DA: Statement by Gareth Morgan, Democratic Alliance Minister of Water and Environmental Affairs, on Abalone fisheries (02/03/2010)

2nd March 2010

The Minister of Water and Environmental Affairs' response to a Democratic Alliance (DA) parliamentary question on matters related to payouts to abalone rights holders, in lieu of their fishery having been closed in February 2008, only serves to raise more questions. The Minister will need to provide further justification why a private business was chosen for a R82m project without following the normal tender process. (See response below)

A business called Anix Consulting was appointed late last year to distribute financial assistance to abalone rights holders as part of the Sustainable Livelihoods for Coastal Communities Project. The Minister has called this set up "a vehicle through which financial assistance to abalone rights holders is distributed". The DA asked in a parliamentary question whether this entity had been appointed through a tender process, which would by definition imply numerous bidders. The Minister in her response stated that this R82m project was appointed through "a process akin to an emergency appointment in terms of the Supply Chain Management Guide". The Minister then goes on to justify this appointment by saying that "payments for Social Responsibility Policy and Projects of the department are classified as transfer payments in the Estimates of National Expenditure and are, as such, not required to follow supply chain management prescripts".

The Minister's response is unsatisfactory and only serves to raise further questions:

Firstly, the Minister needs to justify why this appointment is anything like an emergency situation. The social relief plan for abalone rights holders affected by the closure of the fishery had been in discussion for 18 months prior to this event.
Secondly, the Minister states that her department "endeavoured" nevertheless to follow the tender process, however, it must be asked whether there were more than one entity considered for this job, and what unique specialities Anix Consulting brings to this project. The use of the word "endeavoured" could imply that the Department itself believes it was on shaky ground with the awarding of this contract. The minister also said that she couldn't follow up with the tender process but has not given definitive reasons for why she couldn't follow it through.
Thirdly, while transfer payments are common in government, such payments are normally made to other public entities. The Minister needs to explain how this provision can be used to justify a substantial payment to a private company.
Fourthly, the Minister needs to justify why a private business was contracted in the first place to do this project when Marine and Coastal Management and the Department of Environmental Affairs have in-house resources to conduct this initiative. In effect now, a private company will earn a management fee to do a project that could have been done by government.

It is worth noting that only a few months ago officials from Marine and Coastal Management were hauled in front of the Standing Committee on Public Accounts (SCOPA) following a damning Auditor-General's report on the state of handling of confiscated abalone. The AG in that case raised concerns about matters related to the awarding of tenders and the costing of tenders. Marine and Coastal Management has a record of poor financial management and therefore it would not be unjustified to raise concerns about the procedures followed to award this contract for payouts to abalone rights holders.

The DA will be submitting further parliamentary questions on this matter, and will refer the relevant parliamentary answer to the Auditor-General's office for his comment.

MEDIA ENQUIRIES:
Gareth Morgan MP - 072 528 3910
Jo Lennox - 082 780 0242


FOR FURTHER INFORMATION:

[parliamentary answer below - note that the "certain company" referred to in the question below is Anix Consulting]

QUESTION NO. 257

INTERNAL QUESTION PAPER NO 2 NW272E

(1) What is the role of a certain company (name furnished) with regard to the decision to pay abalone rights holders a monetary amount as compensation for the period within which they could not utilise their rights;

(2) Whether they were appointed by a tender process; if not, why not; if so, (a) what is the value of the contract they have been awarded and (b) what are the further relevant details;

(3) Whether Marine and Coastal Management (MCM) has been informed that the said company is in the process of being deregistered; if not, what action will MCM take to rectify the situation; if so, how did they obtain the tender?

257. THE MINISTER OF WATER AND ENVIRONMENTAL AFFAIRS ANSWERS:

(1) The role of the appointed company, as regards the decision to pay abalone rights holders a monetary amount as compensation, is to distribute the financial assistance to abalone rights holders as part of the Sustainable Livelihoods for Coastal Communities Project of the department, which also includes creating alternative livelihoods for Abalone rights holders. It is thus also a vehicle through which financial assistance to abalone rights holders is distributed.

(2) The company was appointed through a process akin to an emergency appointment in terms of the Supply Chain Management Guide. It must be noted that payments for Social Responsibility Policy and Projects (SRPP) of the department are classified as transfer payments in the Estimates of National Expenditure and are, as such, not required to follow supply chain management prescripts; although the department endeavored to follow these in this process. The contract amount for which the company has been appointed as a Project Implementer amounts to R82 million and is for the Sustainable Livelihoods for Coastal Communities Project, which includes R10 million for alternative livelihoods of abalone rights holders.

(3) The department is not aware that the current Companies and Intellectual Property Registration Office (CIPRO) status indicates that the company is in the process of deregistration.
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