Committee Reports on Compensation Fund Visit & Department Performance

Meeting report

The Committee had a moment of silence for the passing of ANC MP, Ms Dora Dlamini.

Committee Report on Department 2018/19 Third Quarter performance
The Chairperson apologised that the Committee is dealing with these Committee Reports so late but due to Covid-19 they could not return after the Easter weekend as scheduled. She took Members through the report. She recommended that the Report should add that health and safety in mines is also regulated by the Office of Health Standards Compliance (OHSC). It is important to include all the Acts that govern inspections in mines. She raised this because the Department rarely spoke about other sectors, not unless a question arose from a Committee member.

Mr S Mdabe (ANC) asked where the two Acts differ between the Mine Health and Safety Act and the Occupational Health and Safety Act.

Mr M Nontsele (ANC) asked to flag the Chairperson's proposal and keep the sentence as is since the reporting protocol for each of the Acts is to different Portfolio Committees. He suggested the Committee follow up at a later stage on the note by the Chairperson and Mr Mdabe’s question.

The Committee Report was adopted with minor changes.

Committee Report on Department 2018/19 Fourth Quarter performance
The Chairperson took the Committee members through the Report.

The Committee Report was adopted.

Committee Report on Department 2019/20 First Quarter performance
The Chairperson took the Committee members through the Report.

The Committee Report was adopted.

Committee Report on Department 2019/20 Second Quarter performance
The Chairperson took the members through the Report.

The Committee Report was adopted.

Committee Report on Oversight Visit to Compensation Fund Headquarters
Mr N Hinana (DA) said that some of the activities noted during the visit were omitted from the Report.

The Chairperson asked that Members raise concerns and questions as each point comes up in the Report.

Mr Hinana noted that one of identified challenges captured in the report was the number of medical claims that were challenging the ICT infrastructure. This resulted in many unpaid medical claims. The Committee needs clarity on how much the unpaid medical claims were.

The Chairperson asked him to raise this when they come to the Observations section of the Report.

Mr Nontsele supported the Chairpersons note and further suggested that an attendance register be attached to the Report to capture everyone present. The names of the heads be added to the Report. He also noted discrepancies in the status of Ms Thembi Nene-Shezi noted as Compensation Fund Board Chairperson as she introduced herself as Chairperson of the Audit Committee.

Dr N Nkabane (ANC) disagreed about the discrepancy with Ms Nene-Shezi’s status as she verified with the Director General that she is indeed the Compensation Fund Board Chairperson and therefore her title reflected in the Report is correct.

The Chairperson said that she had verified that Ms Nene-Shezi is the Compensation Fund Board Chairperson and a member of the internal audit team.

Ms H Denner (FF+) asked that it be added into the Report that the demonstration was only of the internal use of the CompEasy system and not the external use of CompEasy system.  

The Chairperson noted that she and Ms Hermans were not at the demonstration. She asked that Members present at the demonstration respond to Ms Denner and state if this point was raised at the demonstration.

Mr Nontsele suggested that Ms Denner raise this in the Observations section of the Report.

The Chairperson said Members should leave everything omitted until the Observations section.

Ms N Hermans (ANC) said that there were three key items missing from the Report about the walkabout at the facilities. The first one is the interaction with the walk-in clients. Members were able to see how employees interacted with clients and handled cases. The second item was that the employees showed the Members how to use the system and how the system worked. Lastly there was the visit to the call centre where a client who could not use the system was promptly assisted by an agent.

The Chairperson agreed to capture this information.

Mr Nontsele said that it should be included in the Observations and asked for the Committee to move to the Observations section.

Observations:
Mr Hinana said that there were many disagreements amongst the Committee members about the efficiency of the new system. The Committee observed that the previous uMehluko system was being defrauded and that was included in the Report but not the amount that was defrauded. The amount needs to be reflected in the Report. The inefficiency of the Compensation Fund is also not captured and the involvement of third parties. The Committee was told some of the problems in the Fund was caused by third party involvement. Those observations should also be captured in the report. The progress report for the action plan for phase two is not reflected in the Report.

The Chairperson said that the Committee is not able to quantify the amount defrauded from uMehluko but should rather create a recommendation to take this into account.

Ms Hermans said that in the opening remarks by the Director General, the DG noted all the inefficiencies of the Fund.

The Chairperson went on to read a paragraph from the DG's opening remarks to put into perspective the role of the third parties and how they influenced the inefficiencies of the Fund.

Mr Nontsele agreed with the Chairperson that the points raised by Mr Hinana are reflected in the DG's opening remarks.

Ms Denner asked the Committee to note that only the internal side of the CompEasy system was demonstrated and not the external side. At the time she had asked about the tiles of the programme that were not working on the end user side.

The Chairperson said that a point was raised about the inefficiency of the Compensation Fund. She asked the Members if everyone agrees.

Dr Nkabane said she does not think the Fund is inefficient but that there are areas within the Fund that are problematic.

Mr Hinana said that the Committee's observations should be in line with what the DG reported about the inefficacies of the Compensation Fund.

Ms Denner said that the Committee cannot say in the observations that the CompEasy system is functional if the Committee did not see both the internal and external workings of the CompEasy system demonstrated.

Mr Mdabe said he does not think it is correct to say the Fund is inefficient. The uMehluko control system had many inefficiencies and the CompEasy system was brought in as a solution to deal with the inefficiencies of the old system. Therefore, the Fund is not inefficient, but the system used was inefficient. Those illegally claiming from the uMehluko system can no longer do so on the CompEasy system. This is because the new system needs additional authorisation from the person for whom the third party is applying.

Mr Nontsele said that the areas of concern termed as "inefficiencies" in the Report is why the Committee went on the oversight visit. He reflected on Ms Hermans account of events and her interactions with the system. This relates to what Ms Denner noted about the CompEasy system being functional. The Chairperson and Ms Hermans came back and formally reported their findings. The points Ms Hermans raised should be added to the Report. Those points should ease Ms Denner’s concerns about the functionality of the CompEasy system.

Ms Denner clarified that she referred to the external use of the CompEasy computer programme. She accepts the taps were closed once the switch from the uMehluko system to the CompEasy system was made, she not disputing that fact. She explained what the CompEasy tile does not work. IT support is needed for the external side of the programme for the end user side.

Dr Nkabane said that people seem more concerned with the third parties and service providers instead of the beneficiaries of the Compensation Fund or the vulnerable workers on the ground. The system is not currently inefficient because there was a demonstration. She partially agrees with Ms Denner that they did not test or explore how the external user experiences the system.

Ms Hermans noted the customer who called in and complained that she could not log in and the steps and prompts that were then given to her assist her to log in. Ms Denner could not experience how the system works because she was not a part of the walkabout.

Mr Hinana said he does not wish to doctor reports. If anyone wanted to dispute the DG’s presentation, they should have done so then and there. No matter what the Members say about the efficiency of the Fund, the DG reported on its inefficacy and that is the stance he will also be taking about the Compensation Fund.

The Chairperson said that when the Committee first met with the Compensation Fund, they noted the Fund has inefficiencies. They noted that the uMehluko system led to an adverse audit opinion by the Auditor General. The Committee should consider that migrating from one system to another will cause some problems. That was why they came with a report that addressed the problems. The DG was correct when he said the causal factor for the inefficiencies of the Compensation Fund was because of the third party involvement. She referred to the DG's opening remarks where he says the current complaints from third parties are due to a leak in the system being closed.

The Chairperson asked the Committee not to deliberate on matters outside of what is being presented. The migration from the uMehluko to CompEasy system had some challenges, but the Compensation Fund is not inefficient. She recommended the Committee should monitor the system. The Committee’s focus on the Fund should be on the workers, not the third parties. Members should consider what kind of legacy they want to leave in terms of this Fund.

Dr Nkabane agreed with the Chairperson and adopted her observation.

Mr Hinana said he does not accept the Chairperson’s observation since it excludes the acknowledgement of the inefficiency of the Compensation Fund.

The Chairperson said he must raise his objection at the appropriate time. It has never been said that the Compensation Fund is inefficient, it is the system that is inefficient.

Ms Hermans seconded the Chairperson's observation.

Ms Denner asked the Committee to add her observation that the internal audit committee requests have not been adhered to as stated by the Head of the Internal Audit Committee, Ms L Francois.

Dr Nkabane rejected the observation.

Recommendations:
The Chairperson asked Mr Hinana if he still wanted the quantification of the fraud to be admitted.

Mr Hinana replied that all he wants is the amount to be quantified and reflected.

The Chairperson said that on CompEasy when a claim is incorrect, the system kicks it out. She would like to get a breakdown of claimants who came back when told their forms were incorrect and those who did not come back in order to balance things and see what is happening.

Mr Mdabe agreed and said that a forensic investigation should take place. Quantifying the illegal claims will be a part of the forensic report.

The Chairperson said she wants Members to reflect on the fact that the Committee does not have a time frame for the forensic investigation. The Committee cannot have recommendations without time frames.

Mr Mdabe referred to recommendation 6.4 and asked for some clarity on the recommendation.

The Chairperson suggested the sentence either be deleted or rephrased.

Mr Nontsele explained that the Compensation Fund informed them during the visit about the challenges they have with the State Information Technology Agency (SITA) and they wanted to operate outside that arrangement. He suggested the Committee tell the Department of Employment and Labour to give constant updates on the SITA challenges rather than telling them to separate from SITA.

The Chairperson asked for this formulation to be put on record.

Ms Denner recommended that the Internal Audit Committee requests be adhered to timeously. She also recommended that the inaccessibility of the CompEasy system to end users must be addressed.

Mr Mdabe said that it is incorrect to say that the system is inaccessible if 83% of claimants have accessed it, and 93% of medical invoices have been processed. This data is from external users. To say it is inaccessible is not correct.

The Chairperson said the Committee should not debate as if no reports have been tabled. The reports tabled allow the Committee to understand and track everything reported by the Compensation Fund. Shortcomings should be monitored and that is why it is important to propose time frames.

Ms Denner said she does not dispute that invoices are being processed by the system, or the reports the Committee has, or the percentages given by Mr Mdabe. But those percentages are of invoices that can be measured because they have been submitted. Other invoices cannot be processed because end users cannot gain access to the system, so they cannot be measured.

The Chairperson said that those invoices are only known to Ms Denner and the Committee has not been exposed to those numbers of unprocessed invoices. The Department should let the Committee know the number of invoices not processed because the Committee can only argue with the figures known to them and reflected in the report and not on figures known only to a few people including Ms Denner. That is unfair to the Committee. The Committee cannot alter something based on information known only to a few people. This is another reason the forensic report is so important.

Mr Hinana said the Chairperson needs to be fair as the challenges raised are known to the Committee.

The Chairperson replied that she was not referring to the report but to the information provided by Ms Denner about the processing of claims.

Mr Hinana referred the Chairperson to the first page of the Report and said that the inadequate ICT infrastructure leads to unpaid claims and infrequent payment of benefits. If people are not allowed access, how are they supposed to know that payments are done? What Ms Denner is raising is reflected on the first page of the Report and her point should be acknowledged.

Dr Nkabane said that the Compensation Fund is facing historical inefficiency and is now implementing an action plan to turn around the situation. She recommended the Fund table a progress report on the action plan before the Committee on a quarterly basis. This will allow the Committee to monitor the implementation of the action plan.

Mr Nontsele moved for the adoption of the amendment made by Dr Nkabane as it will address all the points raised by Members.

The Chairperson said Members have not reflected on the time frame for the investigation. It should be a serious conversation for the Committee. The sooner the investigation is done the better. Due to Covid-19 the Department and its entities could not be audited at the scheduled time for the audit.

Mr Mdabe said the Department needs to engage on a forensic investigation process. The process will be informed by its procurement policy.

The Chairperson said that the Committee has to set the time frame and based on what the Committee recommends, the Department will let the Committee know what process has been put in line. The Committee should then just monitor the process. The process should be put in place by the end of the financial year.

Mr Mdabe said it is fine if that time frame is for starting the process of a forensic investigation.

The Chairperson concluded that when quantifying the amount, the reports cannot be in volumes. If 98% of claims have been paid, the Committee must be told the amount, because the volumes are known by other people. She informed Members that service providers have been intimidating her by saying they will send millions of claims. For the Committee to be consistent and understand the claims, the claims cannot just be in volumes. If the Department informs the Committee that for example this number of claims are paid, the Department must tell it about the claims not paid. It should not just be volumes. There are people who know how many claims have not been paid.

The Committee adopted the Committee Report on Oversight Visit to Compensation Fund Headquarters

Ms Denner formally rejected the Report.

Mr Hinana rejected the Report.

The meeting was adjourned.