Lotteries Amendment Bill [B21A-2013]: adoption; National Consumer Commission 2012/13 Annual Report

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Trade and Industry

01 October 2013
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Committee Content Advisor presented the dismal results of the 2012/13 National Consumer Commission Annual Report. The core issues identified in previous engagements with the NCC had been:
▪ Lack of compliance with Public Financial Management Act, especially implementation of governance structures
▪ Lack of leadership in ensuring sufficient oversight over financial reporting, legal compliance and controls
▪ Substantial irregular expenditure of R8.5 million or 25.5% of total expenditure
▪ Performance targets and actual performance measured appeared to be misaligned in certain instances
▪ Procedural discrepancies in issuing compliance notices leading to costly legal cases against the NCC
▪ There was a breakdown in the relationship between the NCC and the National Consumer Tribunal
▪ The high vacancy rate within the NCC, especially in key positions.

The 2012/13 audit report raised four major areas of concern about the NCC: 1) regression from an unqualified to a qualified report; 2) lack of achievement of planned targets (81% not achieved); 3) lack of compliance with laws, regulations and internal controls; 4) investigations into procurement/recruitment irregularities. In addition, during transition within the NCC, the new Commissioner had simplified the strategic plan to only two main strategic objectives: Promote Consumer Protection Act compliance; Be a well-governed and capacitated organisation.
The Content Advisor said that only three of the sixteen targets were achieved due to three key challenges: 1) lack of human resources and IT support; 2) lack of financial resources; 3) late assessment and analysis of performance. The NCC’s irregular expenditure increased from R8.5 million in 2011/12 to R15.6 million in 2012/13. Additionally, fruitless and wasteful expenditure increased significantly to R3.6 million.

The new Acting National Consumer Commissioner presented the NCC Annual Report for 2012/13, noting that he had had only been at NCC for only five months of the financial year. Though he later admitted that it was a terrible Annual Report, he was upbeat about the future of the NCC. He emphasised that despite the regression from an unqualified to a qualified report, many improvements had been made in other aspects important to the functioning of the NCC. Referring to the audit report, he said that much of the irregular expenditure was due to supply chain processes not being followed. Irregular expenditure combined with fruitless and wasteful expenditure amounted to R20 720 773, which was inclusive of R1 555 087 incurred during 2011/12. Appropriate measures were underway to address fruitless and wasteful expenditure. He said that actual expenditure exceeded the allocated budget and that the executive authority had helped and provided additional funds.

The Commissioner outlined the following as key challenges faced by the NCC:
▪ Vacancies: More than 70% of the approved structure remained vacant with 98 vacancies, largely due to a lack of an adequate budget.
▪ Skills: A major skills shortage existed within the entity. A proper skills upgrade programme did not exist due to an insufficient budget.
▪ Complaints backlog: The complaints backlog was currently sitting at roughly 8000. The NCC required the help of 15 interns for a period of roughly six months to get rid of the backlog. This had been approved by the Department of Trade and Industry (dti), but the funds were outstanding.
▪ Funding: The budget allocation for the next three years was insufficient to sustain expected delivery; the budget did not allow for the filling of all the vacant positions; the budget only allowed enough funds to conduct one project: meat investigation.

Members’ questions and concerns included the following:
- The addition of 33 irregular employees into the staff structure
- The payment of private legal fees for the former Commissioner
- Progress on the investigation by South African Police Service
- What information was stolen during the break in
- Relationship between the NCC and the Consumer Ombudsman
- How the NCC was to deal with irregular expenditure in the previous financial year
- Racial profile of the NCC organisational structure
- Whether the NCC should be placed under administration
- Current work environment at the NCC
- Assessment of complaints from the backlog.

The Chairperson requested the NCC to submit a report on the progress of the police investigation as well as a report on what material items had been taken during the break-in.

The Committee adopted the Lotteries Amendment. The DA proposed changing the length of time an organ of state could run the Lottery from eight back to two years. It was voted down. It tried an alternative proposal but this was voted down too. The DA then objected to the Bill's adoption due to its disagreement about Clause 13. In its deliberations on the Bill, these topics were focused on:
▪ The appointment of a new organ of state versus an existing one
▪ Inclusion of life partner in the Act
▪ Disciplinary measures against the Commissioner following termination
▪ The duration of the appointment of an organ of state
▪ Justifiable grounds to appoint an organ of state.

 

Meeting report

Content Advisor briefing on National Consumer Commission Annual Report 2012/13
Ms Margot Herling, Committee Content Advisor, noted that the core mandate of the NCC was to assist in the protection of consumer rights by 1) increasing consumer awareness of these rights, 2) investigating business misconduct and 3) enforcing compliance with the Act's provisions. The NCC’s mandate fell within the Committee’s strategic objective to ‘create a fair regulatory environment that enabled investment, trade and enterprise development in an equitable and socially responsible manner.’ The NCC had a critical role with regards to the empowerment of rural and low-income consumers, who were most vulnerable to unfair practices.

A list of the NCC’s functions was provided, which included:
- Development of codes of good practice relating to the provisions of the Act
- Promotion of legislative reform through consultation with provincial consumer protection authorities, national organs of sate and consumer protection groups, alternative dispute resolution agents and suppliers
- Promotion of consumer protection within organs of state
- Enforcement of the Act including the investigation and evaluation of any prohibited conduct and offences, issuing and enforcing compliance notices
- Research to increase knowledge of the nature and dynamics of the consumer market
- Promotion of public awareness of consumer protection matters
- Liaison with other regulatory authorities on matters of common interest
- Provision of advice and recommendations to the Minister

Ms Herling provided the Committee with a list of core issues identified in previous engagements with the NCC:
▪ Lack of compliance with Public Financial Management Act, especially implementation of governance structures
▪ Lack of leadership in ensuring sufficient oversight over financial reporting, legal compliance and controls
▪ Substantial irregular expenditure of R8.5 million or 25.5% of total expenditure
▪ Performance targets and actual performance measured appeared to be misaligned in certain instances
▪ Procedural discrepancies in issuing compliance notices leading to costly legal cases against the NCC
▪ There was a breakdown in the relationship between the NCC and the National Consumer Tribunal
▪ The high vacancy rate within the NCC, especially in key positions.

With regards to the Auditor-General’s audit report, Ms Herling outlined four major areas of focus. The financial statements received a qualified opinion in comparison to the unqualified opinion in 2011/12. The qualified report was a result of irregular expenditure that was inadequately confirmed due to document theft from the NCC’s premises as well as insufficient filing of information. Other audit concerns were:
- Significant uncertainties linked to disclosed contingent liabilities for a lawsuit and a claim for cancelling contracts and the retention of R2.8 million without Treasury approval
- The restatement of corresponding figures
- Material impairments as a result of long outstanding receivables

Another matter raised in the AG’s Report was predetermined objectives as during 2012/13, 81% of the planned targets were not achieved. There were material misstatements that were subsequently corrected by management. The most significant area raised by the AG was the non-compliance with laws and regulations as well as internal control. The emphasis of matters that the AG had raised in 2011/12, had worsened in 2012/13.

The following were the areas of non-compliance:
▪ Internal audit: the Commissioner did not ensure the establishment of an internal audit, which resulted in poor reporting, lack of evaluation of effectiveness and efficiency at several levels
▪ Audit committee: the audit committee was unable to fulfil its functions of reviewing the effectiveness of the NCC’s internal audit function and internal control systems due to the problem with the internal audit
▪ Budgets: quarterly reports of actual and projected revenue and expenditure were not submitted to the Department and the NCC retained surpluses without approval
▪ Annual financial statements, performance and annual report: financial statements were not fully prepared in all material aspects and/or were not supported by full and proper records. There had also been material misstatements on the initial financial statements received by the AG’s office but were subsequently corrected
▪ Expenditure management: reasonable steps were not taken to prevent and detect irregular and fruitless and wasteful expenditure. There was also no disciplinary action taken against those responsible for these types of expenditure
▪ Procurement and contract management: there was non-compliance with Treasury regulations with transactions above and below R500 000. Sufficient audit evidence could not be obtained due to theft of documents and an inadequate filing system
▪ Asset management: proper control systems to safeguard and maintain assets were not implemented

The lack of internal controls included aspects such as leadership, financial and performance management and governance (see document). The AG had also included information about two investigations. Firstly, an independent consulting firm investigated procurement irregularities in the appointment of certain NCC officials. This investigation was concluded in May 2013 and recommendations were made for follow-up. Secondly, the Public Protector had investigated allegations of irregular procurement and recruitment, and made recommendations about the NCC improving its financial controls and supply chain management.

Ms Herling moved on to non-financial performance matters. The previous NCC Commissioner had set 11 priorities for the 2012/13-16/17 period:
- Protect consumers from hazards through advocacy, education and awareness
- Improve consumer redress as envisaged by the CPA
- Protect consumers from unethical business practices and misconduct through law enforcement and compliance
- Conduct research for policy, legislative and regulatory framework improvement
- Conduct research for policy, legislative and regulatory framework improvement
- Achieve customer and stakeholder expectations
- Ensure the establishment of a functional organisation
- Achieve the mandate of the NCC with an optimal staff complement
- Implement an organisation wide performance management system
- Create the brand of the NCC as South Africa’s consumer voice
- Provide an effective Information and Communication Technology infrastructure and network
- Implement an effective and efficient financial management system
However, a revision of the strategic plan in January 2013 led to a simplification of the strategic objectives to:
- Promote compliance with the Consumer Protection Act
- Be a well-governed and capacitated organisation.

During the revision, performance indicators and targets were also refined and aligned to the NCC’s core mandate. This particular refinement impacted on the ability to monitor the NCC actual performance against the targeted performance due to the significant change in targets and indicators since the initial Strategic Plan. Additionally, the revised Strategic Plan did not provide performance indicators or targets.

Moving on to actual performance, the AG had noted that only three of the sixteen targets were achieved due to three key challenges: 1) lack of human resources and ICT support; 2) lack of financial resources; and 3) late assessment and analysis of performance, as the revised Strategic Plan was implemented in the third and fourth quarters. There was evident progress in the area of consumer advocacy, education and awareness. In addition, there was a great change in the operations of the Enforcement and Investigations Unit, with the focus returning to investigations. Progress was also made in addressing non-compliance when a less confrontational approach was used.

With regards to human resources, the following was highlighted from the Annual Report:
▪ The NCC had an approved structure of 132 positions but 32 of the positions were filled at 31 March 2013 resulting in a vacancy rate of 75.8%
▪ The NCC employed a further 33 employees that fell outside of the approved structure
▪ The former Commissioner indicated that the NCC was undergoing a skills audit in an attempt to place the 33 employees within the approved structure
▪ The vacancy rate was expected to remain high over the current financial year due to financial constraints
▪ The high vacancy rate, especially in certain critical positions, would affect service delivery into the future.

On financial performance, the NCC received R48.3 million from the dti, which was a 36.6% increase from 2011/12. The NCC spent R44.7 million leaving a R3.7 million surplus, which translate into 7.7% of total revenue and that fell outside the accepted range of 5% of revenue. A graph was provided outlining the breakdown of the NCC’s expenditure. Between 2011/12 and 2012/13, irregular expenditure increased from R8.5 million to R15.6 million. The following was a breakdown of the irregular expenditure for 2012/13:
- R8.2 million was due to not following the proper procurement process
- R2.9 million was due to irregular legal fees
- R2.4 million was a result of documentation/contracts not being available, which was linked to an alleged burglary at the NCC offices
- R1 million was linked to a deposit paid for the call centre management system that was contracted to RAM
- R0.8 million was irregular in terms of the PFMA
- R0.2 million was due to non-compliance with procurement processes for goods and services between R10 000 and R500 000.

Lastly, fruitless and wasteful expenditure increased significantly from R135 in 2011/12 to R3.6 million in 2012/13. R1.6 million of this increase was identified in 2012/13 but was attributable to the previous financial year. This expenditure included: Legal fees for the former Commissioner in her personal capacity; Assets paid for and never received; Assets no longer in use; VAT incorrectly claimed; Call centre management system.

National Consumer Commission (NCC) Annual Report 2012/13
Mr Ebrahim Mohamed, Acting Commissioner, provided a quick background and indicated that he took over as commissioner five months into the financial year. He had taken over during a period of great dismay with the National Consumer Commission performance. Technically there had been a regression from an unqualified to a qualified audit. However, while this was a regression in that sense, many improvements had been made at the NCC since the appointment of Mr Ebrahim as Commissioner. He noted that the Auditor General was unable to obtain audit evidence for irregular expenditure that amounted to roughly 38% of the total allocated budget. The audit report outlined that the irregular expenditure was largely due to supply chain processes not being followed, VAT being paid to suppliers that did not possess a valid VAT certificate as well as PFMA breaches. Irregular expenditure combined with fruitless and wasteful expenditure amounted to R20 720 773 (inclusive of R1 555 087 incurred in 2011/12). Appropriate measures were underway to address fruitless and wasteful expenditure.

Mr Mohamed outlined the revised strategic objectives that the NCC was to pursue over the next five years:
1) to promote compliance with the Consumer Protection Act and
2) to be a well governed and capacitated organisation.

The NCC had allocated four divisions to work towards the first strategic objective: Enforcement and Investigations; Advocacy, Education and Awareness; Research; and Legal. For the second strategic objective, Corporate Services including IT, HR and Finance were dedicated to this objective. The document provided a detailed chart indicating the specific achievements against each target for these objectives.

With regards to expenditure, Mr Mohamed noted that actual expenditure exceeded the allocated budget by R3 101 348. As such, the Executive Authority had provided an additional R6 719 490. Given the additional funds, the actual unspent funds amounted to R961 623. The under expenditure rate thus fell to 2.3% and was largely a result of savings of approximately R170 000 per month on lease payments. Matters raised by the AG's audit report were also briefly addressed. Notably, the NCC had failed to submit quarterly reports on actual and projected revenue and expenditure to the dti. As a result, the CFO was suspended and an acting CFO was recently appointed and had commenced with producing these reports. The financial statements submitted for auditing had not been fully prepared in all material aspects, as the financial records of the NCC had been poorly done. The audit report also indicated that effective steps were not taken to prevent and detect irregular and fruitless and wasteful expenditure (see document for all matters raised by the AG audit report).

Mr Mohamed informed the Committee that the NCC key challenges were:
▪ Vacancies: More than 70% of the approved structure remained vacant with 98 vacancies, largely due to a lack of an adequate budget.
▪ Skills: A major skills shortage existed within the entity. A proper skills upgrade programme did not exist due to an insufficient budget.
▪ Complaints backlog: The backlog was currently sitting at roughly 8000. NCC required the help of 15 interns for a period of six months to get rid of the backlog. This had been approved by dti, but the funds were outstanding.
▪ Funding: The budget allocation for the next three years was insufficient to sustain expected delivery; the budget did not allow for the filling of all the vacant positions; the budget only allowed enough funds to conduct one project: meat investigation.

Discussion
Rev Thring appreciated the NCC’s transparency in its report. The report indicated that 33 employees were irregularly employed. How did the NCC manage to bring a balance to employing those who were irregularly employed?

Mr Mohamed replied that the 33 employees had been employed by the previous Commissioner on a month to month contract basis. Two weeks prior to the departure of the former Commissioner, she had appointed them to full time positions. To maintain stability within the Commission, the Minister said that it was important to honour all the contracts and that these employees would be absorbed into the organisational structure. To accommodate them, a proposal was made to enlarge the structure so that accommodation could be done specific to their qualifications.

Mr Hill-Lewis asked why the decision was made to pay the private legal fees of the former Commissioner and was any effort made to recover the funds. It was surprising that so much time had elapsed with no results in the SAPS investigation into the break-in. Was any follow up made on the progress of the investigation? What information was stolen and was there any indication or evidence to suggest that former employees of the NCC were involved in the planning of executing of the break-in? What was the relationship between the NCC and the Consumer Ombudsman?

Mr Mohamed replied that it was difficult for him to answer about the legal fees of the former Commissioner; however, efforts were to be made in the future to recover any amounts that were due.

Mr Narain Kuljeeth, NCC Company Secretary, replied that the forensic investigation department at the SAPS looked into the break-in but very little information was reported to the NCC. On the matter of what information was stolen, it was difficult to ascertain what files were taken. In attempts to reconstruct the files, the NCC was only able to reconstruct one document that was a contract with the police. With regards to SAPS, the NCC would follow up with the SAPS.

Ms Prudence Moilwa, Head of Enforcement, said that the NCC was working very closely with the Consumer Goods Council of South Africa and the Consumer Goods and Services Ombud with regards to complaint referral protocols to ensure that consumers understood the role of the NCC as well as the role of the Consumer Goods Council. The NCC also worked with the Ombud on a letter to be forwarded to suppliers who were not currently members of the Consumer Goods Council.

Mr Radebe noted that while the transparency of the NCC was appreciated, this was by far the worst report he had ever personally seen. What was the NCC doing to deal with the irregular expenditure incurred the previous year? In addition, the NCC staff racial profile was unacceptable as it was not reflective of the laws. Another issue was that of funding and the NCC’s financial capacity to conduct only one project. As such, the Portfolio Committee must work towards improving the budget of the Commission.

Mr Mohamed agreed that it was indeed a bad report and indicated that this was hopefully the end of such reporting. The irregular expenditure that was carried over from the previous year was done so because it was not previously disclosed. The NCC did not intend to hide any such aspects and had reported the irregularities in the current report. As for the racial component, it was in fact an issue. The NCC was comprised of 98% African staff members with only two non-African staff members. There was currently no recruitment drive due to finances. Any recruitment made was for people who were formerly part of Consumer Protection division at the dti who had a wealth of experience, which was necessary for the NCC. It was certainly the intention of the NCC to work towards balancing racial aspects.

Mr Kuljeeth added that undeniably the irregular expenditure could potentially be carried over year after year and it was an aspect that needed to be addressed or it would continue to be an issue.

Dr James asked if it would be helpful if the NCC was placed under administration.

Mr Mohamed replied that administration was not the answer. The NCC was well on the way to recovery and it was hoped that its Annual Report the following year would portray a different story.

Mr Wayile asked what the nature was of the current institutional environment at the NCC. What was being done to deal with the organisational structure of the Commission? Perhaps, it was advisable to conduct a multi-disciplinary report?

Mr Kuljeeth replied that the working environment at the NCC was currently much improved. The current mood at the NCC was much better and there was constant attention to ensure a healthy working environment. It was also agreed that a multi-disciplinary process would be very helpful.

Mr Mabasa asked what its plans were to reach out to those in rural areas.

Mr Gcwabaza requested clarity on the Audit Committee since the report indicated that the internal audit functions were outsourced. It was understandable that vacancies were a result of budget constraints. However, did the NCC fill the most strategic positions required to fulfil the work of the Commission in the meantime? As for the complaints backlog, did the NCC isolate the most important complaints that required urgent attention?

Mr Selau noted that many of the concerns raised led one to the conclusion that a complete turnaround was required as one could argue that there currently was no NCC. Based on the results in the Annual Report, the Committee should demand that the NCC complete a turnaround strategy plan.

The Chairperson noted an optimistic outlook given the improvements since the appointment of the new Commissioner, in particular the achievement of a new strategic plan. The new strategic plan clearly outlined that there was realignment back to the mandate and objectives of the NCC. She greatly commended the NCC was able to improve its staff structure and in particular sort out the irregular employees. The key issue appeared to be that in applying for more funds, processes that should have been followed were not followed and this limited the amounts of funds received. She asked that the NCC send a detailed report of what material items were also stolen during the break-in as well as the SAPS report itself.

Lotteries Amendment Bill
The Committee had final deliberations on the Lotteries Amendment Bill using both B21B-2013 and B21A-2013.

Clause 1 amending Section 1
Section 1(i)
Mr B Radebe (ANC) proposed the removal of the proposed amendment ‘established solely to conduct the National Lottery’. He argued that the term ‘solely’ placed a limitation on the Minister in selecting an existing organ of state.

Rev W Thring (ACDP) noted that this proposed amendment might cause subsequent amendments.

Adv Johan Strydom, dti Legal Advisor, replied that the proposed amendment would not necessarily lead to further amendments. The Committee should keep in mind the other references in the Bill to organ of state.

Adv Charmaine van der Merwe, Parliamentary Legal Advisor, seconded Adv Strydom that the proposed amendment would not lead to further amendments.

Adv Theo Hercules, State Law Advisor, said the clause referred to the Constitution for a definition of ‘organ of state’. The phrase ‘established solely to conduct the National Lottery’ provided a more defined purpose of the organ of state in question.

Mr Radebe understood the points raised in the discussion but continued to argue that this limited the Minister from selecting an existing organ as the term ‘solely’ implied that a new organ of state had to be established for the sole purpose of running the Lottery.

Mr G Selau (ANC) agreed with Adv Strydom that going ahead with the amendment would not create further problems nor destroy the intention of the Bill. He noted that referencing the Constitution was enough and that the section proposed for amendment was simply repetitive.

Rev Thring recalled previous deliberations where the Committee agreed that certain challenges had been found when the running of the Lottery and that these amendments were included to avoid repeating the same challenges. One of the points previously put forward was to have an organ of state that was solely dedicated to administering the Lottery. Another concern with the appointment of an existing organ was that a conflict of interest could arise between the various mandates of that organ.

Mr N Gcwabaza (ANC) agreed with the proposed amendment. He argued that the removal of this section would leave it to the Constitution and ultimately would provide the Minister with two options: 1) the Minister could establish a new organ with the sole responsibility of running the Lottery or 2) the Minister could appoint an existing organ of state with the capacity to run the Lottery for a particular period.

Ms S van der Merwe (ANC; momentarily acting Chairperson) asked if the clause limited the Minister in any way to appoint an existing organ of state.

Adv Strydom replied that given the reference to the Constitution in the clause, there was no limitation on the Minister to appoint any organ of state, whether new or existing. Even if the selected words were deleted, the Minister was able to appoint any organ of choice so long as it met the definition in the Constitution.

Mr Radebe reaffirmed that the word ‘solely’ had a particular limiting meaning. As it stood in the clause, ‘solely’ meant that the appointed organ of state could not run anything but the Lottery.

Mr Gcwabaza added that there was uncertainty in the word ‘solely’. In his understanding, solely meant that in referencing an existing organ, the Constitutional mandate of that organ needed to be changed; however, if ‘solely’ is removed from the clause then the Minister was able to add to the mandate rather than change it completely.

Adv van der Merwe agreed with the interpretation and that it did in fact place a limitation.

Ms van der Merwe, Acting Chairperson, noted that the clause as it appeared in B21A-2013 was accepted.

Clause 4 inserting sections 2A, 2B, 2C, 2D, 2E, 2F and 2G
Section 2C(e)(i)
Mr G Hill-Lewis (DA) noted a grammatical change in this clause. He proposed to change ‘to have acted’ to ‘of having acted’.

The Committee agreed to this change.

Section 2G(2)
Mr Radebe recollected that the Committee had previously agreed for the removal of ‘life partner’ form the clause as the definition of spouse included life partner.

Adv Strydom noted that he remembered the discussion and thought it was agreed that the definition of spouse did not always equate to life partner and, as such, the term was to be kept.

Adv Hercules seconded that it was previously agreed to maintain life partner in the clause. He also argued that the term was included in other parts of the Act that were not being amended.

The Committee agreed to maintain life partner.

Section 2G(3)(a)
Mr Hill-Lewis noted that in the previous clause, 2G(2), it stated that even following termination, one may not receive any benefit from a person who received a grant; however, clause 2G(3)(a) required disciplinary measures to be put in place. He argued that disciplinary measures could not be introduced if one was no longer an employee due to termination. Was there a need for criminal proceedings to be instigated once the Commissioner was not employed?

Mr Radebe stated this might be relative to the new Public Service Management Bill.

Adv van der Merwe noted that disciplinary steps could only be taken against an employee. Once termination was complete, disciplinary measures could not be taken. However, the Lotteries Act provided in Section 57(2)(a) that any transgression of the Act was regarded as an offence and Section 62 provided that any person committing an offence in terms of the Act, was liable to a fine or imprisonment or both.

Mr Hill-Lewis was satisfied with the explanation.

Clause 13 inserting Sections 13A and 13B
Clause 13A(1)
Mr Hill-Lewis referred to a proposal he had made to the Chairperson in writing. This proposal argued for the removal of ‘eight years' from line 35 and replacing it with ‘two years’. This proposed amendment had a consequential amendment in Section 14(a)(1) where the same change would be made.

Mr Radebe opposed the proposal and moved to retain the eight years.

The Chairperson asked for a vote on the matter. Mr Hill Lewis, Dr W James (DA) and Rev Thring voted in favour of the DA proposal. Mr Radebe, Mr Selau, Mr Mabasa, Mr Gcwabaza, Mr Wayile and Ms van der Merwe opposed it.

Mr Hill-Lewis had a follow up amendment given the rejection of his first proposal. It was proposed to insert ‘after having followed the process in 13(2)’ to line 32 on p.10 of B21B after ‘in the event that’.

Adv Strydom requested that ‘or’ on p.10 line 45 of B21B be replaced with ‘and’. He argued that retaining ‘or’ would allow the Minister to comply with only one of the listed factors rather than all of them.

Mr Hill-Lewis later withdrew his proposed amendment to Clause 13A(1) and requested the removal of Clause 13A(3) as he wanted the requirements listed to apply.

Adv Strydom requested that subsection 3 be retained because it was inapplicable to the argument made.

Mr Hill-Lewis argued that Minister must first demonstrate that there was no suitable replacement licensee before appointing an organ of state.

Ms van der Merwe counter-argued that the Bill had been drafted in a manner that required the Minister, in every way possible, to demonstrate justifiable grounds for the appointment of an organ of state, which included a lack of a suitable licensee. As such, there was no need to repeat the process of justification once again.

Mr Hill-Lewis was in agreement with Ms van der Merwe and noted that in his view, the indication from the Department had been that the Minister can appoint an organ of state without following the process in Clause 13A(2).

Adv Hercules argued that the decision to appoint an organ of state could only be made once the Minister was unable to find a suitable licensee.

The Chairperson agreed with the input of the state law advisor.

Mr Hill-Lewis argued that what was argued now was not in line with what the dti Deputy Director General had stated in earlier deliberations.

Mr Gcwabaza noted that justifiable grounds would arise after the Minister took all the necessary steps.

Ms van der Merwe noted that the law already required the Minister to deem it justifiable after the due process of searching for a licensee.

Mr Hill-Lewis argued that in subsection 3, the Bill was exempting the Minister from that process.

The Chairperson suggested that perhaps Mr Hill-Lewis had misinterpreted the clause. Sufficient opinions had been made on this matter and the matter had to be concluded.
Mr Hill-Lewis stood his ground and moved for the removal of Clause 13A(3), which was seconded by Dr James but opposed by Ms van der Merwe on behalf of the ANC.

The Chairperson put the matter to a vote. Mr Hill-Lewis and Dr James favoured the amendment and Mr Gcwabaza, Mr Radebe, Ms van der Merwe, Mr Selau, Mr Mabasa, Mr Wayile and Rev Thring were in opposition. The DA proposal was rejected.

Mr Hill-Lewis raised the objection of the DA to Clause 13.

The Chairperson noted that this concluded the formal deliberations and that the Bill adopted by the Committee and recommended for adoption by the House.

The DA objected to the adoption of the Bill due to Clause 13.

The meeting was adjourned.

 

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