Tag Archive | South Africa

Pravin Gordhan’s plan for ailing SOEs

……article dated 3 September 2020……

New DG explains ‘step in’ powers…..

Khathatso Tlhakudi, appointed recently by Pravin Gordhan as the new Director General, Public Enterprises, recently had the unenviable task of taking on angry MPs to explain the current state of South Africa’s disastrous public utility scenario.  It was his parliamentary initiation as the head of public enterprises, responsible for the seven government SOEs all of which currently are responsible for a drain on the SA economy.

From the start of the meeting, MPs from across party lines expressed their extreme displeasure at the performance of government-run utilities under the tutelage of the Department of Public Enterprises (DPE).     The meeting had been called to establish exactly what progress had been made and to provide an overview of where exactly DPE was headed and to hear a report back.

The state of Denmark

It might be said that in fact MPs got a true picture from the meeting as to how bad the situation was.   In presenting his DPE overview, Tlhakudi said the department had worked on a new platform “for more timeous intervention into the affairs of SOEs in future”.

This plan, he explained, was at an advanced stage and had been developed at the instance of Minister Gordhan to intervene at short notice without overtly challenging the independence of SOE boards.     Whilst obviously contentious, such a system would possibly give DPE some form of “step-in powers into the affairs of a state-owned entities where they were failing to comply according with their own frameworks, or where there were obvious material governance issues involved”.

Consequence management

The concept was demonstrated in the form of allowing for a series of memoranda of incorporation (MOI) with each of the entities, drawn up to allow a public enterprises minister to intervene in cases of  financial distress, maladministration or certain other defined instances with “step in” rights.

Certain powers would be granted to the minister, such as the ability to call for the resignation of the boards which had been appointed by Parliament and for the minister to request Parliament to re-appoint and re-task new boards after an intervention.

Before the horse bolts

If such a move was to eventually come forward from Minister Gordhan this would probably be in the form of a draft Bill, it was stated by Orcilla Ruthnam, Chief Director: Governance Unit at DPE.   Ruthnam has also undertaken an extensive study of how all CEOs and CFOs came to be appointed by SOEs in recent years and what process each board such appointments had gone through based on their qualifications.

This had been a revealing exercise, she told MPs, and was sufficient to show that the current system had to change before a “runaway” took place.

Agreed upfront

In the light of MPs questions, Orcilla Ruthnam gave detail on the proposed basis of an MOI for the DPE portfolio.  Such would, she said, empower the minister to intervene when a board was seriously under-performing to dissolving the board and appointing a “quasi” administrator to turn around the company…..

  • where the SOC was in financial distress, or there were allegations of maladministration and mismanagement
  • when the SOC had material governance challenges;
  • when the SOC failed to perform its functions effectively or efficiently; and
  • where the SOC had acted unfairly or in a discriminatory or inequitable way towards a person to whom it owed a duty under the legislative or policy framework of the SOC; or had failed to comply with any law or any policy envisaged in the legislative or policy framework relevant to the SOC.

 Powers

The principle of providing the minister with temporary intervention powers in law and which would have to trump long standing legislation enacted to ensure SOE independence was clearly to a river to cross,  Ruthnam explained.  It had to be acknowledged that interference by members if the Cabinet in the affairs of an SOE is specifically disallowed by the Companies Act, the Public Finance Management Act and the founding documents of each SOE, said DPE.

The whole principle behind an SOE’s independence from political interference has been in the past to ensure that their boards and management continue to operate in their own areas of expertise without influence from the body politic, Ruthnam continued, but the MOI was worded in such manner to allow for specific instances under specific circumstances as already outlined to MPs.

There were no questions from MPs on this particular subject, bearing in mind this was a virtual meeting.

 

 

Posted in Energy, Finance, economic, Public utilities0 Comments

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

PetroSA part of new energy plan

…..article dated 2 September 2020…..

CEF to restructure both PetroSA and NECSA…..

In what appears to be the first serious attempt to organise and restructure the struggling state entity Central Energy Fund (CEF) and rescue what will now be branded as South Africa’s ‘national petroleum company’ in the form of PetroSA, Minister of Energy, Gwede Mantashe and the relatively new CEO of CEF, Dr Ishmael Poolo, faced a barrage of questions during their scheduled update to Parliament on the fortunes of the troubled group.  CEF appears to be handling two intensive recovery programme at the same time, including at last replacing a swathe of acting posts.

The  first, smaller programme will be the merger of the Nuclear Energy Corporation of South Africa (NECSA) with subsidiaries Pelchem and NTP Radioisotopes, for which a common board has now been established.   The programme includes a drive to return to profit recovering from the massive losses sustained by NECSA providing for a nuclear programme under the tenure-ship of Jacob Zuma’s presidency and which never materialised.

Project Inkwezi, remember?

The second recovery exercise is to sort out and re-build CEF’s entity, PetroSA, after its long-running saga of failure over the Mossel Bay gas-to-liquid venture.   Having had no CEO for 5 years and left to drift without any co-ordinated approach to the industry it was supposed to serve, PetroSA has been in the wilderness without a technical plan to re-establish its presence called for by Parliament for even longer.   Paralysis and ignorance on the part of successive ministers has also been to blame.

Involving billions of rands, the second issue is, by a long chalk, the most damaging to the national fiscus and although both matters are an acknowledged disgrace in terms of financial management, nobody in government, in this case both the Department of Mineral Resources and Energy (DMRE) and CEF, has come with a proper financial plan on the way forward or have been called to account for the mess.

CEF has also suffered SIU investigations into the illegal sale of oil stocks held by the national Strategic Fuel Fund (SFF), another of its entities, a numerous enquiries instigated by the Auditor General.

Top down

In inheriting the problems, Minister Gwede Mantashe has insisted that new management teams be found to head up not only CEF at the top but also for both NECSA and PetroSA in an attempt to bring fresh perspectives to the whole group.  This means, of course, that the Minister has also decided that both entities, NECSA and PetroSA, are to be saved  and this despite the enormous cumulative losses on the balance sheet of CEF.

Not only this, but he insists that the group moved into the black as a whole in the shortest time, but this is only made possible by the fact that it’s entities will have continue functionally bankrupt in the meanwhile.

In the case of NECSA, new appointments are about to be made, MPs were told.   In the case of PetroSA, CEF chairperson Dr Monde Mnyande announced earlier this year that Pragasen Naidoo had been appointed as CEO of what is now branded as the “new national oil company.”   Dr Mnyande said at the time that this move was the first step in “breathing new life in CEF”.    He said that more appointments would follow.

This month

In his first appearance before Parliament, the new CEO of CEF, Dr Ishmael Poolo and appointed by Dr Mnyande in May, told the Committee that a consortium of the three consultancies Mazars, Bayajula Services and US consultancy AT Kearney, are now contracted to assist CEF in the process of merging the entities of SFF and i-Gas into PetroSA.

On a second separate exercise of absorbing Pelchem and NTP Radioisotopes into NECSA, an announcement on the names of consultants to be used in this case would shortly occur, he said.

New Bill

A major refurbishing process was now being hastened in the case of PetroSA, Dr Pollo said, because of the advent of the Upstream Petroleum Resources Development Bill, the crux of which Bill was to allow for PetroSA to receive the benefits of “free carry” gas and petroleum exploration rights granted by the state, thereby fulfilling its mandate as the state’s contractual agent.

“Such a merger of interests, led by a strong PetroSA, would unlock the upstream petroleum economy”, Dr Pollo told MPs, “whilst also maximising the socio-economic benefits flowing from such arrangements and assisting the Minister in realising the state’s Integrated Resource Plan (IRP).”

Bare facts

In an earlier report back to MPs this year, CEF had confirmed that PetroSA had incurred losses totalling R20bn since 2014, mostly in its attempts to stave off shutting down Mossel Bay as a community in a downhill battle for additional gas for its gas-to-liquids refinery, which itself has also had a chequered production life.

Dr Pollo said that now PetroSA was currently producing at a rate of only 6,000 barrels per day, primarily due to shortages of gas from drilling and well operations in nearby coastal waters.    MPs were told by him that PetroSA’s headcount remained at the same level as it had been when producing at an earlier daily rate of 18,000 barrels. He drew attention to the fact that PetroSA was a relatively large company and it accounted for a large portion of CEF’s 1 800 employees.

Rescue plan

It was important for PetroSA to refurbish the refinery and upgrade its ability to take on more gas supplied as part of the overall plan for liquid fuels, Dr Poolo said, and the restructuring processes in respect of merging  SSF and i-Gas into one group was to start Sept. 1.   He said that CEF was exploring its options for either selling or finding a partner to assist with “the commercialisation” of the gas-to-liquid unit.

Dr Poolo concluded by telling MPs that he would return to Parliament in October and account to them on progress of the PetroSA stabilization programme.    During questions, labour issues immediately arose immediately because retrenchments would follow

Cold facts

The Minister said that PetroSA had three union movements involved and negotiations were underway regarding retrenchments which could not be avoided.  Only one of the three plants at Mossel Bay was operating and lay-offs were being limited to the smallest number possible, the unions “having acknowledged that over-staffing existed”. He had told unions that success with PetroSA would result in further employment at a future date.

Questions from both the EFF and DA concerned consultancy fees being paid.  Dr Poolo replied that on retrenchments, the internal teams had stated they were unable to be objective.  “Obviously they could not ‘self-amputate’ and consequently, for many other reasons as well, third party consultants were preferable” Dr Poolo confirmed that both SFF and i-Gas were viable units but that PetroSA was reporting a loss of R200m for 2019/2020.

Asset acquisitions

As to the future, MPs were told that both CEF and Sasol had indicated that talks on the sale of a stake in the Romco gas pipeline from Mozambique to South Africa were possible and discussions were well advanced.   Other assets of Sasol for sale were being considered as Sasol was offloading to raise cash.

Refurbishing the Mossel Bay refinery in order to be able to use liquid feedstock was also part of the restructuring considerations, Dr Poolo said, and CEF was further exploring its options to find a partner to assist with the commercialisation of the PetroSA gas-to-liquid unit.

New nucleus

On matters regarding the re-structuring at NECSA, David Nicholls, board chairperson, told MPs that an “appointment of an external service provider was imminent” in order to act as consultant in the process of merging Pelchem and NTP Radioisotopes into its parent body.  By eliminating the need for three boards and re-sizing, profitability would be seen sooner, he said

Nicholls added that in the short-term, losses of R239m in 2020-21 were projected bearing in mind that COVID-19 had cost an estimated R400m as a result of having on-board highly paid scientific experts but, nevertheless, the new NECSA was estimated to return to profitability in 2021-22, he felt.

He noted that in the meantime Pelchem was producing sanitisers in response to COVID-19 and that the Fund’s Ketlaphela Pharmaceuticals unit “was working hard toward the production of anti-retroviral medication at the soonest”.

DMRE tunes in

As the meeting progressed , a department of energy presence became evident as more members joined the meeting.  In a discussion on general energy matters, Tseliso Maqubela, Deputy DG, Petroleum and Petroleum Products Regulation, DMRE, was called upon to answer the question from MPs as to why the country had very recently “run short of diesel in such critical times”.

He told MPs that the reason was theft direct from the pipeline by “ a highly organised group”  in the Pretoria area, coupled with fuel unloading problems at the East London terminal due to a COVID-19 outbreak which had occurred.

In conclusion, Minister Mantashe, in answer to questions from Kevin Mileham (DA), committed DMRE to publishing an Integrated Energy Plan (IEP) before the end of the current parliamentary year. Mileham had pointed out that in terms of the Energy Act, a IEP was required from the ministry on an annual basis. Seven years had passed since the last energy plan and investors needed this.

Posted in Energy, Finance, economic, Fuel,oil,renewables, Public utilities, Trade & Industry, Transport0 Comments

Road Accident Fund stays as it was

……article dated 2 September…..

Parliament withdraws Bill making settlement changes…

The idea that MPs might be able to revitalize the Road Accident Fund (RAF) by changing the method of claims payments under a new Road Accident Benefit Scheme (RABS) Bill  has been dropped by the Parliamentary Committee on Transport.   The method envisaged, it has been decided, would massively increase costs against the national fuel levy which could not be tolerated, an increase which would have to be borne unfairly by the consumer.

Under the present Road Accident Fund claims system, compensation paid has amounted to as much as R11bn for the year 2019/20, way over its budget allocation; meaning that the Fund technically insolvent.  Currently reliant on Treasury bail outs, it forms part of Treasury’s major national debt worries.

No blame concept

A switch has been thought possible to a ‘no-blame’ pay out system in order to avoid much of the costly litigation in determining liability,  all of which processes have resulted over the years in a disproportionate amount of the funds in the RA Fund landing up with the litigators rather than the litigants, and lengthy delays in settlement of claims awaiting court outcomes.

However, as was strongly suspected would be the case this year, there has been even more strain upon funds because of COVID 19 budget claw backs by Treasury on Fund allocations, resulting in yet more pressure to investigate  further possibilities of a different system of the payment of claims.

Extended social plan

The possibility was tabled some months ago of introducing a regular social payment similar to a pension payment and this paid over a number of years as a planned annuity-type settlement. This it was thought would both improve the Fund’s cash flows and would help to avoid the bad habit of claimants of spending cash pay outs in one initial splurge. Some pointed out that it was not the job of government to run people’s lives.

The Bill has been sitting moribund on the Transport Committee’s agenda for well over a year, simply because no one was prepared to actually cost out what was envisaged as an enormously expensive system needed to effect the plan.   ANC MPs who had become extremely enthusiastic on the idea, baulked at the costs in the face of Treasury misgivings.  Now it has now been finally admitted by a majority vote that the costs of instituting such a system would be similar to running a small SOE all reliant on the national fuel levy, idea not sustainable.

Another idea wanted

DA’s Carl Hunsinger successfully moved this week a motion this week for the Bill to be withdrawn by the Speaker, but this move is accompanied by a suggestion that the Department of Transport go back to the office on the subject and urgently work out a way, as put by Hunsinger, “address the structural manner the way that the Fund operates and bring down costs”. Parliament, he said, wants an answer.

Parliament has called instead for a draft Bill rather amending the RAF Act and “provide a working system that the country can afford”.  Presumably the matter will be taken off the parliamentary agenda.

 

Basics at play

The Fund is managed through a Board and receives its revenue direct from SARS, collected from the fuel tax levy by them.   Technically, as established by the RAF Act, the Fund does not have share capital, is an entity is owned by the South African public.   It is listed as schedule 3 public body in accordance with the Public Finance Management Act.

 

Posted in Justice, constitutional, Transport0 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

Parliament approves new Border Management Authority

……article 20 June 2020…….

The road to Africa: six new border facilities….

Department of Home Affairs has briefed Parliament on the final plan for the construction of six new modern facilities at South Africa’s border posts, part of a major continental plan to improve cross border trade in the SADC region.  The focus at present is  on issues involving the movement of goods transported by road.  This is in the absence of common rail networks and the lack of development by Transnet in the region.

This month Minister of Home Affairs, Aaron Motsoaledi and Deputy Minister Njabulo Nzuza accompanied by Jackson McKay, the Home Affairs DG,  posted MPs of the Transport Committee on the latest position on development, a process which has until now been limping through both Parliament and the Department of Home Affairs for the last three years primarily due to changes in Cabinet, the difficulty of defining responsibilities between home affairs, treasury, public works,  defence, police and SARS.

Ideas on paper

However, the enthusiasm of the Department of Home Affairs (DHA) for the project remains undiminished, it seems.  Most in business agree to the concept but providing it improves delivery, eases trade and is as far as possible, corruption proof.   In addition, it is acknowledged by most  that fully computerised customs posts are a logical answer but implementing the work so far in this area by both home affairs and treasury needs careful handling, MPs have said

The co-ordination in external affairs of state between some seven SADC countries have added to the gargantuan task, this being now the  ladder to climb.

Officialdom

The Border Management Authority (BMA) Bill was proposed to Parliament in 2015 by the then Home Affairs minister, Malusi Gigaba, and at the time a strong suspicion was harboured by business and industry that the ulterior motives of the Bill’s tabling had much to do with the illness of state capture revelations at the time being exposed.

Many thoughts were expressed around accusations of “empire building” by DHA and the very thought of combining customs collection with immigration, complemented by adding defence and security, led to raised eyebrows amongst opposition MPs and some sections of industry.

It became apparent also that as early as 2013, MOUs were struck up between SAPS, SADNF and DHA, totally without the knowledge of Parliament on the staffing of a combined function to police borders, primarily with an aim of controlling immigration. These queries continued for the period that Gigaba was promoted to Minister of Finance by Zuma.

Hands of the money

Nevertheless, any idea of a further MOU between National Treasury and DHA was totally rejected by treasury officials. Within weeks of the Bill being first tabled in Parliament under the aegis of the Fifth Parliament, Ismail Momoniat of Treasury expressed the Minister of Finance’s view to MPs that any hopes that  DHA had of their new BMA staff  being involved with tax matters and customs dues would be rejected in its entirety.

At that point the Bill was still particularly loose and unacceptable as far as its wording was concerned  but it was still agreed by Parliament that, in a broader sense, trade corridors had to be improved.   Injected into the discussions during 2017 was Jacob Zuma’s eleventh cabinet change in the home affairs portfolio, past minister Ayanda Dlodlo, and as a person totally unaware of trade issue implications and the whole concept bogged down, beset as it was with refugee and immigration matters.

As time passed the task of opening up diplomatic and trade relationships in Africa seemed to become more evident. The project then fell to the now incumbent Minister Aaron Motsoaledi who has started pushing for better trade relationships and has begun forcing through the mechanics of trade mechanics and infrastructure.    With neighbouring relationships now coming to the fore under President Ramaphosa as African Union chair, to some extent SADC issues are looking up but still manacled by  economic collapse in both Zimbabwe and Mozambique.

Wasted years

The core of  ANC thinking, like so many other radical African movements, focuses but little in economic terms on international trade and relationships and  nowhere  in this area has this been more evident than in the total lacking of debate during parliamentary meetings.  No serious consideration of development on the subject of road and rail links in Southern Africa has arisen at all or any real focus on the development of port authority controls and handling facility development for anything other than domestic reasons.  Most SADC countries complain of Durban Port “bottlenecks”.

In the past, such matters were left to a crumbling Transnet and under Jacob Zuma this position deteriorated to its worst ever in the history of South Africa, but now, in 2019, the Bill was re-tabled in the new Parliament of Cyril Ramaphosa and the ever busy Minister Dr Aaron Motsoaledi seems to have rescued to some extent the situation, coupled with efforts by the Ministry of Tran

sport with the Economic Regulation of Transport Bill, aiming at pricing controls  and transport management, which Bill is being processed by the parliamentary transport committee.

Refugees under focus  

During the recent passage of the BMA Bill, DG of Home Affairs, Jackson Mackay,  gave it his  best in a presentation on the subject to MPs and one had to admire what has been achieved in such a negative environment.     As a result of this portfolio committee meeting, the concept is now officially approved by Parliament, with MPs now calling for regular updates on the new “one stop border posts”, or OSBs, which will be at Beitbridge, Lebombo, Maseru Bridge, Kopfontein, Ficksburg and Oshoek.

Jackson Mackay’s presentation was supported by the 2017173-page report developed by the Cross-Border Road Transport Agency (C-BRTA) which had provided a bench-marking exercise along the highly trafficked road transport corridors in the west and east Central African regions, all with a view of finding solutions to opening up trade movement to and from South Africa.

Essentially, the “challenges” established, Mackay said, were congestion, delays at borders, and long journey turnaround times, all of which reduced safety and high cost of doing business, such factors impeding inter-regional trade.    Also, trade between the partnering countries stands at only 12% of the economic potential of the region.  Urgent intervention was called for by the report, Mackay said, especially given the fact that cross-border road transport carries over 80% of the total goods that are traded in the region.

Conclusion

The report concluded that the status-quo cannot be left to perpetuate if SADC was to achieve its set socio-economic and developmental objectives without implementing the multilateral cross-border road transport arrangements.  This has now been achieved, MacKay said, in the form of the Border Management Authority, already partially staffed. Essential now is the transformation of  prioritised border posts into “One Stop Border Posts” (OSBs)  to address “the hard and soft infrastructure challenges experienced at commercial border posts along strategic regional corridors”.

DG MacKay said that South Africa currently had an extraordinary number of border points at 72 in all.   Fifty-three of these were on land, eleven airports and eight seaports. Six of these had been officially selected as OSBs and were all road border crossing.The idea is at these crossings transport of goods is no longer stopped twice as previously, once for each country, but only once by the BMA on behalf of both nations. A speedy and consolidated service is to be installed.

Public/private partnerships

MacKay closed with the news that the project had been was registered with National Treasury (NT) as a private-public sector partnership and five consortia had pre-qualified in 2018 tenders to construct the OSBs, Treasury having granted approval to commence the request for proposals.

Budgets are to be submitted to Treasury in the 2020/21 financial year, MacKay said, and that the developers of each port of entry would be appointed by the end of the financial year. The key principle in all planning was “traffic segmentation, where the plans would have separate lanes for cargo, freight, general cars and for vehicles that needed to have goods declared, all only once”.

SA and Zimbabwe had already started preparing an OSB procedure manual for operations on their mutual border, MacKay said, and agreement had been reached with Botswana.  Construction is to start 2022-2024 on all six ports of entry and “the concessionary period” of start-up operations would be in the years 2024-2044, he concluded.

 

 

Posted in cabinet, Police, Security,police,defence, Trade & Industry0 Comments

Warning shot fired over PPE stocks

….article July 20…..

Parliament slaps Treasury on PPE procurement……

Last week a corruption weary public learnt that Parliament’s Finance Standing Committee were as outraged as them on the subject of state PPE purchasing arrangements. The complaints started as case after case of cronyism was aired by the media picked up when the additional Supplementary Budget was being processed through Parliament at committee stage.

This furore was heightened by the appearance of  somewhat arrogant Zulu clansman found by the media who had allegedly  included himself in the R500m COVID 19 emergency relief allocation. It was subsequently reported that after finding out that his apparent initiative was unacceptable, he may have then sold his successful tender bid to another party for R80m.

King rat

The fact that the royal person told everybody that he was attempting to benefit his tribal responsibilities did not wash with anybody, according to press reports and interviews.   The case for his innocence was not helped after a TV interview with the smiling gentleman who seemed not to understand that his problem was that his daughter was spokesperson for the President.  When it came to tendering, he said he thought all persons were equal.

Thank goodness this was all exposed in time  but the whole affair struck the same chord with MPs that has being plaguing South Africa for years.  This same problem was illustrated again by ANC secretary general Ace Magashule who reasoned, when discovered dipping into the same PPE pot with the state, that his sons who had been named as part of a Free State PPE tender process, “had the right to participate in the economy as do any other persons and small businesses”.

As a result of these cases, MPs across party lines in Parliament have called upon Finance Minister, Tito Mboweni, and his Treasury officials to come back to Parliament and give the background on all COVID 19 disbursements and some idea of who is responsible for what and Treasury understands as the parameters for state tendering.  This will final stand off presumably will take place sometime after the short recess in September.

Accounting issue

Not that the President did anything wrong, nor National Treasury either, but it just seems that  month after month Treasury signs off money but has no idea of, or even responsibility for, what happens once the allocations are made.  MPs have complained that Treasury merely seems to call upon the Auditor General, one year later, in order to reconcile with an annual report, opposition parties complained.

In the first case, instead of landing up as part of the small business developmental process,  the award nearly went to a chief exercising grace upon his fiefdom which it appears to consist of some forty or fifty persons, it was reported.   On such subjects, Parliament got specifically involved again when the Finance Minister came to the point where he had to answer questions during the closing debate on the Special Adjustment Appropriation Budget Bill, which had allowed for all the COVID 19 funding in the first place.

Serious implications  

Whilst all of this has been rather  a slap in the face of Minister of Health Mkhize personally, it must also have been a shock for the Department  of Health as well, bearing in mind that the NHI scheme is supposed to have a centralised “transversal” procurement system in place in a few years’ time where such things cannot be allowed to happen.

Furthermore, the Ministry of Finance has been for years planning a Procurement Bill allowing for centralised purchasing  when the budget for a centralised computer system can be afforded, so Minister Mboweni may have got some inkling of what the problems will be when it comes to political interference being wielded amongst those apparently without a moral understanding of what is required in the case of government process.

Fired in anger

That the Covid-19 emergency provision, or officially the Adjustment Appropriation Budget, would be passed by the National Assembly was never in doubt.    It had to be passed.   But for the first reading of the Bill, the vote was 226 in favour with 129 against recorded as a token protest and consequently the Bill was carried through on the back of the ANC numbers in the House.

The Bill from Treasury, being a Money Bill, cannot be stopped by Parliament but a warning shot had therefore been fired at treasury officials and the Minister.

 

Posted in Finance, economic, Health, Public utilities, 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

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