ICD Briefing to the Portfolio Committee on Police Regarding Operating Leases

The Independent Complaints Directorate (ICD) appeared before the Portfolio Committee on Police on 15 November 2011 to brief the Portfolio Committee on Police (Committee) regarding its operating leases. At an earlier meeting, the committee had asked for more details in regard to the operating leases reported in the Annual Financial Statements (AFS).

The ICD indicated that it submitted a needs analysis for its national office for 3 100 square meters and a budget of six million one hundred and ninety rand (R6,1 million) in October 2007. In March 2008, the ICD was invited to view three buildings, one of which was Structura. After the ICD indicated its interest in the Structura building, it was informed that the building did not comply with BEE procurement policies. However, a few days later, the ICD was informed that the Structura building was now BEE compliant as it had been sold to a new owner. The ICD had then indicated its interest in Structura. The cost of renting Structura was indicated to the ICD as three hundred and twenty three thousand six hundred and eighty two rand and forty cents (R323,682.40) per month – this amounts to three million eight hundred and eighty four thousand one hundred and eighty eight rand and eighty cents (R3,884,188.80) per annum. The committee was also informed that the ICD had incurred costs to the amount of seven hundred and seventy thousand rand (R770,000) for computer cabling. The building was never ready for occupation by the ICD as according to DPW, the owner of this building had failed to comply with his/her obligations in getting the building ready for occupation.

The ICD further informed the committee that in January 2010, DPW informed the ICD that there was another building (City Forum) that was available for consideration by the ICD. It was indicated to the ICD that should there be interest in moving to this building, it would be a simple swap, with the ICD moving to City Forum and Department of Human Settlements moving to the Structura building. Since it was to be a simple swap, there was an obligation on DPW to inform the ICD of any changes in the lease amounts, this is in terms of DPW’s own practices. The ICD was never informed of any such changes, therefore, it went into City Forum with the understanding that the lease costs would not differ from the figure confirmed for Structura, that is, R3,884,188.80 per annum.

Before the ICD occupied the City Forum building, the needs analysis had been revised to 4 600 square meters. After the ICD occupied the building on 15 September 2010, it tried to obtain a copy of the lease in order to understand the relevant details and terms of the lease. A copy of the lease was received by the ICD in November 2011 – this was the first time that the ICD became aware of the real costs of its national office lease. Invoices that were received were queried with DPW and these queries are still receiving attention.

In summary, the ICD informed the committee that its role was limited to compiling the needs analysis and budgeting for and viewing the buildings that were offered to it. The ICD dealt with DPW in good faith as the lead department responsible for procuring accommodation for all government departments. Our understanding was that since the move to City Forum was a simple swap, the ICD would only be liable for the amount confirmed for Structura.

The ICD is confident that it has been prudent in the use of public funds and has not intentionally committed itself to an inflated lease.

Issued by the Independent Complaints Directorate

For enquiries:
ICD National Spokesman
Moses Dlamini
082 809 1927