Tighter controls were required to deal with politically exposed persons and anti-corruption methods had to be put into place. There were matters that Accounting Officers had to deal with, but there were also criminal procedures to be followed by the law enforcement agencies. That was what had made ANC Members so defensive in the NCOP sitting the previous day. He confirmed that Members were correct that National Treasury could not monitor every single expenditure item. The Committees frowned on narrow black empowerment and wanted to champion an inclusive economy. Procurement took place on a daily basis and provinces had their own procurement processes, officials, departments, etc. In a normal environment, one only picked up irregular expenditure or fruitless and wasteful expenditure at the end of the year. As DG, he had not issued any guidelines regarding the Solidarity Fund but he had held a meeting with the board chairperson and the CEO to ensure that the prescripts were in line with government policy of maximum value for money. In addition, the funds that National Treasury had allocated had been supplemented by provincial governments. The Executive Authorities and Accounting Officers had to take the matter forward immediately. He also suggested that he and his Co-Chairperson should write to the Chair of Chairs suggesting that Portfolio and Select Committees hold the Criminal Justice system far more accountable. The whole of government should take responsibility to build local capacity and give opportunities to SA entrepreneurs and not pay middlemen. He also noted that all the items required for Covid-19 were not new but had been bought by the state on an ongoing basis and so National Treasury had provided a list of suppliers who had previously supplied the goods. Instruction Note No 3 was issued in relation to the Imperial Medical Services and Business Unity South Africa situation. 1 of 2020/2021: Amended Month-End Closure Dates For 2019/2020 and 2020/2021, Treasury Instruction No. It could not be underscored how greatly that trust in government, National Treasury and the governing party had been undermined. The National Treasury Instruction Note states clearly: the description of item, suppliers name, unit price, total price, whether the price was in line with National Treasury Instruction. National Treasury should build the capacity to procure all the PPEs and essentials needed to fight Covid-19. INVITATION AND EVALUATION OF BIDS BASED ON A STIPULATED MINIMUM THRESHOLD OF CONVERSION PROCESSES FOR LOCAL PRODUCTION AND CONTENT FOR STEEL PRODUCTS AND COMPONENTS FOR CONSTRUCTION. What law permitted National Treasury to engage with Imperial Logistics or Business Unity South Africa which did not have any legislative power to deal with procurement? New controls were being considered following discussions between the Auditor-General and National Treasury and they would jointly issue a “Preventative Guide” that would advise departments and entities on how to follow the Instruction Notes. The ANC had come across the way it did in the NCOP because the entire debate was not about the budget and appropriations and proposals relating to it, but the debate had been simply about the corruption issue and while that was important, the purpose had been to debate the Bill. Co-Chairperson Maswanganyi warned Members that many sets of minutes had to be approved. 28 July 2020 He was not saying that international trade should be closed down, but if there were goods that could be manufactured in SA, why were they not manufactured in SA? 25 June 2020 Provincial Treasury Instruction Notes ... National Treasury Instruction 3 of 2015/2016. There had to be a far greater focus on that area. It was not humanly possible. The Portfolio Committee on Police would also need to address the matter. The Minister invited any suggestions to strengthen the capacity and ability of National Treasury. There had also been engagement between the Secretary-General of COSATU and Deputy Minister Masondo. It was necessary to ask who had given the instruction to sanitise those areas that did not need to be sanitised. He added that there was a view from Mr Ryder that the ANC was tone deaf. During the meeting, the MEC for Finance in the Free State had sent him the list of companies that had received contracts in the Free State. Mr W Wessels (FF+) said that it had been completely predictable that the current corruption involving Covid-19 funding and also PPEs would take place. Name: 20110531 Instruction Note 32 - Enhancing Compliance Monitoring SCM.pdf Title: 20110531 Instruction Note 32 - Enhancing Compliance Monitoring SCM Link: Business Units: Office of the Accountant-General Document Types: Downloads Order: Created at 5/31/2011 12:25 PM by Marius Klue Last modified at 5/31/2011 2:08 PM by Marius Klue That put the Co-Chairpersons in a different category from some of the other people. The Member should get the facts straight. That was a common experience of the lack of professionalism or courtesy from the Minister’s office. He reminded everyone that, as much as they wanted the Auditor-General to get into full swing, the internal audit committees had a responsibility to do their work. What guidelines had been given to departments at all levels to deal with expenditure on Covid 19? Response by National Treasury • Regulation 8 (4): allows organs of state to “self designate” provided they consult with the dti and National Treasury • Regulation 8 (5): bid that fails to meet the required local content is unacceptable He gave credit to those officials who had worked hard and honestly. That was the point that he was making; not the subjective view that one needed the right people in the right places. They would have to consider the case of the politically exposed persons (PEPs) and deal with them. The Trade and Industry and Police Portfolio Committees could sit in a joint meeting. The majority of the R1.4 trillion voted in went to the procurement of a huge range of goods from pencils to petrol. He proposed that the DG should get back to the Committee within three days with a date when the departments, etc. Trust had been broken in some instances. He would provide the numbers as requested by Mr Shivambu but from a spending side, the classification of certain goods had to be corrected and so a number of general entries had to be made. The Executive Authority should have addressed that failure with the relevant Accounting Officers. The Minister added that South Africa could learn from the common platform and common pricing set by the African Union for all countries purchasing materials. 14 July 2020 The police agencies should also be invited as National Treasury could not arrest people. It had become clear that there was a prima facia case to be made that not in all instances had the Instruction Notes been followed. Middlemen or rent-seekers would not create a new industrial or manufacturing class. Co-Chairperson Carrim thanked his Co-Chairperson for doing most of the chairing and he thanked the Members for their participation. It involved spending the funds in an appropriate way. The Deputy Minister noted that, as far as reactive measures were concerned, and trying to find the thieves,  one did need to follow forensic audits, etc. Guidance as to what can be considered impractical can be found in the National Treasury practice Note No 8 of 2007/2008 which provides that circumstances involving urgent or emergency cases or a sole supplier of particular goods or services, may be impractical and warrant a deviation. The Auditor-General would begin to audit the Supplementary Budget immediately and not wait until the end of the financial year. It would be wrong to say that black economic empowerment was responsible for all the corruption. He suggested that he and co-Chairperson Carrim should find a date for the proposed meeting. The problem was that it was so difficult for the average company to enter into tender with government that the only people who did so were those with nefarious motives. What would happen if an Accounting Officer had deviated from the prices? 7 - Unauthorised, Irregular and Fruitless and … The Auditor-General would begin to audit the Supplementary Budget immediately and not wait until the end of the financial year. The matter could not be hushed as public trust could not be restored if those questions were not answered. Mr Mogajane explained that the design of the state was such that National Treasury’s role was limited but nothing prevented National Treasury from intervening with regard to procurement at any level whenever required, as per legislation. A ICT platform would be developed so that departments and entities could procure more consistently and efficiently. He agreed that Members had to see action, especially from the Justice Sector. The Finance Committees would work with the other Committees because it was not National Treasury’s responsibility alone for monitoring procurement. He added that the Co-Chairpersons would not prescribe but as Co-Chairpersons they would suggest some broad direction. 07 July 2020 PT Instruction Note No. Officials in supply chain management who were in the network of corrupt service providers had to be isolated and something had to be done to cleanse those networks of corrupt officials and service providers. 7.1 This practice note is issued in terms of sections 76(1) to 76(4) of the PFMA which empowers the National Treasury to issue instructions applicable to all institutions to which this Act applies concerning any matter that may be prescribed for all institutions in terms of this Act. Minister Tito Mboweni stated that he had organised a choreography regarding the submission. Nevertheless, there were those who were taking advantage of the situation, both in business and officials, especially those in supply chain management. He was not averse to that but as things stood; he had no reason to believe that National Treasury was incapable. He noted how prophetic that was. Pre-lockdown, the economy had been in a technical recession and there had been a downgrade by rating agencies. What steps would be taken against those individuals who were stealing from the people? The regulations had been carefully refined over the past 26 years but he had not seen a single person jailed for corruption. 06 for 202021: IFS changes, Withdrawal of Errata to Instruction Note 3 of 2017/18 cost containement on cellphone expenses, Amendment to Treasury Instruction No. Co-Chairperson Maswanganyi indicated that Mr Hill-Lewis wished to say something. Regulations were good but when regulations were so over-burdensome that they prevented good people from doing business with government, there had to be a re-think. Some of the COSATU proposals and his ideas could have stopped much of the corruption as it had been enormously predictable. Everyone should also be aware that when someone was allocated a contract, it was not a gift. But, there were no actual consequences. An ICT platform should be developed so that departments and entities in rural areas could not be charged more than those in urban areas. It should have been foreseen that a large sum of money to be spent without procurement controls because of the emergency would have led to corruption. 02 of 2018-2019 on Month End Closure Procedures for 2019-2020, Treasury Instructions issued in 2017/2018, Dashboard for Practice Notes and Treasury Instructions - OAG 2017-2018, Treasury Instruction 01 of 2017-18 Travel Project Transitional Period Extension up to 30 Sep 2017, Treasury Instruction 02 of 2017-18 National Travel Policy Framework, Treasury Instruction 02 of 2017-2018 Annexure A National Travel Policy Framework, Treasury Instruction 03 of 2017-2018 Cost Containment Measures, Treasury Instruction 04 of 2017-2018 Cost Containment Measures related to Travel and Subsistence, Addendum to National Treasury Instruction No 4 of 2017/2018 Revised Cost Containment Measures Related to Travel and Subsistence - Revised Maximum Allowable Rates for Domestic Accomodation and Meals, Treasury Instruction 05 of 2017-2018 on Intergrated Financial Management System (IFMS), Treasury Instruction No 6 of 2017-2018 on Retention of Surpluses for CI & 3A & 3C Entities, Errata to National Treasury Instruction no 6 of 2017-2018, Treasury Instruction 07 of 2017-2018 on Tax Compliance Status, Treasury Instruction 08 of 2017-2018 on Month End Closure Procedures for 2018-2019, Treasury Instructions issued in 2016/2017, Treasury Instruction 1 of 2016/2017 on Provincial Bank Accounts, Treasury Instruction No 2 of 201617 Cost Containment Measures, Treasury Instruction No 3 of 2016-2017 Cost Containment related to Travel and Subsistence, Treasury Instruction No 4 of 2016/17 Minimum Bid Specification Requirements for Travel Management Services, Treasury Instruction No 5 of 2016/17 on Month-End Closure Procedures for 2017/2018, Treasury Instructions issued in 2015/2016, Treasury Instruction 3 of 2015/2016 on Retention of Cash Surpluses by Constitutional Institutions and Public Entities listed in Schedule 3A and 3B to the PFMA, Treasury Instruction 5 of 2015/2016 on Month End Closure Procedures for 2016 2017, Treasury Instructions issued in 2014/2015, Treasury Instruction 1 of 2014/2015 on Prohibition of Internet Payments via the Internet, Treasury Instruction 2 of 2014/2015 on Quarterly Reporting for Constitutional Institutions and National Public Entities, Treasury Instruction 4 of 2014/2015 on Management Fees to be charged by the Independent Development Trust, Treasury Instruction 5 of 2014/2015 on Month – End Closure Procedures for 2015/2016, Treasury Instruction 6 of 2014/2015 on Departmental Financial Reporting Framework, Treasury Instruction 7 of 2014/2014 on Provincial Bank Accounts, Treasury Instructions issued in 2013/2014, Treasury Instruction 01 of 2013/2014 Cost Containment Measures, Treasury Instruction 02 of 2013/2014 on Writing off Irrecoverable Debts, Treasury Instruction 02A of 2013/2014 on Writing off of Debts, Treasury Instruction 03 of 2013/2014 Month End Closures, Development Co-operation Information System, Neighbourhood Development Partnership Grant, Collaborative Africa Budget Reform Initiative (CABRI), Independent Regulatory Board for Auditors (IRBA). Co-Chairperson Carrim reminded Members that COSATU had supplied them with a set of documents in which there was reference to shoddy PPE equipment. Mr Mogajane responded that no Accounting Officers had faced consequence management but that would happen as he and the Auditor-General unpacked what had happened in the departments. One should also look at the objective circumstances and ask why people were doing that. Co-Chairperson Carrim agreed that the issue of Instruction Notes was fine as far as he could see and Treasury had done what it was expected to do in terms of Instruction Notes, but it was not having an effect. He himself still did not know if it was right or wrong but 3 500 delegates had decided on it. The COSATU proposal for the immediate establishment of rapid response courts to deal with corruption (based on the model used during the 2010 Soccer World Cup) was a good one. The above sets of Minutes were adopted by the Select Committee on Finance without amendments. One struggled to ever get a reply from the Minister’s Office. detailed Treasury Instructions was an illusion, and in fact accountability was undermined, as departments were required to obtain ‘approval’ from Treasury for example, to ‘write-off’ minor debts. There was a cost to compliance. When the Finance Committees met with National Treasury and the police structures, the relevant Portfolio Committees should be attendance. However, National Treasury could determine the price of goods to be purchased for a transversal contract. The DG listed the Instruction Notes issued for both the PFMA and the MFMA institutions. Treasury did intervene as and when required. Treasury Instructions are issued under Section 80 of the Public Finance Act 1989. 07 of 2019/2020 Month-end Closure Procedures for 2020/2021, Treasury Instruction No. For example, if Treasury was alerted to a problem, it would intervene. Was there a guideline in relation to localised procurement? Mr Mogajane responded to the question on slide 13 of whether National Treasury would be able to publish the tenders and contracts. What steps would be taken against those individuals who were stealing from the people? 04 of 2020/2021: Extension of IYM and quarterly reports, Treasury Instruction No. The above sets of Minutes were adopted by the Standing Committee on Finance without amendments. He would talk about next steps at the conclusion of the conversation with the Committees. NT SCM Instruction No 1A of 2016 2017. On the preventative side, there were a number of controls that departments had, including laws, rules and Instruction Notes and good Accounting Officers but, despite the preventative measures, there were some people who were not providing a good service for South Africans. Something had to be done about politically exposed persons. The task of stopping corruption had to be dealt with by Parliament immediately, and not later. It would be wrong to condemn B-BBEE and blame that for all the corruption. That had just become worse in the crisis. And that was why, as part of a special regime, National Treasury and the Auditor-General had agreed not to wait until the end of the year but to audit immediately to understand what had been spent and Treasury would also be able to identify who had been paid for the goods. That was what had been happening for many years and that was why the country was facing a pandemic of corruption. Secondly, it was up to law enforcement authorities to follow up on those companies that had been awarded tenders illicitly. He would be having that conversation with provincial Ministers of Finance the following day. If National Treasury had a law or instruction and people did not comply and yet there was no consequence, there was no point in the law or the instructions. The PFMA dictated that departments had to supply expenditure on a monthly basis, and on a quarterly basis, National Treasury published that information. He apologised if he appeared agitated and angry but he had come out of a nine-and-a-half hour session of the NCOP the previous day where the Budget had been passed. 13 of 2020/2021 on Month End Closure Procedures, Treasury Instruction No. NT National travel and accommodation project March 2017. One had to be conscious and look at the facts. Co-Chairperson Maswanganyi invited the Minister to respond. In order to be transparent, all details of the companies that had won a Covid-19 related tender  with any organ of state would be published, including the cost of the contract, the names of others who had tendered and the date of establishment of the company that had won the bid. The irregular expenditure only came at the end of the year. If he had not taken action in such a case, then the Minister of Finance would have had to act against him as he had failed to act. Co-Chairperson There should be an ongoing programme for monitoring the issue and that the Committee should receive regular reports from National Treasury and meet with the Department at least once a month. Minister Mboweni agreed that the issue of timelines to require details of contracts won was urgent and should not take too long. He would leave that for another day because the matters that they were dealing with were so serious that it required everyone to work together to right the wrong but, in the process, not to taint every contract with the same negative tone because it was not the case. In such a situation, a new bourgeoisie would turn to the state to make money. The subjective response was that some people were inherently corrupt. He requested the Co-Chairperson to make some opening remarks. The Members should debate the thing of centralising. Had any action been taken against a single Accounting Officer through the processes of consequences in terms of the PFMA or the MFMA? Mr F Shivambu (EFF) said he had not heard what the DG was saying about Instruction Notes and Guidelines that had been given to all departments and what should actually happen. That could happen if goods were procured from abroad, outside SA. He concluded by informing the Committee that National Treasury was looking forward to the guidance and criticism of Members as the South African public relied on MPs to represent them and to ensure that National Treasury managed public finances responsibly. Why had National Treasury allowed departments to procure instead of creating centralised procurement, knowing the risk of decentralised procurement? In addition, departments and entities had to start automating and modernising procurement management. 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