SABC Board interview recommendations, SA Post Office SOC Limited Amendment Bill [B24-2013] public hearings & Departmental responses

Meeting report

Chairperson’s opening remarks
The Chairperson acknowledged the presence of the Director General of the Department of Communications, Ms Rosey Sekese, and her delegation, and the Chairperson of the South African Post Office SOC Ltd Board, Dr Hlamalani Manzini.

He expressed an apology on behalf of the Committee and the Multi-Party Task Team for starting the meeting very late. This was due to delays related to the first item on the agenda of the meeting, which was the report on recommendations for appointments of the SABC Board. The Task Team had not yet finalised the issue and the Committee thought it important to start the meeting and outline the process to be followed, to avoid further delays. He proposed that the proceedings be adjourned at this stage to allow further discussions, in the ANC,  for not more than 15 minutes, following which the Task Team would reconvene.

He ordered a short adjournment.

SABC Board interviews and adoption of Committee report recommending candidates for appointment
When the Committee reconvened, the Chairperson explained that according to the due process, the multi-party Task Team had been convened to deal with the issue of the recommendations for appointments to the SABC Board, in order to narrow down the issues placed before the full Committee for debate. This was in keeping with some of the Rules of the House to protect the integrity of the potential Board members, so that sensitive issues were not dealt with in public. The Task Team had met to deal with the issues but could not finalise its work during the previous week because the process of vetting and checking of qualifications was not done at that time. That process was then completed and the Task Team had proceeded with its work. It was unfortunate that the Task Team could not reach the desired results, but it was important to note that the Task Team was a facilitation of the full Committee, which was supposed to take the final decision. In essence, the Committee was back to “square-one”, but it was important to appreciate the work and effort which had been put in by the members of the Task Team. The discussions were quite mature, with a focus on what was best for the SABC. It was very unfortunate that an agreement could not be reached on the list to be submitted to the Committee. Since there was no consensus at the Task Team level, he was now presenting the matter to the parties to state their opinions as to the candidates to be selected.

Mr A Steyn (DA) questioned whether the Chairperson was suggesting that every party should provide 12 names each. If so, this would result in exactly what the Task Team and Committee had being trying to avoid, which was the creation of disharmony in the Board. If so, he objected to his party listing any names, if it was simply to end up voting on an ANC list.

The Chairperson said that he normally presented what was agreed upon in the Task Team. However, the Task Team had been unable to agree on names, and that was why he asked the parties to present their chosen names.

Ms L van der Merwe (IFP) pleaded that the Chairperson should go ahead and present the list which the ANC had in the Task Team, which the opposition could not alter. That list was going to be presented in the National Assembly later in the week. Taking lists from parties would simply be a futile process.

Ms J Killian (COPE) seconded the proposal from Ms Van der Merwe, based on the argument that it was important to not politicise the SABC Board and that the objective was to get the best possible Board. Excellent candidates had been interviewed but agreement could not be reached on the names. She suggested that the ANC should put forward the names that it had agreed upon and the Committee could take it from there.

The Chairperson asked the ANC Members if he could go ahead and present the names.

Mr C Kekane (ANC) proposed that the twelve names presented should be those on which there had not been disagreement. If there was at least that achievement, it would be some achievement. He asked that, when reading them out, the Committee start with those which were jointly agreed upon, and finish off with the others.

Ms A Muthambi (ANC) said that she would go ahead to present the names of the candidates proposed by the ANC. This list included: Ms Rachel Kalidaas, Ms Ellen Zandile Tshabalala, Mr King Thembinkosi Bonakele, Mr Vusumuzi Mavuso, Ms Nomvuyo Mhlakaza, Mr Ronnie Lubisi, Prof Bongani Khumalo, Prof Mbulaheni Obert Maguvhe, Mr Krish Naidoo, Dr Aaron Tshidzumba, Ms Noluthando Gosa and Ms Hope Zinde.

The Chairperson explained that these were the 12 names proposed by the ANC. He asked if there were other views. He said that it had to be remembered that it would not be good to appoint a Board where some members would feel like they were not wanted by other parties, and it was in this spirit that the opposition parties were raising their objections to stating their chosen names.

He answered Mr Kekane’s point by nothing that members of the Task Team were opposed to attaching any order to the names, as this might imply that some people were ranked lower than others. The disagreement was general, and not specific to names of individuals.

He asked that the Committee now proceed to the normal business of the Committee Report. He read it out. It was specifically noted in this Report that the Committee had been asked to deal with the appointment of the 12 non-executive members of the SABC Board. It had invited the public to nominate persons for consideration and recommendation to the President for appointment on the Board, by means of advertisements in the print media. Responses were received from 147 individuals. On 14 August, the Committee shortlisted 37 candidates to be interviewed: namely
Adv Zola Majavu, Ms Amanda Notando Madikiza, Ms Clare Frances O’Neil, Mr Darkey Ephraim Afrika, Ms Deborah Angelique Thompson, Dr Ndivhoniswani Aaron Tshidzumba, Ms Hope Zinde, Prof Johannes Jacobus Rossouw, Ms Katherine Skinner, Mr Krish Naidoo,  Mr Martin Mhlanga, Ms Merle O’Brien, Mr Joe Makhafola,  Mr John Matisson, Mr Lazaurus Serobe, Mr Lumko Mtimde, Mr Paul Serote, Ms Rachel Kadilaas, Mr Ronnie Lubisi, Mr Thembinkosi King Bonakele, Ms Charlotte Mampane,Ms Constance Seoposengwe, Ms Dudusile Ledwaba, Ms Zandile Ellen Tshabalala, Ms Leah Khumalo, Ms Noluthando Primrose Gosa, Ms Nomvuyo Memory Mhlakaza, Prof Bongani Khumalo, Prof Mbulaheni Obert Maguvhe, Prof Thidziambi Sylvia Tshivhase-Phendla, Mr Mahmood Mia, Prof William Gumede, Colonel Sipho Luyolo Majimbozi, Prof Theodore Mncedisi Jordan, Mr Thulani Tshefuta, Mr Tshilidzi Ratshitanga and Mr Vusumuzi Mavuso.                               

One candidate, Ms Clare Francis O’Neil, withdrew from the process.

After having interviewed the above candidates in open meetings in Parliament on 20, 21 and 22 August 2013 and in Johannesburg on 27 and 28 August 2013, the Committee resolved that the House, in accordance with the section 13 of the Broadcasting Act (No 4 of 1999), should recommend to the President that the following candidates be appointed as non-executive members on the SABC Board:

Ms Rachel Kalidaas, Ms Ellen Zandile Tshabalala, Mr King Thembinkosi Bonakele, Mr Vusumuzi Mavuso, Ms Nomvuyo Mhlakaza, Mr Ronnie Lubisi, Prof Bongani Khumalo, Prof Mbulaheni Obert Maguvhe, Mr Krish Naidoo, Dr Aaron Tshidzumba, Ms Noluthando Gosa and Ms Hope Zinde.

The Chairperson asked Members if they wished to comment.

Mr Steyn requested that the objection of the DA be noted on record.

Ms Killian requested that the objection by COPE should be noted.

Ms Van der Merwe requested that the objection of the IFP be registered.

The Chairperson noted these objections.

The Chairperson noted that eight Members voted in support of the 12 names, and eight against. He noted the adoption of the list and Report.

The Chairperson thanked every Member of the Committee for the hard work which had been put into the process. He noted that the recommended Board consisted of five women out of 12. The Report was going to be forwarded for consideration by the National Assembly. He assumed that, based on the objections, the parties would request a debate.

Ms Killian said that it was either going to be a debate or an opportunity was going to be allowed to make declarations.

Ms R Morutoa (ANC) expressed concern about the way the names were arranged. She proposed that the list should start with any other person but Ms Ellen Tshabalala. This was because she was currently the Chairperson and it could create a wrong impression.

The Chairperson replied that the point was noted but that the names were not in order of priority.

Public Hearings on the South African Post Office SOC Limited Amendment Bill 2013
TELPOS Pensioner Association Submission
Mr Bernie Blume, Chairperson of the TELPOS Pensioner Association, told the Committee that the Association of TELPOS pensioners was a voluntary body that represented the interests of and acted as a spokesperson for pensioners who retired from the SA Post Office Ltd, Telkom and the former Department of Posts and Telecommunications, as well as other related organisations.

This issues which were being discussed affected over 7 000 pensioners of the Post Office Retirement Fund (PORF or the Fund). Most of these pensioners elected to join SA Post Office Ltd in terms of the provisions of the Post Office Amendment Act 85 of 1991. Paramount to their agreeing to transfer their services to the new company on 1 October 1991 was the guarantee, included in the Act, that their service conditions, especially pension and medical aid benefits, would not be less favorable than those applicable immediately preceding the transfer date. Without such a provision in the relative Act, employees would have undoubtedly preferred to remain “state officials” and thus render the establishment of a Postal Office company unviable. This guarantee was also extended to employees who joined the company after 1 October 1991 and who subsequently retired. What the guarantee entailed was that in the event of the PORF being unable to meet its obligations, the SA Post Office Ltd, and/or the state itself as the only shareholder, would become liable for the payment of the annuities to all pensioners of the PORF. This had always remained an enormous feeling of comfort and security to the aged or infirm that the State itself guaranteed the pensions of its former employees or their widows/dependents. Mr Blume told the Committee that the importance of this benefit could not be over-emphasised.

Mr Blume explained that the TELPOS pensioners had learnt that the 1958 Act in which Amendment 85 of 1991 was now embodied, was to be replaced in its entirety, and that the new Bill eliminated the guarantee of the state towards pensioners of the PORF.

Pensioners were vehemently opposed to the removal, or even any change, of the Act that would effectively absolve the State from its obligation towards pensioners who served the State and the Company loyally for many years. Mr Blume said that it was nothing less than absolutely immoral for the State to try to manipulate itself out of its obligation to pensioners.

The TELPOS Pensioners Association according fully opposed the changes and supported any protest or action deemed as necessary in order to uphold the pension guarantee by the State towards retired Post Office employees. 

Discussion
The Chairperson told the Committee that Mr Blume was under time pressures and had to leave the meeting. He noted that the Bill was referred to the Committee on the 25 July 2013, and on 6 August the Department of Communications (DOC or the Department) introduced the Bill to the Committee. Calls for public submissions were made and the closing date was the 30 August 2013. There was a request for the extension of the date, which was granted because only two organisations wanted to make submissions. These organisations were TELPOS Pensioners Association and South African Post Office (SAPO).

Ms S Tsebe (ANC) noted that she understood the argument by TELPOS but there was no concrete proposal on behalf of the association. The concern regarding the guarantee and the state obligation in that regard was genuine, but it was not clear what its request was.

Mr Blume replied that it was not the place of TELPOS to explain what it would like to see happening. This was a situation where the pensions were guaranteed in terms of the Post Office Act, and that was what the pensioners would like to enjoy for the rest of their lives. If workers spent their lives dedicated to a cause and in service of the employer, knowing that their pension was guaranteed, it did not mean that the pension should be guaranteed for one or two years only, but for the rest of their life, which was what was expected and accepted. This involved the security, peace of mind and a decent old age for the employees and their dependants. It was not for him to say what he would like the government to do, other than to urge the government to uphold the guarantee.

Ms Killian asked how many people were affected by this situation. It was only appropriate that DOC and SAPO respond on how they intended to deal with this matter. If government had given guarantees in the past, these guarantees had to be honoured. She asked if the DOC and SAPO foresaw a problem in not removing the clauses concerned.

Mr Blume replied that there were currently just over 7 000 South African Post Office pensioners. The potential of other people who were currently members of the Fund but were not pensioners yet had to be taken into consideration. At the time of establishment of the Post Office, there were about 4 000 people who chose to stay with the Government Employees Pension Fund (GEPF) and were thus not affected by these proposed changes.

Mr Steyn asked if Mr Blume had any idea why all the workers could not either choose to stay with the GEPF or move as an entity to the Post Office. He questioned what were the advantages of staying or moving?

Mr Blume replied that there were many stories around the issue. The move happened during the periods of privatisation and corporatisation and people were given the guarantee that they were not going to be worse off than in the past. There were also road-shows held, where the Minister of Communications and the Postmaster-General went round the country assuring the workers of several guarantees. By and large, a picture of security was painted and there was even a booklet issued to each and every member of the staff painting a rosy picture and encouraging them to join the Post Office. It was now very sad to see that some of the conditions were being re-considered.

The Chairperson asked how the withdrawal of the state guarantee affected the performance of the Fund.

Mr Blume replied that he was not speaking on behalf of the Post Office Retirement Fund. He was speaking of the effect on the security and peace of mind for pensioners, who hoped that whatever happened, the state would not let them down. The guarantee had given a very real sense of security and people were very happy with it. To now withdraw that state obligation and undertaking would be devastating for them.

The Chairperson noted the response and added that SAPO and DOC must clarify issues in the briefing. He thanked Mr Blume for his participation. He then asked SAPO to brief the Committee.

South African Post Office SOC Ltd (SAPO) submission
Dr Hlamalani Manzini, Acting Chairperson, SAPO, introduced the delegation from SAPO, including the General Manager, Mr Andrew Nongogo, who would give the presentation.

Mr Nongogo outlined the purpose of the Amendment Bill, which was intended to update the South African Post Office SOC Ltd Act, 22 of 2011, transfer pension related provisions from the Post and Telecommunication Related Matters Act, 44 of 1958 to the South African Post Office SOC Ltd Act and enable the payment of a pension interest to a former spouse of a member upon divorce or the dissolution of a customary marriage (the “clean break principle”), by amending the South African Post Office SOC Ltd Act. It would also enhance the governance of the Post Office by making certain other amendments to the last mentioned Act.

The SAPO and the PORF in general supported the Bill. The support was, however, subject to two important caveats - the “guarantee issue” and the “interest issue”.

He firstly dealt with the “guarantee issue”. He explained to the Committee that until 1991 the Post Office was part of the civil service. It was commercialised in 1991 when the Post Office was created as a legal entity separate from the State. The erstwhile officials of the Post Office, when it was a department of State, were members of the Government Employees Pension Fund (“GEPF”). When the Post Office was separated from the State, it was necessary to create a pension fund outside the GEPF for its employees, and so the PORF was created. In order to determine the level of its funding actuarial calculations were performed. The idea was that the Fund would be funded by the transfer of assets from the GEPF. However, it transpired that the GEPF could not transfer adequate assets for the Fund to be fully funded, and an actuarial deficit of R595 million was reflected in the books of account of the Fund.

In order to cater for the problem of the underfunding, the legislature introduced the two guarantees into the legislation. The first guarantee was given by the new Post Office to the new PORF. The State gave the second guarantee. The Post Office guarantee was unlimited and meant that the Post Office would ensure that the defined benefits were paid to the members of the Fund. The guarantee of the State was, however, limited to the extent of the actuarial deficit as determined on 1 October 1991, less any payments made by the Post Office, plus interest calculated on the outstanding balance from time to time.

The omission of the State guarantee fundamentally affected the financial position of the SAPO. Up to now it had, in its notional liabilities column, a contingent debt owing to the Fund of some R2.3 billion. This exposure was created by the Post Office guarantee and still existed. However, this exposure was balanced by the State guarantee which was a credit in its notional assets column. This asset was now to be removed from the estate of the Post Office.

In this regard, SAPO proposed that subsections 10A(6) and (7) of the 1958 Act should be included in the 2011 Act and that the old section 10A(6) should become the new section 21C(7) and the old section 10A(7) should become the new section 21C(8).

Mr Nongogo then went on to explain the “interest issue”. The right of a divorced spouse immediately to claim his or her share of the pension of the Fund member at the time of divorce was generally known as the “clean break principle”. In Ngewu v Post Office Retirement Fund 2013 4 BCLR 421 (CC) the clean break principle was considered with reference to the PORF. The Constitutional Court declared the omission of the clean-break principle to be unconstitutional. However, the Court suspended the effect of its order, to afford Parliament the opportunity to amend the 1958 Act to provide for the clean break principle. The judgment of the court was handed down on 7 March 2013 which meant that the new legislation must be adopted before 7 November 2013, hence the urgency of importing that clean- break principle, by way of this Bill, into the relevant legislation.

A key consideration was the matter of interest calculation, due to many court orders that afforded spouses rights to the pensions of members prior to this judgement and subsequent enactment. Another consideration was the question of retrospective application. The Fund was trying to avoid being found in default of any of its obligations vis-à-vis the non-member spouse, by not paying any amount to that spouse before the amendment of the legislation. Any retrospective application of interest would unfairly punish the Fund for something that it did not do wrong. It was a creature of statute and operated legally within the very rules that created it.

On the interest issue, the position of SAPO was that the Post Office Retirement Fund was not liable to pay interest to a member’s former spouse, where the entitlement arose before the promulgation of this section 21I, but should pay interest, which must be calculated in accordance with the rules, from the date of the promulgation to date of payment. The Post Office Retirement Fund would furthermore pay interest to spouses in respect of entitlements that arose after the promulgation, from the date when the Post Office Retirement Fund was notified of the entitlement to the date of payment, and this interest must also be calculated in accordance with the rules.

Discussion
The Chairperson asked if Dr Manzini had any comments.

Dr Manzini said that the presentation captured the position of SAPO and it was backed by the legal team, which was present.

The Chairperson acknowledged the legal team from SAPO, the State Law Advisers and the Parliamentary Legal Team.

Ms Tsebe proposed that the Committee allow the DOC to present to the Committee before discussions, to avoid any repetition and have more productive engagement.

Ms W Newhoudt-Druchen (ANC) agreed with Ms Tsebe, but noted that she needed clarity on the issues of increases.

The Chairperson suggested that this question stand over, and asked DOC for its responses on the submissions.

Department of Communications responses to submissions
Ms Rosey Sekese, Director General, Department of Communications, introduced her delegation, and noted that, in the interests of time, the DOC responses would only deal with the issues raised by SAPO and TELPOS. In essence, these related to the guarantee and interest. These were two contentious issues. The DOC agreed on the clean break principle.

Mr Willie Vukela, Chief Director: Postal Policy, DOC, explained that prior to the submission of the Bill to Cabinet, and on 6 May 2013, the DOC wrote to National Treasury seeking a meeting to discuss the State guarantee and how to resolve the matter. Consultative meetings were subsequently held with National Treasury, SAPO and the Post Office Retirement Fund. The consultation on the guarantee could not be concluded by the time the Bill was submitted to Cabinet Committee for approval and therefore the Bill still contained the State guarantee similar to the provision in section 10A. The DOC had to proceed with the Bill to the Cabinet Committee in order to meet the deadline set by the Constitutional Court of 07 November 2013 on the “clean break” principle. However, at its sitting on 19 June 2013, the Cabinet Committee recommended that the Ministers of Communications and Finance must finalise outstanding consultations relating to the government being the guarantor of the Post Office Retirement Fund, prior to the next Cabinet meeting of 26 June 2013. The DOC and the National Treasury held an urgent meeting on 24 June 2013 to address issues raised by the Cabinet Committee.

The National Treasury was of the view that there was no longer a government guarantee, since the Post Office Retirement Fund was fully funded as at 31 December 2001. Cabinet, on 26 June 2013, subsequently approved the Bill, noting that the reference to the State as a guarantor of the Post Office Retirement Fund should be removed from the Bill, in view of the disagreement that existed on the guarantee, and in view of the urgency of this Bill. It was proposed that the pension-related provisions in the Bill should thus be limited to only the “clean-break” provisions. The DOC would continue engaging with stakeholders to find an amicable solution.

On the interest issue, Mr Vukela told the Committee that DOC held the view the liability of the PORF in respect of the former spouse only commenced on the date of enactment, and interest only became payable thereafter. This was supported by the fact that laws would not generally apply retrospectively. The proposed clause 21I(2)(j) was also aligned with corresponding provisions in the Pension Funds Act of 1956 and the Government Employees Pension Law of 1996. He noted also that the wording in clause 21I was in accordance with final Constitutional Court judgement.

Ms Sekese said, in conclusion, that further discussions would be held with the key stakeholders regarding the State guarantee of the Post Office Retirement Fund. She proposed that the Committee should only proceed with the amendments to the 1958 Act, to enable the “clean break” principle as ordered by the Constitutional Court. On the interest issue the DOC would prepare the appropriate wording to clarify when interest commenced.

Discussion
Ms Tsebe said that the questions which she wanted to ask after the SAPO presentation had been answered in the DOC responses.

Ms Newhoudt-Druchen said that she had a question on the interest, but it had been adequately explained by the DOC. She proposed that the Bill that was before the Committee should be withdrawn until the other amendment was provided to the Committee. She also asked why the government guarantee contained in the 1958 Act should not be put into the Amendment Bill, to allay the fears of the members of the pension fund. She questioned if this was merely an omission, or due to time pressure, and whether there was consultation with the pension fund and TELPOS around this issue.

Ms R Lesoma (ANC) agreed with the view that the Bill must be withdrawn. She asked for an explanation of the implications of the withdrawal of the Bill. She asked who had drafted the Bill for the DOC and what was the rationale for the omission of the guarantee. She also questioned why the payments were stopped in 1997.

Mr Steyn asked who introduced the idea that the clause providing the guarantee should be removed, and why was that done. He was getting the impression that the Bill which was submitted to Cabinet contained the guarantee clause, but that after consultation with National Treasury and other stakeholders, a further amendment was introduced. He did not understand the logic behind the whole process. He asked if the clean break principle applied retrospectively? It was important to note that the Bill could not be withdrawn in its entirety, because of the Constitutional Court judgment, which required the clean break principle to be passed in the legislation by 7 November 2013. He proposed that the Committee should proceed with the amendment in respect of the guarantee, only to deal with the clean break.

Ms Killian asked why the Bill was changed at the very last minute to remove the guarantee provision, and why it could not be put back in the Bill.

Mr Nongogo, SAPO, replied to the question why the payments were stopped in 1997. At that stage, the  Post Office was paying money towards the Fund on the basis of a Cabinet decision only, and there was no statutory requirement on the Post Office to make the payments. In 1997, the Fund was 95% funded and everything was going well. Post Office management therefore took the decision not to continue with payments at the time. However, it must be remembered that there was a shortfall in the Fund, which had arisen in 1958, and was covered by the guarantee, and which still remained in 1977. Because the Post Office payments were stopped, the shortfall continued to accrue interest, which the Act provided must not be less than 12%. This interest compounded to the R2.3 billion which SAPO was referring to.

SAPO held the view that the Post Office fund was never fully funded. If the National Treasury made its decision on that understanding, SAPO believed that it was erroneous. He reiterated that there had always been a deficit, which was why there had to be a guarantee in the first place.

In relation to the clean break principle, Mr Nongogo said that the Constitutional Court essentially said that the clean-break principle must be applied in line with the Divorce Act and that any pension fund which was not applying the clean-break principle was in fact acting unlawfully unconstitutionally. The Constitutional Court did not address itself to the matter of retrospective action and did not address itself to the matter of interest. That was why there was the current discussion on that point.

Mr Themba Phiri, Deputy Director General: ICT Policy and Strategy, DOC, said that the order of the Constitutional Court stated that the invalidity of legislation which had excluded the clean-break principle was suspended for eight months, giving a time period within which the legislation must be amended. On the interest issue, if the eight months lapsed, the award of the court would be substituted for the current legislation.

The DOC was proposing that the Committee consider effecting the clean-break principle in the Bill now, simply because there was not sufficient opportunity to consult all the stakeholders on the issue. There was insufficient time for DOC to go to Cabinet to discuss these issues, and to clarify the applicability of Section 10, whether it was fully funded or not. The proposal was therefore that the sections of the 1958 Act should remain, and that DOC would look into the issue again and revert to the Committee.

Ms Sekese explained that when the DOC took the Bill to Cabinet, it had a State guarantee. Cabinet asked that this be removed and that the Bill be tabled to Parliament. The DOC was to handle the issue, but the money was going to be raised by another Ministry or Department.

Ms Tsebe said that from the SAPO and DOC responses, she was convinced that the best progressive move to make was to deal with the amendment on the clean-break principle, as the Constitutional Court requested. On the issue of the guarantee, the Committee should give space to Ministers to deal with the matter to finality, as this would be in the best interest of the affected, and the Committee would deal with the issue when it was presented again. The key roleplayer on the state guarantee was the National Treasury. She proposed that the provisions around the guarantee be excluded from the Bill, for there was no point in continuing to talk about it at this stage.

Members confirmed that they agreed with Ms Tsebe’s proposal.

 The Chairperson thanked the Members and the officials, and the meeting was adjourned.