Provincial Treasury & Western Cape Gambling and Racing Board 2017/18 Annual Report

Finance, Economic Opportunities and Tourism (WCPP)

11 October 2018
Chairperson: Mr T Simmers (DA) (Acting)
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Meeting Summary

Provincial Treasury 2017/18 Annual Report

Western Cape Gambling and Racing Board 2017/18 Annual Report

The Standing Committee on Finance was briefed by the Provincial Treasury on its 2017/18 Annual Report. The Department recorded progress as far as good governance is concerned. Good financial governance involved various dimensions including tactical, technical and executive dimensions and the Department has successfully delivered on its undertaking to adopt an integrated Work Plan for Provincial and Municipal Planning, budgeting and governance as well as improving the integration of budget planning and procurement despite the volatile and uncertain economic environment that characterised the year under review. 

Members differed with the Department’s view of its status and asked for clarity on its vision of good financial governance. Members were concerned about regressions in accountability and oversight and asked what was being done about this situation. Of equal concern was the identified risks in Financial Management Practice and the Committee asked how the Department aimed to address the identified risks. The under-expenditure of R278 144 000 out of R258 593 000 was noted and questioned. Members sought clarity on the matter between Auditor-General and the Department of Agriculture and were keen to know why the Department of Finance was on the side of the Department of Agriculture on the matter given that a disparity had arose around transfer payments made by the Department of Agriculture.

The Committee also expressed concern about the regression in Supply Chain Management and infrastructure in the province. The Minister was urged to formulate measures that would result in effective information dissemination to local communities. Members were concerned about the ability of the Minister to ‘take the budget to the people’, and cautioned the Department about the exorbitant amount of money paid to consultants. The Committee asked why there was under-performance in terms of Supply Chain Management (SCM) engagements; what the Department meant by the SCM Indaba; explanation on planned targets in terms of the number of municipal budgets; how the Provincial Treasury had managed to achieve all the targets; what were the plans of the Department to ensure timeous publication and tabling of the Annual Consolidated Financial Statement (ACFS) for the current financial year; why interns formed over 10% of the vacancy rate;  if the achievements were external or internal with regard to meetings and engagements with other entities and if any municipality encountered difficulty in relation to the Construction Industry Development Board (CIDB).

Members questioned the Departments position on Gender Budgeting and Women Empowerment and condemned the lack of action plans to implement policies to address the empowerment of women. The Department was urged to influence other Departments to prioritise Gender Budgeting and the empowerment of women.

The Standing Committee on Finance was briefed by the Western Cape Gambling and Racing Board on its Annual Report for the 2017/ 18 financial year. The Committee was concerned about under-spending in certain programmes and asked for the reasons for this phenomenon. The Board had decided to cut down on the number of investigations and to adopt another approach towards investigations. This was of concern to the Committee as it felt that this decision might have negative impacts on the quality and quantity of investigations.

Members noted with concern thirty one investigations with negative findings in relation to illegal gambling. Members asked for an explanation about the approach of the industry towards Broad-Based Black Economic Empowerment (BBBEE) and asked if any challenges were experienced in this regard. Members asked what process the WCGRB engages in to become financially self-sufficient; will the entity require additional funding from the Provincial Treasury; why fees were collected from Licensed Operators after expiration of the legislation; the potential impact of the proposed amendment on the management of the Board; why the R7.1 million was not applicable according to the entity’s annual report on page 26 of entity’s Annual Report.

Members expressed dissatisfaction with the vagueness of the entity’s annual report particularly with regard to the non-achieved targets as detailed explanations of the non-achievement was required. Members requested that the Board submit the report to the Committee of funding models in other provinces. An over payment of R180 000 was of concern to the Committee but it was explained that it resulted from an accumulated payment due to the HOD of Licensing. The Board was asked for clarity on the measures it envisaged taking to reduce under-performance.

Meeting report

The Chairperson stated that the agenda of the meeting was to consider the Annual Report  2017/18 of the Department of Finance.
The Head of Department (HOD) of the Provincial Treasury (PT) thanked the Committee for the opportunity to table the Department’s Annual Report.

Discussion
Mr P Uys (ANC) sought clarity on the Provincial Treasury’s progress towards delivering on its vision of good financial governance. He noted that there have been regressions in accountability and oversight. What is the Department doing to address these challenges? He sought an explanation about the interactions of the Minister with local communities and the role such interactions played in good governance.

MEC Meyer said the Department recorded progress in the positive direction as far as good governance is concerned. He said good financial governance involves various dimensions, including tactical, technical and executive dimensions. He said the Department has successfully delivered on its undertaking to adopt an integrated Work Plan for Provincial and Municipal Planning, budgeting and governance as well as improving the integration of budget planning and procurement despite the volatile and uncertain economic environment that characterised the year under review.  He said the Department was able to reform procurement process and gave R75 million for drought relieve during the year under review.

Mr Isaac Smit, Chief Director: Asset Management said that the Department utilises technology to facilitate the supply chain process. One of the achievements of the Department was the introduction of the WCSD, which helps to verify the status of suppliers in a timeous manner. The Department also develops performance-based approach to financial transactions in a way that ensures efficiency.

Mr Uys requested the HOD to tell the Committee the challenges the Department encountered in Financial Management Practice. How does the Department aim to address the identified risks? He sought clarity on resource allocation and monitoring in terms of infrastructure delivery through institutionalised processes and systems. What measure did the Department put in place to ensure success of infrastructure projects? Further, he sought clarity on the identified risks associated with supply chain management and financial systems.  He noted that the Department spent R278 144 000 out of the R288 593 000 that was finally appropriated. What are the reasons for under-expenditure?

Ms N Ebrahim, Director, Provincial Government Supply Chain Management spoke about the importance of technology in the procurement process as well as supply chain management. The Departments aims to train younger staff members so that the next generation of management is technology savvy. She, however, expressed concern about the ability of the Department to retain trained personnel, as they become more marketable after training and may decide to move to other establishments.

MEC Meyer said the Department engaged actively with local communities in order to create awareness, among the masses, about the budgetary provision of the government. He said the Department used various avenues including radio programmes, seminars and workshop to enlighten people about the budget. He said the Department has robust engagement with the Department of the Premier, the Department of Local Government and the various municipalities to ensure successful implementation of targets.

Ms C Beerwinkel (ANC) expressed concern about the position of the Department of Agriculture especially in terms of Transfer Payments. She expressed dissatisfaction about the position of the PT on the matter. What legal basis or process does the PT have to support the Department of Agriculture in this matter? She expressed concern about the ability of the Minister to take the budget to the people. Does the Minister attend town hall meetings to disseminate information? If yes, how many people attend such meetings? She cautioned the Department regarding the exorbitant amount of money paid to consultants. The Department must ensure that money given to consultants are utilised towards the implementation of targets.  

In relation to the dispute between the Department of Agriculture and the NT, Ms Beerwinkel sought to know the legislation that the PT used to support the position of the Department of Agriculture.
Advocate Estienne Pretorius, Head of the Ministry: The Department of Finance said that the dispute between the Accounting Officer of the Department of Agriculture and the Auditor-General centres on the classification of Transfer Payments made to the Cape Agency for Sustainable Integrated Development in Rural Areas (CASIDRA) and the business model adopted by the Department of Agriculture. He said that the Head of the PT facilitated and attended a number of meetings, which included the Accounting Officer of the Department of Agriculture, the Auditor-General, the Accountant-General of the National Treasury and all relevant stakeholders. Unfortunately, the matter could not be resolved amicably. The Department, based on legal advice, decided that there should be legal clarity on the matter and brought litigation against the Auditor-General.  Based on legal advice, the Department decided not to get directly involved in the dispute. He said the PT, Accounting Officer and the Executive Management of the Department of Agriculture continue to work together to finalise the matter. Advocate Pretorius noted that the dispute began in the 2016/ 17 financial year and the Department continues to play its part to ensure amicable resolution of the matter. He said changes to the business model of the Department of Agriculture can have adverse ripple effect on other Departments.

Mr Zaccharia Hoosain, HOD of the PT said that the PT supports the position of the Department of Agriculture and works actively with all stakeholders to bring the matter to a closure.

Advocate Annamarie Smit noted that   the construction industry currently experienced a decline in growth and the water crisis really impacted a number of projects in the Province. The decline in construction industry has a huge impact on the infrastructure-led growth strategy of the Province. She said Grade nine contractors recently faced financial difficulties that could have adverse effect on infrastructural development. She said the Department, through technical interventions, helps to mitigate some of the risks identified in the construction industry.

Ms N Ebrahim, Director, Provincial Government Supply Chain Management spoke about the importance of technology in the procurement process as well as supply chain management. The Departments aims to train younger staff members so that the next generation of management is technology savvy. She, however, expressed concern about the ability of the Department to retain trained personnel, as they become more marketable after training and may decide to move to other establishments.

Mr McKenzie sought to know why there was under-performance in terms of Supply Chain Management (SCM) engagements. He noted that the Department’s current standard of service was nineteen supplier open days. However, the Department achieved ten interventions in collaboration with the Departments of Economic Development and Tourism; Transport and Public Works.  An intervention was held in collaboration with Local Government Supply Chain Management and Overstrand municipality on how to do business with the WCG and Western Cape municipalities. There was a Local Content engagement held in collaboration with the Department of Trade and Industry. There is also an on-going support to assist suppliers with CSD registration.

Mr Malcom Booysen, Director: Local Government Budget Office, said that the WCG introduced the process since 2005 to address Chapter 4 of the PFMA. He said different role players, including the Department of Local Government, the Department of Development Planning, the Department of Environmental Affairs and the PT work together to ensure the implementation of the integrated work plan. This ensures the municipal budget is assessed in a multi-faceted manner. This helps to prevents unnecessary rifts between the PT and municipal authorities. He said performance indicators like the number of municipal budget policy assessment reports, percentage of quarterly performance reports and timeous publication of the municipal economic review and outlook are aligned to the municipal accountability cycle, which starts with IDPs and which is followed by budgeting, in-year monitoring and oversight functions. In terms of the number of municipal budget policy assessment reports, the PT assessed the municipal budget policy in terms of responsiveness, credibility and sustainability of the budget. The percentage of quarterly performance reports deals with financial and non-financial performance indicators and how the two align with each other. He said timeous submission of quarterly performance is also considered important. The PT makes recommendations based on quarterly reports and this leads to significant improvement in the budgetary process of municipalities. Timeous publication of municipal economic review and outlook helps to facilitate budget formulation in municipalities.
An official of the PT said the deviation observed for the City of Cape Town resulted from misalignment of objectives between Local Government authority and the NT. Local Government Authority initially planned to submit thirty reports for all Western Cape municipalities. However, no report was required for the City of Cape Town when the project was rolled out because the municipality was non-delegated and the mid-year engagement was driven by the NT.

Mr R Mckenzie (DA) noted that the Department planned seven targets in terms of the number of prescribed performance plans and reports submitted for the financial year 2017/ 18. The Department achieved six targets. He sought explanation on why a certain evaluation report was not finalised.

An official of the PT said the deviation observed for the City of Cape Town resulted from misalignment of objectives between Local Government authority and the NT. Local Government Authority initially planned to submit thirty reports for all Western Cape municipalities. However, no report was required for the City of Cape Town when the project was rolled out because the municipality was non-delegated and the mid-year engagement was driven by the NT.

He also sought clarity on what the Department meant by the SCM Indaba.

An official from the PT said the PT gives special consideration to Section 217 as well as sections 152 and 153 of the Constitution in relation to social development. The Indaba transversal contracts aimed to use supply chain as a strategic enabler for local economic development. It deals with procurement in a strategic manner that strengthens local businesses. It uses technology to analyse data sets, which leads to effective service delivery in municipalities.

Mr Uys expressed concern about the current status of supply chain management in the Province. He said reported facts differ significantly with what obtains on the ground. The AGSA earlier told the Committee that there was regression in Supply Chain Management Compliance. What is the Department doing to address this anomaly? He also expressed concern about the state of infrastructural projects in the Province. In relation to the discussion on public participation in budgetary process, Mr Uys noted that radio programme is insufficient to ensure active public participation. He urged the Minister to formulate measures that result in effective information dissemination to local communities.

In response to Mr Uys question, Ms Ebrahim said the Department does not have budgets for interventions implemented in collaboration with other Departments. The inputs of the PT, in terms of budgeting, are restricted. The contribution of the PT comes majorly in the form of resources and technical inputs in SC environment and monitoring. She, however, noted that the PT provided significantly towards the Indaba project. She noted that there were no key policy developments and/ or legislative changes that affected the mandate of the PT during the reporting period. The National Treasury (NT) issued instructions in respect of compulsory participation in transversal contracts. The instruction was issued via cost containment circulars/ instructions, which is inconsistent with the NT regulations 16A6.5 and Section 38(1)(a)(iii) of the PFMA. The PT has raised this with the NT via a provincial position paper and formally via the MEC for Finance with the National Minister of Finance. She said the NT issued the Preferential Procurement Regulations (2017), which became effective as from April 1 2017. The regulations aimed to expand already existing requirements, which contradicts the normal process operated by the PT. The PT exercised its discretion on the matter and its decision was eventually approved by the Cabinet.

Mr Uys raised concern about the performance objectives of the MEC for Finance as contained on page 44 of Annual Report. He sought explanation on planned targets in terms of number of municipal budgets with effective resource allocations and the associated actual achievement. How did the PT manage to achieve all the targets? He also sought explanation on how the Department achieve all thirty targets in terms of the number of municipal budget policy assessment reports. In terms of the number of infrastructure project delivery assessments, Mr Uys asked to know if highlighted projects were the highest priorities or those identified by the Department. He sought an explanation on the decision of Cabinet with respect to deviation on the number of interventions performed to assist Departments with the continuous improvement of their supply chain and asset management systems. Why was the City of Cape Town (CoCT) excluded from submitting report on MGRO engagements? Why was the CoCT not delegated and the mid-year engagement driven by the NT? What are the plans of the Department to ensure timeous publication and tabling of the Annual Consolidated Financial Statement (ACFS) for the current financial year?

In response to Mr Uys’s concern, MEC Meyer said he has both statutory and executive responsibilities. He noted that he attends more meetings than those cited by Mr Uys and said that the spirit in which the report was written was not a true reflection of the responsibilities of the MEC for finance. He asked Adv. Pretorius to give a detailed explanation to address Mr Uys’ concern.

In response to Mr Uys’ question on the meetings attended by the MEC for Finance, Advocate Pretorius Head of the Ministry, the Department of Finance said that the structured meetings between the MEC and his staff members are preceded by the agenda. The meetings usually involve various role players including the PT and the WCGRB, amongst others. The various role players seize the opportunity to remind the MEC of his statutory duties and responsibilities. The MEC also holds meetings with Local Government and Municipal authorities. The municipalities are required to report on the status of implementation for the prior month and for the latest by the 10th day of the succeeding month. The meetings are well documented. Prominent matters on agenda usually include support to vulnerable municipalities, audit problems and challenges and support rendered by the PT in conjunction with the Department of Local Government. He said the Minister is not operationally involved with the WCGRB. However, he exercises oversight over the entity in terms of the requirements spelt out in budgetary allocation letter. The Minister also handles diplomatic engagements with foreign entities on behalf of the WCGRB. He cited a case of the Chinese Director General of Tourism, who came to Cape Town to discuss the possibility of opening a Chinese tourist attraction centre with the WCGRB. The Chinese representative also discussed the possibility of a direct flight between Shanghai and Cape Town. Advocate Pretorius said the Minister also had meetings with Polish, German and American delegations. These are ample proof that the Minister discharged his statutory duties.

In response to Mr Uys’ question on deviations in terms of the number of prescribed performance plans and reports submitted, an official of the PT said that the evaluation report was not finalised due to the prolonged time taken to finalise matters pertaining to the roll-out of the evaluation. This PT realised that it did not have the capacity for the evaluation and had to outsource it to a private firm. The appointment of the service provider went through the normal supply chain process. Thus, the evaluation was not done timeously. She promised the Committee that timeous evaluation will be ensured in the current financial year.

In response to Mr Uys’ concern on timeous publication of the Annual Consolidated Financial Statement (ACFS), an official of the PT said it is practically impossible to table the ACFS by October 31 due to difficulties encountered with provincial revenue fund and audit process. He said the PT normally writes a letter of delay, in compliance with sections 19 and 65 of the PFMA. This enables the PT to table the ACFS whenever the audit is finalised.

Mr Uys also expressed concern about the organisation structure of the Department in terms of the organisational environment. Is the total workforce 328 or 396? What is the reason for deviation in reported figures? He sought to know if the Department had any concerns with the National Treasury on Transversal Contracts. He expressed concern about the failure of certain municipalities to access the Financial Management Support Grant and Financial Capacity Building Grants. He noted that some of these municipalities are in financial difficulty and the grants should enable them to address some of the challenges.

In response to Mr Uys’ question on the disparity in the figure of employees, an official of the PT said the PT has 328 permanent employees, while the 396 refers to the cumulative number of people remunerated including interns. She also said the 396 include staff that left the entity during the financial year under review. She said the 396 includes forty interns.

Mr Malila said that Overstrand, Swellendam, Kannaland and Oudtshoorn were some of the municipalities affected in terms of the grants. He said Overstrand, Kannaland and Oudtshoorn municipalities do not require the Financial Management Support Grant anymore. In addition, he said that the PT did not release the Financial Management Capacity Building Grant to Kannaland and Oudtshoorn municipalities due to their failure to submit an acceptable business plan. Swellendam municipalities only took R120 000 of the Financial Management Support Grant in its first year of participation out of the gazetted R240 000.

Ms Beerwinkel expressed concern about the position of the Department on Gender Budgeting and Women Empowerment. She condemned the lack of action plans to implement policies that address women empowerment. How does the Department intend to put measures in place to ensure effective women empowerment in the Province? She urged the Department to influence other Departments to prioritise Gender Budgeting and Women Empowerment.

Mr N Hinana (DA) corroborated with Ms Beerwinkel on Gender Budgeting and woman empowerment. As a developing nation, South Africa needs to take gender parity and women empowerment seriously. How can implementation of Gender Budgeting and Women empowerment be made possible? In response to the content of page 29 of Annual Report, he expressed concern about insufficient allocation from the NT despite heightened demand for service delivery in the Province. He also expressed concern about insufficient funding of infrastructure projects in the Province. How does the Department plan to address this issue? He emphasised the importance of securing provincial infrastructure as they are the fundament blocks of the economy.

Mr Malila said gender inequality continues to impact negatively on women and girls. The Department aims to utilise fiscal tools, especially budget to create more empowerment opportunities for women. He said women are marginalised in the area of employment. He said the Department aims to employ more women through the mechanisms of supply chain and educational sector. He said the Department works with other Department to formulate policies that prioritise the interests of women. He noted that gender equality used to be the focus about two decades ago but the focus has shifted significantly in recent years. He promised the Committee that the Department, in collaboration and consultation with other role players, will ensure implementation of action plans that lead to the  empowerment  of women in the Province.

In response to Mr Hinana’s question on security of infrastructure, MEC Meyer said the Department takes infrastructural matters seriously. He noted that the Department works closely with the Department of Public Works and Transport to safeguard public assets, especially during social unrest. The Department has developed a transversal Security Procurement Framework to safeguard both infrastructure and staff of the Department. The Department also works to protect schools and medical facilities. He said certain provincial schools have witnessed improved security through electric fencing.
Mr Uys maintained that the disparity between 328 and 396 is significant and the PT will have to explain why interns form over 10% of the vacancy rate.


Ms Beerwinkel sought clarity on the meetings and engagement with various entities. What are the specific achievements in this regard? Are the achievements internal or external? She expressed concern that most foreign visits do not result in actual implementation of targets. She urged the Minister to prioritise practical performance as opposed to written claims. The Minister should ensure active public participation in budgeting and implementation processes at grassroots. This will facilitate service delivery on the part of municipal authorities.

MEC Meyer said that he has not embarked on foreign trips this year. All meetings with foreign delegations were held in the country. He said he met with foreign delegations from different countries like Japan, India, China, Germany, Taiwan, Mozambique, Angola, Madagascar and United States to facilitate direct foreign investments. He said some of the fruits of such meetings included the movement of Panasonic headquarters from Johannesburg to Century City. He was in Japan to convince the Consul General about the movement of Panasonic’s African Headquarters from Dubai to the Western Cape. The Province also celebrated the Festival of Healing with delegation from an Asian country and an Indian company has decided to establish a leather processing factory in the province. He said the Province also celebrated cultural diversity with Indonesia at Mossel Bay. He said the Department collaborates with WESCRO to foster strong economic growth in the province. The province also hosts various African nations on May 25 annually. He noted that interactions among African nations now transcend the celebration of arts and culture. There is an active economic partnership on the continent, which competes favourably with what obtains in the European Union. He said the province is also in active partnership with Taiwan in the areas of automobile and fishing. The Taiwanese firm complained about rental problems, which the Department helped to resolve. The Department recently received global economic review and outlook from Cooper for the year 2050. The documents revealed that the world economic growth will shift toward the East. He said Indonesia, with an estimated population of 250 million will play a major role in this regard. This is a potential market for agricultural sector in the province in terms of export.

In terms of the number of municipalities assisted to improve management of supply chain and assets, Ms Beerwinkel noted that non-registration of suppliers on the Central Supplier Database (CSD), non-consideration of local content and irregularities in Transfer Payments remain major challenges. She asked Mr Smit if any municipality encountered difficulty in relation to the Construction Industry Development Board (CIDB) requirements. In terms of the number of supplier engagement sessions held to develop and educate suppliers, Ms Beerwinkel sought clarity on how the engagements occurred. Did the Department go to the suppliers or did the suppliers go to the Department? Where was the venue of the engagements?

She sought an explanation on why the Minister chose to assist the Overstrand municipality with special supplier intervention training. Has this been done in other municipalities before? She requested the Department to give the criteria for selecting the five municipalities assisted with asset management business process.

In terms of SCM reform, she said the Department does not have influence on the supply chain processes of municipalities. While the PT has the capability to improve its electronic procurement system, local content and supply chain management, its influence is restricted at municipal level.

Mr Smit said the Department improves governance through enhanced efficiency in supply chain management and procurement processes. He said technology has led to significant improvement of supply chain management.

Discussion on Human Resource Management
Mr Uys sought clarity on how the Department intends to make the workforce strategies and key activities valid and  appropriate to ensure that the Department will meet its strategic mandate for the duration of the period (2016/ 17- 2020/ 21). He also sought clarity on medical assistance and overtime. At what level must a staff be to enjoy overtime payment? He noted that four posts were evaluated according to page 109 of annual report. What are the criteria for the evaluation process and why was the evaluation done? How does the Department intend to retain highly skilled professionals, particularly those in Levels 6-8? In response to the content of page 118 of the annual report, he requested the Department to state the types of training enjoyed by staff as well as the training needs that were identified. He sought an explanation on the reason why notch progressions as a percentage of employees by salary band stands at 88.9 % for infrastructure analyst. Why was this category identified and what are the specific issues raised? He sought clarity on the number of grievances resolved and those that remain unresolved. Are grievances part of the normal process or are they associated with any challenge? Reacting to the engagement of consultants on page 135, Mr Uys sought to know if the Department pays consultancy fees to the Department of the Premier or if the consultants were paid directly. He requested the Department to submit detail of transactions with consultants. He noted that the University of Stellenbosch: Executive Development (Pty) Ltd does significant consultancy for the Department. How does the Department arrive at the choice of this entity? He expressed concern that only the University of Stellenbosch is involved in consultancy. He also queried the engagement of HPM Consultants. He said R450 000 appears to be too much to facilitate the Provincial Travel Management Strategy and Transversal Contract.

An official of the Department said the workforce plan has a timeframe and the validity is reflected in the implementation report. The implementation report also reflects if the workforce plan aligns with the strategic objectives of the Department.

An official from the Department said senior management staff are exempted from overtime payment. Overtime payment is given to staff members on Level 1-12. He said medical aid is enjoyed by all staff of the Department. However, medical aid benefits vary depending on levels.
In response to Mr Uys’ question on evaluation of posts, the official said that all new posts must be evaluated. Further, he said posts are evaluated if they have existed for five years or if there is a significant change in strategic objectives.

An official from the Department said thirteen trainees left the Department after fulfilling the requirements of their bursaries. In response to the question on notch progression, the official said that staff members who perform satisfactorily during Performance Review Process are promoted to the next level. Also, those who perform satisfactorily during the two-year probation period are converted to permanent staff of the Department. In response to Mr Uys’ question on resolved and unresolved grievances, the official said that all grievances are resolved. He, however, said that the aggrieved person reserves the right to take matter to another level if he/ she is not satisfied with the outcome of the case.

Advocate Smit said the Department decided to participate in certain programmes that involve engagements with consultants. Such programmes include translational services and the Barrett Cultural Survey 2017. She said the Department went through due process to appoint consultants.

Ms Beerwinkel sought to know if the consultants worked for the Department. She questioned why the total amount paid to consultants was classified under goods and services.

Ms Ebrahim said HPM consultancy is a subject expert on travelling arrangements. The consultancy firm helps to finalise travel arrangements in the best interest of the Department. It also helped to address some of the issues identified with the instructions from the NT regarding travelling.

Discussion with the Western Cape Gambling and Racing Board (WCGRB)
Mr David Lakay (Chairperson of the WCGRB) thanked the Committee for the opportunity given to the Board to present its annual report. He hoped that the Board would answer all questions posed by Committee Members in a satisfactory manner.

Mr McKenzie (DA) sought clarity on the plans of the WCGRB to become financially self-sufficient. What are the reasons for under-spending in certain programmes?

The HOD of ICT said the savings in ICT resulted from the cancellation of certain components of the Automated Licensing System and salaries savings.

Ms Zoe Siwa CFO, WCGRB said under-spending resulted from the need of the entity to cut down on certain expenses. There was under-spending in certain areas like legal fees, ICT and travelling subsistence.  She said the entity did not exhaust the total amount budgeted for legal fees due to the lower number of legal cases compared to those envisaged when the budget was formulated. She said the Department bought two vehicles, which significantly decreased the amount of money needed for travelling subsistence. The entity also had savings in maintenance and cleaning fees.

Mr Uys requested the Board to give details of the disputes documented on page 7 of the entity’s annual report. He noted that there are thirty one investigations with negative findings in relation to illegal gambling. He expressed concern about the decision of the Board to cut down on the number of investigations and to adopt another approach towards investigations. Mr Uys said this decision might have negative impacts on the quality and quantity of investigations.

In response to the question on illegal gambling, Mr Robin Bennett, Head of Department: Regulatory Compliance, WCGRB said all allegations of illegal gambling are investigated within thirty days. He, however, noted that most allegations are not genuine and are based on insufficient knowledge of accuser with respect to what illegal gambling entails. He said the Board has a checklist, which allows officials to determine the materiality of allegations. Immaterial allegations are placed on an ad-hoc list and given appropriate treatment

Mr Uys sought an explanation on the approach of the industry towards Broad-Based Black Economic Empowerment (BBBEE). Do industries have any challenge with the programme? What is the process the WCGRB engages in to become financially self-sufficient? He noted that the entity envisaged an income of R7.1 million, subject to legislative amendment, based on the content of page 9 of entity’s annual report. What happens to entity’s income if proposed legislative amendment is not successful? Will the entity require additional funding from the PT?

Ms Yvonne Skepu, Manager: Legal Services, WCGRB said that cases on BBBEE are presently in the Western Cape High Court. Issues surrounding the BBBEE will be resolved after the hearing in March 2019. She said the disputes on page 7 of annual report refer to grievances raised by patrons of Licensed Operators regarding pay-outs. All grievances addressed to the Board are investigated and outcome of investigation is tabled to both parties. The aggrieved person reserves the right to seek legal recourse if he/ she is not satisfied with the outcome of investigation conducted by the Board.

In response to the question on fees collected from Root Operators, Mr Lakay said the matter could lead to litigation that may have adverse impacts on the Board and the fiscus. He urged the Committee to support the proposed amendment to relevant legislation. This potentially prevents the Board from pre-judicial situation.

Mr Lakay said the Board’s ability to become self-sufficient significantly relies on the success of legislative amendments. The amendment will go along to facilitate revenue collection by the Board. The Board works actively with the PT to ensure financial viability of the entity. He said the Board has good relationship with all licensed operators regarding BBBEE and CSI. He, however, said that a licensed operator raised grievance regarding the inclusion of BBBEE in license requirement during the current financial year.

Mr Bower said there must be five Board Members at every Board meeting.

Mr Bower said the self-sufficient report of the Board was compiled by the Board itself without the assistance of any consultants.

Mr Uys asked the Board to explain why fees were collected from Licensed Operators after expiration of the legislation. He noted that the amendment to the legislation will not cancel the wrongdoing of the Board in terms of the illegal fees.

The Chairperson of the Standing Committee cautioned Mr Uys that the matters on the illegal collection of fees and proposed legislative amendment are scheduled for discussion on November 14 2018.

Mr Uys insisted that the matter must be addressed during the presentation of the annual report.

Discussion on Performance Information
Mr Uys sought to know the potential impact of the proposed amendment on the management of the Board. What are the measures to mitigate the impacts? He requested a copy of the internal research from the Board. He noted that the Internal Research was one of the achieved indicators. What was the aim of the Internal Research? He said the outcome of the Internal Research should be able to address most of the matters confronting the Board. He asked if the Minister of Finance granted approval to remunerate the HOD of Licensing. He noted that the approval has been sought since 2005. Responding to page 26 of the entity’s Annual Report, Mr Uys requested the Board to inform the Committee on why the Board decided to abandon certain responsibilities. Will this decision take off any pressure from the Board? Who will take up the responsibilities on behalf of the Board?

Mr Lakay said a legislative amendment is not only the measure taken by the Board to ensure financial self-sufficiency. He said the Board aims to adopt models used by other provincial licensing authorities to generate revenues that will be sufficient to cover the expenses of the Board. He said the Board actively liaises with the PT to formulate means to achieve financial self-sufficiency.

Ms Beerwinkel noted that the R7.1 million was an integral part of the entity’s internal research and it also speaks to financial sustainability of the Board. She requested the Board to explain why the R7.1 million is not applicable according to the entity’s annual report on page 26 of entity’s Annual Report.

Ms Siwa said that the Internal Research dealt with the introduction of compulsory player cards by the Board. The requirement is a new indicator in the 2017/ 18 financial year. The research was completed and it is being refined and edited in the 2018/ 19 financial year. The outcome will be circulated to all stakeholders for comments before finalisation. The research spans a period of three years.

Ms Beerwinkel expressed dissatisfaction with the vagueness of the entity’s annual report, particularly in respect of the non-achieved targets. She said the Board should be able to give a detailed reason why targets are not achieved. She strongly condemned the use of the phrase “not applicable”.

Ms Siwa said that the Board had one target for internal research as well as legal research. Both targets were achieved. This was why “not applicable” was written in the deviation column. She said the word “none” will replace “not applicable” in subsequent report to prevent ambiguity.

In terms of the suggestion on the analysis and relocation of casinos, an official of the WCGRB said the Board was advised to be mindful of relocating casinos due to the potential myriads of requests from both individual and community organisations who benefit from casinos. More than that, relocation of casinos involves new venues. This requires a significant portion of WCGRB staff members to be on site and it consumes significant resources of the WCGRB. In light of other WCGRB’s responsibilities, the official said relocation of casinos represents a daunting challenge.

An official from the WCGRB said the number of Board’s visits decreased during the last financial year due to the closure of some facilities. He noted that some casinos closed down while new applications were submitted.

The official from the WCGRB said that there were three amendments to the Financial Intelligence Centre (FIC) Act in the previous  financial year. The amendments had a significant effect on how accounting institutions reported to the supervisory body, which is the WCGRB. He said the Board suspended some of the inspection visits due to the inability to finalise terms with the FIC. He noted that the Board continues to pay required visits to licensed facilities in the current financial year. Based on the proposed legislation, there is a reversal of the supervisory roles between the Board and the FIC. The FIC now plays the lead role in inspection, while the Board basically accompanies the entity to licensed facilities.

Mr McKenzie requested the Board to submit the report of funding models in other provinces to the Committee.

Ms Siwa promised to submit the reports to the Committee.

Mr Uys sought to know the current status of the R180 000 overpayment as documented on page 25 of entity’s annual report. Has the Board paid the money and is it awaiting the Minister to approve it retrospectively? Is the payment on-going and when did the Board contact the Minister for approval?

An official of the Board said that the R180 000 over-payment resulted from the accumulated payment due to the HOD of Licensing. The payment started to accumulate in 2015 but was reflected in the annual report of the financial year under review. He said the Board can only pay the money when the MEC for Finance approves it. He said that the 5% deviation in relation to the seventy-one staff members that constituted 95% of staff strength refers to staff that were on leave or maternity leave and could not complete their reviews within the set time (page 23). He said the variance resulted from change in the reporting period of performance review. The reporting period was from August 1-July 31 every year but it is now April 1-March 31. The Board could not achieve all performance targets because of the change in reporting period.

An official of the Board said that the money is not paid yet since approval is not given by the Minister. In case the Minister does not approve it, the Board will have to remunerate the HOD based on the old payment system.

Mr Lakay said that the Board decided to remunerate the HOD based on the Level of operation and the services rendered to the entity. The Human Resource Department evaluated the services of the employee and made recommendations to the Board. The Board approved the amount and approached the MEC for Finance for approval. He said the R180 000 is a once-off payment and it will be effected based on the approval of the Minister.

Ms Beerwinkel sought clarity on measures formulated by the Board to reduce under-performance. She noted that the Board stopped to play a lead role in the FIC inspection in August 2018. Who takes over the function and what is the new responsibility of the Board?

An official of the Board said that the Board no longer leads the FIC inspection. The FIC leads the inspection henceforth and the Board plays a supporting role since it has the documentation of all the licensed establishments.

Ms Beerwinkel sought clarity on the members of the FIC and where they are based.

An official of the Board said that the FIC is an acronym for Financial Intelligence Centre and the office is based in Pretoria. The FIC is the supervisory body for a number of organisations accountable to the Board. He said the decision of the FIC to take over the supervisory function will relieve the Board of certain pressures which is a welcomed idea.

The Chairperson appreciated everyone that attended the meeting.

The meeting was adjourned.
 

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