DEFF Audit Outcomes; DEFF and MLRF 20019/20 Annual Reports; with Minister & Deputy

Meeting report

Opening Remarks

The Chairperson opened the meeting by indicating that the Portfolio Committee was going to be briefed by the office of the Auditor-General of South Africa (AGSA) and the Department of Environment, Forestry and Fisheries (DEFF) on the 2019/20 Annual Reports and audit outcomes.

The Chairperson moved for the adoption of the meeting’s agenda.

The agenda for the meeting was adopted.

The Chairperson noted that the introduction of new Members was not part of the agenda but was important. He asked the new Members to introduce themselves.

Ms C Phillips (DA) introduced herself and indicated that she had moved from the Portfolio Committee on Mineral Resources and Energy. She had dealt with the effects of mining on the environment and was very passionate about the environment and animals. She hoped that she could help the Committee make a difference to the environment and animals.

Mr D Bryant (DA) introduced himself and stated that he was previously a Councillor in the City of Cape Town and chaired the Committee on Sustainability and Resilience. He indicated that he had a keen interest in the affairs of the Portfolio Committee on Environment, Forestry and Fisheries. He said he was keen to work with all the Members of the Committee towards achieving the Committee’s goals.

The Chairperson thanked the Members who had introduced themselves. He invited the office of the Auditor-General to brief the Committee on the annual reports. 

The office of the Auditor General was represented by a team led by Mr Eugene De Haan, Deputy Business Executive. He asked the team to introduce themselves and also state the specific reports they were responsible for.

The team introduced themselves.

Mr De Haan highlighted that the focus of their presentation was to give an overview of the audit outcome for 2019/20 for the whole portfolio of entities within the Department. The report also included the new section of forestry and fisheries that had been taken over from 1 April 2020.

He reminded the Committee that two or three years ago, the Department received a disclaimer of an audit opinion and since then there had been a focus on improving the audit outcomes. The work and relationship between the Department and the Auditor-General’s office had improved. He noted that the office of the Auditor-General had had a successful relationship with the Department although the audit outcome was not reflecting this as yet. He reiterated that there had been some improvement.

Mr De Haan said that in the previous year, there had been qualified opinions in about seven areas. These had been reduced to two. There was obviously still a lot of work to be done but it was noticeable that the Department was improving.

He mentioned that they were recommendations in the presentation not only for the Department but also for the Committee, particularly on how the Committee could monitor the Department going forward. He thanked the Department for its cooperation and handed over to Mr Daniel Van Wyk to present on the audit outcome.

Presentation by the Office of the Auditor-General

Mr Dan Van Wyk, Senior Manager, AGSA, led the presentation. He stated that the Annual Audit Outcome examined three areas: fair representation and absence of significant misstatements in the financial statements; reliable and credible performance information for predetermined objectives; and compliance with all laws and regulations governing financial matters.

The audit outcomes of the portfolio over five years were represented by graphs. These showed that, overall, the portfolio of entities within the Department had improved from the prior year, as the SA Weather Service (SAWS) and the SA National Biodiversity Institute (SANBI) had progressed from qualified to unqualified audit opinions with findings on compliance with laws and regulations.  While the audit opinion of the Department itself remained unchanged as qualified with findings, management efforts in addressing several qualification areas from prior years were commended.

Financial statement preparation remained a concern at the department and at some of its entities, SAWS, SANBI and iSimangaliso Wetland Park, as material adjustments had to be made to the financial statements submitted for auditing.

Consequence management, procurement and contract management were of general concern at most entities as irregular expenditure increased significantly as result of inadequate monitoring of compliance with supply chain management (SCM) laws and regulations.

The audit opinion for forestry remained unchanged with a repeat qualification on the accuracy of biological assets. The audit opinion for the Marine Living Resources Fund (MLRF) improved from a disclaimer to a qualified audit opinion. That was attributable to the monitoring of implemented controls by senior management.

The audit report said there was good effective leadership in all the entities except the MLRF and the Forestry division. Intervention was required to review and monitor compliance.

On financial health, the audit report said there was a material uncertainty relating to the going concern status of iSimangaliso .The entity incurred a loss of R10.31 million during the year ended 31 March 2020.

For the financial year under review, there was fruitless and wasteful expenditure of R76.88 million. The Department accounted for 99 percent of that amount. Irregular expenditure for the financial year was R2.9 billion. Of this, R1.73 billion represented non-compliance incurred in previous years that was identified and reported in the current year. Unauthorised expenditure was R149 million.

There were allegations of fraud that were not investigated in some entities. The ones investigated took longer than six months.

The Auditor- General offered some recommendations to the Department and its entities and also to the Portfolio Committee. The recommendations were mainly around internal controls and monitoring.

The Chairperson thanked the team from the Auditor General’s office for a detailed presentation. He then asked the Minister to introduce the new Director-General (DG) of the Department.

Remarks by Minister Barbara Creecy

Minister Creecy thanked the Chairperson of the Committee for the opportunity. She welcomed the new Members from the Democratic Alliance (DA) who had recently joined the Portfolio Committee. She highlighted that she was with Deputy Minister Maggie Sotyu and together they were wishing the Portfolio Committee all the best for the year. She said the year had not started on a good note and it was going to be a difficult year at a personal level. However, the Department was hoping that the Committee Members would stay safe and continue working together with the Department despite the circumstances.

Minister Creecy introduced Ms Nomfundo Tshabalala as the new Director-General of the Department. She indicated that Ms Tshabalala was also in the meeting and her presence was significant as the Committee would be discussing the outcomes of the audit of the 2019/20 financial year.

She apologised to the Committee on behalf of the Department for the audit outcome. Together with the Deputy Minister, they would do everything they could to get the Department back to an unqualified audit. Members would note from the presentation to be made by the Department that there had been some progress. However, the Department was acknowledging that they had failed and that the rot was deeper than what had initially been anticipated. Members would be briefed by the Department on the steps that had been taken towards consequence management.

The Minister said Ms Tshabalala had extensive experience in governance and in dealing with financial matters and the Department was hoping that she would be able to help with solving some of the complex issues that had been raised by the Auditor General. She asked Ms Tshabalala to address the Committee.

Ms Tshabalala thanked the Minister for the opportunity. She indicated that she was looking forward to working with the Portfolio Committee and, most of it all, with the Department on some of the challenges that the Department was currently facing. She was hoping to work with the Department in ensuring that there proper controls were in place to ensure that the Department carried out its mandate and utilised the resources entrusted to it and approved by Parliament in servicing the people of South Africa. She undertook to work together with the Minister and colleagues at the Department in ensuring that the Department fulfilled its mandate. She said she was looking forward to the engagement with the Committee. The Committee’s oversight role was important in assisting the Department to service the people of South Africa in a manner that was in line with its mandate.

The Chairperson thanked the Minister for the remarks and opened the floor for discussions on the report by the office of the Auditor General

Discussion

Mr N Paulsen (EFF) thanked the Chairperson and the Minister for their remarks and also welcomed Ms Tshabalala as the new Director General for the Department. He said Ms Tshabalala had her work cut out for her. He was certain that Ms Tshabalala’s previous experience would serve the Department well. Ms Tshabalala had served as the Head of the Gauteng Provincial Treasury and had received several accolades for the work done. Mr Paulsen noted his confidence that, for once, the Department was heading in the right direction in which it would work towards achieving its mandate and reducing irregular expenditure which was currently quite substantial.

In terms of achieving a clean audit, how would the process unfold in which the office of the Auditor General worked with the Department? The Committee did not want to sit again in a year’s time with a similar problem, because for two years in a row, the Department’s performance had been similar. The Department had poor management and it was starting the New Year with a new DG. The Committee did not want the meeting to end and with the DG not knowing the path to follow.

Mr D Bryant (DA) reiterated that the new DG had her work cut out for her.  He indicated that the major challenge that had come out of the presentation was related to irregular expenditure. The Committee had heard a ‘euphemistic term’ about procurement without inviting competitive bids. However, the Members know what the term referred to. He highlighted that the key question was about consequence management. The Committee going forward needed to get more feedback on the outcomes of the investigations in line with the recommendations that were made by the Auditor General on page 27 of the slide presentation. He acknowledged that the Minister had kindly offered to provide the Committee with ongoing feedback on the mitigation measures to be taken by the Department.

Mr Bryant said it was vitally important that the Committee started seeing the action that was being taken. In many of the instances, it was not that the contracts were not able to deliver. It went a lot deeper.

Ms C Phillips (DA) thanked the office of the Auditor-General for what she called ‘a very depressing report on a very depressing morning’.  She requested the list of companies that had been awarded contracts without competitive bids taking place, the list of suppliers whose tax matters were not in order and the list of false declarations and intents that were submitted. She stated that she would appreciate it if that information is provided.

The Chairperson reminded the Members that the Department was still going to brief the Committee and it was only the Auditor General’s office that was going to respond to the questions that had been raised. 

Responses

Mr De Haan thanked the Members for their contributions. He said the office of the Auditor-General had held a workshop with the Department once the audit was concluded. The Department had prepared an action plan addressing the audit findings. The workshop was meant to assess the root causes for the audit findings, evaluate them and discuss appropriate action going forward.

He indicated that the Auditor-General had been walking in this journey with the Department for two years and that the same workshop would be held again this year as the audits had already been concluded. The workshop would probably be planned in the next month or two. It was only then that the Department would have a discussion with the office of the Auditor-General in which they would set out the plan that would be escalated to the Department’s Audit Committee. The Audit Committee would then be responsible for making sure that the plan was monitored on a quarterly basis. The office of the Auditor- General was working towards building a working relationship with the Department.

Mr De Haan stated that the Auditor General also conducted an interim audit after every six to nine months. It reviewed significant areas and provided feedback to the Department’s Accounting Officer on whether there had been movement.

Regarding consequence management, there were steps that the Accounting Officer had to execute so as to be compliant with the Public Finance Management Act (PFMA). The Auditor-General’s office also tracked consequence management and had reported on it for the financial year under review. There had been discussions with the Minister and the former acting DG in which the Department highlighted some additional actions that had been taken but which had not been audited. The Minister was already taking some consequence management actions which would be reviewed during the interim audit. He reiterated that there had been movement in the Department in terms of consequence management.

Mr De Haan said the office of the Auditor-General would engage with the Department so that the Department could submit to the Portfolio Committee the lists of suppliers with false declarations and contracts awarded without competitive bids

The Chairperson thanked the team from the Auditor-General’s office for the responses. He stated that the Committee was hoping that they would take it from there and see how a way forward could best be mapped. He invited the Department to make its presentation to the Committee.

Minister Creecy requested that the Chief Financial Officer (CFO) present first. Given the report on the audit outcome and the questions that had been raised by the Committee Members, it was important that the CFO brief the Committee first before the annual performance report was considered.

She stated that after the CFO’s presentation, the former Acting DG would brief the Committee on consequence management. The two presentations were going to answer the broad question that the Committee was asking about the Department’s action plan to deal with the challenges. 

DEFF: Presentation of Annual Report and Audit Outcomes for 2019/20

Mr Rannoi Sedumo, CFO, Department of Environment, Forestry and Fisheries, presented on the audit outcome for 2019/20. He noted that the Department was improving from previous years. In the 2017/18 financial year, there had been an adverse audit outcome with findings; in 2018/19 there had been a qualified audit with 11 findings and for the financial year under review, the outcome was still qualified but the findings had been reduced substantially.

The Department had failed to comply with s40 (1) (b) of the PFMA that provided the timeframe to submit financial statements because there had been challenges in the preparation of the annual financial statements and the audit process due to the COVID-19 lockdown.

 As at 23 December 2020, the Department had managed to resolve sic of the eight audit findings by the Auditor General. The resolved findings related to overstatement of accruals; overstatement of commitments; audit evidence for goods and services; expenditure for capital assets; prepayments and advances; and fruitless and wasteful expenditure. The Department had not resolved issues related to irregular expenditure and immovable tangible capital assets. Action plans for the unresolved findings would be devised by 15 February 2021.

A summary of 2019/20 expenditure performance indicated that the Department spent 98.4 percent of its budget with underspending in the following areas: oceans and coast, environmental programmes and chemicals and waste management.

The Chairperson indicated that the Committee wanted the Department to complete the presentation before the Members started engaging with the report.

The Minister stated that the outstanding presentation on the Annual Reports was on financial and operational performance. She asked for the Committee’s guidance on whether the presentation was to be made at that point or after the discussion.

The Chairperson said that the Department had to present immediately so that when he opened the floor for discussions, Members would engage with the Department on all the issues. He confirmed that the Committee could relate to what the Auditor-General had said but it was better to have a full picture of the Department’s report.

The Minister thanked the Chairperson and invited the Deputy Directors-General (DDGs) to present the performance report.

DEFF Presentation on the 2019/20 fourth quarter/ annual performance report

The annual performance was represented by a pie-chart. It showed that the Department was on target with 67 percent, or 58 out of 87, of its programmes. Thirty percent, or 26 out of 87, were  work in progress. Only three were off the target.

Under the programme for authorisation, compliance and enforcement, 234 enforcement notices were issued for non-compliance with environmental legislation and 56 criminal cases were finalised.

Under the oceans and coasts programme, the coastal water quality monitoring programme was implemented in 23 priority sites in four coastal provinces and 20 scientific publications were peer-reviewed.

In the climate change programme, five adaptation projects were implemented through civil society organisations and four out of four annual pollution prevention plans were processed.

In the biodiversity and conservation programme, a drought management plan was developed in terms of the United Nations Convention to Combat Desertification (UNCCD). A total of 466 biodiversity entrepreneurs were trained.

Environmental programs created 73 568 work opportunities and 53 192 youths benefited from the implementation of environmental programmes.

Under the programme for chemicals and waste management, the Mercury Management National Action Plan was finalised and 30 Environmental Performance Assessments were conducted.

The entities faced a number of key performance challenges in air quality management, performance of contractors and waste tyre processing.

The committee was told that a comprehensive audit action plan had been implemented to address audit findings and improve internal controls.

The Minister suggested that Ms Sue Middleton should present the report on the Marine Living Resources Fund (MLRF).

The Chairperson agreed with the suggestion. He stated that there was a lot of information which was not new to the Committee because it had been provided when the Committee dealt with the Budget Review and Recommendations Report (BRRR). He invited Ms Middleton to brief the Committee. 

Presentation on the Marine Living Resources Fund

Ms Sue Middleton, Chief Director: Fisheries Operations Support, DEFF, briefed the Portfolio Committee on the MLRF. She started by apologising to the Committee because the financial slides that were reflected in the presentation were for the third quarter and were not the annual audit findings. She then gave an overview of the audit findings for 2019/20 financial year.

The MLRF received an improved audit outcome from a disclaimed audit to a qualification. The areas of the qualification related to assets, particularly property plant and equipment, inventory and disclosure of receivables. The contributing factors to this qualification were the high vacancy rate and instability in leadership particularly in the office of the CFO and at the DDG level. She stated that the MLRF together with the new DG for the Department would continue to put measures in place to improve the audit outcome particularly in controls and governance issues.

Highlights of the financial statements

The Committee was told that Income from exchange transactions had improved to R77 million from R58 million in the 2019 financial year. Confiscated stock sales had been resumed. Contract management had improved as had management of irregular and wasteful expenditure. The financial control environment had improved. Cash flow had improved and the number of creditors had been reduced. The amount of corrections that had to be made to the financial statements was high.

In the 2019/20 financial year there had been cuts in universal operating costs. The main research vessel, the Africana, was very old and past her useful life.

Key performance highlights

The MLRF had continued its efforts to reduce illegal harvesting of fish resources through 5 855 compliance and enforcement measures, 68 joint operations with partners and 309 investigations.

The entity had not been able to implement the Aquaculture Development Act Plan because the Bill had been withdrawn in June 2018. A target of 485 job opportunities in the Working for Fisheries Programme was not achieved. Only 69 were realised due to severe capacity challenges. The allocation of fishing rights to small scale fishers in the Western Cape was not achieved due to complaints received by the Department which led to an audit of the provisional list. An aquaculture research project on disease preventative measures was done. 

The overall annual performance, which was shown by a pie-chart, reflected 62 percent, or eight out of 13 programmes on target and 38 percent, or five out of 13, off target.

The Chairperson thanked the Minister for the detailed presentation. He reiterated that the information that had been presented in the Annual Performance Plan was not new as the information was presented before the Committee when it was trying to produce the BRRR. He stated that what was new was the audit outcome as well as the financial statements and opened the floor for discussions.

Discussion

Ms Phillips stated that in one of the reports, the Committee’s attention had been drawn to the fact that there had been burglaries and thefts at some of the air quality monitoring stations. Had cases been opened with the SA Police Service (SAPS)?

Mr Bryant recalled that it had been mentioned in the presentation that there was no evidence of fraud or favouritism in a significant number of the investigation into R800 billion irregular expenditure. If there was no fraud or favouritism found, what were the reasons and in terms of the investigations, what were the conclusions on the irregular expenditure? He said that financial misconduct on that scale should have consequences from a legal perspective. How was the Department deciding which cases should be directed to SAPS and which ones should go through internal disciplinary processes?

He agreed with a recommendation to segregate the membership of Bid Specification, Bid Evaluation and Bid Adjudication Committees so that there would not be a situation in which the same people sat on all of those committees. He suggested that the committees be completely reconstituted. If one looked at the fact that so many irregularities occurred on fundamental issues and that many processes could have been stopped from the outset due to non-compliance, reconstitution would be the ultimate solution. He concluded by making a recommendation to the Department for the potential reconstitution of these committees.

Ms T Mchunu (ANC) started by welcoming the new DG, Ms Tshabalala. She hoped that “the new broom would sweep clean.”

On the Auditor-General’s presentation in respect of the MLRF, she stated that there were issues that the DG for the Department needed to take care of and monitor. The entity also needed attention from the Minister and the Department as there were areas in terms of the daily monthly controls that were still lacking. Also, it was important for the MLRF to improve internal controls for risk management.

She indicated that she was also worried about an unspent R160 million in the Working For Fisheries Programme which had to go back to the National Treasury. The presentation did not reflect when the money was going to be transferred to the Treasury and why, especially when the whole Department was in need of finances.

She noted that when the CFO was presenting on the tenders that the Department was having challenges with, he referred to the action plan as improvement in Supply Chain Management (SCM). She said the Committee needed to recommend that the Department check if the incumbents in SCM had the necessary skills. A skills audit needed to be done.

Ms Mchunu said all disciplinary actions had to take place as presented. Under normal circumstances, whenever officials underwent disciplinary action, they resigned. She recommended that if anyone resigned before the finalisation of internal disciplinary action and court cases, then the Department should not release pension funds so that it could recoup the misappropriated funds from the unpaid pensions.

Mr Paulsen referred to slide 15 on qualification matters. He noted that the presenters had said that the outstanding qualifications were going to be resolved by the end of the financial year. Although it sounded promising, he wanted to know how the Department was going to go about achieving the action plan.

The presentation referred to two disciplinary hearings. He sought information about the charges that had been made and whether the people involved were currently in the process or not.

He indicated that there was no mention of the Draft National Inland Fisheries Policy Framework. The Committee would like to know what the status of that framework currently was. He said the policy framework had been taken out of the annual performance plan for 2019/20 and it seemed that in the past three years there had not been any progress.

Mr Paulsen raised a question on the type of energy being used at air quality monitoring stations. He asked why the Department was not setting a trend of using renewable sources of energy to power the monitoring stations.

He noted that in the Western Cape, the process for fisheries management had not yet been completed. He asked how the process was being publicised so that every interested person could be fully aware of the dates when the process opened and when it closed. He asked if there was a possibility that the application fee for high-value species could be reduced for small-scale fisheries. They were not able to afford the expensive fees that were often set for high-value species as they lived from hand to mouth.

Ms S Mbatha (ANC) stated that the unspent funds were transferred but not approved by National Treasury. She said she did not know how that worked in the Department because the Department was supposed to follow what the Treasury said on the issue of expenditure. She indicated that she was worried about funds being transferred back to Treasury instead of being used for procurement.

Ms Mbatha raised concerns about SCM issues in the audit outcome reports. Also, the entities had referred to the same issues in a meeting the previous week. She said SCM needed to be handled properly as it affected the Department’s audit outcomes.

She expressed concerns on the issue of the completion of school toilet blocks. She wondered how it happened that the Department of Basic Education did not release the funds in time. She recalled that some years back a learner had died after falling into a toilet. She said the state of school toilet blocks was a hazard to the learners and the Department needed to correct it. She recommended that the Department should ensure that all necessary funds had been released before they started on a project.

Ms Mbatha noted that the issue of waste tyres had been an issue for a long time. When one bought new tyres, there was an amount that was paid towards waste tyres management. However, such funds were not being used efficiently and the Department had a serious problem when it came to resolving the issue of waste tyre management. The tyres needed to be recycled because if they w3ere not, they would continue to be burnt during riots and violence and exacerbate the emissions problem.

She recalled from the presentation that the Aquaculture Bill had not been finalised. She recommended that when next the Department presented on corrective measures, it should show the roadmap on how the Bill would be revived.

Ms Mbatha said that in the City of Tshwane there were power cuts every week in one of the areas due to cable thefts. She said the thieves were working with the many recycling companies in the area. They were also selling material from waste management sites and the municipalities did not have powers to close down those areas. Hazardous substance licences were issued by the Department. She proposed that the Department find a way to best help the municipalities deal with unlicensed recycling entities which were increasingly becoming a problem.

The Chairperson stated that the recommended actions on the issue of misconduct and officials participating in supply chain had more to do with technical processes. They had nothing to do with the actual people as prescribed by Chapter 10 of the Constitution. The actions did not provide for how the Department would work with people so that they become professional and ethical in terms of the Constitution. He suggested that the Department focus on actual persons apart from the laid down technical measures.

He said the Committee needed to take a stance against financial misconduct within the Department and its entities. Also, a stance had to be taken in instances where people breached the law in supply chain management. The Portfolio Committee was qualified to say nobody could flaunt the laws that would have been passed by Parliament and were supposed to be executed. Therefore, the Committee needed to put a foot down to put an end to the misconduct. He reiterated that laws and regulations must be followed, supply chain processes must be followed and there should be no leniency.

The Chairperson said at some point, the Committee should seek a report about the implementation agency used by the Department. This was because the same agency caused the Department not to submit financials on time and numerous follow-ups had to be made. He said the Committee needed to understand whether or not that was deliberate as a lot of taxpayers’ money had been used for that implementation agency. 

He then invited the Minister and the team to respond to the questions that had been raised by the Committee.

Responses

The Minister thanked the Committee Members for their engagement. She said the Department supported the Committee’s stance that all non-compliance must be dealt with. Irregular and unauthorised expenditure was a result of an organisation being in the habit of being relaxed on accountability.

She stated that together with the Deputy Minister, she was going to meet with the new DG the following day so that the areas raised, such as irregular and unauthorised expenditure, must be investigated.  The same instruction also went for the other entities within the Department. She reiterated that there was no tolerance for non-compliance and it was only when there was a consistent tone that things would begin to change. The Ministry supported the Committee in holding the Department and its entities accountable and the Committee could be guaranteed of the Ministry’s full cooperation on those areas. 

The Minister indicated that the CFO and the acting DG were going to speak more on the reconstitution of the Bid Adjudication Committee (BAC) and the Bid Evaluation Committee (BEC). She reminded the Members that the Department now had a new CFO who had joined the team just shortly before the end of the 2019/20 financial year. The Department also had a new DG, a new DDG in Environmental Programmes and new leadership in all other branches of the Department. The new leadership was appointed on the understanding that issues of public accountability, transparency and ethics were fundamental for the administration of the Department.

She highlighted that in terms of financial delegations, certain people by virtue of the fact that they hold certain portfolios also serve on the BAC and BCE. However, as would be noted, there was a higher degree of new leadership. She hoped that because of the new leadership, there would also be a difference in approach and attitude in the Department.

The Minister said the Department intended to follow up on consequence management and also to make it very clear to everyone that there was a side of a line that one ought to stay on and if that was violated, there would be consequences.

She indicated that the person standing in for the DG, Administration would confirm that the Department did have training around the issues of ethics. However, if the training was not followed by enforcement then it obviously would just be a nice day spent in a workshop.

Minister Creecy stated that the other issue that had been mentioned which was equally important related to the question of the minimum cash standards. She said it was a requirement from the National Treasury that the Department use implementing agents. There had been a court case in which the approach was not upheld by the judge. As a result, the Department would be looking at the whole issue in the Environmental Programmes section to check whether that would be the best way to approach its programmes. It was something that the new DG would have to give attention to and in due course the Portfolio Committee would be briefed on the Department’s approach.

She handed over to the former Acting DG and the CFO to answer the questions raised.

Mr Ishaam Abader, DDG: Regulatory Compliance and Sector Monitoring, DEFF, thanked the Minister for the responses. He stated that financial misconduct cases that were opened involved disciplinary processes as well as criminal cases. The two processes were not exclusionary. Disciplinary processes within the Department could be done with potential for a recovery process.  However, the processes were such that one could not start a disciplinary hearing and not open a criminal case and have the matter investigated if there was a criminal element.

He highlighted that the disciplinary process was for the Department to conduct and the criminal process for SAPS and the courts once the matter went for prosecution. He said there was also a possibility that the Department would take the approach suggested by the Committee in which the Department withheld pension funds until recovery of the money was made.

Mr Abader stated that the CFO would speak a little bit more on the membership of bid committees because he chaired the Adjudication Committee.

He said the Department had noted the issues that had been raised on the MLRF, particularly on risk management and internal controls. The department had also noted the recommendations from the Auditor General and also those from the forensic report.

He indicated that the Department had noted the recommendations for an audit of the skills of people in SCM and the need to ensure that they were people of integrity. The Department would try to do the necessary security checks and integrity assessment.

Mr Abader said the members from the Fisheries branch would respond to the questions raised around the inland fisheries framework. However, from his recollection, the Department had set up internal processes.

He indicated that the Department had noted the recommendation on using renewable energy at the air quality monitoring stations. However, he was concerned about the fact that the solar panels were going to be stolen given that burglaries had already been recorded at the monitoring stations.

He said the Department had also noted issues raised in the relation to transfers and also on supply chain management. He stated that the Aquaculture Bill and the roadmap for the Bill were going to be on the Department’s programme for the year. The Department was looking at finalising the Bill during this financial year.

The CFO, Mr Sedumo, said that in terms of supply chain processes, there were two Committees - the Bid Specification Committee and the Bid Evaluation Committee. These committees varied from one project to another. He agreed with the Members that skills training was also very critical to the Department. The Department was focussing on aligning processes and ensuring compliance with prescripts. However, people in the Department needed to be well trained in understanding the prescripts of SCM and had also to ensure that they applied the prescripts appropriately.

He stated that the committees were transversal and that was what made them good. The Committees were made up not only of SCM people but also people from the Business unit who were involved in operations. There were also representatives from the legal unit and risk management section. He said the composition of the committees ensured some kind of transparency which gave the Department some comfort that at the end of the day, all the processes would be followed.

Mr Sedumo reiterated that the training was important. SCM could be tricky in certain areas and it was important for the Department to have people who were skilled in the necessary regulations. The Department needed to update the regulations on an annual basis to ensure that everyone who sat on these Committees was aware of the laws that they needed to follow.

Mr Sedumo highlighted that the Department had a programme in place to deal with the remaining three areas where audits were qualified. He expressed his confidence in the management team. The management team was able to address issues not only around finance but also operations.

He indicated that the issue of unauthorised expenditure was a new matter and the Department therefore needed to investigate the issue. The Department was already aware of funds that were being transferred without a business plan. The CFO assured the Committee that the Department was going to deal with the issues through formalised investigations.

On fruitless expenditure, Mr Sedumo stated that the areas had been identified and some work had already been done by the branches concerned. However, there were areas that still needed to conform to the framework set out by the National Treasury. The Department was going to implement the framework appropriately and make sure that there was accountability for all fruitless expenditure.

Dr Thulie Khumalo, DDG: Climate Change, Air Quality and Sustainable Development, confirmed that the Department had reported the cases of burglaries to SAPS. Where there was insurance, the insurance companies required case numbers. The Department was working towards ensuring that insurance was provided in those areas that were not covered. 

She indicated that monitoring stations were connected to the South African electricity grid. If the Department were to put solar panels at monitoring stations, the project would require a lot of solar panels given the amount of power that required to run the stations. The stations had air conditioning to ensure that the temperature was controlled and that would make the project intensive. She reiterated that there was also a high risk that the panels could be stolen.

The Minister asked Ms Middleton to respond to the issues of fishing licences, the Working for Fisheries Programme and other issues pertaining to the MLRF.

Ms Middleton confirmed that the MLRF needed rebuilding and support from the National Department. The MLRF was already at an advanced stage of the process for the appointment of a CFO and after that, the process for filling in the posts of Director, Supply Chain Management and Director, Financial Management would be expedited. The positions had already been advertised and the filling of those posts would go a long way in addressing the issue of capacity raised by the Auditor General.

Ms Middleton responded to the concerns about underspending on the Working for Fisheries Programme. She emphasised the point she had raised in the report that the programme essentially collapsed and had to be rebuilt from scratch. The MLRF had received permission from the National Treasury to redirect R120 million of the unspent funds to the vessel operating costs budget so that critical services could take place. This was a positive response because the budget for the vessel operating costs had been cut.

She stated that the National Inland Fresh Water Fisheries Policy that was on the 2020/21 Annual Performance Plan had gone through the Mintech and Minmec intergovernmental structures. 

She highlighted that small-scale fisheries were exempt from having to pay licence application fees. All species that were defined as small-scale had been included in what was known as the basket of species for which they did not pay application fees. In terms of FRAP, which was the commercial fishing rights allocation process, there would be extensive consultations where the process, the venue and the date would be publicised.

She stated that hake caught by hand-line was a small-scale species because it was a nearshore species but the hake caught by deep-sea trawl and intra trawl were not small-scale species as they did not meet the definition of nearshore species.

Ms Middleton said the Aquaculture Bill would be revived by the Sixth Administration and was already on the Parliamentary and Cabinet schedules for the 2021 financial year.

The Minister asked Ms Mamogala Musekene, Acting DDG: Chemicals and Waste Management, to respond to the issues pertaining to scrap metal and waste tires.

Ms Musekene stated that the Department was in the process of finalising an industry waste management plan. The Department was also looking at challenges in waste processing. It was looking into actions that would be needed to ensure that there was an upscaling in the processing of industrial waste.

She highlighted that provinces were the delegated authorities to issue waste storage certificates and that scrap yards were supposed to get certificates from the respective provinces, or the Gauteng Department of Agriculture and Rural Development (GDARD) in the case Gauteng and Tshwane. Cables and other second hand goods were also regulated by SAPS and required an authority letter issued by SAPS. GDARD had to work with SAPS to check compliance of specific scrap yards. It was something that the Department was working on in Gauteng.

The Chairperson thanked the Department and invited the Minister to make concluding remarks.

The Minister said the Department had covered the issues and she thanked the Committee for the opportunity to make presentations.

The Chairperson thanked the Minister and the whole Department for the presentations and detailed responses. He reminded the Members that they had an oversight programme in Kwazulu-Natal the following day. 

The meeting was adjourned.