Compensation Commissioner for Occupational Diseases 2012/13 & 2013/14 Annual Reports

Meeting report

Compensation Commissioner for Occupational Diseases 2012/13 Annual Report

Dr Barry Kistnasamy, Compensation Commissioner, Department of Health (DoH), said he was appointed as the Acting Commissioner by the Minister on 31 March 2013. The Health Committee of May/June 2012 took a tough stand on the governance of the Compensation Commission for Occupational Diseases (CCOD) which resulted in the resignation of the previous Compensation Commissioner. He gave a brief explanation of the human resource shift within the Department and highlighted that the management was not stable in 2012.

The CCOD functions under the Occupational Diseases in Mines and Works Act (ODMWA) of 1973 but could trace its roots back to 1912; thus the bank accounts and books remain the same. The sources of the fund come from levies, public investment operation. The administration of the compensation fund is provided for by the DoH. Unlike other social protections, the levy only covers income protection but not the cost of administration and it was externalised to the government to administer the fund and provide healthcare and physical examinations.

Referring to the budget figures, Dr Kistnasamy explained that there is a lot of under-expenditure due to the instability of management, goods and services.

Dr Kistnasamy gave the Committee an evaluation of the achieved and non-achieved objectives. In terms of performance, there was no quarterly reports and no policy review. He said as soon as he was on board, he adopted a human rights approach and talked to mine workers, trade unions in the mines and companies to raise awareness of the CCOD. No changes were made to the legislation. Kistnasamy showed a form to the Committee on the numbers of registered claims, finalised claims, paid claims etc. Kistnasamy recognised the improvements made which he listed as follows:

• 43 claims a day registered in 2013 compared to 10 in 2011/12 financial year;
• 6.5 claims paid a day compared to 3.5 previously
• 4.9 years from registration to payments from 3.8 years

Kistnasamy expressed his satisfaction with the performance of the completeness of reconciliations, timeous payments of pensioners and qualified opinions were obtained from Auditor-General. Kistnasamy stated that the operating environment was the same as previous years. Improvements were made in revenues and income. In terms of expenditure, Kistnasamy said that the department has added considerable payments. The figures of investments, trade and other receivables, cash and cash equivalents were given to the Committee.

In terms of governance, there is Advisory Committee, Audit and Risk Committee and an Adjudicating Committee. The Advisory Committee is a statutory committee set up by trade unions, mining sector and members of the mining companies and steel industries.

For the report of the AG, Kistnasamy commented that they could not verify the revenue submissions Improvements have been made the registers of controlled mines and work.

Dr Kistnasamy briefed the Committee on matters of emphasis in report of the AG. .

Mr Maswedi Samson Molautsi, Deputy Commissioner, explained the financial position of the CCOD. The break down form illustrates the fund which was due to the Department, the levies and the revenue that the Department had collected; the allocated budget, operating expenses, and operating costs. He explained the situation of the cash flow in 2013.   

Dr Kistnasamy concluded the presentation and he assured the Committee that improvements had been made. The Annual Report has been reduced to 29 pages from the 150 pages in 2011/12 annual report.

Discussion

Referring to the presentation slides, Mr P Maesela (ANC) said it did not make sense when there was an under-performance rate of 66%, a vacancy rate of 50% while the compensation for employees’ rate was at 100%. Maesela said that he would hope that the figures should be more balanced now since the presented figures were five years ago. He asked if there was a system of risk management. He asked that whether any criminal charges had been filed since CCOD was involved with State capture and corruption. He said he did not understand why compensation for mine workers is lower than workers from other sectors in the country. Since mine workers are exposed to a riskier environment than workers for other sectors, he suggested a need to introduce a law that brought uniformity to the compensation amount. The current system is an outdated one and should be improved.

Ms E Wilson (DA) said that it was hard to imagine any worker got into these unfortunate accidents in the first place. She recognised the Commission’s effort to get things in order and said it was very difficult for Committee Members to make a sound judgement on a report that should have happened six years ago and she looked forward to an improvement and that things would be in order one day.

Mr A Mahlalela (ANC) asked who the accounting officer was and the relationship between the Director-General of the DoH, the accounting officer and the Commissioner. Mahlalela was not certain what role the Commissioner played and clear accountabilities needed to be established in the department. The job title “Acting Commissioner” was confusing because there is limitation to acting role in terms of legality - usually not exceeding a year. He asked for the maximum duration for an acting officer and how long the acting role would be continuing for. Referring to slide 7, Mr Mahlalela asked if there was an explanation that the target part of the following year was not informed by the actual figures of the previous year. The figures in the table presented on Slide No. 7 point to the significant discrepancies between these two parts. It was misleading that the CCOD was achieving all the time. On the AG, he asked what the current situation was and if matters raised in the presentation had been addressed. For instance, whether the accounting officer had developed proper processes and implemented measures on the pay-out of the compensation fund.

In response to clarity on the roles and relationships between DG, AG and Commissioner, Dr Kistnasamy explained the legitimacy of the process. The ODMWA predated the Public Finance Management Act (PFMA). Section 76 of the Act stipulated that a full report of transactions had to be kept by the Commissioner by the 31st March and the report must then be audited by the AG. Section 77 of the Act stipulates that the report has to be provided to the Minister and the advising committee. Kistnasamy admitted that legal opinions had not been sought on the responsibilities of the DG and the Commissioner, however, the DG and the AG agreed that the Commissioner should be responsible for the day-to-day process of the CCOD in terms of the ODMWA.

Dr Kistnasamy responded to the matter of his position as an Acting Commissioner. He explained that a formal process of recruitment had to begin in which he was also part of and was finally appointed as a permanent Commissioner in December 2014. For the sake of this report as it had happened in 2013, he was in an acting capacity then.

He agreed with Ms Wilson that it was hard to obtain data in terms of the hand over issues and compensation of employees, etc. The team had to recreate books, financial statements, excel spreadsheets and manual reports in order to compile this presented report. There was no data handed over by the previous Commissioner. Hence, it was difficult for him to provide an explanation on the irregular expenditures. Dr Kistnasamy stated that due to the lack of data and irregular expenditure, his team was all over the place after the departure of the previous Commissioner.

From governmental, financial management and service delivery points of view Dr Kistnasamy stressed the point that the system was dysfunctional. Kistnasamy doubted if any corruption could still be discovered as banks only kept records for up to five years.  In response to the dysfunctionality of the risk committee, he explained that the risk committee is a strategy committee chaired by Chief Inspector of Mines or Deputy Chief Inspector of Mines. It was in the AG’s findings that the committee was not functional due to their busy schedules. Dr Kistnasamy stated that meetings often got cancelled of that committee whenever there was a fatality on the mine. The purpose of the committee is to highlight the risky nature of mine work and to implement measures in terms of the inspection and the control of mines and working conditions on the mines.

Dr Kistnasamy recognised the importance of Mr Maesela’s inputs and stated that only once the actuarial evaluation is approved, then the benefits of mine workers could be raised. The actuarial evaluation was approved in 2016 thus a 33% increase was implemented to the compensation fund for mine workers. He argued that the business of mine workers should not fall in the domain of the social protection services but rather falls under the Department of Labour regarding the compensation fund and the Department of Mineral Resources (DMR) which should be in charge of the working conditions on the mines. He hoped that a merger of the two legislatures would take place in the next term of Parliament. The compensation of mine workers with the DoH playing an administration role is phasing out on a policy level. It was DMR’s job to do all the inspections and to ensure safety and the Department of Labour should be dealing with the compensation fund.

In response to the question on state capture and corruption, Dr Kistnasamy was unable to give a direct answer as the fund was administered by the Department of Health. Thus, all supply chain, human resource management issues were taken care by the DoH. Kistnasamy assured the Committee that there were no dubious investments. Kistnasamy said that if the question raised was “are you state captured or not”, he said the answer to that was no. Furthermore, Dr Kistnasamy assured the Committee that systems had been put in place to detect fraud in terms of corruption and a few cases had been picked up on. The 2019/20 financial statements would be completed by September 2020. The 2014/15 financial statements has been completed and can be sent to the Committee.

An ANC MP asked the Commissioner why only seven fingerprints a day were taken and if the capacity could be increased to expedite the process.

Dr Kistnasamy said only three inspectors were appointed in the 2014/15 financial year. Due to the budget constraints, the DG had to find external funding to fund more support such as the one funding from the EU in the 2014/15 financial year and the global fund which was coming to an end on 31 March in 2019. Given the current constraints on the wage bill, the Department could not hire more inspectors. The mining companies agreed to fund the FingerPrint and the electronic system which would cost R35 million.

Dr Nhlanhla Mtshali, Director: NDOH, thanked the Chairperson and said that Dr Kistnasamy had covered all aspects that she wanted to say. However, she wished to highlight the cause of the inconsistency of the targets and achievements. Due to the external fund that they had received from Global fund and EU, it is not a viable and sustainable option to maintain the consistency in a long term.

Compensation Commissioner for Occupational Diseases 2013/14 Annual Reports

Dr Kistnasamy said that there had been improvements made on the 2013/14 Annual Report. The revenue qualification was retained but additional accounting standards were incorporated such as the funding of the DOH; visions, organisational structure, mandate did not change. The Minister of Health additionally appointed persons (National Institute for Occupational Health). Referring to the Budget (from voted funds) on slide 5, there was again under-expenditure for the R54 million budget.

In the 2013/14 financial year, the CCOD had their first Annual Performance Plan approved. The governance committee was functional but the risk committee still was not.

Explaining the table illustrating the performance of compensation fund, Dr Kistnasamy admitted that Mr Mahalela was right that there was poor planning in process issues and with the resources of the DOH. Although the Department had limited resources, they had indeed tried their best to go onto the mines and do inspections.

Dr Kistnasamy said that most of the slides of the 2014 Annual Report were a repetition of the presentation that he had just made on the 2013 Annual Report. The deficit in 2014 had gone down slightly compared to the previous year because the Department was paying claims.

The report of the Auditor General indicates the following matters. The auditor General appraised the quality of performance indicators and Strategic plan / annual performance plan.

• Reliability of performance information
• Inadequate financial and revenue management
• Internal audit lacking
• No risk management and internal controls
• Annual financial statements, performance and annual reports not submitted
• Risk Committee not in operation

The assets had moved from R2.4 to R2.7 billion and the liability dropped a bit. Although the investment income and revenue collected from mines had increased, but more pay outs were also made in the same time. The Department had to negotiate with National Treasury to have the original amount raised to 2.7 billion.

Dr Kistnasamy briefed the Committee of the various types of accounts in investments. There is CPD investments, mines account, works account and research account. He emphasised that the amount kept in the investment accounts was more than the one in cash accounts. Due to the pay-out to daily claims, the cash figure has been comparatively low. The Deputy Commissioner began to split accounts in terms of the Section 62 levy and the Section 63 Research Levy.

He explained the causes of the budget differences. He said that levy revenue decreased because of the strike in the platinum sector. The general expenses are coming and are based on updated actuarial valuation as at 31 March 2014.

Mr Molautsi explained the meaning of accrual basis. He compared the accrual process with the investment in a bank in which the generated interest can only be obtained at the end of term.

Dr Kistnasamy concluded by remarking that although improvements had been made and new standards had been incorporated into the system, levies, revenue and qualification issues still needed to be resolved.

Discussion

Referring to slide 5, Dr S Thembekwayo (EFF) would like to know to whom the transaction was made. On the machinery and equipment, she queried about why there was under-spending in the section.

Mr Maesela remarked that prevention is better than cure. Maesela asked why more funds from the investment that Kistnasamy had explained cannot be spent on diagnostic equipment so that the number 1 killer for mine workers, TB, could be detected.

The chairperson invited Hon Mahlalela to ask questions.

Mr Mahlalela asked what role DMR played from a partnership point of view and financial responsibility. Speaking in the context of what the public had seen at SASSA where officials created their own scam and they accessed and pocketed public money, Mahlalela asked how sure the Commissioner was that there was nott bogus people like the ones at SASSA and if a system was in place to safeguard such issues.

Response

Mr Mishack Mqswangany, Director: CCOD said the fund for the transfer of payments was allocated to the CCOD by the National Department of Health (DoH) to pay pensioners.

Dr Kistnasamy added that the transfer of payments was based on the old Act which was very racially biased of which the majority of the beneficiaries were white workers. The system of payment is collaborated with the Department of Home Affairs to ensure that payments terminate once workers are deceased.

In response to the diagnostic of mine workers, there is a programme called “Project Masoyisa” which is led by Dr Kistnasamy that specifically focuses on the diagnosis of TB among mine workers. In this programme, 5 000 mine workers get screened every year. The mining sector is aware of the 2 to 3 times higher TB rate among mine workers and is actively working to bring the situation under control.

One of the key issues elucidated was dust control. Dr. Kistnasamy agreed with Mr Mahalela’s view on prevention but also stated that if the dust control had been managed properly, the situation would not be bad. Using figures of Occupational Exposure Limit (a term that indicates how much silicon dust should be in the air that mine workers can breathe) in several regions (British Columbia 0.025, Australia, 0.05, South Africa 0.1), Dr Kistnasamy said that the OEL figures of mine workers in British Columbia and Australia was half to three quarters lower than mine workers in South Africa. It is agreed that 0.1 is not safe for mine workers to get silicosis which is directly linked to TB. Although the DoH is trying its best to provide treatments to mine workers with TB, the prevention part is the responsibility of DMR.

Dr Kistnasamy apologised for not asking the Committee to convene the Departments of Mineral Resources and Labour for a meeting because there are some overlapping legislatures that need to be clarified and resolved. In response to the question on partnerships, Dr Kistnasamy replied that the DoH was working very closely with DoL and DMR around those overlapping legislations. In October 2016, Mr Kistnasamy said that they had asked the Deputy Minister of DMR to lead his delegation and presented the deliberated report to the Ministers of Labour and Health. However, the Minister of Labour said that she would not want to take on the system. The DoH asked the DML to consult with them in the case of mine acquisition or transfer for that the DoH was responsible to issue a certificate of good services.

Dr Kistnasamy stressed that compensation is the last resort.

Responding to issues of fraud and claims, Dr Kistnasamy affirmed that there were fraud issues but the system of checks and balances is quite different to SASSA.

Mr Maesela remarked that more partners needed to be called to the Committee such as the Department of Environmental Affairs. Maesela mentioned an area and said the dust in that area is hazardous and mine owners insisted that their workers should live nearby. The worst part is that children are living in the area too. Not a single white person lived there while black people lived there not being made aware.

Dr Kistnasamy provided some inputs. The Human Rights Commission (HRC) held one year hearings on the mining industry and the problems. They directed the DoH to take the lead with DMR because DMR has a rehabilitation fund. Many of the problems in which the HRC focused on was abandoned, non-rehabilitated mines, etc. Dr Kistnasamy agreed that the environmental issue was very important. He suggested the Committee to invite the DoH, DoL, DoE and DMR to convene and discuss these issues.

The chairperson affirmed the graveness of pollution and also added the negative consequence of construction.to the environment. The issues related to mine workers are broad and would involve a wide range of stakeholders. The CCOD team should seek legal opinions on the responsibilities and relationships of the AG, DG and the Commissioner to ensure certainty.

The Chairperson thanked everyone and the meeting was adjourned.