Compensation Fund Annual Report 2012 - Department of Labour

Minister M. Oliphant,MPMinister of LabourSubmission of the Compensation Fund Annual ReportMinister of LabourI have the honour of submitting the Annual Report of the Compensation Fund for theperiod 1 April 2011 to 31 March 2012.______________________N.T. P. NhlekoDirector-General: Department of LabourN.T.P. NhlekoDirector-GeneralDepartment of Labour

List of AcronymsAGAPPBASBCEABUMSCCMACCCFCRMCSCFOCOOCIOCOIDADDDDGDDGDEXCOMDoLDPSADWCPECEEAESESSAEPWPEXCOFEMAFSGCISHOHPCSAHRMICDICMICTIESILOINDSKZNLMIS&PLPLP & IRLRA---------------------------------------–-----Auditor-GeneralAnnual Performance PlanBasic Accounting SystemBasic Conditions of Employment ActBusiness Unit Managers (Provincial Deputy Directors)Commission for Conciliation, Mediation and ArbitrationCompensation CommissionerCompensation FundCustomer Relationship ManagementCorporate ServicesChief Financial OfficerChief Operations OfficerChief Information OfficerCompensation for Occupational Injuries and DiseasesDirectorDeputy DirectorDirector GeneralDeputy Director GeneralDepartmental Executive CommitteeDepartment of LabourDepartment of Public Services and AdministrationDecent Work Country ProgrammeEastern CapeEmployment Equity ActEmployment ServicesEmployment Services for South AfricaExtended Public Works ProgrammeExecutive CommitteeFederal Employers Mutual AssuranceFree StateGovernment Communication and Information ServicesHead OfficeHealth Professions Council of South AfricaHuman Resource ManagementIntegrated Client DatabaseIntegrated Claims ManagementInformation and Communication TechnologyInspection and Enforcement ServicesInternational Labour OrganisationIntegrated National Disability StrategyKwaZulu-NatalLabour Market Information and StatisticsLimpopoLabour Policy and Industrial RelationsLabour Relations Act

KRAMBDCM&EMISSMOUMPUMTSFMTEFNCNEDLACNTOHSPDPDPPESPFMAPMOPPPPTSDPWDQMSRAFRMARMEROESAPSCMSDIPSEFSMSSOESPSTEFISWOTTCOIDTTDUIFWCWSP---------------------------------------Key Result AreaMedical Billing Document ControlMonitoring and EvaluationMinimum Information Security SystemMemorandum of UnderstandingMpumalangaMedium Term Strategic FrameworkMedium Term Expenditure FrameworkNorthern CapeNational Economic Development and Labour CouncilNational TreasuryOccupational Health and SafetyPermanent DisablementPersonal Development PlanPublic Employment ServicesPublic Finance Management ActProject Management OfficePublic Private PartnershipPost Traumatic Stress DisorderPeople with disabilitiesQuality Management SystemRoad Accident FundRand Mutual AssuranceResearch Monitoring and EvaluationReturn of EarningsSystem Application ProgrammesSupply Chain ManagementService Delivery Improvement PlanSheltered Employment FactoriesSenior Management ServicesState Owned EnterprisesStrategic PlanShort Term Financial IndexStrengths,Weaknesses, Opportunities and ThreatsTechnical Committee on Occupational Injuries and DiseasesTotal Temporary DisablementUnemployment Insurance FundWestern CapeWork Place Skills Plan

Table of Contents1.General Information.............................................................................................1Organisational Structure ..............................................................................................................................3CF Board members .........................................................................................................................................4Legislative mandate and other mandates ....................................................................................................5Commissioner’s Overview .............................................................................................................................62.2.12.22.32.42.52.62.72.82.92.102.112.122.13Governance................................................................................................................10Introduction.....................................................................................................................................................10Compensation Board.....................................................................................................................................10Mandate of the Board....................................................................................................................................10Board Composition........................................................................................................................................10Board Induction...............................................................................................................................................12Delegation of Authority.................................................................................................................................13Board Committees.........................................................................................................................................14Finance and Investment Committee...........................................................................................................14Assessments and Benefits Committee.......................................................................................................16Technical Committee for Occupational Injuries and Diseases.............................................................18Strategic and Operational Committee ......................................................................................................20Audit Committee............................................................................................................................................21Governance of Risk ........................................................................................................................................233.3.13.23.33.43.53.63.73.83.93.10Information on Predetermined Objectives.............................................26Overall Performance .....................................................................................................................................26Budgeted Funds...............................................................................................................................................42Aim of budgeted funds .................................................................................................................................43Summary of Programmes .............................................................................................................................43Key strategic objectives achievements ......................................................................................................46Overview of the service delivery environment for 2011/12 ..............................................................50Overview of the organisational environment for 2011/12 ...................................................................51Key policy developments and legislative changes....................................................................................52CF Revenue, Expenditure, and other specific topics ..............................................................................53Overall Programme Performance ..............................................................................................................56

4.4.14.24.34.64.74.84.94.104.11Annual Financial StatementsReport of the Audit Committee ................................................................................................................66Report of the Accounting Officer(s) .........................................................................................................69Report of the Auditor-GeneralStatement of Financial Position............................................................................65.................................................................................................................79..................................................................................................................85Statement of Financial Performance ........................................................................................................86Statement of changes in Net Assets .........................................................................................................87Cash Flow Statement ..................................................................................................................................88Statement of Accounting Policies ...............................................................................................................89Notes to the Annual Financial Statements .............................................................................................985.5.15.25.35.45.55.65.75.85.95.105.115.125.13Human Resource Management....................................................................124Service Delivery............................................................................................................................................124Expenditure ...................................................................................................................................................125Employment and Vacancies ........................................................................................................................127Job Evaluation ...............................................................................................................................................128Employment Changes ..................................................................................................................................129Employment Equity ......................................................................................................................................131Performance Rewards .................................................................................................................................135Foreign Workers ...........................................................................................................................................137Leave Utilisation............................................................................................................................................137HIV and AIDS & Health Promotion Programme ..................................................................................140Labour Relations ..........................................................................................................................................141Skills Development .....................................................................................................................................143Injury on Duty ...............................................................................................................................................1516.6.16.2Information and Communication Technology and Call Centre..152Information and Communication Technology ........................................................................................152Call Centre.....................................................................................................................................................153

Chapter I. General InformationVision, Mission and ValuesVisionTo be an employer of choice and an internationally reputable provider of Compensation for OccupationalInjuries and Diseases, rehabilitation and reintegration services.MissionTo utilise\leverage automated solutions to provide efficient, quality, client-centric and accessibleCompensation Fund services.To ensure effective rehabilitation and re-integration services, through reputable (proven) programmes.To ensure financial viability through efficient collections and prudent investments.To promote job creation initiatives through social responsible investments.To develop and retain a competent and content workforce.ValuesWe treat employees with care, dignity and respectWe respect and promote:- Client centred services- Accountability- Integrity and ethical behaviourLearning and developmentWe live the Batho Pele PrinciplesWe live the principles of the Department's Service CharterWe inculcate these values through our performance management system1

Reporting FrameworkThe following represents the reporting framework of the Compensation Fund:MINISTER OF LABOURCOMPENSATIONBOARDBOARDSUB-COMMITTEESDIRECTOR-GENERALLABOURAUDITCOMMITTEECOMPENSATION COMMISSIONER2

Organisational StuctureCompensationCommissionerMr ShadrackMkhontoD: InternalAuditMs Tshidi IkanengChief FinancialOfficerMs Thembeka PuziD: OrganisationalEffectivenessMr SimonNkhabelaneD: HumanResourceManagementMrs Thembi MolekoD: MedicalPaymentsMr A.K PillayD: MedicalServivesMs Kefilwe TselaneD: CompensationMr BasimaneDingaanActingProgrammeManagerMr SimonNkhabelaneChiefInformationOfficerMr Vkash SirkissonActing ChiefDirector:HRMMrs Thembi MolekoD. IncomeMs Ella NtshabeleD: Financial ReportingMr Pitsi MolotoDD: OrganisationalPerfomance andEvaluationMr MadodanaTuntulwanaDD: RiskManagementMr TwanaMakhubelaDD:CommunicationsMs DikentshoSeaboD: Financial ControlMs Pumla MjoliSnr Legal AdminOfficer:Mr OrphanLetsokoSnr Legal AdminOfficer:Ms NontembekoMathe-NdlaziSnr Legal AdminOfficer:Mr AndileSolwandleD: Supply ChainManagement -Mr LeonVan der Westhuizen3

CF Board MembersMr.W. Shisana(HPCSA)Mr. G. McIntosh*(FEMA)Mr.T. Lamati(Department ofLabour OHS)Mr. M. Mngqibisa(National Treasury)Mr. P. Magane(CEPPWAWU)Ms.TT. Pugh(FEMA)Mr. J. Singh(RMA)Mr. S. Motloung(FEDUSA)Mr. M. Majola(BUSA)Mr. N.Weltman(BUSA)Ms. B. Modise(NACTU)Mr. S.Tsiane(NUMSA)Mr. F. Xaba*(BUSA)Ms. J. Bodibe(COSATU)Dr. L. Dzingwa(Department ofHealth)* Alternate member4

Legislative and other mandatesConstitutional mandateThe mandate of the Compensation Fund is derived from Section 27 (1)(c) of the Constitution of theRepublic of South Africa. In terms of this act, all South Africans have a right to social security.TheCompensation Fund is then mandated to provide social security to all injured and diseased employees.Legislative mandateThe Compensation Fund is a public entity of the Department of Labour. The Fund administers theCompensation for Occupational Injuries and Diseases Act no. 130/1993 as amended by the COIDA 61/1997.The main objective of the Act is to provide compensation for disablement caused by occupational injuries ordiseases sustained or contracted by employees, or for death resulting from such injuries or diseases, andprovide for matters connected therewith.The Fund generates its revenue from levies paid by employers, which consists mainly of annual assessmentspaid by registered employers on a basis of a percentage or fixed rate of the annual earnings of theiremployees. The COID Act, however, makes provision for a minimum assessment to ensure that theassessment is not less than the administration costs incurred.The operations of the Compensation Fund are also affected by the following legislation:Public Finance Management Act, of 1999 as amendedOccupational Health and Safety Act, 1993NEDLAC Act, 1994Labour Relations Act, 1995, as amendedBasic Conditions of Employment Act, 1997, as amendedEmployment Equity Act, 1998Skills Development Act,1998 as amendedUnemployment Insurance Act, 2001 as amendedUnemployment Insurance Contributions Act, 20025

Commissioner’s OverviewIntroductionIt is of great honour to present the Compensation Fund Annual Report for the financial year 2011/12 interms of the Public Finance Management Act, 1999. The report highlights the progress made in achieving thestrategic and operational goals of the Fund, as well as giving a view of the way forward in improving servicedelivery. The programmes and achievements reflected in this Annual Report illustrate the critical role playedby the Compensation Fund in strengthening social protection and providing social safety net to South Africans.The milestones in this Annual Report also illustrate the role played by the Compensation Fund in shaping ouridentity as a social security institution, which is founded on the noble principles of equality to social safetyand human dignity for all.Highlights of the yearIn 2011/12 financial year, the Fund paid R205,150 compensation claims amounting to R549, 000, 702 andmedical claims amounting to R1, 882,372, 383. In an effort to improve service delivery and addressthe capacity challenges experienced by the Fund, the revised Compensation Fund organisational structurewas approved by the Minister of Labour in consultation with the Minister of Public Service andAdministration in August 2011. Preparations are being made to implement the structure with effect from1 October 2012.The decentralisation of COIDA services will be fully rolled out to two provinces in thefollowing year and to the other provinces at a later stage.A Change Management and Employee Engagement Strategy, as well as a Communication Plan that describes“how and when” various stakeholders within the Fund will be kept informed about the services of theFund and priority projects implemented during the year. Change management activities conducted as partof the strategy included communication of change through internal initiatives such as, directorate meetings,messages through posters and e-mails, and Commissioner's staff meetings.The Fund participated in the IDTT discussions for social security reforms and contributed positively towardsthe finalisation of the Government Consolidated Paper on Social Security Reforms, which was submitted toCabinet in March 2012.The Fund has made considerable progress with regard to Strengthening Civil SocietyFund, through funding and monitoring of civil society projects. As an effort to strengthen policy advocacy, theCompensation Fund through the DOL Strengthening Civil Society Fund has identified and funded sixnon–profit organisations through which the COIDA and Occupational Health and Safety Policy is advocatedby, amongst other things, developing curricula and training shop stewards in the various industries.The social responsible investments created by the Fund will in future focus on creating more jobs andcontribute towards alleviating unemployment. The Fund will need to ensure that social investments andwork opportunities comply with the principles of equal and universal access.6

In the year under review, the Fund was actively involved in implementing information technology initiatives,which were aimed at automating processes and improving services.The focus has been on the integratedclaims management and financial systems for the Fund which went live in October 2011. A phase II projecthas been initiated and several additional enhancements are being pursued through to improve these systems.Part of these enhancements include, among others, changes relating to the ROE website and the electronicreporting of accidents.The Fund embarked on a process of upgrading its call centre with the aim of improving access and its image.The IVR Customer Satisfaction Option and the Walk-in Centre Self-service Kiosk were implemented.The presentation of this Annual Report coincides with ongoing efforts to stabilise and capacitate the Fund todischarge its social security responsibilities and to be an employer of choice.These efforts relate to, inparticular, change management in terms of introducing a new performance culture and organisational ethics.At the end of the year under review the vacancy rate was 3.3 %.The Fund will continue to ensure that thefilling of vacant positions is prioritised in order to maintain its vacancy rate.During this financial year the Fund implemented the Communication Strategy, stakeholders were informedthrough print and electronic media about the services of the Fund and the direction which the Fund is taking.The Compensation Commissioner, alongside the Board, ensured that the CF's plans to improve servicedelivery through decentralisation were shared with the stakeholders. Part of the efforts made were to conductradio interviews in different languages and discussing the promotion of CF's services.Challenges for the yearThe 2011/12 financial year presented many challenges that prevented the Fund from fulfilling its legislativemandate optimally. These challenges fall into two categories, internal challenges and those that are externalor limited to the influence of the Fund. The external challenges, which had an impact on the Fund's ability torender services effectively, related to the submission of incomplete information and/or documentation byemployers and delays in the submission of banking details by beneficiaries.With regards to the implementation of the new SAP system, there have been challenges in stabilising andenhancing the system and finalising the process of data migration.The stabilisation of the SAP system hasnegatively affected the turnaround time in the processing of compensation claims and payments thereof.Fraudulent activities are still negatively affecting the assets of the Fund. Efforts are being made to improvesecurity, internal controls and risk management processes.Financial viabilityAlexander Forbes Financial Actuaries performed the actuarial valuation of the Fund based on the AuditedManagement Accounts of the Compensation Fund as at 31 March 2012.7

Summary of Actuarial ReportThe Fund should hold an outstanding claims reserve of R4.9 billion as at 31 March 2012(R5.2 billion: 31 March 2011).The liability accounting for what will be paid to pensioners for the current yearshould be R12.9 billion (R10.4 billion: 31 March 2011).The Fund showed a surplus of R2.0 billion in the 2011/12 financial year (R3.6 billion: 2010/11).The Fund has an accumulated surplus of R14.2 billion as at 31 March 2012 (R12.1 billion: 2010/11).The Fund was therefore in a sound financial position at 31 March 2012.Year aheadThe Fund will be focussing on fundamental policy changes that will change the way we conduct business.One of the initiatives will be to amend the Compensation for Occupational Injuries and Diseases Act, whichwill incorporate a chapter on rehabilitation and reintegration of injured workers.The amendment of COIDAwill create a policy environment for rehabilitation, re-integration, and return-to-work for injured and diseasedworkers. Underlying this policy will be the Early Return to Work that will ensure that the injured workerreceives a holistic treatment and regains their dignity. The draft amendment of COIDA including issues ofrehabilitation and reintegration will be tabled at NEDLAC for consultation with stakeholders.In the new financial year the Fund will launch the electronic submission of Return Of Earnings on-line,which will enable employers to file their assessments on-line and thus improving revenue collection.Through its social responsible investments, the Fund will contribute towards reducing youth unemployment,poverty, and inequality through targeted job creation projects and facilitation of access to employmentopportunities. The Fund will, in collaboration with Sheltered Employment Factories, facilitate accessto employment opportunities through targeted job creation projects over a period of three years.The Fundwill be implementing the new organisational structure and COIDA services will be rolled out in full to twoprovinces namely Gauteng and Western Cape. In the implementation of the organisational structure, theFund will be prioritising people with disabilities to support the right to dignity and economic independence.This effort will improve service delivery while keeping on a radar, job creation initiatives.Based on the recommendations of the Customer Satisfaction Survey, the Fund will be implementing aChange Management Programme to deal with the human aspect of change taking place within the Fund.This will be prioritised together with the development and implementation of the Employee WellnessStrategy.The management of Compensation Fund will be putting efforts to improve financial information and thedevelopment of an effective system of internal controls. The Fund will also be focussing on contractmanagement to make sure that value for money is derived for all services provided.8

AppreciationI would like to extend my gratitude to the honourable Minister of Labour Ms Oliphant for the unwaveringsupport she has given to the Fund and the Director-General Mr. Nkosinathi Nhleko for guidance andunderstanding.I would like to thank the Compensation Board and the Executive Committee of the Fund for theirunwavering support and commitment. I also want to thank all staff members of the Compensation Fund fortheir commitment and their valuable contribution, often in difficult times.I wish to thank all our clients and business partners. We trust that they are experiencing a positive impactwe are making to simplify our interface with them and improve their experience with us.It is through your support that the Compensation Fund has managed to successfully deal with most of thechallenges it faced in the year under review. The Fund will strive to achieve more in the next financial year.Your support will always be highly appreciated.Shadrack MkhontoCompensation Commissioner9

Chapter 2. Governance2.1 IntroductionThe principle of good corporate governance espoused in King III guides the operations of theCompensation Board.The Board believes that it complies with the King Code of Corporate GovernancePractice and Conduct.The Compensation Board has continued to advise the Minister of Labour on strategic and operationalchallenges facing Fund, working together with the Compensation Fund Management in an endeavour toeffectively and efficiently achieve the objective of the Fund.2.2 Compensation BoardThe Compensation Board is a statutory body of the Compensation Fund that advises the Minister ofLabour on policy matters, annual benefit increases, appointment of assessors and amendments to theCompensation for Occupational Injuries and Diseases Act (COIDA). Representatives are from organisedbusiness, organised labour, government, mutual assurance companies related to the Fund and medicalexperts.All members represent the interests of the Fund on corporate governance and their respectiveconstituencies on matters of service delivery.2.3 Mandate of the BoardThe Compensation Board is established in terms of section 10 of the Compensation for OccupationalInjuries and Diseases Act, 1993 (Act No. 130 of 1993) as amended.The Board's function is to advise the Minister on the following:I. Matters of policy arising out of or in connection with the application of COIDA.II. The nature and extent of the benefits that shall be payable to employees or dependents of employees,including the adjustment of existing benefits.III.The amendment of the COID Act.2.4 Board CompositionThe Board members bring with them a wide range of skills, business acumen, independent judgement andexperience on various issues, including strategy development, performance and general leadership whilst theCompensation Fund Senior Managers bring in profound functional experience and an understanding of thebusiness of the Fund.10

Table 1: Compensation Fund Board MembersName Organisation PrincipalMemberAlternativeMemberAppointmentDateMr. B. SinghRMAV18/18/08Ms.T.T. PughFEMAV18/18/08Prof. M.S. MokgokongHPCSAVResignedDr. R.B. CrouchHPCSAVResignedMr. N.WeltmanBUSAV18/18/08Mr. M. MajolaBUSAV18/18/08Dr. L. NdeluDep. of HealthVResignedDr. L.S. DzingwaDep. of HealthV01/09/11Mr.T. LamatiDep. of Health OHSV01/04/09Mr. M. MngqibisaNational Treasury (GPAA)V18/18/08Mr. S.TsianeCOSATUV18/18/08Mr. P. MaganeCOSATUV18/18/08Ms. J. BodibeCOSATUV18/18/08Mr. S. MotloungFEDUSAV18/18/08Ms. B. ModiseNACTUV18/18/08Dr.T. Kaipa- BalfourBUSAV18/18/08Mr. E. LefhuguRMAV18/18/08Mr. G. McIntoshFEMAV18/18/08Mr.W. ShisanaHPCSA PrincipalV18/18/08Mr. F. XabaBUSAV18/18/08Mr. S. DevaBUSAV18/18/0811

2.5 Board InductionThe Compensation Board induction takes place when new members are appointed, in order to familiarisethem with the Fund's strategy, operation, risk management procedures, governance frameworks and thethmember's responsibilities.An induction workshop was last conducted on the 10 November 2010, and thefollowing members attended the programme.Table 2: Schedule of attendance of the Induction WorkshopNames & Surnames 10 Nov 20101. Dr. R. Crouch2. Mr. S. Motloung3. Ms. L. Ndelu4. Mr. G. McIntosh5. Mr. P. Magane6. Mr. J. Singh7. Mr. S. Mngqibisa8. Ms.T. Pugh9. Prof. M. Mokgokong10. Mr. M. Majola11. Mr. N.Weltman12. Dr.T. Kaipa- Balfour13.Mr. F. Xaba14.Mr. S. Deva15. Mr. S.Tsiane16. Mr. L. Lamati17. Ms. J. Bodibe18. Ms. B. Modise19. Mr.W. Shisana12

2.6 Delegation of AuthorityAccording to the Compensation for Occupational Injuries and Diseases Act (COIDA), the Director-Generalmay designate any official in the Public Service to chair meetings of the Compensation Fund Board.stThe Director-General appointed Mr. M. Mgqibisa as the Board Chairperson on the 1 September 2010.The Board is also reviewing certain section of COID Act for amendments, in order to improve governance.The Board Secretariat is currently co-ordinated from the Planning, Monitoring and Evaluation unit.The following is the schedule of attendance of Board meetings by all Board members.Table 3: Schedule of attendance of Board Meetings= PresentAP = ApologyA = Absent* = ChairpersonNames & Surnames 25 / 05 / 2011 07 / 09 / 2011 28 / 09 / 2011 23 / 11 / 2011 15 / 02 / 20121. Mr. M. Mngqibisa*(Chairperson)APAP2. Mr. J. SinghMr Matshidze(ALT)APMr Matshidze(ALT)3. Ms T. Pugh4. Ms. J. BodibeAP5. Ms. B. ModiseAP6. Mr. S.TsianeAP7. Dr. L. NdeluResigned _ _ _8. Mr. L. DzingwaA A A13

Names & Surnames25 / 05 / 2011 07 / 09 / 2011 28 / 09 / 2011 23 / 11 / 2011 15 / 02 / 20129. Mr. N.WeltmanAAPA10. Dr.T.Kaipa-BalfourAAPAP11. Mr. G. McIntoshAP12. Mr. P. MaganeAPAAP13. Dr. CrouchResigned__ _ _14. Mr.W. Shisana15. Mr. F. Xaba16. Mr.T. LamatiAAAAPA17. Mr. S. MotloungAP2.7 Board CommitteesConsistent with King III and best practices, the Board has established technical sub-committees to assist inadvising the Board in order to efficiently and effectively achieve its objectives. Each sub-committee has amandate outlining authority delegated to it by the Board. The mandate of each sub-committee sets out thepurpose, composition, terms of reference and reporting responsibilities.The Board has established the following sub-committees:Finance and Investment Committee (FIC)Assessment and Benefits Committee (ABC)Technical Committee on Occupational Injuries and Diseases (TCOID)Strategic and Operational Committee (STRATOP)2.8 Finance Investment Committee (FIC)CompositionThe Committee will be represented as follows:2.8.1 The Board must appoint members of the Committee, who shall be non-executive directors ofthe Board14

2.8.2 The Committee shall comprise of at least Three (3) members representing the Board2.8.3 Representative(s) from Finance have standing invitation; other Departments/ Executive Managers maybe invited as and when required2.8.4 Board Secretariat will oversee the proceedings of all meetings2.8.5 The Committee may invite any other personnel, party, experts with Financial/Investment experienceto the meeting when deemed necessary2.8.6 The Board nominates alternative members to stand in the committee,2.8.7 Members of Committee must have knowledge and experience with regard to FAIS Act and otherFinance/Investment related practices2.8.8 Committee members are nominated to serve on the Committee for the period/term that isconsistent or equal to Board members2.8.9 Members may serve more than one (1) term, provided it is confirmed by the BoardMandateThe core mandates of the Committee emanate from:COIDARegulations issued in terms of COIDAFAIS- Financial Advisory and Intermediary Services Act, 2002 (Act 37 of 2002)PFMA and its Regulations, andOther applicable legislation, directives Financial/Accounting Standards and best practicesDuties and responsibilities of the FICSubject to the powers and duties of the Board and the requirements of the Act, the FIC will perform thefollowing duties:Depositors FundReview and recommend to the Board, investment policy and strategy in respect of depositors fundOversee the implementation of investment decisionsMonitor performance of investments on a quarterly basisReport the activities of the FIC to the board on issues relating to investment of depositors fundFinanceReview and recommend to the Board, Finance policies and strategy in respect of the FundThe FIC will report to the Board about the Annual Financial Statements (Financial position) of the Fund(without taking away Audit Committee mandate)The FIC, in conjunction with business units/Directorates , reports to the Board about status of audit opinionand other related mattersThe FIC will present to the Board, the monthly management and financial statements/information15

Table 4: Schedule of attendance of Investment Committee= PresentAP = ApologyA = Absent* = ChairpersonNames & Surnames 05 / 08 / 2011 24 / 10 / 2011 25 / 01 / 2012 12 / 12 / 2011 15 / 03 / 20121. Mr. S.Tsiane*2. Mr. F. XabaAP3. Mr. M. MngqibisaAPAPA4. Ms. J. BodibeA A A A2.9 Assessments and Benefits CommitteeCompositionThe Committee will be composed of the following representatives:2.9.1 All representatives (7 members) of various constituencies as represented on the Board.2.9.2 All Executive Managers/Directors representing all Departments within the Fund havestanding/permanent invitation to attend committee meetings. Director may bring their supportingmanagers/representative as and when they considered necessary.2.9.3 The Committee may invite any other personnel, party to the meeting when deemed necessary.2.9.4 The Board will nominate alternative members to stand in the Committee.2.9.5 Committee will nominate a coordinator who will serve as chairperson during meetings.2.9.6 Committee members are nominated to serve the period of three (3) years, in line with main Board term.2.9.7 Members may serve more than one (1) term, provided it is confirmed by the Board.2.9.8 The Board Secretariat will provide secretariat services to the Committee.MandateThe core mandates of the committee emanate from COIDA and are found in the following sections ofthe Act:Sections 47-64: Determination and calculation of benefits and or compensationSections 80-89: Obligations and Assessment of employersRegulations issued in terms of COIDAPFMA and its Regulations, andOther applicable legislation and directives16

Functions and responsibilities of the ABCThe Assessments and Benefits Committee will review, investigate, monitor, report and recommend to theBoard on matters related to:Policies on assessments and benefits and compensation payable.Obligations, registration and assessment of employers (sections 80-89).Raising of provisional assessments.Determination and revision of assessments and standard rates.Benefits and compensation payable (Sections 47-64) in terms of the Act.Medical fees payable in terms section 76 of the Act.Information contained in the quarterly reports.Any other matters relating benefits payable as well as assessments of employers.The Committee, through chairperson, will report to the Board on its functions and also makerecommendations regarding the mandate, including reports on Scheduled Benefits in November andsection 76 benefits payable in February.Table 5: Schedule of attendance of the Assessments & Benefits Committee= PresentAP = ApologyA = Absent* = ChairpersonNames & Surnames17 / 08 / 2011 04 / 10 / 2011 09 / 11 / 2011 13 / 12 / 2011 23 / 01 / 20121. Ms. J. Bodibe*2. Mr. G. McintoshA3. Ms. B. Modise4. Mr. S. Motloung5. Ms.T. PughA6. Mr. F. XabaAPA7. Mr. N.WeltmanAAAAA8. Mr. P. Stoop APA17

2.10 Technical Committee For Occupational Injuries And DiseasesCompositionThe composition of the Committee will consist of:2.10.1 The Chairperson of the Committee is the member of the Board (nominated by the Board or theCommittee).2.10.2 All Executive Managers/Directors representing all Departments within the Fund havestanding/permanent invitation to attend committee meetings. Executive Manager may bring theirsupporting managers/representative as and when they considered necessary.2.10.3 The Committee may nominate the meeting chairperson in the absence of the Chairperson2.10.4 One official nominated by the Department of Health.2.10.5 One official nominated by the Department Mineral Resources.2.10.6 Five persons representing organized labour.2.10.7 Five persons representing organized business.2.10.8 Members are nominated for a period of three (3) years, which is in line with term of Board members2.10.9 Members can serve more than one term provided it is confirmed by the Board and theCompensation Commissioner.2.10.10 The Committee can identify and invite technical experts to assist the Committee with a specificissue that is related to their areas of expertise.2.10.11 The Committee may consult with any person or group who may have an interest in the matter(s)under investigation.2.10.12 The Board Secretariat will provide secretariat functions to the Committee.MandateThe core mandate of the committee emanates from COIDA and other legislativeframework may include:Occupational Health and Safety ActRegulations issued in terms of COIDAHealth ActPFMA and its RegulationsFunctions and responsibilities of the TCOID CommitteeThe Technical Committee for Occupational Injuries and Diseases will review, investigate, monitor, reportand make recommendations to the Board on matters related to policy formulation, such as:The policy on assessment and diagnosis of occupational injuries and diseases;The policy on evaluation of impairment from occupational diseases and injuries;The policy on certification of disability from occupational diseases and injuries; and review of existingguidelines and schedules and make necessary recommendations to the Board;Investigate the management of Occupational Injuries and Diseases and their impact on compensation;All the above matters must be investigated and reported, taking full cognizance of the corroboration withODMWA and COIDA;18

The committee may request for access to any documents or records of the ODMWA institutions thatmay assist it in the execution of its mandate;The committee, through the Chairperson, will report to the Board on its activities;On matters where there is more than one expert view or opinion, the drafting of a final report will collatethe various views with their supporting evidence with a view to facilitating discussions at the Board level;All final reports will be circulated to the committee prior to submission to the Board; andA schedule of all reports submitted to the Board will be kept. To assist with document management, allreports will be referenced and the submission dates will be documented.Table 6: Schedule of attendance of Technical Committee on Occupational Injuriesand Deseases (TCOID)= PresentAP = ApologyA = Absent* = ChairpersonNames & Surnames11 / 04 / 2011 19 / 07 / 2011 02 / 11 / 2011 17 / 01 / 201224 / 01 / 20121. Mr. S. Motloung*2. Ms. J. BodibeA3. Mr. W. DilotsotlheAP4. Mr. C. MbekeniAPAP5. Mr. A. Letshele6. Ms. J. MahlanguAAA7. Dr. D. MokobotoAPAPAA8. . Dr. D. KritzingerAAA9. Mr. L. DzingwaAAAA19

2.11 Strategic and Operational CommitteeCompositionThe Committee shall be composed of the following representatives:2.11.1 At least 5 representatives of the constituencies as represented on the Board.2.11.2 All EXCO members, representing all Directorates within the Fund have standing/permanent invitationto attend committee meetings.2.11.3 The Committee may invite any other personnel, party to the meeting when deemed necessary.2.11.4 The Board shall nominate alternative members to stand in the Committee.2.11.5 The committee shall nominate a coordinator who shall serve as chairperson during meetings.2.11.6 Committee members are nominated to serve the period of three (3) years, which is in line with themain Board term.2.11.7 Members may serve more than one (1) term, provided it is confirmed by the Board.2.11.8 The Board Secretariat shall provide secretariat services to the Committee.MandateThe core mandates of the committee emanate from:COIDARegulations issued in terms of COIDAPFMA and its Regulations, andOther applicable legislation and directivesFunctions and responsibilities of the Strategic and Operational CommitteeThe Strategic and Operational Committee shall review, investigate, monitor, report and makerecommendations to the Board, including the following functions:Oversee the implementation and progress of the Fund strategyIncorporates best practices/service delivery activities of the Fund as per COIDAProtect the reputation and image of the FundReview and monitor internal and external communication and marketing strategiesIdentify, analyse and reporting on reliability and credibility of statistical informationEvaluate and analyse the performance of the FundIncorporates best practices to brand and market the activities of COIDAProvide contribution on management structure and governance imperatives of the FundImplementation of resolutions and directivesImplementation of “Batho Pele” PrinciplesAny other matters as assigned by the Board from time to time20

Table 7: Schedule of attendance of Strategic and Operational Committee= PresentAP = ApologyA = Absent* = ChairpersonNames & Surnames20 / 04 / 2011 16 / 08 / 2011 02 / 11 / 2011 02 / 02 / 20121. Mr. M. Majola*AP2. Ms. B. ModiseA3. Mr. S. Motloung4. Mr. S.TsianeA5. Mr. G. MclontoshAA6. Mr. P. MaganeA7. Ms. J. BodibeAA8. Mr. J. SinghAP9. Mr. F. XabaAPAP2.12 Audit CommitteeThe Audit Committee was established in terms of the PFMA and Treasury Regulations to assist the ExecutiveAuthority in fulfilling its oversight responsibility in terms of these statutes.The duties of the committee arebroadly defined in Section 51(1) (a) (ii) of the PFMA and Treasury Regulations issued in March 2005.21

2.12.1 CompositionSection 77 of the Public Finance Management Act, 1999 (Act No. 1 of 1999) regulates the membership ofthe Audit Committee.The Audit Committee will comprise of at least four independent members.The Chairperson is appointed by the Director-General in consultation with the Executive Authority.At leastonce during the term of membership will the Audit Committee meet with the Executive Authority or theMinister in charge of the Department of Labour.The Chairperson must not be in the employ of the Department of Labour.Members will be appointed for a four-year term of office.The Director-General has to concur with any termination of the services of a person serving on the AuditCommittee.A quorum for any meeting will be fifty percent plus one member.2.12.2 The Audit Committee CharterThe Audit Committee has adopted formal terms of reference as its Audit Committee Charter that has beenapproved by the Fund's Board.The terms of reference do not replace the responsibilities in terms of the aboveAct and Regulations, but complement and clarify the role of the Audit Committee in terms of theirresponsibilities.The Committee has conducted its affairs in compliance with this charter and has discharged itsresponsibilities contained therein.The Charter is available on request from the Compensation Fund.2.12.3 Roles and ResponsibilitiesThe Audit Committee's roles and responsibilities include its statutory duties as required by Public FinanceManagement Act (PFMA) and Treasury Regulations issued in March 2005.Primarily the Audit Committee is established to assist the Board in discharging its duties relating to, amongothers:The safeguarding of assets,The operation of adequate systems and controls,Ensuring the preparation of accurate financial reporting and statements in compliance with all legalrequirements and accounting standards,Effective risk management,Ensuring good corporate governance,Ensuring the effectiveness of internal and external audit processes,Ensuring that the Codes of Governance Principles are maintained.2.12.4 Audit Committee Members and Attendance of MeetingsThe Chairman of the Board, Compensation Commissioner, Chief Financial Officer, Chief Audit Executive,External Audit and Executive Management attend meetings by invitation.During the year under review, the following meetings were held:22

Table 8: Schedule of attendance of Audit Committee meetings= PresentAP = ApologyA = Absent* = ChairpersonNames & Surnames06 / 04 / 201123 / 05 / 201127 / 05 / 201130 / 05 / 201114 / 06 / 201130 / 06 / 201126 / 07 / 201109 / 09 / 201103 / 10 / 201106 / 12 / 201119 / 12 / 201114 / 03 / 20121. Mr. K Buthelezi*2. Mr. G Nzalo3. Mr. S Makhubu4. Mr. F XabaAP2.13 Governance of Risk2.13.1 Fraud Prevention PlanAs required by section 29.1.1 of the Treasury Regulations, issued in terms of public Finance Management Act,No.1 of 1999, the Compensation Fund prepared a Fraud Prevention Plan to effectively manage the fraud risksto which the Fund is exposed. The Audit Committee is ensuring that Fraud Prevention Plan and Strategy isimplemented to minimize exposure to criminal acts, particularly fraud.The Risk Management Unit addressesthese threats. Its work covers risk assessment, fraud prevention, detection, response and investigation.Where serious fraud, corruption and irregularities are suspected, investigations are conducted to establishfacts to enable management to deal appropriately with the matter and prevent recurrence.Table 9: Statistical Investigation CasesTotalNumberof CasesEstimatedAmountInvestigationCompletedActual LossReferred toSAPSAmount refto SAPS208R 71,766,067 137 R 26,072,606 45 R 22,137,04223

One official was dismissed for fraud during the year under review and a criminal case was opened with theSAPS for investigation.Graph 1: Statistics of cases per section completedPrior year cases reported to SAPS and Health Care ProvidersHealth Care Providers3 cases of fraud are on trial, 2 convictions and 4 under investigationEx official6 ex-officials are on trial and 4 under investigation24

Graph 2: Statistical Fraud and Risk Awareness conducted2.13.2 Enterprise Risk ManagementRisk assessment was performed and updating of the risk registers by various risk owners. Risk Committee ischaired by an independent member and monitors the implementation of the risk control matrix, to ensurethe effectiveness of risk management.Risk champions were appointed and trained so that they can assist the risk owners on the implementationof the risk control measures.2.13.3 Security Risk ManagementIntegrated Security System was implemented at both Compensation and Benstra Buildings as the measuresto improve the security risk.Executive Management have submitted their vetting forms to State Security Agency for vetting, two alreadycleared and the rest are still waiting for the results.25