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Thursday, 31 May 2018] 1

ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS NO 73─2018

No 73—2018] FIFTH SESSION, FIFTH PARLIAMENT

PARLIAMENT

OF THE

REPUBLIC OF SOUTH AFRICA

ANNOUNCEMENTS,

TABLINGS AND COMMITTEE REPORTS

THURSDAY, 31 MAY 2018

TABLE OF CONTENTS TABLINGS National Assembly and National Council of Provinces 1. Speaker and Chairperson ...................................................................... 2 2. Minister of Justice and Correctional Services ...................................... 2 COMMITTEE REPORTS National Assembly 1. Police .................................................................................................... 3 National Council of Provinces 1. Cooperative Governance and Traditional Affairs .............................. 26 2. Cooperative Governance and Traditional Affairs .............................. 38

2 [Thursday, 31 May 2018


TABLINGS National Assembly and National Council of Provinces 1. The Speaker and the Chairperson

(a) Submission of the Financial and Fiscal Commission on the

Division of Revenue Bill for 2019-20, tabled in terms of section 9(1) of the Intergovernmental Fiscal Relations Act, 1997 (Act No 97 of 1997), as amended [RP 232 – 2018]

2. The Minister of Justice and Correctional Services

(a) Proclamation No 13, published in Government Gazette

No 41650, dated 25 May 2018: Referral of matters to existing Special Investigating Unit and Special Tribunal: Department of Provincial Planning and Treasury of the Eastern Cape, Eastern Cape Development Corporation, Eastern Cape Department of Safety and Liaison, Eastern Cape Parks and Tourism Agency, Buffalo City Metropolitan Municipality, King Sabata Dalindyebo Local Municipality, OR Tambo District Municipality and Nelson Mandela Metropolitan Municipality, in terms of the Special Investigating Units and Special Tribunals Act, 1996 (Act No 74 of 1996).

(b) Proclamation No 14, published in Government Gazette

No 41650, dated 25 May 2018: Referral of matters to existing Special Investigating Unit and Special Tribunal: KwaZulu-Natal Department of Transport, in terms of the Special Investigating Units and Special Tribunals Act, 1996 (Act No 74 of 1996).

(c) Proclamation No 15, published in Government Gazette

No 41650, dated 25 May 2018: Amendment of Proclamation No 8 of 2017, made under section 2(4) of the Special Investigating Units and Special Tribunals Act, 1996 (Act No 74 of 1996).

(d) Proclamation No 16, published in Government Gazette

No 41650, dated 25 May 2018: Referral of matters to existing Special Investigating Unit and Special Tribunal: Media, Information and Communication Technologies Sector Education and Training Authority (MICT SETA), in terms of the Special Investigating Units and Special Tribunals Act, 1996 (Act No 74 of 1996).



COMMITTEE REPORTS National Assembly 1. REPORT OF THE PORTFOLIO COMMITTEE ON POLICE ON

THE 2018/19 BUDGET, ANNUAL PERFORMANCE PLAN AND

2017-2021 STRATEGIC PLAN OF THE PRIVATE SECURITY

INDUSTRY REGULATORY AUTHORITY (PSIRA), DATED

30 MAY 2018:

The Committee examined the Budget, Annual Performance Plan for the

2018/19 financial year and the 2017-2021 Strategic Plan of the Private

Security Industry Regulatory Authority (PSIRA).

The Committee reports as follows:

1. INTRODUCTION

The Private Security Industry Regulatory Authority (PSIRA) was

established in terms of section 2 of the Private Security Industry Regulation

Act (2001). The entity is mandated to regulate the private security industry

and to exercise effective control over the practice of the occupation of

security service providers in the public and national interest, and in the

interest of the private security industry itself.

1.1 Structure of the report

The Report provides an overview of the 2018/19 Budget Hearings of the

PSIRA and is divided into the following sections:

• Section 1: Introduction. This section provides an introduction to this

Report as well as a summary of meetings held during the hearings.

• Section 2: Strategic Priorities of the PSIRA for the 2018/19 financial

year. This section provides a summary of the strategic focus areas for

the Authority for the year under review.



• Section 3: PSIRA Budget and Performance targets for 2018/19. This

section provides an overall analysis of the operating expenditure and

revenue of the PSIRA for the 2018/19 financial year. This section also

provides a programme analysis of the Authority.

• Section 4: Committee observations. This section highlights selected

observations made by the Portfolio Committee on Police on the annual

performance targets and programme specific issues during the 2018/19

budget hearings and subsequent responses by the Authority.

• Section 5: Recommendations and additional information. This section

summarises the recommendations made by the Portfolio Committee on

Police, as well as the additional information requested from the

Authority.

• Section 6: Conclusion. This section provides a conclusion to this

Report.

2. STRATEGIC PRIORITIES OF PSIRA FOR 2018/19

2.1. Legislative mandate

The primary objectives of PSIRA are to regulate the private security

industry and to exercise effective control over the practice of the occupation

of security service provider in the public and national interest and in the

interest of the private security industry itself.

In terms of the Private Security Industry Regulation Act, 2001 (Act No. 56

of 2001), the Authority must:

a) Promote a legitimate private security industry which acts in terms of

the principles contained in the Constitution and other applicable law;

b) Ensure that all security service providers act in the public and

national interest in the rendering of security services;

c) Promote a private security industry that is characterized by

professionalism, transparency, accountability, equity and

accessibility;

d) Promote stability of the private security industry;



e) Promote and encourage trustworthiness of security service

providers;

f) Determine and enforce minimum standards of occupational conduct

in respect of security service providers;

g) Encourage and promote efficiency in and responsibility with regard

to the rendering of security services;

h) Promote, maintain and protect the status and interests of the

occupation of security service provider;

i) Ensure that the process of registration of security service providers is

transparent, fair, objective and concluded timeously;

j) Promote high standards in the training of security service providers

and prospective security service providers;

k) Encourage ownership and control of security businesses by persons

historically disadvantaged through unfair discrimination;

l) Encourage equal opportunity employment practices in the private

security industry;

m) Promote the protection and enforcement of the rights of security

officers and other employees in the private security industry;

n) Ensure that compliance with existing legislation by security service

providers is being promoted and controlled through a process of

active monitoring and investigation of the affairs of security service

providers;

o) Protect the interests of the users of security services;

p) Promote the development of security services which are responsive

to the needs of users of such services and of the community; and

q) Promote the empowerment and advancement of persons who were

historically disadvantaged through unfair discrimination in the

private security industry.

2.2. Strategic Goals and Objectives

The Authority identified three Strategic Goals for the 2018/19 financial

year, which extends over the medium-term. These are:

• Goal 1: To ensure excellent service delivery (effective regulation) in

the private security industry;



• Goal 2: Ensure effective training, registration and regulation within

the private security industry; and

• Goal 3: Ensure good governance across the organisation.

The Authority identified seven strategic objectives for the 2018/19 financial

year. These are:

1) Ensure effective financial management;

2) Ensure efficient and effective processes and systems;

3) To improve performance of the organisation;

4) Increased investigation and prosecution to enforce compliance with

applicable legislation;

5) Increased awareness on the functions and role of PSIRA and its

stakeholders;

6) Improve the integrity and the turnaround time of registration; and

7) Conduct research to inform development of policy and legislative

direction of the private security industry.

2.3. Main policy focus areas

The main policy focus areas for the 2018/19 financial year include:

• Review funding model (Guarantee Fund and Levies Act);

• Organisational Review and Redesign to review its structure to

ensure adequate capacity to support its legal mandate;

• Review of training standards for the Private Security Industry;

• Capacitating the Law Enforcement Programme to reduce

inspector/security business ratio;

• Strengthening Corporate Governance through the establishment

of Industry Sector committees;

• Transformation of the security industry; and

• Continuous awareness of PSIRA brand.

2.4. Institutional Governance and Management

The Council of PSIRA consists of five members, of whom one is the

Chairperson, another the Deputy Chairperson and the remaining three are

ordinary members. Together the Council forms the accounting authority of

PSIRA and thus takes ultimate responsibility for the Authority. According



to section 51 of the PFMA, 1999, the accounting authority for a public

entity must ensure that the public entity has and maintains the following

(amongst others): • Effective, efficient and transparent systems of financial risk

management and internal control;

• A system of internal audit under the control and direction of an audit

committee complying with and operating in accordance with

regulations and instructions prescribed in terms of sections 76 and

77; and

• An appropriate procurement and provisioning system, which is fair,

equitable, transparent, competitive and cost-effective.

3. PSIRA BUDGET AND PERFORMANCE TARGETS FOR 2018/19

3.1. Overall analysis

The Authority generates its own revenue through the collection of

annual levies, and through money received from any legitimate sources,

which has accrued to the entity in terms of the Act. The revenue

collected by PSIRA, is estimated at R267.03 million in 2018/19, which

is a nominal increase of 7.5% over the MTEF compared to the R248.6

million in revenue for 2017/18. Future estimates and plans indicates a

higher growth in expenditure against revenue (budget) with the existing

funding model. The Law Enforcement Programme receives the largest

nominal increase of 25.9% from R89.1 million in 2017/18 to R112.2

million in 2018/19. In real terms, this is an increase of 19.37%.

The Communication, Training and Registration Programme receives a

substantial decreased allocation in 2018/19 when compared to the

previous financial year. The allocation decreases from R51.1 million in

2017/18 to R42.1 million in 2018/19, which is a nominal decrease of

17.62%. In real terms, the allocation is reduced with R11.2 million

(21.92%).



Table 1: PSIRA Expenditure Estimates 2018/19

Programme Budget Nominal

Increase/

Decrease

2018/19

Real

Increase/

Decrease

2018/19

Nominal

Percent

change

2018/19

Real %

change

2018/19 R’000 2017/18 2018/19

Programme 1:

Administration 108 181.0 112 675.0 4 494.0 - 1 380.1 4.15% -1.28%

Programme 2:

Law Enforcement 89 136.0 112 251.0 23 115.0 17 263.1 25.93% 19.37%

Programme 3:

Communication,

Training and

Registration

51 111.0 42 104.0 - 9 007.0 - 11 202.0 -17.62% -21.92%

TOTAL 248 429.0 267 030.0 18 601.0 4 680.0 7.5% 1.88%Source: PSIRA 2018/19 APP

The table above shows the changes to the percentage of total budget per

programme. The weight of the programmes shifted in 2018/19 when

compared to the previous financial year. In 2017/18, the Administration

Programme received 43.6% of the total budget, which decreased with

1.35% in 2018/19 to 42.2% of the total budget. The percentage of the

total budget allocated to the Communication, Training and Registration

Programme also decreased from receiving 20.57% of the total budget in

2017/18 to 15.77% in 2018/19.

These decreases allowed for the needed proportional increase in the

allocation of the Law Enforcement Programme. In 2017/18, the

programme received 35.88% of the total budget, which was increased

with 6.16% in 2018/19 to give the programme 42.04% of the total

budget. The Law Enforcement Programme is the core service delivery

programme of the PSIRA. The revision of the proportional allocations

brings the priorities of the Authority in-line with its legislative

mandate. As an illustration, the Visible Policing Programme of the

Police Vote, receives just over half of the budget allocation for

2018/19, because it is the core service delivery programme of the South

African Police Service (SAPS). The PSIRA should aim to increase the

proportional allocation of the Law Enforcement Programme over the

medium term.



Table 2: PSIRA Programme Estimates as a percentage of Total

Expenditure Estimates

Programme Budget

Percent of total

budget/ programme

Budget

Percent of total

budget/ programme

Change in percent

allocation

R’000 2017/18 2018/19

Programme 1: Administration

108 181.0 43.55% 112 675.0 42.20% -1.35%

Programme 2: Law Enforcement

89 136.0 35.88% 112 251.0 42.04% 6.16%

Programme 3: Communication, Training and Registration

51 111.0 20.57% 42 104.0 15.77% -4.81%

TOTAL 248 429.0 100.00% 267 030.0 100.00% 0.00%Source: PSIRA 2018/19 APP

3.2. Key spending drivers

The Authority highlighted several key spending drivers, including:

• Expenditure has increased by an average of 13% over the 4-year

period. In the 2018/19 budget, personnel costs represent 59% of

the total expenditure with rental expenses being the second

highest cost at 11% and travelling the third highest at 6%.

• Employee costs increased by 21% due to employee annual cost

of living salary increase. Provision for additional 15 employees

was made and they will be recruited in 2018/19 to capacitate

core business units, including Inspectors, legal personnel and

walk-in-consultants.

• Property Rental shows an increase of 35%, which is mainly due

to the improvement of the geographical footprint of the

Authority and to ensure efficient, accessible quality service. The

Authority indicated that new offices will be established in

Pretoria, Bloemfontein, Polokwane, Nelspruit and Empangeni.

• Expenditure on travelling costs is expected to decrease with 9%

during 2018/19 when compared to the previous financial year.

The expected decrease is mainly due to the review of the travel

policy that supports and promote the Authority’s cost

containment measures plan.



• The expected expenditure on stationery, printing, courier and

postage decreases with 30% in 2018/19 when compared to the

previous financial year. This is mainly because of cost

containment measures in place through monitoring of costs and

the reduction of overnight courier.

• The expenditure on advertising is expected to increase by 72%,

which is mainly due to the additional costs including the

branding of new offices and media campaigns to ensure the

awareness of the PSIRA brand.

• Coupled with the establishment of new offices, expenditure on

security costs will increase with 22% for the provision of

physical security, cash management services and armed response

at the new offices.

The expansion of geographical footprint through new additional offices

to bring service delivery closer to customers and improve quality of

service is a major cost pressure during the 2018/19 financial year.

3.3. Cost containment measures

The Authority highlighted the following cost containment measures that

will be implemented during the 2018/19 financial year to limit spending

on non-core items:

• Minimise travelling through early bookings and by reducing the

number of people travelling;

• Use of internal venues and other available government venues;

• The appointment of consultants to be done after an analysis of

needs and a diagnosis of the skills gap;

• Spend Manager to manage 3G Data utilisation; and

• Utilisation of in-house official to configure systems and

infrastructure.

3.4. Programme Performance Indicators and Targets

3.4.1. Programme 1: Administration

The Administration Programme is responsible to provide leadership,

strategic management and administrative support to the Authority. In

terms of measurable objectives, the Programme aims to ensure effective



leadership, management and administrative support to the Authority

through continuous refinement of organisational strategy and structure

in line with appropriate legislation and best practices.

The Programme has three subprogrammes, namely:

• Sub-Programme: Finance and Administration;

• Sub-Programme: Business Information Technology; and

• Sub-Programme: Human Capital.

The table below summarises the performance indicators and targets for

the Administration Programme, together with some comments and

questions on the indicators.

Table 3: Programme Performance Indicators and Targets:

Administration Programme

Performance Indicator 2018/19 Target

Sub programme: Finance and Administration

Unqualified audit opinion with no significant findings Unqualified audit opinion

% Revenue collected 80% revenue collected on

billed annual fees

Establish and Implementation of the Guarantee Fund (New) Final proposal developed and

approved by Council

Sub programme: Business Information System

Critical IT infrastructure restored within the set timeline Average of 12 hours

Implementation of business continuity and disaster recovery

plan (New)

Business continuity plan in

place

Sub programme: Human Capital

% of implementation of the performance management system

(PMS) 100%

% of employee training interventions implemented as per

Annual Training Plan (New) 80%

Establishment of an internal training academy for employees

(New)

Internal Training Academy

Established and Operation

Source: PSIRA 2018/19 APP



3.4.2. Programme 2: Law Enforcement

The Law Enforcement Programme is responsible for ensuring that there

are effective regulations in the security industry and enforcement of law

and compliance to the regulations. In terms of measurable objectives,

the programme aims to ensure that Security Service Providers comply

with the regulations by doing regular inspections for both security

officers and security businesses. Additionally, to ensure that those who

are not complying with the regulations are charged and prosecuted.

The Programme has three subprogrammes, namely:

• Sub-Programmes: Enforcement;

• Sub-Programmes: Compliance; and

• Sub-Programmes: Legal Services and Prosecution.

Table 4: Programme Performance Indicators and Targets: Law

Enforcement Programme


Number of security businesses inspected to enforce compliance with

applicable legislation 6 100

Number of security officers inspected to enforce compliance with

applicable legislation 32 600

% of investigations finalised against non-compliant Security Service

Providers (SSPs) 85%

% of criminal cases opened against non-compliant Security Service

Providers (SSPs) 95%

Number of security businesses licensed to possess firearms inspected 1 350

% of cases of non-compliant Security Service Providers (SSPs) prosecuted

per year 90%

Number of new draft regulations compiled on approved research topics

(New) 2

% of debt collection files referred for litigation (New) 50%

Number of security businesses inspected that are using dogs (New) 60




3.4.3. Programme 3: Communication, Registration and

Training

The purpose of the Communications, Registration and Training

Programme is to provide effective stakeholder engagement.

Additionally, the Programme must ensure that training standards are

adhered to and the registration process is done in accordance with the

PSIR Act. In terms of measurable objectives, the Programme must:

1) Ensure effective and meaningful stakeholder communication;

2) Ensure that all training institutions are aligned to the required

standard of training;

3) Ensure that the registration process is effective and authentic;

and

4) Ensure continuous research to support core business initiatives

and policy development.

There are four sub-programmes within this programme:

• Sub-Programme: Communications and Stakeholder

Management;

• Sub-Programme: Industry Registration (CRM);

• Sub-Programme: Industry Training; and

• Sub-Programme: Industry Research and Development.



Table 5: Programme Performance Indicators and Targets:

Communication, Registration (CRM) and Training Programme


Sub programme: Communication and Stakeholder Management

Number of public awareness campaigns 140

Sub programme: Registration

Average turnaround time of applications for registration meeting all

the requirements for security businesses (working days) Average 10 days

Average turnaround time of applications for registration meeting all

the requirements for security officers (working days) Average 10 days

Sub programme: Industry Training

Number of capacity building activities for SSP training institutions 12

Increased number of training security service provided currently

registered and accredited with PSIRA 200 more registered

Sub programme: Industry Research and Development

Number of completed research topics 3 research topics

Number of completed surveys per year 4 surveys

Number of policy documents completed 3 policy documents

Number of research studies published (New) 2 publications


4. COMMITTEE OBSERVATIONS

The Committee made the following observations during the 2018/19 budget

hearings:

Governing legislation: The Committee asked whether the Authority

has engaged the Minister of Police on the status of the Private Security

Industry Regulation Amendment Bill [B27D-2012] and whether the

Minister has approached the Office of the President regarding the future

of the Bill. The Amendment Bill contains numerous changes to the

regulatory environment of the private security industry and enhances

the mandate of the Authority in the current South African context. The

Authority indicated that they approached the current Minister of Police,

Hon Bheki Cele regarding the Amendment Bill. The Authority further

indicated that they have met with the Civilian Secretariat for Police for

further engagements with the Minister of Police.



Subordinate legislation (Regulations): The Committee had a lengthy

discussion on the further development and implementation of

subordinate legislation to enable the Authority to fulfil its mandate

more effectively. The Committee asked whether the Authority is

working with the Civilian Secretariat for Police in the development of

regulations and policies. The Authority stated that there is an increased

focus on the development of regulations because of delays in approval

of the Private Security Industry Regulation Amendment Bill [B27D-

2012]. The development of regulations is informed by empirical

research conducted by the Authority. The current focus is on various

sectors, including the use of security dogs, protective gear and firearms.

In terms of the relationship with the Secretariat, the Authority indicated

that it has established a working relationship with the Secretariat and

works more closely with Secretariat, which it has not done in the past.

Organisational Review: The Committee raised concerns about the

organisational review and redesign that the Authority will embark on

during the 2018/19 financial year. The Authority indicated that the

Organisational Review was necessary to review its structure to ensure

adequate capacity to support its legal mandate. The necessity was

informed by significant paradigm shifts within the Authority and

regulatory environment related to the inadequate funding model;

establishment of a Guarantee Fund; enhancing the capacity of

compliance inspectors and increasing the standards of regulation. The

review includes identifying the skills sets needed to capacitate the

Authority to fulfil its mandate, especially in terms of the establishment

of a Guarantee Fund. The Committee further discussed the appointment

and use of consultants related to the review.

Consultants: The Committee raised concern about the increase in

expenditure on consultants during the 2018/19 financial year when

compared to the previous financial year. The Authority indicated that a

consultancy firm was appointed to conduct the Organisational Review

and Redesign study, which lead to the increase in projected



expenditure. In turn, the Committee raised further concern on the use of

consultants to conduct internal reviews, especially organisational

development, as consultants do not have a comprehensive understanding

of the organisational environment and culture of the Authority. The

Authority acknowledged that the use of consultants is often a double-

edged sword, especially in terms of organisational development. The

Authority gave assurance that consultants are only appointed after the

completion of a needs analysis and diagnosis of the skills gap. The

Committee reiterated the importance of following the correct procedures

when awarding tenders to ensure that no third party or former employees

are involved. The Committee was assured that a strict competitive bid

process is followed and that no irregularities are allowed.

Funding model and revenue: The Committee raised concerns about

the projection that future estimates and plans indicate a higher growth

in expenditure against revenue with the existing revenue model. This

projection could mean that the Authority will not be able to remain a

going concern. The Authority indicated that the current funding model

is redundant for all practical purposes and that it is currently under

review to augment their sources of income and the collection thereof.

Expenditure: The Committee raised several issues around the

expenditure of the Authority, including the increase in Compensation of

employees, overdraft facility, and reserve funds. The Authority

indicated that the increase in Compensation of employees relates to the

capacitation of its core mandate and the intake of interns. In terms of

the overdraft facility, the Authority explained that it is only a projected

figure and required for an institution that has debtors. The projection

will be augmented by the intensification of revenue collections and the

review of the funding model. In terms of the reserve, the Authority

indicated that reserve funds are not surrendered to National Treasury,

because it does not receive funding for the State. The Authority further

indicated that a deficit is projected for the 2018/19 financial year.



Debt collection: The Authority indicated that they have entered into an

agreement with the State Attorney to assist the Authority in litigation

against defaulting security service providers. The Authority indicated

that many successes have been achieved and indicated that it is

expected that the value in debt collections will increase in future years.

Research: The Committee requested additional information on the

impact of research conducted by the Authority. The Authority indicated

the key role that their research section plays in developing a deeper

understanding of the private security sector, both nationally and

internationally. The Authority indicated that there is currently a vacuum

in research on the private security industry and that the Authority aims

to develop future academics in the field through strategic partnerships

with universities. The Authority indicated that the research products,

currently produced by the research section, play a vital role in the

development of policies to guide and strengthen the Authority’s ability

to regulate the private security industry. It was further stated that the

output of the research section is somewhat hamstrung due to

insufficient funding. The section was established through donor

funding, but now has to be funded internally. The Authority indicated

that the research studies and survey findings would be published on the

Authority’s website within the next month.

Cash-in-transit services: The Committee requested the Authority to

explain its role, mandate and responsibilities regarding cash-in-transit

services offered by private security providers. The Committee raised

the increase of cash-in-transit robberies as a significant concern. The

Committee further asked what proactive steps PSIRA is taking to

mitigate against the scourge of cash-in-transit robberies and improve

the regulation of cash management services. The Authority agreed that

it is a major concern, but indicated that there are several role-players,

notably the SA Reserve Bank (SARB) within this industry and that

PSIRA is only responsible for the development of training standards

and the standard required for vehicles. The Authority further indicated



that the personnel of cash-in-transit services providers fall outside the

Safety and Security Sector Bargaining Council (SSSBC), which

compounds the challenges experienced in the regulation of the industry.

In terms of proactive steps taken, the Authority has met with the

National Head of the Directorate for Priority Crime Investigation

(DPCI) to form a partnership to address the challenge. In conclusion,

the Authority stated that research has been completed on this industry

and that the empirical data collected will be used to develop policies to

better regulate the cash-in-transit services and providers thereof.

Vetting: The Committee raised concern about the lack of security vetting of

security guards working in the cash-in-transit and other sensitive areas of

armed protection. The Authority indicated that engagements with the

industry will be enhanced to strengthen the vetting of security guards in

high value logistics and cooperation with the State Security Agency (SSA)

will be strengthened.

Identity Fraud: The Committee requested an elaboration of identity

theft as a threat to the Authority. The Authority indicated that this

concerning trend was identified where registered security guards sell

their ‘identities’ to undocumented foreign nationals, who are not

allowed to become security guards in SA. It means that guards sell an

original copy of their PSIRA certificates and identification (ID)

documents to foreigners for up to R4000.00 and then get another ID and

certificate from Home Affairs and PSIRA. The Authority indicated that

they have entered into a partnership with the Department of Home

Affairs to address this challenge. The Committee questioned the

Authority on why it allows security guards who are not attached to a

private security business to register. The Authority indicated that

although the practice is discouraged, it is allowed. The Authority

further stated that it has engaged the Department of Home Affairs to

provide a live link on mobile devices to determine the status of

suspected undocumented foreign nationals on-the-spot to avoid the

current practice that compliance inspectors can only access the Home

Affairs database at head office.



Training Academy: The Committee asked the Authority to explain the

need for the establishment of an internal Training Academy and

whether the courses offered have SA Qualifications Authority (SAQA)

accreditation. The Authority confirmed that the courses are SAQA

accredited and that it focuses on the training of compliance inspectors.

The Authority currently employs mostly previous members of the

security services, from the SAPS and Correctional Services, as

compliance inspectors. As there is no official training specifically

designed for compliance inspectors within the environment, the

Authority hopes to fill this gap with offering accredited training to

inspectors.

Security dogs: The Committee had an in-depth discussion on the

Authority’s focus on the regulation of security dogs, which was

included as a new performance indicator in the 2018/19 APP. The

Committee requested the Authority to elaborate on the nature of

compliance inspections, specifically whether inspections will include

the training, transportation and alleged abuse of security dogs. The

Committee questioned the Authority’s mandate on the regulation of dog

handlers. The Committee further warned the Authority not to consider

security dogs as just biological assets and keep the close bond between

dogs and handlers in mind.

The Authority stated that it has a mandate to provide accredited training

to dog handlers and that other legislation governs the use of service

animals. The PSIRA Act, 2001 stipulates strict standards with regard to

security officers (guards), security service providers, dogs and

clients/end users. The Authority indicated that it wants to establish a

unit specifically focussed on dogs and further indicated that only

handlers are registered, but that dogs should also be registered. The

standards of dog training and handling should be enhanced to ensure

more effective regulation of the environment.



In terms of the transportation of dogs, the Committee raised specific

concern about security dogs transported in open vehicles (jumping off

‘bakkies’). The Authority indicated that specific standards apply to the

transportation of security dogs and that no exceptions are allowed.

In terms of the abuse of security dogs, the Authority indicated that it

has received several complaints regarding the alleged abuse of security

dogs. In such instances, inspections are conducted in partnership with

the Society for the Prevention of Cruelty to Animals (SPCA).

Crowd management: The Committee asked whether the Authority

offers any training to security guards on crowd management. The

Authority indicated that there is no accredited training offered to

security guards on crowd management, as crowd management falls

within the purview of the SAPS in terms of the Regulation of

Gatherings Act, 1993 (Act 205 of 1993).

Security at events: The Committee had an in-depth discussion on the

security at sporting events and raised serious concerns about the role of

security guards. Specific reference was made to the assault of a security

guard at the Moses Mabhida Stadium in Durban by disgruntled soccer

fans. More specifically, the Committee pointed out the seeming lack of

training of the security guard to handle the situation. The Committee

asked the Authority whether the current model that governs major

events is adequate and whether the incident will lead to a review of the

model. A question was asked about the use of protective gear and non-

lethal weapons, like pepper spray and electroshock weapons,

colloquially called tasers (Taser is a brand sold by Axon).

The Committee asked the Authority to explain their role in this

environment and whether the Safety at Sports and Recreational Act,

2010 (No. 2 of 2010) assigns a responsibility to PSIRA. The Authority

indicated that its role as regulator is limited, but stated that it is

currently investigating the incident at the Moses Mabhida stadium and



will provide a copy thereof to the Committee once completed. The

Authority indicated that it does not have a seat on the Event Safety and

Security Planning Committee in terms of the Safety at Sports and

Recreational Act and that it only provides a seat for a security service

provider. The Authority stated that it will consider what steps can be

taken to play an active role in the security at events.

In terms of the training provided to security guards on event

management, the Authority stated that it offers accredited training to

guards, which includes a five-module curriculum, including public

relations and occupational safety (amongst others).

The Committee further questioned whether sporting events are graded

differently based on the type of event. The Authority indicated that it

should consider whether different types of sports should be graded

differently, for instance, golf, cricket, rugby and soccer that each draw

different crowds.

Gender equity: The Committee questioned the level of gender equity

within the private security industry. The Authority indicated that females

represent approximately 30% of the industry and that there is a shift in that

more females are entering the private security sector. The Authority further

indicated that the research on the transformation of the industry includes

aspects of gender representation. The research will inform what further

steps to take to elevate the role of females within the private security sector.

Internal audit capacity: The Committee questioned the outsourcing of

the internal audit function and requested the Authority plans to

establish the function internally. The Authority indicated that the

auditing firm contracted to conduct the internal audit function has been

appointed on a three-year contract, but mentioned that the

Organisational Review also includes the capacitation of an internal

audit function.



Relationship with SAPS and NPA: The Committee asked whether the

Authority has a good relationship with the SAPS and National

Prosecuting Authority (NPA) and is satisfied with the quality of

investigations by SAPS and prosecutions by the NPA. The Committee

noted an increasing challenge in the SAPS/NPA interface and

questioned whether the Authority is experiencing similar challenges.

The Authority indicated that the Memorandum of Understanding (MOU)

with the SAPS is yielding successes. No formal relationship has been

established with the NPA, but it has met with the National Director of

Public Prosecutions (NDPP) to explain the work of the Authority. A

challenge that was identified is with admissions of guilt, which negates

strict sanctions and only allows for a fine for serious offences. The

Authority indicated that this area should be addressed through amendments

to their governing legislation to allow for on-the-spot fines.

Geographic footprint: The Committee requested the Authority to

explain the rationale for establishing a new office in Empangeni and

questioned the location thereof. The Authority indicated that a work-

study was completed to establish the reason for the high volume of

clients visiting the Durban office, more specifically from where the

clients visited. The study revealed that a high proportion of the

clients/security guards came from the Empangeni and Richards Bay

area. The Authority further indicated that both locations were

considered, but indicated that office space in Empangeni was acquired

due to the lack of office space in Richards Bay. The Authority stated

that the Free State office, located in Bloemfontein, is expected to open

the following week. The Committee expressed their satisfaction that the

numerous challenges, notably the lack of available office space,

experienced with the establishment of the Bloemfontein office had been

addressed.



5. RECOMMENDATIONS AND ADDITIONAL INFORMATION

This section provides a summary of the recommendation made by the

Committee and a summary of the additional information requested during

the 2018/19 budget hearings.

5.1. Additional information

The Committee requested additional information through written responses

to supplement the information gathered during hearings on the 2018/19

budget hearings of the PSIRA:

• The Authority must provide a report on the investigation of the

assault on a security guard at the Moses Mabhida stadium once

completed.

5.2. Recommendations

The Committee made the following recommendations during the 2018/19

budget hearings:

i. The Committee recommends that the Authority should continue

its engagements with the Minister of Police to ensure progress

on the enactment of the Private Industry Regulation Amendment

Bill, 2012.

ii. The Committee recommends that the Authority should enhance

the development of subordinate legislation/regulations based on

empirical research to increase the regulation of the private

security industry. The Committee further recommends that the

Authority should enhance its relationship with the Civilian

Secretariat for Police to use their legislative drafting experience

and skills.

iii. The Committee recommends that the Authority prioritise the

establishment and effective operation of Industry Sector

Committees to enhance the corporate governance of the

Authority.



iv. The Committee recommends that the Authority must oversee the

work of the consultants conducting the organisational review

and redesign project to ensure value for money and quality of

work.

v. The Committee recommends that the Authority should fast track the

review of the funding model to mitigate against the projected deficit

at the end of the 2018/19 financial year. The Committee further

recommends that the Guarantee Fund should be established and

implemented as a matter of urgency.

vi. The Committee recommends that the Authority must adhere to

the applicable prescripts when appointing consultants and

contractors to ensure that no third parties are attached to the

awarded tenders.

vii. The Committee recommends that the Authority must take

proactive steps to enhance its involvement in the Event Safety

and Security Planning Committee in terms of the Safety at

Sports and Recreational Act, 2010 (No 2 of 2010).

viii. The Committee recommends that the Authority work closely

with the Directorate for Priority Crime Investigation (DPCI) and

the South African Banking Risk Information Centre (SABRIC)

to address gaps in the management of cash-in-transit to mitigate

in security breaches and address the scourge of cash-in-transit

robberies. Coupled thereto, the Authority should enhance

engagements with role-players to ensure the vetting of security

officers working in the armed response sector, specifically in

cash management.

ix. The Committee recommends that the cooperation between the

Authority and the NPA should be enhanced to increase the number

of prosecutions on contraventions of the Private Security Industry

Regulation Act, 2001 (Act No. 56 of 2001).

x. The Committee recommends that the Authority intensify

engagements with the Department of Home Affairs to ensure the

real-time access to the Home Affairs database.



xi. The Committee recommends that the Authority should continue its

focus on the training and use of security dogs and handlers in the

private security industry.

5.3. Reporting requirements

The Authority should report the progress on the recommendations

biannually. The first progress report should reach the Committee no later

than two weeks after the end of the second quarter of the 2018/19 financial

year.

6. CONCLUSION

The Committee noted an overall improvement in the governance and

performance of the Authority over the past financial year. The Committee is

cautiously optimistic about the future of the Authority, based on the

performance information shared during the 2018/19 budget hearings. The

Committee encourages the Authority to intensify its activities to improve

the regulation of the private security industry of South Africa. The

Committee further encourages the Authority to focus specifically on the

exploitation of security guards within this sector and bring non-compliant

employers to book.

Report to be considered.



National Council of Provinces

1. Report of the Select Committee on Co-operative

Governance and Traditional Affairs (Select Committee):

In loco –Inspection in terms of section 139 (1) (b) of

the Constitution in Mpofana Local Municipality, dated

29 May 2018

1. Background and Overview

1.1 On 18 December 2017, the KwaZulu–Natal Provincial

Department of Cooperative Governance and Traditional Affairs

(COGTA) tabled notice of intervention in terms of section

139(1) (b) of the Constitution in Mpofana Local Municipality to

the Office of the Chairperson of the National Council of

Provinces.

1.2. Subsequent to the tabling, the Chairperson of the National

Council of Provinces in terms of NCOP Rule 101 referred the

notice of intervention to the Select Committee for consideration

and reporting.

1.3 On the 15 May 2018, the Select Committee took a decision to

embark on an in loco oversight visit to the above-mentioned

local municipality on 24 May 2018 in order to interact with all

the critical stakeholders.

1.4 Having conducted the in loco-inspection in Mpofana Local

Municipality in KwaZulu- Natal and interacted with the internal

and external stakeholders of the municipality, the Select

Committee reports in terms of Rule 102 to the National Council

of Provinces (NCOP) as follows:



2. Objectives of the In Loco –Inspection

2.1 The main objective of the in loco-inspection was to interact with

the internal and external stakeholders in order to solicit and

verify their views about the constitutional, procedural and

substantive matters related to the invocation of section 139(1)

(b) of the Constitution at Mpofana Local Municipality.

3. Composition of the Delegation

3.1 The delegation of the Select Committee constituted the

following Members of Parliament and Officials: Hon T Wana

(ANC), Eastern Cape. Hon JM Mthethwa (ANC), KwaZulu-

Natal, Hon Mthimunye (ANC), Mpumalanga, Hon M Chetty

(DA), KwaZulu-Natal, Hon R Oliphant (ANC), Northern Cape,

Hon D Ximbi (ANC), Western Cape, Hon B Engelbrecht (DA),

Gauteng, Mr TM Manele, Committee Secretary (Committee

Section), Mrs T Mpapela, Content Adviser (Committee Section);

Mr N Mangweni, Committee Assistant, (Committee Section), Mr

B M Mahlangeni, Committee Researcher (Research unit).

4. General Overview of the Loco Inspection at Mpofana Local

Municipality

4.1. On 24 May 2018, the Multi-Party delegation of the Select

Committee first interacted with the MEC for COGTA; Head of

the Department and other senior officials of the Department

about the substantive reasons for invocation of section 139(1)

(b) of the Constitution at Mpofana Local Municipality.

4.2. The MEC assured the delegation that the intervention at

Mpofana Local Municipality was purely due to failure of the

Council to execute its constitutional mandate and not politically

motivated.



4.3. The Select Committee later interacted with the Mayor, Deputy

Mayor, Speaker, Chief Whips of Political Parties, Councillors,

SALGA, youth forums and organised labour.

4.4. The Departmental official made a presentation and provided the

constitutional, procedural and substantive reasons for invoking

section 139(1) (b) at Mpofana Local Municipality.

4.5. The appointed Administrator reported on progress made since

the commencement of the intervention.

4.6. The political representatives, organised labour and other

stakeholders voiced their views about their support or otherwise

of the intervention.

5. Presentation by the KZN Department of Cooperative

Governance and Traditional Affairs (COGTA) on Section

139 (1) (b) of the Constitution in Mpofana Local

Municipality

5.1 Constitutional and Procedural Matters Related to the

Intervention

5.1.1 The Departmental official gave a briefing on the status of

intervention in Mpofana Local Municipality in terms of

constitutional, procedural and substantive matters. The

presentation also provided background information dating back

from 2012, citing serious financial difficulties; continuous

incidents of unrest coupled with unprotected strike action by

municipal workers and service delivery related protests.

5.1.2 The Departmental Official reported that the KZN Provincial

Executive Council (PEC) took a resolution to intervene at

Mpofana Local Municipality in terms of section 139(1) (b) of

the Constitution in December 2017.



5.1.3 The Minister of COGTA and the Chairperson of the NCOP were

notified of the decision by the PEC on 18 December 2017 as

prescribed in terms of section 139(2) of the Constitution. The

Minister of COGTA approved the intervention within the

prescribed constitutional time frames.

5.1.4 The Speaker of Mpofana Local Municipality was notified of the

intervention on 19 December 2017 after which the MEC met and

further engaged with the Municipal Council on 11 January 2018,

followed by more engagements between the Municipal Council and

the officials of Provincial Department of Cogta.

5.2 Substantive Matters Related to the Intervention

5.2.1 The substantive matters related to the invocation of section

139(1) (b) of the Constitution at Mpofana Local Municipality

were due to various challenges experienced by the municipality

in the execution of its constitutional mandate.

5.2.2 The municipality experienced serious challenges in executing its

duties in relation to four of its critical key performance areas,

which are Municipal Transformation and Institutional

Development; Good Governance and Public Participation;

Municipal Financial Viability and Management as well as Basic

Service Delivery.

5.2.3 The municipal transformation and institutional development

challenges related to the appointment of critical senior managers

including the Municipal Manager and the Chief Financial

Officer (CFO). In relation to the issue of CFO, Mpofana Local

Municipality appointed an Acting CFO who did not possess the

required experience and persistently retained him despite

objections by the MEC.



5.2.4 In relation to issue of the Municipal Manager, the Mpofana

Local Municipality had failed to appoint a Municipal Manager

even after hands- on support from the Provincial Department of

COGTA.

5.2.5 Good governance and public participation challenges faced by

Mpofana Local Municipality related to the flouting of Council

Rules and Orders by the Mpofana Municipal Council itself;

failure to implement the Code of Conduct for Councillors;

inability to hold the management accountable for poor

performance and failure to implement the Auditor- General’s

findings as well as the dysfunctionality of the Municipal Public

Accounts Committee (MPAC) despite training and support

provided.

5.2.6 Mpofana Local Municipality also experienced financial viability

and management challenges. The Municipality received a

disclaimer audit opinion for the financial year 2015/16 due to

failure in submitting required supporting documents. The

Municipality was also found to be operating at a loss of R26 267

981 in the 2015/16 financial year; not spending and cash backing

on its conditional grants amounting to R16 570 878 and was

unable to meet its monthly operating commitments of

R8.6million.

5.2.7 The Municipality had more liabilities than assets and as such

was unable to pay its creditors within 30days as stipulated by the

MFMA. The amount owed to creditors included R36.6million

owed to Eskom; R11.5 million to other creditors including R3.6

million owed to Khuselani security.

5.2.8 The inability to collect revenue coupled with weak credit control

and debt collection also contributed to the financial difficulties

experienced by the Municipality despite reporting R97 million in

gross debtors including R26.9 million property rates debtors.



5.2.9 The lack of finances at Mpofana Local Municipality had also

compromised the delivery of basic services to the communities.

The municipality was only able to provide limited services

linked to conditional grants like MIG, Small Town

Rehabilitation and housing grant. Despite being only able to

provide services financed through the conditional grants, the

Municipality only managed to spend less than 10% of its MIG

allocation.

5.2.10 The municipality was also unable to complete projects under the

small town rehabilitation programme, as the funds earmarked for

the projects were used for operational expenses. The

municipality was also unable to complete their INEP projects, as

the municipality was not able to comply with Eskom

specifications.

5.3 Support provided by Provincial Government

5.3.1 The Mpofana Local Municipality received a variety of hands-on

support aimed at strengthening the identified weaknesses from

the Provincial Department of Cogta; Provincial Treasury and the

Department of Human Settlements. The municipality received

support and training related to budgeting; recruitment processes;

implementation of INEP; housing projects related support;

support related to salaries and compensation of councillors, as

well as negotiating payment agreements with Eskom.

5.3.2 Progress made since the commencement of the intervention

5.3.3 On assumption of duty at the Municipality, the appointed

Administrator identified additional challenges. The identified

challenges included irregular extension of contracts; inability to

honour third party payments; numerous litigations; Eskom debt that

had ballooned to over R66 million due to non-adherence to the

agreed upon payment plan; and non-approval by the Council of a

credible audit action plan.



5.3.4 The presence of the Administrator at Mpofana Local Municipality

has yielded notable progress, as all the ward committees and five

(05) Operation Sukuma Sakhe war rooms within the municipality

have become functional and meeting regularly and submitting

minutes. The Municipality has hosted community meetings in all

wards as part of IDP/Budget engagements while community

meetings at wards 3 and 5 were about to encourage community

members pay for services.

5.3.5 The process to establish the Project management Unit (PMU) is

currently underway. Successful negotiations with contractors who

had deserted projects sites due to financial challenges has yielded

positive results.

5.3.6 A notice of termination was served to an irregularly appointed

electricity contractor and process is underway to appoint a new

contractor for the new INEP allocation of R5million.

5.3.7 Spending on MIG allocation has increased to 64% and will likely

increase to 84% by end May 2018. The Municipality has also started

the process aimed at cash backing other conditional grants. The

Department of Human Settlements has also agreed to resume with

housing projects as soon as the Municipality opens the Municipal

Housing Operating account.

5.3.8 There is noticeable progress in small town rehabilitation projects,

and successful completion is expected by end financial year

2017/2018. Identified roads at Mooi River and Rosetta towns

regularly maintained as per request of Rate Payers’ Association and

waste collection regular at Wards 1,2,3 and 5

5.3.9 Portfolio committees and MPAC have monthly meetings to process

Council businesses. A new Audit Committee is to be appointed by

end May 2018. The Council has reviewed and adopted the Fraud

Prevention Plan, and compiled a Risk Register after conducting risk

assessment. There are also investigations currently under way in

terms of section 106 of the Systems Act.



5.3.10 Municipal Revenue and Debt Steering Committee been established

to recoup funds owed by various Government Departments. A

schedule of government debt compiled and shared with Provincial

Department of Cogta and Provincial Treasury for assistance and

follow up. An appointed debt collector has managed to collect a total

of R2 624613.24 by end March 2018. Data cleansing completed for

260 debtors and top 100 consumers been contacted about their debts.

The Municipality is currently up to date with the Eskom payment

plan.

5.3.11 The Interim Finance Committee (IFC) is dispensing with its duties

and had five (05) sittings since 28 February 2018. A number of

resolutions made by the IFC have been successfully implemented.

The resolutions include placing a moratorium on all non-core service

delivery expenditure; reduction in hours of overtime and travel

claims. Bi- monthly cash flow forecast incorporating creditors

repayment plans prepared and discussed with IFC.

5.3.12 Mpofana Municipal Council has approved electricity recovery

strategy on 7 May 2018. The Council also approved the installation

of a prepaid meter at its Town Hall. Bid Committees have been

reconstituted and Supply Chain Management Registers are monthly

updated. There will be investigations and consequence management

in relation to identified irregular, fruitless and wasteful expenditures.

5.3.13 The Budget and Steering Committee is now established. The

Municipal Council adopted the draft 2018/2019 budget on 27April

2018, although with an identified R28.6 million deficit

5.3.14 Process is underway to appoint the Municipal Manager, CFO and

Director for Social and Economic Services. There is ongoing

training and capacity building for councillors and management. The

reconstruction of HR files destroyed and damaged by fire is

underway.



5.3.15 The Municipality is able to meet some of its obligations including

third party payments, which are now honoured on time. The

acknowledgement of debt and payment plans has averted a number

of litigations by creditors. Some of the debtors are also coming

forward to make payment arrangements with the municipality.

6. Opinions of Political Parties, Organized labour and Youth on

intervention in terms of section 139 (1) (b) of the

Constitution

6.1. The member of the African National Congress (ANC) welcomed

the intervention and raised concerns concerning the slow pace of

housing projects.

6.2. The member of the Democratic Alliance (DA) was of the view

that section 139(1) (c) was an ideal option for this Municipality

as he claimed that Council members of the ruling party do not

have the best interests for the municipality and its business.

6.3. The member welcomed the forensic investigation in terms of

section 106 of Municipal System Act in the local municipality.

6.4. The Member of the Inkatha Freedom Party (IFP) supported the

intervention in terms of section 139 (1) (b) of the constitution.

However, the member raised concerns with regard to Eskom

debt, land grabs and municipal instruction to demolition shacks.

6.5. The representative of South African Local Government

Association supported the intervention in terms of section 139

(1) (b) of the constitution and emphasized the importance of

integrated support to the municipality and collaboration with the

Department of Cooperative Governance and Traditional Affairs.



6.6. The representative of SAMWU noted the progress since the

intervention especially as it pertains to third party payments, but

was reluctant to indicate whether the union viewed the

intervention as having brought overall positive impact as yet,

especially for workers.

6.7. The union however raised a number of issues like lack of

resources, tools of trade for the workers, staff shortage and lack

of office space, as negatively affecting the wellbeing of workers

within Mpofana Local Municipality. The union made an

undertaking to monitor the progress and impact of the

intervention

6.8. The representatives of Mpofana Youth Empowerment and Youth

Forum welcomed the intervention, but raised a number of

concerns. They voiced their concerns about lack of consultation

and support by the local municipality on matters related to

youth; lack of skills and high unemployment among youth;

absence of youth related community projects and substance

abuse by youth within the local community. They requested the

municipality to appoint a Youth Officer who will be responsible

for coordinating youth programmes within the municipality.

7. Select Committee Observations

7.1. The Select Committee delegation noted the adherence to all

constitutional and procedural requirements pertaining to

intervention to any municipality.

7.2. The Select Committee observed and noted the concerns raised

by the youth forum.

7.3. The Select Committee noted and strongly condemned reported

incidents of illegal invasion of land.

7.4. The Select Committee delegation noted and observed the

concerns raised by SALGA about implementation of integrated

support to municipalities.



7.5. The Select Committee observed and noted the amount of debt

owed to Mpofana Local Municipality by Government

Departments.

7.6. The Select Committee noted the progress reported on, since

commencement of the intervention.

7.7. The Select Committee has also observed the poor socio- economic

status of the municipality.

7.8. The Select Committee has further noted and welcomed the

commissioning of Forensic Investigation in terms of section 106

of the Local Government: Municipal System Act

8. Select Committee Recommendations

8.1. Having conducted the in loco-inspection and interacted with the

internal and external stakeholders of the Mpofana Local

Municipality, the Select Committee recommends to the National

Council of Provinces as follows:

8.1.1. NCOP to approve the notice of intervention in terms of section 139

(1) (b) of the Constitution in Mpofana Local Municipality

8.1.2. That the MEC of the Department of Cooperative Governance and

Traditional Affairs should table a progress report to the National

Council of Provinces regarding investigations in terms of section

106 of Municipal System Act conducted in Mpofana Local

Municipality.


Traditional Affairs should provide quarterly and exit reports to the

National Council of Provinces on the progress made in respect of

intervention in terms of section 139 (1) (b) of the Constitution and in

terms of section 106 of Municipal System Act.



8.1.4. That the Select Committee on Cooperative Governance and

Traditional Affairs should conduct proactive oversight in

collaboration with the Portfolio Committee on Cooperative

Governance and Traditional Affairs in KNZ Provincial Legislature in

order to assess the progress made in respect of the intervention in

terms of section 139 (1) (b) of the Constitution and section 106 of

Municipal System Act.

8.1.5. The Select committee on cooperative governance and traditional

affairs should ensure monitoring of the terms of reference and

turn-around strategy through the application of Rule 91 of the

national council of provinces

8.1.6. The appointed Administrator to expedite the process of filing of

vacancies for senior managers in order to ensure proper exiting and

handing over when the intervention is terminated.

8.1.7. The municipality to exercise its facilitative role to build

partnerships and facilitate engagements with various

Departments and other institutions like, Department of Trade

and Industry and Industrial Development Corporation (IDC) to

empower and support youth economic initiatives.

8.1.8. The Municipality need to ensure that youth are also involved in

infrastructure projects implemented by the Municipality.

8.1.9. The Administrator should adhere and implement all activities as

stipulated in his Terms of Reference.

Report to be considered



2. Report of the Select Committee on Co-operative Governance and Traditional Affairs on loco –Inspection in terms of section 139 (1) (b) of the Constitution in Inkosi Langalibalele Local Municipality, dated 29 May 2018

1. Background and Overview

1.1 On 18 December 2017, the KwaZulu– Natal Provincial

Department of Cooperative Governance and Traditional Affairs

(COGTA) tabled a notice of intervention in terms of section

139(1) (b) of the Constitution in Inkosi Langalibalele Local

Municipality to the Office of the Chairperson of the National

Council of Provinces.

1.2. Subsequent to the tabling, the Chairperson of the National

Council of Provinces in terms of NCOP Rule 101 referred the

notice of intervention to the Select Committee for consideration

and reporting.

1.3 On the 15 May 2018, the Select Committee took a decision to

conduct loco inspection to the above-mentioned local

municipality on 25 May 2018 in order to interact with all the

critical stakeholders.

1.4 Having conducted the loco-inspection in Inkosi Langalibalele

Local Municipality in KwaZulu- Natal and interacted with the

internal and external stakeholders of the municipality, the Select

Committee reports in terms of Rule 102 to the National Council

of Province (NCOP) as follows:

2. Objectives of the Loco –Inspection

2.1 The main objective of the loco-inspection was to interact with

the internal and external stakeholders in order to solicit their

views about the constitutional, procedural and substantive

matters related to the invocation of section 139(1) (b) of the

Constitution at Inkosi Langalibalele local municipality.



3. Composition of the Delegation

3.1 The delegation of the Select Committee composed of the

following Members of Parliament and Officials: Hon T Wana

(ANC), Eastern Cape; Hon JM Mthethwa (ANC), KwaZulu-

Natal; Hon G.Mthimunye (ANC), Mpumalanga; Hon M Chetty

(DA), KwaZulu-Natal; Hon R Oliphant (ANC), Northern Cape;

Hon D Ximbi (ANC), Western Cape; Hon B Engelbrecht (DA),

Gauteng, Mr TM Manele, Committee Secretary (Committee

Section); Mrs T Mpapela, Content Adviser (Committee Section);

Mr N Mangweni, Committee Assistant, (Committee Section), Mr

B Mahlangeni, Committee Researcher( Research unit).

4. General Overview of the Loco Inspection at Inkosi

Langalibalele Local Municipality

4.1. On the 24 May 2018, the Multi-Party delegation of the Select

Committee first interacted with the MEC for COGTA; Head of

the Department and other senior officials of the Department

about the substantive reasons for invocation of section 139(1)

(b) of the Constitution at Inkosi Langalibalele Local

Municipality.

4.2. The MEC assured the delegation that the intervention at Inkosi

Langalibalele local municipality was purely due to failure of the

Council to execute its constitutional mandate and not politically

motivated.

4.3. On the 25 May 2018, the Select Committee interacted with

Mayor, Deputy Mayor, Speaker, Chief Whips of Political

Parties, Councillors, SALGA, youth forums and organised

labour at Inkosi Langalibalele local municipality.



4.4. The Departmental official made a presentation and provided the

constitutional, procedural and substantive reasons for invoking

section 139(1) (b) at Inkosi Langalibalele local municipality.

4.5. The appointed administrator reported on progress made since the

commencement of the intervention.

5. Presentation by the Department of Cooperative Governance

and Traditional Affairs (COGTA) on Section 139 (1) (b) of

the Constitution in Inkosi Langalibalele Local Municipality

5.1. Constitutional and Procedural Matters Related to the

Intervention

5.1.1 The Department of Cogta made presentation on the notice of

intervention in terms of section139 (1) (b) of the Constitution in

Inkosi Langalibalele Local Municipality. The presentation

focused on the constitutional, procedural and substantive matters

related to the intervention as well as the support provided and

the progress made in the local municipality. The departmental

official also gave a brief background on issues related to merger

of two municipalities leading to establishment of Inkosi

Langalibalele as well as the governing coalition status of the

municipality.

5.1.2 The Departmental Official reported that the KZN Provincial

Executive Council (PEC) took a resolution to intervene at Inkosi

Langalibalele Local Municipality in terms of section 139(1) (b)

of the Constitution in December 2017.

5.1.3 The Minister of COGTA and the Chairperson of the NCOP were

notified of the decision by PEC on 18 December 2017 as

prescribed in terms of section 139(2) of the Constitution. The

Minister of COGTA approved the intervention within the

prescribed constitutional time frames.



5.1.4 The Speaker of Inkosi Langalibalele local Municipality was notified

of the intervention on 19 December 2017 after which the MEC met

and further engaged with the Municipal Council in January 2018,

followed by more engagements between the Municipal Council and

the officials of Provincial Department of Cogta.

5.2. Substantive Matters Related to the Intervention and Terms

of reference of the Administrator

5.3.

5.3.1. The substantive matters related to the notice of intervention at

Inkosi Langalibalele local municipality related to challenges that

compromised the municipality’s ability to execute its

constitutional mandate. The challenges identified were within

the municipality’s key performance areas (KPAs) which are

municipal transformation and institutional development; good

governance and public participation; municipal financial

viability and management and basic service delivery.

5.3.2. In relation to municipal transformation and institutional

development, the municipality faced numerous difficulties

related to dissatisfaction about remuneration matters related to

job evaluation; unequal pay and staff establishment. The

municipality had no capacity to resolve these matters and they

threatened the stability of the municipality.

5.3.3. These issues put an enormous pressure on the municipality and

led to the Municipal Council adopting illegal and irregular huge

salary bill way above the required threshold. This matter

increased the salary threshold to 54%, which is above the

prescribed norm of 25-40%. The increased salary threshold was

also due to absorption of 200 casual workers and appointment of

41 bodyguards. In addition, the municipality failed to adopt a

new staff establishment developed by the Change Management

Committee to cater for the newly established Inkosi

Langalibalele local municipality.



5.3.4. The challenges related to good governance and public

participation related to failure to submit 2016/17 Annual

Financial Statements by 31 August 2017, and rejecting

assistance by threatening the financial experts provided by

Provincial Department of Cogta and Provincial Treasury. The

municipality was served with a warrant of execution by the Sheriff

to attach the primary bank account and faced 41 litigation suits to the

approximate value of R 38 million. The threat of disconnection by

Eskom; six councillors owing the municipality a total amount of

R26, 722.00 and failure by the Municipal Council institute

disciplinary action against these councillors also contributed to the

financial challenges experienced by the municipality. The

municipality also failed to report unauthorized, irregular or fruitless

and wasteful (UIFW) expenditure in terms of section 32 of the

MFMA to the MEC for Local Government, while the Municipal

Public Accounts Committee (MPAC) failed to investigate the matter.

5.3.5. In relation to municipal financial viability and management the

municipality had insufficient funds to pay for fixed monthly

operations as its expenditure of R531million exceeded the total

revenue amounting to R436 million. In order to continue paying

for monthly operations the municipality used the funds allocated

for conditional grants for operational expenses, while also not

cash backing about R12.5 million on conditional grants. The

financial difficulties faced by the municipality also led to non-

payment of creditors within 30 days as stipulated in MFMA and

the total amount owed to creditors was over R38.4 million in

September 2017. The municipality also failed to manage its

financial affairs as during 2016/17 financial year it had incurred

R42.1 million in unauthorised expenditure; R31.6 million in

fruitless and wasteful expenditure and R260.4 million in

irregular expenditure. The municipality also received a

disclaimer audit opinion for financial year 2016/17.



5.3.6. The service delivery challenges faced by the Inkosi Langalibalele

were related to, inability to spend the MIG allocation and other

conditional grants; inability to complete projects related to

electrification of households; irregular and illegal appointment of

contractors; inadequate budget provisions for replacement and

maintenance of infrastructure, and inability to provide sufficient

tools and equipment for service delivery especially waste collection

and management.

5.4. Support provided by Provincial Government

5.4.1. The Provincial Department of Cogta provided a variety of hands

on support to the municipality, and it included assistance with

development of financial recovery plan; establishment of critical

committees; budget related assistance; HR related matters;

contract management and negotiating on behalf of the

municipalities with government Departments owing the

municipality.

5.5. Progress made since commencement of intervention

5.5.1. The administrator identified additional challenges when he

resumed his duties at the municipality and his intervention led to

development of standard operating procedures; asset

management controls, records management and review of the

functioning of the audit committee, internal audit and MPAC.

The administrator also identified a need for capacity building of

ward committee on LGSETA training in order to maximise their

performance.

5.5.2. The administrator reported that processes are under way to fill

all vacancies across all wards. He also reported that all 23-war

rooms are fully functional, with ward 09 war room nominated

for Premier’s Excellence Award. He also reported that

community meeting have been held in all wards. He reported

that the municipality is in the process of developing a public

participation charter.



5.5.3. The MIG spending has increased to 86.94% as at April 2018

and MISA has deployed engineering experts to support the

PMU, a data capturer and senior technician also appointed to

assist with MIG requirements. The Municipality has received

R15 million INEP for 2017/2018 and has already spent 12.7%

and the spending is envisaged to increase to 70% by June 2018.

The municipality has also submitted a rollover application to

National Treasury on 01 March 2018.

5.5.4. The Municipality is in the process of reviewing its standing rules

and orders and adoption is expected by end June 2018. The

Council, EXCO and Portfolio Committees are sitting to conclude

their business. Relations have also improved between the

Council, management and organised labour.

5.5.5. An audit committee has been established and an audit action

plan developed to address the disclaimer audit opinion.

5.5.6. There are noticeable improvement in revenue collection and the

collection trend is expected to increase to be around 81% by

June 2018 although the National Treasury norm is 95%. A

number of litigations have been settled.

6. Opinions of Political Parties, Organized labour, Business

Forum and Youth on intervention in terms of section 139 (1)

(b) of the Constitution

6.1 The member of the Democratic Alliance (DA) supported the

intervention in terms of section 139 (1) (b) of the Constitution

and the adopted turnaround strategy.

6.2 The Member of the Inkatha Freedom Party (IFP) supported the

intervention in terms of section 139 (1) (b) of the Constitution

and proposed that the intervention should be prolonged until the

end of term of office of the current municipal council.

6.3 The member of the Economic Freedom Front (EFF) supported

the intervention and supported the IFP proposal that the

intervention should remain until the end of the term of office of

the current municipal council.



6.4 The member of the African National Congress (ANC) supported

the intervention for as long as is possible but not until the end of

the term of the current Council.

6.5 The representatives of IMATU and SAMWU welcomed the

intervention, leadership of the appointed administrator and the

progress made since the invocation of section 139 (1) (b) of the

Constitution in the local municipality.

6.6 The representative of AL-Jamaah welcomed and supported the

intervention as well as the assistance provided by the

administrator. The representative raised concern with regard to

the dependency of the municipality on grant allocation.

6.7 Business Forum reported that they support any positive

initiatives by the Municipality aimed at improving the status of

the local municipality. The business forum further offered free

technical assistance to the municipality, but would like further

engagements with the administrator about debt owed to and by

the municipality.

6.8 Youth Forum also voiced their support for the intervention but

also raised concerns about lack of opportunities for the youth

within the municipality including library and sporting activities.

7. Select Committee Observations

7.1. The Select Committee delegation noted the adherence to all

constitutional and procedural requirements pertaining to

intervention to Inkosi Langalibalele municipality

7.2. The Select Committee noted and observed the R69 million debt

owed to the municipality by Government Departments; R104

million owed by businesses and R47 million household debt.

7.3. The Select committee also noted and observed the overcharging and

inflating of prices by certain service providers when conducting

business with the municipality.



7.4. The Select Committee observed and noted the issue related to

contracting of 41 bodyguards and the complex nature of safety and

security of councillors within the area.

7.5. The Select Committee noted and appreciated the offer for free

technical assistance to the municipality by the local business forum.

8. Select Committee Recommendations

8.1. Having conducted the loco-inspection and interacted with the

internal and external stakeholders of the Inkosi Langalibalele Local

Municipality, the select committee recommends to the National

Council of Provinces as follows:

8.1.1 The NCOP to approve the notice of intervention in terms of section

139 (1) (b) of the Constitution in Inkosi Langalibalele Local

Municipality.

8.1.2. The MEC of the Department of Cooperative Governance and

Traditional Affairs should provide quarterly and exit reports to the

National Council of Provinces on the progress made in report of

intervention in terms of section 139 (1) (b) of the Constitution and

forensic investigation in terms of section 106 of Municipal System

Act.

8.1.3. The Select Committee on Cooperative Governance and Traditional

Affairs to conduct proactive oversight in collaboration with the

Portfolio Committee on Cooperative Governance and Traditional

Affairs in KNZ Provincial Legislature in order to assess the progress

made in respect on intervention in terms of section 139 (1) (b) of the

Constitution and section 106 of Municipal System Act.

8.1.4. The Select Committee on Cooperative Governance and Traditional

Affairs should ensure monitoring of the terms of reference of the

Administrator and the implementation of the turnaround strategy

through the application the application of Rule 91 of the National

Council of Provinces



8.1.5. In order to assist the municipality to build institutional capabilities,

the Administrator should fast track the process of resolving pay

parity, filling of vacancies of section 56 managers, appointment of

senior manager for development planning, completion of job

evaluation and presentation of the organogram to the local labour

forum (LLF).


Traditional Affairs in collaboration with the Provincial Treasury

should conduct investigation in the local municipality on recovery of

money owed to the Municipality.

8.1.7. The Municipality Council to implement consequence management

against officials found guilty of financial misconduct and other

performance related misconducts.

8.1.8. Administrator to assist the municipality to exercise its facilitative

role by building partnerships with various Government Departments

like Trade and Industry; Small Business and IDC. This will assist

with empowering and supporting youth economic initiatives.

Report to be considered

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