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Presented by: Mr Fanie Makhanya Chairperson 04 FEBRUARY 2014

SAHRA PRESENTATION TO THE PORTFOLIO COMMITTEE. Presented by: Mr Fanie Makhanya Chairperson 04 FEBRUARY 2014. PURPOSE. The purpose of this presentation is to: To give the Portfolio Committee of the Progress of SAHRA’s intervention;

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Presented by: Mr Fanie Makhanya Chairperson 04 FEBRUARY 2014

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  1. SAHRA PRESENTATION TO THE PORTFOLIO COMMITTEE Presented by: Mr Fanie Makhanya Chairperson 04 FEBRUARY 2014

  2. PURPOSE The purpose of this presentation is to: • To give the Portfolio Committee of the Progress of SAHRA’s intervention; • To give the status report on the areas identified by the Committee and • To introduce the newly appointed SAHRA Council to the Committee.

  3. PRESENTATION OUTLINE • BACKGROUND • TURNAROUND PROCESS • FINANCE TEAM • OD TEAM • PROPERTY STRATEGY TEAM • FORENSIC AUDIT • THE STATUS REPORT OF THE FOLLOWING: • THE STATE OF FUNCTIONING OF PHRA’S • THE STATE OF OUR PROPERTIES WHICH ARE LEASED BELOW MARKET VALUE • THE PROTECTION OF THE SA HERITAGE AGAINST ILLEGAL • THE REPATRIATION AND PROTECTION OF THE SA STRUGGLE HERITAGE • THE STATUS OF DICTRICT 6 • THE RECRUITMENT PROCESS OF THE CEO • THE INTRODUCTION OF THE NEW COUNCIL

  4. Background • During 2011/2012 SAHRA received a negative audit finding that was disclaimed • The Council appointed a turnaround task team to correct the disclaimed audit • SAHRA reported to the Portfolio Committee the intervention strategies adopted to redress the challenges in the organisation. This included the appointment of Consultants to address problems in the following areas: • Finance • Assets • Organizational Development • Property Portfolio • Forensic Audit

  5. The Functions of the teams • The Finance Team: helped us to clean the mess that spans the period of 3 years • The property Team; submitted the draft report to the Council and have made their inputs and they will submit the final report • The OD Team: completed the skills audit, Org. culture audit, Performance Management system, Organizational Performance Management Framework, Wellness Program; salary benchmarking • The Forensic Report; Just received the final report

  6. Outcome of the first phase of intervention: Audit history

  7. Basis for the Qualified Audit Opinion

  8. Basis for the Qualified Audit Opinion

  9. THE STATUS OF THE PHRAS 1.Amafa aKwazulu Natali represented in Council and fully functional 2.Heritage Western not represented in SAHRA Council but fully functional 3.Eastern Cape represented in Council and fully functional with limited resources 4.Gauteng represented in Council and performs all functions except Archaeology, Palaeontology and Meteorites 5.Free State represented in Council and performs all functions except Archaeology, Palaeontology and Meteorites 6.Northern Cape not represented in Council perform built environment functions 7.Limpopo no Council but represented in Council perform built environment functions. 8.Mpumalanga no Council but represented in Council perform built environment functions 9.North West no PHRA Council not represented in Council. SAHRA Perform functions .

  10. THE STATUS OF SAHRA Properties Properties Which Are Leased Below Market Value

  11. SAHRA Progress - Properties The South African Heritage Resources Agency owns a number of cottages in Struisbaai and during the 1980’s, the National Monuments Councilentered into lease agreements with various tenants. The lease agreements bind SAHRA to a twenty five year lease agreement that can be renewed by the tenant for a further twenty five years, with a rental of R1 a year. SAHRA’s previous council had requested that these lease agreements be canceled and the tenants be evicted. SAHRA’s legal advisor proceeded with eviction letters and sought legal advise from Bowman Gilfillan Attorneys.

  12. STRUISBAAI FISHERMAN COTTAGES

  13. TERMS OF LEASE AGREEMENT • The rent shall be the sum of R1.00 per year payable annually • The Tenant may not cede the rights to the lease to the cessionary or sublet the lease without permission from SAHRA • On termination of the initial period (the first 25 years) the Tenant AT HIS OPTION is entitled to renew the lease for the same annual rental of R1.00. • In the event of termination of the lease by reason of death, the Tenant has an option of ceding the lease to a beneficiary stipulated on the lease agreement • The Tenant shall have the right to renew the lease for a further period of 25 years provided that he shall give notice to SAHRA in writing at least one month prior to expiration of this lease.

  14. LEASE AGREEMENTS CURRENT STATUS OF • COTTAGE 1 – CHARLES THESEN – RENEWED LEASE on 23RD APRIL 2008 • COTTAGE 2 – HENDRE & REHAN PITOUT – RENEWED on 21st NOVEMBER 2005 • COTTAGE 3 – HENRY VILLET – KLOHN AND PARTNERS - have sent eviction letter no response, tracing agent employed to locate • COTTAGE 4 - NOELETTE & HAROLD WILMOT – have sent eviction letter no response, tracing agent employed to locate

  15. CURRENT STATUS OF LEASE AGREEMENTS • COTTAGE 5 – DREYER – RENEWED LEASE on 29 August 2006 • COTTAGE 6 - JOHANNES - RENEWED LEASE on 21 June 2006 • COTTAGE 8 - RADEMEYER & OOSTHUYZEN - THE ORIGINAL TENANT CEDED THE LEASE TO A FRIEND – THE FRIEND HAS RENEWED THE LEASE. • COTTAGE 9 – GOUS & FORTUIN - RENEWED LEASE ON 28TH MAY 2006

  16. Position of Tenants • Prior to obtaining a Legal Opinion, the SAHRA met with the Tenants to discuss the option of entering into a new market related lease agreements: • Cottage 1 – not interested as the lease is renewed. • Cottage 2 – not interested as the lease is renewed. • Cottage 3 – unable to reach Tenant • Cottage 4 – unable to reach Tenant • Cottage 5 - not interested the lease is renewed. • Cottage 6 – Is willing to enter into a new lease agreement. • Cottage 8 – Is willing to enter into a new lease agreement. • Cottage 9 - Is willing to enter into a new lease agreement.

  17. Legal Position Lease period The following Legal Position was obtained from Bowman Gilfillan Attorneys: • The lease is renewable twice – the period of the lease may not exceed 75 years • This is based on “on termination the right to renew for a further 25 years” & “such renewed lease shall again be renewable on similar terms”

  18. Legal Position Improvements to properties • Even though certain tenants may have incurred expenses • Improvements made to the homes amounting to R250 000.00 • This does not imply that the lease agreement has perpetual renewals • The tenants were compensated by nominal rental and 75 year term

  19. Legal Position Termination on the basis of non registration of lease • Some may argue that because the lease agreement is a long a lease it is invalid as it is not registered. • The Formalities in respect of Leases of Land Act 18 of 1969 refers to “successors in title”. • All successors in title are bound by long leases irrespective of whether they are registered or not. • SAHRA is a successor in title as it “inherited” the lease from the NMC

  20. Legal Position Terminate Leases • Leases that are not renewed = those that have not exercised their option of renewal by writing to SAHRA are therefore subject to the Rental Housing Act – “a month to month lease” and can receive one months notice of termination. • Leases that were renewed = considering that the lease agreement is not in perpetuity and therefore a legal binding contract and further considering that it was not necessary to register the lease agreement.- the lease agreement cannot be simply terminated.

  21. Options for consideration by SAHRA • At the time the leases were concluded – during the National Monuments Act – the NMA required that the Minister give consent in writing prior to the leasing of land. • The argument is that if there is no such consent then the lease was ultra vires. • A further option would be section 27 (19) of the NHRA – where SAHRA may make regulations pertaining to heritage and regulate conditions of heritage sites – perhaps obtain a “fair market rental” through proclamation of regulations. • However SAHRA would have to show that the reason for drafting regulations of this sort was according to the principles of heritage management and within the general powers and duties of SAHRA. i.e. why is it necessary to obtain a “fair market related rental”

  22. Consolidation of the property challenges SAHRA is taking all of the above into consideration as the draft Property Management Strategy is being finalised. The Property strategy will assist in the preservation of the our heritage for future generations

  23. PROTECTION AGAINST ILLEGAL EXPORT • SAHRA regulates the movement of Heritage Objects outside of and into SA. Applications to export heritage objects are made on the SA Heritage Resources Information System (SAHRIS). SAHRA refused to approve the export of the only known signed copy of the Freedom Charter. • Customs has a co-operative governance role to play which is not yet in place but processes are in motion to enter into a Memorandum of Understanding with Customs to address this gap. SAHRA has also adapted the List of Types of Heritage Objects that are protected to include these in SARS Prohibited and Restricted List. • In 2012/2013, SAHRA received 24 applications for the export of 27 Heritage Objects of which 3 permits were refused. It is believed that objects may be illegally exported because it is known that Customs does not have the infrastructure in place to prevent illegal export.

  24. PROTECTION AGAINST ILLEGAL EXPORT • In 2013 Military objects were stolen from museums in Kimberley, Bloemfontein and the Karoo.  Artworks were stolen in North West.  The thefts were reported to the SAPS who view these as low priority crime. SAHRA forward the information to the Endangered Species Desk and Interpol for investigation.  Since the decline of the National Forum for the Law Enforcement against Heritage Related Crime (NALEH), there is co-ordination of heritage related crime in South Africa. • Although illicit trafficking and thefts from museums form part of organised crime, due to gaps in infrastructure, Heritage Objects are wittingly or unwittingly illegally exported by members of the public.  

  25. REPATRIATION AND PROTECTION OF STRUGGLE HERITAGE • SAHRA’ mandate is restitution of Heritage Objects when a community or body with a bona fide interest makes a claim on a movable heritage resource as part of the national estate and is held by or curated in a publicly funded institution. • SAHRA can advise Minister who must consult with Minister of Finance to purchase or subject to compensation, expropriate any property for conservation or any other purpose under the NHR Act if that purpose is a public purpose or is the public interest. • SAHRA is also mandated to repatriate heritage objects which have been removed from South Africa and which SAHRA considers to be significant as part of the national estate.

  26. Update on District six • Two meetings were held with CEO of District Six after the Portfolio Committee presentation • The discussions were around the clear demarcation of boundaries as the area is big and earmarked for development • Due to the size of the area there are possibilities of objections and challenges • They were advised to develop an integrated management plan that will be inclusive of all facets of the area

  27. The appointment of the CEO • Council advertise the position • Recruited an HR company to assist with the recruitment process • The interviews were conducted

  28. SAHRA Council Members SAHRA Accounting Authority The term of office the previous Council came to an end on 31 July 2013 and a new Council was appointed on 01 August 2013 and inducted on the 15 August 2013. • Mr Fanie Makhanya: SAHRA Council Chairperson ( Architect by Profession) • Ms Mmabatho Ramagoshi: Acting CEO & Head of Turnaround Strategy`[ not activated] • Dr Chitja Twala: Chairperson of HR & REMCO (History Lecturer at the University of Free State) • Mr Mokena Makeka: Chairperson of IT & Assets Committee(Architect by Profession) • Dr Ndukuyakhe Ndlovu: Chairperson HRM Committee (Senior lecturer in Archaeology at the University of Pretoria) • Ms Reyhana Gani: Chairperson of Audit & Risk Committee (Chartered Accountant)

  29. SAHRA Council Members • Dr William Ndlala: Council Member (Member of the Commission for Traditional Leadership, Dispute & Claims) • Dr Gregory Houston: Council Member (Chief Research Specialist) • Ms Jean Burgess: Council Member (Chairperson of the EC PHRA) • Mr Jabu Sindane: Council Member (Municipal Manager) • Mr Donald Lithole: Council Member (Manager Museums & Heritage Services)

  30. Issues raised in the previous briefing of the PC (cont.) • The process followed by SAHRA to transfer of moveable assets: • SAHRA transferred all computers and vehicles to the PHRAs if they were willing to accept if not donated to schools and community organisations, obsolete and untraceable assets were written off according to the policy • Concerns on the use of Contract Workers and Consultants by SAHRA: • Limited capacity and existing skills level at SAHRA a challenge but OD process and implementation of the proposed structure could turn this around • Financial accountability and request for financial statements by the PC • Accounts were de-recognised and removed from general ledger • Investment policy ensured minimization bank charges and better investment without compromising service delivery

  31. Issues raised in the previous briefing of the PC (cont.) • Appointment of a CEO • It was recommended by the PC that the appointment of the CEO be undertaken by the incoming Council since the present term was ending July 2013 • The contract of the Acting CEO was extended to 31 April 2013 and appointment of a new CEO to be completed by 31 January 2014 • It was requested that UNION Representative be present in PC sessions • It was recommended to audit all policies rather than continuously developing new ones • Relocation to Pretoria • PC highlighted that SAHRA operated like a regional office not national due to its locations in Cape Town • However, no comments were made on the proposed relocation of SAHRA to Gauteng

  32. Issues raised in the previous briefing of the PC (cont.) • Properties • Water meters were being installed to address the high amounts paid for upkeep of SAHRA properties • Concerns were raised on tenants that are renting SAHRA properties for R1 per annum and the status of such contracts • The 25 year lease ended in 2006 and will not be renewed • Eviction letters were sent to tenants and on receipt the tenants contacted the property Officer. SAHRA Legal Advisor and the Officer since engaged the tenants who are willing to pay more and enter into a new lease agreement • To prevent vandalising of property SAHRA was to refurbish the properties and put them on the rental market • The payment of levies and rates and taxes by SAHRA for minimal returns on rentals was raised as a concern by the PC • The response was that SAHRA was legally obliged to pay and a strategy was to be developed to provide better returns to cover the rates, taxes and levies.

  33. Root Causes for history of issues

  34. Management Conclusion • The year on year comparison shows that the Agency was receiving unqualified audit Opinion albeit the historical corrections that had to be done during the 2012/13 financial year. • Management therefore submits that this audit was not a normal audit as demonstrated by the previous disclaimer opinion received. • To date we have made significant progress with regards to improving controls and developing a comprehensive action plan to clear the audit finding.

  35. Thank You!

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