Deliberations on ICASA Interviews; Informal Deliberations on the South African Post Office Bill [B2-2010]

Meeting report

Deliberations on ICASA Interviews
The Chairperson stated that the Committee had to finalise the process of selecting the Independent Communications Authority of South Africa (ICASA) councillors. He noted that five candidates had been interviewed the week before. The candidates included Dr Marcia Socikwa, Ms Katheryn Berman, Dr Sadhasivan Perumal, Ms Nomonde Pearl Gongxeka, and Mr Cornwell Ismael Dauds. Each political party had to nominate two candidates. 

The Chairperson asked the Democratic Alliance (DA) for its nominations.

Ms N Michael (DA) nominated Dr Marcia Socikwa and Ms Nomonde Pearl Gongxeka.

The Chairperson called on the African National Congress (ANC) to state its nominations.

Ms R Morutoa (ANC) said that her party nominated Dr Marcia Socikwa and Ms Nomonde Pearl Gongxeka to be ICASA councillors.

The Chairperson asked the Congress of the People (COPE) to state their nominees.

Ms J Killian (COPE) answered that COPE nominated Ms Katheryn Berman and Ms Nomonde Pearl Gongxeka.

The Chairperson noted that the Inkatha Freedom Party (IFP) was not represented at the meeting; the Member must have stepped out. However, he was told that the IFP wanted to nominate Dr Marcia Socikwa and Ms Nomonde Pearl Gongxeka. Once the Member joined the meeting, he could speak for his party if he wanted to. He also noted that all the parties except COPE agreed with the nominations.

Ms Killian replied that her party would abide by the Committee’s decision.

The Chairperson noted that Dr Marcia Socikwa and Ms Nomonde Pearl Gongxeka would be nominated by the Committee to the Minister.

Deliberations in the South African Post Office Bill [B2-2010]
Mr Willie Vukela, Director: Postal Policy and Information and Communication Technology (ICT) Development, Department of Communications (DoC), explained that the purpose of the meeting was to discuss the amendments proposed by the Committee at the meeting held on 24 November 2010 and to discuss amendments proposed by the South African Post Office (SAPO). In most cases, the DoC did not oppose amendments requested by SAPO. The amendments were left to the Committee for further consideration.

Clause 1: Definitions
The definition of subsidiary was amended to provide for the dormant companies of SAPO.

Clause 9: Board of Post Office
Following a submission from SAPO, the Committee resolved that the number of non-executive board members should be reduced to eleven.

Clause 15: Procedure at Meetings, and Committees of Board
Clause 15(1) currently provided that 70% of serving members constituted a quorum at any board meeting. SAPO stated that it preferred a quorum of 50% plus one in accordance with the current SAPO Articles. It thought a 70% quorum would hinder the operations of the organisation, especially when board meetings were called on an urgent basis. The Committee previously indicated that the quorum should not be too low since a small number of members should not be able to take decisions that could detrimentally affect the entity.

Clause 18: Conditions of Appointment of CEO, CFO and COO
Mr Alf Wiltz, Director: Legal Services (DoC), continued with the presentation. Clause 18(5) said that the Chief Executive Officer (CEO), Chief Financial Officer (CFO) and Chief Operating Officer (COO) were entitled to remuneration packages determined by the Board with the concurrence of the Minister and the Minister of Finance. SAPO submitted that the Minister of Finance’s approval was not required because the approval was only relevant in the case of the Postbank and the process would take too long. The State Law Adviser (SLA) agreed with the DoC’s view that this provision should be retained. The approval of the Minister of Finance was required in all laws applicable to statutory bodies. The Minister of Finance had to have overall oversight over the fiscus and expenses relevant thereto.

Clause 22: Personnel of Post Office
Clause 22(1)(a) provided that the Board had to determine the structure or organogram of the Post Office and the conditions of service, remuneration and service benefits of the personnel of the Post Office after consultation with the CEO, and with the concurrence of the Minister and the Minister of Finance.

SAPO submitted that the approval of the Minister of Finance was not required. The DoC and the SLA both argued that the Minister if Finance’s approval was necessary.

Clause 22(1)(b) was reworded as requested by the Committee. The provision prevented any SAPO employee from having any interest that was in conflict with SAPO’s business. The clause was reworded as follows:
“The conditions of service contemplated in paragraph (a) must include-
in respect of all members of staff, obligations comparable with sections 11(1)(g) and 11(3); and
in respect of members of staff in employment at the date of commencement of this Act, obligations comparable with section 11(4).”

Clause 23: Subsidiaries and Accountability
Clauses 23(1) and 23(3) were amended to ensure that a feasibility study and business plan had to be submitted for approval as required under clause 23, not only for new subsidiaries but also when a dormant subsidiary is revived by SAPO.

Clause 23(1) read:
“[Apart from the Postbank] The Post Office may establish subsidiary companies.”

Clause 23(3) read:
“(a) The Post Office must, before it established a subsidiary or revives a dormant subsidiary, submit a feasibility study and business plan of the proposed subsidiary to the Minister and the Minister of Finance for consideration.
(b) The Minister acting with concurrence of the Minister of Finance may, after consideration of the feasibility study and business plan, approve the establishment of the subsidiary
(c) The Minister must, before the approval contemplated in paragraph (b), table the feasibility study and business plan in the National Assembly for consideration.”

SAPO was of the view that the role of the National Assembly was unnecessary since the required safety measures were already contained in the Public Finance Management Act (PFMA).

Discussion
The Chairperson stated that the issue of the number of board members had already been discussed and it had been decided there would be eleven board members. This would not be discussed again. However, the Committee could focus on the matter of quorum at board meetings. He wondered why the Post Office Board could not manage a 70% quorum in meetings if the Postbank Board had to, even when it called urgent meetings. 

Ms N Magazi (ANC) referred the Committee to clause 18 and the remuneration of board members. There was a new proposed way of remunerating members. She asked what determined the new remuneration of the Board.

Mr Wiltz replied that Article 11.4 of the Articles of the Post Office stated that an executive director should be appointed at such remuneration and generally on such terms as the Minister may, after consultation with the board, think fit and which will be included in his/her service contract.

Ms T Ndabeni (ANC) addressed the issue of quorum in board meetings. She said that the moment someone accepted the position to be a board member, it meant that he or she was supposed to be completely committed to the entity. Saying that a 70% quorum was too high gave her the impression that, from the onset, there would be board members who were not committed. She suggested that the Committee retain the 70% quorum that it previously agreed upon.

Mr Andrew Nongogo, General Manager: Public Affairs in the South African Post Office (SAPO), replied that SAPO was in concurrence with the principle of the matter and the high standard the Committee wanted to set by giving a 70% quorum in meetings. However, the standard was so high that it would be “onerous” for SAPO to actually adhere to. SAPO wanted to combine the principle of what the Committee was saying and the practice of the principle itself. A 70% quorum would penalise the institution, rather than penalise the so-called “uncommitted” board members. He suggested that instead of using a 70% quorum rule, SAPO tell board members that they were expected to attend all board meetings or at least miss only one in the course of the term. This meant that the penalty to rest with the individual instead of the organisation. A 70% quorum would result on the SAPO Board finding difficulty in meeting all of its requirements. He respectfully suggested that the Committee look at those whom they wanted to penalise when board members failed to attend board meetings.

The Chairperson noted that the Committee had passed legislation where the Postbank Board had to have a 70% quorum at meetings. The Committee wanted to send a message that “deadwood” board members that did not attend meetings would be exposed. The Committee did not want to romanticise the lack of attendance at board meetings. Only committed board members would retain their positions.

Ms Killian concurred with the Chairperson. She reminded the Committee that they had to focus on the number of board meetings that had to be held. They also had to decide which clause the removal of board members would be discussed.

Mr Vukela added that the DoC was happy with the 70% quorum rule or the 50% plus one rule. 

Mr Wiltz added that there were four standing board meetings that board members usually knew of in advance. It was potentially not a problem to achieve the required 70% quorum. However, problems were created when short notice was given regarding urgent meetings.   

Ms Magazi asked if the Committee was going to include part of a clause that said that board members would be removed from the board if they failed to attend three consecutive meetings. This seemed like an operational matter. She felt uncomfortable about his area coming into the Act.

Mr Vukela replied that this was not an operational matter. The Committee was setting a high standard for the Board and precautionary measures had to be put in place for members. Board members could not be allowed to miss three consecutive meetings without pre-approval of the rest of the Board or the chairperson.

Ms Killian concurred with what Mr Vukela said. Matters regarding the 70% quorum and removal of board members were not operational. Operational matters dealt with issues such as how many meetings were called, but this was about legislating to improve the quality of these institutions.

Ms Morutoa stated that if the Committee wanted reliable people with integrity on the board then it had to focus on the calibre of the board members. The Committee had to be consistent when it came to the issue of quorum. She agreed with the 70% quorum rule.

The Chairperson noted that the Committee seemed to want to keep the 70% quorum rule. He wondered why SAPO had not said anything when it was present at meetings where the Committee amended the Postbank Board’s quorum to 70%.

Ms S Tsebe (ANC) said that the Chairperson was correct. The Committee had to retain the 70% quorum rule. She turned her attention to clause 18 of the Bill, which looked at conditions of appointment of the Chief Executive Officer, the Chief Financial Officer and the Chief Operations Officer. Clause 18(5) stated that the CEO, CFO and the COO were entitled to remuneration packages determined by the Board with the concurrence of the Minister and the Minister of Finance. SAPO argued that the approval of the Minister was not required. She noted that the Committee had fought for this amendment last year as it thought that it was important for the Minister of Finance to be involved. The Committee could not change the amendment now.

Ms Michael concurred with Ms Tsebe. She said that a 70% quorum was needed for board meetings and that the consultation with both Ministers regarding remuneration was of the utmost importance. It created level playing fields and an element of transparency that the Government wanted.

The Chairperson noted that SAPO had indicated to him that it had raised an objection to the 70% quorum amendment that was proposed for the Postbank Board during discussions regarding the South African Postbank Limited Bill. The next time the Committee had to meet to discuss the SAPO Bill, it would be a formal deliberation. The Bill would belong to the Committee and it had to be finalised. The State Law Advisers would then commence the “clean-up work”.

Ms Mandiza Mbekeni, Head of Legal: SAPO, referred the Committee to clause 22(1), which said that the Board had to determine the structure or organogram of the Post Office and the conditions of service, remuneration and service benefits of the personnel of the SAPO after consultation with the CEO, and with concurrence of the Minister and Minister of Finance. SAPO requested that the Board be empowered to take this decision. From a practical point of view, specifically when there were strikes, it was an administrative challenge to get both Ministers to agree to the annual increases of employees. SAPO acknowledged that the Minister of Finance’s approval was needed for senior management’s increases, but they disagreed that the Minister of Finance had to be involved in discussions concerning other lower level employees.

The Chairperson replied that the Committee would need to consult the State Law Adviser to tell them the consequences of this amendment. However, he understood SAPO’s concerns regarding operational challenges.

Ms Ndebeni commented that if SAPO was saying that the Minister of Finance was not needed during salary negotiations for junior level employees, then she understood where they were coming from.

Ms Morutoa added that this was a subject for the State Law Adviser and SAPO to discuss.

Mr Wiltz replied that the amendment would not just apply to junior level employees of SAPO, it would also apply to the executives. Excluding the Minister of Finance would put the Board in full control of remuneration. During previous discussions, the Committee thought it was necessary to have consultations with the Minister of Finance because of the burden wage increases could have on the state.

Mr N van den Berg (DA) noted that SAPO mentioned it was an operational challenge when there were strikes. He thought it was necessary to include the Minister in discussions during strikes so the state had an overall view of the negotiations that were happening. He also thought it was unfair to give the SAPO Board that much power.

Ms Magazi proposed that the State Law Advisers should do a “desktop” study on the matter.

Ms Tsebe noted that the amendment was not made by default. It was discussed at length during previous meetings. The clause captured the position the Committee took on the matter.

Mr Vukela added that the matter had been discussed in two meetings. He stated that anything that involved money could not be considered an operational matter.

Mr Nongogo replied that SAPO was not trying to be sinister or evasive; it was just raising a few practical considerations. They were not adamant that the clause had to be changed; they were only asking the Committee to consider amending the clause again to remove the Minister of Finance from the consultation process.  

Mr C Kekane (ANC) said that if SAPO thought that the inclusion of the Minister of Finance was impractical, then it was worth reconsidering the amendment. The Committee had to come up with something that worked for SAPO as well.

Ms Killian stated that it was clear that the concern pertained to issue of strikes and the urgency to resolve it when it occurred. However, this was exactly why the Minister of Finance had to be included in the consultations and negotiations of remuneration for SAPO personnel. The state had to be involved in the negotiations.

Mr Wiltz added that including the Minister of Finance in the consultation process did not deviate much from common practice.

Mr Nongogo said that Mr Wiltz was quite correct. He understood the Minister of Finance’s role when the remuneration of the executive management of SAPO was being discussed. However, when it came to junior level employees, the Board and the CEO had to be given the power to decide the remuneration with the Minister of Communications. SAPO was just saying that it was not necessary to consult the Minister of Finance. The reality was that sometimes Ministers were not always available on a day-to-day basis. Therefore, decision-making could become an issue, especially when there were strikes. It was a major issue for SAPO, which was a State Owned Enterprise (SOE), to lose five or six working days, as it was competing with other entities for revenue.

The Chairperson clarified that SAPO was arguing that if the Committee removed the Minister of Finance from the consultation process, it would be fine.

Mr Nongogo answered in the affirmative.

Ms Mbekeni added that the Minister of Finance was usually consulted about the remuneration of middle and senior executives. SAPO agreed with this. However, SAPO wanted the Committee to consider the idea that the Minister of Finance was not needed for consultations regarding the remuneration of junior level employees. This was especially important when employees went on strikes and the negotiation of remuneration became a matter of urgency.

The Chairperson acknowledged that this was a difficult matter for the Committee to resolve. He noted that the Members thought the clause was strong as it was. He asked the DoC and the State Law Adviser to discuss the concern with SAPO. The Committee would take a few minutes to discuss the issue at the next meeting before the formal deliberations on the Bill.

The meeting was adjourned.