Read all the latest news in the September PSAM newsletter. The newsletter includes articles from PSAM staff and partners, information about events and conferences attended by PSAM staff, and ongoing initiatives within the organisation.
Groundbreaking legislation, signed into law on Sunday, gives Kimi Makwetu, the auditor general (AG), new powers to act on corruption and the abuse of public money.
The Public Audit Amendment Act only needs the president to announce a commencement date for it to come into force.
The amendments are a global first, according to Pan-African Investment & Research chief executive Iraj Abedian. If successfully implemented, “both corrupt politicians and corrupt technocrats will no longer be able to hide behind the collective to get away with the abuse of public funds”.
The Public Audit Act of 2004 gave the AG the independence to establish auditing functions, but the AG’s office did not have the power to enforce the implementation of its recommendations.
Wasteful expenditure and irregular expenditure increased to R2.5-billion and R51-billion respectively in the 2017-2018 financial year, and they have increased steadily since 2014. As audits continued to regress over the past 13 years, the AG has tried to find ways to address the situation.
When the amendments come into force, the AG will be able to refer serious audit irregularities for further investigation to the Hawks, the South African Police Service and the public protector.
The amendments will also enable the AG’s office to recover lost funds from wasteful and fruitless expenditure and to order the implementation of remedial action.
If this action is not implemented or is not satisfactorily explained, the official or the board the AG has ordered to implement the recommendations will be issued with a certificate of debt and be held liable for the recovery of funds. “Ultimately for us, the winning formula here for us is, if we can succeed in discouraging someone from ignoring irregular expenditure, that’s a win,” Makwetu told Parliament.
One of the reasons the AG’s office was not given the power to enforce its recommendations was because of a global assumption that state-owned enterprises and government departments would act on audit findings, the director of the Public Service Accountability Monitor, Jay Kruuse, said. That had not been the case in South Africa.
Paul Hoffman, the director for Institute for Accountability in Southern Africa, said: “The auditor general has made recommendations in the past that have simply been ignored.”
The Public Audit Amendment Act is supposed to change this. In a report released on Wednesday, Makwetu said: “The public audit Act will provide us with more power to ensure accountability in the management of public funds.”
The aim of the amendments was to empower his office “to directly impact on these audit outcomes”.
The amendments may allow the AG to hold state-owned enterprises, provincial and national governments accountable but, according to Kruuse, they will require a “collective effort” to be implemented.
“The AG is leading by example. Parliament and law enforcement need to support the office of the auditor general, or the amendments will remain superficial,” Kruuse said. “We need to send a clear message that there are real consequences for financial mismanagement.”
Once the president has announced the commencement of the Act, the AG has 90 days to draw up regulations on several processes proposed by the amendments, including timeframes for remedial action and the implementation of a certificate of debt.
Abedian said that, overall, economists believed it would take several years for the amendments to be “bedded down” and “capacitate the auditor general’s office to be in a position to implement the legislation both in form and in spirit”.
Noncompliance has become the norm
A pattern of noncompliance has emerged in government entities, which has contributed to ever-increasing irregular and fruitless expenditure, because the auditor general’s (AG’s) findings were not acted on. The Public Audit Amendment Act will address this.
These are some of the cases the AG would have intervened in:
- This year, an AG report for the year ending March 2017 noted how 13 SAA employees failed to declare their interests in contracts worth R646-million. According to the report, the employees were directors or had close associations with the heads of companies that did business with the airline. SAA is running at a R5.6-billion loss. The AG also expressed concern that the airline did not keep proper financial records of its assets.
- Project Siyenza, awarded to Medscheme in 2013 by the Road Accident Fund (RAF), was reported by the AG to have made irregular expenditure of more than R337-million. The project outsourced some of the fund’s outstanding claims to a third party. Concerns about the contract were raised earlier this year when it was discovered that Charlene Louw, who sat on the RAF’s tender board, was married to the managing director of AfroCentric Health Solutions, Tim Rametse. AfroCentric Health Solutions owns Medscheme.
- Three years ago, the Nelson Mandela Bay municipality could not account for billions of rands. A report by the AG found that R1.3-billion had been irregularly spent in 2014-2015. He also found that deals worth R2.6-billion could not be traced because dozens of files and documents were missing.
- The Madibeng municipality has, for years, incurred adverse audit opinions because of its growing irregular and fruitless expenditure. In the 2016-2017 financial year, it was found that credit cards had been fraudulently opened in the name of the municipality and unauthorised deductions were made.
The AG said there were many municipalities where irregular expenditure had not been investigated, which has led to a culture of noncompliance and no consequences.
— Athandiwe Saba and Gemma Ritchie
The Public Service Accountability Monitor produced an expenditure tracking report, interrogating expenditure in programme five of early childhood development of the Eastern Cape department of education from the 2016-17 financial year to the 2017-18 financial year.
The report also tracked 201718 spending and performance of the early childhood development (ECD) grant of the department of social development.
The department of basic education (DBE) and department of social development (DSD) continues to work together in expanding ECD.
ECD prepares children for school and is, therefore, important for the learning and development of children.
In December 2015, cabinet approved the ECD policy, with the intention to finalise implementation of the policy by March 2018.
Key to the findings of the tracking report is the underspending in programme 5 of the Eastern Cape department of education (ECDoE) by 23%, which is R130.49m of R580.48m, spending R449.98m in 2016-17; and 16%, which is R92.80m of R588.46m, spending R495.65m in 2017-18. While the underspending decreased from 23% in 2016-17 to 16% in 2017-18, it is not good for ensuring quality ECD access for children – especially, considering the poor performance related to the training of ECD practitioners.
According to the ECDoE 2017-18 annual report, the main reasons for this underspending relate to the appointment of professionally qualified practitioners into mainstream schooling.
The training of ECD practitioners started late in the 2017-18 financial year and, as a result, payments for bursaries could not be made.
The department failed to meet its own target of 959 grade R practitioners with NQF level 6 and above qualification, and only managed to achieve 878.
This means the department underperformed by 81 because of practitioners who did not successfully complete all the modules for a diploma in grade R teaching, including students who dropped out of the course.
Similar to the underspending for ECD by the ECDoE between the 2016-17 and 2017-18 financial years, in 2017-18 the Eastern Cape department of social development (ECDSD), only spent 48.6% (R27.2m) of R56.4m of the ECD grant, because of late appointment of service providers.
This means service providers for upgrading and maintaining ECD centres were not appointed on time. As a result, the ECDSD failed to meet all its targets for ECD maintenance.
For example, through the maintenance component of the ECD grant, the ECDSD targeted 96 ECD centres for upgrading, but none benefited.
While R10.2m was allocated for the maintenance of these centres, the ECDSD failed to spend this money. The failure to spend money and meet targets relate to delays internally because of capacity constraints for administering the maintenance component. The underspending and poor performance constitutes an affront to equitable access to quality ECD in SA.
The Public Service Accountability Monitor (PSAM) recommendations are:
● The ECDoE should make plans to provide training to grade R practitioners, ensuring children are taught by qualified educators.
● The provincial treasuries should provide financial management support to departments in order to better manage resources, as outlined in section 18(2) (e) of the Public Finance Management Act (PFMA) 1 of 1999, that a provincial treasury “may assist provincial departments and provincial public entities in building their capacity for efficient, effective and transparent financial management”.
● The internal CFO and strategic planning of the ECDSD should support the department in order to improve performance in the ECD grant implementation in the short- to medium-term.
Siyabulela Fobosi is an education researcher at the Public Service Accountability Monitor, Rhodes University and can be contacted at S.Fobosi@ru.ac.za
(By Sue Maclennan on November 9, 2018)
Public service watchdog PSAM has called on the Speaker to explain to the public her decision to call in law-enforcement officers to remove two councillors from Wednesday’s disrupted Council meeting.
Eight armed police officers and two traffic officials removed two councillors from the Makana Council Chamber on Wednesday, following a heated exchange between members of the DA caucus and the Speaker Yandiswa Vara. Other councillors threw themselves into the fray in an hour of chaos that left Makana’s sole EFF councillor shaken after an ANC councillor confronted her at close quarters and saw the DA caucus stage a walk-out for the second time in eight days.
The special council meeting on Wednesday 7 November continued where the adjourned Monday 29 October one left off. This was at the point when the DA caucus of eight councillors walked out, forcing the adjournment since only 13 of the 27 councillors (less than 50% plus one) remained in the Council Chamber.
That dispute had begun when the DA’s motion of question regarding Sun City – an informal settlement built on a disused dumpsite – was excluded from the agenda. Councillor Mlindi Nhanha said he’d submitted the motion to the municipal manager on 20 September 2018. The Speaker’s failure to entertain discussion on the issue infuriated the caucus and they walked out.
This time, Vara insisted that Wednesday’s meeting was a continuation of the adjourned meeting and that as such, by law, no new items may be added to the agenda.
Councillors Nhanha and Brian Fargher objected strongly on points of order. Nhanha cited a letter from municipal manager Moppo Mene apologising for the omission and assuring him it would be included in today’s agenda. Grocott’s Mail has a copy of this letter.
Tempers flared, primarily between Vara, Nhanha and Fargher, but other councillors joined the fray. At one point, fellow ANC councillors restrained Ward 11 councillor Mncedisi Gojela who confronted new EFF councillor Siyamthanda Dyantyi when she stood up to speak. She was left shaken by the near-physical confrontation. Gojela was later told by the Speaker to apologise, which he did.
WHAT’S GOING ON IN THE VIDEO
ANC councillor Mncedisi Gojela confronts EFF councillor Siyamthanda Dyantyi during a tense and conflict-riddled Makana Local Municipality Council meeting in the Council Chamber on Wednesday 7 November. Fellow ANC councillor Luyanda Nase tries to restrain him. DA councillor Mlindi Nhanha can be heard objecting to the conduct and Speaker Yandiswa Vara can be heard interjecting. 2018 11 07 at 09 57 49. Nhanha was one of two councillors subsequently removed from the Council Chamber by eight armed SAPS members and two traffic officers.
In chaos reminiscent of some of the more notorious incidents in Parliament, the Speaker instructed the municipal manager to bring in law enforcement to remove councillors Nhanha and Fargher.
Councillor Mabhuti Matyumza requested that law enforcement deal also with “the media” for alleged unauthorised documentation of the meeting. Grocott’s Mail was the only media representative present and was not removed.
At first two somewhat perplexed-looking traffic officers were summoned into the Chambers. Ten minutes later eight armed SAPS members led by Joza Station Commander Colonel Vivian Tembani entered and Nhanha and Fargher were surrounded by no fewer than 10 law enforcement officers inside the Chamber.
According to a subsequent statement by the DA, there were more officers outside the chambers and another contingent arrived as the councillors were leaving, totalling around 20. Grocott’s Mail remained inside the Council Chamber and so did not witness that first-hand.
The Public Service Accountability Monitor (PSAM) called on the Speaker to explain to the public the reasons for the heavy handed action.
Asked to comment on the incident, Director Jay Kruuse said, “The PSAM calls upon the Speaker to explain to the public (a) what reasons informed the decision to call upon law enforcement authorities to remove certain Councillors; and (b) what Rules/Regulations/Acts provide the Speaker with such powers to involve law enforcement, and under what specific circumstances may such authorities become involved in the manner reported?”
PSAM also called on the Municipal Council to investigate alleged breaches of the Code of Conduct by Councillors that allegedly occurred on Wednesday, as provided for in the Municipal Systems Act.
Failing this, PSAM would approach the MEC to investigate the allegations as provided for in clause 14(4) of Schedule 1 of the Municipal Systems Act.
In a statement released after the incident, the DA said, “The failing ANC government in the Makana Local Municipality has stooped to the level of using the South African Police Service (SAPS) to try and hide its absolute failure. Today, while DA Councillors were attempting to fight for the rights of people oppressed by poverty, the failing ANC called in the SAPS to intimidate the DA caucus.
“Eight armed police officers entered the council chamber to intimidate the DA. Eventually, 20 armed officers forcibly removed Cllr Brian Fargher and I. In accordance with the rules of council, weapons are not allowed in the chamber.”
The meeting continued without the DA, 16 councillors being present.
The DA last week declared their support for citizens calling for the dissolution of the Makana Council and according to Nhanha, 50 DA members were among the hundreds who marched on the City Hall.
The local ANC leadership, including councillors in the caucus, was clearly in a mood for confrontation this week. Only last-minute intervention from the Regional Executive Committee prevented the local leadership from staging a counter-march, announced on the eve of the petition march, and in opposition to it.
‘Hands off our municipality: ANC march to defend ANC led municipality against the dissolution of Makana Municipality”. With overlapping times and routes, the scene seemed set for a conflict.
Questioned about this on the morning of the petition march, Subregion Chair Mabhuti Matyumza confirmed the counter-action. Ward 7 councillor Malibongwe Kubalo later said he and others from the caucus would join it, in their capacity as ANC members.
Right to protest
However, the party’s REC expressed strong concern about the move. In a letter to local organisers and seen by Grocott’s Mail, REC chair Scara Njadayi said, “I think the content carried in the Makana ANC Poster of Defending the Municipality is in contrast with the founding principles, tradition and values of the congress movement … The ANC promotes democratic principles and the right of individuals to protest.”
Local and regional leadership instead gathered at a meeting at BB Zondani Hall on Tuesday morning. Outside the venue, Matyumza told Grocott’s Mail: “We decided to arrange our march for another time that we will announce.”
Commenting on the petition and the call to dissolve the Council, he said, “You cannot deny that this is a democratically elected Council. What they are trying to do is take a shortcut by dissolving it. There is no shortcut to democracy.”
Commenting at the close of the open segment of today’s meeting, Vara said of yesterday’s march, “These mass actions are not surprising. They are driven by one and only thing – the elections next year. We must always be ready and we must warn residents not to be misled by any Tom Dick or Harry telling them not to pay their rates. They have only one thing in mind – to destroy this municipality.”
The organisers of the petition and the march have repeatedly stated that the campaign is non-party political.
Cape Town, 25 October 2018 – Rather than taking bold steps to stimulate the economy and embark on a more inclusive growth path, the Medium Term Budget Policy Statement (MTBPS) tinkers at the margins… Read further at BJC POST MTBPS PRESS STATEMENT FINAL PP