Pebble Bed Modular Reactor (Pty) Ltd 2008/09 Annual Report; Transnet Second Defined Pension Benefit Fund: briefing

Meeting report

The Chairperson asked the Pebble Bed Modular Reactor (Pty) Ltd why they had tabled their Annual Report in Parliament so late. The issue of delayed submission of Annual reports had to be a thing of the past. The Money Bill Amendment Procedure and Related Matters Act gave Parliament the right to amend the budget. This gave Parliament an enormous amount of responsibility, as there were a lot of factors that had to be taken into consideration when amending the budget. Annual Reports could not be submitted late to Parliament anymore, as it delayed the approval of the entire budget for Departments and entities.

Mr Alex Tsela, Acting Chief Executive Officer: Pebble Bed Modular Reactor (PBMR), replied that PBMR submitted its Annual Report on 17 December 2009 and it was tabled by Parliament on 4 January 2010.

The Chairperson asked if PBMR meant that they had submitted to Parliament or to the Minister.

Ms Lynette Milne, PBMR Chief Financial Officer, answered that PBMR submitted 800 copies of the Annual Report to Parliament on 17 December. PBMR was a Schedule Two Public Entity, therefore in terms of the Public Finance Management Act (PFMA), they were prescribed to submit their Annual Report by 31 August 2009. PBMR submitted their Annual Report four months late. PBMR had requested an extension for the submission of the Report because it was a global private and public partnership and were in the process of accepting an award from the United States Department of Energy for a contract. Last year, in August, independent audits were conducted by KPMG. The audits showed that KPMG could not give PBMR a clean, unqualified audit report. It was important for the company to have a clean, unqualified independent audit report. In December 2009, the PBMR board accepted and adopted a financial policy, which enabled them to release a clean audit report without a qualification so that PBMR could submit their Annual Report to Parliament. The financial policy that was adopted said that the directors of PBMR undertook to curtail all expenses and commitments so they could “meet” the available cash resource needs. In terms of the financial statement that tested the going concern, which is what KPMG would have done, they needed to ensure that PBMR had sufficient funding for twelve months from date of “signature” in the audit report. For this technical reason, the board demonstrated that PBMR had sufficient funding for twelve months. PBMR received an unqualified audit report on this basis and the Annual Report was submitted to Parliament.

The Chairperson stated that PBMR submitted their Annual Report four months late. She clarified that the reason for late submission was because PBMR was a global private and public partnership. The Chairperson did not know of any section in the PFMA that said that an entity that saw itself as a “global private and public partnership” had the right to delay tabling its Annual Report.

Ms Borman noted that Ms Milne had said that PBMR needed a year’s funding before they could submit an unqualified report. She asked if they had submitted after they received funding from overseas.

Mr P van Dalen (DA) wondered if it was normal practice for entities to delay submitting their Annual Report if they thought they would receive a qualified report. The cut-off date for submissions was there for a reason. Entities had to submit their annual reports regardless of whether they were going to receive a qualified audit.

Mr S van Dyk (DA) stated that the Minister had said that PBMR needed an extension because they did not want to submit a qualified audit report. They were looking for international funding so they could receive an unqualified report. He asked if PBMR received the international funding and if this was the main reason for the delay. If they received foreign investment, from whom did they get it?

The Chairperson did not understand what grappling for funds for the future had to do with accounting for funds that PBMR was given in the outgoing financial year. This was what Members were struggling to understand.

Ms Milne addressed all the comments and questions from Members. She agreed that the PFMA did not allow institutions like PBMR to submit their Annual Report late. It was the first time that PBMR submitted late. The only reason that PBMR submitted late was due to funding constraints. According to the PFMA, PBMR did not have the authority to raise funding in the foreign market. However, this was not about raising money in the foreign market, it was primarily about participation in a contract awarded by the US Department of Energy. The total sum of the contract amounted to $40 billion and PBMR had the opportunity to participate in a consortium with Westinghouse and the Shaw Group for at least 50% of that money. PBMR had the skills, competence and capability to take up 50% of the amount awarded to the consortium. The amount of revenue that PBMR would receive from the contract was approximately $10 million. This was included in the budget for the coming year. KPMG’s concern was to ensure that PBMR had sufficient funding. The big change that happened between August and December 2009 was that PBMR’s board decided to streamline and rationalise the business of PBMR. They were considering large-scale retrenchment, and the extent of the retrenchments could be up to 75% of the number of employees at PBMR.

The Chairperson interrupted Ms Milne’s reply, saying that the Committee would come back to the issue. However, she wanted to express the Committee’s discomfort with the situation. The Committee did not understand, nor did they accept PBMR’s explanation for the delay in submitting their Annual Report. This had to be avoided in the future.

Mr G Koornhof (ANC) added that the Committee wanted PBMR’s reasons for the delay to see if they were in sync with reasons given by the Minister. The Committee could not accept that the reason was because PBMR wanted to avoid having a qualified report. This was a sufficient reason to delay submitting their Annual Report. It was more acceptable to say that PBMR was suffering from funding constraints and could not meet its expenditure commitments.

The Chairperson said that the Committee did not need the details; they just wanted entities to have the decency to inform Parliament as a matter of record. She found the matter to be irritating, disturbing and condescending.

Pebble Bed Modular Reactor (Pty) Ltd briefing
Mr Alex Tsela, Acting Chief Executive Officer, highlighted some points from the 2008/09 Annual Report. He stated that PBMR had received an unqualified audit report and mentioned ten highlights for the year including their cost cutting measures, nuclear licensing and progress on the DPP200 Reactor Design.

PBMR focused on their performance against their strategic objectives. The first objective was to select a near-term product configuration based on customer requirements. The PBMR board approved the indirect Rankine cycle for the PBMR-200 Demonstration Power Plant (PBMR -200 DPP) for electricity and processed heat. PBMR wanted to develop an affordable business case and financial model to retain existing investors and attract new investors. A corporate plan was approved by the board in May 2009. PBMR wanted to establish a sustainable, affordable funding model in support of the business of PBMR. The PBMR board approved a business plan and funding model. The government supported the plan but there were financial challenges. PBMR then had extensive consultations with stakeholders and drafted a new shareholders agreement with the DPE. Another strategic objective was for PBMR to partner /collaborate internationally to ensure the commercialisation of the pebble bed technology. The New Generation Nuclear Plant (NGNP) Alliance submitted a bid to the United States Department of Energy based on PBMR’s new product configuration. The last objective was to develop a consortium of customers made up of high-end energy users in South Africa with the aim of evolving into a programme similar to the United States NGNP. Sasol and PetroSA have accepted PBMR’s invitation to join the PBMR customer support group. PBMR would continue to establish and formalise the role of Eskom and Necsa in the consortium.

In terms of technology development, six SA universities and the South African Nuclear Energy Corporation (NECSA) were participating in various research activities to further the technologies required to keep PBMR at the forefront of nuclear reactor development in the future. PBMR was one of the largest and most efficient programmes by any company in SA.

Ms Lynette Milne, Chief Financial Officer: PBMR, discussed corporate governance within PBMR. PBMR’s investors comprised of the South African government, Westinghouse Electric Company, the Industrial Development Corporation (IDC) of South Africa, and Eskom. PBMR’s stakeholders include the Departments of Science and Technology, Water and Environmental Affairs, Trade and Industry, Public Enterprises, Energy, Labour, International Relations and Cooperation and National Treasury, The DPE performed oversight on PBMR. PBMR was accountable to its investors.

Ms Milne focused on employment equity. The skills profile showed that 596 (70%) of the 851 employees at PBMR were engineers, scientists and technologists. Black employees made up 41% of the company. PBMR aimed to increase this figure to 53%. Women made up 32% of the company. PBMR aimed to improve this figure to 35%. In the 2008/09 financial year, 55% of those that were newly employed were black.

The financial information showed PBMR had received R8.7 billion since inception in 1999 until 2010 when the South African government would be cutting PBMR’s funding drastically. Most of the funds were spent on remuneration, corporate costs and the DPP. In 2008/09, PBMR had a budget of R2 586 860 000. Only R1 847 925 000 was actually spent. From 1 April 2009 to 31 March 2010, PBMR had received R1 524 000 000 from the South African government. Investors such as the IDC, Eskom, Westinghouse and Excelon did not contribute any funds for that year. PBMR was awarded a contract with the US Department of Energy NGNP programme. The value of the programme amounted to $40 billion. The contract looked at a nuclear heat supply system, a steam plant and a Balance of Plant (BoP). The PBMR would also be involved in licensing and regulatory functions.

The PBMR was valuable as it contributed to the advancement of science and technology, the local nuclear industry development, social and economic transformation, growth and development, and intellectual property (IP).

Mr Tsela gave the Committee an update on current events, saying that the PBMR board had adopted a financial policy in December 2009 that would curtail expenditure and commit to meeting available resource needs. PBMR would be participating in the first phase of the US Department of Energy’s NGNP. With the approval of the Minister of Public Enterprises, the PBMR Board would be contemplating large scale retrenchments and were currently in consultation with employees in accordance with the Labour Relations Act. PBMR would use existing cash resources to fund the operating costs and closure costs from 1 December 2010 to March 2011

Some of the new objectives would include protecting the IP for the government and existing investors, retaining core skills and know how, reducing current staffing levels to 237, attracting new investors, and securing funding from existing investors.

Discussion
The Chairperson noted that PBMR had not said anything about the resignation of their CEO, Mr Jaco Kriek. She found the situation very worrying. A lot of the time, the Committee had to hear about resignations and appointments in the DPE and its associated entities through the media.

Mr Gert Gous, Chairman: Audit, Risk and Finance Committee in PBMR, apologised for not adequately communicating the situation to Parliament. PBMR had an executive team of eleven people. The board had gone through a very serious and thorough investigation during the last month and realised that it needed to start a consultation process with colleagues to discuss rationalisation of the company. They also realised they would not be able to proceed with an executive team of eleven people and that the team might have to be brought down to three people. During consultations, discussions were held with Mr Kriek and it was mutually agreed that he would depart. However, Mr Kriek would help PBMR with their new executive team for the next few weeks.

Mr Chris Forlee, Deputy Director-General: Energy and Broadband (DPE), stated that the Department was not involved in the CEO’s resignation. This would have happened at the level of the Minister and the PBMR Board. In terms of rationalisation of the company, the DPE was setting up an oversight panel to oversee the process and what was being done to retain certain skills. From a shareholder’s perspective, the DPE was happy with the mix of skills that PBMR was keeping and the objectives that they had set.

The Chairperson said that the Committee was still very disturbed that PBMR had not communicated Mr Kriek’s resignation to Parliament.

Dr M Oriani-Ambrosini (IFP) said that PBMR’s purpose was to build the country a nuclear plant that would provide people with nuclear energy. The presentation showed that the company was now producing technology and possibly, nuclear fuel. These would be supplied to another company in the private sector, which would then build and operate a nuclear plant that would provide nuclear energy. He understood, from the presentation, that this would happen only in 2024. He was concerned that the process had been hijacked by the interventions from Westinghouse who was bringing the project in to compliance with standard procedures and timeframes in the US. Did he understand the situation correctly? If he were correct, how long would the government have to carry PBMR, and at what cost? He wondered if the project would ever become self-sustainable. PBMR had spent 12% of its budget since its inception on corporate costs. This amounted to R1 billion. He asked for what the money was actually used.

Mr Twela replied that the PBMR’s original intention was to build a nuclear plant. Now, PBMR was involved in designing, licensing and fuel. When PBMR looked at the market, they realised there was a need to broaden their scope. There was also an understanding that PBMR had to address their financial constraints. It was this funding constraint that made the company think about what they could do other than producing nuclear energy.

Ms Milne addressed the question on how long and at what cost the government would have to carry PBMR. She replied that PBMR had had a re-look at the funding model. The company could not seek funds internationally, as it was not viable in the stage that they were in currently. PBMR still hoped to build the first commercial reactor for pebble bed technology in South Africa. PBMR would have liked to capitalise on all the contributions that were made to PBMR. The South African government had 81% of the shares in PBMR, 5% of the shares were held by the Industrial Development Corporation (IDC), 10% were held by Eskom and the rest by Westinghouse in the US. PBMR wanted to ensure that the government protected and owned all the intellectual property through a golden share in the shareholder agreement. Then, they wanted to dilute government’s stake in PBMR because there would be sufficient control through the PFMA and the golden share to introduce more investment into PBMR.

Ms Milne said that the 12% for corporate costs consisted of IT costs, rental, licensing fees and everything else needed for the design of PBMR’s product. These costs were benchmarked to other companies. PMBR checked these costs thoroughly to ensure that they achieved efficiency in all operations.

Mr van Dalen asked if the restructuring of the funding model had been going to happen anyway or if it was because the Minister was “drawing a line” through PBMR. Why did PBMR not do this before? He noted that PBMR did not say much about the Energy Intensive User Group (EIUG), which consisted of 38 large companies that used approximately 60% of the energy in the country. He asked if they were cooperating with PBMR and if there was any incentive for them to cooperate with PBMR since they received electricity below cost price. He asked why private investors stopped investing in PBMR in 2007.

Ms Milne replied that not all of the investors had pulled out. It was only Excelon that pulled out for its own reasons.

The Chairperson said that the EIUG question should be answered by the DPE and the Minister. DPE would have to email the information to the Committee. It was an interesting issue that the Committee would keep engaging on.

Mr Tsela added that PBMR had engaged with the entities and when they saw the business model that was presented, most of them wanted to come on board and participate in a consortium. 

Mr Koornhof noted that the presentation spoke of the realignment of PMBRs business and their product so that they could become a nuclear engineering company. PBMR said that this plan could not work without the support of the South African government, even though they had support from their stakeholders and investors. PBMR also indicated that on 31 March 2010, the financial support from the government would come to an end. He asked how PBMR would address its financial ability so that it could proceed with its mandate. The presentation also spoke of various shareholder agreements. Were all the shareholder agreements in place? He noted that one of PBMR’s directors had a 20% attendance record at board meetings. This person was also a chairperson for one of PBMR’s committees. Her attendance at this committee was 50%. Was this person still a director and what were the reasons for her low attendance?

Ms Milne replied that PBMR continually spoke of the strategic support from the government because they had to be able to “unlock and leverage off” the value that PBMR had created to date. A partnership between PBMR and the government was very important.

Mr Forlee added that it was a difficult situation. There was no more money coming from the fiscus and there was the realisation that more funds were needed for the projects of PBMR to come to fruition.

Mr Tsela replied that the shareholder agreements were still being discussed and finalised. He added that the director had resigned because she could not attend most of the meetings due to time constraints.

Ms Borman asked if there was a timeframe in which PBMR would appoint a new CEO. How was PBMR going to reduce the number of executive members to three? She noted a lack of female representation in PBMR’s board and executive members.

Mr Tsela replied that the timeframe for finding a CEO was “transitional”. The understanding from the Board was that when they figured out where exactly PBMR was going, the process would be initiated and a CEO would be appointed.

The Chairperson stated that it was not fair to let Mr Tsela answer the question.

Mr Gous answered that PBMR was going through the processes and working closely with the DPE. It would be a matter of months. The board predicted that it would take between three and six months to appoint a new CEO. The appointment would depend on the outcome of consultations with the DPE.

The Chairperson stated that the Committee would watch over the processes with a ”hawk’s eye”. She hoped the processes would not take too long.

Mr M Nhanha (COPE) asked what the total cost was of retrenching approximately 75% of the staff. He imagined that there would be severance and retrenchment packages. Were there plans to ensure that the 600 retrenched staff were kept in the system? These people had been trained to have special skills and could be snatched up by competitors in foreign lands.

Ms Milne answered that the rationalisation of the PBMR was included in the budget for the following year. They were looking at severance packages and the notice that had to be given in terms of the Labour Relations Act. The Act guided PBMR in the provisions that were made. The company was still looking at their options. The retrenchments would cost PBMR approximately R55 million overall. 

The Chairperson stated that only R55 million for the 600 people that would be retrenched seemed incomprehensible and disproportionate. It was too little money. She stated that it would go on record as a “tentative” figure.

Ms Milne agreed, saying PBMR would forward the Committee a written explanation for the figure. 

Mr van Dalen noted that eight of the eleven Executive Directors were leaving PBMR. Their severance packages should amount to approximately R12 million. This showed that the R55 million set aside for the 600 retrenched workers was too little.

The Chairperson added that PBMR could have miscalculated. The Committee would view the R55 million as a preliminary figure. PBMR had to forward to the Committee a skill retention plan for workers that were being retrenched.

Mr C Gololo (ANC) asked how PBMR’s financial constraints were affecting its employees. Were there plans in the future to retrench more employees? He congratulated PBMR on being awarded the contract from the US.

Mr Twela replied that it was a very difficult time for PBMR and its employees. It was not an easy time for the board members as well. It was difficult to walk in the corridors of PBMR and see people who were unsure of whether they were going to be retrenched. A proposal was tabled with the employees. Some employees were represented by unions. There was currently a consultation process to look at options and alternatives that employees had raised, which they thought PBMR could consider. The board has formed a restructuring sub-committee to discuss, on a weekly basis, what was happening. 

Mr van Dyk stated that PBMR was a long term project and that energy initiatives took between 30-50 years. He noted that PBMR would only deliver 165 megawatts by 2015. Coal power stations delivered approximately 4000 megawatts. The government had already invested billions of Rands into PBMR. He asked if 165 megawatts in 2015 would be a reality or if the country had to wait another 30-50 years for further development. He noted that eleven executive managers received a total salary of almost R23 million per annum. He asked if this was the going rate in the public enterprises sector or if the salaries were determined by PBMR internally. What was the basis for paying these employees almost R2 million each per annum?

Mr Gous answered that the salaries were in line with DPE guidelines. Part of the R23 million were payments made in respect of the previous year. Although the figure looked high, PBMR thought that the employees were fairly remunerated because of the expertise they brought to the company. 

The Chairperson addressed the resignation of Mr Kriek. Mr Kriek was on record as saying that he came to PBMR not knowing anything about nuclear technology, but he now had an immense amount of knowledge about it. The government spent billions of Rands on PBMR and they employed a CEO that did not know anything about nuclear technology. After years of gaining knowledge of the subject, he could say that he was now internationally competent. A lot of resources and funds were used to train the CEO, who knew nothing about nuclear technology. At the end of the day he was allowed to exit the company regardless of the amount of money that was taken from taxpayers and spent on him. She asked if PBMR knew where he was headed with the expertise that the government had given him. She knew that PBMR wanted to guard their Intellectual Property. This was correct; they had to safeguard their national interests. The proposed workshop with the shareholders would address this issue. She noted that some PBMR employees were going to be retrenched. The first people that were usually retrenched happened to be historically disenfranchised and marginalised black people. She wondered how the four-month delay in submitting the 2008/09 Annual Report would impact on the 2009/10 submission.

Mr Gous replied that the PBMR Board had started a consultation process weeks before concerning the rationalisation of the company. Mr Kriek was included in the consultations. There were discussions with him about the new face of the company, the revised workings and strategies going forward and how the company would shrink due to 75% of the employees being retrenched. Through these discussions and consultations, it was mutually agreed that Mr Kriek would resign. PBMR did not know where Mr Kriek would be going to and they did not know of any jobs offered to him, locally or abroad. The PBMR board had a lot of respect for Mr Kriek and for his abilities as a professional manager. He was not a nuclear physicist and with his departure, PBMR would not lose any nuclear or IP skills.

Regarding retrenchments, employment equity in terms of both race and gender was very important to the board. It was an important consideration in who stayed and who would be retrenched. It was a very important balance that had to be maintained. PBMR went out of its way to ensure that they were represented by the historically disadvantaged.

PBMR would not submit their Annual Report late again. The fact that the 2008/09 Annual Report was four months late did not mean that the next Report would be late. He assured Members that the 2009/10 Annual report would be submitted before the end of August.

The Chairperson asked if the Committee should hold a workshop about PBMR with PBMR shareholders.

Dr Oriani-Ambrosini stated that the Committee was trapped in a contradiction as the Minister of Public Enterprises and the Portfolio Committee on Public Enterprises were not the policy makers in this situation. The Minister of Energy and the Portfolio Committee on Energy were the policy makers. Members needed to be sensitive to the fact that PBMR was an international joint venture. What would be said at the workshop should not be perceived as counter-productive to what PBMR wanted to project to their partners and future investors. The Committee needed guidance regarding the workshop so that they did not upset shareholders and investors.

The Chairperson agreed. However, she said that when she spoke of “shareholders”, she was talking about the government in its entirety including some departments such as the DPE and the Department of Energy, the Ministry and other entities such as Eskom. The Committee would host the workshop. She asked if any of the Members would second her proposal.

Mr Nhanha seconded the proposal.

The Chairperson stated that the Committee would hold the workshop cognisant of following the proper processes.

Ms Milne thought the workshop was very important as Members would then be able to understand PBMR’s value.

Mr Twela stated that there were some questions that PBMR could not answer quickly. They would forward the answers to the Committee.

The Chairperson stated that PBMR had three weeks to forward the answers to the Committee.
 
Briefing on Transnet Second Defined Pension Benefit Fund
Mr Eric Boskati, the Committee Researcher, briefed the Committee on Transnet’s Pension Benefit Fund and the concerns raised by pensioners. Prior to 1990, Transnet had the Railways and Harbours Pension Fund for Black employees and the Railways and Harbours Superannuation Fund for white employees. In 1990 the funds were merged into the Transnet Pension Fund which was established under the Transnet Pension Fund Act of 1990 (Act 62 of 1990). The Transnet Pension Fund was a defined benefit fund which meant that Transnet would guarantee, upfront, the amount of the pension benefit that an employee would receive on retirement.

Prior to the merger the two pension funds were controlled by the state and had an actuarial deficit of R17.1 billion. Following the merger, Transnet’s Board, the Board of Trustees of the Pension Fund and the fund actuaries agreed to settle the deficit. This commitment was not fulfilled. In 2000, the Transnet Pension Fund Act was amended in order to split the Transnet Pension Fund into the Transnet Retirement Fund for members who did not want to become members of a defined benefit funds, the Transnet Second Defined Benefit Fund (TSDBF) for all members who retired prior to 1 November 2000, and the Transnet Pension Fund for workers who retired after 1 April 2000.

The Transnet Fund Amendment Act (Act 41 of 2000) made provision for a statutory annual increase of 2%. Pensioners viewed this 2% statutory increase as the result of poor management of the fund in the past. They thought that if the deficit was settled, the increase would have been able to adjust to the inflation ratio. The 2% mandatory increase could be amended by the Board of Trustees of the TSDBF with the approval of Transnet provided that such an amendment was also approved by the relevant Minister with the concurrence of the Minister of Finance.

In 2001 Transnet proposed that the Board of Trustees cancel the Fund’s T011 bonds in return for a trust holding 75 million MTN shares. By January 2006 the MTN investment had realised R5 billion in cash for the TSDBF. Sadly though, pensioner entitlements were never affected by this transaction. These entitlements, according to Transnet’s then Chief Financial Officer, Mr Chris Wells, were determined by the rules of the fund and not by the funding position of the fund. In his opinion pensioners of the TSDBF received more than what was due to them in terms of the rules of the fund. Also, Transnet had a 26% shareholding in the V&A Waterfront and Transnet’s Second Defined Pension Fund also had 43.6% shareholding. Transnet had agreed to sell Cape Town’s V&A Waterfront for R7.04 billion rand (cash) on 18 September 2006 as part of the entity’s restructuring process to focus on logistics and rail. The pensioners’ entitlements were once again not affected by the transaction as the rule again stipulated only a 2% increase annually.

The pensioners had used every avenue available to raise their concerns in the hope that the matter would be resolved and an amendment to increase the 2% would be made. They had brought the matter before all the relevant role players namely, Parliament, the Ministry and Transnet without any success and to date the matter remained unresolved.

Mr Boskati recommended that the Board of Trustees of Transnet’s Second Defined Benefit Fund, Transnet as well as the delegation representing the pensioners would need to appear before the Committee to give clarity on the matter as well as the financial implications of the proposed amendment to the 2% statutory increase of the fund.

Discussion
Mr van Dyk stated that there were always time constraints and this was a matter that needed to be attended to urgently. He proposed that the Committee appoint a small working committee that would include at least one Member from each political party. The working committee could gather for ten minutes either before or after Committee meetings to discuss the Fund with the Committee Researcher and the Legal Adviser. In the mean time, the Committee could familiarise itself with the document presented by the Researcher. He suggested that the Legal Adviser, Ms Zuraya Adhikari, give Members a presentation on matters regarding the Fund from a legal perspective. This could happen on 13 April 2010 when Members returned from their constituency period. The working committee could come back to the Committee on 20 April 2010 with a presentation on the recommendations made by the Researcher that the trustees, Transnet, the actuaries and members of the Fund should address the Committee. This should happen before the end of May. The whole matter should be finalised before the end of October.

Ms Borman stated that it was a shame that the matter had gone on for so long, as it was an important issue that needed to be resolved. She welcomed the proposal from Mr van Dyk. She asked Ms Adhikari if the matter could be rectified by amending the Transnet Pension Fund Act.

Ms Adhikari replied that she had prepared a process document assuming that the Committee would choose the legislative amendment route. She also had a rough framework document that spoke to all of the rules of the National Assembly to which the Committee had to adhere. What was lacking in the recommendations was what the Minister of Finance's role would be in the matter.

Mr Koornhof welcomed the proposal from Mr van Dyk. He noted that Mr Boskati's proposal included a few delegations. These were the Board of Trustees, Transnet, the pensioners, the legal representatives of Parliament and the actuaries. The meeting with the delegations would become a hearing in a sense, as legal documents would be prepared. The meeting would consider the legal implications as well as the financial implications of the proposal.

The Chairperson agreed that a specialised working committee should be appointed. Another meeting should be held to address the way in which they would handle the matter. The pensioners had been given a “raw deal” and she was concerned that the legislative route would take a very long time to resolve their plight. The Committee also had to look at other ways they could resolve the matter. Her other concern was that the Committee was addressing a closed benefit. She did not know what the legal implications were for dealing with a closed benefit.

Mr van Dyk stated that the Transnet Pension Fund was governed by the Board of Trustees by recommendation of Transnet. If there were financial implications, they needed the approval of the Minister of Finance. If the Committee amended the one section of the Transnet Pension Fund Act, it would be a small amendment.

The Chairperson stated that the meetings on the Fund issue would have to be fitted into the programme for the next quarter. Meetings might have to take place in the evenings.

Mr Koornhof stated that Transnet should receive a courtesy call informing them that the Fund would be coming up on the Committee's agenda and that they would have a chance to present before the Committee.

Mr van Dyk informed the Committee that Transnet had received a research document informing them what the issues were about.

Ms Adhikari proposed that she make her presentation after the inputs from all the other delegations, as their inputs would inform her legal advice.

The Chairperson agreed.

The meeting was adjourned.