taken on the questions raised by SCOPA, including the general leadership in the Department and the improvement of accountability. Poor accountability in the past had been the result of an almost semi-autonomous Land Reform Commission that worked outside of the budget framework and took decisions with no cognisance of the availability of resources in the Department. They had made commitments that had led to the many court cases resulting in the fruitless and wasteful expenditure of R66 million and the findings on contingent liabilities. His understanding was that they were hardly talking about court cases any longer, due to the reorganisation of the Department and the setting up of appropriate systems to improve accountability within the framework of the available resources.
There were also intense meetings with the executive management and leadership and they had fast tracked the appointment of key strategic posts in the Department. They had appointed a Chief Information Officer; appointment to the Chief Security Manager post was being finalised; they were creating an internal research unit and appointments were to be made soon. They were taking the advice of the Audit Committee as Mr Buthelezi had indicated. This was a mid-term re-organisation of a new DRDLR and the initiatives were as a result of the new DG taking responsibility for what had to be done, with strong support from the Minister. There was corroboration underway with the Technical Advisory Unit in the National Treasury and some of the work that they were doing was on capacity building.
Internalisation and communication on their new mandate in the various structures and operations of the Department was in progress. There was the Deeds Registration system and the Chief Surveyor-General's office and on the other hand, the new emerging Rural Development authority, all operating under one Department. Each of them had different systems and they needed a better, integrated technology system for the Department as a whole, which had not been there before, when it was the Land Affairs Department. This did not detract from their individual competencies. The Deeds Registration section and Chief Surveyor-General's office were collaborating on the digitisation of the information of the Department, to speed up land claims.
The pressure being put on the Department to bring forward the date for information capturing to the end of 2012, rather than 2013, related to the work that was emerging from the National Reference Group on the Green Paper. Much of the work that they were doing in the Green Paper required the finalisation of the audit, so that the Green Paper would have greater impact. There had been a recent meeting of the Reference Group that gave a sense of the direction that was emerging and progress made, and the finalisation of the audit was viewed as a matter of urgency. The Department was hoping to improve the quality of research and the speed of verification. Mr Tsenoli noted that in the Eastern Cape, the provincial department had reported that they had settled more than 17,000 claims and only 689 claims remained.
Given the capacity, the work could be completed, but it would be tough to achieve the objective. In the past four weekends, the Department had paid out millions of rands in financial compensation. They had privatised this undertaking and the claims were finalised due to the availability of resources that had been budgeted for and the realisation of the urgency required to deal with this matter. Three of these weekends had been in Limpopo Province and the excitement they had seen on the faces of elderly people, who had been waiting a very long time for the finality of their claims, had been palpable.
In KwaZulu-Natal, there were more than 2000 claims that were outstanding because the Department had been using internal research capacity. They were fast tracking the research process of checking the validity of the claims and the verification of beneficiaries. In the new financial year they would fast track technology systems and use young people from the National Rural Youth Service Corps (NARYSEC) project for data capturing. Some of them had been trained to capture the claims. At some stage the Department would give an update of the provinces that had already completed their assessment of the claims (partly because of the assistance of these young people). In some provinces, the capacity there had been taken to the Northern Cape to boost their capacity to capture data and finish the process. They would then move to other provinces so that the process was finalised countrywide. It would then be established what land they had and who it belonged to.
Mr Tsenoli concluded by saying that the Ministry would be able to report back on the rebuilding and improvement in the Department and the Human Resource issues, within the next three months.
The Chairperson observed that the presence of the leadership and the responses and commitment that they gave, helped to reinforce and complete the accountability proceedings of SCOPA. The level of commitment from the political leadership from the DRDLR and other departments had been very encouraging. The Chairperson commented that one of the problems in the DRDLR was that on an administrative level, they were starting at zero. It was as if they had not been building over the past 17 years and this was something that had to be attended to. However, he appreciated the responses from the Deputy Minister and he felt that progress would be forthcoming with ministerial commitment.
Mr Tsenoli added that the DG should respond on the land issue raised by the Chairperson earlier regarding whether restitution of land was based on legality or historical record. He requested that the DG explain the various validity questions about land in respect of compensation and land ownership and tenancy and the basis for the Government's decisions on that.
Ms Balindlela said that the responses given by the on the internal audit committee was not sufficient in the sense that they still did not know who they were, what functions they performed and how often they met. She requested this information in writing.
The Chairperson said they could get an immediate response on the internal audit function
Ms Balindlela asked for a response on the AG's finding that there was no Fraud Prevention Plan as well.
The DG responded that the Internal Audit was a Chief Directorate at National Office and that he had apologised for the absence of the Head of the Internal Audit Division earlier. Mr Van Rensberg was the Head of Forensic Investigations and they had someone who attended to IT and IT related compliance issues and they also had a Head of Legal Compliance that assisted in legal compliance and auditing matters. The Head of the Internal Audit sat in on all senior management meetings where the DDGs and Chief Directors met, as well as executive management meetings together with the Ministry. Management at a DDG level met frequently (every Monday) and twice a month the Senior Management echelon met with the Head of Internal Audit.
Ms Balindlela referred to the AG's finding under Risk Management that the Department did not have an approved fraud prevention plan and the findings under Human Resource Management that there were inadequacies in criminal record checks; the verification of citizenship; and financial and academic qualifications checks (page 49 of Annual Report). These were serious concerns and the systems were dysfunctional. How had the Accounting Officer responded to the AG's findings?
The Chairperson said the issues around the verification process and record checks had been raised by Dr Rabie, and progress had been made on that. The Chairperson asked the Department to respond to the question on the Fraud Prevention Plan as the Chairperson of the Audit Committee had also raised it as part of their concerns. Did the Department have a Fraud Prevention Plan in place? Had it been approved? Had it been implemented?
The DG responded that there had been a plan but it was outdated and it had to be reviewed. It had since been reviewed and it now needed to be fully implemented.
The Chairperson enquired about the framework for implementation and the completion of the review and approval process
The DG confirmed that the relevant processes had been completed, approval was awaited and that implementation would commence on the 1 March 2012.
Ms Balindlela said that a number of her concerns about the investigations in the Department had been addressed by SCOPA members earlier. There were investigations that were completed and those that were still under investigation and the Department should respond on the questions raised earlier.
Ms Chiloane referred to the Department's disciplinary proceedings and that they had indicated that there were four cases of misconduct relating to Irregularities, Theft, Fraud, and Bribery which had been finalised during the reporting period (Table 45, page 152 of Annual Report). These cases would have involved money. How much had the Department recovered?
Ms Chiloane referred to the cases being investigated by proclamation of the President. What was the total worth of those cases, approximately? It would be proper to get the information from the Department, before they read it in the media.
Ms Chiloane asked why disciplinary proceedings had to be started afresh when the chairperson of the disciplinary hearing had passed on - as they had been informed earlier. Was there no secretary for information keeping? How did the Department expect to function when information was lost when someone passed on?
The DG responded that the Chairperson of the disciplinary hearing had been an independent person who had not been a member of the Department. By starting all over again, it was meant that the appointment process had to be done again and not the actual hearings.
The DG responded on the investigations undertaken by proclamation of the President. The figure given by the SIU according to their records was R53 million. The investigations were still ongoing and there could be more money involved.
Ms Singo responded on the amounts involved in the Department's disciplinary cases and said she did not have the information at hand and would provide it. It would most likely be linked to the irregular expenditure reported in the Annual Report.
Ms Chiloane said her enquiry related to the recovery of money from the perpetrators, as they had been disciplined or dismissed for bribery, theft, and fraud, which involved money, which had to be recovered. Was there any recovery of money?
Ms Singo said this was covered by what the DG had said about the SIU investigations and would be included in that recovery.
Ms Chiloane stated that if she had understood correctly, the DG had spoken about R53 million that related to the investigations proclaimed by the President. The cases she was referring to were disciplinary cases that had been finalised by the Department and four people had been found guilty or dismissed. She was checking if the Department had recovered the money involved in those cases. The cases under the proclamation of the President involved R53 million and were still continuing. That was why she had asked the DG to brief them before they heard it in the media.
Ms Singo said that she could only provide the linkage to fruitless and wasteful expenditure.
The Chairperson asked her to forward the list together with the list on the investigations that led to the condonement of R76 million of Irregular Expenditure, as he had requested earlier.
Dr Rabie asked if the AG's performance audit on the Department's use of consultants had been completed (page 50 of Annual Report). When could SCOPA receive the report?
Dr Rabie referred to the allegations of irregularities in respect of the leasing of State land. Could the Department summarise the investigations and inform SCOPA of the findings.
The DG asked for clarity on the question.
Dr Rabie referred to the 18 investigations conducted by the Department in the period under review (page 50 of Annual Report).
Ms Singo responded to the question of the AG's performance audit on the use of consultants and said it had been part of a transversal investigation. It had been completed and the AG would be tabling the report in Parliament shortly.
Mr Van Rensberg said that the irregularities in the leasing of State land involved State land that had been leased to two different persons at the same time. They had been requested to investigate if there had been any malicious actions but the case revealed that it had just been an administrative action that had been incorrectly managed by the office and there was no malicious intent or irregularities in that regard.
The Chairperson enquired what had led to this happening.
Mr Van Rensberg said that it was a communications problem, as the two officials had done the leasing to two different persons and were not aware of the other's actions until one leaseholder had started working on the land.
Ms Mangena raised her concerns about the use of consultants and the cost to the Department. What had they paid for consultants and what had the consultants done for the Department? Were they still there?
The DG said he wished he could report that they were the only Department that did not use consultants, but they did. One of the reasons that the amount of money used for consultants had increased was because the Department used this budget line item to augment the capacity deficiencies in the Department. If they analysed how the money had increased over time, it was because the Department had to buy their capacity because of their capacity deficiencies. At the same time they had tried to build capacity in the Department. What should have happened a long time ago, was a process of building internal capacity and reducing the reliance on consultants. This had not happened and some of the budget in the next financial year would still have to be used for consultants, as capacity was not timeously built.
The Chairperson noted that the figures for the use of consultants by the Department were in the Annual Report before them (page 154). What SCOPA needed to know was the rationale for using them. What were the trends for the current financial year? The understanding was not to be 100% free from consultants, but their concern was the excessive reliance on consultants, which in the end left no capacity in the Department. If anything it enhanced reliance on consultants. Were they reducing or increasing reliance on consultants or maintaining the status quo?
The DG responded that in 2009 when the mandate of the Department changed to include rural development, the use of consultants including rural infrastructure development, social facilitation and other areas. This would be reported on separately in future which would have the effect of reducing a bit on the use of consultants. Rural Development had a division for social facilitation, enterprise development and institution building and they had used consultants to do what was actually the core business of the Department. They had discussed this with National Treasury and there would be a slight decline of the use of consultants overall, but not to the extent that they would want.
The Chairperson raised his concerns about IT issues in the Department, which was also of concern to the Audit Committee. He noted the payment of 25 million to the State Information Technology agency (SITA), which in his opinion was a literally dysfunctional State institution. In addition, external computer service providers costs were R70 million (Note 5.2 page 72 of Annual Report). If they were paying R95 million for computer services, what value did they get if they still had an IT system that was not up to scratch?
The DG responded that the Chairperson of the Audit Committee had articulated the problem. The IT environment was a huge challenge in terms of its overall governance. There had been parallel systems and an over-reliance on SITA and a number of internal service providers. However, they had a new Head of IT who was getting to grips with the challenges and had tabled a turnaround strategy.
The Chairperson said his question was, 'what was the R95 million for?' What value for money were they getting and what were the contract arrangements? In terms of the new turnaround strategy, how would it impact on the existing contract structure?
Ms Singo responded by giving a breakdown of the R95 million IT costs. R25 million was SITA related costs such as datalines, mainframe time and printing. The R70 million related to services where sub-contractors were used such as Help Desk services and maintenance. In terms of value for money, part of the turnaround strategy was the recognition that the Department was spending a lot on IT services and they were doing an analysis of who the service providers were and what they were doing. It was also recognised that they had spent so much on consultants and that they should be building capacity internally and they had therefore appointed a CIO.
The DG noted that the contracts of some service providers were coming to an end at the end of the financial year and they would not be renewed. There were licences that they had, which in terms of the analysis of the new CIO, were not needed, and there would be a clean-up of the IT environment.
The Chairperson speculated that in terms of the money that had been spent on IT, there could be a case for classifying it as fruitless expenditure. They were not getting value for money and at a functional level they were still having the challenges that had been identified. The DG had been in office since November 2010 and the person who had signed the contracts was no longer there and the Department was saddled with contracts that prejudiced good governance. The Chairperson voiced his frustration with the fact that officials in decision-making positions did not act patriotically and look after the interests of the state and country.
Ms Chiloane referred to the utilisation of consultants by the Department in the year under review and said she was struggling with the amount of R6 million reported for consultants for Board Members (table 52, page 154 of Annual Report) Was this for training? For attending four meetings a year? This could not be brushed aside because this was money of the people and they were struggling and they could not get land. She referred to the other huge amounts listed under the utilisation of consultants and called into question the accountability of the previous CFO and asked how long the Acting CFO had been in an acting capacity.
The DG responded that the Acting CFO had been acting in that capacity since August 2011and the post had been advertised.
The Chairperson asked what had happened to the previous CFO.
The DG responded that the previous CFO had resigned, he had got a better job offer and left.
Ms Singo said the issue of consultants was a matter of classification. They had public entities that reported to the Department as a Trust and their Board member fees were considered as consultant fees in terms of their classification. They were not real consultants but considered as such in terms of their remuneration and this applied to the Audit Committee as well.
Mr Singh raised several issues on the list of consultants used by the Department (table 52, page 154 of Annual Report) and said that the information could be provided in the future as he did not think they would have it at hand. He queried the R100 million spent on project management. Could they provide a list of the major contractors to the Department and if there were any former or current employees of the Department who had interests in these contracts?
Mr Singh noted that the Department had received a lot of advice from the State Attorney, which amounted to nearly R50 million. Where was the advice taking the Department? State Attorney conveyancing costs were only R5,900, which meant that very few transfers were being done. Messenger of Court costs were only R1,376. They were getting the advice but there was no concomitant delivery on the advice. How much did the State Attorney charge and what did they do? It was an organ of State as well and yet they were making R50 million out of the Department.
Mr Singh asked if the Land Claims Court fell under the jurisdiction of the Department of Justice, independent of the DRDLD. How often did they sit and how many matters were they dealing with? If this Department were not a well-oiled machinery, which apparently it was not, then the constitutional imperatives of land redistribution would not be met in their lifetime.
The DG responded that the Land Claims Court was not part of the Department.
The Chairperson added to the queries on the State attorney and the amount of money they received vis a vis actual land transfers and the issues that had been troubling the Department
The DG responded that there were two main areas of responsibility of the State Attorney, one was in terms of the Land Claims Commission and the other was in responding in court cases against the Department. In the main, the costs were not related to the attorneys on the payroll of the Department of Justice and Senior Counsels who went to court, but they outsourced to private law firms and briefed senior counsel on behalf of the Department ahead of court appearances. It was thus not money going directly to them, it was attorneys fees and Senior Counsel fees. In some cases, the Land Claims Commission had used them for the purposes of conveyancing but overall the Department, directly contracted conveyancers, outside the State Attorney's office. The conveyance fees listed under Consultants did not reflect the full amount of conveyancing done for the Department.
The Chairperson thanked the DG for his accountability in his institutional capacity. It had assisted SCOPA in understanding the rationale behind decisions taken at a particular time by individuals acting in a certain capacity within the Department. SCOPA expected the information they had requested in writing within a weeks time. The Chairperson encouraged officials to go back and work with renewed vigour to correct and normalise some of the challenges that had been identified. He noted the comprehensive and substantive way the Chairperson of the Audit Committee had articulated their concerns. With commitment and focus these issues could be resolved.
The Chairperson noted that the issues around the IT system were urgent. This was an area of vulnerability for Government as shown by what happened with the Post Office. Countries globally, were preparing their defences not only against physical attacks but also the security of their IT systems.
The Chairperson commented that it had been grossly unfair that the issues of land restitution had been 'managed' the way it had been. The process had been dehumanised as the expectations of many of the beneficiaries had been unmet after more than 10 years and the emotional trauma, especially to the aged, caused by the long waiting process had to be addressed. The Chairperson noted that the Department by its very nature would be prone to fraud and they needed to strengthen their internal controls to mitigate against these challenges.
The number of vacancies and people in acting capacities had to be addressed, especially at senior management level. The issue of protracted suspensions could be attributed to the inadequate capacity in the Department to deal with these matters and not on the cumbersome nature of the labour relations process. The problem of the official who refused to sign the Performance Agreement should be sorted out as soon as possible. The Chairperson hoped that the number of investigations would decline.
The Chairperson voiced his concerns about the land restitution process where land was given to people and the Department had no leverage to ensure that the restitution objectives were met. In his opinion, it rendered the money to acquire the land, fruitless and wasteful expenditure. People were given land and five months down the line, the whole project had collapsed and the objective had not been served. There had to be a way in which the Department could still be involved. The Limpopo government had done an investigation into the Mogoba claim, which was grossly mismanaged, and there were cases in Komatipoort and other areas. The question for the Department was, what had they achieved? These were matters which the Portfolio Committee on Rural Development and Land Reform should consider seriously, as something had to be done to get things right. There were enormous challenges that officials faced and they had to find the inner strength to go forward.
The meeting was adjourned.