Tag Archive | DTI

Minister Patel and the Copyright Amendment Bill

………article dated 2 September 2020….. 

Start made on returned legislation……

Trade and Industry minister, Ebrahim Patel, has made it clear to Parliament that in his view the Copyright Bill, which was returned unsigned to Parliament by President Ramaphosa, can be re-written in such a way that all six requirements set by the presidency on the Bill’s constitutionality can be met.

He has asked Parliament to undertake this process with an eye on the six conditions but at the same time wants as few changes as possible.  From the first meeting, it appears that the Minister will very much be involved in the Bill’s re-drafting, particularly on clauses that affect the application of fair use exceptions  and also re-focusing on a possible re-write of the sections of the Bill to include retrospective royalty claims.

Stage one

Over the next few weeks therefore the trade and Industry committee will consider as a matter of urgency the specific issues raised by the presidency, all debate and alterations staying within the parameters of those specific issues.    Such conditions will also apply to the tandem Performers Protection Amendment Bill, which was returned by the President at the same time.

The timing of the finalisation of a complete Bill will very much depend therefore upon whether Parliament decides to include provincial hearings on a re-write, the president having complained that public participation in the Bill was insufficient.     Minister Patel, from his comments on the subject, would obviously like the Bill to go to for provincial hearings to round up more support for his contentious retrospective royalty clauses.  However, he knows how long this could take with South Africa needing  to resolve trade issues urgently, all depending on the final shape of the Bill.

Bill to stay

It clearly was understood, from the recent the first meeting, that Parliament will not be considering the re-draft of a completely fresh Bill as hoped for by the Copyright Coalition of SA.   This grouping represents, amongst other interests, a number of publishing companies lobbying against specific issues promoted in the draft.

Such have garnered support from US counterparts to influence the final form of the draft Bill, appealing to the Minister to allow for international trade requirements, as expressed in various treaties to which SA is aligned.

Any changes to the anchor Copyright Act, untouched since 1976 and hopelessly outdated, are now necessary to adopt inter alia the rights to communicate literary and musical works to the public in a digital environment of internet platforms and media devices which involve easy copying for private and commercial use and different educational needs.

Where we are

The Bill has been sitting with the President, unsigned, for thirteen months after its original completion by the Portfolio Committee on Trade and Industry, but now has finally been dusted down and returned to Parliament with the six caveats for consideration to be considered before it can proceed further.

Matters raised by the President in returning the Bill are:

  • Queries regarding the tagging, meaning whether or not sufficient parties were consulted
  • Acceptability of retrospective and arbitrary deprivations of property clauses
  • Delegation of discretionary legislative powers to the Minister
  • Public participation in the Fair Use clause provisions
  • Copyright exceptions and the validity of such internationally
  • Concern over international treaty implications

To stay

However in principle, the Minister does not appear to be overwhelmed by any international pressure to either withdraw the Bill or completely re-draft it.   Rather, he sees minimal technical changes being undertaken only to meet presidential requirements. He has made available to all MPs a DTI pack detailing chronological the progress of the Bill through Parliament, who was consulted and why and decisions made.  (available to subscribers)

As an overall impression of the first virtual meeting  on the subject, it would seem that the main thrust of the Bill is accepted in moving away from defined fair dealing principles to fair use generalisations. The issue now seems to be all about past redress on localised royalty rights.  The meeting was perfectly aware of the needs to meet international copyright agreements and the fact that this has escalated into a direct confrontation between US trade interests over what is perceived by the governing party as protection and development of a local industry and for aspirational educational needs.

Strong views

Minister Patel told MPs that there are “significant commercial interests in each corner of the debate on retrospective rights and how they are defined”.  On this he said, “There has been a heavy lobby with a different view, and this will probably remain the case since South Africa is an open society and alternative views are always countenanced.”   Much pressure had been exerted upon government by the publishing industry with regard to the Copyright Amendment Bill draft, he said.

He was therefore acknowledging the issues surrounding the question of “re use” of educational material re-use in schools and universities raised by the publishing industry.  He must be briefed on the divisive matter of internet platform use and supply of material by such entities as Google and Facebook in which area of “fair use” there is much litigation in the US on user privacy.

From the way he spoke, the Minister is aware of the dogged objections expressed by opposition MPs on the risks of offending international partners regarding retrospective royalty payments and violation of past undertakings.

 Important history

In general, and throughout his presentation, Minister Patel referred much to the opinions of the Parliamentary Legal Advisor (PLA)  who throughout past meetings have advised Parliament with regard to legal issues on the  development of the Bill. The portfolio committee on Trade and Industry has had two sub-committees advising them as well – one on constitutionality  and the other on copyright issues.

Three years ago, Parliament who took over the drafting of the Bill from the DTIC legal team, taking advice from the Copyright chair at Stellenbosch University. The extent to which they followed this advice is for the experts.

Minister Patel specifically highlighted the issues that Joanna Fubbs MP, as previous chair of the Committee, had emphasised throughout the development of the Bill under previous minister of trade, Rob Davies   He said, “Creators often sold their rights to ownership and future earnings and use of the work to a person or to a firm. In some cases, the creators did not have a sense of the value of their work and had sold it at prices well below the true market value.”

All about redress

He said, “This past exploitation of creators who, unknowingly, had assigned their rights in unfair contractual agreements, has to be dealt with. Parliament has resolved in meetings that such redress is necessary”, he said. “ This is now a fact agreed upon.”   This issue, he concluded, was the basis surrounding the controversial clauses 6a, 7a and 8a in the Bill, and what the dissension has been about.  “The committee has voted to take into account those parties who have been exploited in the past”, he said.

He acknowledged to MPs that the President’s position was such that retrospective provisions might be unconstitutional as it may create arbitrary deprivation of property under section 25 of the Constitution. This could be possibly referred to as “arbitrary” because the courts may find that such a ruling applied to all copyright holders domestically even if an injustice was not done, thus bestowing a windfall on authors who had in the meanwhile received fair copyright value, he said.

He continued, “Such could be called the indiscriminate results of the wording proposed. In other words, the result was not specific to one case but applies to all and consequently what had been proposed in the Bill did not provide regulatory certainty”, Minister Patel said.    “I recommend therefore that the Committee consider the retrospective clauses 6,7 and 8 and re-consider the wording, without losing the thrust of the provisions that the Committee required in the first place.”

Ministerial powers

He also said, “I have taken note that various legal opinions hold that the ministerial powers in the Bills are sufficiently qualified as to address concerns about impermissible delegation, but as they were an attempt to cure potential constitutional breaches on the formulation of retrospectivity, they would be redundant if those clauses are changed and therefore, I agree that these powers can be removed,” Patel said.

He concluded on this subject  that  alternative mechanisms to address the challenges of redress and to support those creators who are victims of past exploitation, may need to be considered.

Exceptions under Fair Use

A further issue which gave the President concern, Minister Patel said, were the powers given to a minister to both develop specific regulations on any defined retrospective cases and conduct an impact study on each case

In summation, Minister Patel seemed to be saying that to deal with specific cases at ministerial level was going to be difficult and that he as incumbent was more than prepared to surrender any such powers on the basis that, in his view, it was correct that there was a singular lacking public participation and involvement planned for in any such decisions that the minister might make.

Mind reading 

Consequently, Minister Patel said, “In an overall sense it is my view that at the heart of the President’s concern is the fact that it is not so much the content of the Bill per se that concerns him but rather a lacking in public comment and consultation generally in the parliamentary process, particularly as the Bill was progressed in its final stages on subjects such as this.”

On the conclusion of his coverage of the retrospective clauses and ministerial powers to define cases by regulatory means, Minister Patel said the Bill ought to be subject to further opportunities for the public to consult. He said he was aware that the Bill was rushed through to make the deadline of the closing of the Fifth Parliament.

Heated subject

On the subject of international agreements and treaties that were affected by copyright matters, Minister Patel put up a slide which referred to:

  • the World Intellectual Property Organisation (WIPO) treaty
  • the WIPO Performances and Phonograms treaty,
  • the Beijing Treaty on Audio-visual Performances
  • the Marrakesh VIP Treaty
  • the Berne Convention.

The Minister said the President’s main concern in returning the Copyright Bill was as to whether the Bill complied with these treaties.   He also said only two were in force, these being the two WIPO treaties and the others were in the process of being agreed to. It appeared that Minister Patel was aware of this although the PLA advocate seemed to be insisting they were not legally relevant for any discussion until signed.

Consultation

Minister Patel said that  DTIC, who had had sought legal opinion away from Parliament and the Parliamentary Legal Office who had given opinion to the Committee during debate, had both told Parliament that  the contents were in the Bill were in alignment with the Constitution when it came to the retrospective clauses and the record showed that Parliament proceeded on this basis.

However, there were no public consultations on this issue, he admitted.   PLA said later that as this was not ‘wording’ of the Bill and there was not a need for public consultation on this subject accordingly.   For a number of legal reasons however, which the Minister quoted at length, he said in summary, “It could be worthwhile for Parliament to re-consider the alignment of the Bills against treaties since the question of whether of arbitrary application might arise in terms of those treaties will arise.”

Both the same

He recommended that both the Copyright Amendment Bill and the Performers Protection Bill be treated in like manner giving MPs a number of further reasons their consideration which the Minister felt were important to if the Bill were to go back to the President resulting in a successful outcome.

The Minister stated that it was the view of the Department and Parliament’s Legal Advisors (PLA), the Committee might wish to be taken through the contents of the treaties compared to those areas of the Bills where the President had expressed constitutional concerns in order to give proper consideration. He gave his assurance of assistance in this regard.

Secret out

On the retrospective clauses contained in the Bills, Adv. Charmaine van der Merwe, Parliamentary legal advisor, confirmed that the previous Committee in the Fifth Parliament had in fact compromised on the issue of clauses 6,7 and 8 after having  been told of constitutional concerns, but had decided after forcing the issue by majority vote, to rather have such clauses contained in the Bill which went forward to the National Assembly and which could always be struck out should they be found unconstitutional.

This was against the wishes of the DA who voted against such a move but who were outvoted in a majority count.   PLA stated in their time slot that in their view the retrospective clauses could be deleted in their view. When pushed on the issue , they said in a likelihood they should be deleted but no final legal stance had been taken on the subject.

I told you so

DA’s  promptly advised all when the vote was taken that he had warned the Committee on approving the Bill with a “see how it goes” approach on such an important issue.  The debate at the time had become somewhat acrimonious. MacPherson warned that already the AGOA trade agreement had been drawn into the matter and indicated that such a price to pay was too high.

“Both Bills will achieve nothing if they contradicted international treaties and included arbitrary deprivation of rights”, he said. “As a result of this rash behaviour, the Bill has stalled, gone nowhere, and South Africa has found itself in a difficult trade situation.”  He added angrily that he had been accused of grandstanding at the time before the Bill stalled, warning that this would happen.  ANC MPs responded broadly on the basis that the DA was not interested in “people matters”, only money issues.

Conclusion

On the question of how the Bills were tagged, Adv v.der Merwe of PLA stated that in their view it was Constitutionally correct that the Bills could be tagged section 75 and debated therefore only in the National Assembly but if Parliament so wished they could be re-tagged section 76 and be debated in all nine provinces, meeting the President’s call for more public comment.

This was a decision for the Committee, she said, but such a process will cause some considerable delay.

Over to you

She said further public participation with public comment on the “fair uses” clauses was very much up to Parliament and the Committee chairperson.   On the arbitrary deprivation of property issue, she explained that copyright had always been subject to exceptions because without such they could limit the Bill of Rights.

Having seen clauses 6a,7a, and 8a as a problem, i.e. the retrospective clauses, it was the PLA’s view that the Bill otherwise and in general terms allowing for exceptions for Fair Use only, was aligned with the 3-step process used as a test on Fair Use exceptions and as was the Australian Fair Use case, such a law would no doubt be found to be acceptable.

She said as an aside that she had struggled to understand the wording of the retrospective clauses herself and because of this she was unable relate as to whether they were an influence on the  international treaties unless the wording was considerably refined.

Fair Use stays, no doubt

On this note, Minister Patel concluded, as the meeting closed, that on the 3-step process, it was “incredibly important to take note of the unique circumstances in South Africa”.   He said the Bill’s exception for educational purposes could be found in many countries in South America.

Copyright Bill goes back to Parliament – ParlyReportSA

Posted in Education, Finance, economic, Justice, constitutional, Trade & Industry0 Comments

Little support halts National Gambling Bill

…..article dated 7 September…..

Some provinces see Bill as invasive….

The contentious National Gambling Amendment Bill took a nosedive in the Trade and Economic  Select Committee of the National Council of Provinces (NCOP) following the outcome of mandates received from the nine provinces.   When read out they showed that only three supported the Bill, with two abstentions.

A section 76 Bill such as it is, the proposals require a minimum of five provinces in support, the question of a majority not arising in procedure on NCOP matters. The Bill now goes back to the National Assembly, where a final result on its future will be debated and noted.

Two years of slog

In the meeting, Dr Evelyn Masotja  DTI, awaiting mandate results, reviewed the Bill for the record being legislation borne out of the Gambling Commission’s report of 2010 on the industry, and updating the principles established by the Wiehahn Commission on gambling some twenty odd years ago.

The anchor Act mainly limits gambling opportunities and defines what is legal; protects the players; and governs the industry integrity and fairness of the industry with rules and controls.   The amending Bill proposes extension of National Gambling Regulator (NGR) activities and the current computer monitoring systems covering a fuller spectrum of gambling activities in all provinces, plus a widening of the territory covered by its inspectorate reporting back to the NGR.

How it works

The NGR has no board and the entity is run by an administrative office by DTI, as is the case with the National Credit Regulator.  The industry was worth around R31bn in 2019/20, with total taxes collected for SARS recorded then as R3.2bn, Gauteng contributing 40%, the Western Cape  approx. 18.0% and KZN some 17.5% of the tax collection.

Dr Masotja told MPs that concerns in the provinces revolved around the lack of a reporting board  at the NGR; the extent of the monitoring system extensions into many areas of the provinces which were controlled by them; the manner of voting and of quorum issues of the co-ordinating National Gambling Policy Council (NGPC) meetings; empowerment conditions; and lack of meetings by the NGPC currently.

Big brother

Quite obviously, there is an undercurrent of rejection by certain provinces due to the invasive nature of national activities of NGR into areas forming revenue for provincial and local authorities. Mandates were produced on the 28 August, the date of the meeting in question.

In the final count, M Moshodi MP (ANC) said the Free State province was against the Bill;  M Dangor MP (ANC) recorded Gauteng province against the Bill;   Eastern Cape, not represented did not support the Bill but their absenteeism meant abstention; Timothy Brauteseth (DA, KZN) informed that KZN abstained;    M Latchminarain (MPL from Mpumalanga Legislature) was in favour of the Bill; M Mmoiemang MP (ANC) recorded that the Northern Cape province was in support of the Bill; J Londt MP (DA, Western Cape) read out that the North West Province was against the Bill.

The Bill is to go back to the National Assembly on the basis of the fact that “there was not sufficient support for the Bill”, as distinct from being voted against as would be the case in the NA.

 

Posted in Finance, economic, Justice, constitutional, Trade & Industry0 Comments

Funny business at the National State Lottery

………article 25 July 2020……..

NLC Commission finally to be investigated…

For both the years 2018/9 and 2019/2020, Parliament has been unable to obtain from the National Lotteries Commission (NLC) any official list of beneficiaries and any funding details by the State Lotteries Fund run by the secretive Prof. Alfred Nevhutanda, also chairman of its Fund.

No amount of parliamentary requests, annual reporting requirements, or encounters with investigative journalists have convinced the professor to break the veil of secrecy on projects run by the Fund.

With the doors closed to any form of questioning on beneficiaries, even to the department of trade and industry reporting to the minister concerned, it also appears just as important to Prof. Nevhutanda not to part with any information on how decisions are made on funding and what criteria is used. Again he remains silent when  asked by MPs.

Playing mum

After three years of harassing the NLC when it presents its annual returns to Parliament and briefs the Trade and Industry Portfolio Committee as required by the public management financial legislation, opposition MPs over this period have so far only managed to get the Fund to categorize outgoing funds into the types of grant it makes. In accounting terms this means absolutely nothing, of course.

In the last few weeks, however, matters at last might be coming to a head.  If things are as Parliament suspects, there is to yet to be another mighty crash for the reputation of public sector governance.

Fund income

The sale of lottery tickets to the public and disbursement of prizes are separated by law, such operations being run by a service provider, the names and addresses of winners being protected.   It is from the sale of these tickets that the Fund gets its percentage of revenue.

Every year, with the publishing of the NLC annual report, the professor has presented a picture of respectability with a special chapter devoted to the activities of the SL Fund.  2019/2020 was no different until it came to question time during the parliamentary briefing.

Extracting teeth

Professor Nevhutanda, (who was bestowed with his doctorate in Azerbaijan it appears) was asked this year by the same MPs the same questions.  Once again he quoted the necessity for privacy on the grounds of the Fund’s need for neutrality and to maintain the appearance of impartiality.    The same phrases were trotted out that the naming of projects would expose the Fund’s beneficiaries to all kinds of risks and accusations that the Fund favouring one NGO or beneficiary over another.

The professor also told parliamentarians this year that his enemies could include extortionists and spamming operators, even refusing to supply such a list to MPs “for their eyes only” which would have been subject to parliamentary rules. In the past, ANC MPs had nodded at these wise comments.

Enough is enough

For the last three years  at the same time but coming to a head this year, has been a parallel series of stories appearing in the Daily Maverick into the funding of the of SLF projects staring in the Northern Cape, more appearing in Free State, then Gauteng. Pressure this year was seriously put upon the Professor Nevhutanda to answer questions on the Funds’ activities.

In committee beforehand, ANC MPs have stood mute and never commenting, the EFF subsequently joining with the DA this year demanding answers.  It was a stormy meeting.

Turnabout

ANC MPs were finally convinced this year by Mat Cuthbert (DA) in a recent August meeting that it was in everybody’s interests that there be a court challenge on whether Parliament was constitutionally supreme in calling for oversight of all State Lotteries funding, unanimous vote being recorded to request such from experts.

Legal opinion has now come down in time for the most recent meeting with the NLC advising that, on this matter, the Constitution clearly indicates that Parliament can trump the State Lottery Fund Act in equal fashion to any other government institution and that all financial aspects of the Fund should be subject to disclosure and parliamentary oversight thus obtained.

The truth will out

Thanks therefore to the persistence of two DA MPs, Mat Cuthbert and Dave Macpherson, yet another castle of cards involving senior government officials is about collapse.

Looking back things had started to get hotfor Professor Nevhutanda when he was reported as suing a group of investigative journalists, known as Ground-up, for R600,000 in respect of defamation damages. This was an unusual incident in the life of the NLC, it seemed.

Rumblings

It also appeared at the time that the argument was all about reports run by the Daily Maverick, sourced by Ground-up, that in Kuruman, Northern Cape, there were three particular State Lottery projects, an old-age home, a drug rehabilitation centre and a library/museum, being built and all meant to celebrate the life and work of a sangoma, Credo Mutwa.

According to the Daily Maverick article some R60m was granted as far back as 2016/7 but by 2019 two were still “under construction”, having received funding two years before.  The third, a museum, had not single exhibit therein and the library’s shelves were empty”, said Ground-up, who had been to Kuruman to see for themselves.

Photographs of fences, a few walls and piles of bricks were included in various articles and in subsequent articles the construction companies had suspicious links to NLC officials, the Daily Maverick said.

Out of sight

The NLC has distributed on average around R1.6bn per annum in recent years before Covid 19 arrived.  For a good deal of the earlier years, Minister of Trade and Industry Rob Davies, has presided over the affairs of the NLC very much at arm’s length since his department has been at pains, it seems, not to get too involved in lottery matters to any great depth.

Similarly, the Chair of the Portfolio Committee on Trade and Industry for years, Joanna Fubbs, just asked for assurances every year that all funds went to good causes and were distributed particularly amongst the poor. She received such assurances.

Writing the rules

Prof Nevhutanda, always aware that the Lotteries Act demanded no political interference in its affairs, would talk little on what motivated decisions on his  grants. This was a tightly held process within the NLC, he said, and the tenets and principles behind the formulae for consideration of funding had been designed by no less than the professor himself, the annual report of the State Lotteries Commission stated., with the Professor as author.

Consequently, DTI presentations to Parliament on this portion of their responsibilities made to the Portfolio Committee of Trade and Industry have been less than sketchy, particularly on report backs on whether DTI inspectors of NLC staff ever visited project sites.

Grants were declared as annual totals simplistically broken down into projects falling into four categories, the arts, charities, sports and miscellaneous. No more.

 Build up

Meanwhile, Minister Patel has been playing difficult and not really helping obviously not wishing to get too involved in problems of an entity run for so many years by a predecessor.

 

The Auditor General over the years seems to have accepted that no follow through was necessary but last year, with a tightening up of the rules, has now flagged some of the  issues as “irregular”.

D-Day

The letter now sent from Parliament to Prof. Nevhutanda from Parliament demands that the NLC should submit within seven days of receipt of the letter the names of beneficiaries who had received funds from the NLC in respect of the Covid-19 pandemic as well as the amount received as  beneficiaries referred to in the 2018/9 annual report and which were required by the Lotteries Act.

It also calls for details of all the categories under which the grants were made, names of beneficiaries and the amounts involved.  A similar call is made for 2019/20 figures in the 2019/2020 annual report as required in law.

 In the past

To sit through a meeting with the National Lotteries Commission (NLC) has been an insult to the average person’s intelligence for some years now, but the last virtual meeting was short and quick.  Chair Duma Nkosi read from the Courts findings and all quickly sided with Opposition MPs that Parliament had to exercise its authority immediately.

In the most recent meeting, Cuthbert said he was “horrified” to see how many ANCs had suddenly decided to vote agreeing on the matter after three years of disagreement, only siding with the DA when the Courts opinion posed a threat to the blind-eye approach of the past.

Nevertheless, it was a total majority decision made that NLC be hauled before Parliament and explanations given.

Past bad apples

Prof Nevhutanda is not short of publicity either.  Two years ago, he stood accused when a company with the improbable name of the Makhaya Arts & Cultural Development Co, and which employed Prof Nevhutanda’s daughter, controversially received a massive R64m from the National State Lotteries Fund, a story covered by Mail & Guardian.

The charmed life of Prof Nevhutanda seems set to end very shortly. One hopes that endless SIU reports, NPA paralysis and blunted Hawks investigations are not to follow, as the State Lotteries Fund Pandora’s box opens up.  It would seem a question of who gets there first; the SIU or Parliament.

Posted in Justice, constitutional, Public utilities, Security,police,defence, 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 Finance, economic, Labour, 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

Draft Copyright Amendment Bill raises queries

Copyright Bill proposes revenues to state…

copyright graphicsent to clients 28 Oct….  Anomalies abound in the draft Copyright Amendment Bill, recently published for comment and now awaiting tabling in Parliament hopefully with a number of changes, say experts in the intellectual property industry.

The Bill primarily affects music, artistic and literary copyrights but the whole issue of patents, copyright and intellectual property rights are so intertwined that any changes will undoubtedly send up red flags up in various areas.

Government says in this instance it is trying to modernise the existing Copyright Act but as with any changes to established procedures that have existed for years, there are pros and cons that come with change it seems.

50 years after death

The draft Bill deals primarily with copyright of artistic, musical and literary work and most assume earphonesthat works of great composers such Brahms, Beethoven and Schubert are free of copyright, those geniuses having long since passed away. In fact under the existing Act, the author, composer or artist has copyright for life and then fifty years

The draft states both clearly and unambiguously that the ownership of all copyright held by individuals will automatically transfer to the state upon their death.

Until death do us part….

There is not the slightest indication of what body or entity is involved, other than the fact that the Bill is to be tabled by the Minister of Trade and Industry, meaning that DTI, or an entity controlled by it, would receive such, presumably the individual’s Estate being responsible for notifying DTI that they are heirs. The draft also states that government may never re-sell or pass on such copyrights.

The question to any casual observer is what happens to this money, at present collect by such bodies in doubtful manner by such bodies as SAMRO and passed to DTI? It is revenue and does it go to National Treasury, perhaps a fund for aged musicians, authors and artists even child education in the arts? On this the Bill is silent, no policy having been ever stated by any cabinet minister on such matters.

Another tribunal

In the absence of any new guides as promised on intellectual property in general, such having been promised by DTI in the form of a National IP Policy many months ago, more concerning is the establishment of an Intellectual Property Tribunal which is a case of “overkill” in dealing with this limited area of copyright and royalties.

Such a body may adjudicate on “on any application and on any legislation brought before it”, the draft supermarketstates.

On the whole, we have to assume that the majority of the draft Bill applies to individuals only, with the exception of the recording industry and literary reproduction industry, there also being certain clauses regarding End User Licence Agreements affecting software sales.

Criminalisation

Of concern though to many is the growing tendency to introduce criminalisation into legislation such as areas of BEE with fines normally reserved for more serious and harmful criminal police offences. In this case DTI have once again mentioned maximum jail and penalties of totally disproportionate periods and amounts.

To many, this Bill appears to have a lot more written in between the lines and prompts again many questions as to the direction DTI is taking with regard to international agreements, in this case the Agreement on Trade-related Aspects of Intellectual Property Rights.

It will be interesting to see what is finally tabled in Parliament for debate and what emerges from parliamentary public hearings

Posted in Facebook and Twitter, LinkedIn, Special Recent Posts, Trade & Industry0 Comments

25.1% is maximum BEE control, says DTI

DTI upbeat on implementation of BEE codes…..

lionel october 3

In a report to Parliament on the amended BEE Codes of Practice and their implementation as from 1 May 2015, Lionel October, Director General of Department of Trade and Industry (DTI) and his B-BBEE staff team, emphasised that the generic scorecard was aligned to government’s key priorities. He also said the State had no ambitions to take their target on black control beyond 25.1% of ownership.

Supplier Development is new title

DG October said the main emphasis of the codes had now switched to greater emphasis on what was previously termed procurement – now referred to as “supplier development”. This approach was more in alignment with the National Development Plan (NDP) objectives, DG October said, simply because that was the main direction needed to empower the development of black enterprises and build the economy on a stable growth path.

“In fact the German auto industry working with the German Chamber of Commerce had established a fund

BMW-Werk Südafrika

in South Africa”, he said, “for financing, training and building expertise in black businesses to supply the auto industry”.

There was considerable discussion on this by members and DG October said that there had been a general recognition in business and industry of the word “must” had replaced “may” in terms of B-BBEE requirements; that level four had to be reached for incentives and in general now “certainty” had been restored to the business environment on BEE issues, he felt.

Five “Elements”

The generic scorecard now had five elements, he said, which all companies, except those micro-exempted, had to comply with for recognition. All employment equity and management control had now been merged into one of those elements, now termed “management control”.    Sector codes were now to be aligned by 1 Nov. 2015, as set out in Code 003.

He said that “in response to public submissions” the import exclusion principle would be maintained and that the definition of an “empowering supplier” in the context of code alignment was a compliant entity which could demonstrate that its production and/or value adding activities were taking place in this country.”

DTI said that that “deviations of sector codes in terms of targets must be over and above those of generic codes and companies that derive more than 50% of revenue from sectors where there is already a sector code must be measured in terms of that sector code.”

DTI has no doubtful intentions

George Washington, having cut down the cherry tree, with his fatherIn general, DG October said in response to questions from MPs about the amendments, it had been his impression that business seemed to accept there were no political mala fides on the part of DTI; just a wish to get on with the planned NDP growth path which required the co-operation of business and industry on black empowerment.

The funding of Sector Charter Councils was a “joint responsibility between government and the private sector and entities must report annually on their B-BBEE status to sector council who will in return reports to the BEE Commission”, DTI said.

New sectors in the sights

Sector codes were being considered for the tourism, which had reached the stage of gazetting for public comment; “alignment” was being reached in the construction, integrated transport, ICT, financial services and chartered accountancy sectors; the property and forestry sectors had reached gazetting stages and marketing, advertising and communication were with their appropriate ministries for approval.

DG October mentioned the fact that the manufacturing industry stood alone as there were so many different sectors but over a period, aspects would be dealt with such as the film industry and textile and clothing industry.

DTI concluded their input to the meeting by advising that a technical assistance guide to B-BBEE was in process and DTI were in the process of finalising the B-BBEE verification manual.

Recent faux pas

rob davies2Opposition members asked how it was that DTI went so wrong with the question of  downgrading the pointing system for employment schemes and why it was that the Minister of Trade and Industry, Dr Rob Davies, had to retract that portion of the amendments which were not gazetted for public comment.

Chairperson Joan Fubbs intervened at this point, noting the Minister had taken the blame, had apologised for the mistake and could do no more than admit that DTI had been wrong.

DG October added that at a DTI workshop on the subject with “some stakeholders” this direction had been considered as a good option for broader rather than narrow empowerment but it had now been recognised by DTI that “they had gone down the wrong route as far as investor confidence was concerned”.

DTI had now reversed everything with the promise that this would not occur on the agenda again.

Better ideas could come

It had also been realised that such a move could also destroy imaginative plans for black management control such as that pitched by Standard Bank where 40% shareholding went to staff who could have representation on the board; 40% went to recognised BEE shareholders and 20% went into community organisations and trusts.

In answer to direct questioning by MPs, DG October confirmed that by the term “black”, DTI translatedlionel october this as African, Coloured, Indian and Chinese. He also confirmed that all these groups, if foreign and not South African citizens, were excluded.

More than 25.1% “unrealistic”

DG October, when asked by ANC MPs whether the 25.1% target for black ownership was realistic and fair considering that the demographics in South Africa demonstrated a far larger proportion of black people, he said that 25.1% could be considered as a “basic critical mass to engender a solid forward movement”.  To go any further would be unrealistic, he added.

In Malaysia, he said, local ownership was considered fair at 30% and other African countries as high as 50%, but he felt that in South Africa, where the need for the transfer of skills and training from large to small companies, especially through supplier development by state utilities and large businesses, was essential, this was a fair percentage assumption and which called for co-operation and fairness between all parties, all bearing in mind “a pretty hideous past”.

Redress of the past in all preambles

joan fubbsAt this point, Chairperson Joan Fubbs referred to the South African Constitution, reading out the clauses which not only stated that all were equal despite race colour or creed but that discrimination was possible if it was fair and she reminded MPs that redress of the past was “fair”.

She asked for all “not to isolate clauses in the Codes to determine personalised interests but get on with job of re-aligning communities that had been excluded from ownership for over 300 years”.

One ANC MP asked that the focus on big businesses be less emphasised and that DTI rather spent considerably more time with the job of developing ownership of black small business, which he stated could be “the power house of South Africa”.

He called for legislation that enforced government and public utilities, “as custodians of state power” to set an example on supplier development since, he said, one could hardly expect the private sector to follow suit, if the SOEs did not lead the way on this issue.

Incentives needed, not law says DTI

DG October said such sort of things were “impractical in the real world” and said the main challenge was a phased process of change which now had the support of many in positions of power in business. He also emphasised that B-BBEE had to tie in business and industry with incentives rather than with the law.

When asked about his recent public statement that he had set DTI’s target to produce “100 black industrialists”, he was referring rather to 100 black industrial leaders “financed and supported by DTI initiatives”.

Other articles in this category or as background
BEE comes under media scrutiny – ParlyReportSA
Rumblings in labour circles on BEE – ParlyReport
B-BBEE Codes of Good Practice far more onerous – ParlyReportSA
One year to implement B-BBEE Codes – ParlyReportSA

Posted in BEE, Facebook and Twitter, Finance, economic, LinkedIn, Special Recent Posts, Trade & Industry0 Comments

This website is Archival

If you want your publications as they come from Parliament please contact ParlyReportSA directly. All information on this site is posted two weeks after client alert reports sent out.

Upcoming Articles

Earlier Editorials

Earlier Stories