North West Intervention: IMTT on outstanding matters; with Ministers and Deputy Minister

Meeting report

Chairperson's opening remarks

The Chairperson welcomed all present in the meeting, and made brief opening remarks.

Dr Nkosazana Dlamini Zuma, Minister of Cooperative Governance and Traditional Affairs (COGTA), and Mr Obed Bapela, Deputy Minister, were present in the meeting, as was Ms Nosiviwe Mapisa-Nqakula, Minister of Defence and Military Veterans. The Chairperson said the Committee would be receive a report and update from the Inter-Ministerial Task Team (IMTT) outstanding issues since its previous meeting.

The Chairperson said the Committee was appointed by the National Council of Provinces (NCOP) to review the intervention into the affairs of the North West Province -- whether it had been exercised in terms of Section 100 of the Constitution and whether the necessary results had been yielded. The Committee would make appropriate recommendations to the NCOP. It was expected to submit a report to the House on 24 June. The National Treasury had presented on the progress and outcomes of the different entities in the North West to the Committee from before and after the intervention. Law enforcement had dealt with issues around the investigations.

One of the most important allegations uncovered by the IMTT was related to corruption, mismanagement and theft. The Committee felt much more work needed to be done on this. The Committee had met with the Special Investigating Unit (SIU), the Directorate for Priority Crime Investigation (HAWKS) and the Independent Police Investigative Directorate (IPID) to engage on some of the issues with the entities, and would liaise with them again at a later stage. Following this, the Committee had visited the North West for a site visit, as well as some communities, and an extensive report had been compiled. The Chairperson thanked the IMTT for its work. The Committee would decide after the meeting whether it needed to have another site visit.

COGTA Minister's remarks

Minister Dlamini-Zuma said the North West Task Team had last met on 17 May 2021 to consider progress made up to now and to consider the work done by departmental administrators. The Committee had received a comprehensive report from the administrators and had noted the significant effort to bring about stability and governance to counter the violence taking place in the province.

For the first time, all national and provincial leaders were in unison. Most government departments were now functioning in a healthy and stable way. Varied progress had been made, and the biggest challenge was in the local municipal sphere, where there was infighting that resulted in the under-servicing of communities. The appointment of the heads of various departments had been welcomed. Where there were still vacancies the process of appointing new heads of departments was under way.

A number of officials were undergoing disciplinary processes, while others had resigned and some had been dismissed. Some were facing criminal charges. This boded well for the return of the rule of law in the North West. The SIU, National Prosecuting Authority (NPA) and National Treasury were pursuing no fewer than 60 cases. The Asset Forfeiture Unit (AFU) was recovering stolen and misused funds.

She said they could not claim easy victories, and the state of the North West province continued to be an area of concern. The COGTA Department in the province had not been placed under Section B, which meant that it was still functioning. COGTA had asked the Deputy Minister to convene an internal Task Team to drive the work of supporting municipalities and assisting them to use Municipal Infrastructure Grants (MIGS). The Municipal Infrastructure Support Agency (MISA) and National Treasury would be working alongside the Task Team. This would provide a more sustainable approach to court directives issued in many municipalities, where certain parts of some communities had wanted to take over the functions of municipalities. The IMTT had resolved and proposed that a developmental agency should be brought into the province to provide services to the people. Other departments and agencies would also be brought in to assist.

Member asked to leave meeting

The Chairperson said Mr Supra Mahumapelo, who was a Member of the National Assembly (Chairperson of the Portfolio Committee on Tourism, and former North West Premier), was not invited to attend the meeting and asked him to leave the platform.

Mr Mahumapelo said that the meeting would have been convened at Parliament if it were not for COVID-19 and all Members of Parliament were welcome to attend any official meeting provided they did not vote in terms of the rules.

The Chairperson again asked Mr Mahumapelo to log out from the meeting, adding that he would follow-up on the matter with Parliament.

Report of Inter-Ministerial Task Team

Mr Jonathan Timm, Director: Citizen-based Monitoring, Department of Planning, Monitoring and Evaluation (DPME), presented the report of the IMTT.

The overview of progress highlighted the following situation:

• Capacity for service delivery had been built through filling key management posts, investment in infrastructure and equipment, and improved systems.
• Audit results for 2019/20 showed a turnaround after five years of decline and stagnation.
• Irregular project management units and outsourcing had been terminated. Processes were under way to recover losses to the state.
• The posts of Director General (DG) and heads of departments (HODs) for Health, Social Development and Agriculture and Rural Development, had been filled, and those senior management posts that had not been filled were in process.
• Refer to slide 10 for progress of disciplinary actions.
• The NPA and the DPSI have reported on 51 criminal cases related to public funds in the North West. (See slides for details).
• The AFU was currently involved in efforts to recover funds in priority cases. To date no orders had been obtained. 

 

Instability in local government:

A package of interventions was being implemented by the national and provincial COGTAs, together with the Treasuries, to address the crises in several municipalities which were driven by:

• Parallel councils -- two Mayors and two Speakers existing in a number municipalities;
• Maladministration and corruption;
• Defiance of provincial government interventions;
• Private ratepayers organisations withholding revenue and taking over municipal services;
• Failing water and sanitation systems;
• Vandalism and theft of infrastructure;
• Gangsterism and criminal attacks on officials;
• Huge debts to Eskom and Water Boards threatening the continuation of essential services.

 

Risks and mitigations:

• Reversal of gains made after the withdrawal of the intervention was a significant risk, and would require mitigation through a number of measures, including section 100(1)(a) directives, close monitoring, and support to the newly appointed DG and HODs.
• Instability of municipalities continued to undermine service delivery and social cohesion in the province.
• National COGTA had developed a package of measures, including dissolution of municipal councils, administrative interventions, as well as the diversion of municipal infrastructure grant funding to implementing agents in terms of section 21 of the Division of Revenue Act (DORA).
• Budgetary constraints, particularly in the North West Department of Health, were a risk to service delivery. Discussions were ongoing with the national and provincial Treasuries.
• Sustained instability in the Department of Human Settlements (DHS) had had a severe impact on service delivery. The national department was appointing a grant fund manager to manage this risk.
• Delays in resolving outstanding criminal cases undermined the work done to turn around the administration.

 

National Treasury on NW Province financial status

Ms Mary Matjeke, Deputy Director-General (DDG): Intergovernmental Relations, National Treasury, presented to the Committee on the financial status of the North West province.

(Refer to slides for tables and graphs).

Budget and Expenditure for Health 2018/19-2020/21:

• The Department had received an additional R1.7 billion for the COVID-19 response, but spending on COVID-19 had been quite slow.
• Health records showed a preliminary expenditure of R14.052 billion (99%), with under-spending of R143.977 million against the allocation of R14.196 billion. There had been over-spending of compensation of employees (COE) and under-spending on payments for capital assets.
• The initial additional beds planned at West Vaal, Duff Scott and Maseve Hopsital were not supplied, given the staffing challenges. The current assessment revealed that there were enough beds, based on the demands over the past six months.

Budget and Expenditure for Education 2018/19-2020/21:

• Learner Teacher Support Material(LTSM) expenditure started to pick up during the last month of the financial year due to slow purchasing processes during the year.
• The COVID-19 response had been allocated an amount of R435.011 million, of which 82.8% had been recorded as expenditure.
• The Sanitary Dignity Project spending was at R7.288 million against the allocation of R16.427 million, registered an under-expenditure of R9.139 million.
• The Presidential Employment Initiative had an allocation R445.251 million, of which R427.081 million had been spent.
• The procurement of laptops, office furniture, sports and recreation equipment for schools that had been placed on hold, was being revived.

Budget and Expenditure for Office of the Premier 2018/19-2020/21:

• The Office of the Premier (OTP) budget had been reduced by approximately R231.438 million since the tabling of the 2020/21 main appropriation, and this had resulted in a reduction in under-spending when compared to the last financial year.
• The budget reduction had affected the information communication technology (ICT) transformation projects, which had now been deferred to the next financial year.
• The training as per the workplace skills plan, was deferred to the 2021/22 financial year. The human resource management (HRM) unit would arrange free online training for officials who urgently needed training.
• There was delayed filling of identified critical posts.

Budget and Expenditure for Community Safety and Transport Management Department 2018/19-2020/21:

• The spending on scholar transport as at the end of March 2021 amounted to R274.347 million, or 94.10%. It was worth noting that the Department still had outstanding accruals for scholar transport service providers.
• Scholar transport expenditure for the current year was restricted, given that not all grades were granted permission for schooling.

Budget and Expenditure for Public Works and Roads Department 2018/19-2019/20:

• Public Works and Roads recorded preliminary expenditure of R3.282 billion, or 97.88%, under-spending by R70.936 million against the allocation of R3.353 billion.
• The Provincial Roads Maintenance Grant registered a significant increase in spending from the low spending over the preceding months, to R1.264 billion, or 99.93%, from the allocated R1.265 billion.

Discussion

Mr S du Toit (FF Plus, North West) referred to the IMTT presentation's slide 8, which mentioned that capacity building took place across the sectors. When was the last skills audit performed across all sectors? Slide 9 referred to the process under way to fill HOD posts where contracts had expired. Why did the Department not act earlier to fill the posts and advertise the positions in time? Crisis management now needed to be done, and this was unacceptable. Administrators had been appointed and this was a ministerial intervention taking place, but posts had not been filled in time. This was shameful.

On Slide 10, the SIU had mentioned that pension funds would be frozen. He asked if this would apply to implicated individuals as well. He understood that some employees had been suspended or placed on special leave, but were still receiving their salaries. He asked for more details on this.

He asked about the large percentage of vehicles that were not operational. There was no recommendation to correct this matter. The Department of Transport was responsible for repairs, but they were not addressed in the document.

He referred to Section 101 (a) in slide 21, and asked for an explanation on how Section 154 would be implemented as no information was given on this. Were any assessments conducted on this and who would play an oversight role? The mandate was to support local municipalities, and he feared that a duplication might take place with the Province’s intervention on Section 154. How would this be regulated, and what was the turnaround time on the Section 154 intervention? For what period would assistance be provided, and to what extent? He feared that Section 139 interventions did not work.

Instability in municipalities was due to political infighting, mostly by the ruling party. The ANC was the cause of instability in municipalities and this was an in-house matter that should be settled. Interventions in municipalities had not been successful, and this must be addressed as soon as possible.

Responses

Mr Sibusiso Mpanza, the Administrator from the Department of Human Settlements, said that since the intervention, the IMTT had managed to ensure that the people employed by government were doing the work that they needed to do. This had been done by reducing reliance on consultants and outsourcing. Results had been achieved by using internal resources. Good audit outcomes had been received by government employees, and a continuous process was under way to audit the skills in the Department. Positions had not been filled timeously, as due to the intervention, the process had been slowed to comply with the Department of Public Service and Administration (DPSA). All vacant positions at the senior level had been advertised or were in the process of being advertised. By the time the intervention was over, these positions should be filled to ensure the interventions gains were sustainable. The team was busy working on an exit strategy, and a report would be submitted to the IMTT. A review would be done at the end of June on where each department was in this process.

Irregular expenditure, which was high under Section 100 (b), was from historical contracts that could not be terminated, and it was legally advised to deal with it in a different manner. For example, scholar transport was under way, but contractors still needed to be paid. The pace of irregular expenditure had been reduced and a strategy had been developed for the condonement of irregular expenditure. Consequence management would be key.

Ms Jeanette Hunter, DDG: Primary Health Care, National Department of Health (NDoH), said the process of filling the HOD posts could be started only once the disciplinary hearing of the HOD at the time was dealt with, as he had been suspended. After his dismissal, recruitment could begin.

There were not enough vehicles for emergency medical services in the North West, and while there were a certain number of vehicles in for repairs, the Department of Health in the North West and the Department of Transport were working jointly to have a better solution to get vehicles. New vehicles were being purchased, but different modalities needed to be considered to ensure the number of vehicles the Department had were on the road. She pointed out that the number of vehicles available was limited by the Department’s budget.

The Committee would have seen that the Department had under-spent on its revitalisation and decided to use the funds for the shortfall on medication and areas that needed emergency medical services that were directly patient related. The Department was working with the National Treasury to improve its baseline allocation for funding to acquire more emergency medical service (EMS) vehicles and fund its medication budget. This greatly contributed to the Department’s annual accruals.

Mr Mathabatha Mokonyama, Administrator, North West Provincial Transport Department, said departments sometimes did not have the funds to maintain vehicles. With the COVID-19 pandemic, the majority of departments had had their budgets cut such as on vehicles.

Ms C Visser (DA, North West) said she was disappointed that nothing had been done in the Province until the Committee began investigating. There must be more enthusiasm from Ministers. The deep-rooted systemic maladministration and corruption in the top structures of officials had to be addressed. There were irregularities in the way appointments were done, and the 12 municipalities mentioned were by far not all that were in trouble. She agreed with Mr Du Toit’s sentiments on the state of the municipalities. Communities were suffering. There was no water in some communities, and some were threatening violence and destruction because of service delivery issues. The Sedibeng Water Board had sent out letters saying they would stop all water connections.

The Committee should receive forensic reports. High profile officials had been arrested, but the cases had not been solved. The Chief Director of the North West Department of Education had sold cattle from a town in Lichtenberg, and the South African Police Service (SAPS) had had to feed the cattle. What had happened with these cases? The Committee had not received reports on why costs were inflated. She said the audit outcomes seemed better, but general systemic issues and maladministration were still a major concern.

Mr D Ryder (DA, Gauteng) said that rule 108 the rule book made it quite clear that a Member of the NCOP may attend other meetings, but a Member of the National Assembly could not, as this would make it a joint meeting and would complicate matters. He spoke in support of the Chairperson’s decision in asking Mr Mahumapelo to leave the meeting, particularly taking into account Mr Mahumapelo’s history. He thought it was prudent for Mr Mahumapelo to wait for an invitation to the meeting.

He thanked National Treasury for their presentation, and said spending the budget was not necessarily a bad thing, but it was important how the budget was spent. He asked for more information on targets and if the funds had been spent correctly. What was the National Treasury’s take on the correction of past procurement processes, where the processes had not been followed and money was spent without adherence to the Public Finance Management Act (PFMA) and the Municipal Finance Management Act (MFMA)? There were numerous municipalities that were currently dysfunctional. Was the North West Province being left to run the Section 139 interventions? How far away was the Committee from invoking Section 139 (7) of the Constitution, where the National Executive was required to intervene?

He disagreed with Mr Du Toit that most issues were not as a result of maladministration, and said a lot of issues in municipalities were as a result of this. Political in-fighting was creating an environment where people could do whatever they wanted, as there would have been no oversight over the administration in the municipalities. The chaos created an environment that was open for exploitation. He agreed that there was a political issue where there were two mayors running a municipality. A political intervention was needed. He would like to hear from Minister Dlamini-Zuma on this.

A local government election was coming up and when this happened, people tended to take out their frustrations in a way that nobody would endorse. He was concerned that tremendous instability would take place throughout the North West leading up to the elections. What measures were being taken to ensure communities felt that their concerns were being heard? Were feedback meetings being held on this? They would have to replace buildings and road surfaces if these were burnt or destroyed during protests. What steps were in place to protect the North West and its law-abiding citizens?

Mr Joseph Leshabane, DDG: Project and Programme Management Unit, National Department of Human Settlements, said that once the Department was separated from COGTA, the new Department had suffered undesirable scenarios, as personnel had been shared between the two Departments. The two HODs had agreed on such a skewed distribution of personnel that the Department had ended up without the required finance. This had also come to light when the Department could not deal with grant management and compliance, leading to under-expenditure and the loss of R100 million. The audit had suffered at the hands of the two accounting officers, as there had been contestation as to who should sign off on the financial statements and whether this should be the income HOD, or the erstwhile HOD left in COGTA. These issues were not justifiable, but this was how the matters had unfolded. Despite all the guidance given under Section 101 (a), the Department had behaved differently, showing the consequences. The loss of R110 million had been painful to witness. This had left the National Department to trigger the standard operating procedure (SOP) and the grant governance framework. A grant manager had been appointed last week, and other additional physical resources would be put in place for the appointment of a project manager.

Ms Matjeke said National Treasury did not monitor performances by the DPME, but would get the information from the Department and provide it to the Committee.

Mr K Mmoiemang (ANC, Northern Cape) raised issues on senior managerial posts filled, and the process involved. What had been done about consequence management? He said tremendous issues have been covered and there had to be a convergence of the teams, with an exit strategy put in place. This must be a well-executed strategy, taking into account the risks and mitigations, to ensure that it materialised. He asked what matters were driving the Section 100 intervention. It was unsettling to hear that the ANC was to blame for in-fighting and administrative issues. It was in the interests of the ANC to create stability in local government.

The Chairperson noted the progress made by the intervention team in the North West. Unauthorised expenditure had been taking place, the financial system had collapsed, but the situation was being salvaged, with some progress by the intervention team, which should be applauded. Some senior positions had been filled, and those not filled had been advertised. The Department of Human Settlements, which was not under Section 1 (b), had obtained a disclaimer. This Department had not spent about R100 million of its conditional grant and funds earmarked for housing in the North West. These funds had to be given to other provinces, as they had not been spent. The same had occurred with the Department of Education in the North West. This was unacceptable as conditional grants were needed to build infrastructure, particularly in schools where this was needed the most.

The total amount of irregular expenditure showed that some departments had not improved in this area. The Department of Agriculture had also not spent some of its grants. The deteriorating situation at the municipal level was worse in the North West than in the Free State. No municipality had received an unqualified opinion -- they had all received disclaimer -- and the in-fighting continued. He agreed with other Members that there could not be two Mayors or Speakers running a municipality. This showed the unwillingness of the political leadership at the municipal level to take responsibility and normalise the situation.

Until South Africa confronted the municipal issues as it had confronted COVID-19, the issues would not be resolved. There was a need for tough action and decisions. If a provincial government was unable to fulfil its obligations under the Constitution, the Minister and executive government must step in. This was a lesson that must be taught to local political leaders, and clear-cut action must be taken against them. He acknowledged that a lot of work had been done by the intervention team to bring about stability in the North West.

National government needed to announce an intervention on the risk mitigation strategies to bring about normality, as this intervention could not go on forever. Many stakeholders in the North West had said the IMTT had worsened the situation, but he disagreed with this.

Mr Mokonyama said the irregular expenditure was accumulative, which had increased the amount. He assured the Committee that irregular expenditure on learner transport would be dealt with, and this would reduce irregular expenditure by 90% historically. From November 2020 to date, irregular expenditure was not expected. It was also not expected in the current financial year. Due to the improvement on learner transport, a high number of accruals was not expected. The Department was not short of funds.                                                                                    

Mr Loyiso Ncoko, Director: Local Government, COGTA, said support packages were developed for municipalities, but little progress had been made due to a lack of commitment by some sector departments involved, and some municipalities that had not prioritised their budgets with the required interventions. The District Development Model (DDM) focused on the stabilisation of local government. Implementation protocols were being worked on for interventions on the Municipal Infrastructure Grant (MIG) and non-expenditure. MISA was leading this process.

Mr Moremi Molate, Entities Coordination, Department of Public Works, spoke on projects implemented where there were cost over-runs. A report had been submitted to the Ad Hoc Committee on the current and previous financial years. COVID-19 expenses were involved in cost over-runs, as well as community projects, contractors and delayed projects due to the difficulty in mobilising communities. The SIU was working on recovering funds.

Mr Joe Mohlala, Administrator, Department of Education, said the conditional grant under-spending had a history, as the Department had been using unlawful contracts. Capacity issues had also come up, as there were no infrastructure professionals. There were also no contractors. Some short cuts had been taken through other departments, causing irregular payments. He said it was difficult to find engineers and quantity surveyors in the North West. The Engineering Council had been engaged to assist. Infrastructure plans would be submitted. Implementing agents were another issue, considering that when the Department of Education implemented projects, the budgets were always low. The Department had been assisted with implementation. Its irregular expenditure for 2019/20 had decreased by 63%. All other irregular expenditure was historical.

Ms Matjeke said a road map had been developed for when the Section 100 intervention ended. A new framework had been developed to deal with irregular expenditure. National Treasury did not want to condone the irregular expenditure in the North West which had delayed the process of the framework. A bus subsidy affected all provinces, and this would be dealt with by the end of July.

Mr Mpanza said the DPSA was working on a Cabinet submission which would inform the entire route on skills development, after it had been presented to the Cabinet.

Minister's comments

Minister Dlamini-Zuma said part of the unfortunate situation was that there had been three Members of the Executive Council (MEC) over a period of three years. The premier in the North West had to strengthen the COGTA Department. The intervention, as per Rule 154, was to avoid citizens taking municipalities to court or dissolving municipalities.

She admitted that most problems were due to in-fighting and instability in the Councils. Sometimes Rule 139 was applied, but only so much could be done when the problem was at a political level. The Minister could not appoint or remove Mayors.

She said exiting the North West did not depend on the IMTT, but it reported to Cabinet, which would make a decision on when the exit should take place. The exit should not be dramatic, but should be managed to minimise the chances of regression where there had been improvement.  

The Chairperson said the Committee would decide whether it would visit the North West again to compile a report. It would like to see service delivery on the ground.

He made brief closing remarks, and thanked all present in the meeting.

The meeting was adjourned.