1. DAC AND IDT ENGAGEMENT ON THE LEGACY PROJECTS PRESENTATION TO PORTFOLIO COMMITTEE
5 SEPTEMBER 2017

2. TABLE OF CONTENTS PROJECTS IMPLEMENTED FOR DAC BY IDT
IMPLEMENTATION CHALLENGES
WINNIE MADIKIZELA-MANDELA BRANDFORT HOUSE
OR TAMBO LEGACY PROJECT
KHANANDA PROJECT
JL DUBE PROJECT
INGQUZA HILL MUSEUM PROJECT
RECOVERY INTERVENTION
DETAIL OF DAC-IDT ENGAGEMENT

3. PROJECTS IMPLEMENTED FOR DAC BY IDT
The Department of Arts and Culture engaged the services of the Independent Development Trust (IDT), an entity of the Department of Public Works (DPW), to implement its arts and culture infrastructure projects from the financial year
This was based on the need to hasten delivery of the priority DAC infrastructure projects, as the DPW was faced with a huge demand from other Government departments.
DAC entered into the following contracts with the IDT:
October to facilitate the construction of Ingquza Hill Museum for an approved amount of R
29 March to facilitate the construction of OR Tambo Garden of Remembrance for an approved amount of R
29 March to facilitate the construction of JL Dube site for an approved amount of R
18 July to facilitate the construction of Winnie Mandela House site for an approved amount of R
18 July to facilitate the construction of an exhibition at Waaihoek for an amount of R
18 July to facilitate the refurbishment of Dr Moroka House for an amount of R
to facilitate the construction of Enyokeni Cultural Precinct for an approved amount of R

4. IMPLEMENTATION CHALLENGES
DEPARTMENT OF ARTS AND CULTURE
4/21/2018
IMPLEMENTATION CHALLENGES
Ingquza Hill Museum: contractor completed the work and refused to hand over the keys as a result of non-payment by IDT;
OR Tambo: Contractor abandoned the site after non-payment by IDT;
JL Dube: Contractor abandoned the site after non-payment by IDT;
Winnie Mandela House: Contractor abandoned site after non-payment by IDT.
Enyokeni Cultural Precinct: Contractor and professional team left the site after non-payment and IDT has partially settled with the service providers following litigation .
Key challenges faced by the DAC with IDT include:
non-payment of service providers despite the funds being in IDT’s account;
appointment of service providers for more than the approved budget without DAC approval,
unreliable project progress reporting
unreliable financial reporting,
constant revision of figures to include obvious costs that were not included in initial approved estimates such as professional fees,
escalation of construction costs, and
absence from project steering committee meetings.

5. DAC-IDT ENGAGEMENT TO ADDRESS CHALLENGES
DEPARTMENT OF ARTS AND CULTURE
4/21/2018
DAC-IDT ENGAGEMENT TO ADDRESS CHALLENGES
Despite several high level interventions including meetings with the Director General, the IDT regional offices have repeatedly been unable to provide and implement project specific recovery plans.
Frequent escalation of construction costs such as at the OR Tambo Homestead went beyond the approved budget for the project. This was also discussed in various meetings including a meeting at Birchwood Hotel chaired by the DG attended by IDT and IDT appointed consultants AVANI-SA and IDC Architects.
IDT’s head office in Gauteng have similarly been unable to provide leadership in ensuring recovery interventions are in place and implemented.
In the first meeting with the newly created and established Project Management Unit (PMU) it presented a generic draft recovery plan for all heritage projects implemented by IDT without detailing the original targets, the progress, variance, the specific recovery actions, timeframes and resources.
The second PMU recovery plan was again rejected weeks later primarily because all it does is extend the delivery timeframes instead of indicating what actions will be undertaken to recover lost time and meet existing deadlines. Payment and IDT has partially settled with the service providers following litigation .

6. IMPLEMENTATION CHALLENGES
DEPARTMENT OF ARTS AND CULTURE
4/21/2018
IMPLEMENTATION CHALLENGES
DAC appointed Quantity Surveyors, Rubiquant Quantity Surveyors (RQS) found that DAC was overcharged on professional fees and materials and incurred non-project related costs at Enyokeni and also adverse findings at all the IDT-driven projects
As at 22 May 2017, following more than a year’s worth of unsatisfactory engagement and exchange of correspondence, the DAC terminated the relationship with IDT in November 2016, all the project responsibilities have been ceded to the Department.
IDT declared an interdepartmental dispute and on 27 March 2017 DAC and IDT agreed to make another attempt to resolve the matter outside the arbitration process failing which arbitration will presume
Several meetings of the task team to resolve the issues including the financial reconciliation have not led to progress because IDT would not have the relevant people such as the CFO at the meetings and/or would not be adequately prepared to engage on the information provided
All the IDT-driven projects were halted due to the termination of the relationship with IDT as a result of DAC’s dissatisfaction with IDT’s non-delivery and poor accountability.

7. WINNIE MADIKIZELA-MANDELA BRANDFORT HOUSE BACKGROUND
The Free State provincial Department of Sport, Arts and Culture (DSACR) requested the DAC for assistance with completion of a number of incomplete heritage sites in the province. The five Free State project sites are: Rev. Mahabane House, Bram Fischer House, Ms. Winnie Mandela House, Dr J.S. Moroka House and Wesleyan (Waaihoek) Church.
A service level agreement (SLA) was entered into between IDT, DSACR and DAC and was effective from 1 May 2012 to 31 March 2014 for a total budget of R 20 million to facilitate the completion of these five sites.
The R20 million was meant for the implementation of all the Free State project sites and inclusive of the R , IDT management fees.
A first tranche of R was transferred into the IDT’s account to implement these projects.

8. WINNIE MADIKIZELA-MANDELA BRANDFORT HOUSE IMPLEMENTATION CHALLENGES
An original budget of R was allocated to convert the house in Brandfort into an Interpretative Centre and the project has received a transfer amount of R
Site handover to the contractor was done on 11 November 2013, and from 24 March to 31 March 2014; and 04 April to 22 July 2014, the contractor suspended work due to non-payment.
In August 2014, the Contractor issued a letter of suspension of works with a possible termination of contract and from 19 August to 02 September 2014, the contractor suspended work citing payment rates disagreements with the IDT.
On 04 September 2014 IDT terminated the contract and IDT indicated that the main reasons for the contract cancellation at the time were the delayed payments IDT experienced in the changeover of IDT’s financial systems; and a Principal Agent who was not strong on contract management.
In 2015 various meetings, engagements, exchange of correspondence and other attempts to develop and implement numerous recovery plans failed to yield desired results

9. WINNIE MADIKIZELA-MANDELA BRANDFORT HOUSE RUBIQUANT REPORT KEY FINDINGS
A Gobodo forensic report pointed to gross irregularities on the DAC projects run by IDT.
DAC appointed an independent Quantity Surveyor, Rubiquant QS, to look into how IDT managed all the DAC projects.
The Rubiquant report issued on 12 August 2016 found out that the value of work completed by DM-DMZ Construction was at R
The total work certified amounts to R to date, Professional Fees
excluded.
Over expenditure of R occurred during the construction process and the DAC did not receive value for money.
On 09 November 2016, DAC sent a letter to IDT communicating the findings of the quantity survey and valuation investigations on all the IDT-managed projects; and confirmed the termination of MOA between DAC and IDT.
As an immediate action step, DAC is in discussion with the Free State Provincial DSACR HOD to immediately secure the site, from a security point of view. This is critical to avoid further deterioration of the site. 24 hour security would allay some of the concerns that have arisen.

10. FINANCIAL SUMMARY (as at 06/05/2016)
Original Tender amount (R)
Transferred amount (R)
Amount (R) Paid to
Balance (R)
Cost to completion (R)
Contractor
with IDT
( shortfall)
Contract amount
Architect
owed
to architect
Total 10

11. OR TAMBO LEGACY PROJECT
The OR Tambo family graves rehabilitation and the OR Tambo Homestead Project were completed in November 2014.
OR Tambo Memorial Project (Garden of Remembrance) comprises of the construction of the Legacy pathway, landscaping and the OR Tambo Statue.
The Contractor abandoned the site after non-payment by IDT.
The project was 5% complete and the contractor had already started with the earthworks and concrete was already casted on the trenches.
The reinforcement material (steel) left on site by the contractor had also rusted and the sand and aggregate was washed away by heavy rains, hence the project has to start afresh. 11

12. KHANANDA PROJECT
Scope of works consists of the construction of the Interpretative Centre.
The project was at roof level when the suspended thatch roof was shifted towards the northern side from uprising valley winds coming from the southern valley slope, thus leading to the collapse of the portion of the building.
The IDT indicated at the time that it had completed its internal investigation and according to the investigation, the structure has collapsed as a result of negligence of the contractor and/or the consultant.
The IDT indicated at the time that it is in the process of recovering the cost for repair of the structure from their respective insurances. 12

13. JL DUBE PROJECT
The JL Dube graves rehabilitation project at Ohlange in Inanda has been completed.
The JL Dube Homestead - Installation of the perimeter fencing has been completed.
The JL Dube Amphitheatre, Parking and Access Road project:
The contractor stopped the works on Amphitheatre, Parking and Access Road site since July 2015, pending the approval of the tensile roof variation order.
The contractor provided security on site at the time which was withdrawn when the contractor abandoned the site.
IDT indicated that the contractor gave notice of cancellation of the contract, and indicated therefore entitled to claim due to loss of profits as IDT is liable to honour the contract terms.
IDT also indicated at the time that the PSP’s were assessing the works, and compiling the final account for the contractor . 13

14. INGQUZA HILL MUSEUM The scope of work consists of the following:
construction of six workshops, display area, offices;
construction of a guardhouse, parking (including the external works);
installation of the perimeter fencing; and
construction of kitchen and toilets.
The project was continually interrupted by community disputes.
The contractor has completed all the works, the bulk electricity supply from ESKOM has not been connected.
Practical completion was achieved in February 2016.
The contractor has refused to hand over the keys to the IDT as he has not been paid for the work that has been completed.
DAC paid the contractor R4.3 million directly for work done including penalties in order to meet the deadline for official site opening on 6 June 2017. 14

15. RECOVERY INTERVENTION
The DAC ADG on 19 March 2017 approved a submission and a letter that requested DAC’s participation in the DHS infrastructure contract in terms of National Treasury Regulation 16A 6.6 for the completion of incomplete legacy projects.
The Terms of Reference for these projects were developed by the DAC Bid Specifications Committee (BSC) and approved by the DAC Bid Adjudication Committee (BAC).
On the DHS’s recommendation the DAC ADG wrote on 22 June 2017 to the Housing Development Agency (HDA) Chief Executive Officer (CEO) requesting:
a. Approval to participate in the HDA’s Professional Resource Team’s (PRT) infrastructure contract in terms of Treasury Regulation 16.A6.6.
b. Upon approval of the participation, provision of copies of the:
i. Bid advert;
ii. Minutes of the Bid Adjudication Committee meeting showing bid approval;
iii. Letters of Notification and Acceptance; and
iv. Contracting arrangements. 15

16. RECOVERY INTERVENTION
On 26 June 2017, the HDA CEO responded via that he has no objection to DAC’s request for participation and agreed that the requested information be sent to DAC.
On 27 June 2017, DAC received the following documents from the HDA.
Tender adverts;
BAC Approval & SCM report; and,
Contact Details of the service providers.
The above procurement documents were studied and the documents illustrate that the 76 HDA PRT companies have been appointed through a competitive bidding process as required by paragraph 16A6.6 of Treasury Regulation of 2005.
Letters to each of the 76 HDA PRT companies requesting their consent to the DAC’s participation in the HDA’s infrastructure contract as required by paragraph 16A6.6 of Treasury Regulation of 2005, were signed and sent to these companies.
The HDA selected nine (9) companies from the 76 as per their rotation system. DAC sent the Terms of Reference to the nine (9) selected companies and invited them to a compulsory site briefing
Compulsory site briefings took place on 15, 16 and 22 August 2017 at the JL Dube, OR Tambo and Khanda and Winnie Mandela sites respectively and 5 out of the 9 companies attended.
These companies will after the compulsory site briefing, send their proposals to DAC and the companies meeting all the requirements will be appointed after the closing date on 31 August 2017.
The appointed company will then sign the SLA with DAC and implement the project in line with the SLA guidelines. 16

17. DETAIL OF DAC-IDT ENGAGEMENT

18. ENGAGEMENTS THAT BEGAN DURING DG XABA’S TIME, ON A RECOVERY PLAN
DEPARTMENT OF ARTS AND CULTURE
4/21/2018
ENGAGEMENTS THAT BEGAN DURING DG XABA’S TIME, ON A RECOVERY PLAN
August 2013, Meeting with DG Xaba
19 March 2014, recovery plan meeting chaired by Dr Tyiso held with IDT delegation led by regional manager Ms Busi Bhembe (Minutes available)
31 March 2014, meeting arranged by DAC Director Finance Mr Mandla Langa to reconcile DAC and IDT project and financial records cancelled by IDT
11 April 2014, scheduled follow up meeting on meeting of 19 March 2014
10 June 2014, first draft recovery plan sent via to Dr Sakiwo Tyiso
June 2014, Internal DAC meeting convened to discuss the plan
26 June 2014, IDT recovery plan meeting where recovery plan was found to be inadequate a generic draft recovery plan for all heritage projects implemented by IDT without detailing the original targets, the progress, variance, the specific recovery actions, timeframes and resources
25 July 2014, urgent meeting convened by DG Xaba with IDT CEO Dr Stanley Bhembe, DAC, PSO and IDT, PMO to escalate the concerns raised by the portfolio committee and IDT’s inability to address these through ineffective recovery plans based on unreliable project and financial information
The second PMU recovery plan was again rejected weeks later primarily because all it does is extend the delivery timeframes instead of indicating what actions will be undertaken to recover lost time and meet existing deadlines.

19. DAC-IDT ENGAGEMENTS LED BY ADG NDIMA
DEPARTMENT OF ARTS AND CULTURE
4/21/2018
DAC-IDT ENGAGEMENTS LED BY ADG NDIMA
22 January 2016, Meeting convened by ADG Ndima with IDT, after which IDT submitted Reconciliation report and bank statements and DAC overall financial report per project and requesting extension of submission for the detail report, as we are still verifying the information.
5 February 2016, technical meeting (without the ADG) that IDT has requested to table the preliminary report is confirmed for
17 February 2016, meeting to present the updated comprehensive report to DAC ADG and IDT CEO
26 February 2016 meeting called by ADG Ndima with IDT with the request that IDT ensure that their legal and finance units are represented to discuss comprehensively the consolidated report and draft MOA. The meeting at DAC on Friday resolved that: A Task Team is established to work on the matter towards development of a full comprehensive report with full supporting documents,
The Task Team was driven by CFO Matlala and the Heritage Chief Director; IDT CFO committed to contact Chief Director Heritage by Monday 29 February 2016 with regards to the proposed Task Team meeting; The Task Team has to meet by Tuesday 01 March 2016; The Task Team was given a time-frame of two (02) Weeks to complete the exercise.

20. DEPARTMENT OF ARTS AND CULTURE
4/21/2018
CFO-CFO ENGAGEMENTS
Friday 11 March 2016, at a meeting held to kick-start the Task Team work the following was agreed upon: A Monthly Movement Schedule (File) be compiled of all projects/ programmes comprising the following; Breakdown of all the funds received agreeing to Programme Bank Statements from 1 April ’14 – 28 Feb ’16; Original Invoices (hard copies) for all expenditure for the period in question; Interest earned tying to Bank Statements; Management Fees charged (if applicable); Unpaid / outstanding Programme Expenditure; Unpaid/ outstanding Management Fees; which project was paid from which bank account; Contracts that have expired and those that are about to expire; The next session will be held at the IDT offices to inspect the documents and files that will be ready for the exercise.
17 March 2016 another project recovery plan submitted by IDT Mr Matsoso
17 March 2016, DAC CFO request project bank statements which were not included in the project files given to DAC
March 2016, letter from ADG Ndima to CEO Pakade requesting finalisation of the idt’s recovery plan, project completion budget and service level agreements
14 April from DAC CFO to IDT CFO acknowledging receipt of the recons and supporting documents, however DAC was unable to complete the review because there were no bank statements to compare the cash movements with invoices.

21. DEPARTMENT OF ARTS AND CULTURE
4/21/2018
CFO-CFO ENGAGEMENTS
DAC requested all the monthly bank statements since inception of the projects. To date the DAC has not received these, making it impossible to complete the financial reconciliation and be able to disclose satisfactorily the transactions for our Infrastructure projects managed by IDT. The again requests this information.
18 April 2016 DAC CFO to IDT CFO requesting meeting to discuss the above was sent.
19 May 2016 DAC CFO to IDT CFO indicating As per our meeting of the 4th May 2016, we resolved that IDT will prepare and submit expenditure report per project. It was also agreed that the reports with supporting documents (invoices and bank statements) will be submitted to DAC by the Monday 9th May. To date the DAC has not received any feedback or reasons why the information is not made available. The DAC has been following up with CFO and Mr Matsoso who apparently were out office for the better part of period. However on Wednesday the 18th Mr Matsoso mentioned that, they are still searching for bank statement in their archives and this will delay the submission of the reports. A written response was requested as to why IDT was not able to submit the report last week and by when this will be submitted. It must be noted that the feedback or report will affect the DACAFS which are due to the Audit Committee by Monday the 23rd. So the DAC will be unable to submit complete AFS because of the non-responsiveness of IDT.

22. DEPARTMENT OF ARTS AND CULTURE
4/21/2018
CFO-CFO ENGAGEMENTS
19 May response from IDT finance official Mr Themba Ngobeni indicates that challenges were experienced in getting bank statements in time from the bank, this is due to the related cost implications attached to that approach, hence we diverted to our archives first. Unfortunately, we have only managed to get over 65% of the statements up to so far and doing our level best to speedily get the remaining outstanding statements from the bank to forward through in one file together with the invoices.
27 May 2016, DAC ADG letter to IDT CEO indicating that DAC has appointed a quantity surveyor tasked with auditing/verifying all the projects that are currently being implemented by the IDT to enable DAC to submit complete AFS and requesting IDT cooperation with the firm.
14 July 2016 the DAC, led by ADG Ndima, met with the IDT, led by CEO Coceka. Salient points arising out of that meeting: The status of the IDT-implemented projects remains the same for now – projects may not proceed prior to the finalisation of the financial reconciliation. The 2 entities agreed that, as a way forward: The CFO’s of the 2 entities, together with the legal representatives of each entity, must meet within the next 2 weeks to resolve matters pertaining to litigation. The litigation in question is driven primarily by the lack of payment of professional/contractor fees, in particular on the Enyokeni Project. (Basil Read Contractor suing for up to R 17 million). (CFO & Legal Services);

23. DEPARTMENT OF ARTS AND CULTURE
4/21/2018
CFO-CFO ENGAGEMENTS
The Legal Teams must also advise asap on whether the current contract on OR Tambo Project can be terminated due to the re-scoping of the project . (CFO & Legal Services); CFO Matlala to write a letter, for signature by ADG Ndima, addressed to CEO Coceka, regarding the lack of cooperation, by IDT Regional heads/project managers. This is with reference to enabling the DAC-appointed Quantity Surveyor to obtain access to information related to the projects where he was to conduct project valuations.
CEO Coceka has undertaken to assure this necessary access; HPP Is to write to IDT Free State asap, stating that Totem Media must be compensated for the expenses they incurred in the storage of the Wesleyan Church Exhibition material. This is urgent as Totem Media is now suing for the money owed; HPP to draft a letter for signature by ADG Ndima, indicating the immediate cessation of any contract with the PMO; A progress report will be given to the ADG and the CFO by 28 July 2016; Upon completion, report being derived by the DAC-hired QS will be shared with the IDT upon conclusion; In the longer term the political principals will be briefed on developments related to the Legacy Projects.

24. DEPARTMENT OF ARTS AND CULTURE
4/21/2018
CFO-CFO ENGAGEMENTS
27 July 2016, Letter to IDT CEO on preliminary report: quantity surveying and evaluation of infrastructure projects: urgent intervention to avail project information and meeting of DAC and IDT legal team
October 2016, DAC ADG Letter to IDT CEO Pakade registering concern that no response had been received to the 27 July letter, communicating of findings of the quantity survey and valuation on Enyokeni cultural precinct project as well as confirmation of termination of the memorandum of agreement between IDT and the DAC in respect of all projects managed by the IDT.
7 November 2016, letter from IDT CEO to DAC ADG giving notice of the declaration of an intergovernmental dispute
20 February 2017, State Attorney confirms the appointment of a mediator
29 March 2017, meeting arranged by IDT CEO with DAC DG whilst arrangements for mediation meetings were being made through the mediator. The meeting resolved to make a last attempt to find a solution outside the mediation process and to make available to IDT relevant extracts of the Gobodo Forensic investigation report and the Rubiquant Quantity Surveyors report.
10 May 2017, Meeting convened by CD/HPP to get and discuss IDT’s feedback on the two reports and to finalise the financial reconciliation

25. DAC LEGAL UNIT ENGAGEMENT WITH IDT
DEPARTMENT OF ARTS AND CULTURE
4/21/2018
DAC LEGAL UNIT ENGAGEMENT WITH IDT
21 June 2017, meeting convened by CD/HPP had to be postponed due to among others, that there was no one from IDT who was empowered to address Gobodo Forensic Investigators (GFI). The GFI team was then excused from the meeting in order not to waste their time. There was no one from the IDT Finance Unit to address the matter of the Financial Reconciliation.
26 June 2017, the 3 session engagement with IDT, the IDT has again requested a session with Gobodo and Rubiquant. Both will be required to present their findings to the meeting. This session will include DAC Units Legal Services, Internal Audit, Finance and Heritage (HPP). The IDT wishes for the DAC to join it in the pending legal action between the IDT and Royal Haskoning. Legal Services is handling this item.
The IDT is of the view that as the DAC served a termination letter, then DAC should take over the projects and assume all attendant liabilities as dictated by the MOAs.
In the view of the IDT legal representative, the CFO and the CEO, this therefore implies that there is no point in pursuing the arbitration process. Legal Services is handling this

26. SUMMARY OF DAC-IDT CHALLENGES
Ineffective Communication between Client and Implementation Agent
Work undertaken without explicit approval of Client (DAC)
Recovery Plans that were not implemented
Lack of granular detail on the Financial Reconciliation
Lack of readiness to engage on the Gobodo Forensic Investigation regarding Enyokeni Cultural Precinct
Lack of responsiveness on the Rubiquant Quantity Surveyor Report

27. DEPARTMENT OF ARTS AND CULTURE
4/21/2018
THANK YOU