National Lotteries Board: Chairperson selection and task team establishment

Meeting report

The Chairperson noted that the purpose of this meeting was to gain clarification on what criteria and legislation would be pertinent to the selection of a Chairperson for the National Lotteries Board (NLB or the Board) by the Committee.

Mr S Marais (DA) suggested that, as he had already nominated two disabled candidates, he not take part in the interviewing of other candidates to avoid any biased selections.

The Chairperson thanked Mr Marais for his honesty, but added that there was nothing in the legislation to preclude his nominations.

Response to issues around the selection of a Chairperson in terms of the Lotteries Act
Ms Koleka Beja, Parliamentary Legal Advisor, continued to respond to questions previously posed by the Committee.

She addressed whether the Committee had a legal role in the appointment or oversight of other board members. She noted that the Lotteries Act (the Act) did not specify any further oversight roles for the Committee beyond selection of the Chairperson. Oversight over the rest of the Board was a duty delegated to the Minister.

With regard to the term of office of the Chairperson, she noted that the Act did not specify terms of office for the Chairperson as distinct from the rest of the Board. Section 3(4) of the Act stated that a board member shall hold office for such a period not exceeding five years, though this was subject to renewal.

The Act was silent on whether the position of Chairperson was a full-time or part-time position. This meant that the normal rules of statutory interpretation would apply, and that mitigated or limited meanings would not be inferred. Thus, in the absence of any specification, it would be understood that the position would be full-time.  In addition, the fact that the only executive position on the Board was that of the Chairperson would also be consistent with the finding that this position should be full-time, whilst other Board positions would be part-time. She said that this should be clarified in the legislation.

On the issue of remuneration, she said Section 6 of the Act stated that members of the Board who were not in the service of the State may, in respect of their services, be paid such remuneration and allowances as were fixed by the Minister, in consultation with the Minister of Finance. Further subsections stated that remunerations and allowances may differ from other Board members based on their functions.

Members had asked whether the Act provided criteria for the Committee to use in the selection of a Chairperson, and whether the Committee could develop its own criteria. She noted that Section 3A simply required that the Chairperson be a person with applicable knowledge and experience with regard to matters connected with the function of the Board, as listed in Section 6. Therefore it would be difficult for the Committee to come up with its own criteria beyond demonstrable knowledge and experience as provided for in the Act.

She noted further that although the Committee was involved in the selection of a Chairperson, the Act did not provide for the Committee to be involved in removal or termination should the Chairperson not fulfil his or her function as set out in the Act. Section 3(5) of the Act empowered the Minister to terminate the membership of any member of the Board on various grounds, including misconduct and prolonged inability to perform necessary functions as a member of the Board. However, since Section 55 of the Constitution gave power to the National Assembly and its committees to maintain oversight over the exercise of national executive authority, including the implementation of legislation such as the Lotteries Act, there would be nothing precluding this Committee, if it was in possession of information showing that a Chairperson was not fulfilling his or her duties, to compel the Minister to take steps to discharge the Chairperson.

Members had questioned whether it was advisable for the Department of Trade and Industry to play a role as observers. She responded that this would not be problematic as the Act required the Committee to conduct this process in an open and transparent manner. Furthermore, Section 59 of the Constitution required the National Assembly, and by necessary implication its committees, to conduct its business in an open manner, unless excluding the public was reasonable and justifiable in an open and democratic society.

Discussion
Mr Marais suggested that he not take part in determining a short-list of candidates, and furthermore that if the candidates he had nominated were selected in the final list, he should also be exempt from discussions on that process.

Mr A van der Westhuizen (DA) then suggested, in order to further avoid any accusation of bias, that the Committee should not examine the CVs of the candidates until the criteria and questions to be used for compiling a short-list were finalised.

The Chairperson agreed, and said that this meeting should focus on determining an honest procedure and criteria.

Prof B Turok (ANC) then noted that there was a large quantity of money involved, which was of interest to many members of the public. The responsibilities of the Board and Chairperson were substantial. He suggested that a task team of two or three Committee members should be established to examine existing issues and legislation, and to provide specific recommendations and anticipate necessary amendments and regulations.

The Chairperson then asked whether the legal requirements of the Act in the selection of the Chairperson were closely comparable to the legal stipulations of other similar pieces of legislation in South Africa and abroad.

Ms Beja said that in the latest versions of the Broadcasting Act and the National Youth Development Agency Act, relevant Parliamentary Committees had a role in the appointment of all Board members, and in the case of the Broadcasting Act, they also had powers of removal.

Mr X Mabaso (ANC) asked, in the interest of informing the Committee’s actions, what the main objective of establishing the NLB was in the first place.

Ms Beja said that the main objective of establishing the NLB was for regulation.

The Chairperson said that some clarity on the purpose of the NLB could be ascertained by examining the functions of the Board as set out in the Act.

Mr Mabaso then asked what the respective strengths and weaknesses of the previous Board were.

Mr Mabaso further asked what public criticisms had emerged, and how might the Committee act in accordance with the public interest and opinion.

Mr Z Ntuli (ANC) asked who was responsible for the sorting and short-listing of candidates.

Ms Beja said that this Committee would be responsible for filtering the candidates for short-listing.

Mr van der Westhuizen noted that as there were a great number of applications, it would be impractical to invite all candidates for interview, and that therefore the Committee should develop categorical desktop criteria to in order to make initial eliminations.

He said further that the duties of the Board Chairperson would be greater than those outlined in the Act, which only dealt with the functions of the Lotteries Board. The Chairperson, for example, would need to have the ability to lead meetings, critically examine reports, understand legal processes, and follow the duty to act in an open and transparent manner. Therefore the selection criteria must be augmented.

Ms Beja said that the Committee was not limited to asking candidates questions about the function of the Board, but were free to ask questions relating to their broader responsibilities as well.

Ms Margot Herling, Parliamentary Content Advisor, added that the criteria used for the selection of the Chairperson would be built on the specifications of the Act and vacancy advertisement.

Mr Marais further noted that a Chairperson must have a certain level of empathy and understanding as to how organisations applying for funding would use the money they had requested.

Mr S Njikelana (ANC) asked whether there were any regulations to the Act.

Ms Beja noted that Sections 60 and 61 of the Act empowered the Minister to make regulations relating to the national lottery and sports pool, and set out the responsibility for the appointment of distribution agencies.

Mr Njikelana asked why the Committee was limited to the selection of just the Chairperson of the Lottery Board, and why it was not involved in the selection of other Boards. He also asked what the judicial functions of the full-time executive Chairperson were, and whether that Chairperson would be bound by any preference management arrangements.

Ms Beja said that the Act did not provide for preference management arrangements, and at this was not supported by any precedent, except in cases where the Chairperson had neglected his or her duties. Performance was managed simply by the threat of termination.

The Chairperson requested clarification on Section 10C of the Lotteries Act, which dealt with the administration of funds held in trust after deductions were made for operational costs. Specifically, he asked who was in charge of the disbursement of funds from the trust, and what powers of allocation the Chairperson had to determine how much, when, and through what agency money would be allotted. She further asked how applications for funds were examined.

The Chairperson asked whether social responsibility criteria exist as regulatory devices, or as something else which was not explicit.

Mr L Mahlang, Parliamentary Researcher, said that the Board was responsible for establishing an administration, a management and distribution agent.

Mr Marais said that the lottery distribution trust fund was administered under a separate Act. The distribution agency was appointed as a responsibility of the trust fund, with the Board members as trustees.

The Chairperson then asked Ms Beja and the Committee Secretary, Mr Andre Hermans, what the deadline was for sorting the applications.

Ms Beja said there was no explicit deadline in the Act, and that its establishment was contingent on a decision by the Minister.

Mr Marais noted that the new Board would be expected to take over from 1 January 2010

Mr van der Westhuizen said the Committee must finish its selection process before November, to give the Minister sufficient time to make appropriate selections for the Board, which would likely be contingent on who was selected as Chairperson.

Mr Hermans said the Committee had the power to determine the timeframe for the process within the constraints of the final deadline of 1 January 2010. An examination of the Committee programme would need to be made to determine how to make the necessary adjustments to fit in the process.
The Chairperson added that the term of office for the current Board ended on 2 December 2009.

Prof Turok reminded the Committee of the protracted legal battles which occurred last year over the distribution function of the Chairperson, and urged caution in the selection of the Chairperson.

Prof Turok asked what percentage of the fund would be allocated to government through the Reconstruction and Development Programme (RDP) fund.

Mr Mahlang said that since 2008, the RDP had not been earmarked for lottery fund allocation, that that this was distributed to arts, sports and charities.

Prof Turok emphasized the importance of establishing a task team, and offered his personal documentation for the Committee’s use.

Mr Marais noted that the Act before the Committee was not latest version of the legislation.

The Chairperson, after consulting with Ms Beja and Mr Hermans, agreed that the copy before the Committee was indeed outdated, and requested that the latest version be distributed to Committee as soon as possible. She then noted that some questions would be dealt with by this meeting, but others would be determined by the task team to be established at the end of the meeting.

Mr van der Westhuizen said that it was important that the Chairperson’s contract be written with a good deal of insight into that person’s duties. Much criticism that was levelled at Government claimed that individuals occupying senior positions were ill-equipped to meet their responsibilities. It was important that the Chairperson selected must be well positioned to make other well informed appointments, to avoid the potential of the Chairperson becoming not accountable.

Mr Marais noted that the advertisement called for candidates for the Board, and did not specify candidates for Chairperson. It was likely that many of the applicants were applying only for general Board positions rather than for the position of Chairperson.

Mr Njikelana hoped that some clear and consistent policy guidelines would be established on the relationship between the Committee and the selection and removal of Board members. He also said that if the Lotteries Board was so large that it required a full-time Chair, then there must be effective market incentives to ensure the efficient functioning of that Chair, otherwise the offices of the Chief Executive Officer (CEO) of the Board must be augmented.

Prof Turok said it was important to recognize that there were three main levels of function which required different considerations; namely the board, the CEO, and the distribution agencies.  The first prerogative for the Committee would be the establishment of a task team whose recommendations would guide the selection of a Chairperson, and it was imperative that the Chairperson understand the policy implications of fund allocation. Since the original purpose of the Act was to end peripheral and informal gambling, this must inform the Committee’s decisions.

Ms P Lebenya (IFP) agreed that the Chairperson must be full-time in order to meet his or her multifarious responsibilities, and that the degree to which a candidate would be available to meet these responsibilities could be ascertained during the interview process.
She said it was unfortunate that the Committee, which was responsible for selecting the Chairperson and therefore deciding upon the necessary criteria for selection, was not involved in the publishing of the vacancy advertisement. It was necessary to re-evaluate the Act in order to rectify this and other issues.

The Chairperson noted that the legislation and requirements of the Committee in appointing the Chairperson were more complex than initially anticipated. During this process a number of weak areas had been identified.

She proposed the establishment of a task team, to be supported by the parliamentary research staff, who should study the matter further and report back to the Committee within a week.

The Committee agreed to this proposal.

The Chairperson then proposed that the Committee establish the terms of reference for the task team, and Members also agreed to this.

Mr Mabaso suggested that the task-team study the relative success and failures of the previous Board.

Mr Marais suggested that conflicts in legislation pertaining to the appointment of board members and the Chairperson, and the potential for amendments, be noted by the team.

Mr van der Westhuizen suggested that the Committee establish what was the position of the Minister as to whether there was time for the legislation to be amended, and asked whether the decisions of the Committee were binding on the Minister.

Mr Ntuli suggested that the task-team be given a mandate to establish what criteria would be appropriate to use in screening candidates.

The Chairperson suggested that the task-team also establish whether amendments might be effected before the selection of the Chairperson, and to establish clearly what the time constraints before the Committee were.

Mr Marais noted that in the corporate environment, the Chairperson would be selected after appointment of the Board, and that it was strange that in this case the Chairperson be selected before the Board.

Mr Njikelana suggested that the task-team should facilitate the process of short-listing.

Mr Mabaso suggested that the task-team give close consideration to public opinion.

The Chairperson then suggested that the task-team comprise only three members.

The Committee agreed to appoint Mr Njikelana, Mr van der Westhuizen and Ms Lebenya to comprise a multi-party task team.

The Chairperson noted that the Committee would expect at least a brief report by the newly established task-team by 23 September.

Mr van der Westhuizen suggested that before the Committee start the short-listing process, the task-team first establish criteria.

The Chairperson agreed, noting that prior to the short listing process he task team would need to examine a series of other issues, including whether there would be time to amend the legislation.

The meeting was adjourned.