1. Presentation to the Portfolio Committee on Public Service & Administration 23 February Harold Wesso PhD Acting Director-General Department of Communications
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2. PURPOSE
To brief the Portfolio Committee on the irregular, unauthorised, fruitless and wasteful expenditure incurred by the Department of Communications during the 2009/2010 financial year.
Making South Africa a Global Leader
in Harnessing ICTs for Socio-economic Development

3. Background
During the financial year 2009/2010, the Auditor General has identified R24,202,000 of irregular expenditure of which R15,701,000 was incurred in prior years.
The balance of R8,501,000 was incurred during the 2009/2010 financial year. Below is a detailed breakdown of amounts, service providers involved, the years in which they were incurred, and the circumstances under which the transactions occurred, including the corrective measures taken by the Department to prevent recurrence.
Making South Africa a Global Leader
in Harnessing ICTs for Socio-economic Development

4. Irregular Expenditure for Prior Years (i.e. 2006-2008)
Service provider
Amount
Year
Reason
Corrective Measures
Distinctive Choice
R15,304, 000
A Travel Agency was appointed without following procedures to render travel and accommodation to the office of the former leadership of the Department.
A disciplinary process concerning officials who were involved in this matter is currently underway. The matter is before the courts. Legal advice is being sought wrt to officials who have left the Dept to determine the possibility of recovery.
Uniglobe
R397, 000
2008
A Travel agency was procedurally appointed to render travel and accommodation services to the Department. However the agency was used by officials in the Department to procure goods and services outside its scope of wo work
The Tender Committee has recommended that precautionary letters be issued to officials who were involved. This process has commenced.
SUB TOTAL
R15,701
Making South Africa a Global Leader
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5. Irregular and Unauthorized Expenditure for 2009-2010
Service provider
Amount
Year
Reason
Corrective Measures
Draft FCB
R446, 000
2009/10
A service provider was procedurally appointed to render communication and marketing related services for Broadcasting Digital Migration, however, the service provider was requested to place an advert paying tribute to the late Minister, contrary to its scope of work.
An investigation was conducted and concluded. Disciplinary action has been instituted against officials who were involved and the matter is before the courts.
Various service providers
(Unauthorized Expenditure)
R1,106, 000
No procurement process followed in acquisition of various goods and services below the rand value of R200k. No prior approval was obtained before purchasing.
The Tender Committee has recommended that precautionary letters be issued to officials who were involved and this process has commenced.
Intelligent Edge
R2, 427, 000
A service provider was appointed to render training to community radio stations without following procurement procedures.
A former employee responsible for this transaction has since left the department. However a legal opinion is being solicited in this regard to determine the possibility of recovery.
Making South Africa a Global Leader
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6. Making South Africa a Global Leader
Service provider
Amount
Year
Reason
Corrective Measures
Distinctive Choice
R4, 522, 000
2009/10
A Travel agency was appointed without following procurement procedures to render travel and accommodation to the offices of the former leadership of the Department.
A disciplinary process concerning officials who were involved in this matter is currently underway. The matter is before the courts. Legal advice is being sought wrt to officials who have left the Dept to determine the possibility of recovery.
SUB TOTAL
R8,501, 000
Making South Africa a Global Leader
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7. Making South Africa a Global Leader
Fruitless and Wasteful Expenditure for 2009/2010
The Department incurred fruitless and wasteful expenditure of R54, 000 as follows:
Service Provider
Amount
Year
Reason
Corrective Measures
Telkom
R30, 000
2009/2010
Interest on late payment due to an investigation related to a DoC line that was intercepted by a syndicate and made illegal calls
Telkom has since reversed this amount to the Department
Flights
R1, 000
Cancellation of air tickets
Transaction condoned and written off.
Duplicate payments.
R21, 000
Two service providers were paid for the same service.
Transaction not yet condoned, the matter is with the State Attorneys for advice.
Visa fees
R2, 000
Payments for visas for a trip that did not take place due to reasons beyond their control
Condoned and written-off.
Making South Africa a Global Leader
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8. Procurement is strictly done in line with the SCM policy
Corrective Measures
In response to non-compliance with supply chain management regulations as highlighted by the Auditor General, appropriate measures and key controls have been adopted and immediately implemented by the Department as follows:
Procurement is strictly done in line with the SCM policy
Sourcing of goods and services up to R200k has been centralized- a function which was previously left to individual business units and led to instances of non-compliance.
The evaluation of all tenders is done in line with the PPPFA regulations.
All Responsibility Managers have been trained on Supply Chain Management and PFMA (It is now a requirement that Managers must undergo this training prior appointment as Responsibility Managers)
Internal Audit Unit is fully functional and has concluded audit of critical areas such as supply chain and finance and recommended areas for improvements.
Making South Africa a Global Leader
in Harnessing ICTs for Socio-economic Development

9. Corrective Measures Cont’D
7. The Audit Committee is in place and functional
All finance policies have been reviewed to ensure that compliance is strengthened.
Regular meetings are held with the Accounting Officer to assess
the state of compliance in the Department and to identify areas that need further improvement.
10.The Departmental Bid Adjudication Committee is fully constituted and functional. Alternate members of the committee have now been appointed to ensure that there is rotation.
10.Disciplinary processes have been instituted against officials who have transgressed the law. These matters are at different stages in terms of progress.
Making South Africa a Global Leader
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10. Concluding Remarks
The Department of Communications takes the issues of compliance with PFMA, PPPFA and Treasury Regulations very serious.
The leadership of the Department has adopted zero-tolerance against non-compliance by ensuring that key internal controls are fully in place to prevent recurrence.
Compliance in the Department has significantly improved and a culture of compliance is beginning to emerge.
The Leadership of the Department has further adopted a “hands on Approach” to ensure that compliance is every employee’s Responsibility in the Department.
Making South Africa a Global Leader
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11. THANK YOU Making South Africa a Global Leader
in Harnessing ICTs for Socio-economic Development