Private Security Regulatory Authority on its 2014 Strategic Plan

Meeting report

Committee Researcher briefing on PSIRA
The Committee Researcher, Nicolette van Zyl-Gous, noted the Private Security Industry Regulatory Authority (PSIRA) is established in terms of section 2 of the Private Security Industry Regulation Act, 2001 (Act No. 56 of 2001). The entity is mandated to regulate the private security industry and to exercise effective control over the practice of security service providers in the public and national interest. Chapter 12 of the National Development Plan calls for the creation of safer communities by 2030 and it is also aligned with the government’s strategic goal to ensure that all people of South Africa are and feel safe. PSIRA is a public entity, and currently receives no government funding. Revenue comes from annual registration fees, fines issued in terms of the Code of Conduct enquiries, and other disbursement fees. There had been almost a decade long failure of PSIRA to increase fees led to a massive fee increase: 75% for companies and 900% increase for individual guards employed by companies. This was despite the Treasury recommendation to implement an inflation-related increase of 9.1% across all categories. The Security Industry Alliance (SIA) successfully applied for an interdict not to pay, but ultimately lost the court case – and it has appealed this. PSIRA has been experiencing financial instability, with a record deficit of R23 million in 2010/11, but a turn around plan had been initiated by the Minister and it had been steadily reducing the deficit since then (see document for further detail).

Private Security Industry Regulatory Authority (PSIRA) on its Strategic Plan
PSIRA presented their strategic plan for 2014/15 – 2018/19. Members of the delegation included Council Members: Mr Thula Bopela, Chairperson of Council; Mr Joy Rathebe, Deputy Chairperson of Council; Major General Cynthia Phillison, Council Member; Adv Nontokozo Mthembu, Council Member; Mr Benjamin Ntuli, Council Member; and the Management Team: Mr Manabela “Sam” Chauke, Director; Adv Philani Mthethwa, Deputy Director of Law Enforcement; Ms Portia Mngomezulu, Deputy Director Finance and Admin; Ms Mpho Mofikoe, Deputy Director Communication and Training; and Ms Zanele Mthembu, Corporate Secretary.

Mr Manabela “Sam” Chauke, PSIRA Director, said the legislative mandate of PSIRA is to promote a legitimate industry and to ensure the industry acts in the public and national interest; determine and enforce minimum occupational conduct by service providers; ensure a transparent, fair, objective, and timeous registration process; ensure compliance through active monitoring and investigation of service providers; and promote services that respond to the need of users and the community. He discussed key achievements. Some of these included improved operational efficiencies with registration average turnaround time improved from more than 180 days to 19 days. There had been improved industry regulation as it successfully prosecuted 1 323 improper conduct cases. Inspections increased by 253% and investigations by 294%. There had been effective revenue management as revenue had grown by 63% from R97.95 to R160.05 million. Expenditure controls resulted in savings of R29.02 million on operating expenses.  He then spoke to the concerns raised by the Portfolio Committee the previous year:

 

Discussion
Mr F Beukman (ANC) asked if the council is meeting on a regular basis, and if not, what the challenges are. The chairperson of the audit committee resigned due to problems with the secretarial service; has this been sorted out by the board? Is the audit committee functioning? It seems it has been dysfunctional for some time.

Ms M Molebatsi (ANC) asked what the election of the building means. She referred to the term "consultancy", which was a concern of the previous Portfolio Committee, what does this mean? You said that the salaries have been resolved, what does this mean?

Ms L Mabija (ANC) asked who is really in charge of PSIRA to ensure that things are done properly.

Ms D Kohler-Barnard (DA) said that looking at the method in which things are reported, for years and years this entity chose to report on financial statements in a matter inconsistent with standard reporting methods, not as prescribed by National Treasury. The Public Finance Management Act (PFMA) requested this so why are we not seeing it. The request was made, and it is the law.

Mr Bopela stated that at full capacity the council has responsibility, followed by the director and the deputy directors.

Mr Chauke said that they should avoid renewing the current lease so that they can go back to Arcadia. The use of consultants cannot be phased out completely because in other areas such as IT they use consultants. They are looking into reducing the costs of utilizing consultants.

Mr Bopela said that from Day 1 all three audit committee members had been appointed, but one never showed up. They thus had two members of the Audit Committee, but the previous chairperson of the Audit Committee resigned at the end of the period this year and a new Audit Committee was put in place that ensured that everybody on that committee is a PSIRA member and fully qualified to carry out the job of the Audit Committee. They have a fully operational Audit Committee; all its members have been appointed. Appointment of Council Members does not rest with its chairperson: it is the Minister’s prerogative. The former Minister was able to assist them. PSIRA tabled with the Minister the concern of the previous Portfolio Committee about the capacity of the previous council. Before the Minister was moved to another post, he appointed the PSIRA council members. And it is a full council, as you can see, so those matters have been resolved. With regard to meetings, the council meets regularly. They have scheduled monthly meetings of the council to look at each performance of the management and to keep up to speed with what the managers are doing. All council meetings up to December 2014 have been scheduled.

Mr Beukman said that there are no problems with governance in terms of council meetings, meetings are taking place regularly and there are no problems with that. Was there a problem with the secretarial function at committee meetings?

Ms Kohler-Barnard said that the statement she took down was “previously three committee members had been appointed but only one member showed up.” She thought those people were paid, did that person ever show up? Did PSIRA pay someone who was invisible?

[Responses from Mr Bopela and Mrs Mngomezulu inaudible]

Ms Molebatsi noted the lawsuit brought against PSIRA due to the increase in annual frees, and asked what the situation is now.

Ms Kohler-Barnard asked if they could discuss PSIRA's deficit. Since 2006 it had been in trouble. What is it trying to do to fix the situation? This court case has dragged on. PSIRA had ignored Treasury guidelines in 2012. What is the status today?

Mr Z Mbhele (DA) asked about the 253% increase in inspections and 294% increase in investigations, and asked for the nominal figures behind these percentages.

Ms Molebatsi asked how the situation with the payments within the customer system is improving.

Mr Beukman asked if financial management is being handled by qualified staff, and stated that the previous Portfolio Committee had challenges regarding the CFO.

Mr Bopela replied that the council had temporarily appointed Ms Portia Mngomezulu to deal with the PSIRA financials. The previous CFO resigned because the council indicated to him that he was going to be reported. He resigned at a time when PSIRA was very much under pressure due to its finances. PSIRA took the decision to appoint Mrs Mngomezulu for six months. PSIRA has published an advert to look for a CFO to work on a permanent basis.

Mr Beukman commented that this sounds like there is a plan, which is important. He asked what the timeline is.
 
Ms Kohler-Barnard said that she is astounded that the qualifications of the previous CFO were not checked. Was there is a system in place to check the qualifications of applicants so that they do not end up with another liar?

Mr Bopela replied that he does not want to say 'yes' for sure because when they appointed the previous CFO, they got State Security involved.

Mr Beukman stated that he understands that PSIRA is rectifying the concerns and asked what the timeline is.

Mr Bopela stated that Ms Mngomezulu’s appointment as interim CFO will end in September 2014. By that time PSIRA will have interviewed a permanent CFO. As soon as she finishes her six-month appointment, there will be a permanent CFO in place.

Mr Chauke responded about the lawsuit, saying the high court actually dismissed the application by SIA, but SIA had appealed to the Supreme Court of Appeal, and they are currently awaiting judgement on that.

[Response from Mrs Mngomezulu was inaudible].

Mr Twala asked about the practice of employing non-compliant companies and the exclusion of the compliant companies, and how it impacts on the quality of service. What strategy does PSIRA have to rectify that?

Mr Mthethwa replied that the companies that do not provide PSIRA with a compliance certificate will not be considered for any jobs.

Mr Twala asked if they can ensure that from a regulatory point of view.

Ms Mofikoe stated that they look at what service providers they are dealing with, and who they are exposing their stakeholders to. [The rest of her response was inaudible].

Mr Twala asked about the proliferation of non-South Africans working as security guards.

Mr Chauke stated that they do vetting, and they have a registration subcommittee that looks at registration compliance. They also check to see if persons are citizens of South Africa. There are stringent compliance matters. In terms of whether PSIRA can force security companies to consider hiring only their own country members, he did not think that PSIRA can do that.

Programme 1: Administration
Deputy Director of Finance and Administration, Mrs Portia Mngomezulu, presented Programme 1: Administration's Key Performance Indicators (KPIs) and targets over the next three years (see document). The purpose of Programme 1 is to provide leadership, strategic management, and administrative support. The three sub-programmes are Finance and Administration; Business Information Technology; and Human Capital.

Programme 2: Law Enforcement
Deputy Director of Law Enforcement, Mr Philani Mthethwa, presented the KPIs and targets. The purpose of Law Enforcement is to ensure that there are effective regulations in the security industry and enforcement of law and compliance to the regulations. The three sub-programmes are Enforcement; Compliance; and Legal Services and Prosecution.

Discussion
Mr Beukman asked why the annual fees, business fees, registration fees, and so on were not included in the document. He noted that an issue raised in the Legacy Report of the previous committee was the R40 million investment fund.

[Ms Molebatsi and Ms M Mmola (ANC) asked questions that were inaudible].

Ms Kohler-Barnard asked if all their inspectors have been trained in firearms control. About the firearms audit function that PSIRA was given to ensure that there is accountability of firearms in the security industry, what was its status and has an audit been completed? This was an issue from last year. Has the Private Security Industry Levies Act of 2002 been enforced? On the issue of offices – they had bought a building in Arcadia but it was condemned, they then moved somewhere else, but they ended up owning a building, then leasing a building. Was this all Public Works' drama?

Ms Mabija asked whether the police are doing an effective job in monitoring firearm licences, since many companies are using firearms with expired licences.

Ms Mngomezulu replied that they need Treasury approval to carry over any surpluses from a previous period. At the moment its cash flow has been retaining close to R10 million. On the Estimates of National Expenditure (ENE), they review expenditure on a monthly basis so that they do not see a huge backlog at the end of the financial year. They have introduced debt collectors to chase up security companies that are not paying their fees.

Ms Mofikoe explained that PSIRA does not give accreditation, they contract training providers and ensure there is a proper accreditation process. PSIRA is in the process of registering as a professional board. PSIRA has not been developing and professionalising the sector, so registering will enable it to actually do that by training people in their various positions.

Ms Kohler-Barnard was concerned about whether PSIRA can know for sure that security guards have been trained by acceptable service providers.

Ms Mngomezulu replied that she was referring to the training of the PSIRA staff. There are at least 900 registered companies per year who are licensed to possess firearms. If there are firearms that are not accounted for, PSIRA must assist in an audit to ensure that those firearms will be dealt with. On the training of firearms, this was done in the previous year and that is why it is not appearing in the strategic outcome KPIs for this particular year. Training is ongoing, and this ensures that their inspectors are brought up to speed.

Mr Chauke stated that they have requested the Minister to review the PSIR Act with the aim of ensuring that it is put into operation properly. The purpose of the review is to align the Act to what is happening currently in the industry. The current regulations make provision for fees to be paid. On the matter of its building: the head office is still on a lease, it expires in 2016. On the process of disposing of the building owned by PSIRA, they have ministerial approval. The outcome is to look at the possibility of constructing a new building and they are working with National Treasury on that process. The building in Arcadia is composed of three buildings, the main one has been condemned. The two houses that are currently being utilised are satellite offices.

Mr Beukman was concerned about leaving out of the strategic plan checklist: ensure good national governance. He added that there was R20 million in the account, how do they decide where that account goes.

Ms Molebatsi pointed out that this programme is their core business and they have removed the appointment of additional inspectors – how do they explain that? How do they explain the review of law enforcement policing and what is its intention.

Ms Kohler-Barnard asked if anyone has been charged with contravention of the PSIR Act since 2002. It seemed they just chose to ignore the PSIR Levies Act, and SAPS chose to ignore the DNA legislation and other legislation the Portfolio Committee had passed. As an entity which had its own legislation since 2002 they have actually chosen to ignore the Levies Act. And now PSIRA wants the Committee to review the whole Act again and bring it up to date, because PSIRA chose to ignore it. They have to explain what gave them the right to ignore the legislation passed by the National Assembly.

Ms Mabija asked when PSIRA makes strategic plan assessments if they find better usage for the money in the programmes. Do they find themselves making an effective impact on the ground?

Mr Beukman asked what their staff establishment looks like countrywide.

Mrs Mngomezulu stated that their reports tell them how far they are from their budget. She offered to provide the Committee with a quarterly report so they can see this. The account is with Nedbank; to open a bank account one has to write to Treasury and have Treasury approve this.

Mr Chauke noted that this was the same investment account that was investigated by the previous Portfolio Committee. With regards to the 2012 Amendment Act, the Act was an act of law but it has not been put into operation. It required a lengthy process to put the Act into action so they concentrated for now on the previous 2002 legislation.

Ms Mofikoe explained that additional inspectors were appointed, and one of the objectives was to increase human resources in terms of inspectors. With SAPS, there is a lot of non-compliance with the security officers, so they change their law enforcement strategy to include the inspection of security officers. They are coming up with initiatives to maximize their effectiveness in that area.

Mrs Mngomezulu stated that PSIRA is an approved establishment of 291 positions, with 217 positions filled. They are listing vacancies in various cities.

[Responses from Mr Chauke and Ms Mofikoe were inaudible].

Programme 3: Communications, Registration & Training
Deputy Director of Communications, Ms Mpho Mofikoe, presented the KPIs and targets (see document). The purpose of Programme 3 is to provide effective stakeholder engagement, to ensure that training standards are adhered to and the registration process is done in accordance with the PSIR Act. The sub-programmes are Communications and Stakeholder Management; Industry Registration (CRM); Industry Training; and Industry Research and Development.

Budget 2014/15
Deputy Director of Finance and Administration, Ms Portia Mngomezulu, presented the 2014/15 budget. The purpose of the ENE is to set out planned expenditure and performance at the time of tabling the budget. It is aligned to the National Development Plan 2030 and outlines PSIRA’s contribution to governments’ Outcome 12 and its key service delivery goals. Performance, personnel, and finances were discussed in each Programme, in respect of the impact they have on each Programme’s plans.

Discussion
Ms Molebatsi stated that in discussions on the 2012 Amendment Bill, they had discussed security uniforms and emblems. Have they started working on that? What is the budget for their vehicles and why is it not included in the Capital Expenditure Budget? Do they intend to procure additional vehicles?

Mr Mbhele asked for clarity on the performance indicator on awareness programmes and the content on that. In regards to the fingerprinting budget, he asked for a review of what that entails: is the fingerprinting system in sync and integrated with the other electronic databases of the criminal justice system?

Ms Kohler-Barnard stated that they do not give the number of active security officers in the country. How many private security companies are registered and operational in the country?

Mr Mthethwa stated that on the issue of wages, the wages are determined by the Minister of Labour and is sent to the industry. Creating awareness with the industry, they joined the Department of Labour where they want to make it clear to the industry that in fact the core mandate of wages is with the Department of Labour and they can only enforce the law so far. They have achieved effectiveness where the security officer knows where to go. In regards to fingerprints, they have their fingerprints verified by the central criminal records by the police.

Ms Mofikoe stated that they have over 1.8 million registered security officers, and they have 485,000 active security officers. They have over 25,000 registered businesses and over 18,000 active businesses registered.

Mr Bopela stated that there is a significant budget which unfortunately is not included in the budget. Their current inspectors are utilizing their vehicles to conduct inspections. In other areas they prosecute them. They are currently working to address inspectors.

Ms Kohler-Barnard asked about the issue of consultants and whether it has been resolved.

Mr Beukman asked for PSIRA to give the Committee a written report in the next two weeks, and thanked PSIRA for their presentation.