SECTION 100(1)(b) IMPLEMENTATION IN THE (FORMER) DEPARTMENT OF ROADS AND TRANSPORT IN LIMPOPO PROGRESS REPORT PRESENTATION TO THE NCOP, 30 JULY 2014

Presentation Outline Background information Responses to the previous NCOP recommendations Progress to date Way forward Recommendations 2

In December 2011, Cabinet invoked Section 100(1)(b) of the Republic of South Africa Constitution Act, No. 108 of 1996, as amended, for purposes of intervening in the administration of five departments in Limpopo provinces; including the Department of Roads and Transport. The Department of Transport and the Provincial Department of Roads and Transport adopted a Diagnosis, Turnaround/ Recovery and Exit approach. On 9 July 2014 Cabinet decided to approve the transition of the national government intervention in Limpopo from Section 100 (1)(b) to Section 100 (1)(a). This presentation seeks to provide progress made in the (former) Limpopo Department of Transport. 3 Background information

Responses to the previous NCOP recommendations 4 NCOP recommendationsResponses 4.1The Department of Roads and Transport must fill the key vacant posts at RAL within the next four months The Board was appointed in April 2014 and has already conducted interviews for the positions of CEO and CFO. 4.4The next four months should be a transition to implement the exit strategy Procurement delegations were delegated to the HOD in February The five systemic challenges should be prioritized and remedies implemented within the next four months See the slides on progress made to date 4.7The Limpopo Provincial Administration should ensure compliance with the PFMA, 1999 See the slides on progress made to date

Progress to date 5 Status quo analysis Confirmed the issues that caused the qualification Turnaround Developed a Turnaround/ Recovery Plan. Received a team from National Treasury (PWC) to address 2012 / audit queries. The Department obtained an unqualified audit opinion in 2013/14 RecoveryDiagnosis Exit Rational for the intervention: Qualified audit opinion for 2010/11

Progress to date Rational for the intervention: No contract management Weak internal controls 6 Status quo analysis Majority of the issues raised by NT and AG confirmed Inadequate SCM policies Turnaround Developed a Turnaround/ Recovery Plan. Records management improved Reviewed SCM policies, financial delegations, and reconstituted bid committees. RecoveryDiagnosis Exit

Progress to date Rational for the intervention: No oversight over agencies 7 Status quo analysis Poor financial management at both RAL and GAAL. Weak Corporate Governance at both institutions. No Shareholders Compact signed at RAL. Vacancies at key positions. Turnaround Seconded a DOT official to act as interim CEO at RAL. Reinstated the CEO of GAAL. Facilitated the appointments of new Boards of Directors for RAL and GAAL. Approved Shareholders Compact. RecoveryDiagnosis Exit

Progress to date Rational for the intervention: Over commitments 8 Status quo analysis No proper verification of payments. Backlog in payments to service providers especially at RAL. Turnaround Cleared payments backlogs at Department and the agencies. Strengthened internal controls (checklist) RecoveryDiagnosis Exit

Progress to date Rational for the intervention: Irregular tender awards 9 Status quo analysis Weak quality assurance checks. Wrong application of sub-contracting and ceding and database (panel) policies. Probe by Public Protector on irregular award of a tender. Turnaround Provided technical and legal support. Supported forensic, criminal and DC investigations. Closed gaps. Developed an action plan to implement the Public Protector’s recommendations RecoveryDiagnosis Exit

More progress Cash situation stabilized. The Department has not over spent on the 2012/13 current budget. Paid all outstanding invoices with 99% currently being paid within the required 30 days. Implementing cost containment measures. Introduced internal control with regard to payments in the Department. From December 2011 to date a total invoices to the value of R were verified and processed for payment. Aligned the budget to the Strategic Plan, Annual Performance Plan and broken it down to project level. Brought additional capacity from DOT to do quality checks and invoice verification with regard to two main cost drivers, namely; roads infrastructure and bus contracts. Brought additional capacity from DOT to improve financial management and SCM at both RAL and GAAL. 10

More progress Seconded an official from the Department to act as interim CEO for the duration of the intervention. Reviewed 11 and approved 7 policies at RAL. Reviewed and amended 13 policies at GAAL. Re-instated the CEO of GAAL Improved contract management in the department. Implemented the Public Protector’s recommendations to an extent they are the responsibility of the Department. Outstanding issues are related to either legal or criminal processes underway. Obtained unqualified Audit Report for 2012/13 for the Department. Cleared the payments backlog especially at RAL. Stopped the usage of hand written cheques at GAAL 11

More progress Infrastructure delivery: 8 new roads projects (upgrade) were re- started after being discontinued because of lack of funds (over- commitments), 5 new roads projects were started. 3 roads rehabilitation projects were started, 3 bridge construction projects have started, 3 flood damaged projects are being undertaken, 36 preventative road maintenance projects commenced, 49 EPWP projects of various types were commissioned, and new and replacement road signs have been acquired and are being installed. Criminal cases: 5 cases have been registered with the police as a result of the forensic investigation. 30 cases of conflict of interest were investigates and 27 withdrawn. The former CEO of RAL has been arrested on fraud and corruption charges. One employee, one ex- employee of the department as well as 9 contractors were arrested in relation to the patching of potholes project (all but 4 where withdrawn). A former employee of GAAL was successfully convicted on cheque fraud. 12

More progress DC cases: Department: 7 cases on pothole patching project. RAL: 2 cases of insubordination and neglect of duties. The case of former CEO for constructive dismissal is arbitration at the CCMA GAAL: 4 cases of mismanagement and financial misconduct. A former employee of GAAL was successfully convicted on fraud (cheque fraud) charges. Former CEO and an official of RAL as well as a private service provider have been arrested on fraud and corruption charges. 13

Way forward The Department of Transport contributed to the MOA and issues specific for Roads and Transport that need closer cooperation in the spirit of Section 100(1)(a) include the following: Outstanding DC cases. Finalisation of the study to the appropriate models to deliver infrastructure and management of the airports in the province Provision of support on criminal and related investigations. Provision of support to the numerous litigation cases; especially at RAL. Support in the filling of key positions Support in the SCM practises for high value contracts. 14

Recommendation It is recommended that the NCOP notes the presentation. 15

Thank You