RTMC shut down?

The Road Traffic Management Corporation (RTMC) has been denied a request for increased funding of R92 million by the Parliamentary Portfolio Committee on Transport.

The committee met last week to discuss the adoption of its draft report on the 2011/12-2013/14 strategic plans and budgets for the Department of Transport (DOT) and its entities. The considerations, however, centred around the RTMC.

There were serious concerns raised about the past performance of the entity, and the problems around capacity and management that led to the resignation of the CEO.

This raised suggestions from committee members that the ailing Aarto manager should be closed down since it does not even have a functioning board.

The lack of a board means the committee is not able to consider any strategic plans for the entity, since strategic plans would have to be approved by the board in order to be approved for implementation by the management of an entity.

Democratic Alliance (DA) shadow minister of transport Stuart Farrow said he was particularly concerned that the corporation had requested R92 million of additional funding, and pointed out that it had a history of mismanagement and unnecessary expenditure.

For this reason, he asked the committee to delay the approval of any further funding until such time as the department had dealt with the matter and the legislative issues.

DA shadow minister of transport Manny de Freitas agreed and said the RTMC's operations are not up to scratch.

However, ANC committee member Doris Dlakude said previous presentations by RTMC management highlighted that the corporation could not perform its duties because of a lack of funding and the necessary resources to deal with its work.

Farrow and other committee members said there were certain issues that needed to be ironed out within the corporation, before any additional funding could be granted to it.

The shadow minister then suggested the additional funding requested should, instead of being allocated to the entity, which already had serious challenges and which probably could not implement any corrective measures, rather be used to fund a turnaround strategy.

He said the committee should not simply “take money away”. However, due to the current state of affairs at the RTMC and its lack of strategic direction, the committee should rather stress to the department that it should assume responsibility for the corporation.

The final decision was that it would not be appropriate, at this stage, to grant the additional funding that the RTMC had requested.

Farrow suggested that since there was no board at the RTMC, the entity should either be closed, or the DOT should be given the mandate to administer the corporation until a solution could be found.

Committee chairperson Ruth Bhengu said there was already relevant legislation that says in the absence of a board for the RTMC, the shareholders had the duty of taking decisions that were normally to be taken by the board, so as to give guidance as to the governance functions and management.

However, Farrow said although the shareholders' committee had the right to provide governance, it met only twice a year and it was made up of provincial MECs who were difficult to coordinate.

Also, the committee can not hold MECs accountable in the same way that it can hold a board accountable.

Farrow suggested the committee should recommend that the DOT should take over the administration of the RTMC, until a clearly defined turnaround strategy had been found, a new board established, and its mandate was clearly defined.

There are serious challenges around governance, failure to execute mandates and wasteful or unnecessary expenditure at the corporation. It is also one of the entities called in to answer to the Standing Committee on Public Accounts.

There is an investigation which was under way at RTMC, and a report will be finalised soon.

The chairperson added that there were two challenges at RTMC. The first is the capacity problems and allegations of mismanagement, which resulted in the resignation of the CEO, and the absence of a board.

Secondly, there was a legislative issue, which impacted negatively on the RTMC's ability to execute its mandate and sustain itself.

The committee will monitor the position of the corporation and call for reports on plans to turn the entity around, including the establishment of a new board. The report from the committee would have to be tabled in Parliament next week.

Transport minister Sibusiso Ndebele appointed an independent task team in February 2010 to investigate several complaints about the company and the damning findings of an independent audit, which showed gross financial mismanagement.

The report from the task team displayed key findings to be irregular expenditure, inappropriate procurement procedures and unauthorised use of eNatis transaction fees.