Tag Archive | parliament

Parliament looses control on government spending

SA’s big black hole in its fiscal galaxy…..

It  looks like the governing party knows even more about the daylight robbery going on in certain provincial and local government structures than was originally disclosed.    A big hole in local givernment spending is still swallowing up millions in taxpayer revenue.    Not good news when an election is happening.

As a result of the disclosures, this is a delicate moment for South Africa waiting to learn the make-up of the parliamentary political balance and who is nominated to Cabinet, and just as important as it is to see the structure of provincial government where most of taxpayer’s money is spent.

With the economy in peril, what happens now in terms of responses with regard to the outcomes on state capture and corruption, and how it is handled, is a matter of dancing on the edge of a financial cliff.  Financial commentators from the around the world are watching.

Gearing up

With Parliament re-opening, the third pillar of the South African democratic structure will again assume its critical role in debating and shaping government policy.    Equally important, it will resume its position as a listening post for business and industry.   We have sharpened our pencil.

Its seems such a short time since 1994 when Parliament started its first five-year government term. Looking back over the five terms, what a roller coast ride it has been.

Watching, waiting

Now, for the sixth time, 400 members on the national political party lists are allocated to the National Assembly (NA) and a further 90, representing provincial interests, go the National Council of Provinces (NCOP) in the form of 10 delegates for each of the nine provinces.

The NCOP has the task of monitoring the NA in fact, therefore representing, somewhat tenuously, the voice of the people in those provinces.

Good start

The home of the NCOP is a building opened in 1884 as the first parliament of the Cape of Good Hope which interestingly enough was multi-racial, condescendingly so some say.  Its good-looking edifice dominates the central portion of the parliamentary precinct, next to the more modern National Assembly building.

With political balance of the 490 MPs on the precinct about to be established and the voice of the people thus represented, there is a shadowy side to Parliament as well which many politicians at national, provincial and local government have learned to use or abuse.

 In reality, the NCOP is the combined voice of the nine legislatures of the provinces acting as a watch-dog and checking that the National Assembly is not disregarding their interests.

The watchers

Only 54 of its 90 seats allocated have voting powers, the balance of 4 members per province having a special status to be heard but who cannot vote.  One of those members with special status is the Premier of each province, all Premiers rarely attending being too busy with their legislatures.

The other three seats allocated as special status are for provincial members assigned for particular reasons, maybe on a specific debate, and who travel from the provinces.  Ordinary citizens cannot be heard unless invited to do so but may watch, unless the meeting is closed for good reason.

Basic work

When legislation is tabled, it goes first to the NA for debate and approval.  If it has strong provincial interests it is “tagged” to go to the NCOP not just for simple “concurring”. In this case, the matter is sent with a special call to all nine provinces for comment Houses_of_Parliament_(Cape_Town)and majority vote or rejection.  This mandate in reply from provincial power bases is then expressed upwards by the NCOP.

In the National Assembly, the 400 members are spread out into “portfolio” committees for debate on national government reporting on policy matters and in accounting terms.  Their main tasks are to approve the budget and allocate same to the nine provinces, also to debate tabled legislation and monitor how all national departments are performing against targets.

Numbers game

In the NCOP there is a problem. There are only 54 members allocated to it and who can vote.   With and far too many government departments to watch, as a result their monitoring brief on national departments is broken into selected groups. (Hence the term used by Parliament of “select” committees.)

In addition to the provincial presence, local government is represented in the NCOP by SALGA who can also attend meetings in the NCOP with a voice but have no voting powers. This really is the only contact Parliament has with local government.

Three-tiered cake

However, the snag with the system now becoming more and more evident is simply that the traffic on money matters is one-way only.  It goes from the top, downwards.    That is not because the system is wrong, since it was designed that way so that the NCOP is fully briefed on budgets and allocations to the provinces.

However, such a system can be easily “worked” to provide an outcome that hides criminal intent or sloppy accounting since no information is coming upwards other than when MPs decide to make personal visits as a committee team on a specific issue and travel themselves “downwards”.

Mushroom club   

Consequently, nobody in the NA has really any idea of what is happening in the nine provincial legislatures or how municipalities and local governments are spending the budget in a reportable audit form other than what is reported by to it by national government entities and departments.

For example, in the Free State, heaven knows what has been going on there for a number of years with past Premier Ace Magashule and his cohorts, who seemingly have only been monitored by AmaBhugane but certainly not properly by the Premier and the Free State legislature.

Nobody seems to have listened the DA in the Free State complain and their accounting experiences with Free State audits investigated, such matters having been brought up in question time in the NA again and again but written off as opposition trouble making. The NCOP, of course, does not come into the equation.

Another world

The net result is that none of the frightful qualified audits on Free State budget spending on infrastructure representing an accounting malaise of epic proportions have come fully before Parliament. At the moment the big black hole in the economy at provincial level appears to have much to do with the distortion in accounting terms between how the money was used for spending and what actually was the value of the work done, if at all.

When the power shortly returns to Parliament the President will only have a very short time to deal with his compatriots who, as Archbishop Tutu put it, have lost their moral compass and taught so many how to steal from the poor.

Perhaps the new challenge of the Sixth Parliament is to have better contact with provinces, municipalities and local government, since here lies the gaping hole in the economy coupled to lack of service delivery.

 

ends/ editorial /parlyreport/1 May 2019/sent to subscribers

 

 

 

 

 

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World Bank gets the cold shoulder

From the Aug/September 2018 ParlyReport…….

Go to:   World Bank gets the cold shoulder

Posted in Finance, economic, Trade & Industry0 Comments

Communal Property Bill part of land reform

From Aug/September ParlyReport….

Communal Property Bill posted 7 10 2018

Posted in Agriculture, Cabinet,Presidential, Finance, economic, Justice, constitutional, public works, Special Recent Posts, Trade & Industry0 Comments

Reserve Bank sees no threat in nationalisation

 

FromAug/September report……

State bank posted 7 10 2018

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ANC MPs face to face with reality

….SA on world stage for Parliamentary opening

….editorial 27 January 2018

Who is going to be doing what in the ANC as Parliament re-opens for the first session of 2018 is far from clear as the party cogitates over leadership factors.    However, the vessel, the SS Rainbow Nation, may have righted itself and could commence the long and difficult voyage to economic recovery, although the vessel could well be said to be currently in damage control mode.   But at last the glass is half full, not half empty.

For the next few weeks, all eyes will be on Parliament.  The Bard could not have put it better.   “All the world’s a stage: all have their exits and their entrances…”, to paraphrase a little.

Patience called for

Those who feel that injustices have taken place and people must go to jail will just simply have to wait and learn to control the anger and frustration in the coming weeks as we learn of further exposés indicating the real depth of the corruption and mismanagement during the Zuma era.  The wound has been lanced but it took far too long for the doctor to arrive and apply a dressing.

In the meanwhile, somehow, South Africans are going to have to put this ten year period of atrocious governance behind and just simply get on with the job.. The endless denials of who did what to whom and whose hands are clean will go on for a very long time.  Replays of past speeches which are totally contrary to current statements will be the order of the day and prepare for brazen lies about how so many people all miraculously got to stay at the Oberoi Hotel in Dubai, for example.

They told us so

AmaBhungane and Daily Maverick told us about the Vrede Dairy Project theft of R220m as long ago as June 2017, the scam set up by still current Minister Mosebenzi Zwane and ANC Secretary General Ace Magashule, then Free State Premier, and contemptuously planned as a siphon for personal financial gain.   It was almost tiring to see the whole story splurged again in the weekend press. The “I am innocent until proven guilty” answers from Minister Zwana were equally as absurd.

Consequently, for the last six months, it has also been most difficult to watch Zwane strutting about in parliamentary portfolio committee meetings in the confident manner that is his hallmark busily destroying half of the mining industry on behalf of the Guptas knowing that all around him knew what he was up to.

Fortunately, partner Ace Magashule appears rarely Parliament. His time may come, however, once his position at Luthuli House is clarified.

Failure of disciplines

Under Jacob Zuma, the habit of state “fruitless and wasteful” expenditure has become endemic ever since the example had been set by the top with Nkandla. This was probably the first awful display of arrogance in the face of overwhelming knowledge of the truth. Now with Eskom debacle included, we know that that the total of money stolen in the Zuma era is around R700bn. This is according to the Institute of Internal Auditors.

If the “fruitless and wasteful” aspect of bad governance are added to this already frightful figure, then whomsoever said “Every nation gets the Government they deserve” is right, meaning of course that if Parliament and the Auditor General fail in oversight of government expenditure then all are poorer for not having applied consequences.  A private member’s Bill, recently tabled in Parliament to give the AG more teeth, is most welcome.

How low can it get?

If the Sunday press coverage of the Vrede dairy swindle was not enough,  once again we had to watch, with no satisfaction we might add, this same sickening story of corruption and greed repeated by a TV announcer standing outside a sliding gate and a wall located in the back and beyond of the Free State with a few building structures in the distance.  The total sum of assets still technically belonging to the Department of Agriculture from their project from which the R220m had been blatantly diverted.

As had been told to us six months before by Amabhungane and by Jacques Pauw,  Minister Zwane’s son who works for the Gupta family, was the recipient of a good slice of this money.   Even the President’s son is deeply involved as a beneficiary.   One turns one’s head away in shame. All in the name of a few cows and a group of hapless indigent farmers. A line which should not have been crossed.

Parliament is the people

What has been learnt is that Parliament is the people’s place of refuge. That is all we have, however ineffectual it may seem at times.  The proof of this is in the pudding. That creaky old system invented centuries ago won the day and in the end the people spoke. Parliamentary enquiries, whilst not courts of law and cannot judge, have produced the questions which leave the ordinary person, “the people”, to judge for themselves.

It seems pretty common cause, therefore, that  “people say”  that President Jacob Zuma should no longer be allowed to occupy Tuinhuis with a whopping salary and a rather large home and family.  The “people” were supported, brilliantly, by a strong civic voice and whistleblowers who have not benefited.

The stage is set and the play will end where it started.  In  the people’s Parliament.

Fresh start

Time now to forget the past. We must start again. It would be good to rise above the obsession to see these partners in crime and state capture go to jail. The systems, it appears, are back in place to ensure whether this happens or not.

Revenge is not the issue, however. The job in hand is to get on speedily repairing the damage. One remembers with warmth the leadership style, vision and courage endowed to us all by Nelson Rolihlahla Mandela, who asked us to rise above the sins of apartheid and focus only upon building a country. Many feel the time has come for the ANC to repeat the exercise.

A long road

Africa is indeed rising again and for the first time, in a long time, we can look forward to newscasts that don’t leave one feeling helpless, as has been the case ever since the Gupta e-mails emerged. In the few days after Cyril Ramaphosa returns from Davos (with whatever title he may have assumed by then) parliamentary business can return to normal.

All eyes in the next few weeks will focus upon the State of Nation Address and the Budget. Why exactly is the glass half full and not half empty? Because the governing party has been given a chance to put things right. Their endeavours to do so will be for all to see on the stage called Parliament.

Previous editorials
Parliamentary start to 2018 will be stormy – ParlyReportSA
Parliament SA: the top half of the iceberg.. – ParlyReportSA

Posted in earlier editorials, Special Recent Posts0 Comments

Competition Commission gets to know LPG market

 DOE holds off on LPG regulatory changes…

Sent to clients 25 Oct….In a briefing to the Portfolio Committee on Energy on the report by the Competition Commission (CC) into the Liquified Petroleum Gas (LPG) sector, acting Director General of the Department of Energy (DOE), Tseliso Maqubela, has again told Parliament that the long-standing LPG supply shortages are likely to continue for the present moment until new import infrastructure facilities come on line.

He was responding to the conclusions reached by the CC but reminded parliamentarians at the outset of the meeting that the Commission’s report was not an investigation into anti-competitive behaviour on the part of suppliers but an inquiry, the first ever conducted by the CC, into factors surrounding LPG market conditions.

Terms of reference

In their general comments, the Commissioner observed that the inquiry commenced August 2014 on the basis that as there were concerns that structural features in the market made it difficult for new entrants and the high switching costs for LPG gas distributors mitigated against change in the immediate future.

They worked on the basis that there are five major refineries operating in South Africa, these being ENREF in Durban, (Engen);

refinery

engen durban refinery

SAPREF in Durban, (Shell and BP); Sasol at Secunda; PetroSA at Mossel Bay; and CHEVREF in Cape Town (Chevron). There are four wholesalers, namely Afrox, Oryx, Easigas and Totalgaz.

Wholesalers different

As far the wholesalers are concerned, in the light of all being foreign controlled, CC also observed that transformation was poor, but this was not an issue on their task list, they said. They had assumed therefore that BEE legislation was difficult to enforce and that the issue had been reported to the Department of Economic Development, the portfolio committee was told.

Price regulation at the refineries and at retail level is supposedly determined by factors meant to protect consumers, the CC said, but their inquiry report noted no such regulations specifically at wholesale level. This fact was stated as being of concern to the CC in the light of known “massive profits in the LPG wholesaling sector”.

Structures

Commissioner Bonakele said, “We started the inquiry because of the worrying structures of the market but in benchmarking our market structures with other countries and we found LPG in SA was not only unusually expensive but was indeed in short supply. Why? When it is so badly needed, was the question, he said

The CC established from the industry that about 15% of LPG supplied is used by householders and the balance is for industrial use.   In general, they noted that there were regulatory gaps also in the refining industry but regulatory requirements were over-burdening they felt and contained many conflicts and anomalies.

The CC had also reported that the maximum refinery gate price (MRGP) to wholesalers and the maximum retail price (MRP) to consumers were not regulated sufficiently and far too infrequently by DOE.

Contentious

There needed to be one entity only regulating the entire industry from import to sale by small warehousing/retailers, they said. The CC suggested in their report that the regulatory body handling all aspects of licensing should be NERSA .

As far as gas cylinders were concerned, Commissioner Bonakele noted in their report that there are numerous problems but their criticism was that the system currently used was not designed to assist the small entrant. The “hybrid” system that had evolved seemed to work but there was a “one price for all” approach.

DOE replies

In response, DG Maqubela confirmed that the inquiry had been conducted with the full co-operation of DOE into an industry beset with supply and distribution problems, issues that were only likely to change when there were “adequate import and storage facilities which allowed for the import of economic parcels of LPG supplied to the SA marketplace.”

When asked why local refineries could not “up” their supply of LPG to meet demand, DG Maqubela explained that only 5% of every barrel of oil refined by the industry into petroleum products could be extracted in the form of LPG. Therefore, the increase in LPG gas supplied would be totally disproportionate to South Africa’s petrol and diesel requirements.

Going bigger

Tseliso Maqubela, previously DG of DOE’s Petroleum Products division, told the Committee that two import terminal facilities have recently been commissioned in Saldanha and two more are to be built, one at Coega (2019) and one at Richards Bay (2021). These facilities were geared to the importation of LPG on a large scale.

He said, in answer to questions on legislation on fuel supplies, that DOE were unlikely to carry out any amendments in the immediate future to the Petroleum Pipelines Act, since the whole industry was in flux with developments “down the road”.
It would be better to completely re-write the Act, he said, when the new factors were ready to be instituted.

Rules

On the regulatory environment, DG Maqubela pointed out that for a new refinery investor it would take at least four years to get through paper work through from design approval to when the first spade hit the soil. This had to change. The integration of the requirements of the Department of Environmental Affairs, Transnet, the Transnet Port Authority, DTI, Department of Labour, Cabinet and NERSA and associated interested entities into one process was essential, he said.

On licencing, whilst DOE would prefer it was not NERSA, since they should maintain their independence, in principle the DOE, Maqubela said, supported the view that all should start considering the de-regulation of LPG pricing. He agreed that DOE had to shortly prepare a paper in on gas cylinder pricing and deposits which reflected more possibilities for new starters.

MPs had had many questions to ask on the complicated issues surrounding the supply, manufacture, deposit arrangements, safety and application of cylinders. In the process of this discussion, it emerged, once again, that LPG was not the core business of the refinery industry and what was supplied was mainly for industrial use. The much smaller amount for domestic use met in the main by imported supplies for which coastal storage was underway over a five-year period.

Refining

DG Maqubela noted that on Long Term Agreements (LTAs) between refineries and suppliers, DOE in principle agreed with the Commission that LTAs between refiners and wholesalers could be reduced from 25 years to 10 years, to accommodate small players. Again, he said, this would take some time to be addressed, as was also an existing suggestion of a preferential access of 10% for smaller players.

All in all, DG Maqubela seemed to be saying that whilst many of the CC recommendations were valid, nobody should put “the cart before the horse” with too much implementation of major change in the LPG industry before current storage and supply projects were completed.

However, the current cylinder exchange practice must now be studied by DOE and answers found, Tseliso Maqubela re-confirmed.
Previous articles on category subject
Overall energy strategy still not there – ParlyReportSA
Gas undoubtedly on energy back burner – ParlyReportSA
Competition Commission turns to LP gas market – ParlyReportSA

Posted in BEE, Energy, Finance, economic, Fuel,oil,renewables, LinkedIn, Trade & Industry0 Comments

Marine Spatial Bill targets ocean resources…

Bill to bring order to marine economy…

November 2017 ParlyReport…..

In the light of President Zuma’s emphasis in his recent speeches on oil and gas issues, it is important to couple this in terms of government policy with the tabling of the section 76 Marine Spatial Planning Bill (MSP Bill).  The proposals are targeted at business and industry  to establish “a marine spatial planning system” offshore over South African waters.

The Bill  also says it is aimed at “facilitating good ocean governance, giving effect to South Africa’s international obligations.”

A briefing by the Department of Environmental Affairs (DEA) on their proposals is now awaited in Parliament. The Bill until recently was undergoing controversial hearings in the provinces as is demanded by its section 76 nature.

Water kingdom

The MSP Bill applies to activities within South Africa’s territorial waters known as Exclusive Economic Zones, which are mapped out areas with co-ordinates within South Africa’s continental shelf claim and inclusive of all territorial waters extending the Prince Edward Islands.

The Bill flows, government says, from its Operation Phakisa plan to develop South Africa’s sea resources, notably oil and gas.   The subject has recently been subject to hearings in SA provinces that have coastal activities. This importantly applies to South African and international marine interests operating from ports in Kwa-Zulu Natal and the Eastern and Western Cape but also  involves coastal communities and their activities.

International liaison

Equally as important as maritime governance, is the wish to assist in job creation by letting in work creators.  Accounted for also are international oceanic environmental obligations to preserve nature and life supporting conditions which DEA state can in no way can be ignored if maritime operations and industrial seabed development are to be considered.

South Africa is listed as a UNESCO participant, together with a lengthy list of other oceanic countries, agreements which, whilst not demanding total compliance on who does what, are in place to establish a common approach to be respected by oceanic activity, all to be agreed in the 2016/7 year.  South Africa is running late.

Invasion protection

Whilst the UNESCO discipline covers environmental aspects and commercial exploitation of maritime resources, the MSP Bill now before Parliament states that in acknowledging these international obligations, such must be balanced with the specific needs of communities, many of whom have no voice in an organised sense.

As Operation Phakisa has its sights set on the creation of more jobs from oceanic resources therefore, the MSP Bill becomes a balancing act for the Department of Environmental Affairs (DEA) and the Bill is attracting considerable interest as a result.

The hearings in the Eastern Cape have already exposed the obvious conundrum that exists between protecting small-time fishing interests and community income in the preservation of fishing waters and development of undersea resources.  What has already emerged that the whole question of the creation of future job creation possibilities from seabed-mining, oil and gas exploration and coastal sand mining is not necessarily understood, as has been heard from small communities.

The ever present dwindling supply of fish stocks is not also accepted in many quarters, with fishing quotas accordingly reduced.

Tug of war

All views must be considered nevertheless but from statements made at the political top in Parliament it becomes evident that the potential of developing geological resources far outweigh the needs of a shrinking fishing industry.  At the same time, politicians usually wish to consider votes and at parliamentary committee level, the feedback protestfrom the many localised hearings is being heard quite loudly.

As one traditional fishing person said at the hearings in the Eastern Cape, “The sea is our land but we can only fish in our area to sustain life. The law is stopping us fishing for profit.”

Local calls

The attendees at many hearings have said that the MSP Bill and similar regulations in force restrict families from earning from small local operations such as mining sand; allow only limited fishing licences and call for homes to be far from the sea denying communities the right to benefit from the sea and coastal strips for a living.

Hearings last went to the West Coast and were held with Saldanha Bay communities.

Big opportunities

Conversely, insofar as Operation Phakisa is concerned, President Zuma, as has been stated, said clearly in his latest State of Nation AddressZuma that government has an eye for much more investment into oil and gas exploration.   He has since announced that there are plans afoot to drill at least 30 deep-water oil and gas exploration wells within the next 10 years as part of Operation Phakisa.

Coupled to this is the more recent comment in Parliament that once viable oil and gas reserves are found, the country could possibly extract up to 370 000 barrels of fossil fuels each day within 20 years – the equivalent of 80% of current oil and gas imports.

According to the deadline set by the Operation Phakisa framework, the MSP Bill should have been taken to Parliament at the beginning of December 2016 for promulgation as an Act by the end of June 2017, making it appear that things are running late.

Environmental focus

As the legislation is environmentally driven, with commercial interests coming to the surface in a limited manner at this stage, the matter is being handled by the Portfolio Committee on Environmental Affairs.    It is understood that later joint meetings will be held with the Trade and Industry Committee and with Energy Committee members.

Adding to the picture that is now beginning to emerge, is the fact that Minister of Science and Technology, Naledi Pandor, has signed a MOU with the Offshore Petroleum Association of South Africa.

Minister Pandor said at the time of signing, “The South African coastal and marine environment is one of our most important assets.   Currently South Africa is not really deriving much from the ocean’s economy. This is therefore why we want to build a viable gas industry and unlock the country’s vast marine resources.”

Moves afoot

OPASA is now to make more input with offshore oil and gas exploration facts and figures.   Energy publications are now bandying figures around that developments in this sphere will contribute “about R20bn to South Africa’s GDP over a five-year period.”   If this is the case, the Energy Minister might be compromised once again, as she was with renewables, on the future makeup of the planned energy mix.

Amongst the particularly worrying issues raised by opposition parliamentarians and various groupings in agricultural and fishing areas is that there is a proposal in the MSP Bill on circuit states that the Act will trump all other legislation when matters relate to marine spatial planning. DEA will have to answer this claim.

Opposition

Earthlife Africa have also stated at hearings in Richards Bay that in their opinion “Operation Phakisa has very little to do with poverty alleviation and everything to do with profits for corporates, most likely with the familiar kickbacks for well-connected ‘tenderpreneurs’ and their political allies.”

This is obviously no reasoned argument and just a statement but gives an indication of what is to be faced by DEA in the coming months.

Giants enter

With such diverse views being expressed on the Bill, President Zuma and past Minister  of Energy, Mmamaloko Kubayi cannot have missed the announcement that Italy’s Eni and US oil and gas giant, Anadarko, have signed agreements with the Mozambique government to develop gas fields and build two liquefied natural gas terminals on the coast to serve Southern African countries.

Eni says it is spending $8bn to develop the gas fields in Mozambique territorial waters and Anadarko is developing Mozambique’s first onshore LNG plant consisting of two initial LNG trains with a total capacity of 12-million tonnes per annum.  More than $30bn, it has been stated in a joint release by those companies, is expected to be invested in Mozambique’s natural gas sector in the near future.

Impetus gaining

In general, therefore, the importance of a MSP Bill is far greater than most have realized. The vast number of countries called upon to have their MSP legislation in place also indicates international pressure for the Portfolio Committee on Environmental Affairs to move at speed.

This follows a worldwide shift to exploiting maritime resources, an issue not supported by most enviro NGOs and green movements without serious restrictions.  Most parliamentary comments indicate that the trail for oil and gas revenues needs following up and the need to create jobs in this sector is even greater.

Ground rules

Whilst the oil and gas industry and the proponents of Operation Phakisa also recognize that any form of MSP Bill should be approved to provide gateway rules for their operations and framework planning, the weight would seem to be behind the need for clarity in legislation and urgency in implementation of not only eco-friendly but labour creating legislation.

Operation Phakisa, as presented to Parliament particularly specified that the development of MSP legislation was necessary and Sean Lunn, chairperson of OPASA has said that the Bill will “add tangible value to South Africa’s marine infrastructure, protection services and ocean governance.”  He said it will go a long way in mitigating differences between the environmentalists and developers.

Not so nice

On seabed mining, the position with the MSP Bill is not so clear, it seems.    Saul Roux for the Centre for Environmental Rights (CER) says that the Department of Mineral Resources granted a few years ago three rights to prospect for marine phosphates.

He also stated that the marine process “involves an extremely destructive form of mining where the top three metres of the seabed is dredged up and consequently destroys critical, delicate and insufficiently understood sea life in its wake.”   Phosphates are predominantly used for agricultural fertiliser.

“These three rights”, he said “extend over 150,000 km2 or 10% of South Africa’s exclusive economic zone.”

Something happening

One of CER’s objectives, Roux says, is to have in place a moratorium on bulk marine sediment mining in South Africa.   He complains that despite the three mining rights having been gazetted, he cannot get any response from Minister of Mineral Resources, Mosebenzi Zwane, or any access to any documents on the subject.

He stated there were two South African companies involved in mining sea phosphates and one international group, these being Green Flash Trading 251, Green Flash Trading 257 and Diamond Fields International, a Canadian mining company. All appeared to be interested in seabed exploration for phosphates although not necessarily mining itself.

Roux called for the implementation of an MSP Bill which specifically disallowed this activity as is the case in New Zealand, he said.

Coming your way

The MSP Bill was tabled in April 2017 and once provincial hearings are complete it will come to Parliament. The results of these hearings will be debated and briefings commenced when announced shortly.

Previous articles on category subject

Operation Phakisa to develop merchant shipping – ParlyReportSA

Hide and seek over R14.5bn Ikhwezi loss – ParlyReportSA

Green Paper on nautical limits to make SA oceanic nation – ParlyReportSA

Gas undoubtedly on energy back burner – ParlyReportSA

 

Posted in cabinet, Energy, Enviro,Water, Finance, economic, Labour, LinkedIn, Mining, beneficiation, Special Recent Posts, Trade & Industry0 Comments

Parliament thrashes out debt relief Bill

Credit Regulator calls for defined debt relief… 

From November 2017 ParlyReport…..

MacDonald Netshitenzhe, of Department of Trade and Industry (DTI), has told parliamentarians that his department in general endorses the call  by the National Credit Regulator (NCR) for the Minister of Trade and Industry to provide for debt relief provisions under the National Credit Act (NCA). The call will be answered by a Bill generated by Parliament because of its cross-cutting nature.

DTI’s input came after the portfolio committee last year held two meetings on the debt situation in South Africa, following a decision taken earlier in the year to gain input from the public and appropriate state entities on the possibility of debt forgiveness.

Parliamentary initiative

The parliamentary subcommittee, formed by Joan Fubbs (ANC), chair of the Trade and Industry Committee, was established last year to investigate possible debt relief systems for over-indebted households. The objective was to provide with consultation for as many parties as possible and to obtain a legal background to enable debt relief regulations to be drafted as an extension of the NCA.

It was tacitly accepted at the time that the result of the investigation would turn out to be a parliamentary committee Bill drafted on the subject to amend the anchor Bill after an initial policy review was carried out on indebtedness nationally. Documents before MPs showed that the World Bank had noted that South Africans currently owed R1.63-trillion to lenders and SA consumers were the most indebted in the world.

Basics

To draft the Bill, it was agreed that technical support would be given by DTI and that a Socio-Economic Impact Assessment (SEIAS) was to be undertaken when the Bill was agreed as a completed draft.

Meetings on debt relief have been held by the parliamentary subcommittee with South African Reserve Bank, the Financial Services Board, the National Credit Regulator (NCR) and the National Consumer Commission. Already implemented are revised cuts in interest and fees and the well publicised garnishee order changes for public servants.

National Treasury is also working on a draft Insolvency Bill with Department of Justice (DoJ) and input from DoJ has included the Debt Collectors Amendment Bill and the Courts of Law Amendment Bill both now before the PC on Trade and Industry, in separate meetings.

Debt relief per se

In recent meetings, Netshitenzhe who is Chief Director of Policy and Legislation at the DTI, when asked to contribute to the sub-committee’s work, outlined first whom he thought debt relief should apply to.    He replied that DTI recommended that such relief could be for retrenched consumers, victims of unlawful emolument attachment orders (EAOs), victims of unlawful social grant deductions and victims of reckless credit lending.

 

In answer to questions, it was explained that an EAO, more commonly known as a garnishee order, was a deduction by an employer from a wage as distinct from the more sophisticated administration order where an appointed administrator paid one or more creditors from an allocated sum for which a fee was charged.

Flexibility

In expanding on debt levels generally and in talking on counter measures, Netshitenzhe said the position on levels of debt that were currently being experienced would not always be the same and therefore, in allowing the Minister to provide debt relief measures in some form, DTI recommended that it be understood right from the start that the provisions could altered from time to time and the position should remain fluid.

It was DTI’s view that the Minister of Trade & Industry should consult carefully with the appropriate members of the credit industry before drafting the first such amendments in the form of the Bill and making any subsequent changes later. Naturally, he said, National Treasury had to be drawn into the debate immediately.

Domestic debt targeted

As well as providing remedies for household debt relief, strong counter measures also should be adopted, he said, in cases where indebtedness resulted from the behaviour of unscrupulous credit providers. This had become a major problem in SA.

Parliamentarians were told that over-indebtedness had worsened with the slowdown in economic growth and ever-increasing joblessness. Some 40% of the 24m credit card consumers had currently an “impaired record”, which was defined currently as three or more months in arrears or were listed with a credit bureau or who had been subject to a court judgement or administration order.

Causes

Consumer over-indebtedness resulting from prejudicial behaviour by unscrupulous credit providers, he said, was a further major problem, followed by borrowers borrowing more to redeem debt with no checks being carried out by lenders.

In outlining DTI plans, Netshitenzhe said that proposals may have to be provided to alleviate or support those in debt for reasons to be defined and the State therefore would no doubt need to establish a fund reserved for debt relief interventions to either partially or fully pay off the debt of qualifying consumers dependant on their circumstances.

Credit checks

Who qualified for relief of any kind and how to define the circumstances was the next big issue coming under debate. He added that it was DTI’s view that the possibility had to arise whereby credit providers should provide debt relief to over-indebted consumers who have already paid “a significant portion” of their debt. This whole concept had to be fleshed out, he inferred.

At that stage, Opposition members welcomed the propositions in general but were deeply concerned, as were many parties, that the very offer of forgiveness of debt might provide encouragement of reckless borrowing or spending. They wanted to see strong counter measures in the form of affordability assessments when credit was granted.

National Treasury

In a follow-up meeting led again by Chair Joan Fubbs with National Treasury (NT), MPs were told by Katherine Gibson, Senior Adviser for Market Conduct at Treasury (who also handles Twin Peaks regulatory measures) that in economic terms, further research was needed to determine the impact of possible debt relief packages which as an outcome, she said, could heavily impact on retailers and microlenders.

Treasury, she said, had previously introduced a debt amnesty to assist poor and indebted consumers and they also were considering many options including ‘extinguishing’ some or all of debt to help people get a fresh start. “However, the underlying principle that if a person can pay, he or she should pay is adopted at Treasury in all considerations”, she said.

Early days

Ms Gibson told MPs that such research was essential since the impact of any kind of debt relief packages was likely to affect retailers and microlenders which could have a knock-on effect of further inability for consumers to access credit. This would, in turn, cause further “worst case scenarios” pushing the more desperate creditor into the hands of illegal

operators. In all considerations, protecting the poor and focusing on the poor was paramount, she said.

In her briefing, she noted that whilst the new requirement that registration of credit providers applied to only those granting credit of over R500,000 or at least 100 agreements, reckless lending was playing a large role in the deterioration of household debt.

Overload

Ms Gibson said it also concerned Treasury that a great number of credit providers had provided credit to already totally over-indebted consumers and had failed to conduct affordability assessments. To this end government, through the Treasury, had appointed a service provider (consultant?) to investigate all EAOs issued to public sector employees.

The service provider had tested the EAOs against various parameters and the credit provider involved was asked to withdraw the arrangements if certain criteria could not be met.

Overhaul

The next phase, said Ms Gibson, was to check on the types and details on EOUs that were currently being applied. It had been noted in discussion with paymasters in government service that employees with the largest level of exposure had instalment values ranging between R1 200 and R6 500.

The state departments with the largest number of EOUs were the SA Police Service (SAPS), followed by the Department of Education, the Department of Health and then the Department of Correctional Services. SAPS also had the largest exposure of different types of credit providers, she said.

Ms Gibson commented, in answer to questions from MPs, that mostly credit providers had corrected their processes and credit arrangements voluntarily after an enquiry by the team investigating. Those not doing so were now subject to litigation in court. This was happening across the various state departments but in answer to a question, Ms Gibson said she was not referring to SOEs.

In need

She also identified many areas where Treasury agreed in principle with DTI as to who were the groups were most likely to receive relief in the final analysis.

These categories were those who had no money or assets; those who had low income and low assets but according to circumstances needed relief; those who had been defrauded and those who clearly had no basic understanding or capability to understand what they were signing because of lack of explanation, lack of understanding of a financial arrangement or lack of a needs assessment.

Any international precedents on the issue of whom should be assisted that had taken placed in developing countries should sought, said Ms Gibson. She said she understood this was in process at DTI.

Debt clearance

Treasury had stated that a procedure must be established, she said, whether the debt was to be written off completely; whether it should be restructured; whether write-off should apply to people who were poor and whether the credit should never have been given in the first place and therefore how it was granted followed up on.

Other cases could involve people who were only insolvent for the moment and therefore needed only a debt restructuring plan to tide over. MPs flagged that they saw problems ahead with instituting such processes in practice but would await a further briefing from DTI and take matters up with them.

OK so far

Ms Gibson concluded that Treasury had already found it had common ground with DTI about debt relief. She acknowledged that the tailoring of measures to meet the circumstances was going to be difficult but most important was to install simplistic check systems.

However, she said, it was also important to control better with strict applications any credit availability and to “change the behaviour of reckless borrowers.” She understood that education processes were to be organised by DTI for borrowers on the subject of borrowing without conscience or thought of the implications of debt.

Big stuff

Chair Joan Fubbs explained to members that the whole issue of mortgages, secured loans, various banking arrangements and pawning were not discussed at this stage, this being left to further final debate and parliamentary presentations after the parliamentary recess in August.

Many inputs have, however, have already been made by the banking industry, business entities and employee representatives during initial discussions but with no draft Bill as a consideration.

Finance Regulatory Bill

Ms Gibson added that much would change upon the implementation of the “Twin Peaks” banking and finance institutional programme where Treasury’s influence upon the banking industry and debt collectors in general would come into play.

Legislation is being concluded by DG Roy Havemann of Treasury, she said, and “Twin Peaks” would change the aspect that the Treasury did not have the power to monitor debt collectors and banks but would have so shortly.

She said the banks had been highly co-operative but had expressed deep concern over long term debt effects and its effects on banking costs, as distinct from immediate short-term relief most of which was in place already as far as consultation with their own clients was concerned

However, she said, the proposed impact assessment on debt relief to attempt to measure outcomes on the proposals for both the private sector and public service sectors was now essential.

Final mix

In conclusion, she said that there was a need for correlated action by all role players since there were many different players, consumer groupings and regulators involved and the views must be heard again of the various entities granting and dealing with credit when the Bill is in final stages of the Bill.

Consumer bodies dealing with debt relief should also be asked to comment, she said. Ms Gibson concluded by saying that there had to be a better understanding how debt was incurred by different South African groupings, why it was so easily incurred and to identify the most appropriate remedies and options that were available to various groups and cultures.

PMQ & A

Questioning from MPs was direct bearing in mind that the proposed Bill was to be a parliamentary submission for tabling. One MP noted that most debtors were litigating against creditor providers whereas it was the collector, such as a state department, that had wittingly or unwittingly entered an illegal garnishee and not necessarily the credit provider.

It was also suggested as not ideal that in some retail-to-consumer arrangements, the credit provider sold the debt to the debt collector in the first place. Then it was the debt collector who arranged the garnishee order and worked on a collection fee.

Ms Gibson responded that this kind of situation had to be accepted and, furthermore, it was not of consequence, providing the credit provider who granted the credit was registered and obeyed the rules and the arrangements fell inside of what was to be allowed in the Bill.

Dave Macpherson (DA) asked about the progress regarding the fraudulent EAOs and asked for a list of the deregistered credit providers who were still operating despite the restraint. Ms Gibson said she would supply such a list to the committee which would be confidential but such a list existed.

Debt collectors

Ms Nomsa Motshegare, Chief Executive Officer: National Credit Regulator (NRC), also said that the “policing” of credit providers could not be controlled with existing legislation but that on the sale of debt, debt collectors were required to register with the NCR to allow monitoring. NCR had a mandate to ensure that the purpose of pensions should not be to pay off debt but to cater for retirees’ welfare

Charmaine van der Merwe, Parliamentary Legal Adviser, entered the discussion to say that not everything that debt collectors did was illegal, by any means, but it was incumbent upon any regulated debt collection profession to reported shady arrangements in credit provision, especially if it involved a legal application.    Sadly, she said, reckless lending could not be reported because it was a matter of opinion and in most cases the facts were unavailable to governance authority.

Learning money

Chairperson, Joan Fubbs asked for the number of teachers involved in debt education in government service since there were many consumers who resigned from the workplace in order to cash in their pensions and pay off debts resulting in skills being lost to the country. Ms Gibson advised that this was a problem that existed throughout South Africa and in any country.

On the issue of rigged auctions, which subject had arisen in earlier meetings, Fubbs said, that although banks were proven to be complicit in some cases, consumer conduct needed also to be addressed in this area since consumer fraud and unmanageable debt had arisen. The committee said this would have to be once again investigated.

Around in circles

MPs warned that in providing for stricter conditions on loans, it might become more difficult for the poor to secure credit. Chairperson Joan Fubbs said that all were aware of this problem but she charged that the most serious issue facing her Committee were poor people losing their homes because they had become jobless, a poor economic climate and unavoidable debt with school fees added to food costs. Frivolous debt was not the issue under discussion, she said.

Department of Justice will now see through the associated Bills and the question of debt relief moves to a final wording with approval of Treasury and ending with hearings. Being a parliamentary Bill, the NEDLAC process will be short-circuited.
Previous articles on category subject
Treasury proposals on debt control approved – ParlyReportSA
Credit regulations to squeeze racketeers – ParlyReportSA

Posted in earlier editorials, Finance, economic, Labour, Trade & Industry0 Comments

Fresh Cybercrimes and Cybersecurity Bill tackles Internet fraud

…  Revised Bill criminalises cybercrimes …

posted 5 Aug… A new Bill designed to give powers to the State Security, Defence, Police and Telecommunications Ministers to intervene in many aspects of South Africa’s key economic, financial and labour environments and zeroing in on cybercrimes and related offences, is in debate.  It also calls upon the financial sector to assist in tracking down fraudsters.

Offences include the circulation of messages that aim at economic harm to persons or entities; that contain pornography or could cause mental or psychological stress; the Bill calls upon the private financial and communications sector and, more specifically, electronic service providers to assist with its objectives. The Bill will also change much in the way how government and SOEs go about their business to reflect the current call for electronic security.

The revised Bill is re-write of that originally tabled in 2015 and rejected as too convoluted and wide ranging on issues that could cause unintended consequences.

Badly needed

Despite placing considerable onus upon the private sector to assist, the IT industry seems to be guardedly welcoming the debate which is about to commence. The original and rejected Cybercrimes and Cybersecurity Bill was tabled in Parliament last February.

The main comment circulating seems to be that this later version is more specific than its earlier counterpart, provides more clarity and has less weight placed upon tedious operational management factors in state structures designed to fight cybercrime.

The Bill is the product of the Department of Justice and Constitutional Affairs (DoJ) and from what has been said, Deputy Minister John Jeffreys seems to be the state official still running with the legislation. He said at a media briefing some months ago, “This Bill will give the State the tools to halt cybercrimes and trained teams to bring to book those who use data as a tool for their crime.”

Not meant

Originally, when the Bill was tabled in 2015 it caused a storm of controversy. Whilst its objectives to catch criminals and stop the growing invasion institutional attacks were understood, unintended consequences for the media were not foreseen. The new Bill acknowledges that journalists and whistle-blowers have protection under the Protected Disclosures Act.

However, the somewhat draconian powers of seizure of data granted to the authorities will still no doubt worry many service providers insofar as interlocking the proposals into the Protection of Personal Information (POPI) Act and the Regulation of Interception of Communications and Provision of Communication-Related Information Act (RICA) are concerned, it has been suggested in hearings.

However, the Minister and other ministerial portfolios concerned, appear to have weighted their decision upon the growing threat of international cybercrime and have continued to call for service providers to assist with the issue caused by a late start.

SA under limelight

Some IT forensic reports indicate that sub-Saharan Africa has the third highest exposure to incidents of cyber fraud in the world and according to those who published this fact, they also claim that incidences of cybercrimes and cybersecurity breaches are escalating globally at 64%, with more security incidents reported in 2015 than 2014 for South Africa.

South Africa is known to be a specific target for cybercrime involving unlawful acquisition of sensitive data relating to clients and/or business operations due to a very high reliance on internet connections by commerce. Large data storage packages proliferate in SA, it is suggested, ranging from the JSE to the banking sector.

ATMs, bank transfers

In the case again of South Africa as part of sub-Sahara Africa, wire transfer fraud accounts for 26 percent of cybercrimes, far ahead of the global average of 14 percent, South Africans being defrauded of more than R2.2bn each year it is estimated.

Banking and financial institutions in South Africa, it is noted in the preamble to the Bill, are particularly exposed, the Reserve Bank having stated back in 2016, “It would be remiss of us in our duty if we ignored the growing risks emerging from the financial services sector’s increasing reliance on cyberspace and the Internet.”

Definitions

The Bill now before Parliament criminalises unlawful and intentional conduct regarding data, data messages, computer systems and programs, networks and passwords and creates as crimes “cyber fraud, cyber forgery and cyber uttering”.

It criminalises malicious communications – namely messages that result in harm to person or property, such as revenge porn or cyber bullying. The police are given extensive investigation, search and seizure powers in the Bill and an array of penalties, including fines and imprisonment apply, including various prescribed in terms of the Criminal Procedure Act, 1977.

No FICA-type warrants.

It is notable that cyber-crime powers of search and arrest remain with SAPS and not any specific structure or system set up by the new Bill to monitor instances of cybercrime or detect suspicious data attacks.

There remain, however, quite onerous obligations on electronic communications service providers and financial institutions, not only to assist in investigations of cybercrimes but also to report instances of cybercrime. A “framework of mutual co-operation between foreign states” is established in respect international investigation and the prosecution of cybercrime.

Crime fighting structures

The Cybercrimes and Cybersecurity Bill also establishes a Computer Security Incident Response Team, as did its predecessor, to establish contact with the private sector alongside with the already functional Cyber Security Hub responsible to the Minister of Telecommunications and Postal Service.

Finally, on structures, the Minister of Defence is to establish and operate a Cyber Command and appoint a General Officer Commanding.

The Bill also provides for the declaration of what is termed as “critical information infrastructure possessed” by financial institutions – for example databases upon which an attack could possibly represent a national threat.    Debate will no doubt flow around who and who not should report and upon what exactly.

The crimes defined

For the technically minded, the Bill In terms of the Bill, the following activities are criminalised: unlawful securing of access to data, a computer programme, a computer data storage medium or a computer system; unlawful acquisition of data; unlawful acts in respect of software or hardware tools; unlawful interference with data or a computer programme; unlawful interference with a computer data storage medium or computer system; unlawful acquisition, possession, provision, receipt or use of password, access codes or similar data or devices.

Also included are cyber fraud; cyber forgery and uttering; cyber extortion and certain aggravating offences; attempting, conspiring, aiding, abetting, inducing, inciting, instigating, instructing, commanding or procuring to commit an offence; theft of incorporeal properties; unlawful broadcast or distribution of data messages which incites damage to property or violence; unlawful broadcast or distribution of data messages which is harmful; unlawful broadcast or distribution of data messages of intimate image without consent.

The Bill imposes a list of penalties and allows for imprisonment for up to 15 years for cybercrimes and the maximum fine that may be levied for failing to timeously report an incident or failing to preserve information is now capped at R50,000, far less than the extraordinarily high penalties for non-disclosure levied in the initial version of the Bill.

Necessary actions

The search and seizure powers granted in terms of the new Bill “do not represent increasing the state’s surveillance powers”, Deputy Minister, John Jeffries said, “But if the State cannot seize evidential material to adduce as evidence, it will be impossible to prove the guilt of an accused person.”

Any hearings will obviously focus mainly upon the onuses and impositions imposed in the Bill upon electronic communications service providers and financial institutions, known by an acronym in the Bill as “ECSPs”. A date for further parliamentary briefings by DoJ has yet to be scheduled.
Previous articles on category subject
Cybercrime and Cybersecurity Bill invokes suspicion – ParlyReportSA
Draft Cybercrime Bill drafts industry – ParlyReportSA
Lack of skills hampering broadband rollout – ParlyReportSA

 

Posted in Communications, Justice, constitutional, LinkedIn, Security,police,defence, Trade & Industry0 Comments

Border Management Authority around the corner

SARS role at border posts being clarified ….

In adopting the Border Management Authority (BMA) Bill, Parliament’s Portfolio Committee on Home Affairs agreed with a wording that at all future one-stop border posts, managed and administered by the envisaged agency and reporting to Department of Home Affairs (DHA), were to “facilitate” the collection of customs revenue and fines by SARS staff present.

However, on voting at the time of the meeting, Opposition members would not join in on the adoption of the Bill until the word “facilitate” was more clearly defined and the matter of how SARS would collect and staff a border post was resolved.

Haniff Hoosen, the DA’s Shadow Minister of Economic Development said that whilst they supported the Bill in general and its intentions, they also supported the view of National Treasury that the SARS value chain could not be put at risk until Treasury was satisfied on all points regarding their ability to collect duty on goods and how.

Keeping track

Most customs duty on goods arriving at border controls had already been paid in advance, parliamentarians were told; only 10% being physically collected at SA borders when goods were cleared.

However, with revenue targets very tight under current circumstances both SARS and Treasury have been adamant that it must be a SARS employee who collects any funds at border controls and the same to ensure that advance funds have indeed been paid into the SARS system.

The Bill, which enables the formation of the border authority itself, originally stated that it allowed for the “transfer, assignment and designation of law enforcement functions on the country’s borders and at points of entry to this agency.”

Long road

It was the broad nature of transferring the responsibility customs of collection from SARS to the agency that caused Treasury to block any further progress of the Bill through Parliament, much to the frustration of past Home Affairs Minister, Malusi Gigaba.   It has been two years since the Bill was first published for comment.

DHA have maintained throughout that their objective is to gain tighter control on immigration and improve trading and movement of goods internationally but Treasury has constantly insisted that customs monies and payments fall under their aegis. The relationships between custom duty paid on goods before arrival at a border to Reserve Bank and that which must be paid in passage, or from a bonded warehouse was not a typical DHA task, they said.

Breakthrough

It was eventually agreed by DHA that SARS officials must be taken aboard into the proposed structure and any duties or fines would go direct to SARS and not via the new agency to be created or DHA.

This was considered a major concession on the part of DHA in the light of their 5-year plan to create “one stop” border posts with common warehouses shared by any two countries at control points and run by one single agency. More efficient immigration and better policing at borders with improving passage of goods was their stated aim.

Already one pilot “one stop border post”, or OSBP, has been established by DHA at the main Mozambique border post by mixing SAPS, DHA and SARS functions, as previously reported.

To enable the current Bill, an MOU has been established with SAPS has allowed for the agency to run policing of SA borders in the future but Treasury subsequently baulked at the idea of a similar MOU with SARS regarding collection of customs dues and the ability to levy fines.
Bill adopted

At the last meeting of the relevant committee, Chairperson of the PC Committee on Home Affairs, Lemias Mashile (ANC) noted that in adopting the Bill by majority vote and not by total consensus, this meant the issue could be raised again in the National Council of Provinces when the Bill went for consensus by the NCOP.

Objectives

The Agency’s objectives stated in the Bill include the management of the movement of people crossing South African borders and putting in place “an enabling environment to boost legitimate trade.”

The Agency would also be empowered to co-ordinate activities with other relevant state bodies and will also set up an inter-ministerial committee to handle departmental cross-cutting issues, a border technical committee and an advisory committee, it was said.

Mozambique border

As far as the OSBP established at the Mozambique border was concerned, an original document of intention was signed in September 2007 by both countries. Consensus on all issues was reached between the two covering all the departments affected by cross-border matters.

Parliament was told at the time that the benefit of an OSBP was that goods would be inspected and cleared by the authorities of both countries with only one stop, which would encourage trade. In any country, he explained, there had to be two warehouses established, both bonded and state warehouses.

Bonded and State warehouses

Bonded warehouses which were privately managed and licensed subject to certain conditions, were to allow imported goods to be stored temporarily to defer the payment of customs duties.

Duties and taxes were suspended for an approved period – generally two years but these had to be paid before the goods entered the market or were exported, MPs were told. The licensee bore full responsibility for the duty and taxes payable on the goods.

State warehouses on the other hand, SARS said at the time, were managed by SARS for the safekeeping of uncleared, seized or abandoned goods. They provided a secure environment for the storage of goods in which the State had an interest. Counterfeit and dangerous or hazardous goods were moved to specialised warehouses.

Slow process

MPs noted that it had taken over six years for the Mozambique OSBP to be finalised. SARS said there were many ramifications at international law but added two discussions with Zimbabwe for the same idea had now taken place. It was hoped it would take less time to reach an agreement as lessons had been learnt with the Mozambican experience.

On evasion of and tax, SARS said in answer to a question that losses obviously occurred through customs avoidance and evasion, so it was consequently it was difficult to provide an overall figure on customs duty not being paid, as evasion was evasion. Smuggling of goods such as narcotics, or copper, which could only be quantified based on what had been seized.

The same applied to the Beit Bridge border with Zimbabwe where cigarette smuggling was of serious concern and through Botswana.

In general, it now seems that Home Affairs is to adopt an overall principle of what was referred to as having one set of common warehouses for one-stop declaration, search, VAT payment and vehicle movement with a SARS presence involving one common process for both countries subject to a final wording on the SARS issue before the Bill is submitted for signature.

Previous articles on category subject
Border Authority to get grip on immigration – ParlyReportSA
Mozambique One Stop Border Post almost there – ParlyReportSA

Posted in Finance, economic, Fuel,oil,renewables, Justice, constitutional, Mining, beneficiation, Public utilities, Security,police,defence, Trade & Industry, Transport0 Comments

Barnes prepares SAPO for SASSA

Modernising SAPO a culture change

….. sent to clients 27 February…. Stage by stage, Mark Barnes, Group Chief Executive Officer of South African Post Office (SAPO), appears to be reforming cultures and cleaning out “ten years of decay”, as he put it to the Portfolio Committee on Telecommunications and Postal Services.

“The years 2017 and 2018 could be our years”, he said, “especially if the Cabinet smiles on a SASSA deal. We have the reserves to do this thing.”

Introduced by Minister Siyabonga Cwele, Minister of Telecommunications and Postal Services, on the utility’s presentation on its corporate progress report and prospects for the third quarter, CEO Mark Barnes claimed that SAPO is becoming profitable; is well capitalised and the long-awaited corporatisation process is back on track with many of its labour problems sorted out.

Up and away

When introducing him to new members of the committee, the Minister said that for the last few years SAPO had been facing many challenges, but CEO Barnes, with a new Group Chief Financial Officer, “had put SAPO on the road to recovery”.

Because of its struggles with old systems of the past, digging it out of financial mismanagement and the need to pay urgently its creditors, SAPO was given a cash injection from the State.   The Minister said this was a good decision.  In 2017 SAPO was starting to focus on new businesses, with part of the strategic planning focused on the internet. One of the key goals was corporatisation, the Minister concluded.

New world

Mark Barnes described the position when he took over the reins to save the utility from “self-inflicted suicide” was far worse than was originally thought. He described a process whereby he had to send specialised “swat” teams into each major sorting complex starting with the large Johannesburg complex and eventually to other major towns and cities.

It took months, he said, to “clean up the mess and try to establish order out of chaos”, a good deal of which had been caused by the extended postal strike but mainly poor systems and management disinterest.

The delays caused by basic simple clean-up housekeeping held the initial  financial assessment back whilst the physical clean-up operations, after years of neglect were undertaken, he said.   The “swat” teams eventually established what SAPO assets had and where they were located.

First audit

He said, “I hope this is the last time I refer to ‘the past’ but we are having a mock audit in late January 2017 to establish remaining areas of wasteful expenditure, something that was not even thinkable of last year.”   He said, “The main issue is that SAPO has established an air of confidence and that confidence has reached a point where the rest of the journey becomes a worthwhile investment.”

In answer to criticism from Shadow Minister Cameron MacKenzie (DA) who said that “this SAPO report is being prefaced by the same remarks as before” and who added that it “was the same story of promises made last year but re-hashed”, CEO Barnes made a rebuttal. He retorted that “It is a mistake to take just a superficial look from the outside. Internal organization is being achieved and we haven’t had time to wave flags.”  He gave a long list of what had been achieved.

Heavyweights in saving banking

On savings, Barnes noted that SAPO serviced some 6 million customers with 2,486 outlets and reached out where no established banking services existed. “Compliance is now in place on banking procedures with the SA Reserve Bank  and we are seeking approval to establish the promised SA Postbank Limited with CIPC,  applications being submitted before July 1 2017.”

Postbank’s depositor funds were now standing at R4.9bn, having increased by 128m. Postbank itself had invested R7.3bn, he said.  Payables, Barnes also said, were reduced by R531m and the group met liquidity and solvency standards. The Post Office is backed by a R4.2bn Treasury guarantee.

 An overdraft of R270m had been repaid and R17m had been realized from the sale of pointless property holdings. Rental from existing tenants had increased and a more suitable and less expensive head office was now being targeted. He said he was always trying to get officials out of their old mindset about SAPO and to realize they were in business.

Major cut backs

On the labour front, there were 18,000 less staff this year, Barnes said, “brought about by a process of natural attrition” and it was hoped to transfer a large portion of a “hopelessly overstaffed head office” to operational duties.

If operational revenue failed to provide the necessary improved results in the short term, he said, then a retrenchment programme may have to be negotiated. “It will be tough but that’s how it is. The unions are aware of the long-term planning processes that have been undertaken and the alternatives understood”, he said.

SASSA a target

CEO Barnes expanded on the possibility of SAPO handling all payments of SASSA grants in the light of the volumes of “points of presence which amounted”, he repeated, “to approximately 5,000 counter points  Postbank is also to make an application to government to both handle all government mail business and a submission to SASSA in the very near future as current hiatus evolves.

He said that they had been talking to National Treasury on the savings to the national fiscus that could be gained. It was agreed that it would take much to achieve this possibility but was highly “do-able”.

He said Postbank had sufficient funds of its own to capitalize such a venture with IT networks and training should the security of such a contract be awarded. He commented that ordinary mail had dropped to 50% of original volumes due to the advent of electronic mail.

“This sea change in the way that the world now communicates had found the original management of SAPO completely at a loss on what to do”, he said, “and the decision had  apparently been to do nothing.”

Diversification from snail mail

The plan was now to diversify into courier services probably with a partner and to focus on selling Postbank services at package rates to corporate business.  

So far, four offer attempts had been made to “buy in” as partners, CEO Barnes said, all four of which had been found totally unacceptable.  There had been an obvious attempt in all cases just to acquire Postbank’s extensive national footprint as if a possible merger of interests was a fire sale, in each case contenders having given no consideration to the idea of what “was in it” as a revenue source to Postbank.   All propositions were  rejected out of hand.

Barnes told Parliamentarians, with the Minister still present at the portfolio committee meeting, that e-commerce in the form of public hubs or malls to the SADC area as well as locally will become a major revenue base for SAPO especially in lower income groups.

Generally, on all fronts, 22 significant projects had been approved, CEO Barnes said, with a further 9 in the project stage; 4 projects were in the procurement stage and others in testing and feasibility stages.

Transport more agile

As far as the transport book was concerned, SAPO  had decreased its annual expenditure   by 30% by exercising rationality and purchasing new vehicles cutting down on maintenance and repairs to old vehicles, Savings were also achieved by boosting efficiency with “a more agile logistics mind-set.”

The overall corporate plan forecast is mixed, Barnes said, and whilst revenue has declined significantly on a net basis, which was expected and planned for whilst SAPO re-grouped and cut out unprofitable exercises, it will still meet its corporate plan targets and “looked headed to be back into the black by a small amount in 2016/7”, said Barnes.

When it came to the balance sheet, he remarked SAPO still has an extremely large amount of debt which needs to be paid. However, it was important to note that the entity was now solvent and could pay. It also had liquidity in cash of its own available for development.

The big plan

He told the Committee that the key to SAPO’s future was the corporatisation of the Post Bank, with approval to establish the bank being granted by the SA Reserve Bank in July 2016. Preparations were currently underway to submit for registration in February 2017 as a South African Postbank Limited entity with CIPC.

The Postbank staff, operations and balance sheet will transfer from the Postbank division to the new entity after the incorporation process. The Postbank will allow for broader financial inclusion for all South Africans and it has the capacity to do this, he said.

SAPO, he said, had a relatively sophisticated E-commerce infrastructure with a large footprint which allowed it to facilitate speedy connections and deliveries. This, combined with the ports, vehicles and the access SAPO has at airports could make SAPO the E-commerce hub for Africa.

Ms M Shinn (DA) asked whether anything had been done address the security of IT systems and whether SAPO had the money to recruit and retain cyber-security skills. Cameron MacKenzie asked for more information on the SASSA bid.

Biometrics needed

Outsourcing was now underway and tenders being called for on biometrics, CEO Barnes said, which was the only route to stop fraud, duplicated payments to persons claiming or withdrawing twice under different names; to follow world trends and to get SAPO into the future to serve the nation as it should. Such was necessary if they were to handle the SASSA account which would be a great achievement and was the correct thing to do.

He said that partnerships in the IT sector were very likely to be sought as well as outsourcing, as SAPO, given its size and history, was not going to be able to keep up with the latest developments in the IT sector, nor would SAPO wish to be that expert, he said. Their focus was to get into courier work and banking, not IT. So, partnerships were going to be needed on the right terms.
He said that there had been half-expected problems with the data centre and disaster recovery this year as new equipment was being added to old. Repairs had been undertaken and there were negotiations underway to outsource the work of the data centre.

CEO Barnes said motor vehicles licence renewal processing was up by about R7m transactions in the year but this figure was coming from a very low base.

Money, money, money

In response to the question of when was SAPO likely to return to profitability, he re-confirmed that SAPO expects to start trading profitably during the 2018 financial year.

On complaints from the DA that SAPO still needed help from Treasury, Barnes explained that it was the nature of a turnaround situation not use cash in hand for the wrong things. Working money was one thing but depositor’s funds and reserves were a completely different issue, he said, and these were the security needed for developmental issues to get SAPO off the starting block.

He said whilst corporates have replaced SAPO with other service providers, they are a lot more expensive to hire. “SAPO is a low-cost producer and the only reason people turned to the alternatives is because SAPO became a dysfunctional low cost producer.”
“This is changing”, he said, “and we have to change the corporate customer mindset to show that we can do things again”.
Previous articles on category subject

SAPO – one big bungle at taxpayer’s cost – ParlyReportSA

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FICA Bill could meet new task force deadline

OECD money task force waiting for SA  

….sent to clients Feb 7…. Chairperson of the Standing Committee on Finance, Yunus Carrim, made it quite clear in terms of parliamentary rules that further debate on the FICA Bill aligning SA to global money laundering task force requirements are confined to the President’s reservations about the Bill’s constitutionality on the issue of warrantless searches. Nothing else was to be debated or considered despite attempts, he said.

After a “suspicious delay”, to quote the Democratic Alliance, of over five months during which the President unexpectedly failed to sign the Bill into law, it was suddenly returned to Parliament with the query a few days before closure for the Christmas recess.

Playing for time

It is suspected that the President’s office might have been making a pitch for more debating time on the Bill in 2017 and to allow the Bill to be re-scrutinised thereby causing further delay or even allowing for an ANC motion to reject the Bill.  This is according to one Opposition member on the Committee.

Following this, in a meeting hastily convened before Parliament closed, parliamentary orders were changed and Chair Carrim re-scheduled the Committee’s last meeting which was to be held on the Insurance Bill.  He instead scheduled an urgent meeting to debate the President’s move, calling for both legal opinion from the State Law Advisor and the attendance of National Treasury to learn of implications caused by the delay.

Next move

As of the result of this last-minute meeting, Parliament and Carrim have to some extent countered what seemed the purposeful delaying tactic.    The Committee agreed to call for written submissions only, preferably containing legal opinion, on only the constitutionality of Clause 32, section 45B (1C) on warrantless searches, saying only such will be allowed and no generalised observations on any other clauses or the rationale behind the Bill will be heard.

In the meeting, MPs expressed anger at the waste of public money and even Chair Carrim expressed his frustration of having to go back to the drawing board on a Bill that had already been passed. “I am getting too old for these kind of games”, he said.

Carrim concluded, “This Bill was approved by Parliament in its entirety and by a majority vote after many months of debate. Legal opinion was called for on many aspects and its signature into law was urgently required to meet international deadlines. In terms of the Joint Parliamentary Rules therefore, only the one aspect that the President has queried could be considered and the Bill was to be returned with the opinion of this Committeeafter a vote in the NA.

Advice sought

It was agreed by the Committee that legal counsel specifically would be sought on the constitutional aspects raised and this would be returned together with the Bill as it stood for signature in an attempt to convince the President not to refer the matter to the Constitutional Court and further delay implementation of a law approved by Parliament.

Adv. Jenkins, State Law Advisor, told Yunus Carrim that he could see no grounds for the contention that the circumstances of warrantless searches were not properly circumscribed in the Bill and were thus legal. It was established that FICA had already conducted some 380 warrantless searches.

Adv. Jenkins pointed out that in terms of the Constitution and Parliamentary rules the President could only return a Bill once to Parliament, whatever the specific subject or subjects.  Thus, this was the only issue that should be debated and considered by Parliament.

It would also be preferable, he said, to return also legal opinion based on supporting input from public hearings, but he advised that once again this should be confined to the subject matter, i.e. warrantless searches.

Country exposed

Meanwhile, President Zuma’s obviously purposeful delays have exposed South Africa to further detrimental opinion from the Financial Action Task Force (FATF) who are holding a plenary meeting of the OECD in Paris in February, Treasury deputy director-general Ismail Momoniat told Chair Yunus Carrim.

South Africa could well be slapped with a warning letter or even a fine at taxpayer’s expense for failing to sign into law amendments to the Financial Intelligence Centre Act, he said, and added that this would not be helpful at the time of a Standard and Poor financial rating exercise to be carried out in the New Year.

Local banks at risk

Even a mild rebuke from the Task Force could have significant consequences for SA, DG Momoniat said, since it would raise concern among foreign regulators and banks about SA’s commitment to vigilant financial regulation.     This in turn would have a ripple effect throughout the economy since correspondent relationships between the global network of banks are vital to effect payment for South Africa exports and imports.

Carrim responded that of the two bad options resulting from the President’s actions, the least damaging was to ignore OEDC opinion for the moment, take proper legal counsel on the issue and await the opening of a new session in late January/early February 2017 for a water-tight case to go back to the President’s office. DG Momoniat acknowledged that Treasury noted the course that was being adopted.

Jeremy Gauntlett S.C. was to be contacted and the question of warrantless searches be considered by him, the wording revised if necessary according to counsel given and the Bill returned to the National Assembly for adoption based on any revisions, if made.

Rules for submissions

The final position was therefore that all submissions to Parliament had to only deal with the constitutionality of section 45B (1C) dealing with warrantless searches in clause 32 of the Bill and those making submissions were requested to provide legal opinions for their arguments .

It was suspected that Black Business Forum and other groupings would make a determined effort widen the scope of the deliberations.

Any submissions on other provisions of the Bill, not the subject of the hearings, had to be made separately in more public hearings to be held on “Progress on Transformation of the Financial Sector”, tentatively set for 14 March 2017. Those additional hearings will be advertised separately, said Carrim’s parliamentary notice when published.

Previous articles on category subject

FICA Bill : Hearings on legal point – ParlyReportSA

FIC Bill hold up goes to roots of corruption – ParlyReportSA

Red tape worries with FIC Bill – ParlyReportSA

Posted in Energy, Finance, economic, Justice, constitutional, Security,police,defence, Trade & Industry0 Comments

Cybercrime and Cybersecurity Bill invokes suspicion

Cybercrime Bill stated as invasive

…sent to clients 28 Jan…   A new law to assist in enforcing South Africa’s fight against cybercrime, hacking and unlawful interception of data is about to be tabled in Parliament. As expected, the proposals are not without considerable misgivings in the private sector and involve claims that the state may have designs upon the control of free speech and/or are intent upon the control or manipulation of cyberspace.

The draft Cybercrime and Cybersecurity Bill (C&C Bill) has now been approved by Cabinet, the draft having been published for comment as far back as September 2015.  Industry players are deeply involved and the next platform for their involvement moves to the actual wording of the document that will form the basis for regulations.

Agents for the state

The legislation states that the proposals are designed to give powers to the State Security, Defence, Police and Telecommunications Ministers, which powers will not only extend into many aspects of South Africa’s key economic, financial and labour environments but will impose responsibilities on service providers.

The Bill clearly states it will call upon the private sector for compliance into order to meet its objectives and will also change the way the public service goes about its business to reflect the call for security.  Cross hairs are to zero in on the criminalisation of cyber-facilitated offenses including circulation of messages aimed at economic harm, contain pornography or could cause mental or psychological harm.

Parliamentary stage

The next stage of public sector involvement will be extensive parliamentary hearings, no doubt involving joint portfolio committees, to cover the many aspects involved.  Also to allow for further submissions on deep concerns in the private sector regarding compliance and intrusion of free speech rights.

The long and quite complicated process of drafting such legislation has been undertaken by the Department of Justice and Constitutional Development.  It is stated that the proposals are of an umbrella approach towards legislation already in the ambit of the new Bill, the objective of which is to extend any new regulations over a wide range of business endeavours and activities “in the public interest”.

Long history

The process started at a point in the cybercrime history log which seems a century ago.  A government gazette articulated what was necessary. “I, Mbangiseni David Mahlobo, Minister of State Security, hereby publish the National Cybersecurity Policy Framework as approved by Cabinet in March 2012 for public information.”

The long journey has finally resulted in a 130-page draft which firstly creates offences, prescribes penalties and regulates for powers to investigate, gain access, search and seize items. It gives such powers to the South African Police Service (SAPS) and the State Security Agency (SSA).

Future structures

The Bill then proposes that structurally the Minister of Police establish both a National Cybercrime Centre and appoint a director in charge – a person currently serving with the SSA – and similarly appoint such a director in charge for a “point of contact centre” for cybercrime activity, outreach and contact.

Monitoring all structures will be a Cyber Response Committee (CRC) made up of 13 experienced persons chaired by the DG, Dept. of State Security.

Any interventions at this level will be, by nature of the vastly changing business environment and the global challenge of the subject matter of the Bill, “which will form the critical point of balance between the forces of state control and public endeavour”.

Ground troops

Initially, the Minister of State Security is to appoint a director in charge of a proposed Cyber Security Centre, such person also serving with SSA and for the Minister to establish Government Security Incident Response teams, also appointing a person from the State Security Agency as the head of each specialised investigating team.

Finally, on structures, the Minister of Defence is to establish and operate a Cyber Command and appoint a General Officer Commanding.

Furthermore, provision in the Bill is made for the Minister of Telecommunications and Postal Services to establish and operate a Cyber Security Hub and appoint a director of same. It is in this area that assumedly the main interface between private and public sectors will take place.

Key points

An example of a database to be protected is given in the Bill as the Home Affairs database and the mandate for dealing with cybercrime clearly includes the fact that foreign states and South Africa will be co-operating to investigate possible offences.

Also, powers are granted to the President who may enter agreements with foreign states to promote cybersecurity. The proposals make it quite clear that international crime fighting and the local protection of cyberspace are to be woven together. This will involve changes to the anchor Electronic Communications and Transactions Act, particularly where the Act deals with attempts to deal with abuse of information systems.

The nitty gritty

Where the C&C Bill ventures into the private sector there will no doubt be, and certainly has been to date, plenty of debate.  The Bill as proposed, broadly and perhaps too grandly, allows for the imposition of obligations on electronic communications service providers (ECSPs) and financial institutions in respect of aspects “which may impact on cybersecurity”.

The difference between obligations and compliance seems a fine line but already the Dept. of Telecommunications has set up a website on https://www.cybersecurityhub.gov.za/ to try and clarify issues.

At what point?

The general obligations of ECSPs are a set out in the draft bill but an obligation is proposed that as soon as a ECSP “becomes aware of an offence being committed on its network”, the matter must be declared to the National Cybercrime Centre.

The offences are enumerated in the Bill but it is possible that clarity is required, according to stakeholders who have voiced opinions so far, as to who decides at and at what level the retention of a suspicion becomes an offence or to restate the problem, at what point does a suspicion become a reportable fact.

Proposed offences include unlawful interception of data; unlawful access, personal information and financial information-related offences; unlawful acts in respect of software or hardware tools; unlawful acts in respect of malware; unlawful acquisition, possession, provision, receipt or use of passwords, access codes or similar data or devices; computer-related fraud and computer-related extortion.

Extensive powers

Most focus on the fact that the Bill’s clause 58 gives the State Security Minister powers to determine what should be included in a “national critical information infrastructure”.

The Bill goes on to state that should it “appear” to the Minister that any information presented is of such “strategic nature” that any interferences, loss, damage, immobilisation or disruption which may result in prejudice to the “security, defence, law enforcement or international relations of South Africa; or prejudice the health and safety of the public; interfere or disrupt any essential service’, then the Minister may implement the powers granted by the Bill.

The “Apple” problem

Broadly speaking, also included is any malevolent act which “causes any major economic loss, destabilises the economy of South Africa or creates any form of public emergency’’ with the proviso that the organisation must “at its own cost take steps to the satisfaction of the Cabinet minister” to comply with a state request.

Any “affected organisation may be given the right to be afforded an opportunity to make representation” but, to repeat, players in the industry note that a great amount of responsibility has been delegated without clear definitions of what is reportable.

The background

The seriousness of the Bill and the recognition that cybercrime must be dealt with firmly is measured by the background given to the Bill.    It is estimated that cyber-related offences currently exceed a value of more than R1bn annually. This is escalating at speed, the Department of Justice states.

In general terms, one of the tasks of the Cybercrime Centre is stated in the revised draft as informing all of cybercrime trends and creating an environment which enables parties to report cybercrime without being suspected of whistle-blowing with the accompanying commercial disadvantages.

In other words, the fear with the original draft expressed by the Right2Know campaign that the draconian powers of seizure worried many in the IT industry and that lack of protection for whistle blowers was out of kilter with free speech requirements, may have to some extent been responded to.

Heavy hand of the law

Still, fines of up to R10m and/or 10 years’ imprisonment are involved following a guilty verdict for unlawfully accessing or intercepting “a national critical information infrastructure” involving “critical data”, which makes for a tricky scenario for ECSPs handling traffic and journalists handling information.

This is in the light that an ECSP could be liable on conviction to a fine of R10 000 for each day on which such failure to comply with disclosure requirements continues, it was noted.    To be specific, some fifty offences are detailed in the areas of data, messages, computers, and networks.

This is serious talk.   Whilst national cybersecurity needs are recognised as paramount, as the latest draft explains, the extent of state powers in the hands of uncontrolled and misdirected state effort gives concern to many in the ECSP business community, particularly in the light of the public nature of the internet.

No warrantless searches

On the other hand, whilst the C&C Bill gives SAPS and SSA extensive powers to investigate, search, access and seize assets wherever they might be located, the search powers granted are not emanating from the proposed Bill.

Search powers are only possible provided the search entity has a search warrant granted in the normal way, the department says.  SSA will be purely looking, they say, for data that has a feature of malevolence and commits crime in terms of the need to protect the State and its citizens.

At a briefing for the media, the Justice and Constitutional Development Department in Pretoria Deputy Minister of Justice and Constitutional Development, John Jeffery, gave a further assurance that what is about to arrive in Cape Town “will not give any powers to the State Security Agency (SSA) to control the internet or spy on local users”.

Criminal data

The search and seizure powers granted in terms of the latest draft of the C&C Bill around the interception of data “do not represent increasing the state’s surveillance powers”, the Minister said.

“As part of the final draft of the bill, it says that to prove an offence in a court of law, data must be seized as evidential material.  If the State cannot seize evidential material to adduce as evidence, it is impossible to prove the guilt of an accused person. “

The criminal procedure act is currently used to investigate cybercrimes, Minister Jeffery said, and to this end the Regulation of Interception of Communications and Provision of Communication-Related Information Act (RICA) “are already in the tool box”.

Anchor still RICA

The C&C Bill is merely extending the RICA from that aspect, he said, which already has basic general principles in place to protect persons against unlawful interception of communications. “There is thus no extension of the so-called ‘surveillance powers’ of the State”, he added.

He confirmed that previous versions of the Bill, whilst stating a person who fell foul on the issue of state information that was classified as secret could go to jail for 10 years without the possibility of a fine, now, the final draft of the Bill acknowledges that journalists and whistle-blowers have protection under the Protected Disclosures Act.

Minister Jeffrey said was satisfied that the C&C Bill, now headed towards its final shape, gives the State the tools to halt crime and bring those who used data as a tool of crime to book.

 Defining data

He concluded, “Data is merely a means to commit offences such as fraud, damage of programmes and computer systems, extortion, forgery and uttering. It can also be used to commit murder by remotely switching of a respiratory system or terrorism by overloading the centrifuges of a nuclear station or remotely opening the sluices of a dam which causes large scale flooding.”

Much of what will come up in the parliamentary hearings of submissions will most likely involve the space occupied by the ECSPs and their responsibilities as perceived by the State. Furthermore, the role to be played by any business institution using large amounts of data needs to be clarified as far as areas of compliance are concerned.

Previous articles on category subject

Draft Cybercrime Bill drafts industry – ParlyReportSA

South Africa on international cybersecurity – ParlyReportSA

Broadband allocation could involve SABC – ParlyReportSA

Posted in Communications, LinkedIn, Security,police,defence, Trade & Industry0 Comments

Credit regulations to squeeze racketeers

Debt relief and credit under microscope

… sent to clients 22 Dec 2016…. Further powers for the National Credit Regulator to regulate against reckless lending have been reaffirmed as necessary and the subject of debt relief for needy persons considered.

This conclusion was the result of a series of hearings conducted by Parliament and criteria are to be developed for the application of debt relief measures and how this could be achieved are now being studied.

Such criteria could include target groups of debtors who would be eligible for the relief; the period in which the measure would apply; the type of debt that would be covered and how the measure could be implemented.

An earlier study, commissioned by the National Credit Regulator (NCR) some months ago, concluded that there was a need for the National Credit Act to make provision for the introduction of some form of national debt relief but the NCR decided to consult Parliament and to involve public input.

Growing debt bubble

Whilst reckless lending and irresponsible borrowing which led to the disastrous housing bubble in the US, Joanna Fubbs, as chairperson of the Portfolio Committee on Trade and Industry, acknowledged that the situation regarding any retail debt bubble is not as bad in SA.   Nevertheless, she said that for some time she has been concerned that the National Credit Amendment Act is not working in the best interests of vulnerable groups.

On the issue of debt relief, whether from reckless lending or not, it was agreed some time ago by the Committee that it was important for stakeholders to be consulted to establish a better picture.  A parliamentary select committee, chaired by MP Eddie Makue of the same Committee, was formed to investigate whether debt relief would be an acceptable policy for SA and to organise parliamentary hearings focusing on banking input and debt control aspects.

The brief

The Portfolio Committee also recommended to this subcommittee that there needed to be a better understanding between the excesses of lending, the plight of borrowers and a view established on regulations which should refrain from fostering any culture of not paying debt in the hope that it might be written off.

Meanwhile, it has been proposed by the Department of Trade and Industry (DTI) to extend the powers of the National Credit Regulator to conduct proactive investigations into reckless lending . They would also be asked to impose administrative fines and to empower the Minister to provide debt relief mechanisms through further regulations, yet to be drafted.

Also, NCR submitted that it had already laid out its own proposals to tighten up existing regulations and penalties for perpetrators of reckless lending which the Regulator was currently entitled to enforce under the Act but the views of the Regulator were to be sought on debt relief by Makue’s Committee.

DTI view

DTI has since confirmed to this Select Committee that it was their view was that the Minister of Trade and Industry, Rob Davies, should be given the power to prescribe debt relief measures, the nature of which must be carefully thought through . At the time, DTI acknowledged that banks and credit providers had to make their views known preferably in a series of hearings now conducted.

NCR view

National Credit Regulator, Nomsa Motshegare, has confirmed to the Select Committee that in their view some form of debt relief is necessary given the reasons of the country’s slow economic growth; retrenchments that were taking place; and rising unemployment figures.

In general, she said, these factors had already diminished household income and led to difficulty for consumers to repay loans.   The NCR had found, they said, that there was a willingness in general amongst banks to find ways to relieve the financial burden of indebted clients, many of them stating that they did this already, but there was considerable doubt on whether this should or could be backed up by any enforcement measures and regulations.

 The banks

In this regard, during further public hearings, Cas Coovadia of the Banking Association of SA (BASA) emphasised that legislated debt relief for all would have negative consequences since this was far too prescriptive. He  called for “a customised debt relief approach that would suite various portfolios” as a better principle to follow.

At the outset of the discussions, Coovadia stated that BASA did not support the principle of debt forgiveness as an objective.  One of the banking system’s foundation principles, he said, was the need to efficiently and legally lend money to borrowers and to collect repayments from borrowers to settle the loans.

He told parliamentarians. “A confluence of pricing, regardless of individual consumer risk, will arise at a portfolio level to offset the inability to price for the risk.    This will mean that consumers who have a good repayment history will no longer be rewarded for such behaviour when they apply for further credit.”

He warned that blanket debt forgiveness would accelerate irresponsible borrowing and said all banks offered means to repay and gauged the circumstances when lending.   Any failure to perform on this principle would have severe consequences for the industry and economy; would increase risk to depositors/savers; would impose a cost on society; and would limit credit providers’ ability to extend credit, he said.

Making a plan

Nedbank said that the option of rehabilitation was always a preferred course rather than hard legal collections and the bank had recently adopted a philosophy in general banking terms that to become proactive in terms of debt relief solutions was the far better solution for those who had over-extended themselves.

They said the situation between credit provider and consumers should remain “mutually beneficial”, which principle bore in mind that the economy of the country was less affected.   Nedbank confirmed that a satisfactory low, in their view, of 4.6% of their clients could be classified as technically in total default without the any possibility of rescue, as at the end of 2015.

Too prescriptive

Individual banks, such as Standard Bank, Absa, First Rand, Capitec and African Bank generally supported BASA’s view that prescriptive laws or regulations regarding lending, collection and debt relief would remove the principle of case by case treatment which in turn, they said, would probably inhibit loans being granted or drive up their cost

Debt and labour

Chamber of Mines was blunter and took the view that employee over-indebtedness was a major problem in labour relations and “fed into unrealistic wage demand” scenarios.  Indebtedness, they said, was one of the major catalysts in recent mining unrest.

They were clear that education on family accounts and the implications of over borrowing had to be stepped up, rather than complicated prescriptive measures on relief that would favour one and not the other.  More important they said was that loan sharks should brought under control and whose malpractices were rife amongst the mine working community.

Ms Sue Fritz, speaking for the Chamber, said that any form of debt relief provisions must consider the danger of undermining the basic principle that with the ability to borrow came the understanding such debt had to be repaid or quality lending would cease and debt might increase.

Cosatu view

Cosatu’s Matthew Parks urged that some form of debt relief be provided to a defined base of categories, such as retrenched workers; those only on social grants; the poor; working-class and middle-class students with student loans and borrowers who had paid off a large part of a loan but fallen on hard times. He also appealed to parliamentarians that there was a need to crack down on loan sharks, formal and informal.

Paul Slot, speaking as president of the Debt Counsellors Association, said some form of debt relief was necessary to counter the current high level of household debt, noting that according to the association, 54% of those in financial trouble simply applied for more debt to extricate themselves.

Conclusions in process

The Select Committee has now made a call upon on the National Credit Regulator to tighten regulations further on loan sharks and the registration process.  Chairperson Eddie Makue has now reported back on the hearings to the Portfolio Committee but has noted in Parliament that he was deeply concerned that a large amount of vulnerable people remain exposed to unregulated credit and can become victims purely because of greed alone on the part of the lender.

On reckless lending, it was noted that often ridiculously high repayments from the poor were a weapon used to gain control of assets.    Makue said, “The NCR has to protect poor South Africans against such lending by unregistered and immoral micro-lenders.   In most rural and semi-urban areas people maintain their existence through borrowing and the interest they sometimes get charged is shocking, and interest rates should be capped by law”, Makue said.

State debt relief and debt relief regulations

The “jury is still out” therefore for 2016 on the issue of DTI tabling a Bill and the subject of debt relief generally.

Parliament closed 7 December and will resume this debate early in 2017

 Previous articles on category subject

National Credit Act Bill aims to help consumers – ParlyReport

Treasury proposals on debt control approved – ParlyReportSA

National Credit Amendment Bill changes – ParlyReportSA

 

Posted in Finance, economic, LinkedIn, Special Recent Posts, Trade & Industry0 Comments

Liquor licensing may have impractible conditions

DTI gets tough with age limits

...sent to clients 17 Oct…..   In what will be a tough ask, Minister of Trade and Industry, Robliqour-store Davies has proposed a number of changes to the National Liquor Act, the most contentious being to raise the legal minimum age for purchasing liquor from 18 to 21 years of age. The call for public comment on the draft National Liquor Amendment Bill as gazetted closed on 30 October.

The Department and Trade and Industry (DTI), who deal with liquor licensing at a national level, state that South Africa has globally the worst figures for alcohol related accidents and anti-social incidents involving liquor abuse.

Drastic steps had to be taken to gain control of alcohol related injuries, illnesses and abusive behaviour that were costing the state some R40bn a year, the Minister said.

Younger age groups

The Bill focuses specifically on youth since DTI maintains that alcohol abuse specifically damages the development of the brain making youth vulnerable. Liquor advertising aimed specifically at young persons will be prohibited under the Act and revised rules set down on broadcast times and content. Advertising billboards aimed at youth will be banned from high density urban areas.

Minister Davies called for “robust public engagement on the issues raised in the Bill” as it dealt with matters “that are of significance to South African society.” He noted that South Africans consume alcohol related products at double the world average rate.

On the question of the age threshold proposed in the draft Bill is a minimum purchasing age, not as has been widely reported a “minimum drinking age”. The onus of establishing age will fall upon the supplier who must take “reasonable steps to establish age” when dealing with a young purchaser.

Pressure point

A civil liability will now fall upon the manufacturers and suppliers as well who knowingly breach the new regulations, Minister Davies said, believing that this was the only way to get the problem understood and the new rules adhered to.

sab-youth-beer-adThe draft Bill states that responsibility will also fall upon the seller not only not to supply liquor to a person visibly under the influence of alcohol but that the seller could be in addition asked to show reason why they should not bear costs for damage incurred as a result of a subsequent accident involving that person who made the purchase.

On the problem of community issues, such as tackling foetal alcohol syndrome which is considerably worse in South Africa than elsewhere in the world and alcohol related crime, the onus of proof will shift not only to a supplier but also to manufacturers to show that reasonable steps were taken to ensure that liquor is not sold to illegal or unlicensed outlets. Which brings up the issue of liquor licences.

Distance from community

Licensing is a provincial matter and there are a number of changes that the amending Bill police-raidwill make to the anchor Act which will have to be abided by. Particularly notable is the proposal that licences cannot be granted to an outlet less than 500 metres from any school, recreation facilities and places of worship.

Provinces are stated as “having an obligation” to be far stricter in granting licences in highly urbanised areas, giving due regard for the need for stricter business hours and for the need to deal with noise pollution in stressful living conditions.

Previous articles on category subject
New health regulations in place soon: DoH – ParlyReportSA
Licensing of Businesses Bill re-emerges – ParlyReportSA
Medicines Bill : focus on foodstuffs – ParlyReportSA

Posted in Justice, constitutional, Security,police,defence, Special Recent Posts, Trade & Industry, Transport0 Comments

Communal Property Bill assists land reform

Reform assisted on communal property 

communal-land-4…sent to clients 21 Oct….The tabling of the Communal Property Associations Amendment Bill could represent a major advance in bringing order to many aspects of government’s land reform policy. In essence, the Bill will ensure that householders have security of tenure and thus have the ability to raise capital before they enter into any agreement on the management of communal land.

The new Bill focuses on developing the practical and legal aspects of ownership of communal land by a communal property association (CPA) whilst at the same time providing security of tenure with a new initial procedure of naming householders to benefit. The draft has now been approved by Cabinet.

Whilst the thrust of government policy on land reform has always been to bring ownership ofland-reform self-sustaining agricultural land to previously disadvantaged communities, the process has been much bedeviled by conflict over land falling under the control of traditional chiefs; the inability of small farmers to raise finance without title and, most important, for households able to enjoy security of tenure.

Communal confusion

An unintended consequence of the original CPA programme launched by government has been that government has not wished to involve itself, nor has any investing entity for that matter, in the community strife and argument over communal land, a feature of many CPAs. Consequently, the CPA system has demonstrated its inability to involve itself in loans, any state support, or receive the support of agricultural assistance programmes.

community-farmIt might be said that CPAs as a structural system is “off the banking radar”, a fact which MPs in parliamentary committee meetings have complained of a number of times.

As a result, expensive trusts have become the order of the day, banks preferring to deal with such entities and even government itself having to use them because of the informality of a CPA and the inability of loan applicant to show security.

The objective of the Act when it was signed into law was to create a new form of juristic person to allow disadvantaged communities to acquire, hold and manage property in common. A community that qualifies in terms of the Act can therefore, on the basis of agreement contained in a written constitution, form a legal entity (the CPA) and thereby become owners of property, including land, via the CPA.

Agricultural reform

A CPA as it currently stands allows its members to become owners of land which has been “prioritised for the provision of infrastructural support to land reform farmers to enable them to create sustainable jobs and alleviate poverty.”

However, over the few years since CPAs were established, it appears from parliamentary Lesedi traditionalportfolio committee meetings, that things have not gone well. In some cases, traditional chiefs had intervened and gained control of land previously under the aegis of the members of a CPA. Meanwhile, traditional chiefs had complained that CPAs were acting like “chiefdoms” in themselves, the department told parliamentarians.

Tweaking and compromising

Some attempts were made by the Department of Rural Development and Land Reform to persuade CPA members to appoint traditional chiefs on an “ex-officio basis” but the situation remained untenable, not necessarily just because of the problem of traditional control but because, due to shortage of staff, they said, had no ability to monitor the situation and no picture of what land was under CPA control, where CPAs were, and their needs.

In addition, no measurement of outcome of any schemes appeared possible, Opposition members complained. Quite clearly, they said, the NDP land reform programme has not been successful to date. Whilst the idea had been along the right tracks, it seemed the system was patently in trouble.

Green Paper study

After two years of investigation, in 2014 the Ministry, produced a Green Paper on the subject. After creating communal property ownership rights, the new proposal in the Paper was to secure individual tenure to each household beforehand, be it a farm-dweller or tenant, and for each household to own its rights at law before the CPA was formed to lock into this.

land-reform-5As per the Act in force, it would be possible for a community or group of persons to have access to a registered title to land through common or joint ownership with every name included (in a deed of transfer) or through a trust (with title vesting in the trustees) or a juristic person (with title vesting in that legal entity). Once registered, the CPA would become a juristic person – that can sue and be sued. It could acquire rights and incur obligations in its own name, in accordance with a CPA constitution.

In a policy statement, a Bill was proposed along these lines with a CPA constitution as before dealing with sub-divisions, servitudes, the right to encumber with a mortgage, deal with leases and settle disputes – all essential to the development of the area concerned but in respect of nominated persons giving those persons therefore security of ownership.

The bigger picture

The new Bill therefore speaks to a process to align a CPA to the broader land reform mandate in terms of the policy statement. The Bill also says a Communal Propertyland-claims-court Associations Office is to be established which is headed by a Registrar of Communal Property Associations. As a result, CPAs will be better equipped, it is felt, to take part in development; its status is recognised and is known to government; and has a secure system of tenure established as a base for ownership.

DHA said the plan was to clearly establish the connection between the land itself and those who live on it and depend on it for agricultural income. With more clearly established security and a need to register for compliance, it is hoped that a CPA structure will present a more viable face to the investing world.
Previous articles on category subject
New approach to land reform – ParlyReportSA
Restitution of Land Rights Act reversed – ParlyReportSA
Land Holdings Bill joins state acquisition trend – ParlyReportSA

Posted in human settlements, Justice, constitutional, Land,Agriculture, LinkedIn, Special Recent Posts0 Comments

PIC comes under pressure to disclose

Unlisted investments of PIC queried….

matjilaWhen asked for information on how the Public Investment Corporation (PIC) had invested its funds, Dr  Daniel Matjila, Chief Executive Officer, told parliamentarians that the most he could do, even with ‘listed’ investments, was to give only names. Any terms and condition of any investment agreement could not be made public. On ‘unlisted’ investments, he held back completely.

He was then formally asked by David Maynier (DA) if the PIC had invested, directly or indirectly, any funds in any Gupta-owned enterprise. He was also asked for details of any financial implications upon the Government Employee Pension Fund (GEPF) and other pension fund assets resulting from the dismissal by the President of former Finance Minister Nene.

Confidentiality

Dr Matjila responded that the fund “could not cross the line of disclosing private information” and the members ofPIC logo.2 the Standing Committee on Finance, before whom he was appearing “should not read into his statements any insinuation that the PIC was protecting information.” He noted that he was totally aware of the fact that the PIC was under investigation for passing funds to the ANC and any such idea “was totally false”.

As far as funds to any Gupta owned business was concerned, Dr Matjila replied that the organisation stood by its earlier answers to the media that it had not invested directly in any Gupta owned enterprise. Following this remark, ANC MPs stood by Dr Matjila and told Opposition members that the PIC could not become “entangled” in such questions which were veiled with gossip and insinuation. It was the word “directly” used by Dr Matjila that caused the question.

Sub-judice

yunus carrimThis point was emphasised by Yunus Carrim, Chairman of the Committee, that most of the questions that were concerning Mr David Maynier should only be dealt with after the investigation of the possibility of ANC funding by the PIC had completed its course. He said that Dr Matjila was bound by circumstances to say nothing.

Present at the standing committee meeting was Deputy Minister of Finance, Mcebisi Jonas, who said the reporting process of h a pension fund to the committee should not get side-tracked with politically motivated questions. Maynier had asked this time about the possibility of “indirect” investments by PIC of any Gupta businesses.

On the issue of the effect of the ‘9/12 issue’, as referred to by Dr Matjila when Nhlanhla Nene was fired, he reported that the impact of this event had caused “significant losses” to the PIC portfolio. The GEPF lost R95bn, the Unemployment Insurance Fund lost R7bn and the Compensation Fund had lost R3bn – all managed by PIC and the event had been most worrying.

However, he said that the performance of all the funds had been subsequently excellent in the sense that recovery was achieved quite quickly – in fact “the recovery represented more than all the PIC funds lost within those two days of crisis.”

Information withheld

David Maynier (DA) remarked that funding was still shrouded in mystery and that he was “extremelydavid maynier uncomfortable” that the PIC would give no information at all on the “unlisted” investments of PIC.

Reporting generally, Dr Matjila said the fund had benchmarked itself and its operations compared favourably with “top private sector investment companies”. The GEP Fund “had shown over five years a 14.3% interest factor compared, he said, to a global median of 9.9% and a local investor median of 10.1%.” It had invested approximately R33.9bn in numerous portfolios aimed to drive transformation and create jobs, he said.

He told parliamentarians that the PIC “had invested approximately R33.9bn in numerous portfolios aimed to drive transformation and create jobs.” He said any risk taking was carefully managed and remained on the conservative side. Furthermore, he assured MPs that PIC did not take any risk that could not be “managed”.

Listed investments growing

Dr Matjila said that for all investments, the total allocation was now R400bn and “partners were always sought that would make positive returns”. ‘Listed’ investments in the last five years had grown from R495bn to R892bn recording a growth factor of 12.5% per annum.

vodacom logoThe PIC always held to principle, he said, that there was always a need for BEE compliant businesses to be considered so that it attracted a portion of government expenditure. ‘Unlisted’ investments, nevertheless, had large share of the market holdings, he said, with roughly R55 billion allocated to this form of investment. The total allocation for PIC investments, including GEPF and UIF, was approximately R400bn.

On investment policy, Dr Matjila said that his team liked to look at partnering with other stakeholders that added value and knowledge to make sure that maximum benefits and input from any arrangement were received.

Downstream SMME outlets

On SMME development, Dr Matjila said that PIC was “in discussion with groups such as Spar and Woolworths to ensure that small business was represented in their current growth patterns.” He said it would seem important for PIC to participate further in the Barclays Africa “sell down”. PIC, he noted, had invested in many international and local companies with assets within South Africa “in order to drive economic growth and increase job creation.”

Dr Matjila turned finally to ‘unlisted’ investments and said PIC had a slate of roughly R55bn to work from. Such investments were usually international, he said, and were not necessarily BEE compliant. David Maynier (DA) asked whether the GEP Fund management was “comfortable with the fact that a confidentiality clause existed on so many investments and the fact that disclosure to Parliament was denied.” Some ANC members also mentioned disquiet on this issue. Maynier said he intended to pursue the issue of non-disclosure of “unlisted” investments further.

Previous articles on category subject
Retirement savings subject of treasury probe – ParlyReport
Treasury calls for “Twin Peak System” with two financial bills – ParlyReportSA

 

Posted in Earlier Stories, Finance, economic, LinkedIn, Public utilities, Special Recent Posts, Trade & Industry0 Comments

Environmental legislation updates

Changes to environmental legislation….

dea logosent to clients 10 Oct….. The Department of Environmental Affairs (DEA) has published for comment a whole series of amendments to the cluster of laws generally referred to as the NEMA laws, or South Africa’s national environmental legislation.

The changes affect mining and quarrying, the industrial and manufacturing sectors and relationships of the many sectors with local authorities on licensing.

The draft Bill refers to the overarching National Environmental Management Act; the National Environmental Management: Protected Areas Act; National Environmental Management: Biodiversity Act; the National Environmental Management: Air Quality Act; the National Environmental Management: Integrated Coastal Management Act and the National Environmental Management: Waste Act.

Piggy bank for closures

In the case of National Environmental Management Act a number of changes are proposed, perhaps the most notable being ” to provide clarity to the definition of “financial provision” that an applicant or holder of an environmental authorisation relating to mining activities must set aside financial provision for progressive mitigation, mine closure and the management of post closure environmental impacts”.

NEMA generally provides that if environmental harm is authorised by law, such as a permit issued under any environmental law, the relevant operator is obliged to minimise and rectify such harm. Where a person fails to take reasonable measures to minimise or rectify effects of environmental pollution or degradation, the relevant authority may itself take such measures, and recover costs from the responsible operator. Failed mining operations apparently have presented government with little option but to use taxpayer’s money.

With the recent amendment to provide for liability for historical pollution any operator occupying land may also be liable in future for remediation costs under the NEMA: Waste Act equally and this is notwithstanding that the activity is authorised by permit. All five laws are designed to intertwine, the Management Act amendments say.

Mineral Resources only

Other changes under the National Environmental Management Act provide clarity that “the Minister responsible for mineral resources is also responsible for listed or specified activities that is or Is directly related to prospecting, exploration, extraction or primary processing of a mineral or petroleum resource.” Various other changes are proposed which should be read by parties affected.

The changes under the NEM: Protected Areas Act are relatively minor providing for the chief financial officer of the SANParks to be on the board; various new offences in marine protected areas and to clarify certain offences andenvironmental2 procedures.

Again under the NEM: Biodiversity Act changes are proposed on board representation to include technical experts; steps, actions or methods to be undertaken to either control or eradicate listed invasive species and, importantly, to ensure that MECs in the provinces “must follow a consultation process when exercising legal powers” under the Act.

Air quality ; Who licences what

Under the NEM: Air Quality Act the issue of who does what is clarified for municipalities on listed unlawful activities and the proposals provide clarity on the issue of a provincial department responsible for environmental affairs is the licensing authority where a listed activity falls within the boundaries of more than one metropolitan municipality or more than one district municipality and to deal with appeal processes.
Other articles in this category or as background
NEMA: Waste Bill passed – ParlyReportSA
Environmental pace hots up – ParlyReportSATougher rules ahead with new evironmental Bill – ParlyReportCoastal environment bill proposals clearer – ParlyReport

Posted in Enviro,Water, Facebook and Twitter, LinkedIn, Trade & Industry0 Comments

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