Minister of Trade and Industry on Cipro: Briefing; Formal Consideration of Committee Report on Department's Budget

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Trade and Industry

22 April 2010
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Minister of Trade and Industry briefed the Committee on the Companies and Intellectual Property Registration Office. The Office and the Department of Trade and Industry were present. Thereafter the Office responded to questions that Members had submitted previously, and the Committee formally considered the Budget Vote Report.

The Minister said that the Department had, in response to the Auditor-General’s report, commissioned its own forensic investigation into the Enterprise Content Management tender. This had yielded pertinent information which had led it to seek legal counsel. The Department would inform the Committee on Public Accounts on 18 May 2010. The Companies and Intellectual Property Registration Office faced the dual challenge of fighting corruption and building the organisation.

The Deputy Director-General, Department of Trade and Industry said that, despite the issues around the awarding of the tender, the Enterprise Content Management system was one of the best for ensuring speedy turnaround times. The system, however, needed to be implemented by people who were equipped to do so.
Members asked what was being done to ensure that people in rural areas could access the technology needed with the proposed automated system; why the legal process for the investigations was taking so long; why the scanning was sub-contracted to outside entities; what was being done to protect whistleblowers; what other fraudulent activities were taking place within the organisation; what limits on the number of companies registered within a particular sector existed; to what extent the issues around the awarding of the Enterprise Content Management contract would jeopardise the process; and whether there were any financial obligations between Companies and Intellectual Property Registration Office and its agencies.

In considering the Committee’s Report on the Department’s Budget, Members asked why the Industrial Development Corporation had been transferred to the Economic Development Department; how the transfer would impact on the Industrial Policy Action Plan and trade; whether the significant decrease in the budget was related to the transfer of certain entities to the Economic Development Department; if there were other allocations over and above the global amount for the Industrial Policy Action Plan; how the process would be managed; and how the Department would raise awareness among people in rural areas around consumer protection. The Report was adopted.

Meeting report

Minister of Trade and Industry’s briefing
The Hon. Dr Robert Davies, Minister of Trade and Industry, said that, in response to the Auditor-General’s report, the Department had commissioned its own multi-faceted forensic investigation. The results of this investigation had been shared with law enforcement agencies who were continuing their own investigations. Investigations into the Enterprise Content Management (ECM) tender had yielded pertinent information which had led the Department to seeking legal counsel on how to pursue the matter.  The Department would inform the Committee on Public Accounts on 18 May 2010. The Companies and Intellectual Property Registration Office (Cipro) faced the dual challenge of fighting corruption and building the organisation.
Ms Z Ntuli, Deputy Director-General, Department of Trade and Industry (DTI), said that the ECM system was one of the best systems for ensuring speedy turnaround times. The system, however, needed to be implemented by people who were equipped to do so.

Companies and Intellectual Property Registration Office presentation
Mr Lungile Dukwana, Acting Chief Executive Office, Cipro, said that there was a direct link between Cipro and the South African Revenue Service (SARS) with regards to the registering of new companies. Electronic files were forwarded to SARS relating to the company’s registration, deregistration and amended information. Cipro was also starting an initiative which could deal with integrated business registration. Registered entities would remain on the Cipro database despite being deregistered. Cipro was set to become a commission on 01 October 2010.

The ECM project was intended to complete the issue of automation of Cipro business processes through an integrated document and workflow management system. Some of the objectives included re-engineering and optimising most of the current business processes and to align these with the Companies Act. This was also informed by the need for Cipro to make advances in seeking to deal with the ever-increasing need for its services and to better serve its clients. This system would also minimise fraudulent activities. Significant progress had been made towards the implementation of ECM.

Some of the issues it was dealing with in relation to e-Cipro were those of data purification, system security, website capacity, training and project management capacity. Though backlogs had been cleared in many areas, there were still backlogs with name reservations. Cipro had 20 cases of misconduct by staff, of which 13 had been finalised. Three officials had been dismissed as a result of fraudulent activities.

The commission would become a national public entity. The Department of Trade and Industry would oversee the corporate governance issues of Cipro. The commission’s mandate would be broader than that of Cipro currently.
All documents received were scanned for safekeeping. Measures had been put in place to enhance document management. When Cipro adopted the decentralisation model, the main purpose would be to improve access for all communities.

Discussion
Mr X Mabaso (ANC) asked what was being done to ensure that people in rural areas could access the technology needed with the proposed automated system.

The Minister answered that digital technology could be used to bridge geographical and class divides. It would also assist smaller businesses in poorer, more remote communities.

Ms Ntuli added that this was one of the issues being looked as a challenge to be addressed.

Mr A van Der Westhuizen (DA) asked why the legal process was taking so long.

The Minister answered that the Department was not dragging its feet, but was looking at moving in a procedurally correct way.

Mr S Marais (DA) asked why the scanning was sub-contracted to outside entities. What was being done around the protection of whistleblowers?

Mr Dukwana answered that although the scanning was contracted out, the organisation was currently working on ensuring that it had the capacity to do the scanning internally.

The Minister added that although there had been cases of people being treated unfairly in this regard, the Department had re-accommodated those employees who had wished to return.

Ms Ntuli added that one person who had been fired had been reinstated and another who had been suspended had had their suspension lifted. More information could be provided to the Committee in writing as this information was largely confidential.

Ms C Kotsi (COPE) asked what other fraudulent activities were taking place within the organisation. Were there limits on the number of companies registered within a particular sector?

The Minister answered that most of the fraudulent activities related to the ability of people within the organisation to access the system and corrupt it. The new system was intended to prevent these activities.

Mr Dukwana added that there was no limit on the number of companies which could be registered.

Mr S Njikelana (ANC) asked who the organisation’s partners were.

Mr Dukwana answered that it had numerous partners that fell under different categories: information dissemination, registration and payment.

Mr Marais asked why the Director-General, DTI, as the accounting officer, was not in attendance. To what extent the issues around the awarding of the ECM contract would jeopardise the process?

The Minister responded that the Director-General was in meeting of all Directors-General called by the President. Mr Marais’ question could not be answered as it would depend on the outcomes of the legal advice it had sought.

Mr Mabaso asked whether there were any financial obligations between Cipro and its agencies.
Mr Dukwana replied that its partnerships had no financial obligations.

Committee Report on Department of Trade and Industry budget
Mr G Radebe (ANC) asked why the Industrial Development Corporation had been transferred to the Department of Economic Development.

The Minister answered that the model which had been developed made it clear that there needed to be a high level of cooperation between Government departments.

Mr Marais asked how the transfer would impact on the Industrial Policy Action Plan (IPAP) and trade.
The Minister responded that it would be of significance to the progress of IPAP if the Economic Development Department (EDD) could devote quality time to this project.

The Chairperson asked whether the significant decrease in the budget was related to the transfer of certain entities to the EDD. Were there other allocations over and above the global amount for IPAP? How would the process be managed?

The Minister replied that a decision had been taken to ensure savings in the budget, though this did not impact on IPAP-related items. A more detailed account could however be provided to the Committee in writing. It was essential that departments worked together in order to give effect to this programme.

Mr Radebe asked how the Department would raise awareness among people in rural areas around consumer protection.

Ms Nthuli answered that campaigns were being rolled out in different phases. Workshops were also taking place in various communities. Simplified publications were also translated into five other languages.
The Chairperson said that the Committee’s position would be that there would be a decline in the DTI budget.
Mr Marais said there was no need to deviate from the Committee’s position on paper. More clarity on its enquiries around the forensic investigation would be given during the forthcoming meeting with the Committee on Public Accounts.

Mr Radebe asked that the issues of whistleblowers and the forensic investigation be noted in the report, and proposed the Report be adopted.

Ms Kotsi seconded this proposal.

The meeting was adjourned.



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