Intelligence Services Control Amendment Bill; National Strategic Intelligence Amendment Bill; Electronic Communications Security

Intelligence Legislation

09 October 2002
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Meeting report

INTELLIGENCE LEGISLATION AD HOC COMMITTEE

INTELLIGENCE LEGISLATION AD HOC COMMITTEE
10 October 2002
INTELLIGENCE SERVICES CONTROL AMENDMENT BILL; NATIONAL STRATEGIC INTELLIGENCE AMENDMENT BILL; ELECTRONIC COMMUNICATIONS SECURITY (PTY) LTD BILL: DELIBERATIONS

Chairpersons:
Dr S Cwele (ANC)

Relevant documents
Intelligence Service Control Amendment Bill [B50-2002]
National Strategic Intelligence Amendment Bill [B51-2002]
Electronic Communications Security (Pty) Ltd Bill [B59-2002]
Proposed Amendments to National Strategic Intelligence Amendment Bill (Appendix 1)
Transtel Submission on Electronic Communications Security Bill (Appendix 2)

SUMMARY
Amendments were proposed to Clause 1 of the Electronic Communications Security Bill including a reference to the Joint Standing Commission on Intelligence (JSCI), and minor amendments were proposed to the Chapters 2 to 5. The funding of the Communications Security Service (ComSec) was discussed especially the meaning of the phrase "reasonably market related", as this could allow ComSec to charge higher rates than an outside security firm. Members also sought clarity with regard to whom any excess funds generated by ComSec would be handed over, and the role of the Security Services Special Account here. It was decided to amend Clause 18 by including "dividends" as a source of income for ComSec.

The meaning of the phrase "critical electronic communications infrastructure" in Clause 21 was discussed as well as the importance of including such a provision. Concern was raised with the wide ambit of Clause 22(1)(f), and clarity was sought on the party responsible for bearing the costs of installing any new security equipment in Clause 23.

A few minor amendments were proposed to Clause 1 of the Intelligence Service Control Amendment Bill, and concern was raised with the problems created by confusing "activities" and "functions" in Clause 2(d). The definition of "incapacity" in Clause 7 was discussed, and it was decided that the dictionary definition of that term be included in the Bill.

A new definition of the term "subversion" was proposed for inclusion in Clause 1 of the National Strategic Intelligence Amendment Bill and a new Section 2A, that grants the NIA the authority to conduct security clearance investigations, was also proposed for inclusion in the Bill.

MINUTES
Electronic Communications Security (Pty) Ltd Bill
The Chair proposed that the public hearings on this Bill commence on Monday 14 October 2002 at 14:00. Two bodies have already confirmed that they will be presenting a submission, and confirmation from another is expected. The formal deliberations on this Bill will then commence on Tuesday 15 October 2002, and this Committee will sit for a longer period to ensure that the necessary quorum is obtained so that decisions may be taken.

Ms M Olckers (NNP) asked whether the Committee would be sitting all day on Monday, because the House will be sitting in the afternoon.

The Chair stated that the Committee will try to sit all day and contended that the parties should not find it difficult to agree with each other on most of the issues, because they do not deal with party politics but rather with national concerns.

Chapter 1
Clause 1: Definitions
"Joint Standing Committee on Intelligence"
Ms Takie Netshitenzhe, Legal Advisor to the Department of Intelligence (the Department), stated that this clause would probably have to be amended via the inclusion of the term "Joint Standing Committee on Intelligence", because during yesterday's meeting Members contended that the Electronic Communications Security (Pty) Ltd (Comsec) would have to be held accountable to the Joint Standing Committee on Intelligence (JSCI) on its expenditure. Due to its inclusion in the Bill that term must now be defined in Clause 1.

Ms Olckers suggested that this accountability is important as this Committee should learn from the recent problems experienced with SCOPA's oversight function, and this therefore functions very much like a secret account. Comsec therefore has to be interrogated on the Auditor-General's (AG) report.

The Chair asked whether the Bill specifically states that the Comsec budget is to be audited by the AG, and stated that he is not certain whether other security budgets are required to be audited by the AG as well.

Ms Netshitenzhe replied that the Comsec budget "stands alone" and is audited separately, and informed Members that the similar provision in the Regulation of Interception of Communications Act has been consulted in order to provide direction here.

The chair stated that Comsec must not merely be required to "submit" its report to the JSCI, but must also be held accountable.

Ms S van der Merwe (ANC) contended that the AG report has to be referred to the JSCI because Parliament itself decides to whom the report has to be forwarded for inspection. Furthermore, it is not certain whether this Committee should expressly stipulate in law that the JSCI will be responsible here, because that Committee could change.

The Chair stated that a Committee will be established to oversee this process, and Parliament can decide to forward this report to any Committee it sees fit. The problem created here is that should this Bill not specifically include this provision then Comsec could refuse to account. Its inclusion in the Bill therefore creates and enabling provision but it cannot be a limiting enabling provision, and the provision cannot therefore state that the JSCI alone has to evaluate the report. This provision therefore has to be phrased broadly.

"telecommunications service"
Ms Netshitenzhe informed Members that the definition of this term would also have to be included in Clause 1 of the Bill because it was introduced by the Director-General of the Department of Communications (the DG), and it seeks to obligate the telecommunications service to co-operate with Comsec should the former need the services of the latter. Again a similar provision is found in the Regulation of Interception of Communications Act, and a similar approach could be followed in this case as well.

The Chair stated that the definition of this term contained in the Telecommunications Act has to be consulted to check for any inconsistencies with the Bill.

Clause 2: Establishment of Comsec; Clause 3: Principal objective of Comsec; Clause 4: Incorporation of Comsec; Clause 5: Provision of Companies Act not applicable to Comsec under certain circumstances.
The Chair noted that Members raised no objections with these clauses.

Clause 6: Request for exemption from application of provision of Companies Act

Ms Olckers asked whether it had not been decided by Members in a previous meeting to replace the word "prejudicial" in Subclause 3(c) with "detrimental".

Ms Netshitenzhe replied that this amendment could be effected.

Clause 7: Functions
The Chair reminded Members that it was decided to evaluate the issue of convergence between broadcasting and telecommunications here.

Mr R Pieterse (ANC) informed Members that the DG stated that this matter will be revisited.

Chapter 2: Governance of Comsec
Clause 8: Board of Directors; Clause 9: Composition of Board; Clause 10: Termination of office of members of Board; Clause 11: Remuneration of members of Board; Clause 12: Removal from office
The Chair noted that no objections were raised with these clauses.

Chapter 3: Chief Executive Officer
Clause 13: Functions of the Chief Executive Officer; Clause 14: Employment of personnel; Clause 15: Employment of employees of Security Services

The Chair noted that Members raised no objections to these clauses.

Chapter 4: Security Matters
Clause 16: Security clearance

The Chair noted that Members raised no objections to this clause.

Chapter 5: Service Delivery
Clause 17: Analysis of electronic communications security needs, and business agreement

Mr L Landers (ANC) suggested that Subclause 2 will have to be amended, and reminded Members that the DG referred the Committee to Section 86 of the PFMA as a possible example to be followed in this regard.

Ms Netshitenzhe stated that this clause seeks to move around the problem with defaulting by an organ of state should it fail to comply here, and consequent penalties will then be imposed. Members agreed that an additional penalty and offence will be inserted in the proposed Clause 23 of the Bill by including the phrase "and (2)" at the end of Clause 23(1)(b).

Chapter 6: Financial Matters
Clause 18: Funding of Comsec
Ms Olckers asked for clarity on the precise meaning of the phrase "reasonably market related" in Subclause 3. This phrase has to be clarified because the rates charged here could very well be higher than those charged by an outside firm.

Mr Ngcakane, from the National Communications Centre, replied that the primary concern here should not be whether the service costs less or more, rather it is the provision of security that is important here. The cost of providing such security could be much more extensive than is the case in the open market, but this is due to the very nature of the technology. Yet this has to be "reasonabl[e]", and it is at this point that the Minister of Finance and that Ministry's expertise comes into play. It has to be remembered that the inclusion of the word "reasonably" here is important because it acknowledges that security is technology-driven, and also recognises the need for technology to ensure security.

Ms Olckers stated that this does not answer her question because she had asked whether the intention here is to charge more or less, and Mr Ngcakane answered that the rates will be higher. Ms Olckers stated that this is precisely her point because Comsec has a "captive audience" and would then have to abide by this higher charge and use the technology offered by Comsec.

The Chair contended that he interprets the provision to read that the charge has to be reasonable, and this means that the charge could also be less than the rate in the open market.

Ms Olckers stated that this is, however, not the answer given by Mr Ngcakane.

Mr Ngcakane responded that the company has to provide cost-effective services and the company itself is driven by the need to be competitive in the market place. It has to be remembered that the company will be providing a service to its client that ensures absolute security, so that no-one can breach the security clearance and gain unauthorised access to the client's database. The inclusion of the term "reasonable" is therefore an attempt to include all these different factors, and includes making provision for security needs which might not yet be catered for in the market place and the provision of this new service could then involve a larger cost, and the company has to be able to compete and be cost-effective as well.

Brig Gen P Schalkwyk (DP) stated that he has a problem with the manner in which this provision will be controlled in practice. The current rate is approximately R400 per hour and, should it rise to R1 000 per hour, the provision does not indicate how the Minister of Finance would control this provision in practise.

Mr D Gumede (ANC) stated that he would be making his point with reference to purely economic standards. The first thing that has to be done here is to look at the type of market in which Comsec will be active, and here due regard also has to be had to the number of suppliers and firms operating in the market as well as the information available. This is a national market but one can also look at the global market as well, depending on the type and sophistication of the technology used. It is therefore an imperfect market and the phrase "reasonably market related" has been included because it is considered to be the best option in this regard, as it brings all those factors listed above into account.

Mr Pieterse contended that efforts should not be made to determine every detail here, and he understands that the personnel employed here would be the best persons for the position.

Mr Kotane, Deputy Executive Director: Operations of the National Communications Centre, reminded Members that this Bill deals with a unique market and Comsec cannot be controlled by the cost-dictates of a market. It should instead look at the security needs and not the costs involved. The word "reasonably" has to be included here to ensure the provision of an acceptable level of security on the one hand, and also ensure that Comsec has the funds to pay for all the necessary equipment on the other.

Mr S Abram (UDM) contended that the current formulation of the clause makes sense and it does encapsulate all the necessary requirements, and suggested that the current matter has much to do with supply and demand.

The Chair asked for clarity regarding the party responsible for bearing the costs here, and contended that the phrase "reasonable market related" has been included so that Comsec may not charge rates that would unfairly prejudice the State. It is also aimed at ensuring that Comsec does become self-sustainable and self-sufficient.

Ms Olckers maintained that this provision amounted to giving Comsec "a blank cheque", and Comsec is also able to gather additional funds via requests for more funding, receiving grants and the rest of the sources mentioned in Clause 18(2). Comsec therefore seems to enjoy a carte blanche funding power that can be used to build up a "huge fund" if managed properly, and it never has to give back the funds it has so accumulated. Those Members involved in Parliament pre-1994 will remember how the then National Party was able to build up these "slush funds" and how they were used for party purposes, and the concern here is that Comsec funding could become too large and unmanageable as well.

Furthermore, Members of the JSCI were informed by the CIA that the shelf-life of security technology is no longer than three months.

Mr Ngcakane replied that a business plan has been devised in this regard and it projects that the company will become self-sustainable in three years. It contains a provision requiring the Board of Directors of the company to motivate to the Minister of Finance the manner in which any surplus funds generated by the company should be utilised. As stated earlier, the technology employed here does move very quickly because it is dynamic, and measures have been put in place to ensure that the manners in which the funds are spent are properly monitored. Comsec will not be generating unlimited amounts of funds to be used for ulterior purposes, as contended earlier by Ms Olckers. In fact in the United States even private companies are encouraged to develop security technology here. The oversight mechanisms put in place by the Bill to ensure proper oversight of such funds are sufficient to ensure all activities are above board.

Mr Kotane added that the CIA reported that its technology of attack becomes obsolete every three months, and when six United Kingdom universities were visited it was discovered that the CIA had invested resources in those universities in the strategic research environment. This enables the CIA to gather attacking technology against the rest of the world, and if South Africa wishes to compete with that it has to pump cash into technology. It was clear that there were many aspects in need of significant investment. The aspect currently under consideration is just one small aspect of a larger whole, and this clearly indicates that Comsec will not have limitless funds which it will be able to plough into ulterior purposes, because it would have to invest a substantial amount into improved technology.

The Chair stated that the Constitution does not allow any political party to use Comsec funds for its own purposes. Who are the Comsec shareholders, because it is not the Minister of Intelligence (the Minister) that receives these benefits?

Ms van der Merwe contended that if the intention is to enable the company to become self-sustainable in three years, then the provisions of the Bill would have to changed fairly regularly. Clause 18(9) provides that the Comsec financial records have to be audited by the AG in accordance with the Security Services Special Account Act, because it deals with different sources of funding. Furthermore, Clause 18(5) provides that Comsec may only retain any excess funds generated on once such retention has been approved by the Minister of Finance, because the general principle which operates in such situations is that any surplus funds have to be handed over to the National Reserve Fund.

Mr Landers agreed with Ms van der Merwe that the general principle here is to hand over any excess funds to the State departments, yet Comsec is a State-owned enterprise, and therein lies the difference. The State Law Advisors are asked to provide clarity on this matter.

Ms Netshitenzhe replied to these concerns by stating that although it has been contended that the intention is to enable Comsec to become self-sustainable in three years so that it would no longer rely on State funding, it remains a State-owned company. Subclause 9 thus remains valid because Comsec is subsidised by the State and those funds are then placed in the Security Services Special Account in terms of the Security Services Special Account Act, and is then made available to the company.

The Chair asked whether the three-year period has expressly been included in the Comsec business plan.

Mr Ngcakane replied that it is a requirement for capital expenditure and for the operating costs.

The Chair sought clarity on the service fees to be levied by Comsec and the funds received from State departments, the extent of the funds received from special grants and the donations received by Comsec.

Ms Netshitenzhe responded that all these sources of funding would be placed in the Special Account.

Ms van der Merwe added that all the funds would be allocated to Comsec via the Special Account, and this has to be clearly stated in the Bill.

Mr Abram stated that the provision cannot stipulate that these are "all funds" of the company, because Comsec also generates funding itself.

Ms Landers questioned whether the provision states that even funds generated by Comsec itself would have to be channeled back via the Special Account.

Ms Netshitenzhe responded that this would have to be done in accordance with the PFMA and its regulations and, once approved, the Ministers of Finance and Intelligence would then have the discretion to decide how the funds would be used. This could create bureaucratic problems.

The Chair stated that the Special Account could be viewed with suspicion and it has to be ensured that the financial records of company do balance, and the mere shifting around of funds to create the impression that everything is above board has to be prevented. The fact that the provision requires the AG to conduct an annual audit of these financial records is sufficient.

Ms Netshitenzhe informed Members that once the Special Account has been approved it is deemed to accord with the Security Services Special Account Act for the purposes of auditing, and this is the intention even though the provision might not state this specifically.

Ms van der Merwe asked for clarity on the position of the excess funds.

Ms Netshitenzhe replied that she would have to consult the PFMA for guidance in this matter.

Mr Abram reminded Members that Comsec is a company that has been created by statute and is not a State department. Clauses 18(2)(a)-(d) are all clearly formulated, and in addition to those sources of funding listed there is another avenue which is not provided for, and it has to be included here. Clause 18(2) has to be read with Clauses 18(7) and (8), but the overall position is that Clause 18(2) "covers the field" and an additional grounds might have to be added.

Ms Netshitenzhe stated that all the sources of funding are sound and are in accordance with the PFMA.

Mr Abram referred to Claus 18(10) and asked whether Comsec may also acquire shares "in" any other company, because it currently provides that Comsec may acquire shares "from" any other company.

Ms Netshitenzhe responded that she would look into this.

The Chair sought clarity on how Clause 18(10) would operate.

Ms Netshitenzhe replied that it would be treated in the same way as Clause 18(5), and the shares would not be handed over to the shareholders because there is only one shareholder: the State. Thus the shares would devolve to the State.

Ms van der Merwe asked whether the same would happen with regard to any excess.

The Chair informed Ms van der Merwe that the shareholder would decide whether it would be sent back to the Special Account.

Mr Abram suggested that the wording of Clause 18(5) is not "neat enough", and asked Ms Netshitenzhe to look into this.

Mr Landers questioned whether Clause 18(10) means that the proposed Clause 18(2)(e) would be inserted to deal with dividends emanating from the acquisition of shares, because dividends constitute "funds" as well.

The Chair requested Ms Netshitenzhe to note this and advise Members on this matter at a later stage.

Chapter 7: General
Clause 19: Intellectual property

Mr Gumede suggested that it seems as if extensive research and development will have to take place in this area, and thus Comsec cannot be expected to show a profit in the first few years.

Clause 20: Exemption from application of this Act
The Chair noted that Members agreed with this provision.

Clause 21: Critical electronic communications infrastructure
The Chair sought clarity on the precise meaning of this provision, because the Committee has received several submissions on it.

Mr Kotane explained that, as mentioned by the DG during yesterday's meeting, illegal or unauthorised communications can be applied to access critical electronic infrastructures that contain valuable or strategic information, such as databases and other electronic storages for example. It is thus necessary to protect such critical infrastructures to prevent such unauthorised or illegal access. This would include protecting the vehicle from which the State President communicates, for example.

Mr Ngcakane added that this provision deals with electronic communications infrastructure which has to be secured, as it is this infrastructure that enables persons to talk between two critical points, one of which can be a database. The DG referred to the valuable database of Statistics South Africa, and it is this type of important database and information that has to be secured here so that no unauthorised or illegal access is gained for nefarious purposes.

Ms Netshitenzhe added that this provision deals with infrastructure that transmits and receives critical information of government, such as information on the State's economy and the records of the Department of Home Affairs, Welfare etc. The DG stated that there are government departments that employ the services of private sector companies to store this critical information, such as the then Department of Welfare which used the services of QData. This information is thus not protected by government itself but rather by that private company, and here is is contended that Comsec should be tasked with protecting such critical information as well even though private companies can and do also store the information. Comsec should also be able to retrieve such critical information should it be lost, because none of the private companies currently offer this facility.

Brig Gen Schalkwyk urged Members to be mindful of the provisions of the National Key Points Act in this regard.

Mr Landers stated that the title of this clause does not clearly indicate its meaning, and asked whether Clause 1 contains a definition of "critical electronic communications infrastructure". It does not seem to say much and this could perhaps have been done deliberately, but it is not certain whether the current formulation is of any use. Furthermore, this could lead to the undesirable situation in which someone could decide to challenge this law on the grounds that this definition does not mean anything, and they could recommend that it be struck down.

This term has to be more clearly defined, and Ms Netshitenzhe did offer a possible solution when she stated that it is "infrastructure that transmits and receives critical information", as such a definition will make it clear that the provision is not merely dealing with "some building somewhere", as is the understanding of "infrastructure". This would also provide legal clarity because the provision will be tightened up from a legal point of view.

Mr Abram agreed that this is not clearly captured and that the definition provided by Ms Netshitenzhe does offer some guidance. Parliament has recently passed the Electronic Communications and Transactions Act and clarity is sought with regard to the extent to which the Bill complements that Act, because the two pieces of legislation cannot be at variance with each other. It does appear that the Bill deals with security on the public sector, but there could very well be provisions in that Act that allow a private company, an individual or a syndicate to circumvent the provisions of this Bill.

Ms Netshitenzhe replied that the Bill does not clash with the Electronic Communications and Transactions Act in any way, and the Bill has been scrutinised by the Department of Communications' legal team. That Act is broad enough apply to the private sector, even though the Bill is limited to the government sphere.

The Chair stated that this is an important provision because, as mentioned by the DG, persons could not only gain unauthorised or illegal access to such critical information, but could also manipulate it.

Mr Landers sought clarity with regard to what precisely the "computer systems and programmes" contained in Clause 21(1) refer.

The Chair replied that these refer to government computer systems and programmes.

Mr Landers agreed but stated that the current formulation of the provision does not make this clear but merely assumed this to be the case, and it therefore has to stipulate this expressly.

Ms Netshitenzhe replied to the concerns raised by Mr Landers by stating that Clause 21 will be reworked, but the essence is to exempt the functions of Comsec from cost recovery, and is also aimed at clearly defining these terms. This relates to the essence of the role of the State in this regard, because it should fall outside the Clause 7 functions.

The Chair stated that this has to be read with the "functions of Comsec" in Clause 7(1)(a). Clarity is needed with regard to the cost factor here in providing these critical electronic communications infrastructures, and whether the client would have to apply to Comsec whether the department intends to cover the costs or not.

Mr Kotane replied that, in unfolding this process, the client would be approached to explain the critical nature of the information for which it is responsible and in which it is in possession of, it would also be explained that that client is transmitting that information from one point to the next and there is thus the need to secure that information. The client will also be brought up to speed on the steps that will be taken to secure the information, and here even the costs involved and a comprehensive breakdown could be made available to the client.

Clause 22: Regulations
Mr E Ferriera (IFP)stated that Clause 22(1)(a) and (f) are problematic as they seem to clash with Clause 7. Practical examples of the "additional functions" stipulated in Clause 22(1)(a) are needed, and clarity is also sought with regard to who would be responsible for regulating these. Clause 22(1)(f) is phrased "conveniently wide" as it provides for "any other matter" that the Minister may consider necessary.

Ms Netshitenzhe replied that the same question was posed during yesterday's meeting with regard to Clause 7 of the Bill, as Clause 7(1)(d) also provides "any other function". These phrases have been included to ensure that other functions related to the protection and security of electronic communications that might have been overlooked may still be included. These functions cannot be inconsistent with the Bill and the Minister can pass regulations to ensure these functions are not ultra vires.

Clause 22(1)(f) is a standard clause contained in all regulations and is used to address any restrictive interpretation of regulations.

Adv Gideon Hoon, from the Office of the State Law Advisor, added that Clause 22(1)(f) is a standard clause and the South African courts, including the Constitutional Court, have ruled on such provisions on several occasions. It is a difficult question because the Minister cannot pass laws as this power lies solely with Parliament, yet the Minister can pass regulations taking into account the objects of the legislation.

Ms van der Merwe sought clarity on the decision to include the double negative "not inconsistent" in both Clauses 22(1)(a).

Adv Hoon replied that it is phrased in the conventional manner, but it would be better to phrase it in the positive.

Mr Ngcakane stated that flexibility is needed with regard to the functions necessary to protect critical electronic communications, and these have to be consistent with the functions of Comsec.

Ms Olckers informed Members that the JSCI is involved in the drafting of regulations.

The Chair stated that it was decided that the phrase "after consultation with the JSCI" should be inserted at the beginning of Clause 22(1), and this amendment will then remedy the problem.

Clause 23: Offences and penalties
Ms Netshitenzhe informed Members that this provision is aimed at ensuring the co-operation of telecommunication service providers, and it was agreed that should they refuse to co-operate the State would have to force them to comply. For this reason it was decided to include the penalty in this provision.

Mr Landers agreed with this decision, because matters of national interest are involved.

The Chair added that this provision is also necessary because the costs involved here do not necessarily fall with the service provider, not all the costs in any event.

Ms Olckers stated that the DG contended that the State would have to bear the cost here and, should new equipment be needed, who then would be the cost? This is similar to the debate that took place during the deliberations on the Regulation of Interception of Communications Bill, with regard to who would bear the costs of establishing the interception centres.

The Chair stated that co-operation between the State and Comsec has to be ensured.

Mr Ngcakane stated that the cost here has to be borne by the State.

The Chair asked where in the Bill a provision that clarifies this matter should be placed.

Ms Netshitenze suggested that it be inserted as the new Clause 7(5).

The Chair agreed and requested the provision to be drafted in simple language so as to avoid any interpretation that the costs would have to borne by the telecommunications service providers.

Mr Ngcakane assured the Chair that Comsec will co-operate with the State in ensuring that a secure service is provided to the President, for example, and this would not necessarily cause any changes to be effected to the infrastructure of the telecommunications service providers.

Ms Netshitenze stated that Clause 23(2)(a) and (b) are merely consequential amendments effected to accommodate Clause 17.

Mr Landers informed Members that the Justice and Constitutional Development Portfolio Committee has imposed fines up to R1b for contraventions of the Regulation of Interception of Communications Act, and does not feel one iota of guilt for imposing such a heavy fine because those who contravene that Act have significant amounts of funds.

The Chair agreed and stated that imposing a fine of R1m would not phase them.

Mr Gumede suggested that the licences of the telecommunications service providers could also be withdrawn as a penalty, in addition to the imposition of a fine.

The Chair stated that this is a rather harsh penalty, especially in view of the nature of the co-operative relationship to be enjoyed by both the service providers and the State.

Clause 24: Limitation of liability
The Chair noted that no objections were raised to this clause.

Clause 25: Savings and liabilities
Mr Landers contended that Subclause 4 would have to amended to provide for transitional arrangements because of the introduction of a new Bill, and clarity is needed with regard to the meaning of the phrase "disciplinary proceedings instituted prior to the commencement of this Act", because Comsec does not yet exist.

Ms Netshitenze replied that this provision seeks to include those entities that have yet to be incorporated.

Mr Landers agreed.

Clause 26: Amendment of laws; Clause 27: Short title and commencement
The Chair noted that no objections were raised to these clauses.

Schedule 1
The Chair stated that Ms van deer Merwe had raised concerns with the amendments proposed to the Acts listed in the Schedule, and asked Ms Netshitenze to report back to this Committee on her discussions with the Department of Labour in this regard.

Ms Netshitenze replied that she was requested to consult with the Department of Labour today, and has not yet been able to get hold of anyone.

The Chair stated that the none of the communications industry players have shown an interest in this Bill, and they probably believe that it will not adversely affect them. Yet this Committee has contacted them in an attempt to maintain the relationship enjoyed between the two spheres.

Ms van der Merwe stated that this Committee has consulted with the Department of Communications.

The Chair asked whether this can be included in the Memorandum.

Adv Hoon replied that this can be done.

The Chair suggested that it should be included in an effort to avoid the undesirable situation should that Department decide to institute legal proceedings against this Committee for failing to consult it.

Adv Hoon responded that this would not happen because of the constitutionally entrenched principle of co-operative governance, but it can nevertheless be included.

Intelligence Services Control Amendment Bill
Clause 1: Amendment of section 1 of Act 40 of 1994, as amended by section 1 of Act 31 of 1995 and section 1 of Act 42 of 1999
Ms Nomaliso Bulisile, from the Office of the State Law Advisor, informed Members that this clause ensures that the National Commissioner of Police and the Secretary of Defense are included in the JSCI, but the current formulation of the provision does not allow for both to be included, as the intelligence unit can only have one head. In order to accommodate these two they have each now been included in the provision.

Ms van der Merwe suggested that Clause 1(b) should read "South African National Defense Force", and not merely "National Defense Force".

Brig Gen Schalkwyk suggested that "the" appears too many times in the last line of the proposed amendment.

Mr Landers proposed that the "the" after "and" be removed.

Ms Bulisile stated that the new clause refers to "intelligence services" but because this term has not been defined, it is currently defined in the proposed Clause 1(e).

The Chair stated that the current Clause 1(e) would thus now become Clause 1(f).

Ms Netshitenzhe stated that this amendment was effected as a result of a proposal put forward by Members during yesterday's meeting that the reference to "Agency" be replaced with "Intelligence Service".

Ms van der Merwe asked whether the SANDF and criminal intelligence have purposefully been excluded from this provision.

Ms Netshitenzhe answered in the affirmative as this maintains the distinction drawn in Section 199(1) of the Constitution between intelligence services and the SANDF.

The Chair stated that the definition of this term on the Intelligence Services Act has to be checked for compliance.

Ms Netshitenzhe replied that it is currently being changed.

Ms van der Merwe added that the definitions in both pieces of legislation are being changed.

Clause 2: Amendment of section 2 of Act 40 of 1994, as substituted by section 2 of Act 31 of 1995 as amended by section 2 of Act 42 of 1999
Ms Bulisile stated that the bold type in the phrase "[intelligence and counter-intelligence functions]" has to be removed.

Mr Landers noted that the word "functions" has been omitted from the proposed amendment.

Ms Bulisile responded that that word should be reinserted so that the proposed amendment read the same as the original formulation of the provision. The Committee decided to insert the phrase "and activities" after "functioning" at the end of Clause 2(d). This is a grammatical rather than a substantive amendment.

Ms van der Merwe stated that she is not certain whether this provision now reads properly because "functioning of the Committee" is different to the "activities of the Committee", and the current formulation now seems to transfer "functioning" to "activities". Yet "functioning" properly deals with the rules of the Committee, and therefore the provision should either provide "functioning of the Committee and activities of the Committee" or "functioning and functions of the Committee".

The Chair agreed because the "activities" of the Committee are its "functions".

Ms Bulisile responded that Section 3 of the Intelligence Services Control Act (the principal Act) spells out the functions of the Committee, and after the word "Services" at the end of Clause 3(a)(i)(aa) an "and" can be inserted, and a new Clause 3(a)(ii) can be introduced to deal with the reporting to Parliament requirement.

Clause 7: Substitution of section 7 of Act 40 of 1994, as amended by section 5 of Act 31 of 1995 and by section 5 of Act 42 of 1999
Ms Bulisile informed Members that the proviso contained after the semi-colon in the proposed Section 7(3) has been deleted, following proposals made by Members on Monday. Members also requested clarity on the meaning of the term "incapacity" in the proposed Section 7(4) and it has since been decided to use the dictionary meaning, which means the inability to do work.

Mr Landers suggested that "the" before "office" in the proposed amendment has to be deleted, and he was not certain whether the clause should state conviction "of" or "from".

Ms van der Merwe stated that it should read "conviction of".

Mr Landers agreed.

Ms van der Merwe asked whether the term "ill-health" in the proposed amendment refers to "incapacity" alone.

Adv Hoon replied that the term "incapacity" appears in many laws and means unable to work or on the grounds of any legal prohibition, and it is thus a legally clear term. Some aspect may be omitted from the definition in the Bill, but it depends on the circumstances of each case.

The Chair asked Adv Hoon whether he is saying that the original definition of the term will be retained.

Adv Hoon answered in the affirmative, and stated that should Members wish to define the term they should think carefully about it so that the term is not phrase too restrictively.

Ms van der Merwe asked whether "incapacity" includes incapacity due to imprisonment.

Mr Landers contended that it must, because the person would then physically be in jail.

Ms van der Merwe suggested that this is not always the case, because the person could have received a fine as well.

Ms Bulisile informed Members that the dictionary meaning of the term includes convictions, because the person in question would be unable to perform his/her work.

Ms Netshitenzhe added that the intention of the legislation in the principal Act is important here because it recognises the need for defined circumstances here. During the meeting on Monday only "conviction" was referred to and on Wednesday Members decided to add "ill health" to the principal Act expressly and, should this be left out of this provision, the courts will interpret the section broadly in the light of the circumstances of each case.

Mr Ferreira stated that the Bill does not stipulate "must remove" but only provides "may remove", and the Inspector-General cannot therefore be removed for minor offences or matters.

Ms van der Merwe proposed that the dictionary meaning of the term "incapacity" be retained in the Bill as suggested earlier by Ms Bulisile, and that the phrase "ill health and conviction" be removed, but "security clearances" and "poor performance" has to be retained.

Mr Mkaliphi (ANC) asked whether this would include the situation in which the Inspector-General is declared an insolvent.

Ms Bulisile replied that being declared insolvent would legally disqualify the Inspector-General from holding that office, as it would amount to incapacity.

Ms Netshitenzhe reminded Members that all this would be covered in the regulations.

Mr Landers stated that the proposed Section 7(4) has to include "may" and not "must".

Mr Ferreira contended that he was not suggesting that "must" be adopted, but merely used it as an example to point out that the Inspector-General should not be removed from office for minor offences.

The Chair noted that Members agreed to the amendments put forward by Ms van der Merwe.

Ms Bulisile informed Members that the proposed Sections 7(10)-(13) deal only with consequential amendments due to the revised Clause 1(e), and merely replace "Agency" with "Service".

The Chair noted that Members agreed to these amendments.

National Strategic Intelligence Amendment Bill
Clause 1: Amendment of section 1 of Act 39 of 1994, as amended by section 1 of Act 37 of 1998 and section 24 of Act 66 of 2000
Adv Hoon stated that the word "[intelligence]" in Clause 1(a) has to be replaced with "intelligence", and thus the bold type is merely being removed.

Mr Landers suggested that the provision should read "to protect intelligence and classified information", and not "to protect classified intelligence information" as it currently stands.

The Chair suggested that the word "any" be inserted before "classified information".

Adv Hoon stated that a new definition of "subversion" is to be inserted in Clause 1, and it has to be refined by the Committee:

"'subversion' means any activity directed towards undermining by covert unlawful acts, or directed towards, or intended ultimately to lead to the destruction, or overthrow by violence of the Constitutionally established system of government in the Republic of South Africa;"


Ms Netshitenzhe added that this formulation is the definition received from he NIA, and the proposal from SAPS has not yet been received.

Ms van der Merwe suggested that in Clause 1(b)(c) the term "Agency" also has to be replaced with "intelligence service".

Ms Netshitenzhe replied that the use of "the Agency" in that provision must not be altered to "intelligence service".

Clause 2: Amendment of section 2 of Act 39 of 1994, as amended by section 2 of Act 37 of 1998
Adv Hoon stated that it is proposed that the phrase "on request" be deleted from the beginning of Clause 2(a)(iv), and a new Clause 2A is to inserted under the heading "Security screening investigations" in the National Strategic Intelligence Act of 1994 (the principal Act):

2A. (1) The relevant members of the National Intelligence Structures may conduct a security screening investigation to determine the security competence of a person if such a person-
(a) is employed by or is an applicant to an organ of state;
(b) is rendering a service or has given notice of intention to render a service to an organ
of state, which service may-
(i) give him or her access to confidential information in the possession of the
state; or
(ii) give him access to areas designated National key points in terms of the
National Key Points Act, 1980 (Act No.102 of1980).

(2) The Agency shall be responsible for security screening of persons contemplated in
subsection (1) excluding persons employed by, applicants to or persons rendering a
service to the South African Police Service or the Department of Defence.

(3) Notwithstanding the provisions of subsection (2), the Agency may request the

assistance of the South African Police Service or the National Defence Force in the
performance of the function contemplated in subsection (2).

(4) The security screening investigation contemplated in subsection (1) may entitle
relevant members of the National Intelligence Structures to use a polygraph, to
determine the reliability of information gathered during the investigation.

(5) The relevant members of the National Intelligence Structures may gather information
relating to-
(a) financial status;
(b) criminal record;
(c) personal information or
(d) any other information which is relevant to determine the security competence of a
person: Provided that the communications of such a person shall not be monitored
or intercepted without complying with the provisions of the Interception and
Monitoring Prohibition Act, 1992 (Act 127 of 1992).

(6) The head of the relevant National Intelligence structure may at4er evaluating the
information gathered during the security screening investigation, issue, degrade or
withdraw or refuse to grant a security clearance.

(7) The head of the relevant National intelligence Structures may establish a security
screening Advisory Board to assist him or her in the determination of the security
competency of a person.

(8) A person whose security clearance has been refused, withdrawn or degraded may
appeal to the Minister.

(9) The Director-General of the Agency may issue functional directives on:
(a) usage and application of polygraph;
(b) criteria for determining security competence; and
(c) levels of security clearance.

(10) The directives contemplated in subsection (9) shall be issued with the approval of
the Minister. \\ho shall act in consultation with the Minister of safety and security and
the Minister of Defence and shall apply to all the relevant National Intelligence
Structures.

Ms Netshitenzhe informed Members that this amendment brings the Bill in line with a similar provision in the regulations, and it was decided to include it in the actual text of the Bill as well. The NIA is currently mandated to conduct counter-intelligence security clearances and this exclusive power has now been captured in this "stand alone" clause, because it is an important function. The inclusion of the word "relevant" at the beginning of Clause 1(b) further seeks to exclude other entities from performing this function, as stipulated in the proposed Section 2A(2).

A Member suggested that the phrase "or her" should be inserted after the word "him" in both the proposed Clause 2A(1)(b)(i) and (ii).

Ms Netshitenzhe stated that Clause 2 has to be read with Section 2(1)(b) of the principal Act, as the NIA has the national mandate to conduct these security clearances on all South African citizens. The proposed Section 2A(3) provides that SAPS may only conduct such clearances on its own members and the same applies to SANDF, and the proposed Section 2A(2) therefore deals with the public service. The proposed Section 2A(3) has been inserted to provide that, notwithstanding anything provided in the proposed Section 2A(2) the NIA can request the assistance of SAPS and the SANDF, and this is aimed at addressing the current problems being experienced by NIA.

The Chair questioned whether "vice versa" applies, and whether SAPS or the SANDF may request assistance from the NIA.

Ms Netshitenzhe responded that this situation is not excluded by the wording of the proposed Section 2A(2), and the phrase "and on request by any person employed by SAPS or the SANDF" could be inserted.

The proposed Section 2A(4) and (5) are identical to the regulations and deals with what information can be gathered by a polygraph test.

The Chair asked whether the term "polygraph" has been defined in the Bill.

Ms Netshitenzhe answered in the affirmative. The proposed Section 2A(6) deals with the evaluation of information gathered during the screening investigation, and this clause is contained in the Intelligence Services Act, the NIA Act and the SARS Act. These powers have now been granted to the Director-General of the Department of Intelligence and the Minister now serves as an appeal authority.

The proposed Section 2A(7) establishes a security screening advisory board to assist the head, and this has been incorporated in the draft regulations. This essentially consists of one member of various intelligence services that would deal with those borderline cases in which the Director-General of the Department of Intelligence cannot decide whether to award the clearance or to consult the Minister. The advisory board would then evaluate the information.

The proposed Section 2A(8) allows for appeals to the Minister when security clearances have been refused.

Mr Landers asked what the next step would be once the person has appealed, because the provision does not make this clear.

The Chair suggested that the Minister then has to consider the appeal.

Mr Landers stated that the provision does not stipulate this.

Adv Hoon agreed and stated that the provision has to be expanded, and there are standard clauses that can be used in this regard.

Ms Netshitenzhe stated that the proposed Section 2A(9) provides that the Director-General may issue directives on various matters. This provision was inserted following the opinion of the State Law Advisors on the regulations which concluded that the Director-General cannot be granted these powers via regulations, but they should instead be conferred expressly via legislation.

Clause 4: Amendment of section 5 of Act 39 of 1994, as inserted by section 5 of Act 30 of 1998
Adv Hoon stated that the Committee decided on a previous occasion that the phrase "the Director of the Financial Intelligence Centre" has to be included. Adv Hoon stated that he has not yet received guidance from his principal in Pretoria as to how to proceed with this matter, and he will be able to advice Members on Monday 14 October.

There were no further questions or comments and the meeting was adjourned.

Appendix 1

AMENDMENTS PROPOSED TO NATIONAL STRATEGIC INTELLIGENCE AMENDMENT BILL [B51-2002]

CLAUSE I

1. On page 2, in line 11, to omit "[intelligence]" and to substitute 'intelligence".

2. On page 2, after line 20, to insert the following paragraph:

(c) by the insertion after the definition of "South African Police Service' of the following definition:

"'subversion' means any activity directed towards undermining by covert unlawful acts, or directed towards, or intended ultimately to lead to the destruction, or overthrow by violence of the Constitutionally established system of government in the Republic of South Africa;".

CLAUSE 2

1. On page 2, in line 24, to omit "on request".

NEW CLAUSE

1. That the following be a new Clause:

Insertion of section 2A in Act 39 of 1994

1. The following section is hereby inserted in the principal Act after section 2:

"Security screening investigations

2A. (1)
The relevant members of the National Intelligence Structures may conduct a security screening investigation to determine the security competence of a person if such a person-
(a) is employed by or is an applicant to an organ of state;
(b) is rendering a service or has given notice of intention to render a service to an organ of state, which service may-
(i) give him or her access to confidential information in the possession of the state; or
(ii) give him access to areas designated National key points in terms of the National Key
Points Act, 1980 (Act No.102 of1980).
(2) The Agency shall be responsible for security screening of persons contemplated in subsection (1) excluding persons employed by, applicants to or persons rendering a service to the South African Police Service or the Department of Defence.
(3) Notwithstanding the provisions of subsection (2), the Agency may request the assistance of the South African Police Service or the National Defence Force in the performance of the function contemplated in subsection (2).
(4) The security screening investigation contemplated in subsection (1) may entitle relevant members of the National Intelligence Structures to use a polygraph, to determine the reliability of information gathered during the investigation.
(5) The relevant members of the National Intelligence Structures may gather information relating to-
(a) financial status;
(b) criminal record;
(c) personal information or
(d) any other information which is relevant to determine the security competence of a person: Provided that the communications of such a person shall not be monitored or intercepted without complying with the provisions of the Interception and Monitoring Prohibition Act, 1992 (Act 127 of 1992).
(6) The head of the relevant National Intelligence structure may at4er evaluating the information gathered during the security screening investigation, issue, degrade or withdraw or refuse to grant a security clearance.
(7) The head of the relevant National intelligence Structures may establish a security screening Advisory Board to assist him or her in the determination of the security competency of a person.
(8) A person whose security clearance has been refused, withdrawn or degraded may appeal to the Minister.
(9) The Director-General of the Agency may issue functional directives on:
(a) usage and application of polygraph;
(b) criteria for determining security competence; and
(c) levels of security clearance.
(10) The directives contemplated in subsection (9) shall be issued with the approval of the Minister. \\ho shall act in consultation with the Minister of safety and security and the Minister of Defence and shall apply to all the relevant National Intelligence Structures.

CLAUSE 4

1. On page 3, after line 19, to insert the following paragraph:

(b) by the addition to subsection (1) of the following paragraph:

"(g) the Director of the Financial Intelligence Centre.".

CLAUSE 6

1. On page 4. in line 20, to omit "Nicoc or its' and to substitute "the National Intelligence Structures or their".

Appendix 2

Transtel and Eskom Enterprises submission on the Electronic Communications Security Bill ("COMSEC").


Introduction

Eskom Enterprises and Transtel welcome the opportunity to make comments on the above Bill. We would further welcome the opportunity to make an oral presentation to the Committee to address any questions that the Committee may have regarding our submission. Our joint submission is set out below.


1. Comments on Definitions

1.1 It is recorded that the company established in terms of the Bill will provide electronic communications security products and "related services" to government and organs of State.


1.2 There is no definition provided for the term "related services". This casts the net of services that can be provided too wide. We submit that a definition of "related services" should be provided to enable third parties to identify areas where there is potential for overlapping of services and competition.


1.3 The definition for "critical electronic communications" is too wide and vague.


1.4 A definition of "electronic communications product" is needed.


1.5 A definition of "electronic communication systems and services" should be included.


1.6 "Critical Electronic Communications" means communications that are of importance for the protection of the national security of the Republic or the economic and social well being of the citizens.

1.7 This intent doesn't appear to fit too well with the Application of the Bill. Why should the Bill apply to the economic activities of citizens that are not organs of state?

1.8 "Critical Electronic Communications Infrastructure" means infrastructure that is of importance to national security of the Republic or the economic and social well being of the citizens.

1.9 "The Citizens" is not defined. Are citizens intended to be both private and juristic or only juristic as one could infer from the Application of the Bill?

2. Comments on Sections of the Bill

2.1 Preamble

The preamble of the COMSEC Bill indicates that it is applicable to organs of state. We submit that the provision of services to organs of state should be discussed with the various organs before the Bill is passed.


2.2 Section 3

2.2.1 The principle objective of Comsec (Pty) Ltd is to provide secure electronic communications for the protection of critical government communications in the interest of national security.

2.2.2 The objective begs the question as to whether the Bill applies to the private sector given that the aim of the Bill is to protect critical government communications in the interest of national security.

2.3 Section 7

2.3.1 The provisions of this section enable Comsec to install, maintain and provide electronic communications services and systems. The ambit of Comsec's powers extend into the domain of the Public Switched Telecommunications Service licence-holders. This is currently at variance with the Telecommunications Act.


2.3.2 It is not clear whether or not Comsec will provide its own infrastructure or whether it will be required to utilise existing infrastructure. It is our view that by providing its own infrastructure, Comsec will duplicate services and the end result will be an imprudent expenditure of taxpayers money.


2.3.3 What is intended by the word "integrate"? Does it mean integration on a general basis between Comsec and the third entity or does it mean integration in a partial fashion?

2.4 Section 9

2.5 Ad para (9(2) We believe that it is best that reference to the quorum of the Board of Directors be dealt with in Comsec's sharholders' agreement.

2.6 Ad para (9(3) Please see our comment to paragraph 9(2) above.

2.7 Section 10

Section 10(3) deals with disclosure requirements of the board of directors. This provision conflicts with the provisions of the Company's Act and good corporate governance.


2.8 Section 17

Procedure for approval and verification of electronic communication products must be included in the Bill.


2.9 Section 18

2.10 The implication of Comsec's exemption from the provisions of the Telecommunication's Act raises serious concerns. The principal objective of the Bill is to provide secure electronic communication for the protection of critical government communications, the Bill does not, however, stipulate how this will be achieved. There is therefore no clear indication as to why Comsec should be excluded from the Telecommunications Act in its entirety.


2.11 Furthermore if it is envisaged that Comsec will interconnect with the PSTS operator/s, we submit that Comsec must be subject to the Telecommunications Act.


2.12 Instead of the rates that will determine the cost of the service being periodically approved by the Minister of Finance, they should be approved at least every six months or annually by the Minister of Finance.


2.13 Section 20

Clarity is required on the criteria for exemption from the provisions of the Bill.


2.14 Section 21

The Bill is unclear on who will be liable for the costs of protecting the infrastructure.

2.15 Section 22

Ministers do not have the legislative competence to make regulations. Ministers' functions are to set broad policy frameworks and agendas. An administrative body is the appropriate entity to make regulations. This provision needs to be changed immediately or else the Bill will be unconstitutional.

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