ARC, NAMC, OBP, ITB, OVG 2021/22 Q1, 2, 3 Performance & Audit Plans

Meeting report

Ms K Mahlatsi (ANC) was unanimously elected as the Acting Chairperson after the Chair had not checked in to the meeting 18 minutes after its scheduled start. The Acting Chairperson said the meeting would be a continuation of the quarterly performance reports from the Department of Agriculture, Land Reform and Rural Development (DALRRD) and its entities.

Mr Mooketsa Ramasodi, DALRRD Director General, said the Agricultural Research Council (ARC) would be making the first presentation.

Dr Mono Mashaba, ARC Deputy Council Chairperson, was rendering an apology for the Council Chairperson when his connection was lost.

Ms Nthabiseng Motete, ARC Acting CEO, requested a minute for the ARC team re-establish the connection

Nkosi Z Mandela (ANC), Committee Chairperson, apologised for joining the meeting late. He had a connection problem and had to drive to a place with better signal reception.

Agricultural Research Council 2021/22 Quarters 1, 2 and 3 Performance
Ms Nthabiseng Motete, ARC Acting CEO, said the presentation had been structured to provide feedback on Quarters 1, 2 and 3 performance information together with its audit improvement plan.

Dr Hilton Vergotine, ARC General Manager: Risk and Planning, noted its six performance outcomes:
1) Increase agricultural production and productivity
2) Sustainable ecosystems and natural resources
3) Improved nutritional value, quality and safety of agricultural products
4) A skilled, capable agriculture sector with innovation, knowledge and technologies
5) Enhanced resilience of agriculture
6) A high performing and sustainable organisation.

Overall for 2021/22, ARC had 53 performance targets. It was reporting on 32 targets for Quarter 1, of which 72% were met. The reasons for not meeting all the targets was due to: Project initiation delays (Field trials), COVID restrictions impacting farmer field days (gatherings) and delays in finalisation of service level agreements (farmer assessments). For Quarter 2, ARC was reporting on 40 targets, of which 73% were met. For Quarter 3, 43 targets were being reported on and 51% were met.

Ms Maureen Manyama, ARC CFO, skipped financial performance for Quarters 1 and 2 and presented only Quarter 3 because it was reporting on a year-to-date basis. At the end of Quarter 3, ARC was sitting with an operating surplus of R11.1 million. ARC had delayed spending on personnel costs amounting to R38.1 million due to vacancies and operating costs amounting to R107.1 million. The cash reserves were R919.2 million. The foot and mouth disease (FMD) ring-fenced funds were R452.4 million. The positive net cash flows from operating activities were R443.8 million and current assets of ARC exceeded liabilities, ensuring satisfactory solvency and liquidity assessment. The net asset value of ARC was R2.1 billion.

ARC had targeted to achieve 30% of external income as a percentage of total revenue, but had been sitting at 16%. The target for personnel costs as a percentage of the operational parliamentary grant had been set to 80% and it achieved 83%.

The ARC audit improvement plan, called the ARC Controls and Efficiencies Improvement Plan (ACE.IP), had 84 initiatives, of which 40 were ongoing within deadline, 18 were complete and 17 were ongoing but had missed the initial deadline. The details of the initiatives were contained in the ACE.IP document.

Discussion with ARC
The Chairperson had challenges with his connection and Ms Mahlatsi lead the Committee as Acting Chairperson. She asked the Committee for questions of clarity to ARC.

Ms T Breedt (FF+), asked how much of the ring-fenced FMD amount was spent and what had it been spent on. From 2019/20, many disciplinary cases were still pending. What was the time-line for their completion?.

The Chairperson regained his connection and asked ARC how far the process was for filling the CEO position that was vacant since August 2021. ARC should provide progress on the appointment of the Group Executive for Research and Innovative Systems and Group Executive for Human Resource and Legal Services – positions that both became vacant since November 2020. Were there other executive and senior management vacant positions in ARC. If so, what had been the impact of the vacancies on ARC sustainability. ARC had to provide reasons for the areas that had not been sufficiently addressed in the audit improvement plan, particularly Supply Chain Management matters that had not been resolved. How far was the implementation of the new structure, and were employees consulted before finalising the structure?

Mr Ramasodi replied that the new CEO had been appointed, approved by the Minister and would be starting work on 1 April 2022. The appointment of the two Group Executives had been stalled so the new CEO could be able to choose and appoint his preferred team. Ms Maureen Manyama, ARC CFO, would be leaving ARC on 1 March 2022, moving to greener pastures. The process was under way to advertise for a new CFO.

Ms Motete replied that amendments to the structure had not begun as that was awaiting the new CEO appointment of 1 April 2022. ARC was continually engaging with its organised labour on any changes that would be occurring as a result of operational requirements.

Ms Manyama replied that the FMD Funds were sitting at R509 million – a total that government had promised ARC. In 2021/22, R1.4 million had been spent to date. This was for electrical upgrades to the FMD vaccine production facility. On monthly reviews of the contract register, it had since been updated and automated so that it was in alignment with National Treasury’s template. The two disciplinary cases for irregular expenditure had been finalised, leading to the dismissal of two employees. One other disciplinary case had been terminated after the implicated employee resigned during the disciplinary process.

ARC had submitted a condonation request for the irregular expenditure incurred by ARC in the past. National Treasury was still to engage with the State Attorney and ARC was awaiting the result.

The Chairperson requested ARC submit its answers in writing.

National Agricultural Marketing Council: Q1, Q2, Q3 Performance Report
Mr Angelo Petersen, NAMC Chairperson, said when the new NAMC board took over, it found legacy challenges that could destabilise the entity. The board had decided on a ‘back to basics’ approach in dealing with the challenges to resource the entity adequately within its budgetary constraints. NAMC was slowly making progress over time and the presentation would show that it was moving forward.

Mr Simphiwe Ngqangweni, NAMC CEO, said the entity would not present the full 28 slides but would rather go through the highlights of 2021/22. It had achieved 28 of its 36 outcomes for 2021/22.

Programme 2: Enabling agricultural marketing policy and statutory environment
NAMC had targeted to receive 30 applications, but only 16 applications had been received in the first three quarters. It was looking to revise the target based on the fact that the submission of applications was a voluntary process.

On the status of the agricultural industry trusts, the 2021 survey on the status of trusts was in the process of being completed and the questionnaire would be shared with all the industry trust administrators. The Winter Cereal Trust (WCT) was currently facing administrative challenges which had led to the formation of a new trust referred to as the South African Winter Cereal Trust. The WCT was no longer collecting levies, which was the main source of income for the Winter Cereal Industry. No meeting was held due to lack of quorum and the industry trustees had resigned from attending WCT board meetings.

Programme 3: Ensuring agricultural sector is viable, inclusive and competitive as a key economic sector
Farmer development support had been facilitated for 90 farmers linked with the market in contrast to the target of 60 farmers over the three quarters.

Programme 1: Business Excellence
NAMC had made five permanent appointments and five contract appointments during 2020/21 and 123 project employees had been employed in the National Red Meat Development Programme.

Ms Irene Mathatho, NAMC CFO, said the target for budget spend was 25% per quarter and it had been doing well over the three quarters. NAMC had received an unqualified audit report with findings.

NAMC procurement spend targets for businesses owned by:
1) Woman – the target was 30% and was achieved in the first and second quarter.
2) Youth – the target was 20% and was achieved only in the first quarter.
3) Persons with disabilities – the target was 5% and was not achieved over the three quarters.

R50.1 million was the 2021/22 budget and revenue received had been R53.9 million as a result of various sponsorships. It spent the bulk of its budget on compensation of employees, but that had been within budget. There was an overspending in operational expenses, however NAMC was sitting with a surplus of R12 million at the end of the three quarters.

Speaking to the audit improvement plan, NAMC had 10 major audit findings in 2020/21 of which five had been improved upon and it did not anticipate repeat findings for those. The other findings had work in progress in the improvement actions being implemented.

Onderstepoort Biological Products: Q1, Q2, Q3 Performance Report
Ms Rene Kenosi, OBP Board Chairperson, said for the period 1 April 2021 to 31 December 2021, OBP had generated gross revenue of R146.1 million, compared to the budget of R159.0 million, which was R12.9 million behind the year to date budget. OBP had operating expenses of R90.3 million with a budget of R121.0 million for the period, constituting a saving of R30.7 million year to date. The company had reduced overall expenses by R14.9 million which aligned with the decreased revenue against the 2021/22 budget.

The OBP board was dealing with legacy issues which resulted in inefficiencies in: management of
industrial relations, human capital development, innovation, research & development, product availability
and Good Manufacturing Practices (GMP). The board was exercising consequence management and was developing a refined organisational structure. The board was consulting with experts on how to improve on GMP.

Dr Bethuel Nthangeni, OBP Chief Scientific Officer, said OBP was busy with the development of a new ‘heartwater' vaccine , which was undergoing clinical trials. It was using technologies sourced from Scotland to develop a new product for treating Snotsieke (Malignant Catarrhal Fever) and was also working on a new vaccine for treating African Horse sickness. The new technologies OBP was making use of would result in a rapid turnaround time as the time to test the vaccines would be shortened. These technologies were for developing both bacterial and viral vaccines. Products that had been registered but never went to market, were now under way for market distribution.

Mr Luvuyo Mabombo, OBP Interim CEO, said that in the past five years the number of products produced by OBP had been higher than the number of products sold, on average. In 2019 a lot of Blue Tongue vaccines were sold, mainly due to a large number of exports made in that year. The year 2020/21 had its own challenges due mainly to OBP's ageing infrastructure. The load-shedding in 2021 had a huge impact on the bacterial products in particular.

Ms Elspeth Govender, OBP CFO, noted OBP had generated revenue of R146 million compared to the R159.0 million budget to date. There was a budget deficit of R12.9 million. The operating expenses were R90.3 million with a R121.0 million budget up to 31 December 2021. The company had reduced expenses by R14.9 million. 97% of the OBP sales were from vaccine sales and 3% was from other income.

50% of sales were from the local market and 50% from export market. For the actual dosage administered to animals, 70% had been administered locally and 30% externally. Employee costs for 2020/21 were R69.9 million compared to the budgeted R70.4 million. Repairs and maintenance up to 31 December 2021 were overspent by R3.6 million. These repairs were attributed to ageing equipment that had been constantly breaking down.

Looking at the Annual Performance Plan, overall performance was 35% of its Quarter 1 targets, 50% of its Quarter 2 targets and 53% of its Quarter 3 targets.

OBP had implemented and audit improvement plan tracking register which had been presented to the board on a quarterly basis. As at the end of the third quarter, OBP had three external audit findings which would be finalised before the end of the financial year. It had six internal audit findings and it may not be able to resolve all of them by the end of the financial year.

Discussion with NAMC and OBP
Ms A Steyn (DA) said that the Committee needed to perform proper oversight on OBP because she had been inundated with calls from people telling her there was something massively wrong at OBP. The Committee needed proper details of everything that was 'being brushed over’ in every meeting it had with it. OBP had to provide insight on which vaccines were available and which were not, because people had been complaining about the unavailability of vaccines.

Ms N Mahlo (ANC) asked how the NAMC turnaround strategy was going to look as it had reported about R6 million rand underspent due to COVID-19. How would the NAMC turnaround ensure that the trust (WCT) collected revenue. She requested NAMC submit a list of the 29 farmers it had assisted; the Committee wanted to perform oversight on those farmers. She noted OBP’s underspending of R37 million, asking what had been the reason for that.

Ms Breedt asked OBP to explain the UIF double expenditure that had gone on from November 2021. How far had the investigations gone and what had been the final outcome? She asked NAMC to provide an update on the implementation of the recommendations issued in February 2021 on suspected fraud and corruption, on procurement and contract management for agriculture and the agro-processing master plan. Had action been taken against the implicated staff members? The Committee required to be briefed on the findings of the Special Task Team.

Ms M Tlhape (ANC) said the Committee had recorded risk management concerns within OBP in May 2021. She supported that the Committee had to perform oversight on OBP. She asked NAMC if there was any impact of market trends in agriculture on food prices. Had factors such as COVID-19, weather patterns and the growing South African population affected food prices in any manner? On food availability, not sustainability, which commodities had been key to the country and what was NAMC doing to ensure that such commodities were available. Why was NAMC appointing personnel on contract, while it needed them for long term purposes. What was NAMC doing to market its service to people living with disabilities?

The Chairperson asked NAMC if it could assure the Committee that it would resolve its remaining 50% of audit findings by end of March 2022. NAMC had to indicate to the Committee the implications of the challenges in the Winter Cereals Trust, particularly the non-collection of levies for the winter cereal industry. How much was the NAMC irregular expenditure over previous financial years, for which it had requested ‘condonation’ from National Treasury – what measures was it going to take for that. In 2020/21 NAMC incurred about R30.2 million in irregular, fruitless and wasteful expenditure. Of this, how much was fruitless and wasteful expenditure and what disciplinary action had been taken against those responsible?

He asked if OBP had appointed a new HR manager, when was the appointment made and could OBP provide assurance that the outstanding audit findings would be resolved before the end of the financial year.
OBP ended the previous financial year with a 26% vacancy rate which impacted its performance and operations. What was its current vacancy rate? Besides the CEO matter that was being handled by the CCMA, were there any other critical OBP vacant positions?

In 2020/21 OBP had cited lockdown restrictions and a dispute with the supplier as the reason for underachievement in completing 100% of phase one and 50% completion of phase two of the GMP facility, which was referred to a legal process. Is the legal process with the supplier finalised? If not, how far was it? In light of the challenge with the previous supplier, how was OBP continuing with the GMP project and how did it plan to prevent further delays, due to supplier / service provider challenges? The Chairperson noted the slow progress in resolving SCM audit findings in the audit improvement plan.

NAMC response
CEO Simphiwe Ngqangweni said NAMC would provide the Committee with the report detailing the farmers assisted by NAMC with market access. On the implications of challenges in the Winter Cereals Trust, he replied that a voluntary trust was established to temporarily oversee the funding of the winter cereals industry because the Winter Cereals Trust had challenges in collecting levies.

Mr Bonani Nyhodo, NAMC Senior Manager, replied that the R64 million asset decline in its investment portfolios had been due to the drop worldwide in the stock exchanges due to the effects of COVID. The Trusts were earning an income from the buildings owned by them, however the occupancy rate of the buildings had dropped as the businesses making use of the buildings had been under financial constraints. NAMC could attest to the Committee that there were some exciting developments in the industries despite some areas needing attention.

Dr Christo Joubert, NAMC Agricultural Economist, replied on the status of food availability, saying 3.8 million tons of maize would be exported before the end of April. That would bring a lot of foreign exchange into the country. There was 80-day stock available at the end of the marketing season. The country’s flooding problems seemed to be resolved; that was going to ensure successful crop production. The one problem that NAMC identified was the tensions between Ukraine and Russia, from where 30% of South Africa’s wheat was being imported. As a result , it was expected that food prices would rise, but inflation would not exceed that caused by the drought a few years back. Increases in fertiliser prices and in fuel would also affect food prices. However, the country was in good standing for food availability and sustainability.

Mr Ngqangweni replied about the commodities prioritised by NAMC – it was monitoring all the grains such as maize, wheat, sunflower for availability and monthly reports were available on that. The work to ensure the supply remained stable was not NAMC’s mandate and had to be done by DARLLD.

Ms Nolwazi Simelane, NAMC Senior Manager: Human Capital, replied that there were four positions that had been approved but there was a problem since the structure was approved on a non-funding basis. The organisation had to look for funding to ensure that the structure was resourced accordingly. The National Red Meat Development Programme (NRMDP) contracts were placed in December and their end date was February, with the hope that they would then be allocated to ARC.

Ms Mathatho, answering on preferential performance targets, said the challenge had been that the NAMC budget was limited and the procurements made were based on the operational expenditure. The procurements were not targeted since some of them were done through bids. The Supply Chain Management often struggled to find suppliers in categories such as: persons living with disabilities. NAMC was doing its best to get suppliers in such categories.

On the audit action plan, NAMC had systems in place to ensure it would have dealt with 100% of the audit findings by 31 March, even though it had only attended to 50% of the findings in the last three quarters.

Ms Mathatho replied that total irregular expenditure at the end of 2020/21 had been R147 990 000 which had been incurred over the years and was never condoned. NAMC had been meeting with National Treasury to express the difficulties it had been encountering, especially when it came to consequence management. Some of the staff members who had been there when the irregular expenditure was incurred were no longer with NAMC and legally it was challenging to follow up on them. NAMC thought it was important to provide staff with training to prevent the recurrence of irregular expenditure. At the end of 2020/21, NAMC did not record any fruitless and wasteful expenditure.

Mr Angelo Petersen, Chairperson: NAMC said the current NAMC board was dealing with legacy issues, to clear them out and refocus NAMC. The board was going to exercise consequence management in the event that proper procedures and protocols were not being followed. The major challenge was dealing with issues that had occurred during the term of the previous board.

Ms Thandeka Ntshangase, Deputy Chairperson: NAMC, replied about the Agriculture and Agro Processing Master Plan (AAMP), saying the main allegation in the investigation had been administrative about irregular expenditure incurred through NAMC employees. NAMC was working to finalise the investigations, but had taken the decision to focus its efforts on dealing with HR matters. The HR Committee had been tasked by the board to evaluate the substantive matters relating to the allegations. The particular matter was concluded by the previous Audit and Risk Chairperson, Ms Lerato Mothao. There were no service providers appointed for AAMP and Prof Mzukisi Qobo had been directly appointed by the Minister at a departmental level, not by NAMC.

OBP Responses
Ms Kenosi, OBP Board Chairperson, replied that OBP was open to the Portfolio Committee performing oversight on it at a time that was convenient to the Committee. In the past, there had been a lot of conspiracy theories about OBP; the OBP was inundated with media queries, some of which included queires about unavailability of OBP products. The OBP sales team was able to track the products in areas where it had been said they were unavailable. It was possible for OBP not to have a particular vaccine available at a certain time because OBP produced for immediate distribution. It was also possible to have vaccines produced but not distributed, pending approval. On the R30.7 million underspending, about R14 million had been due to savings as part of OBP cost containment measures.

Mr Mabombo, Interim CEO, assured the Committee that OBP did have African Horse Sickness vaccines available. There was only one management position vacancy, that of CEO. OBP had a vacancy for a Corporate Services executive and it was fishing for a candidate who could fill the position. OBP had appointed an HR manager and the candidate resigned within 6 months of appointment. OBP asked the Department to loan one of its seasoned Chief Directors to fill the role of HR manager while OBP was looking for a new HR manager.
 
Ms Govender, OBP CFO, replied that OBP had finalised the disciplinary process for all irregular expenditure (except two instances) for which it had requested condonation from National Treasury. OBP undertook a risk assessment for the current financial year and noted a decrease in irregular expenditure as there were currently three instances of irregular expenditure amounting to about R80 000. OBP has recorded no fruitless and wasteful expenditure for the current financial year. For the disciplinary processes concluded, OBP was working with the South African Police Service to recover the monies irregularly spent and criminal charges were being laid against all the individuals involved.

OBP needed Capital Expenditure funding for its ageing infrastructure and had communicated the matter to National Treasury but had received no response.

The Chairperson requested OBP and NAMC send their responses in writing to the Committee.

Office of Valuer General: Q1, Q2, Q3 Performance Report
Ms Motlatso Maloka, OVG Board Chairperson, introduced her delegation.

Mr Thapelo Motsoeneng, Acting COO: OVG, presented and noted that in Quarter 1 OVG achieved three out of its eight targets; in Quarter 2, four out of 10 targets; and in Quarter 3, four out of nine targets. Valuations were the core function of OVG and OVG achieved 100% of the planned valuation targets for Quarter 1, 48% in Quarter 2 and 58% in Quarter 3. OVG was progressing in reducing the number of valuations completed by private valuers. OVG had continued to improve on the average number of days to produce a valuation certificate. OVG was able to achieve the 50 days target or complete the valuations in less time.

Mr Tumelo Mokale, CFO: OVG, said OVG had a 2021/21 allocation of R131.8 million which had been split into compensation of employees and goods and services. R11 million was spent on the compensation of employees and R3.6 million on goods and services in Quarter 1. In Quarter 2, R15.3 million had been spent on employee compensation and R18.5 million had been spent on goods and services. In Quarter 3, R23.5 million had been spent on employee compensation and R17 million had been spent on goods and services.

Ingonyama Trust Board: Q1, Q2, Q3 Performance Report
Ms Zethu Qunta, ITB Deputy Board Chairperson, introduced her delegation and gave an apology for the absence of the Board Chairperson who was attending a family funeral.

Adv Vela Mngwengwe, CEO: ITB, said ITB would start with financial performance in the interest of saving time.

Mr Siyamdumisa Vilakazi, CFO: ITB, presenting the financials, said it was important to note that the revenue model explaining from where money came indicated that ITB was a Schedule 3 entity and the utilisation of the grant was its main source of funding for expenditure. In Quarter , ITB had budgeted for R5.8 million, but received R2 million. The main costs of ITB were due to board members fees as ITB was a labour intensive entity. It had been underspending relative to its budget because it had not been well resourced financially. The monies received were governed by Treasury Regulation 14 on how they should be spent. In Quarter 2, ITB received R750 000 but needed R1 million. The Quarter 3 financials were the same as for Quarter 2, with the difference being interest money was received from the bank.

ITB had continued to incur deficits due to insufficient funding. There were processes that had been embarked on to get more funding, but those processes had failed due to a variety of reasons. It had been overspending, specifically on salaries and wages.

Adv Mngwengwe said ITB had only achieved one target in 2020/21 financial year and that trend had continued into Quarter 1 of the 2021/22 as zero targets were achieved. In Quarter 2, two out of six targets were achieved and in Quarter 3, four out of six targets were achieved.

Discussion with OVG and ITB
Ms Steyn asked ITB if it had plans for obtaining additional funding. How was ITB planning to solve its financial challenges without having to send its concerns back and forth to Parliament. Had ITB stopped issuing leases to the community?

Ms Steyn said it was concerning that OVG was seemingly not getting its house in order; it was still taking a long time to give valuations to people. What were the time-frames for OVG to get their valuation in order?

Nkosi Z Mandela highlighted that OVG functions included regulation of valuations to ensure that there was compliance, particularly with Section 25 of the Act, as to property value and just and equitable compensation. The Committee’s assessment of OVG performance should not be detached from the assessment of land redistribution and restitution. In Quarter 3, the target to settle labour tenants had not been met due to long negotiation processes. Could OVG explain in plain terms, reasons for the variation in slide 16. It was unclear why OVG had waited until the end of the year to report on valuation requests. What was the total number of valuation requests between Quarter 1 and Quarter 3? What was the total number of outstanding valuations? What was the total number of valuations completed, but the property owner had not agreed to?

In 2021, processes were set in motion through the Ministerial Advisory Panel to review the work of OVG and the Property Valuation Act. Could the DG provide the status of progress on the review. As recently as 11 February 2022, the Land Claims Court gave a judgement on a land claims dispute involving the owners of the Farm Jakkalsdans and the Moloto Community. The dispute was due to the landowner being offered less than market value for the land as a result of a revised valuation formula by the Valuer General in August 2015. Could the Valuer General explain OVG formula. What did the court order say about the property value as per OVG formula?

The Chairperson asked ITB to give reasons for the classification of ‘grant to loan’ as reported. What were the reasons for the change and what did it mean for accounting for revenue?

[The Chairperson hand over the chair to Ms Tlhape as he had to go for his prayers].

Ms Breedt referred to the Inter-Ministerial Advisory Panel and asked what progress had been made on OVG permanent structure. What mechanisms had been put in place to ensure the elimination of fraud and corruption within OVG?.

Ms Mahlo noted that six of OVG Valuation Process targets had not been achieved. Why were the targets not achieved? On the use of private valuators, when would OVG proposed Valuation Tracking System be implemented? Was there any monitoring of private valuators and if so, what was OVG monitoring?

The Acting Chairperson, Ms M Tlhape, asked OVG to share with the Committee three measures that would ensure it was well functioning, compliant and could achieve its targets. She asked ITB if there were items that it was planning to improve on so as to raise the confidence of the Portfolio Committee.

OVG response
Mr Motsoeneng, Acting COO, replied that OVG was making progress in reducing time-lines but was still not happy with the amount of backlog work that had not been completed by the end of the 2021 calendar year. OVG was in a position where it would be able to achieve all its targets in the next financial year.

On the reasons for variation in slide 16, private valuers had been and continued to be a problem. However, the number of valuations in the hands of private valuers had significantly reduced. On valuation requests, OVG processed 121 backlog valuations in Quarter 1, 143 backlog valuations in Quarter 2, and 206 backlog valuations in Quarter 3. The total number of completed valuations rejected by owners was 15 in Quarter 1, 21 in Quarter 2 and 37 in Quarter 3.

Mr Motsoeneng said OVG was now using an Enterprise Resource Planning (ERP) system that allowed clients to give feedback on a digital platform and to give an indication of what became the final value on their certificate.

In the Moloto community case, the court judgement had compared the OVG formula to what had been done in the past, and the court took the ‘two stage approach’, where a market value would be determined and then reduced or increased based on other factors that affect or were related to the land. The court had said that the formula was consistent with the ‘two stage approach’ and was not in violation of any law.

On initiatives to eliminate fraud and corruption, OVG was running staff workshops and would be launching a fraud and corruption hotline. OVG was working to gets its clients involved in the fraud and corruption workshops. The valuation tracking system was online and monitoring the private valuers to give OVG an indication of what was happening in terms of contracts, time-lines and delivery of work.

On three measures that would help OVG, the Acting COO said it was a difficult question but that the first one would be OVG's digital maturity, which would lead to the stability of operations and ensure it could readily track its progress by capturing trends and informing predictability. As OVG retained more and more data, there would be more analytic information to help OVG improve its processes, particularly on valuations.

Mr Mooketsa Ramasodi, DALRRD Director General, replied that the report of the review of the Property Valuation Act had been completed and it was awaiting consultation with the Minister. On the question about the land reform space, he requested that the Department submit a formal written response to the Committee on the issues between Land Reform and Rural Development and OVG.

ITB response
To gain the confidence of the Committee, Dr Qunta replied that ITB was designing an appropriate operating model, that would be followed by an organogram. ITB was developing systems in all areas of operation. ITB was streamlining operations to ensure the separation of those responsible for oversight from those responsible for execution. With those systems in place, ITB operations would improve.

Mr Mngwengwe replied about additional funding. ITB had two sources of revenue and it had decided to establish an entity to operate in the commercial space with a view to generate more revenue, for the purpose of enabling the Trust to exercise its mandate towards its beneficiaries. He confirmed that ITB had ceased entering into residential leases with Trust beneficiaries.

Mr Vilakazi said there was a need for an ‘education session’ to educate the Committee on how ITB operated, as a result of its tricky business model that required a bit of a study. There had to be an understanding that ITB was a Schedule 3A entity and its funding was the responsibility of government. There was nowhere else to go for funding ITB. Trust monies were all governed by Treasury Regulation 14 and could not just be used on the instruction of the Department. ITB was trying to run away from committing financial misconduct. The root cause of ITB inefficiencies had been lack of funding. The financial regulations of the Trust allowed for up to 10% of the Trust monies to be used for administration of the Board as a Schedule 3A entity.

Ms Steyn requested that ITB submit in writing the answers to her questions: what was the number of residential leases affected by the court order, what was the implementation plan for the court order and what was the total cost needed to reimburse those affected.

The Acting Chairperson requested ITB and OVG submit their answers in writing and the meeting ended.