PRESENTATION TO SCOPA BY FORMER DG PUBLIC WORKS

AUDITOR GENERAL REPORT OF 3 MARCH 2009; DG’s RESPONSE REPORT OF 6 MARCH 2009; MINISTERIAL COMMENTS OF 18 MARCH 2009;

PROCESS ISSUES ON ADMINSTRATION, LEGALITY AND MEETING FINANCIAL REQUIREMENTS AS

PER APPLICABLE LAWS

12 MARCH 2010

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Pertinent Issues for this Engagement

Period 1 April 2007 to 3 March & 2 April 09Irregular Expenditure:

DPWNIF Decision and Scope of Pilot?Written Authority by EA to DG S64?Contravention of S45 PFMA (Emphasis S38)?AG Report (Legality and Rights of DG including S196

of the Constitution & S84 PFMA)

Cash Incentive to the Former DG:How it occurred, Processes and Explanations?Contravention of PSA S31(1)?

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PRESENTATION TOPICS

How it all led to the appointment of Servcon and Intersite, including presentation to DPWNIF;

Technical Work performed post DPWNIF approval of the two SOEs; Intention of DPWNIF – Appointing SOEs; Appointment of SOEs without following Competitive Bidding and

Deviation from competitive processes by DG; Non-Withdrawal of DG from Procurement Process to appoint

Servcon; Condoning of Irregular Expenditure/Reporting thereof; The Signing of SLAs (R223m vs. R30m Budget; Status of Cash Incentive received by DG from Servcon Purpose and Limitation of the AG Report; Performance of the DG DPW – 2007/8 and 2008/9 Why the Request to Clear DG’s Name before SCOPA

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HOW IT ALL STARTED

Implementation of the Government Immovable Asset Management Act (GIAMA);

The fact that DPW required to urgently update its Asset Register – NT Deadline;

Cost of performing the Update of the Asset Register:Use of Private Concerns – Why Not Them;Use of SOEs – Choice of DPWNIF;DG S51(1)(b)(iii) Efficient & Economic

Management of Working Capital (DG)

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PRESENTION TO DPWNIF 25/5/07

Articulated to DPWNIF the need to audit all state owned assets within financial year 2007/8;

Outlined limitations placed by A miniscule budget (R30m over 3 financial years);

Choice between Private Concerns and SOEs – Cost Benefit Analysis – S63 & S39;

Urgency to perform – NT/Accountant General;DPWNIF appoints both SOEs and directs that

legal, administrative and financial processes should be embarked upon by DPW before signing of SLAs – Written Directive (DPWNIF).

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Intention of DPWNIF – Appointing SOEs

The fact that both were 100% SOEs;Incidental cost R1 596-00 vs. R4 066-00;Savings and implications of the PFMA and

the Constitutional obligations;Immediate capacity and budget;Willingness to perform until such time

DPW had a budget to pay for their costs;Pilot – Had No Limitations

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Appointment of SOEs without following Competitive Bidding and Deviation from Competitive Processes by DG - DeviationBoth are 100% SOEs – Written Minute of

DPWNIF and cost effectiveness (there were no private concern considerations;

Section 41(1)(h)(i to vi) applies;The DG could not issue a public tender for

R30m (Past exercises had failed and were limited to one out of many aspects of a having detailed Update Asset Register);

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Appointment of SOEs without following Competitive Bidding and Deviation from Competitive Processes by DG …Reason justifying that there was no Irregular

Expenditure:Written Minute of DPWNIF (Qualifies PFMA) – S64;Appointment of SOEs – refer Section 41(1)(h)(i to vi) of

the Constitution;The Branch Financial Management was satisfied from

25 May 2007 to December 2007 that the DPWNIF directive qualified regular expenditure in terms of appointment of SOEs;

Not need for SOEs to compete amongst themselves;Private Concerns completely excluded from the process.

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Non-Withdrawal of DG from Procurement Process to appoint Servcon

Servcon is 100% SOE;Manye Moroka has no Business interest

in Servcon;Appointed Director November 2002 and

only resigned December 2009;When appointed DG, Continued to serve

as Director of SOE/Servcon;DPWNIF appointed Servcon;There is no Conflict of Interest

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Condoning of Irregular Expenditure/Reporting thereof;

There was never any irregular expenditure and incidental processes within DPW, FM Officials could have picked that up before December 09;

AG Officials, in January 2009, insisted that the DG write a letter to NT – At the time of DG’s departure there was no NT response;

Section 38(1)(g) was not contravened and again DPWNIF minute applies and so does other precedents in other Departments.

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The Signing of SLAs (R223m vs. R30m Budget;

DPWNIF written minute directed to the DG;There was absolutely no limitations placed on

the scale of the Pilot Programme;Regular Reporting to DPWNIF – No Objection

raised that the DG exceeded his mandate in terms of DPWNIF Minute and/or even at Minister/Top Management Meetings;

The SLAs were prescriptive to SOEs;Delays in administrative processes led to delays

in seeking virements or funding from NT. Not a cent was paid to the SOEs between May 2007 and 2 April 2009.

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Status of Cash Incentive received by DG from Servcon

Cash Incentive was decided by Servcon Board, without the knowledge of the DG;

The cash incentive had nothing to do with the DPW/Servcon SLA;

Explanatory letter was submitted by Servcon, shared with DDG Corporate Affairs and submitted together with the DG’s Financial Disclosure Form on 31/3/09

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Status of Cash Incentive received by DG from Servcon …

The Cash Incentive Issue was also discussed with Minister in January 2009:Submitted together with DG’s initial response to the

AG’s Report;Minister only noted and did not follow, if in doubt, the

route as stipulated in Section 31(1) of the PSA;Section 31(1) of the PSA:

It was not contravened as the DG had no prior knowledge that Servcon was going to give him an incentive for unrelated performance to that of DPW;

No Disciplinary Hearing instituted by Minister whilst DG was still in the employ of State solely because there was no case or reason to do so then and even now.

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Status of Cash Incentive received by DG from Servcon

The DG’s resignation from State was not premised on receipt of cash incentive from Servcon:Finding out about an investigation (December 2008)

being conducted by the Minister on DG regarding the appointment of SOEs soon after having turned down a request to appoint a private concern to perform services amounting to R45m without issuing a tender;

Refusing to seek previous Executing Authority regarding the appointment of SOEs;

Causing the DG to explain himself to DG of Housing (as per directive of Minister of Housing) regarding an alleged R20m from DPW to Servcon and immediate withdrawal thereof – No such transaction took place;

No Financial Misconduct Case against DG.14

Purpose and Limitation of the AG Report

No Disciplinary Hearing was instituted by Minister against the DG whilst in the employ of state and/or before submission of his resignation letter:AG Report 3/3209 (09:00 to 11:00)Minister and AG Meeting 3/3/09 (11:00 to 12:00)DG Resignation (16:00) whilst attending a Meeting with

the Minister at Midrand – Unconditional AcceptanceS85(1)(c) – Process (13 Jan 2009 to 2 April 2009)

Reference to specific clauses of the AG Report:Paragraph 1.4.2;Paragraph 4.5; andDG’s Response Report Dated 06/03/09 Page 29

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Performance of the DG DPW – 2007/8 and 2008/9

Excellent Performance recorded with the PSC, scoring 4.5 out of 5 for the reporting period 2007/8;

Performance for 2008/9 is still outstanding but recorded trends are that there was a 30% improvement on the 2007/8 financial year performance;

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Why the Request to Clear DG’s Name before SCOPAThat I never at any stage contravened any section of the

PFMA – The Reason why EA never instituted a Case against DG PSA and S196, including S84 PFMA;

That I never at any stage contravened section 31(1) of the PSA, hence the fact that Minister of Public Works never instituted any action against the DG nor did he seek legal process whilst I was still in the employ of Servcon. If so I am not aware of such actions;

Brief Work Background and Ethics;That this presentation is limited to period ending 2 April

2009 and any other steps taken outside of this period was never discussed with me;

That SCOPA Accept my presentation as a true reflection of related administrative, legal and financial processes.

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