About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Johannesburg Labour Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: Johannesburg Labour Court, Johannesburg
>>
2017
>>
[2017] ZALCJHB 12
|
|
Mathebula v General Public Service Sectoral Bargaining Council and Others (JR220/13) [2017] ZALCJHB 12 (19 January 2017)
THE
LABOUR COURT OF SOUTH AFRICA, HELD AT JOHANNESBURG
Of
interest to other judges
C
ase
no: JR 220/13
In the
matter between:
MAGUMENI PHILEMON MATHEBULA
First Applicant
and
GENERAL PUBLIC SERVICE
SECTORAL BARGAINING COUNCIL
First Respondent
SELLO NKURUMAH MOIMA
N.O
Second Respondent
DEPARTMENT OF AGRICULTURE
RURAL DEVELOPMENT AND LAND
ADMINISTRATION
Third Respondent
Heard
:
26 and 27 October 2016
Delivered
:
19 January 2017
Summary:
(Review – misconduct – dismissal
upheld on grounds other than those originally raised – award
set aside –
reinstatement not appropriate – costs of
postponement where date agreed upon in pre-hearing case management
hearing –
costs where court hampered by lack of bundle)
JUDGMENT
LAGRANGE
J
Introduction
[1]
The arbitration award in this matter was
handed down on 8 January 2012. On 19 February 2013 the applicant
applied to review the
award, approximately one year late. Before the
applicant had filed a supplementary affidavit, the third respondent,
the Department
of agriculture filed its answering affidavit on 25
February 2013.
[2]
On or about 14 March 2014, the department
filed an application under rule 11 of the Labour Court Rules to
dismiss the review application
on account of the applicant failing to
prosecute his review application within six months in terms of clause
7 of the Labour Court
Practice Manual.
[3]
On 22 June 2016, the matter was set down
for a pre-enrolment hearing. The rule 11 application was withdrawn
and the matter was enrolled
as the only matter for hearing on 26
October. On perusing the file prior to the hearing, it became
apparent that no bundle of documents
used in the arbitration had been
filed. Although the applicant’s attorneys were alerted by the
court to this the day prior
to the hearing, by the time the matter
was heard on 26 October no documents were forthcoming. Instead, the
applicant sought to
remove the matter from the roll by consent having
tendered the costs of the third respondent, the Department of
Agriculture (Gauteng).
Effectively, this would have meant a
postponement of the matter which had initially been enrolled as a
result of the prehearing
process on the basis that the matter was
ready to be heard. The prehearing process effectively gives
preference to parties that
have asked for the matter to be heard. It
also means that applications involving a substantial amount of
reading are separately
enrolled to give the court an opportunity to
dedicate more time to the matter. Where this process is hampered
because a record
is incomplete, the object of the preferential
enrolment is undermined.
[4]
So as to limit the prejudice to the
applicant as a result of his attorney’s failure to ensure that
the record was complete,
I reluctantly postponed the application to
the following day to give him a final opportunity to rectify the
deficiencies in the
bundle. Nonetheless, as a mark of the court’s
displeasure of the applicant not being ready to proceed on account of
his attorney’s
failure to finalise the record, his attorney was
ordered to pay the wasted costs of the postponed hearing on 26
October on a punitive
basis. Parties afforded preferential dates
under the pre-enrolment hearing process must bear in mind that if an
application does
not proceed on the agreed date it means that parties
in another application which was ripe for hearing and could have been
heard
on that date were denied that opportunity. Where, as in this
case, the reason for not proceeding is because it turns out that the
matter was not ripe for hearing, the party or the legal
representatives at fault should not be surprised to find themselves
facing
punitive cost orders for squandering the opportunity of a
having a preferential hearing at the expense of other parties whose
matters
could have been heard.
[5]
Despite
being granted a postponement, when the application was heard on 17
October, the applicant’s representative advised
the court that
the applicant and the respondent did not regard the bundle of
documents as necessary for his review application.
In keeping with
this submission, no bundle of documents was produced as part of the
record. Thus, the only record available to
the court consists of the
arbitrator’s award and a transcript of the proceedings, which
was also incomplete. An applicant
may choose to rely on only so much
of a record as it deems necessary, and it is inadvisable simply to
file an entire record where,
for example, the reviewable defect is
apparent on the face of the arbitrator’s award. However, an
applicant must always bear
in mind that it bears the risk of the
review application being dismissed if the applicant’s
assessment of what is necessary
falls short of what is sufficient for
the court to decide the application on the grounds of review
raised.
[1]
[6]
While it is clear from the applicant’s
supplementary affidavit that he took the view that the failed efforts
to reconstruct
the missing portions of the transcribed testimony were
not fatal to his review application, it is inexplicable why the
bundle of
documents used in the lengthy arbitration were not laid
before the court as part of the record, leaving the court to surmise
from
those limited extracts of the documents read into the record
what the documents contained. This unnecessarily hampered the court.
The
arbitration award
[7]
The essence of the charge relating to
misconduct is described in the SMS services Handbook as wilfully or
negligently mismanaging
the finances of the State by making certain
transfers to various entities in breach of s 42 of the Public Finance
Management Act
1 of 1999 (‘the PFMA’) and Treasury
Regulation 6.5 which directly relates to s 42.
[8]
At the time of the alleged misconduct, the
applicant was acting head of Department and,
ex
officio
, the accounting officer.
Accordingly, he had to fulfil the general responsibilities imposed on
an accounting officer in terms of
section 38 of the PFMA.
[9]
Apart from charges relating to his alleged
failure to disclose a personal interest in various entities, the
remaining charges concerned
an alleged irregular transfer of
approximately R 73,000,000 to each of six different entities. By far
the largest transfer consisted
of R 70 million transferred to a
provincial agricultural development agency, the Mpumalanga
Agricultural Development Corporation
(‘MADC’). It was
alleged that these transfers were in contravention of section 42 of
the PFMA and Treasury regulations
6.5 and without the approval of the
Treasury.
[10]
The arbitrator found the applicant guilty
of all six charges.
Grounds
of review relating to the arbitrator’s findings on procedural
fairness
[11]
Most of the applicant’s grounds of
review in his founding affidavit are devoted to the arbitrator’s
finding that his
dismissal was procedurally fair.
Failure
to file heads
[12]
His first complaint is that, even though
the chairperson of the disciplinary enquiry called for heads of
argument he was not afforded
an opportunity to file his heads whereas
the employer did.
[13]
He also argues that the Commissioner failed
to raise with him the need for him to produce evidence to show that
he was prejudiced
by not filing heads of argument and that the
Commissioner should not have relied on the absence of any evidence of
prejudice as
a basis for rejecting his claim that his failure to file
heads did not result in any procedural unfairness.
[14]
He further criticises the Commissioner for
his speculative conclusion that the presiding officer must have made
his findings on
the basis of the evidence before him without having
regard to written argument, especially when the presiding officer had
called
for written submissions to be made.
[15]
The applicant submitted that the arbitrator
improperly stated as a general proposition that a failure to file
heads of argument
did not amount to an act of procedural unfairness.
[16]
I do not intend to dwell on the
circumstances which caused the applicant not to file
heads of argument with the
presiding officer, and I accept that
the arbitrator was wrong insofar as he might have suggested as a
general proposition
that not being able to file heads could not
be construed as procedurally unfair. On the other hand, it is equally
true that
an omission in disciplinary procedures, in and of itself,
is not sufficient to establish procedural unfairness in the absence
of
demonstrating the prejudice occasioned by the lapse. In this
regard it is noteworthy that on review, he did not advance any
specific
reasons why his case before the presiding officer suffered
on account of him not presenting heads of argument.
Denying
the applicant an opportunity to call a witness
[17]
The applicant complains that he was
prevented from calling an additional witness from the Treasury
Department to testify on the
interpretation of the sections of the
PFMA in circumstances where the chairperson had advised that such a
witness should be called.
The arbitrator found on the evidence that
in fact the applicant had had ample opportunity to call such a
witness and that in any
event, that witness’s evidence
concerned a matter of legal interpretation that fell within the
expertise of the presiding
officer to decide, which are both findings
I would agree with on the record.
The
arbitrator wrongly concluded that the applicant had not called an
expert witness.
[18]
The applicant claims that the arbitrator’s
conclusion that he had failed to call an expert witness when the
arbitrator gave
him that opportunity at the end of the proceedings
based on his complaint that he had been denied the opportunity to
lead such
a witness in the disciplinary enquiry, whilst at the same
time acknowledging later in his award that Tshitangana who did
testify
for the applicant during the arbitration proceedings was
probably the witness the applicant intended to call in the
disciplinary
hearing. The applicant cites this as illustrating that
the arbitrator’s award is “a model of inconsistency”.
[19]
The arbitrator may not have expressed
himself clearly, but it is difficult to see how this helps the
applicant. The applicant was
given the opportunity to call an expert
but never did. Moreover, the arbitrator appreciated the import of
Tshitangana’s evidence.
It must also be noted that the
applicant testified at the arbitration that he saw no need to call an
expert witness during the
internal hearing to testify about the
interpretation of the relevant statutes as that was a matter for the
arbitrator to decide.
His complaint at the time was that, when a
witness did indicate he was willing to testify, the chairperson did
not reconvene the
hearing before making his decision. It is difficult
to understand why the applicant takes umbrage at the fact that he did
not have
the opportunity to call the witness in question when he saw
no need for such a witness, which he reaffirmed at the arbitration
when the arbitrator afforded him a similar opportunity.
[20]
The version recorded by the chairperson of
the enquiry was that, it was the applicant who asked for a
postponement of the hearing
to be given an opportunity to call an
expert witness and that he agreed to this despite the prejudice to
the employer because the
applicant at that stage was not represented.
The hearing was postponed on 7 May but the applicant was unable to
secure the attendance
of a witness when the hearing resumed on 12
May. It was at that stage that the arbitrator asked the parties to
file heads of argument,
but held open the possibility of the missing
witness still testifying if the applicant could obtain one.
[21]
The applicant claimed that his
representative had sent correspondence to the Department of
Agriculture after 12 May stating that
he had secured the witness and
asking to the chairperson to reconvene the hearing to hear the
additional evidence. However, from
what can be gleaned from the
arbitration transcript, the correspondence indicated that the
employer would not agree to reconvene
the hearing and the chairperson
also failed to make a ruling on re-convening the enquiry.
Consequently, the deadline for filing
heads of argument passed
without the applicant’s representatives filing any.
The
chairperson’s failure to allow the applicant an opportunity to
give evidence in mitigation
[22]
In essence, the arbitrator decided that the
gravity of the charges against the applicant was such that it was
improbable any evidence
he could have offered in mitigation would
have made any difference and the other factors that would have to be
considered apart
from his personal circumstances would not have
assisted him.
[23]
The
applicant argues that the arbitrator failed to appreciate that the
failure to allow him an opportunity to lead evidence in mitigation
was a gross violation of his procedural rights and that the
arbitrator’s conclusion on this issue is insupportable. In this
respect, the arbitrator seems to have been overly robust in
dismissing the chairperson’s failure to allow the applicant an
opportunity to lead evidence in mitigation despite the gravity of the
charges. It is a well recognised and accepted part of fair
disciplinary proceedings to allow an employee to give evidence in
mitigation before determining a sanction.
[2]
It is also an explicit requirement in terms of the SMS Handbook which
applied to the applicant.
Substantive
merits
[24]
On the substantive issues decided by the
arbitrator, the applicant raised the following issues on review:
Failure
to consider evidence of a witness
[25]
Firstly, the applicant claims that the
arbitrator failed to consider the evidence of Tshitangana, because he
supposedly found that
Tshitangana had not testified when in fact he
had. This issue has been indirectly alluded to above. On a
superficial reading of
the arbitrator’s award, it might seem
that there is such a contradiction, but the assertion made by the
applicant is an oversimplification
and a gross distortion of the
arbitrator’s reasoning. It is readily apparent on the face of
the award that he took Tshitangana’s
evidence into account but
essentially decided that it was opinion evidence about the
interpretation of the PFMA. This view seems
to be correct and accords
with the applicant’s own view that the question of interpreting
the statute was a matter for the
chairperson to decide. In passing,
it should be mentioned that Tshitangana’s evidence was not part
of the transcribed record
before the court.
General
allegations of misconstruing or failing to consider evidence
[26]
Secondly,
the applicant alleges in broad terms that the arbitrator gravely
misunderstood the evidence to such an extent that his
conclusion was
one that no reasonable arbitrator could have arrived at. However, he
failed to set out any factual basis for this
submission in his
founding affidavit. In similar vein, he claimed in his founding
affidavit that the decision was unreasonable
because the Commissioner
failed to apply his mind to relevant evidence and took into account
irrelevant evidence such that his
decision should be set aside
regardless of whether the result could be on the evidence before the
arbitrator. In making this claim,
the applicant incorrectly
characterises the law relating to the consequences of alleged
failures to take account of relevant evidence
or taking account of
irrelevant evidence. The correct approach is set out in more than one
decision of the LAC in recent years.
[3]
Arbitrator
merely adopted the findings of enquiry chairperson
[27]
In
his supplementary affidavit, an additional ground of review advanced
by the applicant is that, the arbitrator merely confirmed
the
findings of the chairperson of the enquiry on charges 1 to 6, whereas
there was no reason on the basis of the
de
novo
proceedings before the arbitrator to reach that conclusion
independently on the evidence before him. No factual basis is laid
out in the supplementary affidavit for this bald averment and
accordingly this ground does not require serious consideration.
[4]
Arbitrator
failed to consider if the charges for which the applicant was
dismissed related to the evidence of the misconduct that
was led
[28]
Lastly, the applicant raises the complaint
that the arbitrator failed to consider if he had been correctly
charged and found guilty
under section 38 and section 42 of the PFMA.
Aside from the procedural issues, this ground forms the crux of the
applicant’s
review on the substantive merits of the award.
[29]
In summary, the charges against him were
that:
29.1
he breached clause 2 of ANNEXURE a of the
Senior Management Service Disciplinary Code of 2003 in that he
wilfully or negligently
mismanaged the finances of the state in
allowing and/or causing the transfer of funds to the following
entities in contravention
of s 42 of the PFMA and Treasury regulation
6.5:
29.1.1
R 417,400.00 to Kind Lemon Oil
Projects between July and August 2006 (charge 1);
29.1.2
R 509,969.00 to Vukuzenzele
Beekeeping between May and August 2006 (charge 2);
29.1.3
R 240,031.00 to Vukuzenzele Beekeeping
between August and November 2006 (charge 3);
29.1.4
R 1,003,626.00 to Mphatlalatsane Cooking
Oil between September and November 2006 (charge 4);
29.1.5
R 804,757.99 to Coromandel Farmers Trust
Project between November 2006 and March 2007 (charge 5);
29.1.6
R 70 million to Mpumulanga Agricultural
Development Agency (‘MADC’) between April 2007 and June
2008 (charge 6), and
29.2
he failed to disclose his interest in an
entity Itnembe Lase Reg 1997/0420275/23 in or about April 2008
thereby contravening clause
1 of the SMS disciplinary code and two
other counts of misconduct relating to this entity, which made up
charges 7, 8 and 9 against
the applicant.
[30]
Clauses 1 and 2 of Annexure A of the SMS
Handbook respectively describe the following types of misconduct:
30.1
A failure to comply with, or contravention
of an Act, regulation or legal obligation and
30.2
Wilfully or negligently mismanaging
the finances of the State.
[31]
Section 38 of the PFMA states the general
responsibilities of accounting officers:
38
General responsibilities of accounting officers
(1)
The accounting officer for a department, trading entity or
constitutional institution-
(a)
must ensure that that department, trading entity or constitutional
institution has
and maintains-
(i)
effective, efficient and transparent systems of financial and risk
management and internal
control;
(ii)
a system of internal audit under the control and direction of an
audit committee complying
with and operating in accordance with
regulations and instructions prescribed in terms of sections 76 and
77;
(iii)
an appropriate procurement and provisioning system which is fair,
equitable, transparent,
competitive and cost-effective;
(iv)
a system for properly evaluating all major capital projects prior to
a final decision on
the project;
(b)
is responsible for the effective, efficient, economical and
transparent use of the
resources of the department, trading entity or
constitutional institution;
(c)
must take effective and appropriate
steps to
-
(i)
collect all money due to the department, trading entity or
constitutional institution;
(ii)
prevent unauthorised, irregular and
fruitless and wasteful expenditure and losses resulting from criminal
conduct;
and
(iii)
manage available working capital efficiently and economically;
(d)
is responsible for the management, including the safeguarding and the
maintenance
of the assets, and for the management of the liabilities,
of the department, trading entity or constitutional institution;
(e)
must comply with any tax, levy, duty, pension and audit commitments
as may be required
by legislation;
(f)
must settle all contractual obligations and pay all money owing,
including intergovernmental
claims, within the prescribed or agreed
period;
(g)
on discovery of any unauthorised, irregular or fruitless and wasteful
expenditure,
must immediately report, in writing, particulars of the
expenditure to the relevant treasury and in the case of irregular
expenditure
involving the procurement of goods or services, also to
the relevant tender board;
(h)
must take effective and appropriate disciplinary steps against any
official in the
service of the department, trading entity or
constitutional institution who-
(i)
contravenes or fails to comply with a provision of this Act;
(ii)
commits an act which undermines the financial management and internal
control system of
the department, trading entity or constitutional
institution; or
(iii)
makes or permits an unauthorised expenditure, irregular expenditure
or fruitless and wasteful
expenditure;
(i)
when transferring funds in terms of the annual
Division of Revenue
Act, must
ensure that the provisions of that Act are complied with;
(j)
before transferring any funds
(other than grants in terms of the annual
Division of Revenue Act or
to a constitutional institution) to an entity within or outside
government,
must obtain a written
assurance from the entity that that entity implements effective,
efficient and transparent financial management
and internal control
systems
, or, if such written assurance
is not or cannot be given, render the transfer of the funds subject
to conditions and remedial measures
requiring the entity to establish
and implement effective, efficient and transparent financial
management and internal control
systems;
(k)
must enforce compliance with any prescribed conditions if the
department, trading
entity or constitutional institution gives
financial assistance to any entity or person;
(l)
must take into account all relevant financial considerations,
including issues
of propriety, regularity and value for money, when
policy proposals affecting the accounting officer's responsibilities
are considered,
and when necessary, bring those considerations to the
attention of the responsible executive authority;
(m)
must promptly consult and seek the prior written consent of the
National Treasury on any new entity
which the department or
constitutional institution intends to establish or in the
establishment of which it took the initiative;
and
(n)
must comply, and ensure compliance by the department, trading entity
or constitutional
institution, with the provisions of this Act.
(2)
An accounting officer may not commit a department, trading entity or
constitutional institution to any liability for which money
has not
been appropriated.”
(emphasis
added)
[32]
Section 42 of the PFMA deals with the
transfer of assets and liabilities under certain circumstances:
“
42
Accounting officers' responsibilities when assets and liabilities are
transferred
(1)
When
assets or liabilities of a department are transferred to
another department or other institution in terms of legislation or
following
a reorganisation of functions
, the accounting officer
for the transferring department must-
(a)
draw up an inventory of such assets and liabilities; and
(b)
provide the accounting officer for the receiving department or other
institution with
substantiating records, including personnel records
of staff to be transferred.
(2)
Both the accounting officer for the transferring department and the
accounting officer for the receiving department or other
institution
must sign the inventory when the transfer takes place.
(3)
The accounting officer for the transferring department must file a
copy of the signed inventory with the relevant treasury and
the
Auditor-General within 14 days of the transfer.”
(emphasis
added)
[33]
Treasury regulations 6.5 states:
“
6.5
Transfer of functions [Section 42 of the PFMA]
6.5.1
Where a function is to be transferred between votes during a
financial year, the relevant treasury must be consulted in advance,
to facilitate any request for the resulting transfer of funds voted
for that function in terms of section 33 of the Act. In the
absence
of agreement between the affected departments on the amount of funds
to be transferred, the relevant treasury will determine
the funds to
be shifted.
6.5.2
Should the Minister of Public Service and Administration or a Premier
of a province make a determination regarding the transfer
of a
function between departments in terms of the Public Service Act,
1994, that determination must accompany a request for the
transfer of
funds as per paragraph 6.5.1. Should the Minister of Public Service
and Administration or a Premier approve a function
transfer after the
finalisation of the adjustments estimates, it must be dealt with on a
recoverable basis.
6.5.3
Before seeking formal approval from the Minister of Public Service
and Administration or the Premier of a province for any
transfer of
functions to another sphere of government, the transferring
accounting officer must first seek the approval of the
relevant
treasury or treasuries on any funding arrangements.
6.5.4
The transfer of functions to provinces and municipalities must be
dealt with in terms of the annual
Division of Revenue Act and
the
Local Government Municipal Finance Management Act (MFMA), 2003 (Act
No. 56 of 2003).”
[34]
Treasury regulation 8.4.1 which the
applicant referred to states:
“
8.4
Transfers and subsidies (excluding Division of Revenue grants and
other
allocations to municipalities)
[Section 38(1)(j) of the PFMA]
8.4.1
An accounting officer must maintain appropriate measures to ensure
that transfers and
subsidies
to entities are applied for their intended purposes. Such measures
may include-
(a)
regular reporting procedures;
(b)
internal and external audit requirements and, where appropriate,
submission of
audited
statements;
(c)
regular monitoring procedures;
(d)
scheduled or unscheduled inspection visits or reviews of performance;
and
(e)
any other control measures deemed necessary.”
[35]
The arbitrator found the applicant not
guilty of charges 7, 8 and 9 and it is not necessary to consider
these further. In relation
to charges 1 to 6, it is clear from
paragraph 11.8 of the arbitrator’s award that he was alive to
the issue of the different
provisions of the PFMA
[36]
As the department’s main witness, Mr
Goqo, a forensic auditor, had testified that both sections 38 and 42
were applicable
to the charges and should not be read in isolation.
The witness had further testified that what was at issue was both the
unauthorised
transfer of funds and secondly the fruitless and
wasteful expenditure which the applicant had failed to prevent
despite his obligation
to make sure that public funds were properly
utilised.
[37]
The arbitrator concluded that transfers of
funds were made to the six entities in question without the necessary
authorisation and
that the grant funding to those entities
constituted fruitless and wasteful expenditure. He also concluded
that there were no follow-up
measures to ensure that the funds which
were transferred were properly utilised. Further MADC had been
‘appointed’
before tender procedures had been completed
and the applicant merely rubberstamped the arrangements. The
arbitrator considered
the defence of the applicant that section 42 of
the PFMA under which he was charged relates to the transfer of
functions from one
Department to another. However, the arbitrator was
of the view that in view of the seriousness of the misconduct just
described,
that it was not sufficient for the applicant to simply
defend himself on the basis that he was charged under the wrong
section
namely section 42 as opposed to section 38 of the PFMA.
Consequently, he found that the dismissal was substantively fair.
[38]
It is readily apparent from the evidence
that the transfer of funds from the Mpumalanga Department of
Agriculture to the entities
mentioned in charges 1 to 6 did not
concern a transfer of assets and liabilities of the kind that occurs
when functions are transferred
from a Department to another
department or entity as contemplated in section 42 of the PFMA read
with clause 6.5 of the Treasury
regulations. Clearly the grant
payments entailed the transfer of funds but it is an artificial
construction of those transfers
to equate them with a transfer of
assets under the statutory provisions mentioned. Rather, they were
simply grant payments. Similarly,
the payment made to MADA which was
for services rendered by MADA was not a transfer of assets in the
sense envisaged by s 38 of
the PFMA.
[39]
Thus it would appear that, insofar as the
charges of mismanagement of state finances were confined to the
contravention of s 42
and of the PFMA and Treasury Regulation 6.5,
those were not the appropriate provisions to use to describe the
nature of the wilful
or negligent financial mismanagement the
department wanted to hold him responsible for.
[40]
If one has regard to the evidence of the
forensic auditor Mr D Goqo, he testified
inter
alia
that funds were transferred to the
entities mentioned in charges 1 to 5 without a proper evaluation of
the project being conducted
beforehand, which was contrary to s
38(1)(a)(iv) of the PFMA. Also, the payment of R 70 million to MADC
was not authorised by the
Treasury and payments were made to projects
that were not functioning. Further, he testified that there
were no supporting
documents relating to the funds transferred and
that MADC was appointed without an open tender process being followed
and without
appointment procedures being completed. MADC was also
paid without rendering any services. Payments to the Kind Lemon
project were
made despite the absence of supporting documents and
contrary to the terms of the grant. Moreover payments were made
despite the
fact the project was non-functional. The applicant had
not ensured that the utilisation of the funds was properly monitored
and
reported on.
[41]
Goqo sought to argue that all the
transactions covered by the charges fell under s 42 of the PFMA but
struggled to explain how the
transactions were transfers pursuant to
a transfer of functions between government entities which required
Treasury approval in
terms of Treasury regulation 6.5. Although he
was adamant that the projects mentioned in charges 1 to 6 were found
to be non-functioning
when they were investigated, and that this
meant that wasteful and fruitless expenditure had been occurred, he
conceded that the
applicant had not been charged with authorising or
permitting fruitless and wasteful expenditure. He did testify that in
relation
to the Kind Lemon project, there was no evidence that the
items which the transfer of R 417,000 was to cover had been procured.
[42]
Ms Sithole, the head of the Department also
testified. She took over the reins from the Applicant in 2008 who was
acting in the
post at the time. She confirmed that the applicant’s
responsibility as accounting officer was to ensure that systems were
in place to ensure that grant moneys had been utilised for the
purpose intended. In relation to the payment to Coromandel, that
payment was for services rendered to MADC and should only have been
made following a proper tender process, because that payment
was made
to Coromandel not as a grant payment to Coromandel in its capacity as
a beneficiary but as a payment made for services
rendered to MADC, in
Coromandel’s capacity of a service provider. Moreover,
the payment should have been made to MADC
and not directly to
Coromandel. She accepted that the application for grant funding for
the Kind Lemon project had been approved
by the Department’s
bid committee but maintained that there should have been a
competitive bidding process followed which
was not done. It was
unclear from her evidence whether the competitive bidding process
related to the application for grant funding
itself or to the
procurement of services and suppliers by the Kind Lemon project who
would be paid out of the grant raised from
the Department.
[43]
In relation to the payment to the Kind
Lemon project there were no supporting documents attached to the
letter from the Chief Financial
Officer motivating payment of the
grant and the applicant as the accounting officer ought not to have
approved the payment without
the documents and no supporting
documents could be found. When the beekeeping project was
investigated it was found that no feasibility
study had been
conducted prior to the funds being transferred. The applicant failed,
not because he did not anticipate the failure
of this and other
projects which received grants, but because he did not take measures
to ensure that the expenditure was not fruitless,
such as ensuring
that a clear project management plan existed. It was his duty to
ensure that these measures were in place, not
that he had to perform
those tasks personally.
[44]
From her testimony it seems that when the
projects were investigated there was either no supporting
documentation or insufficient
documentation to identify if the funds
had been utilised for the intended purposes. The documentation
available consisted of the
motivation for the grants in question, but
what was lacking was evidence of how the grant was actually spent and
the projects were
unable to provide proper records of how money had
been spent.
[45]
In dealing with the difficulty of the
absence of a charge of fruitless and wasteful expenditure, Sithole
sought to explain that
the fruitless and wasteful expenditure was
simply another consequence of the applicant not complying with s 42
of the PFMA.
[46]
The applicant’s answer to this was
that, service level agreements with reporting mechanisms had been
drawn up in relation
to all the projects. He did not directly address
the absence of supporting documents for each payment. In
relation to the
huge transfer of R 70 million to MADC In any event,
he consistently maintained that the breaches of the PFMA and Treasury
regulations
mentioned in the charges were of no relevance to the
transfers made. The applicant claimed he had authorised the payments
in terms
of s 38(1)(j) of the PFMA and Treasury Regulation 4.8.1.
[47]
Ms Sithole explained that even if s 42 of
the PFMA was not applicable to the transactions in question, the
applicant was not excused
from ensuring that proper financial
procedures were followed. The charge relating to payment of
Coromandel Farmers Trust concerned
a failure to ensure that proper
procurement procedures had been followed before payment to Coromandel
as a service provider to
MADC was approved. The applicant claimed
that he had authorised payment for Coromandel’s services to be
made to MADC and
not directly to Coromandel. MADC had presented an
invoice to the Department for the services rendered by Coromandel. He
was unaware
that the payment had been made directly to Coromandel.
The applicant claimed that if he had known this had happened he would
have
investigated the matter.
[48]
Throughout the testimony of the Sithole and
Goqo, they were consistently challenged on how the charges framed
under s 42 of the
PFMA and Treasury regulation 6.5 did not apply to
the transfers that were the subject matter of the charges and that
the alleged
misconduct they wanted to hold the applicant accountable
for was not set out in the charges against him. Neither of them could
explain why charges had not been framed under s 38 of the PFMA if
that was the gravamen of the complaint against the applicant.
The arbitrator simply dismissed the applicant’s defence that
the Department had framed the charges incorrectly and was satisfied
that he was nonetheless guilty of serious misconduct even if the
grounds of misconduct were different.
[49]
It is
well established that disciplinary proceedings are not criminal
proceedings and a degree of latitude is permissible in interpreting
the ambit of disciplinary charges. Thus in
Woolworths
(Pty) Ltd v Commission for Conciliation, Mediation & Arbitration
& others
[5]
the LAC reiterated the approach usually adopted in cases where there
is alleged unfairness arising from the framing of the charge:
“
[32]
Unlike in criminal proceedings where it is said that 'the description
of any statutory offence in the words of the law creating
the
offence, or in similar words, shall be sufficient',the misconduct
charge on and for which the employee was arraigned and convicted
at
the disciplinary enquiry did not necessarily have to be strictly
framed in accordance with the wording of the relevant acts
of
misconduct as listed in the appellant's disciplinary codes, referred
to above.
It was sufficient that the
wording of the misconduct alleged in the charge-sheet conformed, with
sufficient clarity so as to be
understood by the employee, to the
substance and import of any one or more of the listed offences
.
After all, it is to be borne in mind that misconduct charges in the
workplace are generally drafted by people who are not legally
qualified and trained. In this regard I refer to the work of Le Roux
& Van Niekerk where the learned authors offer a suitable
example,
with which I agree:
'Employers
embarking on disciplinary proceedings occasionally define the alleged
misconduct incorrectly. For example, an employee
is charged with
theft and the evidence either at the disciplinary enquiry or during
the industrial court proceedings, establishes
unauthorised possession
of company property. Here the rule appears to be that, provided a
disciplinary rule has been contravened,
that the employee knew that
such conduct could be the subject of disciplinary proceedings, and
that he was not significantly prejudiced
by the incorrect
characterization, discipline appropriate to the A offence found
to have been committed may be imposed.'
[33]
To my mind, the misconduct charge against the employee was framed in
such a manner as to have sufficiently embraced most of
the specific
acts of misconduct listed in the appellant's 'Honesty Code of
Conduct' and the 'Disciplinary Code: Policy Amended
15/5/2000',which
I have referred to above.”
[6]
(emphasis
added – footnotes omitted)
[50]
The essential issue is whether the employee
would have been prejudiced in the conduct of their defence. In this
instance, the applicant
was found guilty of the charges as they were
framed. He then conducted his defence confident that there was no way
in which the
transfers he authorised could be construed as transfers
forming part and parcel of a transfer of functions as envisaged in s
42
of the PFMA read with Treasury Regulation 6.5. It is obvious that
this was the charge he attempted to meet and that the employer
laboriously tried to squeeze its case against him within the four
corners of the charge. Failing that it resorted to holding him
liable
for misconduct under s 38 of the PFMA. The arbitrator acquiesced in
allowing the scope of the charges to be materially extended
to
embrace misconduct under s 38 of the PFMA.
[51]
I am mindful of the arbitrator’s
dilemma when it became apparent that issues of the applicant’s
accountability would
have been better addressed under s 38 and that
under that provision there was a much stronger case for him to answer
than under
the charges on which he was originally dismissed. But this
is not a case in which the inappropriate drafting of the charge on
which
the employee was found guilty is an insignificant issue.
[52]
The problem is that the charge was not
framed sufficiently widely to cover most infractions the applicant
might have been guilty
of in relation to the transactions in
question. If anything, the charge was very narrowly and specifically
framed. The other
difficulty is that the charge was framed with
particular statutory provisions in mind and there was no reason for
the applicant
to have supposed that this included a broader claim
that he must be prepared to defend himself against alleged breaches
of other
specific provisions of PFMA as instances of financial
mismanagement or negligence.
[53]
The employer proceeded to dismiss the
applicant on the basis of those narrowly framed charges, when it
could easily have amended
and broadened their scope at any stage
during the internal disciplinary proceedings. It might be the case
that the employer could
have argued that it was apparent from the
course of the enquiry that the charges the applicant faced were
broader in ambit than
the way they were framed, but from the limited
material available to the court, it is apparent that even in the
course of disciplinary
enquiry, the thrust of the case was that the
employer insisted the applicant’s conduct amounted to a breach
of s 38 of the
PFMA and Treasury Regulation 6.5. The central bone of
contention between the parties at the enquiry was whether the
employer’s
interpretation of those provisions was applicable to
the facts, not whether the applicant was, in the alternative, guilty
of other
misconduct under s 38 of the PFMA.
[54]
In the circumstances, it is clear that the
arbitrator misconstrued his role which was to consider if the
applicant was guilty of
the charge for which he was dismissed, on the
basis of having made the transfers contrary to the provisions of s 42
of the PFMA
and Treasury Regulation 6.5. In widening the enquiry and
entertaining distinctly additional charges the arbitrator acted
impermissibly
and effectively also exceeded his jurisdiction. Insofar
as he reaffirmed the applicant was guilty of the charges 1 to 6, and
did
not rely on an expanded notion of the misconduct the applicant
was guilty of, this conclusion cannot constitute a plausible
interpretation
of the evidence in relation to the nature of the
charges.
[55]
While his finding of guilt must be set
aside on this basis, I am not of the view that the applicant should
be reinstated as a remedy
for his substantively unfair dismissal.
He himself testified without much evidentiary basis that he believed
he was the victim
of a conspiracy. It is difficult to see how the
trust relationship between him and the department could persist in
the circumstances.
In relation to the appropriate compensation, I am
not satisfied that the applicant comes out of the arbitration
untainted. A few
examples might be mentioned which give rise to a
serious sense of disquiet about his conduct as accounting officer. He
never sought
to explain how the actual expenditure of the grants made
was monitored and seemed content to rely on the fact that formal
undertakings
concluded with the various projects in terms of which
they were supposed to act in a financially accountable fashion. He
never
explained why the projects handling of the funds was not
closely monitored in practice or why there seemed to be an absence of
supporting documents for expenses met with the grant funding advanced
to those projects.
[56]
I also accept that there was some
procedural unfairness which occurred when the presiding officer
decided the outcome of the enquiry
without first clarifying that he
would no longer wait for the parties to try and agree on the
admission of the evidence of the
applicant’s additional witness
on the interpretation of the PFMA, or without making it clear that he
was not going to hear
such evidence and would simply deliver the
outcome on the basis of the evidence coupled with written submissions
of the parties.
He also should have made his intentions clear about
the hearing of additional evidence in mitigation or aggravation
before handing
down his verdict and sanction and this was unfair.
[57]
In all the circumstances, I believe six
months’ remuneration is adequate compensation for the
applicant’s unfair dismissal.
[58]
The considerable difficulties the court has
had in deciding this matter in the absence of a bundle of documents
makes it fair and
equitable in my view that the applicant should not
be entitled to his costs.
Order
[59]
The arbitration award of the second
respondent dated 8 January 2012 issued under case number GPBC 573/09
is reviewed and set aside
except in so far as the arbitrator found
the applicant not guilty of charges 7 to 9.
[60]
The arbitrator’s finding that the
applicant’s dismissal was substantively and procedurally fair
is substituted with
a finding that his dismissal was substantively
and procedurally unfair and an order that the third respondent must
pay the applicant
six months’ remuneration calculated as at the
date of the applicant’s dismissal as compensation for his
unfair dismissal,
within 15 days of the date of this judgment.
[61]
In the event the parties cannot agree on
the applicant’s rate of remuneration at the date of his
dismissal, either party may
apply to the court for the court to
determine the rate.
[62]
No order is made as to costs.
_______________________
Lagrange
J
Judge
of the Labour Court of South Africa
APPEARANCES
APPLICANT:
M
Mnyatheli instructed by P L
Samuels Attorneys
THIRD
RESPONDENT:
P
L Dikolomela instructed by
Morathi Mataka Attorneys
[1]
See
e.g
JG
Trading (Pty) Ltd t/a Russells v Whitcher NO & others (2001) 22
ILJ 648 (LAC)
at 650-651, paras [8] – [14].
[2]
See e.g
Eddels
SA (Pty) Ltd v Sewcharan
(2000)
21
ILJ
1344
(LC)
at
11345
[3]
See e.g, Herholdt v Nedbank Ltd (Congress of SA Trade Unions as
Amicus Curiae) (2013) 34 ILJ 2795 (SCA) at 2801-2 , paragraph
[12]:
"That
decision was taken on appeal to the Constitutional Court in Sidumo &
another v Rustenburg Platinum Mines Ltd &
others and overruled
in two respects. First it was held that although a CCMA award
involved administrative action it did not
fall within PAJA. Second
the court enunciated an unreasonableness test that differed from the
test adopted by this court, namely,
whether the award was one that a
reasonable decision maker could not reach. That test involves the
reviewing court examining
the merits of the case 'in the round' by
determining whether, in the light of the issue raised by the dispute
under arbitration,
the outcome reached by the arbitrator was
not one that could reasonably be reached on the evidence and other
material properly
before the arbitrator. On this approach the
reasoning of the arbitrator assumes less importance than it does on
the SCA test,
where a flaw in the reasons results in the award being
set aside. The reasons are still considered in order to see how the
arbitrator
reached the result. That assists the court to determine
whether that result can reasonably be reached by that route. If not,
however, the court must still consider whether, apart from those
reasons, the result is one a reasonable decision maker could reach
in the light of the issues and the evidence."
[4]
See
e.g.
National
Union of Mineworkers & another v Commission for Conciliation,
Mediation & Arbitration & others
(2010) 31
ILJ
703 (LC)
at 711-2, paras [13]-[14]
[5]
(2011) 32
ILJ 2455 (LAC)
[6]
At 2467-8.