International Relations and Cooperation Budgetary Review and Recommendations Report

Meeting report

The Committee received apologies from the Minister of International Relations and Cooperation as well as the two Deputy Ministers for not being able to attend the meeting. An apology was also received from the Director General of the Department of International Relations and Cooperation (DIRCO).

Committee’s Draft 2019 Budgetary Review and Recommendations Report (BRRR)
The Chairperson instructed the Committee Content Adviser to take the Committee through the Draft 2019 Budgetary Review and Recommendations Report (BRRR) page by page focusing specifically on the Committee’s Findings and Recommendations.

Ms Lineo Mosala, Committee content Advisor, proceeded to take Members through the Draft 2019 BRRR focusing specifically on the Committee’s Findings (page 63) and Recommendations (page 74). She said that members should feel free to make any changes to the Draft 2019 BRRR where they deemed it necessary and to make additional recommendations if they so wished.

Findings
-The overall service delivery performance of the DIRCO in achieving its predetermined objectives was regarded as good and healthy.
- DIRCO had received a qualified audit opinion with emphasis of matter in 2018/19. This related to repeat findings on the completeness and existence of movable tangible capital assets. The DIRCO had not maintained a reliable asset register on movable assets due to ineffective systems of internal control over asset management.
- There was also a new finding by the Auditor General of SA (AGSA) on cash and cash equivalents. There were differences between bank statements and information submitted for audit which management could not explain. 
- The AGSA had recommended that steps be taken to rectify problematic areas. These were asset management, contract management, increasing irregular expenditure matters, Information Communication Technology (ICT) issues; internal controls; addressing apparent incompetence by officials especially in the Finance Branch, lack of consequence management on those who caused irregular, wasteful and fruitless expenditure, leadership’s inability to address repeat findings, investigations into the area of cash and cash equivalents and non-compliance with laws and regulations on Supply Chain Management (SCM).
- The African Renaissance Fund (ARF) had received an unqualified audit opinion for the 2018/19 financial year. The major challenge with the entity was still around its governance structure within the DIRCO.
- During the reporting year the DIRCO recorded irregular expenditure to the tune of R298m. The nature of the irregular expenditure was due to the procurement of goods and services without inviting competitive bids.
- DIRCO also incurred fruitless and wasteful expenditure in the amount of R2m during the reporting period. This was amongst other things due to payments made for cleaning and security services for the upkeep of vacant state-owned properties abroad. Fruitless expenditure was also reported due to flight cancellations and functions by DIRCO officials without valid reasons.

Recommendations to the Minister of International Relations and Cooperation
-The Minister must ensure that an audit action plan was developed, implemented and monitored to address the audit outcomes before the commencement of the interim audit.
-  There was a need to develop and report on a turnaround strategy on measures being put in place in order to have a credible asset register, to avoid findings on existence and completeness. The new asset management system should demonstrate how it would improve the audit outcome.
- The Minister should investigate cash and bank findings relating to foreign bank accounts before the end of the current financial year.
-  Details should be provided on whether missions’ performance was measured and monitored and what actions had been taken where missions were not performing and/or contributed to negative audit findings.
- The Minister should conduct a skills audit in the Branch Finance and Asset Management unit to determine whether there were appropriate competencies and skills necessary for the proper preparation of annual financial statements.
- There was a need to investigate and report on the circumstances pertaining to irregular expenditure to the tune of R298m which was incurred during the 2018/19 financial year.
- The Minister should develop an asset acquisition strategy and assess the possibility of leasing out, renovating or disposing of unused state owned properties abroad.
- ICT infrastructure of DIRCO and its missions should be upgraded. Staff involved in the implementation of the ICT refresher plan should also be capacitated to avoid exposing foreign policy related information to related risks.
- Ensure that there was consequence management to address the inadequacies in the work of the Finance Branch.
- Compile a report on the circumstances impacting on the conclusion of inter-departmental negotiations relating to the establishment of the South African Development Agency (SADPA).
- Provide a full report on the circumstances that led to the conception and ultimate procurement of land /property for the missions in New York and what the current status thereof was.

Recommendation to the Minister of Finance
-Investigations be undertaken and a report be submitted around the role played by National Treasury in the procurement processes of the New York pilot project. Consequence management should be undertaken where wrongdoing had been established.

Recommendations to the National Assembly
-National Assembly should consider the importance of the oversight requirement for the Committee which was currently not favoured by the prevailing Parliamentary Oversight Model. The Committee needed to, at least twice a year, perform oversight on South African missions abroad. This would allow the Committee to monitor causes of irregular expenditure and non-compliance with supply chain management issues.
- The Committee should be allowed to attend and monitor the participation of SA in multilateral forums related to foreign policy.

Discussion
Mr D Bergman (DA) referred to page 63 under the Findings of the Committee. He did not feel that the service delivery performance of DIRCO could be regarded as good and healthy as was captured in the paragraph. He suggested that “good and healthy” be replaced by “was regarded as satisfactory”.

Mr T Mpanza (ANC) disagreed and said that “good and healthy” was a fair reflection since DIRCO had achieved 92% of its targets. It should be left as it was or alternatively he suggested the use of “relatively good and healthy”.
 
Mr M Chetty (DA) responded that staff in the Finance Branch of the DIRCO was incompetent. Members still did not know what was happening over the New York issue. The Chief Financial Officer (CFO) had been suspended for a year. The Committee needed to be realistic. He recalled that last week the Chairperson had said that the Minister had inherited a dysfunctional department. He agreed with Mr Bergman that “satisfactory” could best describe the performance of the DIRCO.

The Chairperson stated that Members were playing with semantics. She felt that “good and healthy” was the same as “satisfactory”. Members were simply playing with words.

Mr D Moela (ANC) said that the majority of members felt that “good and healthy” as it was captured was a fair reflection of the DIRCO’s performance. Not everything in the DIRCO was problematic.

Mr Bergman alternatively suggested that “average” be used to replace “good and healthy”. DIRCO had inadequacies in finance and in its operations. He pointed out that the Committee was using data that the Auditor General of SA (AGSA) had cautioned about. He did not feel that “good and healthy” was an apt description of the DIRCO’s performance. At best the DIRCO’s performance was “average”.

The Chairperson replied that first Mr Bergman’s suggestion was to use “satisfactory” and now it was “average”. There was a play on semantics. She said that satisfactory meant fulfilled and perfect.

Mrs T Msane (EFF) suggested an addition to “good and health”. It could be something to the effect of that notwithstanding the challenges faced by the DIRCO its service delivery performance was good and healthy.

Mr Moela agreed with Mrs Msane’s suggestion.

Dr C Mulder (FF +) was satisfied with the wording as it was in the paragraph.

The Chairperson said that the majority of parties were in agreement that the wording should stay as it was. The matter was settled.

Mr Chetty, in the interests of time, asked if the Committee could directly deal with the Recommendations of the Committee as contained in the Draft 2019 BRRR. Members could also make additional recommendations if they so wished.

Mr Mpanza agreed with Mr Chetty to go directly to the Recommendations of the Committee. There was in any case a synergy between Findings of the Committee and Recommendations of the Committee. The Recommendations spoke to the Findings.

The Committee agreed to go directly to the Recommendations in the interest of time.

The Chairperson referred to finding 33 on page 70 which spoke about the Committee being resolute to finalise the processes on the Foreign Service Bill before December 2019. She said that the Committee could write a letter to the Speaker of the NA that the Foreign Service Bill be referred to the Committee for processing.

Mr Chetty suggested that a recommendation be made for the Minister to revive the Foreign Service Bill.

The Chairperson preferred that the Committee write a letter to the Minister.

Mr Chetty suggested a recommendation that there be an investigation into the conduct of the CFO of DIRCO. He noted that the Committee had discussed the matter at length but that nothing has happened.

The Chairperson said that Mr Chetty’s recommendation was noted.

Mr Chetty added that the investigation into the conduct of the CFO should be undertaken by DIRCO. The Committee needed to draw a line in the sand over the matter at some point.

The Chairperson referred to page 69 of the Draft 2019 BRRR and said that the CFO had been asked whether he agreed with the audit report of the AGSA. The CFO had not responded. She pointed out that the Committee could hold the CFO accountable. The question was whether the Committee would make a recommendation to the Minister and DIRCO. The Committee could also explore its powers in terms of members’ powers and privileges legislation.

Mr Bergman stated that the best option was to have the CFO appear before the Committee. The Committee needed to decide whether it wished to interrogate the CFO. The Committee could do the interrogation and thereafter refer the matter to the Standing Committee on Public Accounts (SCOPA).

The Chairperson referred to page 72, paragraph 10 and said that the CFO had maintained that he was not in full agreement with the AGSA. The CFO had said that he had not had an opportunity to defend himself. The AGSA had however stated that DIRCO had been given an opportunity to respond to its findings. She asked members how they felt about the recommendation made by Mr Chetty and Mr Bergman.

Mr Mpanza said that the Committee could in terms of legislation summon the CFO before the Committee. It could be a recommendation of the Committee in the report. He noted that most of the recommendations pertain to financial issues. He referred to page 76, recommendation 15 which stated that the Minister needed to ensure that there was consequence management to address the inadequacies in the work of the Finance Branch. The issue over the CFO was covered by recommendation 15. The Committee should not be tempted to individualise issues. Due process should be followed.

Dr Mulder stressed the importance of getting the Foreign Service Bill to Parliament before the end of 2019.

Mrs Msane said that bringing the CFO before the Committee would be a long process. A better option would be if SCOPA could revive the first disciplinary hearing in which the CFO was found not guilty.

Mr Moela agreed that the matter should not be individualised. The Committee was well aware of the problems. The CFO was not the only one in the Finance Branch that should be held accountable. He too felt that recommendation 15 on page 76 covered everything. The CFO could not be targeted alone. He suggested that recommendation 15 be left as it was but that the concerns of members were noted.

The Chairperson agreed with Mr Bergman that the CFO should be summoned to the Committee. She noted that the CFO had stated that he was not accountable to Parliament. She clarified that the recommendations of the AGSA on consequence management was on financial management. The CFO would have to face the consequences of his actions. If the Committee was deliberating on the CFO issue on its own, then matters would be confused. There were many problematic issues related to the Finance Branch including the issue around the New York matter. It was best for the Committee not to separate matters. There were many issues implicating many people. Due process would be followed. The Committee would invite the CFO together with the Directors of the Finance Branch to appear before the Committee. Issues would be fleshed out and thereafter the matter would be referred to the SCOPA. These were normal processes of parliament. The Committee would not take the route of an investigation. The Director General of the DIRCO should also be part of the delegation.

Ms Mosala said that the Committee could make a resolution and it would be reflected in the minutes of the meeting. 

Mr Bergman said that the Committee had discussed SA’s memberships to various organisations. Recommendation 13 on page 76 mentioned various organisations but he suggested that there be an audit of this in terms of costing and SA’s participation in them. The idea was to streamline SA’s memberships. Were many of the memberships still relevant? Perhaps the scope of recommendation 13 could be widened to accommodate his suggestion.

The Chairperson referred to recommendation 11 on page 75 which called upon the Minister to provide a full report on the circumstances that led to the conception and ultimate procurement of land/property for the missions in New York and the current status thereof. She asked whether members wished to add in a forensic investigation under the recommendation.

Mr Bergman noted that there were issues around the Diplomatic Bag Tender. He added that on rules and responsibilities there were perhaps a need within DIRCO to have restructuring at deputy director level.

Ms Mosala responded that the Diplomatic Bag Tender was covered under recommendation 18 on page 76. All tenders were covered by recommendation 18. The restructuring of the DIRCO’s organisational structure was covered under recommendation 16 on page 76.

The Chairperson stated that it looked as though all the issues that members had raised were covered.
She placed the Draft 2018/19 BRRR before the Committee for adoption.

The Draft 2019 BRRR was adopted as amended.

Dr Mulder asked whether everyone in the Committee supported the Draft 2019 BRRR since it was now adopted.

The Chairperson said that members were free to make declarations in the House on whether they supported or rejected the Draft 2019 BRRR. The Draft 2019 BRRR having been adopted as amended would now be ATCed i.e. published in a document called Announcements, Tablings and Committee Reports (ATC).

Ms Msane asked when the Committee would be summoning the CFO and the Finance Branch to the Committee. She agreed that afterwards the matter could be referred to the SCOPA.

Mr Chetty said that the following Wednesday 30 October 2019 would be fine.

Mr Moela said that it should be as soon as possible.

The Committee agreed to Wednesday 30 October 2019.

Mr Lubabalo Sigwela, Committee Secretary, asked whether the CFO and the entire Finance Branch should be summoned to the Committee.

Dr Mulder suggested that the Committee first put out an invitation for the CFO to attend the meeting. If he refuses to attend then he could be summoned to appear.

The Committee agreed with Dr Mulder.

Other Matters
Mr Bergman asked what had happened to the planned oversight visit to New York.

The Chairperson said that she had been in engagement with the Chairperson of Chairpersons and was told that the priority was to deal with BRRRs at present. If the Committee still wished to go to New York in December 2019 then the application should be made now. The AGSA in his findings had spoken to the New York issue. Was it land or property that had been purchased? The AGSA noted that in Manhattan there were only buildings that could be purchased. The New York matter was an urgent one. 

Committee Minutes
Minutes dated 9 October 2019 was adopted as amended.

The meeting was adjourned