Sub-committee report on Co-operatives Amendment Bill; Input from Parliamentary Law Adviser on previous meeting with the National Consumer Commission

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Trade, Industry and Competition

17 August 2012
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Sub-committee appointed by the Committee to consider the Co-operatives Amendment Bill presented a report on its activities.  The Sub-committee had been briefed by the Parliamentary Law Adviser on the submissions received from interested parties on the Bill.  The report summarised the broader and specific issues that had been raised in the submissions and listed certain procedural matters regarding the processing of the Bill.  The response of the Department of Trade and Industry would be forwarded to the Parliamentary Law Adviser before she presented a further briefing to the Sub-committee.  Experts in the fields of co-operatives and auditing were identified and would be invited to provide input on the Bill.

The scheduled continuation of the meeting with the National Consumer Commission could not be held due to the illness of the Commissioner.  The Committee decided to request that a deputy be appointed to present briefings if the presenter was unable to attend. 

The Committee received input from the Parliamentary Law Adviser on certain discrepancies noted during the briefing of the Commission to the Committee on 8 August 2012.  The document detailed discrepancies noted in the briefing documents submitted by the Commission, the responses of the commissioner and the Head: Legal Services and the corresponding comments of the Parliamentary Law Adviser.

The Committee had received a document from the Commissioner, dated 15 August 2012, which appeared to be a lengthy response to the issues raised during the previous meeting.  Members had not received sufficient time to study the document in detail and queried the status of the document.  The document would be forwarded to the Parliamentary Law Adviser for comment.

Members expressed grave concern over the apparent breakdown of the relationship between the National Consumer Commission and the National Consumer Tribunal and the ‘polarisation’ between the Commissioner and the Minister of Trade and Industry.  Other concerns included misinterpretation of the provisions in the Consumer Protection Act, placing consumer protection at risk and whether the Commission was meeting its mandate.  The Committee had not been briefed on the financial reports and the 2012/13 first quarter report of the Commission.

Although further discussion with the Commission was necessary, the Committee’s tight schedule made it difficult to schedule another meeting.  The Committee decided to submit a formal request for the outstanding information and consider the documents submitted before submitting its report to the House.  The Matter would also be referred to the Standing Committee on Public Accounts.

Meeting report

The Chairperson advised that the Commissioner of the National Consumer Commission (NCC) was unable to attend the meeting due to illness.  The scheduled continuation of the engagement with the NCC could therefore not take place.  The Parliamentary Law Adviser was requested to give input on the engagement with the NCC on 8 August 2012.  The agenda for the meeting was amended accordingly.  The apologies of several Members of the Committee were noted.

Ms S Van der Merwe (ANC) proposed that the Committee should take a decision that from now on a deputy must be appointed if an official was unable to present at a scheduled briefing. The proposal was seconded by Mr X Mabasa (ANC) and Mr N Gcwabaza (ANC).  Mr Mabasa added suggestions for the letter to be sent to the NCC by the Committee.

The Chairperson said that certain matters could only be responded to by the Commissioner but the financial reports and the report on the performance during the first quarter of 2012/13 could have been presented to the Committee by the Chief Financial Officer of the NCC.  She ascertained that Members representing the various parties had submitted contributions to the report on the study tour to Kenya.  The first draft of the rolling report detailed who had been involved, the venue and the issues that had been raised and was circulated to Members.

Sub-committee report on the Co-operatives Amendment Bill
Mr Mabasa presented the report of the Sub-committee (see attached document).  The Parliamentary Law Adviser (PLA) had briefed the Sub-committee on her initial responses to the issues raised by stakeholders.  She highlighted the broad and the specific areas of concern with regard to the provisions in the Bill.  Other matters related to the processing of the proposed legislation, i.e. the impact of the classification of the Bill; engagement with co-operatives in Mpumalanga and KwaZulu Natal; the response of the Department of Trade and Industry (DTI) to the submissions received to be forwarded to the PLA and a further briefing by the PLA on Tuesday, 21 August 2012.  The Sub-committee proposed that expert advice should be sought on the auditing provisions in the Bill from Prof Kathy Idensohn.  The Sub-committee asked for the assistance of the secretariat to identify other experts on co-operatives who could be approached for assistance.

The Chairperson thanked the Sub-committee for the report, which was received on 16 August 2012.  She had been advised verbally that the date of the briefing had been changed from Tuesday, 21 August 2012 to Thursday, 23 August 2012.  She suggested that the response of the PLA to the issues that were raised on the Bill was forwarded to the DTI.  Dr Waema had been identified as an expert on co-operatives in Kenya.  Another (unnamed) person was an expert on co-operatives in the Basque region of Spain.  The Committee would issue invitations to the experts to provide input.

Mr Mabasa asked for comment from the PLA on the report from the Sub-committee.

The Chairperson said that Members required more time to study the report before engaging in further discussion.  The PLA also had to consider the response from the DTI on the submissions received, which could have a bearing on her initial response.  She asked the PLA to highlight the three key areas.

Advocate Charmaine Van der Merwe, PLA advised that the input received from professional auditing entities indicated that the provisions in the Bill were not acceptable.  Professional auditors worked on the basis of a framework, which might be a good idea for co-operatives as well.  The proposed new social and management reports were not part of the current framework.  The submission from the Pretoria Trust co-operative had included detailed comment on the conflicting provisions in the Bill and in the principal Act.  Many contributors had asked questions relating to policy.  She suggested that the DTI explained the policy behind the Bill to the Committee so that the Committee would be able to decide on what had to be achieved.

The Chairperson awaited the response of the DTI.  Other issues concerned the extent of the advertising of the Bill to the public and how broad the target group of co-operatives invited to submit comment had been.  The proposed legislation could be a significant instrument to encourage economic development in rural areas.

Mr Mabasa suggested that the DTI’s list of co-operatives and the lists of attendees at workshops were used to send direct invitations to comment on the Bill.

Mr Gcwabaza understood that the United Nations (UN) had declared 2012 as the year of the co-operative. It was not clear if South Africa had done much to popularise the notion and to make people aware of the benefits of co-operatives.  Most members of co-operatives were over the age of 35 and the youth were largely excluded.  It was necessary to do more to educate the population on co-operatives in order to garner more support for government’s objectives.

The Chairperson was interested to hear of the UN initiative.  Legislation was one aspect of achieving the objectives concerning co-operatives.  The Co-operatives Amendment Bill was one of several pieces of legislation currently before the Committee.  More needed to be done to raise awareness.  Members of the Sub-committee met on a weekly basis and it was clear that the Bill was being taken seriously.

Input from the Parliamentary Law Adviser on the engagement with the National Consumer Commission on 8 August 2012
Advocate Van der Merwe had prepared a document on the discrepancies she had noted during the Committee’s engagement with the NCC on 8 August 2012 (see attached document).

After the presentation, the documents submitted to the Committee were checked and investigated further.  Advocate Van der Merwe commented on five discrepancies in the information provided in the NCC presentation document.  The discrepancies identified were concerned with the following: who had been the applicant in the referral of the NCC to the National Consumer Tribunal (NCT)?; the finding of the NCT that the compliance notice issued to the City Of Johannesburg by the NCC had been defective; the interpretation of the standing of the NCC with regard to applications for interim relief on behalf of consumers and the interpretation of the NCT Regulations as well as the provisions in the Consumer Protection Act (CPA) dealing with compliance notices.  The reference to the Auction Alliance case could not be commented on as Advocate Van der Merwe had not yet seen the written judgment on the case.

Other comments concerned the responses of the NCC to questions from the Members of the Committee.  Advocate Van der Merwe disagreed with the statement made by the Commissioner that reasons were not provided in judgments by the NCT why the NCC was found to be not complying.  She listed the cases involving City of Johannesburg, Multichoice Africa (Pty) Ltd, Vodacom Service Provider Company (Pty) Ltd, Hyginique Toilet Hire and Sales and Murray, NO and Others where clear reasons were provided in the judgments for the findings.  She clarified the provisions in the CPA dealing with what the NCC might publish to address the issue concerning whether or not the NCC had usurped the power of the Minister of Trade and Industry.  Detailed comment was provided on the matter concerning the NCT’s threat to refer the NCC to the Law Society.  Advocate van der Merwe had established that the letter from the NCT threatening referral to the Law Society was dated 3 July 2012 and was addressed to Botha, Massyn and Thobejane Associated Attorneys, not the NCC.  Other comments concerned the confidential report from the NCT to the Minister and the allegations that were made that the NCC had exceeded its mandate.

The Chairperson thanked Advocate Van der Merwe for her input.  She noted that it might be necessary for legislation to be amended to ensure that there were no room for confusion and misinterpretation.  Another grey area was the manner in which entities engaged with each other.  The Committee had been concerned that the legislation was being misinterpreted but the PLA was of the opinion that the problem was the process and the manner of enforcement.  The matter concerning the Law Society highlighted that both parties needed to be present during any kind of engagement involving a case.  She hoped that the DTI also understood that the NCC could publish anything in the Government Gazette.

Mr Mabasa expressed appreciation for the PLA’s input.  The document was most helpful in assisting Members to understand the issues.

Ms Van der Merwe asked what the status was of the document from the NCC to the Committee dated 15 August 2012. The document was signed by Ms Mamodupi Mohlala-Mulaudzi (the NCC Commissioner) and appeared to be a rebuttal and/or response to the issues raised by Members during the meeting on 8 August 2012.  She asked if the document had been referred to the PLA as it appeared to include reference to the issues covered in the discrepancy document dealt with earlier.  She asked what the status was of the copy of the ‘alarming’ letter from the Banking Association of South Africa to the Director-General of the DTI.

Mr W James (DA) also queried the status of the documents received.

The Chairperson explained that letters received by the Committee were made available to Members and could be referred to the PLA if a legal opinion was required.  The Committee would then take a position on the matter.  She preferred written communication with the Committee to verbal complaints.  The Committee had asked the Commissioner to provide additional information during the previous engagement with the NCC.  The Commissioner’s response was in the document dated 15 August 2012, which was circulated to Members.  Additional information was requested, which would have been presented during this meeting.

Advocate A Alberts (FF+) asked the PLA if there was any evidence that the Commissioner was attempting to hide anything from the Committee.  He suggested that the document from the NCC should be referred to the PLA.  He was most concerned by the growing polarisation between the Commissioner and the Minister.  He wondered if the NCC was a “rogue agent”.  It was essential that the Commission ensured that all the facts were covered and the legal process was correctly followed before it took on big organisations.

The Chairperson cautioned against the use of emotive language in discussion.  It was preferable to refer to facts instead.

Ms Van der Merwe said that the Committee had oversight responsibilities and had to ensure that the entities it was responsible for operated effectively.  In this case, the Committee had to ensure that the consumer was protected but she thought that there was a problem.  She was particularly concerned over the animosity between the NCC and NCT, as indicated in paragraph 82 of the document from the Commissioner, dated 15 August 2012.  She quoted the relevant paragraph verbatim.  She expressed extreme concern over the statements made and felt that the Committee should address the matter.

The Chairperson said that she had not experienced such a display of animosity between two related entities, which could only result in a lack of service delivery.  The Constitution spelled out how entities were required to cooperate with each other but in this instance, there was a clear flouting of the requirements.  When two entities communicated through lawyer’s letters, it was an indication that the relationship had broken down.  There was a contract between the Commissioner and the Minister.  The Minister had executive authority and had the right to delegate certain responsibilities to officials, for example the Director-General of the DTI.  It was apparent that communication in the desired manner had not taken place.  The Committee attempted to foster a positive relationship between the various entities that would benefit all South Africans.  However, the Committee had observed that there had been a breakdown in the relationship and that there had been instances of serious misunderstanding of the legal provisions and procedures.  The Committee had to ensure that the entity delivered on its mandate.  In this case, the Committee had considered the cases the NCC was involved in and had asked for a record of the number or cases dealt with, which cases were still in progress and which cases had been successful.  More information on unsuccessful cases was requested.  The information allowed the Committee to assess the progress made by the entity.  The Committee did not receive a clear response from the NCC but had received information from other entities (for example the South African Revenue Service (SARS).  The latest response from the NCC had not been constructive and further engagement with the NCC would be necessary.  However, the Committee had a very tight schedule and would have to ask for permission to hold meetings after hours.  Alternatively, the Committee could decide to use the information that had been received, submit a formal request for the outstanding information, hold a discussion and take a position before submitting a report to the House.  The matter should also be referred to the Standin Committee on Public Accounts (SCOPA).

Mr James said that the protection of the consumer was at risk.  The Minister had an obligation to restore the entities involved to professional order.  He proposed that the Committee expressed censure on the conduct of the Commissioner as information requested was not provided and no arrangements were made to send a delegate in her place.  He supported the alternative option outlined by the Chairperson.  The input provided in the document prepared by the PLA was sufficiently detailed to inform the Committee’s report.

The Chairperson observed that the input from the PLA was unbiased.  The matter was serious and required further discussion. 

Ms A Ndlazi (ANC), Member of the Portfolio Committees on Communication and Science and Technology joined the proceedings to establish a quorum.  The Chairperson summarised the issue concerning the NCC before the Committee for her benefit.  The main focus of the Committee was service delivery.  Two scheduled meetings with the NCC on 27 July 2012 and 3 August 2012 were postponed to 8 August 2012.  The Committee had not yet been briefed on the 2011/12 financial report of the NCC and the report on the first quarter of 2012/13.  The Committee was currently engaged with whether or not the NCC was meeting its mandate.  The response of the Commissioner dated 15 August 2012 would be forwarded to the PLA for comment.  She asked Mr James to clarify his proposal that the Committee censured the Commissioner.

Mr James had reconsidered his earlier proposal and decided that it would be premature to censure the Commissioner at this stage.  It would be more appropriate to obtain the information requested and complete the process before the Committee decided on what action should be taken.

The Chairperson asked for secondment of the proposal on how the Committee would proceed with the matter.  Mr Gcwabaza seconded the proposal.  The Chairperson instructed the Committee Secretary on what was required.

The meeting was adjourned.


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