Informal Deliberations on the South African Postbank Bill [B14-2009]

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Communications

16 August 2010
Chairperson: Mr I Vadi (ANC)
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Meeting Summary

The Department of Communications and the National Treasury briefed the Committee on amendments to the South African Postbank Bill that were proposed by Members at the previous meeting. Members also deliberated on additional amendments proposed by the South African Post Office (SAPO). The Committee adopted their Third Term Committee Programme. Included in the Programme, was a meeting with the South African Broadcasting Corporation (SABC) Board to discuss various problems that had been reported in the media.

The Committee approved amendments made to clause 2 of the Bill, which looked at the Objects of the Act, and clause 14, which looked at the appointment of board members. Clause 16 was amended to provide that only non-compliance with the fiduciary duties in sub clauses
(1)(a), (1)(b), (1)(c), (1)(e)(viii) or (1)(e)(ix) constituted an offence. National Treasury asked if the Committee had additional items that could be considered offences and should be criminalized in clause 16(1)(e). The Committee thought that the aim was to do away with conflicts of interest completely. Some Members were worried that if board members could not have any conflicts of interest at all, it would raise the bar too high. The job required special skills and expertise that were needed for the Postbank. Strict controls had to be put in place to manage conflict of interests. Other Members felt that the Minister could not appoint members to the Board if they had financial interest in the Postbank and said it was a “little hysterical” to say that the Committee would never be able to find board members that did not have financial interests. It was not impossible to find people willing to divest their interests in order to serve on the Postbank Board. The Chairperson noted that the Committee was left with the choice between either omitting anyone that had a direct or indirect financial interest from appointment or including a set of controls in the clause to address conflicts of interest. The drafters would draft both options for the Committee to consider.

Clause 20 looked at the personnel of the Company. Clause 20(2) was amended to say “The Board must determine the conditions of service, remuneration and service benefits of the personnel of the Company”. The clause would exclude “after consultation with the Managing Director and with the concurrence of the Minister of Finance”. Adv J De Lange (ANC) noted that the Minister of Finance was being removed completely from oversight of the staff component, salaries and conditions of employment. The Chairperson explained that the concern was that the Postbank would need the concurrence of the Minister of Finance to appoint every staff member, including lower level staff, and this could become a cumbersome procedure. Adv De Lange pointed out that removing the Minister of Finance from the clause would remove the little bit of protection that currently existed. He thought that the clause had to be read correctly. The structure of the company and the personnel had to be approved by the Minister of Finance. The Committee supported Adv De Lange’s interpretation.

Clause 25(1) was amended to remove the requirement for consultation with the Registrar of Banks. Also deleted was the requirement that the Board must recommend first, prior to the Minister making regulations. Members
worried about what would happen if there was no concurrence between the Minister of Communications and the Minister of Finance on regulations. However, a solution was to spell out the consequences of not following the policy set out by the Minister. The Minister had to be given the power to intervene in any instance where he felt that policy was not being adhered to.

SAPO proposed additional amendments to clauses 3, 8 and 12. The amendment of clause 3(2) was for SAPO to be able to hold more than 15% of the shares in Postbank because the Banks Act would limit the percentage shareholding of a shareholder. However, Adv De Lange said that it was completely wrong for the Committee to allow the amendment. The consequences were huge and it was not fitting to propose a blanket exemption from all pieces of legislation. The
Department of Communications (DoC) stated that their understanding was that the exclusion only applied to shareholding and membership. The amendment could also make room for a provision stating “from any other applicable legislation”. This provision would cater for the Dedicated Banks Bill that was not an Act yet. Adv De Lange stated that the Committee could not include a provision for future legislation that did not even exist yet. The Treasury said that they agreed and would amend it to say that the Company had to be registered under the Banks Act. They did not want to refer to legislation that did not exist yet. This clause would be amended only once the Dedicated Banks Act was passed. The Committee agreed.

The Chairperson added that the issue of the quorum of the Postbank Board had not been addressed. He suggested that there be a seven-member quorum. The State Law Adviser informed the Committee that there would be times that the Board would only consist of a few members. He asked the Committee to consider including a provision that stated that the quorum would consist of the majority of the members serving on the board. It was difficult to mention a particular number of members. Adv De Lange stated that the Committee had to be careful about what it decided. This was a company that would incur and create billions of Rands of problems for the country. The Committee had to stop every single loophole in the Bill. After sixteen years, the Committee should know that good intentions could go very wrong. He did not think that it was too much to ask for a seven-member quorum when this Board would be making decisions that had huge consequences for the country. The Chairperson also wanted to know what would happen if the five-year terms of the Board’s membership lapsed, what happened if there was an appointment during the year or if someone was unable to complete their term. The DoC answered that Bill did not need to include a specific clause on “staggering” board members. The Minister was allowed to appoint board members for periods up to five years. The Minister had the opportunity to appoint half of the Board for five years and the rest for three years. This way, the Minister could entertain continuation. It seemed to be a practical way of doing things.

Meeting report

Third Term Committee Programme / Meeting with the SABC
The Chairperson congratulated Ms P De Lille (ID) on the “marriage” of the Independent Democrats (ID) and the Democratic Alliance (DA). He wished them a happy marriage and many years of bliss.

He stated that the Committee had to adopt its Third Term Committee Programme. For the next few weeks Parliament would rise at approximately 3pm almost every day. Committees were being asked to use the time slot of 3:15pm to 5pm as Committee time. Therefore, the Communications Committee has tried to include some smaller items in the afternoon slots on Tuesdays. The Committee programme would be reviewed if there were any changes to the Parliamentary Programme.


One of the things not included in the programme was the invitation from Altech in Kwazulu-Natal. The Committee agreed to accept the invitation. The meeting was scheduled to take place on Friday, 20 August 2010. However, since the visit was being sponsored by Altech, the Committee needed Parliament’s approval. As soon as the Committee received formal approval, Members would be informed.

The Chairperson noted the meeting with the South African Broadcasting Corporation (SABC) Board on Tuesday, 24 August 2010, to discuss the issues reported in the media. This had become quite an important matter and had been in the media for some time. The Minister had requested that the Committee postpone the meeting until 31 August 2010. The media had already reported that the meeting would take place on 24 August and a formal notice had already been sent to the SABC. The Minister wanted the Committee to give him a little time to intervene in the SABC’s problems. The Chairperson informed the Minister that he was unable to make the decision on his own and that the Committee would discuss the matter.

Mr N van den Berg (DA) proposed that the Committee retain the 24 August meeting with the SABC. The Committee would not take any decisions on that day. Members had to hear what the SABC had to say. The business of the SABC was so important that it could not be delayed another week.

Ms J Killian (COPE) supported Mr van den Berg’s proposal. The meeting would be a basic interaction with the Board so that the Committee could understand what corporate governance complications the SABC was facing.

Ms De Lille added that the SABC Board expected the Committee to give them a chance to express their views on the matter. It was such a young board and they had hardly even started working together. She supported the proposal that they proceed with the 24 August meeting. The Chairperson had already announced that the meeting was taking place. It would not look right for the Committee to delay the meeting on request of the Minister.

Ms R Morutoa (ANC) stated that it would not look good for the Committee to announce the meeting and then to withdraw it. She agreed that the meeting should be held on 24 August 2010.

The Chairperson announced that the meeting would still be held on 24 August 2010. The Minister’s Office needed to be informed accordingly for reasons already mentioned. The Committee wanted a formal report on the problems experienced in the SABC. The agenda for the meeting with the SABC would include a briefing on their Turnaround Strategic Plan, a report on the appointment of Mr Phil Molefe as the Head of News and Current Affairs, and a briefing on the functionality of the Board. There has been a resignation from the Board already, and there were
rumours that there would be more resignations.

The Committee adopted the Third Term Committee Programme.

Deliberations on the Postbank Bill
Mr Willie Vukela, Director: DoC Legal Services, presented the drafted amendments to the Bill following the deliberations on 10 August 2010:

Clause 2: Object of the Act
The revised clause 2(e) spoke to the rates and charges of the company that would take into account the lower income market. The amended clause would read “ensuring that the rates and charges of the Company take into consideration the needs of people in the rural and lower income market”.

The Committee approved of the amendment.

Clause 14: Appointment of the Board Members

Mr Vukela stated that a new Clause 14(5)(a) had been inserted to provide that at least one and a half times the number of Board members to be appointed, were recommended. The re-worked clause would say that Nominations of suitable persons as contemplated in subsections (1)(b) and (4) must include at least one and a half times the number of Board members to be appointed”.

The Committee approved the amendment.

Clause 16: Disclosure and Fiduciary Duties of Board Members

Clause 16(2) has been amended to provide that only non-compliance with the fiduciary duties in sub clauses (1)(a), (1)(b), (1)(c), (1)(e)(viii) or (1)(e)(ix) constituted an offence.

Ms Jeanine Bednar-Giyose, Director: Fiscal and Intergovernmental Legislation, National Treasury, stated that the Treasury agreed with the approach that the DoC was taking as well as the inclusion of the provisions that were mentioned. There was just one thing that Treasury wanted to the Committee to consider. They wondered if the Committee had any additional issues that could be considered offences, which should be criminalised, for uinclusion under clause 16(1)(e). She suggested that the Committee consider more closely the items listed under clause 16(1)(e).

Ms L Mazibuko (DA) thought that the Committee was trying to do away with conflicts of interest completely. The Committee had experienced the problem before where people neglected to declare their interests.

Ms De Lille addressed the Treasury’s proposal. She was a little confused. It seemed that some of the points under clause 16(1)(e) were being excluded and the Treasury was proposing the Committee add clauses 16(1)(e)(v), (vi), and (vii). She wondered why they Treasury and the DoC had not sorted this out in their task team and approached the Committee with one proposal. However, she supported the proposal that clauses 16(1)(e)(v), (vi), and (vii) be included.

Mr Vukela replied that Treasury had approached the DoC with this proposal quite late in the day, yesterday. The DoC team was already at the airport and could not meet with Treasury. The DoC told Treasury they could raise the proposal with the Committee.

Ms Morutoa said that the Committee was supposed to be addressing amendments put together by both parties. It was unacceptable that the Committee had to listen to two kinds of amendments again. She was confused.

The Chairperson added that the Committee would have preferred if Treasury and the DoC had given them one comprehensive presentation. This was the best way to work on the final amendments. In future, there had to be one presentation. He asked if it was possible to appoint board members with the requisite skills that did not have any interest in the sector. This was a specialised area that needed specialised skills. He worried that saying board members could not have any conflicts of interest at all would raise the bar too high.

Mr Omega Shelembe, Acting Chief Director: Financial Sector Development, Treasury, replied that this was a difficult matter to resolve. He agreed that the bar could be raised too high if the Committee said there should not be any conflict of interest. In normal practice, organisations sought to manage issues of conflict of interest by having people declare their interests. He shared the Chairperson’s concern.

Ms Motshoanetsi Lefoka, Chief Executive Officer: South African Post Office (SAPO), agreed this was a major concern, as the job required special skills and expertise. Strict controls had to be put in place to manage conflicts of interest. There were other regulations and processes that the management had to go through. This clause, on its own, put more responsibility on its board members than any other Act did. There were control mechanisms in place to manage conflicts of interest.

Ms Mazibuko stated that it seemed as if the Committee was now allowing for members who had conflicts of interests to serve on the board. The Committee had already exempted the board of the Postbank from being screened by the Registrar of Banks.

The Chairperson said that the Postbank board still had to be screened by the Registrar of Banks. It was the SAPO board that was exempted from being screened.

Ms De Lille pointed out that the Committee was discussing clause 16(1)(a) that dealt with direct and indirect financial interests that would compromise the board and the performance of its functions. It seemed that the argument was more about financial interests versus qualifications. People thought that if they exempted people with financial interests in the Postbank, then they would not be able to attract qualified people to the board. This was not true. People were allowed to choose to do away with their financial interests if they were offered a position on the board. She wondered how the Committee could find a middle road where they could separate qualifications from financial interests.

Ms Killian wondered why the Committee was so concerned that it would not find suitably qualified people that did not have any financial interests in the Postbank. The board could not appoint members if they had a financial interest in the Postbank.

Mr van den Berg agreed with Ms Killian. He urged the Committee not to even consider “opening the door” to board members that might have financial interests in the bank. He was sure the Committee would find dedicated members to serve on the board.

Ms M Magazi (ANC) wondered where the Committee would find board members that did not have some sought of financial interest. It depended on the individual and how much of a conscience they had.

Ms Morutoa stated that it was unrealistic to try to appoint board members that did not have any type of financial interest. It was better to try to regulate what these financial interests were.

The Chairperson noted that the Committee was left with the choice of either omitting anybody that had a direct or indirect financial interest from the appointment process or including a set of controls in the clause to address conflicts of interest, with criminal liability for not doing so. This would force members to think twice about not declaring their interests, as it would then be seen as a criminal offence. The Committee might want to amend clause 14(4) to include a provision to say that the nomination committee, in making a recommendation to the Minister, had to consider “possible conflicts of interest”. This would allow the nomination committee to apply their minds before the make recommendations to the Minister. He did not know what the legal people thought of this, but the Committee was putting in very stringent measures that the Postbank Board would have to deal with.

Ms Mazibuko used the example of the ICASA Board. The Committee had managed to appoint council members that did not have any conflict of interest, and who, if they wanted to serve on the ICASA council, were willing to divest themselves of their interests. What was “good for the goose, had to be good for the gander”. The Committee had to set this tone. It was a little hysterical to say that the Committee would never be able to find board members that did not have any financial interests. It was not impossible to find people that were willing to divest themselves of their interests in order to serve on the Postbank Board.

Ms Lefoka stated that clause 16(1), in its totality, still applied to board members that were going to be appointed. At the last meeting, members stated that Treasury and DoC had to be specific about the transgressions that had to be criminalised. Everything in clause 16(1) was still applicable to all board members. The Treasury only proposed the amendment because the Committee asked them to be specific about the offences.

The Chairperson said that Ms Mazibuko was proposing that members should not have financial interests in the Postbank at all; however, if they wanted to become eligible for appointment to the Board, they would have to divest themselves of all those financial interests. Other Members felt that the bar could be raised too high. In trying to exclude one possible rotten egg, the Committee could be excluding a range of good people. He stated that the Committee was trying to ensure that there were sufficient safeguards built into the clause that would guard against conflict of interest. An additional safeguard would be added to address conflict of interest as a criminal liability. He was confident that there were adequate safeguards. This was a policy choice that had to be made. The legal people had to draft amendments for both proposals. The Committee’s study groups would consider the proposals. He asked that the proposals be given to Members the following day.

The Chairperson welcomed Adv J De Lange (ANC) to the meeting. He noted that the Committee was discussing a matter that was very close to his heart.

Adv De Lange was adamant that there should not be room for any board members to have any conflict of interest at all. The government should have learnt its lesson over the past sixteen years. It created trouble when board members were allowed to have a conflict of interest. It did not help for board members to excuse themselves from meetings if they had interests in particular areas. This did not help. All the information was at the member’s disposal and could be given to third parties to act on behalf of the member. He was not opposed to discussing the matter; however, his own opinion was that they should not appoint anyone who had any interest in that institution. Members had to divest themselves completely of any interest in that institution.

The Chairperson asked the DoC and Treasury to draft the two proposals. The Committee would make a decision sometime in the next week.

Clause 20: Personnel of the Company
Mr Vukela explained that clause 20 (1)(b) was amended to provide that the Managing Director may, with the concurrence of the Board, appoint such persons necessary to perform the functions of the Company.

The Chairperson noted that the Committee was comfortable with the amendment.

Mr Vukela stated that clause 20(2) was amended to state, “The Board must determine the conditions of service, remuneration and service benefits of the personnel of the Company”. The clause would exclude “after consultation with the Managing Director and with the concurrence of the Minister of Finance”.

Adv De Lange noted that the Minister of Finance was being removed completely from oversight of what the staff component should be. This was the only protection the staff had against abuse. This was what was happening in the SABC at the moment because they did not have this clause. This was a standard clause that was in almost every piece of legislation. It would allow the Board to appoint anyone and pay any amount that person wanted.

The Chairperson explained the concern was Postbank would need the concurrence of the Minister of Finance to appoint each staff member, including lower level staff, and this could become a cumbersome procedure.

Ms Lefoka replied that the determination of the conditions of service and the determination of the remuneration were within the ambit of the Board. Policies from the Labour Relations Act were included in the Postbank Bill. Higher level staff appointments would have to be done with the concurrence with the Board. The appointment of the Managing Director would have to be done with the concurrence of the Minister of Communications and the Minister of Finance.

Mr van den Berg commented that there were no built in clauses to prevent anything from going wrong with the staff appointments.

The Chairperson understood what Adv De Lange and Mr van den Berg were saying, but it would mean that the Minister of Finance would have to approve each staff appointment.

Mr Herman Smuts, Principal State Law Adviser, replied that he did not think that the Minister would have to approve every appointment. The Board would determine the conditions of service, remuneration and service benefits of the personnel of the Company. In other words, from time to time there would be determinations of conditions of service and this would be done after consultation with the Managing Director and in concurrence with the Minister of Finance.

Adv De Lange said that the clause was quite simple. The fist part of the clause dealt with the appointment of staff. It was the salaries and conditions of employment that had to be done in concurrence with the Minister of Finance. The argument was not that the Minister of Finance had to deal with each staff appointment. He only had to have a say in the structure of the company and the personnel. Removing the Minister of Finance from the clause would remove the little bit of protection that currently existed. The clause had to be read and understood correctly. The structure of the company and the personnel had to be approved by the Minister of Finance.

Mr van den Berg agreed with Adv De Lange’s interpretation. There had to be a clear structure within the Company.

Ms Killian supported Adv De Lange’s proposal to amend the clause. She asked Treasury and the DoC to draft a proposal for the Committee to consider.

The Chairperson said that the study group would have to scrutinise the proposals. There was no harm in doing this; however, the Bill had to be finalised as soon as possible.

Clause 25: Regulations
Mr Vukela stated that the clause 25(1) was amended to remove the requirement for consultation with the Registrar of Banks and to delete the requirement that the Board must recommend first, prior to the Minister making regulations. Clause 25(1) would read, “
The Minister may, after consultation with the Minister of Finance, make regulations”.

Ms Killian was worried about what would happen if there was no concurrence between the Minister of Communications and the Minister of Finance on the matter of the regulations. It placed the responsibility very firmly with the Minister of Communications. This was a banking institution and was not necessarily what the institution needed. She asked why the clause was amended to say, “The Minister may, after consultation with the Minister of Finance, make regulations” instead of with the concurrence of the Minister of Finance.

Mr Alf Wiltz, Director: Legal Affairs (DoC), replied that the DoC thought that it would be easier to move ahead with the process if the clause said “after consultation”. The Minister of Communications was obligated to consult the Minister of Finance who had the opportunity to provide input. Also, all policy had to be approved by Cabinet and the Minister of Finance would be able to have a say there too. This way, the policy would go to the Cabinet and would be a decision of the collective.

Adv De Lange commented that he had a problem with the DoC saying that all decisions would go to Cabinet. In his experience, not all decisions went to Cabinet. He would prefer that the Minister would make all the regulations, but Cabinet would approve all policy. He thought the consequences of not following the policy had to be written in the legislation.

Ms De Lille was not sure that policy matters should be written into legislation. She wanted to hear the legal advisers’ view on this.

The Chairperson stated that this was a standard provision in law. All Ministers had to have the power to make policy. This was an enabling mechanism that would allow the Minister of Communications to guide the affairs of the bank. There was nothing wrong with it. The Committee was debating whether they should give him the sole responsibility to do this after consultation with the Minister of Finance, or if it should be done with the Minister of Finance. Adv De Lange was saying that Cabinet should be consulted as well.

Adv De Lange added that his biggest worry was to spell out the consequences of not following the policy set out by the Minister. The Minister had to be given the power to intervene in any instance where he felt that policy was not being adhered to.

The Chairperson hoped that the DoC had captured what the Committee was trying to say. He asked them to draft proposals based on these concerns.

South African Post Office proposed amendments briefing
The Chairperson informed the Committee that SAPO had some more amendments that they wanted to propose. They would be allowed to talk to the proposed amendments.

Clause 3: Incorporation
Ms Lefoka proposed that clause 3(2) be amended to say “Notwithstanding the provisions of the Banks Act or any other applicable legislation, the Post Office shall, upon incorporation of the Company, be the sole member and shareholder of the Company”. The amendment was to provide for SAPO to be able to hold more than 15% of the shares in the Postbank because the Banks Act would limit the percentage shareholding of a shareholder.

Ms De Lille wondered why this was necessary. The DoC spoke of registering the Postbank under the Dedicated Banks Bill once it was passed. She asked SAPO to clarify this.

Adv De Lange added that it would be completely wrong for the Committee to allow the amendment. The consequences were huge. If there was something that SAPO was worried about, they had to tell the Committee. If SAPO wanted more than a 15% share in the Postbank, then they had to say something. But, it was not fitting to propose a blanket exemption of all pieces of legislation. The Committee did not understand all the consequences of this.

Mr Wiltz stated that he had read the amendment that morning, but his understanding was that the exclusion applied to shareholding and membership. He reminded the Committee that they had tried to say that the Post Office should be the sole shareholder and member of the Postbank. However, the Postbank learnt that there was a clause in the Banks Act that said that a member was not allowed to have more than 15% shareholding in the company. The amendment was trying to override this specific provision.

Mr Shelembe added that Treasury was satisfied that the proposed provision only dealt with the exclusion of the Banks Act as far as membership and shareholding of the Post Office in the Postbank was concerned.

Ms Zuraya Adhikari, Parliamentary Legal Adviser, advised that an actual provision should be mentioned in the proposed amendment so that the clause in the Banks Act that prohibited the Post Office from acquiring more than 15% of the Postbank’s shares could be excluded.

Mr Wiltz replied that adding a reference to the clause in the Banks Act was fine. The amendment could make room for corresponding provision from any other applicable legislation. This provision catered for the Dedicated Banks Bill. The Committee was clear that an opportunity had to be created for the Dedicated Banks Act to be used once it was passed by Parliament.

Adv De Lange stated that the Committee could not include a provision for future legislation that did not even exist yet. Only once the Dedicated Banks Act was passed would Treasury and the DoC be able to interact with it. The point was that the DoC could not include a provision for legislation that did not even exist.

Mr Shelembe asked the Committee for its indulgence, as Treasury wanted to reopen clause 4 of the Postbank Bill and amend it to say that the Company had to be registered under the Banks Act. They did not want to refer to legislation that did not even exist yet. This clause would be amended once the Dedicated Banks Act was passed.

Mr Vukela stated that the DoC had been saying from the beginning of the deliberations that the Postbank Bill should be registered under the Banks Act.

Ms De Lille said that Treasury had told the Committee that the Postbank would be registered under the Banks Act. She told them that the Banks Act made provision for two types of banks. The Treasury told the Committee that the Postbank would be registered under the Banks Act and that the Banks Act was broad enough to make provision for what the Committee was trying to constitute in the Postbank legislation.

Ms Bednar-Giyose replied that she had indicated that the Banks Act was to provide for the nature of the banking institutions registered in terms of the Act. However, it did not necessarily specify particular categories of banks or necessarily preclude that if the Postbank was registered in terms of the Banks Act, it would be able to fulfil the objectives and the mandates set out in the Postbank Bill. The rationale for including the Dedicated Banks Bill was to develop a piece of legislation that might more appropriately cater for the type of institution that the Postbank was.

Ms Mazibuko stated that the Committee was only alerted to the existence of the Dedicated Banks Bill by Treasury in their original submission. The Committee embraced it because of the concerns they had at the time. Members wanted to ensure that they had some control over what the purpose of the bank would be. This was the purpose of Clause 4. It had been amended on this basis to say that the bank could be subject to any other applicable legislation and its controls. If the Bill was specific about the clauses in the Banks Act, then the controls had to be inserted elsewhere. Could these controls be included in matters of policy? There had to be some means of saying in the legislation that the Postbank was not a commercial bank. The Dedicated Banks Bill was going to be a means of circumventing any kind of situation in which politically connected people would be able to access finance from this bank. All the Committee wanted was checks and balances against the abuse of the banking institution. The Committee wanted the Postbank to have a specific mandate, the parameters of which would not be confused.

The Chairperson added that he had difficulty with what Treasury was proposing because the Committee would then have to make changes to almost every other clause in the Postbank Bill where reference was made to “any other applicable legislation”.

Mr Smuts did not think it was necessary to include a reference to “any other applicable legislation”. 

The Chairperson clarified that the words “any other applicable legislation” would be deleted from every provision in which it had been included. He noted that Treasury had realised that they had made a mistake when they proposed that the Postbank should be registered under the Dedicated Banks Bill. They were “big” enough to admit it.

Clause 12: Composition of the Board
SAPO proposed that clause 12(3)(a) be amended to read, ”The non-executive members had to be appointed for a period not exceeding five years”. Clause 12(3)(b) had to be amended to say “The non-executive members of the board may be re-appointed for a further term not exceeding five years, unless otherwise agreed to by the Minister”.


The Chairperson noted that the Committee was comfortable with the proposed amendment to clause 12(3)(a). He was not comfortable with the amendment to clause 12(3)(b), as he did not want member to serve on the Board for more than ten years. He did not want them to be “lifelong” members.

Adv De Lange stated that the words “otherwise agreed to by the Minister” had no meaning. All that the clause needed to add was the word “non-executive”.

Mr Wiltz added that the drafting of the amendment was not suitable as it made room for the members to be appointed for more than ten years.

The Chairperson concluded that this was unacceptable. He noted that the term “non-executive” would be included in both clauses.

Clause 8: Value of Business of Former Postbank for Purposes of Finance Laws
SAPO proposed that the heading and content of clause 8 should be amended. The proposed heading should be “exemption from tax liability”. The clause would state, “The transfer of the business of the former Postbank, as described in clause 5(1) above, should not attract any tax liability of whatever nature”.

Mr Wiltz proposed that the provision be inserted under clause 7, which dealt with the transfer of the former Postbank.

Mr Shelembe accepted the amendment on the basis that Treasury did not want to create artificial taxes for the state.

The Chairperson asked if everyone was comfortable with deleting clause 8 and including it as clause 7(e).

Mr Smuts added that it was easier to retain clause 8, otherwise all the cross-referencing would have to be changed if the clause was included as clause 7(e).

The Chairperson noted that clause 8 would not be deleted.

Additional Comments from the Chairperson
The Chairperson noted that the Bill seemed to omit any details about the quorum of the Board. About the five-year term for members, he wanted to know what would happen if the terms lapsed. Presumably, in the fifth year, the Minister had to start the process of nominations for the next round of members. But, what would happen if there was a government election in the year, followed by a transitional period? What would happen if the board was unable to complete the fifth year? The Postbank would have to sit without a board. It seemed that the assumption was that the Minister could extend a member’s term of office without going through the nomination process.

Mr Wiltz replied that the Bill did not need to include a specific clause on “staggering” board members. The Minister was allowed to appoint board members for periods up to five years. The Minister had the opportunity to appoint half of the Board for five years and the rest for three years. This way, the Minister could entertain continuation. It seemed to be a practical way of doing things.

The Chairperson noted that there were ten members on the Board; one executive member and nine non-executive members. He asked how many members were needed to make a quorum. Was seven enough to make a quorum?

Ms Lefoka wondered if it would be covered in the Articles of the Board Charter. Did the Committee want to legislate what the quorum should be?

Adv De Lange replied that the Committee should legislate what the quorum should be, as Members wanted to ensure that all decisions would be made with a majority. He stated that a seven-member quorum would be fine.

Ms Adhikari added that the Committee should add a provision in the Bill, which stated that if there was any defect in the procedure for appointment of members, that the decisions of the Board would stand.

The Chairperson asked the DoC and Treasury to note the proposal from Ms Adhikari.

Mr Smuts said that there would be times that the Board would only consist of a few members. He asked the Committee to consider including a provision that stated that the quorum would consist of the majority of the members serving on the board. It was difficult to mention a particular number of members.

Adv De Lange stated that the Committee had to be careful about what it decided. This was a company that could incur and create billions of Rands of problems for the country. The fiscus would have to bail the individuals out. The Committee had to stop every single loophole in the Bill. The Minister could appoint fantastic people. However, these people were only human and would make mistakes. These mistakes were going to be very costly. After sixteen years, the Committee should know that good intentions could go very wrong. A seven-member quorum might seem too much but he was assuming that there would always be ten members on the Board. Therefore, he did not think that it was too much to ask for a seven-member quorum when this Board would be making decisions that had huge consequences for the country.

Ms Killian asked if the seven-member quorum would include the Managing Director.

The Chairperson answered that it would. He noted that the Committee agreed that there should be a seven-member quorum.

Mr Vukela commented that the DoC supported the seven-member quorum. The Committee must legislate all the governance issues of the Company.

The Chairperson noted that the Committee had asked the DoC and Treasury to make quite a number of new amendments to the Bill. He asked if they would be able to forward these amendments to Members by the following day so that they could take them to their study groups.

Adv De Lange said that the lending powers of the Postbank were not discussed. He remembered that when the Bill was first discussed that the Committee wanted to limit the bank’s lending powers. He would discuss this matter with the study group.

The Chairperson agreed that matter should be discussed at the study group.

Mr Wiltz stated that he was not sure that they would be able to give the Committee the amendments to the Bill by the following day. They would definitely be able to give the proposed amendments to Members on Thursday, 19 August.

The Chairperson replied that this was not helpful, as the study group met on Wednesday afternoons. The Committee needed the amendments by Wednesday at noon. He stated that the Bill was very complicated, but noted that the Committee had made quite a bit of progress.

The meeting was adjourned.

 

 

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