National Consumer Commissioner was not fired through an advert - the dti

14 May 2012

The Department of Trade and Industry (the dti) has noted with great concern reports published in the weekend newspapers and numerous broadcast media claiming that the National Consumer Commissioner Ms Mamodupi Mohlala-Mulaudzi has been fired by the department through a newspaper advertisement. 

The department wishes to place on record that contrary to the news reports, Ms Mohlala-Mulaudzi's tenure as a Commissioner of the National Consumer Commission (NCC) was set to expire on 3 September 2012. Ms Mohlala-Mulaudzi assumed the position at the NCC as a result of the arrangement reached in an out-of-court settlement in a matter between her and the Department of Communications.

The then Minister of Public Service and Administration, Mr Richard Baloyi and the Minister of Trade and Industry, Dr Rob Davies, agreed to offer Ms Mohlala-Mulaudzi a position as a Commissioner until her contract with government as a Director-General expired. In a letter that Minister Davies wrote to Ms Mohlala-Mulaudzi in February this year, he brought it to her attention that her contract, whose term was from 1 November 2010 to 3 September 2012 as per her appointment letter, would not be automatically renewed.

Minister Davies stipulated in the letter that in the interest of good governance, and in line with the Consumer Protection Act, the position of the National Consumer Commissioner would be advertised and Mohlala-Mulaudzi was welcome to apply. To this end, the dti placed the advert in the newspapers for the position of the National Consumer Commissioner.

On the claims of lack of adequate funding for the NCC, the dti wishes to bring it to the attention of the general public that the budgetary process of the South African government requires that all institutions funded by government submit funding requests annually to the National Treasury for consideration. The NCC is no different in the application of this process and essentially the funding allocated to it is the responsibility of the National Treasury.

Once budgets are allocated the department to which the agency reports has to obtain assurance in terms of section 38 (1) (j) of the Public Performance Management Act that effective, efficient and transparent financial management and internal control systems have been implemented before funds can be transferred to that institution.

The NCC became operational on 1 April 2011 and on 29 March 2011 the Director-General of the Department, Mr Lionel October wrote to the Commissioner alerting her of this requirement and also advising of the different processes that must be in place before funds could be released. In the same correspondence Mr October acknowledged that there would be insufficient time to address these issues and advised that the majority of the financial processes should be outsourced for a period of time while the necessary financial capacity, systems and controls are being addressed.

Mr October also offered the services of the departmental officials to provide assistance and advice that could be required from time to time. As this advice was no heeded and noting that the NCC did not have the necessary capacity to have implemented the necessary controls required in terms of section 38 (1) (j), the dti processed all financial transactions on behalf of the NCC until 30 September 2011.

The NCC began processing financial transactions as from 1 October 2012. This was after the NCC had appointed finance staff, including a Chief Financial Officer (CFO) and assured the department that it had the necessary financial systems and controls. After a few months it became apparent that the NCC was encountering challenges with financial management. This was evidenced from the financial reports being submitted to the department whereinerrors were detected and the report from one month to the next did not balance with each other.

Further, the Auditor-General in the third quarterly dashboard report indicated that there were serious concerns around the financial management at the NCC. His office was either unable to secure meetings with the Commissioner or meetings were postponed. Upon Minister Davies's intervention the Commissioner met with the Auditor-General's staff and after discussing their concerns it was still been reported that intervention was required in the following areas in finance:-

• Implement controls over daily and monthly processing and reconciling of transactions
• Prepare regular, accurate and complete financial and performance reports that are supported and evidenced by reliable information.

Amongst others these two areas singled out for direct intervention are core to the financial management of any institution. Notwithstanding this funds have been transferred to the NCC to ensure that the operations of the organisation are not disrupted. In view of these serious concerns Mr October requested the Internal Audit unit of the dti to perform a high level audit of the NCC systems and processes in order to provide him with reasonable assurance that the requirements in terms of section 38(10)(J) were complied with.

As the NCC is a very important institution Mr October has committed the department in providing any assistance and advise that is required in order to ensure that the financial management of the institution is rectified as a matter of urgency.

Lastly, last year we appointed the independent investigator to conduct an investigation into the state of affairs at the National Consumer Commission (NCC). This was after we received complaints from Nehawu regarding non-adherence to the terms of the transfer agreement and other concerns raised by staff members. The investigation was also necessitated by a request from eleven employees who have requested to be transferred back to the dti.

Minister Rob Davies decided to appoint an independent investigator as he did not want to make any pronouncement on this matter prior to an objective view of the complaints. The purpose of the investigation was to determine the status of reports about transgressing the terms of the transfer agreement, including relevant policies as outlined in the agreement.

The intention of conducting this investigation was to provide Minister Davies with an independent assessment report that can enable him to act decisively and bring the situation back to normal. There was no presumption of wrongdoing.

We regret to mention that Commissioner Mohlala-Mulaudzi refused to cooperate with the investigators on this matter. We refute the allegations of the abuse of power by either the Minister or the Director-General.

Statement issued by the Department of Trade and Industry, May 14 2012

Click here to sign up to receive our free daily headline email newsletter