Safety and Security SETA and Public Service SETA on their 2013/14 Annual Reports

Meeting report

The Chairperson welcomed the Deputy Minister, officials from the SETAs and guests to the Committee meeting. 

Safety and Security SETA (SASSETA) Annual Report 2013/14

Mr Abbey Witbooi, Board Chairperson, SASSETA said it was common knowledge that SASSETA had been experiencing governance and administration challenges. It operated non-aligned to government activities. The role of SETAs should not be to train people for the streets. It was trying to get support from other stakeholders, such as Defence and Police, which had capacity but had not yet been fully utilized.

Mr Makubetse Sekhonyane, Senior Manager, SASSETA, said that the organisation’s environment lacked stability. Several key posts were vacant and there had been a number of resignations and dismissals. A number of investigations had been carried out, resulting in disciplinary processes. A number of measures had been taken to stabilize the environment by filling vacant posts, the development of a turnaround strategy, an action plan to address audit findings, and the appointment of an internal audit unit. This had resulted in an improved audit outcome, even though some targets had not been met. The Auditor General noted that the financial statements were presented fairly in all material respects. The financial position of SASSETA as at 31 March 2014 and its financial performance and its cash flows for the year, ended in accordance with the SA Standards of GRAP and the requirements of the Public Finance Management Act (PFMA) and Skills Development Act

(SDA). However, it had been noted that internal audit had not evaluated the effectiveness and efficiency of internal controls and had not made recommendations for their enhancement and improvement, as required by Treasury regulation 27.2.10

Discussion

Ms J Kilian  (ANC) said the Auditor General’s report pointed to serious internal control deficiencies, which was worrying. She wanted clarity on the disciplinary action taken over the abuse of discretionary grants and duplicate payments, and whether it involved a single individual or many. She asked for details of consequence management instituted against those whose hands were found in the criminal cookie jar in terms of the PFMA. She asked for reasons for the resignation and dismissal of staff.

Ms S Mchunu (ANC) appreciated the progress on audit findings, even though she would have liked to have seen a clean audit. SASSETA had managed to achieve only 32% of its skills implementation and monitoring, which meant there were weaknesses in its core business. She asked the reasons for poor performance and what plans were in place to turn around the situation. The targets it set itself to achieve were very low, considering that it was dealing with the entire country. The Department of Higher Education and Training (DHET) had declared this decade a ‘decade of artisans’, but the SASSETA report noted that no artisans completed training because of a legal dispute between the service provider and the Manufacturing, Engineering and Related SETA (MERSETA), which had led to suspension of accreditation. There was incongruence between the money spent and targets achieved.

Dr B Bozzoli (DA) said the annual report was just an abstract, and the oversight committee was never going to understand it. An annual report must be informative. It should have noted where it trained its learners, who trained them, how and why. The report noted a high number of enrolments but a small completion rate. She asked what the ideal balance was between administration costs and the actual money that went into skills development. She had a horrible feeling that two thirds was likely spent on administration and a third into skills development. She wanted clarity on the surplus that it held in its account.

Ms F Nkadimeng (ANC) asked about the challenges related to finding partnerships with universities. She asked why the chief financial officer had resigned and whether the vacant positions had been filled. She wanted clarity on officials placed under suspension and later dismissed.

Mr Y Cassim (DA) asked if the chairperson of the board had an office at SASSETA’s offices, and the role of his wife at SASSETA. He asked when the advert for the appointment of the chief operating officer, currently occupied by Brigadier General Petronella Tembe (Retired), had been put out, who set out in the appointing committee, given that she was a long serving member of the board, and when did the recommendation take place. He asked why the audit company OMA was fired and asked if members of the audit committee were sitting. He asked why listening devices had been put into cell phones that belonged to SASSETA.

Mr M Mbata (EFF) said SASSETA wrote its annual report like an intelligence organisation. The Committee was not a war organisation. The report did not describe its activities or where it carried out its mandate, and looked like a mercenary report. It did not disclose who the beneficiaries of its programmes were and how they were identified. He asked why there was a problem with the internal audit, as evidenced by a lack of strong internal controls and a finance department not behaving well.

Mr Witbooi replied that Ms Boniswa Witbooi was his wife. She had been appointed in 2007 and he had started serving on the board in 2011. Some of the mistakes identified by the board were that senior managers were not responding adequately to recommendations by the Auditor General. The board had taken a decision that no junior managers would respond to issues raised by the Auditor General. The board also identified that inasmuch as legislation had changed, SASSETA had not reviewed its policies to be in line with legislation. Government departments were also not paying their levies on time, creating many problems in the implementation of projects. Some of the money had been committed, contracts had been signed, and the actual project had not yet started.

Mr Nicholus Maziya, Board Member, SASSETA, replied that the former chief financial officer was under investigation and had decided to resign before the investigation was completed. Mr Solly Ngoasheng, Senior Manager, had also resigned under the same circumstances and the matter had ended up at the CCMA. Criminal charged had been opened to recover what belonged to the state. Investigations on junior staff members had revealed that payments had been made to non-existent projects. It was investigating how the system was being manipulated for such issues to happen. The chairperson, and none of the board members, had an office at SASSETA.

Mr Makubetse Sekhanyane, Senior Manager, SASSETA, said it was opening Section 205 cases so that the money would be recovered where it had been channelled.

Mr Mongezi Ntanga, Board Secretary, SASSETA, replied that a service level agreement had been entered into by two parties, the DHET and SASSETA, agreeing on the targets in line with the budget. However, because of budgetary constraints the targets had been downgraded to be commensurate with the budget. It had reviewed the processes relating to project implementation so that projects started as soon as the new financial year started. Ms Boniswa Witbooi deserved to be assessed on her own. She had contributed materially to the unqualified audit opinion.

Brigadier General Tembe (Retired) said that the entity’s challenges related to the capacity of Technical and Vocational Education and Training (TVET) colleges, because the programmes being offered were very unique and expensive. The Department of Defence had made a commitment to help in the training of artisans.

Mr Phehello Tsotetsi, Chief Financial Officer, SASSETA, said the financial challenges were a result of the previous financial year’s qualification. The levy failures were a result of the old dispensation, that departments must contribute 10% to SASSETA. The surplus had increased over the years, and that surplus was committed. The former senior employees were paid in terms of the labour relations framework. 

Mr Thembelani Mangena, Senior Manager, SASSETA, replied that the chief operating officer application had been considered by the board. There had been no conflict of interest. She had never served in any chamber that dealt with the appointment of staff. She was asked to recuse herself from meetings that dealt with the appointment of staff when her application was being considered. There was no existing policy of conflict of interest to avoid her applying.

Mr Velile Kweyama, Audit and Risk Committee Member, said the performance of the appointed audit firm had been below the agreed standards and the contract had been terminated. Resignations had had an effect on the performance of the audit committee

Mr Mbata asked if SASSETA was involved in preparing its financial statements.

Mr Cassim asked why there was a high rate of turnover of CEOs.

Ms Kilian said the performance of SASSETA was miserably disappointing. It must compile measurable goals that had tangible impacts. SASSETA could not minimise conflict of interest, as noted in its annual report, but must eliminate it to root out corrupt practices.

Dr Bozzoli asked how much money had been stolen.

Mr E Siwela (ANC) said SASSETA offices were open in KZN and asked if it was going to open offices in other provinces.

Mr Maziya replied that Ms Witbooi was acting as head of department. There were no listening devices. The former chief operating officer’s contract applied, and was not renewed because towards the end of his contract, performance was a key issue. Three offices would be opened in provinces in this financial year.

Retired Brigadier General Tembe added that SASSETA would not only have regional offices, but a presence.  Its activities were directed by the security cluster that it belonged to, and bursaries were granted to meet the needs of the cluster.

Mr Mangeni said R3 million had been stolen.

Mr Kweyana said that members of the audit committee had never been members of the bid evaluation committee (BEC).

Mr M Manana, Deputy Minister of Higher Education, said the comments had been noted. Government must strengthen the governance and performance of SETAs. A panel had been appointed to review the reporting mechanisms of SETAs. 10.5% was being spent on administration. The picture was not bleak for the SETA, but worrying. The Ministry needed to be given time to deal specifically with the SETA and would report back to the Committee.

The Chairperson said SASSETA must go back and improve on its performance. The President had announced that this was a period of radical economic transformation. It must do something that was radical by responding to what leaders required from entities. The number of learners being trained was very few considering that it was dealing with the whole country. While the Committee commended the move from a qualified to unqualified audit, the Committee expected a clean audit. It must consider establishing its own internal audit unit. SASSETA had the responsibility of implementing the national skills plan. It must give the Committee an improvement plan, so that it could oversee its progress. SASSETA must do what was expected from it.

The Chairperson thanked SASETTA and urged it to have a look at all the issues raised by Members.

Public Service Sector Education and Authority (PSETA) 2013/14 annual report

The PSETA had welcomed the financial year 2013/14, anticipating that the circular issued by the Department of Public Service and Administration (DPSA) on the utilisation of the one percent  training budgets by government departments, would facilitate the achievement of its mission to provide cutting edge skills for quality public services.  However, due to administrative and legal challenges, a moratorium was placed by National Treasury on the directive intended for government departments to transfer levies to PSETA and other SETAs.  In terms of the directive, national departments did not pay over the funds to PSETA during 2013/4, except for a few provincial departments.  As a result, PSETA’s annual performance plan (APP) had been reviewed midterm.

The entity had other challenges within its finance division, which was compromised because of resignations and litigation. Nevertheless, it had doubled the number of learner certificates, six occupational qualifications had been developed, 368 assessors and moderators had been registered, and 39% of its interns had been absorbed into employment. It had received a qualified audit opinion based on deferred income liability. Qualification was based on a failure to present financial evidence supporting utilisation of R4.6 million from a 2006 National Skills Fund (NSF) grant.

Discussion

Ms Kilian asked PSETA to justify its existence, given that there was the Public Administration Leadership and Management Academy (PALAMA) and the new school of government that would be established. She wanted clarity on the audit qualification based on internal control deficiencies. Even though the entity did not receive levies from government departments, could government trust a department that could not account for the little money that it had.

Mr E Siwela (ANC) said PSETA was operating under difficult circumstances, with no revenue. He asked if the government really needed this SETA that was flouting all the rules of procurement and lacked leadership.

Ms Nkadimeng was concerned that money had been overspent while only 40% of the targets had been achieved.

Mr Cassim said PSETA had a budget of R28 million and about R10 million seemed to have been spent on staff salaries. He asked if money was being channelled just to sustain a bureaucracy. Its targets were also vague. He asked why the finance committee had not met.

Dr Bozzoli said PSETA was like a school with a headmaster and teachers, but without pupils and continued paying the staff. The Committee should recommend its closure.

Mr Mbata asked why it was not forcing government departments to pay levies. There were critical skills required, confirmed by the national executive, which was relying on the SETAs to deliver those skills. Unfortunately, they were not delivering.

Ms Mchunu said the DHET should consider merging PSETA with PALAMA. The PSETA focused only on easily achieved targets and had not reviewed its budget, even though the APP had been downgraded.

Ms Koko Mashigo, Chairperson, PSETA, said the national school of government and PSETA were different, with the former being a national academy while PSETA did the accreditation process. It had tried to engage director generals from other government departments, but because of pressing government commitments, they were often absent from meetings. To press government departments was something beyond its control. There had been challenges with the previous finance committee, but it had now appointed a finance committee with the requisite skills.

Ms Emily Ntsowe, Chief Financial Officer, PSETA, acknowledged that there had been internal control deficiencies. It had come up with a strategy to cure such deficiencies, which rested on three pillars -- people, procurement and systems. It had started redeploying people who had been placed in the wrong positions and had intensified recruitment processes. It was reviewing its procurement systems to ensure that supply chain management procedures conformed to the laws and regulations. During this financial year, the system had been upgraded to give information that was correct, but this had happened only towards the end of the financial year. It was filling vacant positions that had been redeployed to other departments.  Previously, people who worked in supply chain management were not fully trained. It had created a new position of supply chain manager to oversee all procurement activities. It now had a compliance register to ensure that all procurement regulations had been met and all deviations were recorded timeously.

Ms Shamira Huluman, Chief Executive Officer, PSETA, said that the entity was linking work places and education. It had come up with a credible sector skills plan. It had significantly improved through credible labour research used by the DPSA. It was in a “chicken-and-egg” situation in terms of funding. Government departments should not interpret it as giving away money to PSETA when they paid levies. It had a good working relationship with the school of government and DPSA, but it had not yet achieved the desired impact because of funding challenges. The Ministers of DHET and DPSA had tried to convince the Cabinet to make sure that departments paid their levies. Even though it did not have the money, it was still expected to deliver on certain programmes, so it must not be closed. 39% of 79 people had managed to complete the programme.

The Chairperson said 79 was very few, considering that PSETA was dealing with the whole country.

Mr Manana said the targets were negotiated between PSETA and the DHET. The determining factor had been the budget. PSETA was under severe financial constraints. There was no sustainable funding model for this SETA, hence the targets were very low. DPSA and DHET had tabled a memo to Cabinet that departments to pay levies, but the Act did not compel government departments to pay levies. Maybe there was need to amend legislation to compel departments to pay levies. The DHET was developing a new SETA landscape, reconfiguring the SETA system for 2016. He would not recommend the closure of PSETA as it helped to ensure that the public service was open to young people for training, and would increase the uptake of learnerships.

The Chairperson said it was clear that PSETA did not have a sustainable funding model. PSETA needed to improve its performance. She thanked the Deputy Minister and officials from PSETA, and urged them to look at all the issues raised by Members.

The meeting was adjourned.