Joint Investigation Report on Arms Deal: discussion; Report-Back by Groups: adoption

Meeting report

STANDING COMMITTEE ON PUBLIC ACCOUNTS (SCOPA)
18 June 2003
JOINT INVESTIGATION REPORT: DISCUSSION ON PROCEDURE; REPORT-BACK BY GROUPS, ADOPTION OF RESOLUTIONS

Chairperson: Mr F Beukman (NNP)

Documents handed out:
Draft Report on National Treasury changes to 2003 ENE
Parliamentary Business Unit Memo to SCOPA
Draft Response to the Auditor General's Reports on Audit Outcomes and Audit Activities
Document Package containing: General Principles of Process, Proposed Terms of Reference, Proposed Process (Plenary or Sub-Committee), Proposed Time-Table, Proposed List of Documents to be Obtained

SUMMARY
The Committee discussed at length the way forward with regard to Bell's letter noting the media allegations that there was substantial editing by the Executive of the draft Auditor General's Report on the Arms Deal investigation prior to the Final Report being released to the public. The Committee decided to wait for the Auditor General to present a special report responding to allegations about the controversial arms deal - opting not to call him directly to the Committee.

The Committee adopted a number of reports and the two work groups reported on their progress.

MINUTES
Work Group Report-backs
Second Workgroup
Justice and Constitutional Development
Ms K. Mothoagae (ANC), on behalf of her Work Group, said that the group had had a briefing from the Auditor General on the 2001/2 Justice and Constitutional Development Report. The auditors indicated some errors in the report, which have nothing to do with the Auditor General. The Department has a budget of R4 billion, to coordinate between 600 offices throughout the country.

On governance structures, she said that although the internal auditing should be done according to the PFMA, no reliance could be placed on the work done by the Internal Audit Committee, as the investigations done by them were not considered relevant to the objectives of the External Audit Committee. Because the Audit Committee report was not signed, its authenticity was called into question. The National Prosecuting Authority forms part of the report, but it is now a stand-alone entity, and will be dealt with separately.

Challenges facing the Department are mainly staff-related:
- there are numerous vacancies within the Department
- the staff are not properly trained
- some services could not be delivered, because units are under-funded
- low culture of compliance and accountability amongst staff
- no reliance is placed on systems, because of a lack of control of the staff
- high fraud risk to the Department, because of financial discrepancies

Focus Areas to be looked at were:
- the Paymaster-General Account, which was not being adequately recorded by the Department
- revenue (various offices in the country are sending finances to SARS, without relevant
information being captured)
- suspense accounts
- unauthorised expenditure
- monies in trust (a serious problem since 1995, especially in Kwazulu-Natal and the Eastern Cape. These are funds allocated for admission of guilt, posting of bail, maintenance fees, and court fines.

Department of Water Affairs and Forestry
Ms Mothoagae reported that the Department of Water Affairs and Forestry resolution could not be finalised.

Communications Department
A standard resolution would be forthcoming. Definite improvement was reported.

Public Services Commission
A standard resolution would be tabled.

Public Protection
There is a resolution.

National Prosecuting Authority
Their replies were evaluated, and a standard resolution would follow.

Correctional Services
The Department's transcripts would be noted, which would be engaged in preparing the resolution.

First Workgroup
Mr Don Gumede reported that his group had considered the following reports:
- African Institute of South Africa
- Playhouse Company
- Art Gallery
- Theta
- South African Police Services
- Health and Welfare Sector
- Training Authority

He stated that the workgroup was finalising the drafts to hand over at the next plenary meeting.

Update of programme
There were no alterations to the Work Programme.

Adoption of Resolutions
The Study Tour to Malawi report was adopted.

Response to Auditor General's General Reports
The Chairperson read the Committee's report on audit outcomes, audit activities, and the annual report of the Office of the Auditor General, which was considered, but not adopted.

Report on National Treasury changes to 2003 ENE
The Committee Report on Treasury's changes to the form of the 2003 Estimates of National Expenditure was adopted.

Categorisation of Reports
There were none.

Adoption format for standard resolutions / committee reports
The proposed formats were adopted.

Study Tour
The Chairperson reported that the first application for the study tour had been submitted in early May, and the second one in early June. It had not yet been approved. From a logistics point of view, therefore, it would be impossible to undertake the tour in the beginning of July.

New Business: Correspondence
1. The Chairperson reported the receipt of a letter from disgruntled members of the Department of Correctional Services to SCOPA. The Chairperson stated that since it referred to policy matters, it should be referred to the Portfolio Committee.
2. Regarding correspondence received from the Public Service Commission, it was reported that the matter had been discussed the previous day by the cluster, in which they had stated their factual position.
3. The Chairperson reported receipt of a letter from the Auditor General with regard to an article that had been placed in the "Business Day" newspaper publication.

Mr B. Kannemeyer (ANC) felt that correspondence received should be referred to the relevant cluster. Should it refer to an item on the agenda, it should then be read with the item.

The Chairperson responded that he agreed with the motivation behind Mr Kannemeyer's suggestion, and that it had in the past been attempted. However, it was often found that the relevant cluster had not dealt with the correspondence. Still, he said that the point was taken.

Mr N. Bruce (DA) mentioned the matter regarding the Department of Home Affairs had been before the Committee for a long time. He did not think it was fair for it to continue for such a long time, adding that there should be a limitation on the amount of time given to matters which are investigated by SCOPA.

The Chairperson responded that the particular matter in question was as a result of the hearing which had taken place, and added that the cluster was working on it.

On the invitation received to attend the IPAC Conference, the Chairperson stated that those wanted to attend, should make their names available. However, he cautioned that he was not sure if approval for such attendance would be forthcoming.

Joint Investigation Report: Proposed Process and Terms of Reference
The Committee proceeded to discuss a proposed investigation into media allegations that the Auditor General's Final Report into the Arms Deal to SCOPA was extensively edited in a consultation process between the Auditor General and the Executive. Mr Bell in a letter to SCOPA had requested an investigation.

Mr Nair commented that thus far, nothing substantive had come before SCOPA to warrant an investigation by the Committee. Mr B. Bell (DA) had written a letter to SCOPA, based on a newspaper article that appeared in the 'Business Day' newspaper. He said that newspapers speculate, and are not necessarily unbiased. He said that this was very clear when the Auditor General made a response to the article, and the newspaper did not publish his response. He continued that SCOPA would investigate the issue. However, before time-tables are set for a meeting, the Committee should wait for the Auditor General's special report responding to these allegations. The matter may necessitate setting time side for a hearing. He added that the Committee would be sitting in judgement on issues that are purely speculative.

Mr V. Smith (ANC) stated that in terms of the Constitution, SCOPA had an obligation to exercise oversight over the Executive. That was not in dispute. However, the Committee had to be very careful not to be seen to be casting aspersions on the integrity of the Auditor General. Mr Bruce had previously said that nobody was above criticism, which Mr Smith noted well. However, there was a difference between criticism and misrepresentation. He confirmed that the matter had been brought to the Committee's attention on the basis of a newspaper article (Mr Bell having informed the Committee in his letter). However, for the purposes of SCOPA, to re-open the matter, there must be new allegations. In the letter, Mr Bell had mentioned gifts. However, the Auditor General had indicated that he had already dealt with that matter, and it was subject to criminal investigations. Mr Smith pointed out that Mr Bell was as yet not present at this meeting nor had he tendered an apology for the meeting. Hence the Committee was unable to hear his comments on the matter.

Mr Smith noted that on the item of misleading SCOPA in terms of the ownership of African Defence Systems (ADS), the Auditor General had also dealt with that matter. When the resolution had been taken in 2001, Parliament and SCOPA had both been aware of that issue. Until fresh allegations came to light, Mr Smith agreed with Mr Nair that the investigation could not be re-opened on the basis of a newspaper article placed by someone who had tendered, and had not received a favourable outcome, in terms of the Arms bid.

Mr Bruce (DA) stated that he had hoped that SCOPA members worked through a consensus approach. However, there had been some attacks made on his own party. He referred to Mr Smith having said that Mr Bell should apologise for his letter. A court of law had ordered that certain documents be made public. SCOPA had not had the privilege of seeing the Auditor General's original, unedited report. Since the Auditor General had indicated his desire to address the Committee on the matter, and to make those documents available, he had every right to do so. The decision to investigate was made in court - so it was not merely based on a newspaper article. The Committee was therefore bound to go into the matter. It was an extremely serious matter, which had been under investigation by the Scorpions for two years, and the investigation involved the possible misappropriation of a large sum of money. He mentioned an amount of 60 billion dollars under investigation. Since the Auditor General wanted to address the Committee, he should be welcomed to. Mr Bruce then asked if the ruling party was not in favour of an investigation. The Committee had the duty of oversight, which it was ignoring.

Mr Smith responded that Mr Bruce had said the ANC did not want to discuss the matter. However, they had said they would wait for the Auditor General's report. The party agreed that they had an oversight duty. It had never, in fact, been said that the Auditor General wanted to come and personally address the Committee. Rather, it was said that he would furnish a report. He could not understand from where the figure of $60 billion mentioned by Mr Bruce had been derived. The true figure under investigation was $4.3 billion. It was unfortunate that Mr Bruce had given such a hugely inflated figure, since he was afraid it would be captured by the media, and presented to the public. Not only that, but it was doing a serious disservice to the integrity of the Committee, and to the country as a whole. Since the Auditor General indicated that he wanted to clear the air, the Committee should await his report, in order to evaluate it soberly. The ruling party agreed with the approach as outlined by the Chairperson. However, what they were asserting, was that the basis on which the Committee should move forward on an investigation, should not be on newspaper allegations, but on fact. They had not said that the matter should not come before SCOPA, but until new allegations were brought, the matter should not be re-opened.

Mr Nair reminded Mr Bruce that this was a civil action, brought in terms of which certain documents had been given to the litigant. There was much publicity, and distortions had been placed in the "Business Day". He asked if Mr Bell had considered the response of the Auditor General, adding that his letter to SCOPA had been based entirely on what appeared in the Business Day, without taking into account the Auditor General's response. That, showed imbalance. So far, the Committee did not have the complete picture. Mr Bruce had mentioned the Arms Deal. However, the White Paper pertinent to the Arms Deal had been presented to, and supported by, both the DA and the NNP. The DA could not now extricate itself from the Arms Deal.

Mr Bell stated that, having arrived late at the meeting, he had heard his name "being used in vain". He added that he had never made any reference to gifts in his letter. To Mr Nair, he said that his letter had been written before the response of the Auditor General, meaning that he could not therefore be accused of disregarding the Auditor General's response. Even though it was felt his letter had been based entirely on a newspaper report, the documents were available to be perused. He added he was pleased that the Auditor General wanted to present a report. Should he provide the documents himself, that would be "first prize".

Mr Vezi said that the Committee was now awaiting evidence to come before SCOPA. Only thereafter, would the Committee decide if the matter should be re-opened.

Mr B. Kannemeyer (ANC) said that directing his letter to SCOPA had been the correct approach by Mr Bell. What followed, he said, was unfortunate, as political parties had drawn conclusions. There were sanitisations, cover-ups, and injustice was done to the country's democracy. He reminded the Committee that they were all members of political parties, and their discussions were not proceeding in the absence of that fact. It was important that when reporting to the public, accurate information was given.

He continued that the Auditor General's initiative in coming back to the Chairperson, should be applauded. In the light of the Auditor General's response, although Mr Bell's letter had been written in good faith, SCOPA could not make a decision to re-open the matter on the basis of a newspaper report placed by a bidder whose motivation had been that he had lost out on a contract. The initiative of the Auditor General was a helpful stimulus, enabling the Committee to make a decision based on this report.

A member stated that Mr Bruce should correct his statement which said that 60 billion dollars was under investigation, so that the public could get the correct picture.

An ANC member stated his concern that the Chairperson had allowed members to engage in party politicking. He was pleased when Mr Bell was given an opportunity to explain his letter to the Committee, however, what transpired after that was a degeneration into political point-scoring and propaganda. That was not the duty of the Committee. Rather, their duty was one of oversight, to examine how institutions utilise the finances allocated to them. Political point scoring could be done outside of the parliamentary chamber.

A committeee member explained that there had been a misinterpretation of Mr Smith's words, adding he had not stated that Mr Bell should apologise for having written his letter. He had, in fact, said that Mr Bell, who until then, was not yet present at the meeting, had not submitted an apology for his absence.

On the matter of how much money was under investigation in the Arms deal, Mr Bruce said that he had incorrectly referred to 60 billion dollars, when he had meant to refer to 60 billion rands.

The Chairperson stated that relative consensus had been reached on the suggestion that the Chairperson obtain information regarding the Auditor General's report, that the report be heard, and that the Committee thereafter consider the terms of reference.

He agreed with Mr Smith's suggestion that, after having examined the report, the Committee then decide whom to invite to address the Committee.

Various members voiced their agreement to this course of action, which was then adopted.

The meeting was adjourned.