Ferrostaal document: legal opinion & vote; Committee Report on Gambling Review Commission Report

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Trade and Industry

06 March 2012
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The meeting was briefed by the parliamentary legal advisor who had been asked by the Committee to give a legal opinion on a three page document provided by a Committee member regarding Ferrostaal in a previous meeting. The document was marked as legal and confidential and the question was whether the Committee could use it. The advisor said that as the document was not the full document, that as only three pages of the forensic report was available, that as the pages had not been received from the original source and therefore might be contaminated and that as the document was subject to attorney-client privilege, her advice was not to accept the document as it was too big a risk.

The Chairperson ruled that the Committee would go no further with the Ferrostaal document but would hold the Department accountable to respond on the National Investment Participation Program (NIPP).

The Democratic Alliance said they wished to place on record their objections based on the fact that the document was in the public domain, that Ferrostaal was confirmed as the client, that the document had been published many times in the media and that the document be used as a basis for posing questions which were in the public interest. The Democratic Alliance asked that the issue be put to a vote.

The Chairperson agreed and asked Members to vote whether the Ferrostaal document should be put before the Committee. The DA and Freedom Front Plus voted in favour (3 votes), the ANC voted against (5 votes) with two abstentions. The document would not be placed before the Committee.

The Gambling Sub-Committee chairperson then presented the subcommittee’s report’s recommendations.
He said the National Lotteries Board had gray areas like the definition of political office bearer that needed to be clarified. The Minister had to be granted the discretion to extend the licence of the operator to prevent a re-occurrence of the lottery not operating for months as happened in the past. It was important that the location of gambling machines not be easily accessible so as to protect minors. It should become mandatory for winners to undergo some form of financial management training before being paid out. The Distributing Agencies had to be held accountable to the National Lotteries Board (NLB). The application forms had to be revised and simplified to facilitate applications from small rural organisations. More funding should be allocated to rural areas as a means of speaking to the priorities of government. The NLB’s powers should be extended to include control over illegal lotteries by banks and cell phone companies over which the NLB currently had no control. Proposed legislative amendments should:
▪ enable the NLB to enforce the Act through court action
▪ establish a professional grant-making institution
▪ formalise the relationship between the NLB and the proposed grant-making institution
▪ address bottlenecks in the Act regarding distribution of funds including the legal requirements for the
adjudication process.
▪ empower the NLB to set norms and standards that govern promotional competitions.

There appeared to be a disjuncture between the national and provincial governing boards and norms and standards should be applied nationally. The
National Gambling Policy Council (NGPC) had to meet regularly but concurrent powers were at issue and the parliament legal advisor was asked to provide input.

The parliament legal advisor said that gambling fell under Schedule 4 dealing with concurrent powers between national and provincial spheres of government. If the national and provincial legislation were not complementary then Section 146 of the constitution meant that the national legislation prevailed provided the legislation was uniform and applicable to all and the provincial legislation became inoperable. Every gambling licence was subject to Financial Intelligence Centre Act (FICA) rules, no one was exempt. In the case of a gambling machine manufacturer, FICA laws were not applicable as it was not a gambling institution but a manufacturer.

The Gambling Sub-Committee chairperson emphasized the need to strengthen the corporate governance principles of the NGPC and that there be an MOU between the Provincial Gambling Regulatory Authority and the National Gambling Board. Online gambling was complex. Legislating online gambling should not be a blanket legislation; it should only be for specific sectors and that overseas operators should establish companies and offices locally in South Africa.

Members said that greyhound racing and harness racing was an opportunity to introduce the previously disadvantaged through the form of co-operatives into racing. Members said that gambling had to be seen as providing job creation and thus working towards government’s priorities. Members said that there should be legislation such that should some NGPC members be absent, meetings could continue without their input.
Members recommended that further oversight in the form of an ombudsman, as in the insurance industry, be established. Members said charities should be allocated a greater share of lottery funds than sport.

The Committee added a brief introductory paragraph before adopting the report as the Committee Report
on the Gambling Review Commission Report.

Meeting report

Document regarding Ferrostaal: legal opinion and vote
The meeting was briefed by Advocate Charmaine van der Merwe, parliamentary legal advisor, who was asked by the Committee to give a legal opinion on a three page document regarding Ferrostaal provided by Mr D Maynier (DA) in a previous meeting. She said that the document was marked as legal and confidential and the question was whether the Committee could use it. The National Assembly Rules did not have a rule on this but the Constitutional Court had said that a court had to decide the relevance. She said the document was not the full document, that it was only three pages of a forensic report, that the pages had not been received from the original source and therefore might be contaminated and that the document was subject to attorney-client privilege. The privilege of course could be waived by the client but that there was no confirmation that Ferrostaal was the client. Her advice was not to accept the document as it was too big a risk.

Mr G Mackintosh (COPE) asked what the status of members in a Portfolio Committee was regarding parliamentary privilege.

Mr G Hill-Lewis (DA) asked what risk the advocate was referring to.

Adv van der Merwe replied that the parliamentary privilege included both Parliament plenary meetings and the Portfolio Committee meetings. She said the risk was that the origin of the document could not be ascertained and the document was not complete and that the client might not concur with the findings.

The Chairperson ruled that the Committee would go no further with the Ferrostaal document but would hold the Department accountable to respond on NIPP.

Mr Hill-Lewis said he wished to place on record his objections based on the fact that the document was in the public domain, that Ferrostaal was confirmed as the client, that the document had been published many times in the media and that he was suggesting that the document be used as a basis for posing questions which were in the public interest.

Mr W James (DA) added that he wanted the issue put to a vote.

The Chairperson agreed and asked Members to vote whether the Ferrostaal document should be put before the Committee.

The DA and Freedom Front Plus voted in favour (3 votes), the ANC voted against (5 votes) with two abstentions. Thus the document would not be placed before the Committee.

Gambling Sub-Committee Final Report on Gambling Review Commission Report
The chairperson of the Gambling Sub-Committee, Mr N Gcwagbaza (ANC), presented the subcommittee’s report. He said that the Lottery Board had grey areas regarding licensing and the extension of the licence that needed to be clarified. The definition of political office bearer needed to be clarified and the Minister had to be granted the discretion to extend the licence of the lottery operator to prevent a re-occurrence of the lottery not operating for months as had happened in the past.

He said it was important that the location of gambling machines be such that one was required to travel to them, that they not be easily accessible so as to protect minors.

He said it should become mandatory for winners to undergo some form of financial management training before being paid out.

He said the Distributing Agencies had to be held accountable to the National Lotteries Board (NLB).

He said the application forms had to be revised and simplified to facilitate applications from small rural organisations. More funding should be allocated to rural areas as a means of speaking to the priorities of government.

He said illegal lotteries by banks and cell phone companies existed over which the NLB had no control and so the NLB’s powers should be extended to include control over these lotteries.

He said the proposed legislative amendments should:
▪ enable the NLB to enforce the Act through court action
▪ establish a professional grant-making institution
▪ formalise the relationship between the NLB and the proposed grant-making institution
▪ address bottlenecks in the Act regarding distribution of funds including the legal requirements for the
adjudication process.
▪ empower the NLB to set norms and standards that govern promotional competitions.

He said there appeared to be a disjuncture between the national and provincial governing boards and that norms and standards should be applied nationally. The
National Gambling Policy Council had to meet regularly but that concurrent powers were at issue and he then asked the parliamentary legal advisor to provide input.

Adv van der Merwe said gambling fell under Schedule 4 dealing with concurrent powers between national and provincial spheres of government. If the national and provincial legislation was complementary then it co-existed while issues of duplication could be addressed through memorandums of understanding (MOU). If the national and provincial legislation were not complementary then Section 146 of the Constitution meant that the national legislation prevailed provided the legislation was uniform and applicable to all and the provincial legislation became inoperable. Parliament’s oversight role was over national entities while the provinces oversaw provincial entities.

She said that every gambling licence should be subject to Financial Intelligence Centre Act (FICA) rules, no one should be exempt. In the case of gambling machine manufacturers, FICA laws were not applicable as these were not gambling institutions but manufacturers. If however they operated gambling machines on their premises then they would become subject to FICA rules.

Mr Mackintosh raised the issue that the
National Gambling Policy Council (NGPC) could regularly not achieve a quorum.

The Chairperson of the Gambling Sub-Committee emphasized the need to strengthen the corporate governance principles of the NGPC and that there be an MOU between the Provincial Gambling Regulatory Authority and the National Gambling Board.

He said that online gambling was complex. One could not ignore legislating online gambling but that it should not be blanket legislation; it should only be for specific sectors. Overseas operators should establish companies and offices locally in South Africa.

He said the Committee had not consulted extensively with the animal welfare organisations and more time was needed for this as well as for greyhound racing, for bush and harness racing and fahfee.

He said the subcommittee agreed that there should be clear identity checks and a ceiling on the daily stakes should be introduced

Mr Mackintosh said that greyhound racing and harness racing was an opportunity to introduce the previously disadvantaged through the form of co-operatives into racing.

Mr X Mabasa (ANC) said that gambling had to be seen as providing job creation and thus working towards government’s priorities.

Ms Kotsi (COPE) was concerned with under age gambling.

Mr Radebe said that there should be legislation such that, should the NGPC members be absent, the meeting would continue without their input.

Mr A Alberts (FF+) recommended that further oversight in the form of an ombudsman, as in the insurance industry, be established. He asked how the funds would be allocated as he felt that charities should be allocated a greater share than sport.

Mr Mabasa raised concerns about the location of gambling machines in close proximity to schools for example.

The Gambling Sub-Committee chairperson said that all legislation regarding gambling had to ensure that the location was such that one had to travel a distance to reach it, that it not be easily reachable.

The Committee added a brief introductory paragraph and then adopted the report as the full Committee Report.

Mr Hill Lewis asked whether a copy of the attendance register of the NGPC meetings he had requested the Committee to ask for in a previous meeting, had been received.

Mr Radebe said that the Select Committee and the National Council of Provinces were responsible for MECs and were thus the appropriate authority to follow up on the issue but that there was a need to amend the legislation to allow work to continue should a quorum not be constituted by the NGPC. He added that point 8.2.3 in the recommendations talked to strengthening corporate governance principles in NGPC meetings.

The meeting was adjourned

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