Public Protector Report on MOU between Gauteng Government & Gauteng Horseracing Industry; AGSA Second Special Report relating to Sport, Arts and Culture sector; with Deputy Minister

Meeting report

The Chairperson noted that it was World AIDS day, and was thankful that the virus was under control. She hoped that the country would one day also overcome the challenges of the Covid-19 virus.

She introduced a new member joining the Committee, Ms G Marekwa (ANC).

Public Protector's report

Adv Kholeka Gcaleka, Deputy Public Protector, said that the report into maladministration and improper conduct in the horse racing industry in Gauteng had been taken to court by Phumelela. The parties who had asked for the matter to be taken on review were the President, the Minister of Trade and Industry, and the Gauteng Gambling Board. She wanted to advise the Committee that on August 30, Phumelala and the Public Protector had agreed that the remedial action and the findings in the report be set aside and made an order of the court on September 2.

The report was set aside and the other party did not pursue the matter further. The report was no longer in force, and there was no referral of the matter back to the Public Protector. The presentation would be made, however, if the Committee wanted details about the findings and the remedies. She asked the Chairperson for direction.

Discussion

The Chairperson thanked Adv Gcaleka for the clarification. While the Committee was keen to engage on the question of transformation, it was aware that another Committee was handling the gambling issues. Furthermore, the Office of the Speaker had required the Committee to entertain the report.

She asked for the opinion of Committee Members, but it was evident that the Committee could not entertain the Public Protector’s report.

Mr T Mhlongo (DA) said that since the report had been set aside by court, it would be unnecessary for the Committee to discuss it.  

Mr D Joseph (DA commented that that there were complainants who had raised issues that had triggered the Public Protector to get involved, which had led to the matter being submitted to court. However, there seemed to be no case any longer. The Committee would like to know the root cause that the Public Protector had spoken about, and if there were changes to be implemented, who would monitor implementation. He also asked if there would be another public participation process, what the complainants' views were, and if there no other avenues or methods that the complainants could explore if dissatisfied.

The Chairperson added that when an issue was set aside, she was not certain that the Committee with an oversight role could still open and refer to the report. It was her responsibility to ensure that the Committee did not engage in a matter that was outside its purview.

Mr B Madlingozi (EFF) said he was also of the view that since the report had been set aside, there was nothing the Committee could say about the matter.

Public Protector's response

Adv Gcaleka said that the problems -- particularly the issue of transformation -- had unfortunately not been addressed. However, the report could still be used to transform the industry, because it had been set aside on the grounds of a technicality, and this did not imply that there were no outstanding problems. The Committee could use the evidence gathered from the report to formulate recommendations on transformation which would be taken into account when laws were being promulgated. This would ensure that going forward, the state would enforce issues of transformation when dealing with gambling and the socio-economic challenges in the country.

The Chairperson thanked the Deputy Public Protector and members of the entity for its submission. The Committee was aware that it had a bigger role to play on issues of transformation.

AGSA report on Covid 19 initiatives

Ms Mbali Tsotetsi, Deputy Business Unit Leader, Auditor-General of South Africa (AGSA), presented the findings which emanated from its second annual report, which had been tabled in December 2020. The purpose of the special audit was to assist the accounting officer to implement AGSA’s recommendations, thereby strengthening the controls in relation to Covid 19 initiatives, particularly the relief fund.

AGSA provided a report on the initiative overview, the status of implementation, and the progress on the special report.

The AGSA flagged that:

-No mechanisms in place to prevent disbursements to people with other sources of income –potentially 286 beneficiaries identified out of 4 169

-System deficiencies resulted in duplicate payments and key information not being captured. Inadequate validations by the system and a lack of reconciliations further increased the likelihood of invalid or inaccurate payments

-Weaknesses in the procurement process for digital solution services and in the appointment and management of the payment agencies.

-Non-compliance on personal protective equipment (PPE) procurement –hand sanitisers were procured at prices above the annexure A price list from the National Treasury instruction note issued in 2020

-The Department did not differentiate between the management fee payable to the disbursing agents and the amount of transfer to disbursing agents for relief beneficiaries. This resulted in a misclassification of the management fees

-Double-dipping –beneficiaries who benefited from both the Department’s covid-19 relief fund and relief funds from other government institutions, with a total value of R244 200

-Non-compliance in the procurement process of digital solutions, whereby the supplier who received the highest points was not appointed.

(See attached document for details)

Discussion

Mr Madlingozi said it was clear that there had been corruption involved when prices had been inflated above the prescribed levels, but no action had been taken to ensure that the corrupt people were prosecuted. The Committee needed to know what legal action had been taken against the defaulters.

Ms V Malomane (ANC) said she could see from the report that there had been progress, particularly where it referred to the preventative controls and recommendations. The Committee hoped that as management measures were put in place, the Department would ensure that these measures were carried out according to national instructions.

There was also evident progress on the follow-up in the current year, but the Committee should also receive a report on those mismanaging or found to have done wrong, and the punitive measures that would be taken against them.

Mr Joseph asked about “double dipping,” and wanted to know if there were standard rules on consequence management, and what the role of the AG in such cases was. He also asked if “double dipping” was a standard contravention across departments and entities, and suggested an amendment of the rules to ensure that cases of double dipping were avoided.

Mr Mhlongo expressed concern about the figures received from the Department and the AG, and suggested that the Committee invite the Department to provide clarification on this.

He also asked about an action plan for when the amendments were being enforced. How would the AG assist with the action plans and their implementation, to enable the Committee carry out effective oversight?

AGSA's response

Ms Tsotetsi responded to the question regarding the procurement of personal protective equipment (PPE) and the concerns around corruption. She said a proclamation was issued in 2020 for the Special Investigating Unit (SIU) to review the contract relating to PPE, and based on their report the matter would either be submitted for prosecution or for consequence management. A review had been conducted on whether there was compliance with the instruction notes issued by National Treasury in relation to emergency procurement, and the findings had been reported. The Department would also need to conduct its own investigations, based on the AGSA’s findings, to ascertain the cause of the non-compliance and irregular expenditure. Thereafter, consequence management would be implemented by the accounting officer

As for linking double dipping with the amended powers of AGSA, for the year under review (2020/21) the amended powers would not yet have been implemented at the Department. During the new cycle (2021/22) the irregularity process would be implemented, together with non-compliance to determine if there were matters of irregularity, and reports would be made in line with AGSA’s amended powers.

Regarding the non-corresponding figures, the Department may respond better on this. The figures the AGSA was reporting on were as at 31 March 2021, which was the year it was auditing in this last cycle.

Department's response

Ms Nocawe Mafu, Deputy Minister of Sports, Arts and Culture, said the Department noted the report from the AG and the requests that it provide clarify on some issues. It would be unfair to expect the Department to immediately provide clarity because it had not come prepared with a report. For purposes of clarity and avoidance of errors, it was preferable that the Department be allowed to submit a report to the Committee based on their concerns, and be ready to discuss the report presented.

Mr Vusumuzi Mkhize, Director-General, DSAC, agreed with the Deputy Minister, and with the AG’s point on consequence management. The Department had set up a process on the findings, but needed to first investigate the causes and who was responsible. A committee had been appointed for this purpose. Once defaulters were identified, that process would be implemented and there would consequence management.

On double dipping, the Department had reported earlier that there were two areas of concern. The first was the integration across government, which remained a problem. The second was determining who made the first payment. Where the DSAC had paid initially and a person had moved somewhere else, even if the systems were integrated, the burden of proof would not have been with the Department. However, where the systems were integrated and the Department verified that a person had already benefited from another relief initiative of government, then the burden would be on the Department. It was imperative to ascertain when payment was made and carry out a comparison with the Department's’ data base.

On the issue of the figures, the AG was correct, because when the DSAC reported to the Committee, it had also indicated that it was a moving target, and if the Department continued to pay, then it could not report the old figures. There had been a cut-off point when the AG was doing the audit, but the Department had to continue paying people beyond that cut-off point. That was why its latest figures might not be the same as those of the AG during its audit. The Department would, however, do the reconciliation and give accurate figures to the Committee, and never mislead it on figures.

The DSAC would definitely prepare an implementation plan. It was also working on finalising payments to the companies and organisations.

Mr Mhlongo acknowledged that the numbers would not be the same, based on the comments and explanations of the Deputy Minister and AGSA. He asked about the process for the final audit after the Department had given the Committee the figures, and the possible outcome of the audit.

The Chairperson said she supported the request of the DM, that the Department be given a chance to report back.

Mr Mkhize said he also agreed with the DM -- he was just providing clarity on why the figures were different. A full report would be submitted to the Committee when they had completed all the payments, as per the guidance of the Deputy Minister.

Ms Tsotetsi said that auditing had been done up until 31 March 2021, and payments that happened subsequently till 15 December would be reported in the next cycle.

Review of Committee programme

The Chairperson said that the programme of each week had been given to Members, and asked for suggestions.

Mr Mhlongo acknowledged that a programme was sent, but he insisted that when issues were deferred, the Committee should be receiving prior notice.

The Chairperson asked Mr Mhlongo to inform the Committee of all items that had been deferred.

Mr Mhlongo said many matters had been deferred, and he was not certain about which matter to review.

The Committee Secretariat said that the Swimming SA agenda had been deferred at the last meeting, and the Committee would meet on Friday with the Department on the progress report on the White Paper on Arts, Culture and Heritage, and  for an update on the Sports and Recreation Amendment Bill. On Tuesday next week, the Committee was meeting with Cricket SA on allegations of mismanagement, and for an update on social justice.

The Chairperson requested that communication should be sent to the Swimming South Africa, inviting them for a meeting with the Committee on Tuesday. She confirmed that after every Committee meeting, a communication on all deferred matters was always sent to the administration office.

Ms Zoleka Kula, Committee Secretary, said she had sent an email to Swimming SA, but there had been no response. However, the notice had been amended to include Swimming South Africa in next Tuesday's agenda.

The Chairperson said that based on the Committee’s decision, on Tuesday next week it would meet with Cricket South Africa, while Swimming South Africa should be tentatively included in the agenda.

Mr Mhlongo said that the Committee should not have two items on one day due to the amount of deliberations involved. He proposed that another special meeting be scheduled for Swimming South Africa.

Ms V Van Dyk (DA) agreed with Mr Mhlongo that the Committee would need more time with Swimming South Africa, due to their non-responsiveness to issues raised. The Committee could also request a presentation from the victims' side, such as the organisations like Women and Men Against Child Abuse (WMACA). This would enable the Committee to understand what the issues were and why Swimming South Africa should be more responsive to the victims' side.

The Chairperson expressed concern about Ms Van Dyk’s proposal on the organisations, but agreed with her comments on Swimming South Africa.

Ms Malomane proposed that the Committee should meet with Swimming South Africa on Tuesday 7 December.

Mr Solomon Mthombeni, Committee Researcher, said that he was concerned whether Cricket South Africa would be ready to talk about the social justice report, because they were still holding hearings till next month. The Committee needed to find out from them if they would be ready to present next week, and their report needed to be sent to the Committee tomorrow so that members had enough time to read it.

The Chairperson said that from tomorrow, the Committee would be working with all the comments received, and by Friday emails would be sent to Members on matters to be discussed at the next meeting.

The meeting was adjourned.