Beitbridge border fence findings; with Minister, SIU, Treasury

Meeting report

Opening remarks
The Chairperson welcomed colleagues from the Portfolio Committee on Public Works and Infrastructure as the issue is a cross-cutting one. This was done to ensure that there is no duplication of activities and resources as part of effective and efficient oversight. SCOPA met with the DPWI in June on the Beitbridge border post fence. It had expressed concern about the procurement process and the fact that the fence does not appear to be fit for purpose, particularly as the costs for it seem to be astronomical in comparison to what is on the ground. At the last meeting it was established that R21 million had already been paid of R37 million. The Committee requested that further payments be frozen. At the last meeting it was requested that the AG conduct an investigation and the Committee would also hear from the AG today. It came to light that the SIU had also conducted an investigation. The Chairperson is advised that the Portfolio Committee on Public Works and Infrastructure has set in process a programme of oversight, which he suggested SCOPA look into as part of the collaboration. The Portfolio Committee Chairperson had been in touch with him and SCOPA would get these details in due course.

He proceeded to welcome the Minister and Deputy Minister of Public Works and Infrastructure, Ms Patricia De Lille and Ms Noxolo Kiviet. He asked the SIU to present, followed by National Treasury and then the AG. He asked that the members be mindful of time as there was a sitting this afternoon.

Special Investigating Unit (SIU) on Beitbridge fencing investigation findings
Adv Andy Mothibi, SIU Head, greeted the Committee and the Minister. He introduced his team as comprising Mr Leonard Lekgetho— the Chief National Investigation Officer— who was overseeing the investigation. Mr Johnny le Roux, Chief Forensic Investigator Officer—who was the project manager for this investigation. Dr Jerome Wells is the Chief Legal counsel. Since this matter is on its way to the Special Tribunal, he is attending to that end, so it can arrive before the Tribunal speedily.

DPWI brought the issues to SIU attention and requested assistance in investigating the irregularities at the Beitbridge border post. The Acting Director General (ADG) at the time contacted Adv Mothibi with the request to enter into a secondment agreement. Section 3(6) of the SIU Act permits SIU members to be seconded by an organ of state. The secondment agreement was entered into which kick-started the collaboration. He handed over to Mr Leonard Lekgetho to continue the presentation.

Background
Mr Leonard Lekgetho said that after the secondment agreement was concluded, the investigation commenced on 28 April 2020 after the Minister’s request for DPWI’s Anti-Corruption Unit to investigate the procurement process on 25 April 2020. The investigation was therefore collaboration between the SIU and the DPWI Anti-Corruption Unit.

Scope of the investigation
The SIU was to determine if DPWI followed a fair and transparent supply-chain management (SCM) process as prescribed by Section 217 of the Constitution during the appointment of the contractor and consultant. Additionally, it was to determine if a feasibility study was conducted for the service of erecting a 40km fence, whether there was value for money and if there was any criminality in the process

General Findings of the Investigation
The investigation revealed procurement irregularities perpetrated during the infrastructure delivery process, as well as possible acts of fraud.  The irregularities identified include:
* Irregular application of emergency procurement.
* Irregular appointment of the Contractor and the Principal Agent (PA).
* The effecting of an advance payment of R21, 8 million to the Contractor and R1.8million to the Principal Agent within days of their respective appointments. This was irregular as no material was delivered and construction had not commenced.
*The Department failed to test the market to determine the reasonableness of the contractor’s price.
*The procurement framework of bid specification, evaluation and adjudication was not properly followed.
* National Bid Adjudication Committee’ (NBAC) who adjudicated on the appointment of the PA and Contractor, failed to ensure that proper SCM processes were followed.
* The appointment of the Contractor was predetermined.
* The process failed to achieve the objectives of a competitive, transparent, reasonable and fair procurement process, making it irregular in terms of Section 217 of the Constitution as well as Treasury and departmental regulations on this.
* An assessment conducted by the Professional Review Team, of the items in the Bill of Quantities (BOQ), Drawings, and Specifications and the work ‘as built’ indicated that they were not aligned. The assessment also found that the fence is not in compliance with the Drawings and the Specifications.
*The Value for Money Assessment conducted by the PICC technical task team indicated significant anomalies. The total project cost, which includes both construction and engineering fees, for the contract was R40.4million.
* Although the contracted amount was ostensibly calculated at 2016 prices based on an earlier contract, the evaluation indicated that some items quoted were in fact not based on these 2016 prices. This includes site establishment costs exceeding R1 million, which should not have been charged, and excessive units rates for specific items. Using the 2016 contract rates – at which this project was contracted, the assessment found that the overall total project cost should have amounted to R26.1 million and was overpriced by R14.3 million. An assessment using market related prices for materials actually used on site and revised fees for engineering services provides for a total project cost of R23 388 023.97 - indicating that the project cost was exceeded by R17 047 891.01.
* No proper review of the BOQs was conducted by the DPWI, and this consequently resulted in the contract price being inflated. This also reflects the real risk to the DPWI of having failed to test the market. The 2020 market comparison also indicates that the 2016 rates were inflated at the time.
*Poor construction practices compromised the effectiveness of the fence as a deterrent for crossing the border with Zimbabwe. Final height of the fence reached 1.8 m, on making it easily scalable despite the originally intended height of 2.2 m per the design.
* SIU site visit on 4 and 5 May 2020 yielded the observation of 115 breaches of the fence.
* The construction of the fence is also in material breach of the conditions of the Provisional Site Clearance Certificate (PSCC) including breaches of Environmental Regulations, as well deviations from the approved line of construction.
* Given the non-compliance with aspects of the design specification and poor construction practices, the fence is not fit for purpose and current payments in this regard may already be regarded as fruitless and wasteful expenditure.

Recommendations
* Disciplinary charges have been recommended against 14 DPWI senior officials as a result of a wide range of alleged misconduct perpetrated mainly during the procurement and construction phases of the Beitbridge Border Fence Project.
* It is recommended that the DPWI should register a criminal case of fraud against the Principal Agent, Main Contractor and designated officials for misrepresenting to DPWI that project progress was achieved to justify a progress payment, when this was not the case, as well as for financial misconduct where appropriate.
* The Principal Agent and the Main Contractor must be restricted from doing business with government subject to the application of the relevant due process. 
* It is recommended that DPWI should report this material non-compliance with environmental laws and to consult with the Department of Environment, Forestry and Fisheries (DEFF) to correct this non-compliance.
* The Principal Agent failed to act in the interests of the Department and accordingly breached their fiduciary duties towards DPWI. It is therefore recommended that their conduct accordingly be referred to the Council for the Built Environment (CBE) and the Engineering Council of South Africa (ECSA) for further investigation. 
* DPWI must ensure that appropriate training is conducted and awareness is created that the systems of Governance that regulates the activities of the Department has not been suspended as a result of Covid-19 related emergencies.
* Supply Chain Management should use the appointed Service Provider to conduct Due Diligence on Tender Processes.
* Any further border fence initiatives should be located in the context of this programme in terms of an Integrated National Strategy, Best Practice and Border Management Master Plan, aligned to and noting the recently signed Border Management Authority Act of 2020.

Conclusion
DPW has already begun implementing the recommendations from the report.

SIU will be approaching the Special Tribunal to cancel the contract and to recover the losses suffered by the state.

The Chairperson thanked Mr Lekgetho and asked Adv Mothibi to continue.

Adv Mothibi referring to the last slide, said Dr Wells, the Chief Legal Officer, would speak to SIU approaching the Special Tribunal. SIU conducted the matter under secondment and not via a proclamation at that time. Now that the proclamation is in place, the SIU has to ensure that it had locus standi, that is, legal standing to begin litigating the matter. He asked Dr Wells to explain more about what the SIU has done, and what the timelines are for commencing litigation at the Special Tribunal. This litigation would be to ensure that the contract is cancelled and recoveries are made on behalf of the Department.

Dr Jerome Wells, SIU Chief Legal Officer, clarified that the SIU needed to obtain a legal opinion confirming the legality of the SIU litigating based on the evidence obtained whilst the SIU was on secondment. The opinion has been obtained and it is now confident that the SIU is acting both in its own name and on behalf of the Department to institute the necessary civil remedial action. Counsel has advised that there is a basis to set aside the contract as in her words, she called it ‘a nullity'. This means that the contract is void ab initio, based on the irregularities established during the investigation. The second leg is the ascertainment of the quantum as there has been to delivery to some extent. Since it has obtained the opinion, it now has the green light to proceed with litigation and counsel has requested a consultation with the team on the morning of 26 August. On timelines, he expected that its papers should be ready to be issued by the later part of next week.

The Chairperson asked National Treasury to present.

National Treasury on DPWI Emergency Procurement at Beitbridge border post
Mr Dondo Mogajane, Director General: National Treasury, said that a lot of the items in its presentation were investigated by SIU. Its presentation was informed by having done a desktop review of documentation received from DPWI. This is not independent work done on its own. It assessed the bid evaluation process and documentation from the Department which made the review possible. He introduced his team including Ms Estelle Setan, the Acting Chief Procurement Officer, and her colleague who essentially did the review. Treasury looked at the situation from a slightly different perspective. For these reasons, the presentation would be brief and the team would go through it quickly.

The Chairperson asked that the presentation not be done quickly as SCOPA wants to be thoroughly appaised of all of the material vantage points.

Ms Estelle Setan, Acting Chief Procurement Officer, said that National Treasury’s perspective is based on documents received and the bid review it conducted. On the background to the transaction, on 16 March the Minister of Public Works and Infrastructure issued a directive in terms of Section 27(2)(l) of the Disaster Management Act, No. 57 of 2002, for the emergency safeguarding of the South African border posts.

The directive was issued to have the emergency procurement procedure undertaken with immediate effect for erection and repairs of the border fences, with the priority being Beitbridge Border Post, together and in parallel with the other identified hotspots.

A directive was issued by the Minister of Public Works and Infrastructure that included the following conditions:
–The project team to conduct a site visit with the contractor by latest 18 March 2020 to undertake due diligence, secure the brief and personnel needs, determine the provisional costs and identify the emergency construction timeline.
–The appointment of a contractor to commence work by latest 20 March 2020.
–That CFO: DPWI shall be advised as to the costs in order to secure the provisions for this emergency variation order. The CFO shall put emergency mechanisms in place for payment of the contractor for work undertaken on a weekly basis.
–The DDG: Construction Management shall identify competent site managers (1 per hotspot) that will be on site permanently during the rollout of the emergency construction. One project manager would be identified to be responsible for the oversight of the entire project and accountable for the delivery in terms of the expedited timeline
–A delivery progress report shall be provided to the Minister of Public Works and Infrastructure together with the Minister of Defence on a weekly basis.

Matters of Concern
The Minister’s directive’s contained conditions that concerned Treasury - ‘DPWI shall be advised as to the costs in order to secure the provisions for this emergency variation order. The CFO shall put emergency mechanisms in place for payment of the contractor for work undertaken on a weekly basis,’ are concerning for Treasury.

Appointment of Service Providers
DPWI’s NBAC approved both bids as follows:
On 18 March 2020 the NBAC approved the appointment of Caledon River Properties CC t/a Magwa Construction in the amount of R37 million to provide contractor services.

On the 19th March 2020 the NBAC approved the appointment of Profteam CC in the amount of R3.2 million to provide professional consultant services.

Findings
It is not clear whether DPWI has a current contract in place.

The service is for continuous maintenance of the border post. The fact that it is a continuous post and not a once-off post calls into question the urgency and the emergency nature of the service.

The fact that Magwa Construction was appointed for what seemed to be a continuous period makes the transaction disputable.

Magwa submitted its proposal prior to the appointment of the original team.

There is no evidence to indicate the NBAC decision to appoint both bidders was based on justifiable and reasonable grounds, taking into consideration that the scope of work was determined at the site inspection.

Documentation provided by DPWI indicated that both Magwa and Profteam were approached with the intention to issue the variation order after receiving the request from the Minister.

The correspondence from the Minister referred to the variation order but did not provide the description of the order or details of the contractor but it would seem the Minister had a contract, supplier or contractor in mind.

If the contractor and consultant were approached after the ministerial directive it also poses the question of the purpose of inviting the other consultants and contracts to the site inspection.

The invoices paid to Magwa do not make provision for the items on the bill of quantities. The grounds on which the completion certificates were signed off is also not known.

DPWI indicated that the final payment could not be made due to the investigation process. The department failed to indicate when the instruction for non-payment was received. The date of instruction will also have bearing on the payment of the R21m. It is also not clear what the scope of work was for the outstanding amount and if it relates to the fencing

In terms of the separation of powers, the Executive authority should not interfere with administrative functions.

Despite saying that there is no clear indication as to the start date of the contract, the minutes of 19 March 2020 stated that the contract commencement date is 18March 2020. This means that the contract took effect at the site inspection meeting prior to the appointments being approved by the NBAC. This means that the transaction may be deemed to be irregular.

Recommendations
Investigation of the fencing and its procurement. However, this recommendation is superfluous after the SIU recommendations.

Discussion
The Chairperson noted that the Auditor General had informed him that AGSA had not yet concluded its report so it would not be presenting.

Mr M Dirks (ANC) commended the work of Adv Mothibi and the SIU in fighting the scourge of corruption. He emphasised his concern about the Ministerial directive referring to the DDG. At the time the directive was made, there was a DG in the Department; however the directive was prescriptive using the term ‘the DDG shall'. Directives ought to go to the head of the Department, who is the DG. It is not for a Minister to direct the administration. Today, Adv Mothibi said that politicians and Ministers must be held accountable for wrong doing. He asked Adv Mothibi if the SIU has looked into the directive. He asked the Minister, since she asked for weekly reports, what did she do about everything going wrong? The Committee cannot stop at holding Department officials to account. Minister De Lille must also be held accountable for issuing the directive and for her lack of action.

The Chairperson said that the Minister was present and would respond and asked the SIU to note the pointed question.

Ms V Mente-Nqweniso (EFF) said she was not convinced that Treasury did everything it was supposed to do. Could Treasury not have asked the Minister if there was a variation instruction? It seems as if the bid proposal was done by the company itself and the prescripts came from the company itself. This is very problematic, but it may not be conclusive. She asked for clarity from Treasury if the company proposed its own quantities and gave DPWI its prescripts, which DPWI accepted without DPWI outlining its own proposal in terms of quantities. She asked that Treasury provide a conclusive report on what was wrong between the company and DPWI pertaining to breaching Treasury regulations and the PFMA. In June, SCOPA had a meeting with DPWI where it specifically asked who was responsible to sign off for due diligence. In that document, DPWI should have known the specifics as to the fitness of the company, the specifics required, the quality of service expected, the time frame for expected delivery. Who approved that Magwa Construction was fit for the job? Whoever approved this must be held to account. The one who must account is the person or a team who convinced the Department that Magwa Construction met all those requirements. She asked who signed off the R21.8 million advance for something not there or was not what was required since the fence was1.8m in height, when it was meant to be 2.2m.

On the over-inflated pricing, DPWI made a comparison of 2016 prices, regardless that the 2016 prices were inflated. She asked if the Minister went back to look at who of the 14 people was responsible for the over-inflated prices of 2016 on which the Minister based her pricing. How many criminal processes have been started against the 14 officials and against the company and had the Minister begun the process of cancelling the contract?

Ms S Graham-Mare (DA) commended National Treasury's reliance on the ministerial directive. The directive is very clear and Treasury's slide errs on one point in saying that the Minister says that they ought to appoint ‘a contractor,’ when in fact the Minister’s directive stipulates ‘the contractor'. She had asked on several occasions about the Minister’s involvement in the procurement of the fence, particularly as her advisory staff were present in all the discussions on the appointment of the contractor and the site inspections. She welcomed the fact that National Treasury has identified the directive as the starting point of this whole process. She asked who requested the SIU to investigate because she had a letter from the DG in which he complains to Adv Mothibi about the intervention of the SIU in the Department. According to the letter, the accounting officer and the Minister were not aware that SIU workers were seconded to undertake work at DPWI nor that SIU was assigned to investigate the Beitbridge border fence maintenance project. She quoted directly from the letter reading: ‘In light of this anomaly, we therefore distance ourselves from any report which may have been submitted to the official of DPWI as mentioned above'. She would like to know what has been done to address this issue. At the end of Treasury’s presentation, Ms Setan said she felt that her report was superfluous. However, she disagreed as the report shows that there was ministerial interference in the procurement around this project.

Mr B Holomisa (UDM) said that on 23 August 2020, President Ramaphosa said that his party, the ANC, does not stand alone in the dock, but it does stand as accused number one. Perhaps he was concurring with his former colleague, Nomvula Mokonyane, who told the Zondo Commission that Bosasa was supporting and working with the ANC. Given these admissions, should SCOPA not consider endorsing an action where the SIU investigates, not only corrupt individuals and tenderpreneurs, but that it also follows the breadcrumb trail to establish if any illicit action has taken place in the executive. This is not the first time these kinds of ministerial directives have been seen and they have messed up the administration.

Mr B Hadebe (ANC) said that it did not take a rocket scientist to show that the tender was pre-determined—this was evident when DPWI presented at the previous meeting. Given the issue of ensuring equity and the issue of competitiveness, he asked DPWI in the previous meeting if it felt that it had done everything in line of procedural fairness and if what they did was rational. Their answer was yes, and they did not hesitate to say that they thought that they had done everything according to procedural fairness.

He had also asked the Minister and officials if the country received value for money given the quality of the fence and the amount of money spent. The fence was meant to be 2.2m and SCOPA is now told that it ended up being 1.8m in height. The report indicated there were site visits both from the officials and the project management on a daily basis. The question is whether they were really inspecting on a daily basis and compiling a report for the Minister on a weekly basis since they could not ascertain that a fence intended to be 2.2m was only 1.8m. He asked if all the officials involved are still within DPWI and if they are still responsible for procurement and bid evaluation. If so, they ought to be suspended with immediate effect. The fence does not qualify to stop chickens from crossing over from Zimbabwe and yet at the previous meeting SCOPA was told it was value for money.

Officials coming before SCOPA and contradicting themselves and treating the Committee  as if it does not understand its work when it presents evidence to officials, must come to an end. He moved for suspension, insisting that it would be unfair to the public for the officials involved not to be suspended immediately until all disciplinary processes are concluded.  He asked if SIU found that a feasibility study was conducted by DPWI. It was very strange that DPWI would ask SIU to conduct a feasibility study that it should have conducted itself. DPWI should not have outsourced the inquiry into whether a feasibility study was conducted. As the responsible Department, it should know if one was conducted or not.

Ms T Marawu (ATM) said as clear as the report is, SIU is silent about the intervention of the Minister. The National Treasury report has no clear recommendations about the intervention of the Minister and the contractors of 2016. She asked the Minister what interest she has in intervening in the administrative sphere and if she is not aware of the separation of powers doctrine.

Mr R Lees (DA) said he appreciated the enthusiasm with which Adv Mothibi keeps returning to the Committee. He asked what the chances of recovery are and if the Asset Forfeiture Unit has started taking over assets. Of 14 senior officials recommended to be charged by SIU, who they are and is Melissa Whitehead is one of those officials?  

To the Minister, it is clear that the contract was delinquent right from the beginning. It seems that there is sufficient evidence that her involvement was deep seated. The contract has cost the country a lot of money and even more so, the objective of protecting the country from the COVID-19 virus was certainly not met, since 115 breaches were reported in a very short space of time. It is clear that there has been a delinquency in both action and non-action not only on the part of the officials, but also by the Minister. He asked the Minister if she would resign and take responsibility for her part in the delinquency.

Ms B Swarts (ANC) expressed disappointment that everything presented indicates that the Minister’s staff was involved in the site inspection. Mr Solomons led the delegation and she asked if Ms Melissa Whitehead would remain on the Minister’s staff or if she would be held accountable. In the last presentation, DPWI showed photos from 2017, and not from 2016, which were specifically requested at the previous meeting. DPWI needs to give a report clearly detailing its involvement step-by-step.

Ms K Mkhonto (EFF) noted that SIU said it would speak to investigations, outcomes and actions. She did not hear anything about actions. It is not clear what has already been done, specifically to the individuals at whom the maladministration and financial mismanagement allegations are directed. She was unable to discern the role played by the DG as the accounting officer and if he is part of the 14 officials. She expressed her puzzlement since there was a lot of outsourcing and asked if DPWI is without officials to do this kind of work. A lot of money and work was outsourced instead of using the human resources available to DPWI. In future, she asked that there be a focus on the individuals behind companies which are blacklisted as they can simply go and register a new company and do business with the state.

Minister’s response
Minister Patricia De Lille stated that she wants to be held accountable and that she would never run away from accountability.  She expressed respect for the public of South Africa and said that she would work even harder. However, she reminded SCOPA members of the history of DPWI. Members would be aware she arrived in DPWI a year ago. She had introduced a number of systems such as consequence and contract management and due diligence. As the Members say, the buck stops with her, she must be held accountable, but only in terms of certain provisions of the Act – section 38 of the Public Finance Management Act read together with section 64, dealing with Executive Authority. The two sections must be read together along with section 85 of the Constitution. Section 85 of the Constitution deals with Executive Authority of the Republic. Section 85(2)(c) says that the President holds executive authority together with cabinet members for ‘co-ordinating the functions of state departments and administrations'.

On 15 March, the State of Emergency was declared. Borders were closed and it was brought to DPWIs attention that about 40m of the border fence between South Africa and Zimbabwe needed attending to. On the 15th a meeting was held with the DG and the DDG of Construction Management, which identified the 40m of the 700m fence at Beitbridge.

She said that if there is any evidence that she has personally benefited from the contract, then she should be held accountable. Her responsibility is to report any wrongdoing of the DG and she would continue to do so as it is her responsibility. In terms of officials within DPWI, the DG as accounting officer would take charge of the disciplinary process. She became concerned about Beitbridge not only from some reports from the public, but also some reports which she had received. She immediately contacted the Office of the Auditor General on the 20 April and asked them to do an independent audit. On 25 April, she also instructed the DPWI Anti-Corruption Unit to investigate. The Unit was assisted by SIU, who seconded two of its officials. She thanked Adv Mothibi for seconding the two officials. She also brought in the Presidential Infrastructure Coordinating Commission (PICC) to assist with the technical parts of the investigation. Additionally, she took the step of instructing that no further payments be made to the company from DPWI. Today she is happy to report to Parliament because she believes in transparency and openness and that the executive should be held to account as the public is owed this. It is because she wants to be held to account that she initiated these investigative processes. Now that the President issued a proclamation on 23 July, the SIU will continue to investigate the Beitbridge issue, DPWI awaits the results of that investigation. She asked the ADG to deal with the technical aspects of the investigation later on as she had attempted to give a summary.

The Chairperson said the ADG would get a chance to speak after further responses.

SIU response
Adv Mothibi said that the SIU often has to look at new information even if it appears at the tail-end of the investigation. From the presentation it appears that there may be possible evidence indicating irregularities on the proclamation and s64, which permits executive to intervene in cases which have financial implications, however it would look further into this

He confirmed that he was aware of the letter sent by the DPWI DG and said he was surprised that that kind of letter would be written to the SIU. The SIU has had dealings under various proclamations with the DG [Sam Vukela] and the Acting DG [Imtiaz Fazel, previously DDG for Governance, Risk and Compliance]. The DDG for Governance, Risk and Compliance has traditionally been the nodal or contact person authorised by DPWI to deal with SIU. Over the years, based on that authority, SIU has dealt with the DDG and it was in this context that he was duly authorised to approach the SIU to conclude the secondment agreement.

Adv Mothibi had responded to the DG and his email response could be provided to the Committee. His response said that until now, the DDG had been the nodal point of authority, to which the DG acceded. At no point did the DG ever indicate to the SIU that there was now a different point of contact or that the authority given to the DDG had been withdrawn and that from now on, the SIU should deal directly with the DG. In the DG's response, he acceded to the fact that from now on, the SIU is to deal with the DG directly. The SIU has no problem with this; the context for that letter indicates that he would have withdrawn authority from the DDG.

To Mr Dirks, he said the SIU would definitely look at the administrative arrangements, in particular, the directive. During the investigation, the SIU conducted interviews with the Special Advisor to the Minister and others. Should there be any evidence that comes up, the SIU would investigate further. DPWI is in the best position to release the 14 names in the report. As the investigation was done under secondment to DPWI, it is DPWI’s report, unlike when investigation is done under proclamation where it is the President’s report.

To Mr Lees, in the civil litigation process, it ensures it has the potential to recover money as it does not want to create a hollow judgement. Where there is no cash flow they look to assets. There were some findings against the Special Advisor to the Minister, DG, Director of Special Projects, Acting Chief Financial Officer, Acting Head of SCM and NBAC members.

National Treasury’s response
Mr Mogajane replied that the Treasury report was only superfluous insofar as it recommended that an investigation needs to be conducted; however, it otherwise remains relevant. It is unable, in terms of its mandate, to investigate as deeply as the SIU is able to investigate. The 2016 bills of quantities were used and these were performed by professional technical service providers. The same providers were used in 2020. If the bill of quantities was done professionally and the same people were appointed, there may be a conflict of interest. This requires deeper investigation, which can be done in two ways. If the discussion suggests an in-depth investigation, and if DPWI does not have the capacity to investigate as it has picked up before in other reports Treasury has conducted, then the Office of the Accountant General (OAG) comes in with specialised audit service and conducts a detailed forensic investigation. When the work is complete, it can then be entrusted to other relevant authorities within the state. The reason SIU is in the room is by proclamation of the President. In this way, it the makes sense for the SIU to get into all of the details which Treasury has mentioned, if it has not already done so. This is why he believed Adv Mothibi said it is necessary for Treasury to engage with SIU on specific matters on specific matters which require further attention, or if there was any act of wrongdoing where provisions or instructions in the practice notes were not followed. In that case it can be determined if expenditure was fruitless and wasteful or irregular. In this case, consequence management actions must be taken. If the AG was on the call, the AG would have determined whether the expenditure was fruitless, wasteful or irregular.

For the purpose of its review report and presentation, the intention was not to do everything as it was not seen as critical at this point. It only lifted obvious issues and recommended further in-depth investigation. If instructed to do a further investigation, it would do so, however, it would not want to duplicate efforts already being made by the SIU. He asked Ms Setan if she would like to add anything.

Ms Setan said the DG had sufficiently covered the responses, and clarified it was only the recommendation to investigate which was superfluous as SIU had already begun to do so. On Ms Mente-Nqweniso’s comments, Treasury would have to go back and for the sake of completeness, look at the questions raised and adjust its reports accordingly.

The Chairperson noted that Adv Mothibi mentioned the SIU had made a finding against a number of people and asked if a finding was made against the Minister.

Adv Mothibi replied that no finding was made against the Minister in the report handed over.

The Chairperson said that he would flag that. Treasury had found something against the Minister and he asked them to speak further to this.

Ms Setan replied that, as Ms Graham-Mare said, the fact that the directive refers to ‘the contractor’ and not ‘a contractor’ leads Treasury to believe that there was already a contractor that the Minister was referring to. It could not gather information to see if she was referring to either Magwa or Profteam as the service provider. The other issue was the Minister’s segregation of duties – where she is not supposed to interfere with administrative functions as it impedes the separation of powers.

The Chairperson asked whether or not Treasury felt the Minister’s directive should have prompted it to investigate. This is the basis on which the entire transaction has happened. To make an assumption that it was not able to establish if Magwa or Profteam was the service provider referenced means that Treasury has dropped the ball on that. If the directive has not been looked into, then Treasury is not speaking authoritatively. Glossing over the directive is a shortcoming on the part of Treasury.

Mr Mogajane agreed that the directive is an issue which it needs to address. The speed of the process flouted the underlying processes which needed to take place. Issues have been lifted. As to whether it has dropped the ball, no-one requested Treasury to do this. In the public interest, they took it upon themselves to do the desktop inquiry.

The Chairperson intervened to say that the last comment was substantively immaterial as the Treasury was meant to investigate following the 12 June meeting. Well done for being proactive, however, it is common cause that the reason the meeting was called for was to give a directive for an investigation to be done. To issue a directive when the work had already been done would have been futile had SCOPA already received one. It is immaterial who gave the directive to investigate.  The substantive issue is whether in dealing with the issue, Treasury satisfied the process and the concern. When Treasury was uncertain whether there was a contract or not, what did it do about it? This is what he is not satisfied with. Although their proactiveness was good, it should have also been substantive as the nub of the issue is the directive. All the members have raised the directive and Treasury itself has raised the uncertainty of the directive.

Mr Dirks felt that the Minister was missing the point. The contention is that the directive was prescriptive as she is meant to give the directive to the DG, and is not able to instruct the administration. No one is saying that she benefited personally. However, they need further investigation into the directive. He was concerned the Minister was getting daily reports and yet a lot of money was lost. Mr Holomisa raised that Ministers should not be involved in administrative processes and the investigative directorate should look into this

Ms Swarts said that no one said that the Minister benefited. She simply wanted to say that the Minister cannot consistently remind the Committee of the Act and her powers at each and every meeting. She asked for a report on all the meetings which the Minister and her staff attended. She keeps asking for the dates they met on the matter. If the Minister found that all the meetings were led by her staff members in the form of Rogers and Whitehead, then SCOPA needs to be told so. If SIU and Treasury feel that there is a hint of interference, they ought to tell SCOPA what it is. She took issue that the Minister evaded the questions and that she tends to rely on what she is empowered to do. All the Committee wanted to know relates to what was presented before and how it relates to what is being presented now. There are cracks, requiring both SIU and Treasury to go back and do more work.

Mr Hadebe asked when the report arrived at DPWI. When the Minister responded that DPWI will deal with the officials, he asked if the officials are still within DPWI or if it found it fit to suspend these officials as it did with its DG. These are the same officials who said with a straight face that the state received value for money. These officials showed absolutely no remorse and may be busy concluding further tenders. He said the report should have been released by yesterday.

The Chairperson said these substantive questions should be answered by the DG.

Mr Lees noted Mr Mogajane’s desire not to duplicate the work of the SIU forensic investigation. This is a valid point but he asked for assurance that nothing would then fall through the cracks. He asked Adv Mothibi if SIU would conduct such a forensic investigation or whether SCOPA needed to recommend that Treasury, through the OAG, needs to undertake such an investigation. The point about the report belonging to DPWI is a problematic one, although he understands where Adv Mothibi is coming from. As SCOPA, there has been a history of reports requested of other entities, not the SIU, which were not submitted. For example, Minister Gordhan has not responded to questions sent in May. He asked that the DPWI/SIU report be sent within a week. He said that in his opinion and as expressed by others, the Minister has not responded adequately to the questions, specifically to his question as to whether she would resign.

Ms Mente-Nqweniso said it was problematic that the Minister said she only accounts for the DG and not officials below the DG. As Minister, she should have a special interest in finding out who the 14 officials are and have asked the DG what he has done to remove or suspend them. The Minister's reputation is on the line. The Department belongs to you. She should know what the DG has done to deal with the 14 officials. Secondly, SIU does not have an obligation to release the report because it is not a proclamation. The Minister blew the whistle herself. The Chief Procurement Officer was meant to read between the lines to see that the fence was not able to keep even a chicken from crossing, therefore Treasury was meant to look deeper and compare pricing. It is Treasury’s responsibility to provide prescripts on pricing. It ought to drill down, even before the AG, who will take forever as it will audit only what is placed before it. It needs to investigate thoroughly so that these people do not run away.

Ms Marawu registered her disappointment with the Minister’s responses by defending the position taken to appoint certain officials. There is nowhere in the Act where one can find that the executive can interfere with administrative functions. Her adviser needs to come closer to her otherwise she would be compromised. The only role she needed to play is to ensure that the budget was spent effectively. She asked the SIU to suggest timeframes to deal with this matter.

Ms Graham-Mare said that this matter has come to the Portfolio Committee on a number of occasions. Responses to questions posed in person or in writing were provided months after they were posed. The responses given on the appointment of the contractor related to the fact that the contractor was already doing work at Beitbridge, which relates to the Minister’s directive referring to ‘the contractor'. The SIU report references that the technical report and investigation was done by the PICC. The Committee has had no sight of this report, no sight of the terms of reference of the intervention and has no knowledge of how it was appointed, who was on the task team and what the outcomes were. The Minister's reply to a written question she had sent to the Minister was that fence had been designed by an engineer and was built using off the shelf products, therefore, no additional engineering was needed and had been built in terms of the specifications of the products used. According to the written reply, the fence was up to specifications and she was still waiting for the final sign off reports from the engineers. This would have been the task of Profteam, who would have had to sign off. This needs to be looked into as the role it was meant to play, it clearly did not. The Committee knows that the fence in no way, shape or form adhered to specifications.

Minister’s response
On the claim that the Minister does not answer questions, she welcomed any further investigation by the SIU and investigative directorate and she would give her full cooperation as they need to work together to enhance democracy and do their work. To Mr Hadebe, everyone is guided by the law. The role and responsibility of the Minister is to act when it comes to the DG only. When it comes to action against people below the DG, that is the role of the DG. Before she is accused of interfering again, she asked the ADG to give a full report on how far DPWI is in implementing the SIU recommendations. The report must be given to the Committee, the only issue being…

Mr Hadebe interjected to raise point of order and said that the question was clear and that the Minister is not responding substantively to the question for a second occasion. The Committee understands that it becomes the DG's role to discipline, but the same DG reports to the Minister and he asked the Minister if she has requested information from the DG about the 14 identified officials.

The Minister said she has seen the report, but since the ADG is present, she asked that he speak.

Ms Mente-Nqweniso said the Minister was speaking to the release of the report, and she asked for the Minister to respond.

The Minister replied that the Committee members are entitled to the report and it should not be withheld from them. DPWI is, however, in the process of testing the allegations and she would share the legal opinion which it has received about the report. This can be sent to the SCOPA Chairperson.

The Chairperson noted this and asked the ADG for his response.

DPWI Acting Director General response
Mr Imtiaz Fazel, DPWI ADG, said he would speak about the current status of the implementation of the investigation recommendations. Before that, he noted the technical questions raised to do with the procurement process and the border fence.

Mr Fazel replied about the bid proposal by the company and whether or not the company wrote its own specifications and bill of quantities, which DPWI subsequently signed off. On Tuesday 17 March 2020, DPWI and stakeholders undertook a site visit as explained earlier. On the same day, the company to be named as the professional consultants,  Profteam, developed a draft bill of quantities using the pricing in the 2016 contract at the Beitbridge border post. It submitted this to DPWI for consideration, who gave it to Magwa Construction. Magwa Construction then looked at it and made some adjustments to the bill of quantities and sent it back to DPWI. The Department then adopted it as the final bill of quantities amounting to R37 million.

What is important to point out is that Profteam developed the bill of quantities on Tuesday 17 March; however, this was before it was appointed on Thursday 19 March as the professional consultants. Treasury pointed out that another peculiarity is that Magwa Construction was appointed before the consultants. This is against the normal sequence of events. The consultants are normally appointed first to develop the bill of quantities. On this basis a proposal is requested from construction companies, who are then appointed. Here there was an inversion of events.

On the circumstances around who signed off on these things, Mr Fazel replied that on Wednesday 18 March, Magwa was appointed by DPWI. The NBAC then appointed the company and again approved the appointment but no tender documents were actually served between the bid committee and the company. It was merely a request to make an appointment of the company as a convenient way to deal with the emergency.

The signing of the advance payment was made within days of the award of the contract, before any material was delivered on site. The principal agent, Profteam, prepared what they called progress payment number one and this demonstrated that progress was achieved, implying that material was delivered on site. However, since no material was actually delivered on site, it was a misrepresentation. This is the basis for the case being taken up with the police. This relates to the fraud charges. No feasibility study was conducted for this border project. This is probably why the project was conducted so haphazardly.

The Chairperson intervened to ask if what he is raising is covered in the SIU report.

Mr Fazel replied that if he is able to answer to the report, then there is no reason why the Committee cannot access the report.

On the 14 officials, the ADG replied that no one has been suspended as DPWI is giving all of the officials a chance to answer to the allegations.

Ms Swart interjected saying SCOPA should be given the report so it can follow better.

The Chairperson agreed saying that SCOPA would read the report itself as it cannot follow what is being said. It will read the report and take it from there. On the specific names whom the SIU made findings against, it is safe to assume that no one has been suspended and that all the people mentioned in the SIU findings are still at work. SCOPA juxtaposed this against what Mr Hadebe said about suspension in other departments. He asked the ADG to note what Members said about how such officials have been dealt with in other departments.

The ADG spoke to the current status of the SIU recommendations. The disciplinary charges are currently being processed by the DDG for Corporate Services under the auspices of the legal chief directorate.

On the civil and criminal charges, the matter was referred to the SIU on 27 July. The criminal charges are very closely linked to the work of the SIU. Criminal charges relate to the misrepresentation to pay out 60% of the contract price within four days of the commencement of work on site. The SIU is going to assist in determining whether beyond the principal agent who made the misrepresentation, there were also DPWI staff members who were responsible for signing off the paperwork and thus culpable. The SIU is assisting in identifying those who may be culpable in making this misrepresentation. These SIU processes are currently taking place.

Further questions
Ms Mente-Nqweniso said that the ADG is playing shop steward. He is an employer, if he is saying he is going to follow the SIU recommendations on criminal action, why is he not doing the same where disciplinary action is required. It is the unions who need to ask for a chance to counter the allegations. It is his job as the employer to suspend the officials for breaching procurement law.

The Chairperson said that he is going to ask the ADG to stop there as he is referring to a report which SCOPA does not have before it.

Ms Swarts asked that the ADG should amend his response to include mention of who the technical heads are. The names of the technical heads should be given.

Mr Hadebe said he was very disappointed by the response of the ADG. The responsibility of irregular expenditure is on him. The DG was suspended, and the very same officials who have the potential to cause fraud are still in charge of bid adjudication committees. He asked how much more fraud would DPWI like them to commit before suspending them. Suspending an individual does not mean that that they will not have an opportunity to make representations about the allegations. It appears that some animals are more equal than others. He insisted on knowing why suspend the DG and not suspend the others with similar cases of irregular expenditure and the possibility of fraud.

The Chairperson said that it would await the report, look at it and look at the process which DPWI is following. Parallel to this, he asked DPWI to provide SCOPA with a schedule of transactions which the implicated officials have been involved in to date, since they are not suspended.

SIU response
Adv Mothibi reiterated that SIU investigated as part of the secondment agreement with DPWI and at the end of it, the report becomes the report of DPWI. He welcomed further enquiries to DPWI should the Committee need it. He guaranteed that the forensic investigation would be conducted comprehensively.

National Treasury response
Mr Mogajane said that Treasury relied on the manner in which it has engaged with SCOPA in the past. He gave the examples of the Tegeta contract, the IEC headquarters and the Vrede dairy farm – all of these instances began with a review and then based on preliminary results, a forensic process was undertaken, after which the reports would be made available. For a matter like this, he agreed that Treasury should have gone into detail from the beginning as Ms Mente-Nqweniso said and, if it was not getting documents or information, it should have insisted on them. For now, its draft review report will be made available to the SIU. DPWI should make itself available to assist in every way, whether from a systems point of view, or making payment histories available.

The Chairperson said that this was one of the first COVID-related findings dealt with, which is why detail was needed. What SCOPA is hearing Treasury saying is that it is not receiving the bid adjudication documents – as these were not given by DPWI.

Mr Mogajane replied that he was only using those instances as an example. Treasury details what it received and did not receive in the 13-page document.

The Chairperson said that the role of the Minister needs to be thoroughly investigated so that it comes to a logical conclusion. He asked National Treasury to clarify the directive. SCOPA expects the Treasury DG to look into the directive and the role Minister and the Minister has said she will cooperate, particularly as Treasury raised it in its own report. As a comparison he gave the example of the Department of Water Affairs, where a large number of contracts and interventions were carried out on the basis of ministerial directives – inasmuch as it was provided for in law, it caused problems. Members have seen something like this before, where the nub of the issue is a ministerial directive; therefore it needs to be clarified. SCOPA is expecting the Treasury DG to do this particularly as Treasury raised it in its own presentation and as the Minister has indicated that she is willing to cooperate. SCOPA wants a report to this effect which it will consider.

On the SIU report, due process needs to be observed. The body responsible for handing over the report is DPWI. He then asked the Minister that report be given to SCOPA by 28 August so that Members can look at it in preparation for the joint oversight visit to Beitbridge next week with the Portfolio Committee on Public Works and Infrastructure.

The Chairperson noted his dissatisfaction that the Auditor General was asked to investigate this matter on 20 April 2020 and yet, to date, it has not been completed. This slow pace of work is not acceptable. This is because it sets the tone that the confidence which government is trying to build of law enforcement agencies and other entities moving with the necessary speed, will not happen. This not to take away from the speed in which the SIU acted.

To the SIU, the previous meeting was about pleasantries, however the next meeting would be about results as there is a zero appetite for corruption or a failure to move with speed amongst SCOPA members. On this note, it expects DPWI to set into motion disciplinary processes that inspire confidence that things are being done correctly. DPWI will be gauged against this. The Public Works Portfolio Committee has an oversight visit  schedule, which SCOPA would join to avoid duplication of efforts. This will be taking place this weekend to indicate this Committee's commitment.

He thanked the Minister and Deputy Minister, the SIU and the officials present.

Mr Hadebe asked when the oversight visit takes place.

The Chairperson said that it is next weekend; however it is something which the Committee would discuss on the group WhatsApp as it officially landed on his desk today. He thinks the Committee is handling the matter properly by focussing on due process. He closed by giving condolences to the ANC parliamentary caucus on the passing of another Member the day before.

Mr S Somyo (ANC) - who had recently joined the meeting - wanted to note that the AG team had a meeting with DPWI. It looks like DPWI team got there before the AG. The AG found that the work AGSA would do would be done by the DPWI team and it cannot do the same work. The AG wrote to DPWI to this effect, and DPWI is aware that the AG pulled back from investigating. Therefore, coming to the meeting and saying that the AG has not reported as yet is not alright.

The Chairperson noted this and said it would be discussed when they next meet. He accepted the intervention and said SCOPA would discuss it further. He welcomed Ms Tolashe, Ms Mente-Nqweniso and Mr Somyo back from the ad hoc committee conducting the interviews for the appointment of the next Auditor General. They had conducted the process well and he expressed hope that the outcome would be just as well.