Department of Community Safety & Western Cape Liquor Authority Annual Report 2021/22, with Minister

Meeting report

The open public meeting was preceded by a closed meeting with the Auditor-General of South Africa (AGSA). The Chairperson remarked that the meeting was advertised in all three official languages of the Western Cape Province, i.e. Afrikaans, English, and Xhosa, to allow members of the public to interact and ask questions. The meeting would only be dealing with sections C and E of the Annual Report as the other sections had been covered in the earlier session. The Chairperson indicated that the reports of both the Department and the entity would be dealt with simultaneously.

Annual Report Overview
Minister Reagen Allen, noted, in jest, the commitment of the Committee to ask questions, even if it is done in the graveyard shift. He was pleased to announce that the Department received a clean audit. The alignment between the Department and the WCLA was important to reprioritise and focus on the safety needs of the province because organised crime was becoming more deeply entrenched.

Adv Yashina Pillay, HOD, Department of Community Safety, said the Department achieved its fourteenth consecutive clean audit. She welcomed the clean audit. The Department is focused on service delivery despite the clean audits. The underspent amount of R8.8 million was within the 2% acceptance norm of good financial governance.

Discussion: Section C
Mr A van der Westhuizen (DA) wanted an explanation for the regression in the fraud and loss cases, from zero at the beginning to three at the end of the financial year. He requested an age analysis of the three open fraud and loss cases as well as the two open investigations reported at the end of the financial year. He believed in a skilled public service and support training interventions. He requested an explanation for the huge differences in the number of attendees to the Provincial Forensic Services and the E-learning training programmes.

Ms N Nkondlo (ANC) voiced her scepticism about the location of the Liquor Board within the Department of Community Safety. This practice was unique to the Western Cape. The Minister explained the interface between liquor and crime but neglected the economic aspect of liquor as an enterprising industry. Placing the entity in this Department meant that the industry is being viewed from a law enforcement perspective. She wanted to understand how the Department was managing the needs and concerns of stakeholders of the entity considering that the team was not doing oversight in the economic space. She asked when the entity would be moved to the Economic Development Department. She asked for an explanation about the equitable distribution of work amongst Board Members considering the high level of re-imbursements paid to the Deputy Chairperson of the WCLA, Dr Gregory Grootboom, and Ms Crystal Abdoll not attending any meetings during the year under review.

Ms A Bans (ANC) stated that one of the key emerging risks was the possible suspension of the Law Enforcement Advancement Plan (LEAP) unit due to a lack of future funding commitment. She asked what the possibility was of the LEAP unit being discontinued and what the fate of the officers would be.

Adv Pillay replied that the three open fraud and loss cases were still under investigation. She explained that the Covid-19 lockdown periods had an impact on attendance at training programmes. Attendance at training programmes had since been made compulsory.

Minister Allen said the Western Cape prides itself in always being innovative. Locating the Liquor Authority within the Department of Community Safety was done in the public interest. He believed that liquor outlets can be sustainable if they are compliant and that non-compliance was affecting communities negatively. The re-alignment was done to focus on the link between alcohol abuse and the increase in crime. Compliance leads to safer spaces for communities. He explained that due to severe underfunding of the police, the Premier and Provincial Treasury had to reallocate funds from the Departments of Health and Education to the LEAP initiative.

Adv Pillay said extensive engagements were held with all government departments about the amendments to liquor legislation. Putting the amendments forward was a collective decision. The LEAP initiative had initially been reported as a strategic risk but had been removed from the risk profile after the re-allocation of funds by the Premier. However, no funds had been secured beyond the 2024/25 financial year. LEAP officers had been appointed on a contract basis and many have been absorbed into permanent positions within other Law Enforcement units.

Mr Ronald Kingwill, Chairperson, WCLA, explained that Dr Grootboom’s expenses were based on his physical location. He resides in George while all other Board Members were based locally. Ms Abdoll joined the Board on 2 March 2022 therefore she had not attended any meetings during the year under review which ended on 31 March 2022.

The Chairperson wanted to know from the Minister if the alignment of the Liquor Authority with the Department was not stifling growth of the industry. He sought clarity on whether the LEAP officers formed part of the R1 billion safety plan.

Ms Nkondlo asked the Department to provide evidence of the input of liquor traders operating in the informal space. The Liquor Traders Association issued a memorandum on the issues raised by liquor traders. She asked for scientific data as evidence of the correlation between non-compliance and crime. The lack of an economic strategy was one of the biggest challenges for the township environment. She asked if the Department had a sexual harassment policy in place and whether women were able to work in safety.

Mr van der Westhuizen was concerned that the Department felt the need to strengthen oversight over the Liquor Authority. He viewed it as a potentially conflicting situation. He was struck by the Enyobeni tragedy in the Eastern Cape and asked if the Department had the capacity to ensure the safety of people who visit taverns. The Liquor Board had the responsibility to prevent similar situations from taking place in the Western Cape. He wanted to know if the Liquor Board regarded its role as safeguarding the security visiting liquor outlets.

Mr Bosman noted the statement by the Department that it could have met 100% of the targets had National Treasury implemented the preferential procurement framework correctly. He asked the AG’s team to expand on whether the matter had an impact on other departments and entities not meeting targets.

Minister Allen made it clear that he did not regard the location of the Liquor Authority as being misplaced. He reiterated that communities are safer when there is compliance. In a recent engagement with the Liquor Board, it was found that only 116 of the 8 898 outlets did not get automatic renewal of their licences. 91% of the 116 outlets provided the relevant information to become compliant. The Department was viewing the matter from a safety and not policing perspective. Both the contribution of liquor to the GDP and the impact of alcohol in society must be weighed.

Adv Pillay said the proposed amendment was aimed at assisting the industry to thrive and to reduce harm to communities. The Department had a transversal sexual harassment policy in place. She advised that the Minister had a responsibility to the Liquor Authority and exercise his oversight duties in terms of the Memorandum of Cooperation. The Department missed one of the 45 indicators due to not being able to timely procure services from a service provider.

A WCLA representative stated that alcohol is defined as a substance that produces dependence and is the basis of social ills. Trading must be done in the public interest and the public interest is best served by compliant traders. Regulation could minimise the hours of work and propagate the economy versus safe space. The safety lens is a considerable lens in terms of the Constitution. The industry is resilient and elastic because it is always in demand. Online platforms were developed during the Covid-19 lockdown periods to facilitate the liquor business. On the Enyobeni tragedy, he said outlets exist because communities allow it. The Liquor Authority is entitled to close non-compliant outlets. The enterprises in the Western Cape where shootings incidents and gang-related killings occurred had been closed. Hearings are being conducted to ensure outlets have valid licences to conduct business.

Ms N Makamba-Botya (EFF) had connectivity problems and relayed her questions to the Chairperson who asked the following questions on her behalf: what informed the creation of area-based teams and why were only 16 teams created, what are the policing needs and priorities for the Western Cape, explain the difference between compliance-only and outcome-based oversight, explain the nature of the open cases and provide the reasons for closing cases during the year, and why had the uptake been so low for Forensic Services training.

Ms Nkondlo sought clarity on the extent of increased compliance operations and requested evidence of studies conducted to test the correlation between crime reduction and increased compliance operations.

Minister Allen replied that Provincial Executive determines policing needs and priorities. The Constitution provides for the National Minister of police to consider the policing needs and priorities (PNP) of provinces when it develops policing policies. The Department was doing its utmost to hold the South African Police Service (SAPS) accountable but to date no reply on the recommendations in the PNP report that was submitted, was forthcoming.

Adv Pillay explained that area-based teams are established in areas with the highest murder rates. Eleven area-based teams were operating in the City of Cape Town Metropole and five in District Municipalities. The fraud case was identified by the AG and referred for forensic investigation. A decision was made to not procure services from the two implicated companies.

The AGSA official said the interpretation of the Constitutional Court judgment had subsequently been corrected. The AG’s office was not aware of any department that dealt differently with the matter other than through the AG’s letters of communication.

Mr Bosman replied that he was not privy to the AG’s circular on the Constitutional Court judgment. He wanted to know if the Department would have achieved 100% of its target had it not been for National Treasury’s handling of the judgment.

The AGSA official said it would be difficult to determine if achieving targets would have been influenced by the decision because the factors may vary from department to department.

Discussion: Section E
Mr van der Westhuizen drew attention to the SUNBEL building that was placed under auction and stated that there was a problem with the lease of the building. He asked why fines had been highlighted as a cause for the loss in income. A significant percentage of fines had been outstanding for more than a year. He asked what the chances were of collecting the fines and how much had been written off.

Ms Nkondlo asked whether it was time to start auditing the service delivery aspect of the Department given the record of clean audits achieved. On the issues of staff overpayments, she asked what the nature of the payments were and what challenges resulted in the overpayments. She asked what caused the delay in filling vacancies and how did it impact service delivery. The notion to cut the fat on Compensation of Employee (COE) costs was promoted as a cost reduction mechanism. But the interface between departments during the Covid-19 period impacted heavily on the workload of the remaining staff. The situation posed a risk of continuing challenges considering the increasing demand for public services due to the increase in population growth and the migration to the Western Cape. She requested an explanation for the underspending and for making fewer funds available to municipalities.

Mr Bosman referred to the AG’s comment about the responsibility of departments to adjust targets. He asked how oversight should be adapted to make provision for National Treasury regulations that impact the procurement process. He wanted to know how the Department of Community Safety would be assessed should service delivery audits be conducted considering the Department has an oversight function.

Minister Allen said the 3,1% vacancy rate was within the acceptable bracket but he would only be satisfied if all vacancies are filled. He acknowledged the increasing demand for service delivery because the Department had traversed spaces that were not previously covered. He commended the dedicated officials who suspended their leave to attend the strategy session.

In response to the question about service delivery audits, Adv Pillay advised that performance information had been audited. Overpayments were made to two staff members in the Ministry as well as payments to Senior Management Service (SMS) members that were made in error. SMS overpayments had been recovered and the responses of the two Ministry officials are being considered. The misalignment of the financial period between the Department and municipalities resulted in the reporting of fewer funds available for municipalities.

The WCLA representative said the entity was currently housed in the problematic SUNBEL building, which until four months ago, had an absent landlord. The sale of the building delivered a new landlord who was fully on board. The entity would be able to complete the remaining part of the lease in the building.

Mr Sandiso Gcwabe, CFO, WCLA, said transgressors are allowed a period of between three and six months to pay a fine. The license of a non-compliant business is suspended and in collaboration with the SAPS, the business is then closed. A fine is recoverable as long as the license is valid.

The AGSA official said the office of the AG does have a performance audit team who brings a different flavour to the normal audit. The process involved engaging the department to get an understanding of the strategies. In addition, the team reviews the system design for effectiveness, efficiency, and associated costs and checks whether services are delivered timely. He proposed that the team be invited to do a presentation and to have a discussion about their work.

The Chairperson asked why no performance awards had been paid during the 2021/22 financial year. He asked for an explanation of the significant decrease in the LEAP budget from R417 million in 2020/21 to R165 million in the 2021/22 financial year.

Mr van der Westhuizen drew attention to SCM processes that were not followed to address the ‘damp’ problem in the SUNBEL building where the WCLA is being housed. He asked why the emergency procurement regulations were not followed to avoid further costs and why the expense was not condoned. He sought clarity on the amounts that appeared to be listed repetitively on the last page of the Department’s asset register. He asked for an explanation of the irregular expenditure as well as condoned expenditure.

Ms Nkondlo asked which areas were experiencing staff attrition and wanted to know how the issue is being managed. She asked to whom and why the administration of the Safety Ambassador Programme had been outsourced. She wanted to know how long the programme had been in existence and what impact it had in terms of the Department’s mandate. She sought an explanation for the circumstances that led to the accumulation of leave without pay and the reasons for the write-off that was approved by the State Attorney.

The Chairperson asked the following question on behalf of Ms Makamba-Botya; what are the reasons for the underspending under the Security Risk Management Programme and the underspending on transfers due to less funds paid to municipalities.

Minister Allen said a Cabinet decision was made to not pay performance bonuses as part of fiscal containment and considering the impact of Covid-19 on the fiscus. He attributed the reduction in the LEAP budget to initial expenses that were not required in the following year, e.g. the purchase of vehicles is not a recurring expense.

Adv Pillay said the City of Cape Town requested the rollover of amounts through a reduction in the budget. Training was postponed due to in-person training that could not occur during the lockdown periods. The administration of the Safety Ambassador Programme was outsourced because it became difficult to manage in-house. The State Attorney approved the write-off of leave without pay amounts due to the low prospects of recovering the money from staff who had left.

Mr Moegamat Frizlar, CFO, Department of Community Safety, said the Department decided to end the contract with the initial NGO that managed the payments of the Safety Ambassador Programme, because the AG raised concerns about the classification and the procurement process. Payments had been processed in-house for the past six months while the Department was engaging another NGO to take over the payment function.

Adv Pillay said the Department held the view that staff could be better used by offering services instead of processing the 1 600 payments of the Safety Ambassador Programme.

Mr Frizlar said the underspent amount of R8.8 million was within the 2% acceptance norm of good financial governance. The bulk of irregular Expenditure could be attributed to non-compliance to SCM prescripts in 14 incidents. Seven cases were under investigation while the remaining seven had been referred to Provincial Treasury for condonation.

Adv Pillay said the R25 million submitted for condonation included the extension of a security contract which she regarded as value for money. The contract did not involve fraud and corruption. She acknowledged that the interpretation of the matter as an irregular expense, was based on the incorrect interpretation of the 12 month and 15% variables. The matter had since been updated and a corrective system was put in place, i.e. pre-audit of batches are done before payments are made.

Minister Allen said when the matter played out in the media, the Department was clear that it did not involve corruption and fraud. The Department wanted to share their insights with the Committee and would welcome additional requests that would be forthcoming through the Procedural Officer. The Department valued the role of Parliament to hold government accountable.

Adv Pillay thanked the Minister for his leadership and assistance in responding to questions from Members. She was grateful for the questions and comments from Members. She thanked her team and staff of the Department who contributed to the report. She thanked the Liquor Board for the good working relationship.

The Chairperson of the Liquor Board said he enjoyed being held accountable.

An AGSA official thanked Members for the stimulating questions. She was looking forward to further engagements.

The Chairperson said accountability was a collective effort and each one must play a meaningful role in the accountability ecosystem. He thanked the Minister and HOD for being available to answer uncomfortable questions. The Committee was fulfilling its responsibility to hold the executive to account. He thanked the Liquor Board and the AGSA officials. The work of the Committee is made easier by reliable allies. He said in jest, that he was expecting something from the Liquor Board considering the meeting was taking place on a Friday afternoon.

Resolutions and actions
The Chairperson said the Department achieved clean audits but a number of issues had been raised.

Mr van der Westhuizen said the severe under collection of income and the severe under expenditure by the Liquor Board was of concern. The more than 20% variation is excessive considering a variance of 2% as per Treasury guidelines. The Committee needed to ask why the Department did not adjust the estimates during the adjustment process so that the final deviation is not as significant as reported. The Committee needed to be given more insight into the real reasons for the deviations other than what had been reported in the notes to the financial statements. The Committee needed to obtain the standard procedures and the debt collection process for payment of fines because the collection process appear to be open to personal interpretation. There should be a more objective basis for treating entrepreneurs.

Ms Nkondlo supported the proposal by Mr van der Westhuizen. She proposed that the issue about the location of the entity within the Department should be referred to the Standing Committee and the Economic Development Committee because it is not only a governance issue. She wanted an understanding of the engagements held because the public participation process had not yet started.

Mr Bosman said based on information shared in another meeting, the Department indicated that the Act was not yet ready for public participation. A request had been made for timelines in terms of the progress to date. The Department must be asked how much of the underspending and under collection was as a result of the year under review being a Covid-19 year.

The Chairperson said the Department must be asked about plans to address the risk of underfunding of the LEAP Programme beyond the 2024/25 period because the depletion of funding seemed to be a continuous problem. He thanked Members for their resilience on a Friday afternoon and the Procedural Officer for his dedication.

The meeting was adjourned.