Virtual oversight on cash missions

Meeting report

The Chairperson welcomed everyone to the virtual meeting. She said people should not fear the Portfolio Committee; the Committee is just doing its job as expected by the people of South Africa. Embassies should not be nervous to present today. She was looking forward towards a fruitful oversight meeting. She said that the meeting must finish by 14:30 latest, because there was a House sitting at that time. There would be no lunch break and the Committee would try and include all embassies. She would leave the meeting at 13:00 because there was a Chairpersons’ forum meeting and Mr T Mpanza (ANC) would take over until she returned.

DIRCO CFO

Mr M Chetty (DA) asked whether the Chief Financial Officer (CFO) of the Department of International Relations and Cooperation (DIRCO), Mr Caiphus Ramashau, was present in this meeting, since the meeting was dealing with cash missions.

Ms Nonceba Losi, Acting Director-General (ADG) of DIRCO, said Mr Ramashau was not present but the acting CFO, Ms Hlengiwe Bhengu, was present.

The Chairperson asked the ADG to respond comprehensively and tell the Committee where the CFO was.

Ms Losi indicated that Mr Ramashau was on precautionary suspension.

Mr Chetty said that he did not have time for stories. He had asked the Acting DG on the previous day if any senior official had been suspended at DIRCO, to which the DG initially refused to respond but eventually said that one official but did not disclose who it was. He said that the Acting DG had to decide whether she was working with the Committee or against the Committee. The Acting DG could have informed the Committee of this matter on the previous day, when the question was asked.

Ms T Msane (EFF) said that the Department and its political heads undermine the Committee. There were no political heads present from the Department, and no apologies were sent by the Deputy Ministers. Committee Members learned through news outlets and social media that the Director-General was suspended and now the Committee was informed in a “by the way manner” that the CFO had been suspended, in a meeting where financial matters of the Department would be discussed. Cash-on-cash missions had been flagged by the Auditor-General for many years.

The Chairperson said that the Minister did inform the Committee about the CFO’s suspension; the message had probably not yet been communicated to Members. Even though the Minister did not write to the Portfolio Committee, she did call the Chairperson and informed her of the suspension.

Ms Msane said that the Committee was uninformed and unaware, even though the Chairperson was informed. She maintained that the Minister and the Acting DG had a chance to inform Committee Members when the question was raised on the previous day but none of them said anything.

Mr T Mpanza (ANC) asked whether it would be possible to put this matter on the Committee’s agenda – not necessarily the suspension of DIRCO officials but an update on consequence management within the Department.

Mr D Bergman (DA) said that he kept quiet on this matter because he wanted to the Acting DG to settle in first. He added that he already knew the answers to the questions that were asked on the previous day, and it looks like the Acting DG did not know the answers. This was the third time in two meetings where the Acting DG was being caught out for not knowing an answer to a question. He said that the Acting DG could have informed the Committee about the CFO’s suspension, but the Acting DG chose to play politics.

Mr B Nkosi (ANC) asked the Acting DG to take the Committee into her confidence, saying that there was no need to work against the Committee.

Ms Losi noted the concerns raised by Members and added that she was not playing politics; she was trying her level best to work with the Committee.

Mr Chetty said that he did not know how many times the Chairperson would accept this. DIRCO had continuously fooled the Committee, and he did not buy this apology from the Acting DG. He said that the Chairperson would remember that DIRCO officials in the past have tried to sabotage the Portfolio Committee. The Committee should not accept this.

Opening Remarks by the Chairperson

The Chairperson said the previous day was the Portfolio Committee’s first interaction with the Acting DG, who had been the incumbent for less than a month. The Chairperson asked Members to give the Acting DG the benefit of the doubt. The Acting DG still needed to settle in and taking up this role would be hard. She asked Acting DG not to play monkey tricks with the Committee because that would be a dangerous game to play. As an accounting officer, the Acting DG must always answer questions posed by Committee Members.

The Chairperson told Ms Losi that she must understand the responsibilities that come with her new position. She said the Acting DG’s attitude towards Members would be her liberator and things could get ugly fast because Committee Members could get nasty when they wanted to. The Committee was not here to socialise with officials but rather to hold DIRCO accountable.

The Chairperson said that the meeting should continue, as this issue has already taken up valuable time. Today’s meeting was a milestone for the Portfolio Committee, as it marks the first time in history where an oversight visit would be done virtually. She said that the cash-on-cash missions has contributed to DIRCO receiving negative audit outcomes, challenges with handling cash accounts and the unexplained differences under cash and petty cash. She said that the unexplained differences amounted to R188 million in the 2018/19 financial year. This resulted in a material miss-statement and it could not be audited. DIRCO’s management had committed to perform regular reconciliations to prevent this from happening again, hence the Committee’s oversight today to ensure that reconciliations were being done and that proper cash records were being kept.

The Chairperson asked all the embassies to log off from the meeting and log in again when it was their time to present. She reminded Members that they would only have 10 minutes to ask questions after the presentations of the missions.

Introduction to Oversight Presentations

Ms Losi made a brief introduction and handed over to the South Africa’s Ambassador to Iran, Mr Vika Khumalo, for his presentation.

Iran, Tehran, Iran Oversight Presentation

Ambassador Vika Khumalo, DIRCO, introduced his team and gave a brief introduction of the location of the mission in Iran. He further gave an overview of the property and the state of its condition. He highlighted maintenance issues and said maintenance cost were high while the maintenance budget the mission received was not sufficient.

Video footage of the property was shown.

He explained why this was a cash mission. He said that the mission did not have a main account and it used cash through the generation of vouchers, which helped the mission keep track of its cash. The mission had kept a registry where all receipts and withdrawals were recorded. An overview of the mission’s cash management was also given. Members were shown what the cashbox looked like and the procedure was followed when cash was issued. Ambassador Khumalo also gave an overview of the asset registry.

Discussion

Ms B Swarts (ANC) said that 1978 was a very long time ago; looking at the video and the state of the property was very sad.

She asked: when did the process start to acquire a title deed and how far along is this process? What are the challenges in acquiring the title deed and has DIRCO been assisting the mission in this regard? She said that the Committee had always been saying that as long as DIRCO did not have a property management strategy that was implementable, these property problems would persist.

She asked how much money DIRCO gave the mission each month and how much the mission’s monthly expenditure was. She also asked for clarity around the cash box: who had authority to sign off when cash was being taken out and how the mission reconciled after salaries and rent had been paid.

Ms Msane asked for a full staff compliment; she wanted to know in detail how many South Africans and Iranians worked at the mission. She asked what the process of vetting Locally Recruited Personnel (LRP’s) was before bringing them on board.

She commented that it was really sad that after 40 years South Africa still did not have a title deed. She also raised the issue of security: why no security for the mission was there and what the challenges around getting security to the mission were. She asked what the mission’s total allocated budget was. She also asked why the mission still used excel for asset registry and not net-trace because DIRCO had informed the Committee that all missions would migrate to net-trace.

Finally, she asked how many accountants the mission had. She asked DIRCO to explain what accounting system was in place for cash-on-cash missions.

The Chairperson recounted that the Committee visited Iran in 2015, and the issue of the title deed was discussed then. It was now 2021 but there was still no title deed. She asked what steps had been taken to acquire the title deed and if DIRCO had been assisting the mission.

She commented that the conditions of the property was unacceptable and was a health hazard. She asked DIRCO to present plans on how they would fix this issue.

Mr Nkosi asked what the skill was set of the people handling the cash management of the mission. He asked if the mission had a risk strategy to mitigate against discrepancies that might occur during reconciliations and if this strategy had been approved by DIRCO head office. He asked whether the mission was experiencing discrepancies with receivables and reconciliations.

He asked if the mission was one of the missions that were flagged by the Auditor-General as having non-receivables as receivables.

Responses

Ambassador Khumalo responded to the questions.

He said that the property was given to South Africa after the 1979 revolution in Iran. There were currently no records of attempts to get a title deed between the years 1979 and 2000. His predecessor had started the process to acquire a title but was unfortunately unsuccessful. The process was restarted, and for the past two years had not been easy but the title deed would be received in the next two months. The property was, however, registered in South Africa’s name. There was a maintenance plan but funds were not sufficient.

Ambassador Khumalo said that the mission had been trying to get security and the area around the mission had changed from residential to commercial; this had become a problem. Access was another problem and sometimes it was hard to exit the mission because it would be blocked by cars. DIRCO did not provide security at the residence of the Ambassador and they had also since withdrawn security at the chancery. There were seven diplomats deployed to the mission and there were 12 locally recruited officers who among, other things, provide translation services.

He said that all audit reports of the mission had been clean and this showed that the cash management of the mission was in good hands. Funds were received from DIRCO on a quarterly and not monthly basis. After all salaries and other expenditures had been paid, the rest of the cash would be put in the cash box and kept in a safe. The cash in the box mainly consisted of American dollars.

He said that net-trace was used by the mission as a verification method and assets were captured on both excel and net-trace. The total budget for the mission was USD1 345 235, consisting of USD784 634 for compensation and USD560 601 for goods and services.

Angola, Luanda, Angola Oversight Presentation

Ambassador Ephraim Monareng, DIRCO, introduced his team stationed at the Angolan mission. The presentation about the property was given and the Committee was informed South Africa owned the property. The Ambassador gave details about the property and said it needed a total revamp.

Video Footage of the Property was shown.

Ambassador Monareng explained to the Committee the cash management system of the mission in detail. He said that the mission had a bank account, through which they received all their funds on a monthly basis. Most of the mission’s major commitments were paid through bank transfers, and for control matters all cash and transfers were signed off by two signatures.

He also gave an overview of the asset registry.

Discussion

Mr Mpanza said that the state of these properties was really bad and was a bad reflection on not only DIRCO but South Africa as a whole. This had been a trend because even in the previous presentation the property was dilapidated.

Ms Msane said it was disappointing and it seemed like all properties owned by DIRCO were in a bad state. She asked what DIRCO’s plan with the properties in Angola was and expressed that the state of these properties was unacceptable; no human being should live in such conditions.

Ambassador Monareng responded that the budget for maintenance was not sufficient and the mission had been in discussions with head office on revamping the place. COVID-19 and the reprioritisation of funds meant this had to be put on hold.

Sudan, Khartoum, Sudan’s Oversight Presentation

Ambassador Cassandra Mbuyane-Mokone, DIRCO, said that she had recently arrived in Khartoum and had not yet had a chance to present her credentials to the President of Sudan. As Head of Mission, she introduced all diplomats stationed at the Mission.

The Ambassador gave an overview of the current political climate in Sudan and also on COVID-19 regulations in Sudan. She outlined the cash management system of the mission, saying that for some time the mission did not have a bank account because the banking system collapsed in Sudan and the country was under sanctions. The mission collected cash from other missions, and this was usually signed off by the accountants of all missions involved.

The last part of the presentation focused on the asset registry of the mission. An overview was given of the property.

Discussion

The Chairperson said that this presentation was not complete; most of the information that had been requested by the Committee was not included in the presentation.

She asked the Committee Whip, Mr Mpanza, to take over and chair the meeting.

The Acting Chairperson opened the floor for Committee Members to ask questions.

Mr Chetty said the presentation was not sufficient. The Committee had seen the first two presentations and this one fell short. He was sure that DIRCO had briefed the mission on what was expected in the presentation. Committee Members could not ask questions on a presentation that was half baked. He said he could not even ask questions about the property because the Mission even failed to present a video.

Ms Msane said that guidelines were sent by the Committee to DIRCO to relay to the missions. Unfortunately, this specific mission did not adhere to those guidelines and this was not helpful to the Committee. This was an oversight visit and had it not been for COVID, Members would have been physically there; this was why a full video of the premises was requested. She asked that this presentation be postponed till a later date so the mission could present the proper items that were requested.

The Acting Chairperson said that he was in favour of what Ms Msane proposed.

Mr Nkosi said that the delegation should present on the next day, after all items had been finished in the meeting.

There was consensus among Committee Members, and it was agreed the mission should present in the next day’s meeting.

Ambassador Mbuyane-Mokone said that there were supporting documents that were uploaded into the system. She said the property the mission was currently on was a rental, and she was under the impression that photographs and videos were only for properties owned by the state.

The Acting Chairperson said that consensus has already been reached and the Committee expected a comprehensive presentation from the mission on the following day. Officials must do their work and not expect the Committee to do it on their behalf.

South Sudan, Juba, South Sudan’s Oversight Presentation

Ambassador Gordon Yekelo introduced his team stationed in Juba. On the cash management of the mission, he said that the mission had three bank accounts and cash was withdrawn from these accounts by issuing a check and a letter signed by two signatories to the bank, which would reflect the amount to be withdrawn. When returning to the office, the money would be counted in the presence of the accountant, third secretary and the corporate services manager. The money would then be placed in a safe in the corporate manager’s office. A further overview was given on how cash was normally dispensed at the mission. An overview on the mission’s asset registry was also given.

The mission owned a vacant land that was donated by the South Sudan government to South Africa. The problem with this land was that there currently were illegal occupants at the property.

Photographs of the vacant land and its occupants were shown to the Committee.

Discussion

Mr Nkosi said that this situation with the squatters on the vacant land was worrisome and presented a challenge to DIRCO and the mission. He said South Sudan was a fairly new country and it would be difficult trying to get verification on the land.

Ms Msane said what was shown by the mission was an embarrassment and it surpassed everything the Committee had seen hitherto. She asked the Acting DG to explain why the land had been left in such a state after it was donated to South Africa by the South Sudan government. She asked what DIRCO’s development plans for this land were and how far these plans were. She also asked how long South Africa had rented property in South Sudan and what the rental cost was.  She asked the Acting CFO how many templates DIRCO used when handling cash.

The Chairperson asked if this was the mission where money went missing and an official committed suicide.

Ambassador Yekelo responded that the land was given to South Africa on a basis of reciprocity; South Africa would also donate land to South Sudan in Pretoria. South Sudan was currently in discussion with DIRCO Head office on this matter.

He indicated that DIRCO had no development plan in place for the vacant land in Juba. Other factors impact this; these included the fact that South Sudan was a fragile state and there was a lot of internal conflicts. DIRCO had to move its chancery a couple of times because of this instability. The mission was currently on a five-year lease that was approved by DIRCO head office, and the area was a bit more stable and safer, but it was expensive.

The ambassador said that the vacant land given to South Africa was quite big and a chancery could be built there. The Mission would start to engage with DIRCO head office and start developing a plan. He said that the squatters on the land were the concern of the South Sudan government and security forces. The mission could build a wall to stop people from entering the land and the mission was prepared to do this if DIRCO made the budget allocation for it.

He said that this was the first time he heard of the suicide and could assure the Chairperson that no suicide happened at the mission. He had arrived at the mission in 2017 and no one had mentioned a suicide to him. There was an incident of money that were stolen, as a sense of duty the then corporate service manager did not know what to do and decided to replace the money with his own. DIRCO investigated the case, the culprit was caught, and the corporate service manager was repaid.

Ms Msane said that there was a question directed to the Acting DG and asked her to further explain how South Africa received the vacant land.

Ms Hlengiwe Bhengu, Acting Chief Financial Officer (CFO), DIRCO, responded that there were four templates that DIRCO utilised when dealing with cash management. The first one would be cash book receipts used when money is received from head office. This was an electronic process and it would immediately create a voucher after the cash was documented on the receipt book. The voucher was the second template. The cash register was the third template, which was used to allocate funds received. The fourth template was the cash count certificate, which must be completed every month and must correlate the details in the cash register. Cash must be counted on a daily basis.

Ms Losi said that she did not know the particulars of the land donation very well, but there was an agreement between South Africa and South Sudan for the exchange of land between the two countries; so each country could build a chancery on these respective lands. South Sudan was given land in Sunnyside, Pretoria; that was where their Embassy would be based. She said that after this meeting she would have a meeting with Finance and DIRCO’s property management unit to develop a plan for the vacant land in Juba.

Cuba, Havana, Cuba’s Oversight Presentation

Ambassador Thaninga Shope-Linney introduced her team of diplomats stationed in Havana. She said that no foreign Embassy in Cuba owned property and this was because of the country’s laws – private ownership of property was limited. Hence South Africa did not own the property it was currently occupying. She then gave an overview of the properties that the Mission was currently renting.

Video Footage and photographs of the properties in Havana were shown to the Committee.

The Ambassador said that the Mission in Havana was not necessarily a cash mission.

She presented the cash management system of the Mission and the details about the cash box and asset registry were discussed.

Discussion

The Acting Chairperson said if it had not been for COVID-19, Members would have experienced these situations at the missions for themselves. He feared that had Members been physically present, they would have cried, because he suspected the conditions of these buildings were far worse than presented. He thanked the Committee Chairperson for arranging this session, adding that the Committee needed another round of these types of meetings because it was very informative and showed the Members the challenges that were faced by missions.

Mr Nkosi said that he understood that Cuba was under severe sanctions and this might add to the state of the properties, but DIRCO still had a responsibility to ensure that missions had adequate resources. DIRCO should try and prioritise things highlighted by the Mission.

Ms Msane said that if these oversight visits happened physically, Committee Members would have needed high blood pressure tablets by now. She said it was a disgrace and DIRCO was trying to portray that socialism did not work. The excuses that would be given by DIRCO were unacceptable. This portrayal of socialism not working was not true.

The mission in Cuba should have been top-notch, as it was an important partner of South Africa. Cuba had been looking after South Africa since the days of Apartheid, but South Africa was neglecting Cuba. She said that there were no excuses because Cuba had proper five stars hotels and good residential areas. The fact that DIRCO could not even provide proper pots to the mission was an embarrassment. She said the issue of a property management unit had been raised by the Committee and this glove approach of DIRCO would not work. She asked when last DIRCO visited Havana and where the officials stayed for the duration of their visit.

Mr Chetty said there would a time where South Africa needed to decide between quantity and quality. He said that it was good to say that South Africa had a large footprint. The problem was exactly what the Committee saw today, and South Africa should be embarrassed. He asked where oversight had been and why has DIRCO allowed for these missions to be in such conditions. DIRCO officials should go out to these Missions and try and live at these missions.

Ambassador Shope-Linney responded that sanctions made it hard to source for services and goods, including material for maintenance. She said that Cuban government did help missions with maintenance issues, but this takes long and further affected by COVID-19. She said that often times, it was expensive in Cuba because of sanctions and the maintenance budget was not sufficient.

The Acting Chairperson thanked the Members for their attendance all missions who presented in the meeting.

The meeting was adjourned.