Comrades and hon members, we are presenting, as they appear on the Order Paper, reports of the committee on the Department of Mineral Resources and the Department of Labour and its entities, the Sheltered Employment Factories, as well as Transnet and the Magalies, Bushbuckridge and Botshelo Water Boards. We are disappointed that the Department of Mineral Resources had a qualified audit. Although the Department of Labour's one was unqualified, it did have very significant emphasis of matter that warranted a hearing.
The findings that were issues of discussion between ourselves and them and that form part of the issues we've raised include poor accounting records; misstatements of receivables; lack of supporting documentation; non- collection or undercollection of revenue; noncompliance with regulatory requirements; contravention of supply chain management processes; and other issues. Part of our recommendations deal with the need to ensure that there are proper governance policies and systems, that proper record keeping systems are developed, implemented and monitored, and that there is compliance with regulatory requirements, as well as ensuring that appropriately skilled personnel are appointed, especially in the finance sections.
The entities called the Sheltered Employment Factories have remained and functioned as they were conceived many decades ago. However, we are happy that the current CEO, Silumko Nondwangu, seemed to have a proper understanding of the challenges and the transformatory trajectory that needs to be followed to change and turn around that institution. However, there are still a number of challenges, and we believe it will take some time to get it exactly where it's supposed to be.
There were challenges around issues of nondisclosure of certain items such as operating leases, poor accounting records, no supporting documentation, irregular expenditure, as well as fruitless and wasteful expenditure. These challenges also applied to Transnet and I think that there are issues around Transnet that we would definitely, as a committee, need to pursue, because some of the information that they gave to us during the hearing has subsequently been proven not to have necessarily been correct. We do believe that the need to strengthen internal controls and ensure monitoring of compliance with policy and procedures will be very important, not only for the Sheltered Employment Factories but also for Transnet. We are ensuring that disciplinary measures are taken against employees that have been responsible for irregular expenditure as well as fruitless and wasteful expenditure, which, in the case of Transnet, amounted to very high amounts, billions of rand.
As for the Water Boards, they all had qualified audits, and one is not certain whether there is a need for a policy review because certainly the capacity of some of these Water Boards to actually get things right is highly circumscribed, except for the Bushbuckridge Water Board, but not limited to it - the issues around going concern and the debt that the municipality has vis-a-vis the board. If that is not addressed, it will seriously threaten the ability of that board to function. But equally, if you look at the Botshelo Water Board you get a sense that some of the people at the helm of that water board really have no idea of what they are supposed to do and lack a sense of commitment towards ensuring that water services are provided to the communities. We have, in these reports, added the quarterly reporting requirements. Like I said on Tuesday, from our side as a committee we have planned carefully in terms of being able to pursue these timeframes. We will, however, still rely on the Speaker's Office to ensure that decisions taken by this House, especially around timeframes, are respected. I do want to add, however, that as a committee we are equally committed to ensuring that we bring before the House for adoption, and also for debate and discussion, reports of departments and entities that got unqualified audits, including those that got clean audits, because the assumption is that we don't have departments and even entities that perform well, that have clean audits. We would want to bring them to the House in order that they be adopted and debated, so that we can start to see what is the balance between those who are doing well and those who are not doing well.
Lastly, I would also like to add that we believe, as Scopa, that the need to have a structured way of co-operation between ourselves and the other committees can have a positive bearing in ensuring that some of the challenges that we have identified are addressed, not only by ourselves but also in the interaction of the departments and the entities with the other committees. I want to present the reports for adoption by the House.
Chairperson, I move:
That the Reports be adopted.
Requests for declarations of vote have been received. I will now allow up to three minutes for one member of each political party wishing to make a declaration of vote.
Declarations of vote:
Chairperson, it is that time of the year again and I actually feel very sorry for hon Godi and the members of the public accounts committee, who sit for many, many hours scrutinising the accounts of many departments, and come before this House to present their reports. They do very extensive work and I do not believe that as Parliament, we should simply brush over the findings of the Standing Committee on Public Accounts, Scopa.
Therefore, I believe it is important that we really focus on the many recommendations that they are bringing before us today in the respective reports. In particular, we see a recurrence of certain practices which we must really root out in the departments. Just like every other year, Scopa again recommends that officials responsible for irregular, unauthorised, fruitless and wasteful expenditure, or those who ignore supply chain management regulations, be disciplined in terms of the Public Finance Management Act, PFMA. We would like to fully support that. Yet the question remains, how and when will this happen?
Whilst the very important work of Scopa could be considered as history by the time that it reaches this House, the recurrent nature of the weaknesses and trends that have been identified is really a matter of grave concern. I see even our hon Finance Minister has preferred to leave because it must be difficult for him. He painstakingly processes budgets and adjustment budgets, and yet departments come back with wasteful expenditure.
Cope is concerned about the absence of visible and well-publicised consequences for failure or misconduct. It seems as if the Auditor-General, AG, and Scopa make recommendations and that is the end of it. The people of South Africa want to see that justice prevails, that people who are guilty of dereliction of duty, fraud and corruption are disciplined and, where applicable, hauled before the criminal courts.
Where is the executive? It is a matter of grave concern that our executive is not here. Scopa processes are mostly with directors-general, but at the end of it, it is money wasted for which the executive should account. Therefore, we would like to suggest that going forward, we must focus on a categorised database of Scopa findings and their recommendations, and that these be compiled and presented to portfolio committees, and that we regularly go through them within our portfolio committees. This could become a highly effective management tool for oversight committees, members of the executive and the CEOs. Thank you, Chairperson. [Time expired.] [Applause.]
House Chair, the ANC takes note of the recommendations contained in the six reports. We are keen that all recommendations should be speedily implemented. In this regard we endorse all the recommendations, including the fact that accounting officers of the six bodies referred to in the report should submit progress reports on the implementation of the above to the National Assembly within 60 days after the adoption of the report by this House.
With regard to the water boards of Botshelo, Bushbuckridge and Magaliesberg, we note with concern that a serious lack of policies and procedures results in a lack of proper controls, asset management and overall financial management. As the ANC, we cannot countenance a situation where legislated tools of accountability are disregarded without consequences. We are fully behind the decision to follow due processes to recover the amount of R1,3 million which was paid to suppliers in breach of supply chain management regulations by employees at Magalies Water authority.
We are appalled by the fact that fruitless and wasteful expenditure amounting to R36 million was recorded at Transnet. We fully support the call for eight employees concerned to be subjected to disciplinary action. The ANC will not stand by when the resources which should be used to improve the lives of poor people are plundered through sheer negligence. Not in the name of the ANC! [Applause.]
We further note with utter dismay that irregular expenditure of R8,3 billion, which resulted from noncompliance with contract management policies of the group, was noted at Transnet. We endorse the recommendation which provides that the relevant policies are reviewed, like the chairperson said, to prevent employees who mismanage company resources from resigning before they face appropriate disciplinary action.
In conclusion, we call on Parliament to endorse these reports so that the recommendations can be implemented, to turn the situation of this organisation around. Thank you. [Applause.]
Madam Chairperson and colleagues, it is very refreshing to note that a member of the ruling party can speak in the manner that she has spoken on behalf of Scopa. [Interjections.] I just hope that members of the executive take these words by hon Chiloane very seriously. I'm glad that the hon Minister of Transport is holding the fort on behalf of the executive because I think the executive needs to know what the feelings of the members of Scopa are.
Having said that, I want to follow on what hon Godi, the chairperson of our committee, said about emulating good practice. I know that not so long ago we were all waxing lyrical about the Minister of Home Affairs and the Department of Home Affairs having turned around and having received an unqualified report. However, it's quite depressing when one reads the latest report that they have regressed to qualified. Something needs to be done in that regard, and I am sure we are going to call them in for a public hearing. A common thread in most of the reports that are published by the Auditor- General is noncompliance with laws and regulations, and one cannot understand why heads of departments cannot comply with laws and regulations that are clearly written there for them to follow. There are sanctions, as hon Kilian and other members said, in terms of section 38 of the PFMA, but to date we haven't imposed any sanctions on any of these heads of departments.
Another area which Scopa looks at is the information technology, IT, environment, and I think when it comes to the IT environment in most departments, they are seriously lacking. This puts risk management at the forefront, and this is something that all departments need to look at.
When we look at what portfolio committees do, it is to look at the strategic plans of departments. All of us spend a lot of time looking at what they present to us and how they are going to spend the money, but when the Auditor General makes his findings we find that the predetermined objectives which were stated by that very department are not met. Why should that be the case? The Department of Labour, for example, spent 99,5% of its budget, yet in terms of performance it was 50%. We need to look at these kinds of things.
Turning quickly to Transnet, it's quite sad that there's R8,3 billion of irregular expenditure, which even warranted the chairperson of the portfolio committee writing to Scopa to investigate this R8,3 billion irregular expenditure. What comes up in Transnet with the portfolio committee, is the obscene salaries that are paid to members of this state- owned enterprise, SOE, ranging from R3,5 million up to R10 million a year. I don't know what kind of rocket science is required to administer some of the SOEs for those kinds of obscene salaries to be paid. No wonder we get strikes ... [Time expired.] [Applause.]
Motion agreed to.
First Report of Committee on Public Accounts on Report of Independent Auditors on 2009-10 Financial Statements of Botshelo Water accordingly adopted.
Second Report of Committee on Public Accounts on Report of Independent Auditors on 2009-10 Financial Statements of Bushbuckridge Water accordingly adopted.
Third Report of Committee on Public Accounts on Report of Independent Auditors on 2009-10 Financial Statements of Magalies Water accordingly adopted.
Sixth Report of Committee on Public Accounts on Annual Report and Financial Statements of Transnet and Report of Independent Auditors on 2010-11 Financial Year accordingly adopted.
Fifteenth Report of Committee on Public Accounts on Annual Reports and Financial Statements of Department of Mineral Resources and Report of Auditor-General on 2010-11 Financial Year accordingly adopted.
Sixteenth Report of Committee on Public Accounts on Annual Reports and Financial Statements of Department of Labour and Sheltered Employment Factories and Report of Auditor-General on 2010-11 Financial Year accordingly adopted
The last item on the Order Paper is a subject for discussion in the name of Dr P J Rabie, on South Africa's latest ranking on the overall World Economic Forum's Global Competitiveness Index, which has seen it drop by two places in the past year, and solutions to improve the situation. The hon P J Rabie? [Applause.]