3rd Quarterly Reports for National Credit Regulator, National Lotteries Board & Companies and Intellectual Property Commission

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Trade and Industry

24 March 2015
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

 

The National Credit Regulator (NCR), the National Lotteries Board (NLB) and the Companies and Intellectual Property Commission (CIPC), reported on their Third Quarter Financial and Non-Financial Performances. The Committee also dealt with the request by Mr G Hill-Lewis to have full access to the forensic investigation report on the alleged corruption at the Companies Tribunal.

The NCR reported that the targets to conduct three workshops on affordability assessment regulations and to conduct a study to review the current levels of the cost of credit (Strategic Objective 1) were not achieved. The scope of work had been amended based on the Competition Commission’s response and lack of funding; hence there had been a delay in appointing a service provider to commence with the review. The target to investigate two credit bureaus and to implement enforcement action (Strategic Objective 3) had been partly achieved. The first investigation into a credit bureau had commenced and was still ongoing. The procurement process took longer than anticipated and both investigations would be finalised in the Fourth Quarter. The target of having a report produced on the implementation of recommendations of the ICT assessment (Strategic Objective 4) had also been partly achieved. The planning session had been conducted with the service provider. The process to appoint a Project Manager was underway, where after the development of the sub systems would commence. NCR’s 2014/15 total expenditure budget had been revised from R129 million to R117 million. Cost containment measures had to be reprioritised and NCR received additional funding of R5 million in January 2015. NCR accumulated a surplus for the year to date, because expenditure was below budget by 5%.

The Committee enquired on the status of the interest rate review and what NCR was doing with African Bank to sort and separate the reckless credit. Members asked for a breakdown of what ‘Other Income’ and ‘Professional Fees’ entailed and what percentage of the budget had been allocated to Strategic Objective 1. The Committee wanted the issue of ‘depreciation’ explained how this impacted on NCR’s service delivery.

The NLB had 17 indicators for the Third Quarter with 12 (71%) being achieved and 5 (29%) not achieved. The five targets not achieved related to obtaining approvals for the IT Sustainability Strategy, the Corporate Social Responsibility Strategy and the Integrated IT System.  Standard operating procedures needed to be aligned to the Funding Model. This target was delayed because NLB was awaiting publication of the Regulations before being finalised. The Funding Model aimed to have a minimum of 5% allocated to each province. The provinces currently allocated below 5% were the Free State (3%), Mpumalanga (2%), North West (4%) and the Northern Cape (3%). Lottery ticket sales for the Third Quarter amounted to approximately R1.2 billion and the 34% contribution to the National Lottery Distribution Trust Fund (NLDTF) amounted to R414 million. An analysis of material variances showed that Goods and services were below budget by 34% due to under spending in advertising and savings in consultancy and legal fees. Compensation of employees was 6% above budget due to the implementation of the staff salary increases at a higher level than at budget (8.5%),as well as bonus payment slightly higher than budget.

The Committee asked for clarification on the Goods and services budget, the miscellaneous allocation, as well as what ‘other income’ specified. The Committee also wanted to know in terms of disbursements to provinces, why Mpumalanga was so low and continued to be low and what was done differently in Limpopo that increased their disbursement so dramatically. Members further enquired about the revenue spilt and the status of the 2012/13 backlog applications. The Committee wanted confirmation on whether NLB incurred irregular expenditure in the Third Quarter.

The CIPC reported that 2014 was a year of great change in CIPC. The new website was launched in September 2014 with initial teething problems relating to the database. CIPC received an overall satisfaction rating of 6.30 out of 10. Stakeholders were less satisfied with the CIPC (4.70) compared to customers (6.38). Service Excellence and Communication received the lowest satisfaction ratings among both customers and stakeholders. Stakeholders tended to be less satisfied with the CIPC across all attribute dimensions, as compared to customers. CIPC removed the call centre indicator from the reporting due to difficulties in measuring such an indicator.

The Committee disagreed with CPICs decision to remove the call centre indicator, because it was an important way the public engaged with CIPC and it was also one of the most common complaints that there was a lack of response from CIPC. Members also wanted more information on the findings by the Auditor-General which highlighted irregular expenditure, reliability of information and record keeping as problems. Members felt that CIPC was really harming the economy because of the red tape companies had to endure just to register and asked for a commitment that CIPC would address these issues as soon as possible. CIPC was asked to come up with a formal proposal in terms of ICT, because it kept on coming up in the Auditor-General’s report and in CIPC’s own analysis.

The Committee discussed the annexures to the Companies Tribunal report. The Chairperson confirmed that the information had been sent to the Committee and would be made available to Members the following day. She also confirmed that all Members received the legal opinion from the Parliament Legal Office.

Mr Hill-Lewis had requested that the Committee asked for the full and unedited report, including the addendums. The response from the Minister did not include the full report as requested, but it indicated that DTI was of the view that in terms of the Protection of Information Act (PAIA), the full report should not be released to protect the privacy of third parties. The advice given to the Committee stated that DTI refused access to certain information on the grounds of certain sections in PAIA. Mr Hill-Lewis responded that it did not make much difference because careful reading of the report and the amounts mentioned made it very clear that those were the amounts the Chairperson and the Deputy Chairperson of the Companies Tribunal charged as a daily rate. The report itself and the Minister’s response showed that the investigation could not be completed because there was no CCTV footage and time registers, but it should be noted that it was the job of a chairperson to set up those control mechanisms. It was also made clear in the report that there was no signed affidavit by the whistle blower and the Chairperson and the Deputy Chairperson of the Companies Tribunal did not cooperate with the investigation. It was a serious matter when there was a forensic investigation ordered by the Minister and two senior civil servants did not comply with the investigation. The Chairperson and the Deputy Chairperson of the Companies Tribunal should be asked on what basis they thought it was acceptable to not comply with the investigation ordered by the Minister. The Chairperson and the Deputy Chairperson of the Companies Tribunal should appear before the Committee with the Department, preferably the Minister, to go through the report and to ask the difficult questions that needed to be asked. Just addressing the control mechanisms did not go far enough to satisfy the Committee and its oversight function that nothing was wrong.

The Chairperson said to move forward on this issue required a decision by the Committee and there needed to be a quorum for such a decision. She proposed that Members be given an opportunity to go through the documents and to study the report before making an informed decision. 

 

Meeting report

The Chairperson welcomed everyone to the meeting. The matter of the Companies Tribunal would be dealt with after the presentations and the agenda for the meeting was adopted.

National Credit Regulator (NCR) Third Quarter Performance Report 2014/2015

Ms Nomsa Motshegare, Chief Executive Officer, NCR, gave an overview of the NCR’s strategic objectives. The targets to conduct three workshops on affordability assessment regulations and to conduct a study to review the current levels of the cost of credit (Strategic Objective 1) were not achieved. The study was underway and a report would be submitted with recommendations once completed. The scope of work was amended based on the Competition Commission’s response and lack of funding; hence there had been a delay in appointing a service provider to commence with the review. A service provider was appointed in January 2015 to test different scenarios in respect of prescribed formulas. The target to investigate two credit bureaus and to implement enforcement action (Strategic Objective 3) had been partly achieved. The first investigation into a credit bureau had commenced and was still ongoing. The procurement process took longer than anticipated and both investigations would be finalised in the Fourth Quarter. The target of having a report produced on the implementation of recommendations of the ICT assessment (Strategic Objective 4) had also been partly achieved. The planning session had been conducted with the service provider. The process to appoint a Project Manager was underway, where after the development of the sub systems would commence.

Ms Ayanda Mafuleka, Chief Financial Officer, NCR, said the 2014/15 total expenditure budget had been revised from R129 million to R117 million. Cost containment measures had to be reprioritised and the NCR had received additional funding of R5 million in January 2015. The NCR accumulated a surplus for the year to date, because expenditure was below budget by 5%.

Ms Motshegare said there had been 28 referrals made to the National Consumer Tribunal with three raids conducted in three provinces where 32 compliance notices were issued. A Credit Industry Forum had been established, but funding and office space remained challenges for the NCR.

Discussion

The Chairperson indicated that she had attended the National Credit Conference in Johannesburg and it was extremely well attended. The Committee previously submitted concerns that there seemed to be a lack of synergy between DTI and the Departments of Finance, Justice and Correctional Services and others. The senior representation from those departments were impressive and although they did not agree on everything, there was consensus that measures needed to be put in place to curb unsecured lending. It was good to that the departments and the practitioners were taking this matter seriously and there was a call for greater coordination between the spheres government and the sectors of society. Congratulations should be extended to NCR for an active and engaging conference.

Mr G Hill-Lewis (DA) asked what the status of the interest rate review was. He asked what work the NCR was doing with African Bank to sort and separate the reckless credit and what actions would be taken against banks right down to individual staff member levels for those reckless credit agreements.

Ms Motshegare replied that the NCR had come up with a number of scenarios in terms of formulas and it had been tested with a few credit providers. Actuaries were appointed to a conduct sensitivity analysis and this analysis was currently ongoing. The NCR hoped to have a published draft by the end of April 2015 to present to DTI. The sensitivity analysis was being done by PricewaterhouseCoopers (PwC). The NCR, in terms of African Bank, was in touch with the curator and he furnishes NCR with regular updated reports. African Bank wanted to appoint debt counsellors to start identifying reckless loans. There was a report that would be made available to the Registrar of Banks to see what actions would be taken.

The Chairperson noted that the issue of capping of credit insurance had been referred to the Minister of Finance for consultation as required by the Act and would soon be published. The revision of fees and the interest rate were at an advanced state and it would be published for comments shortly.

Mr N Koornhof (ANC) said it was mentioned at the last visit to the NCR that when a bank repossessed a car or a house, the outstanding debt was still pursued. He asked if the NCR did any investigations to see if the banks could take more of the risk. He asked that the ‘Other Income’ and the ‘Professional Fees’ categories on the financials be unpacked.

Mr Obed Tongwane, Chief Operating Officer, NCR, replied that the investigations into the shortfalls after bank repossession had been mandated and was approximately 60% concluded.

Ms Mafuleka replied that ‘Other Income’ consisted of interest and royalties from the National Loans Register. The decline in the ‘Other Income’ was related to the decline in the interest, because in the past there had been more interest accumulated due to cash surpluses.  Professional fees made up legal fees and consultancy services.

Mr A Williams (ANC) asked if the NCR visited African Bank before the problems started. He asked what percentage of the budget was allocated to Strategic Objective 1. Big banks still offered unsolicited credit and he asked what the NCR was doing to address that. He also wanted to know how the NCR ended up with surplus if funding was cited as a challenge.

Ms Motshegare confirmed that the NCR visited African bank and that was how the issue around the in duplum was raised. She asked if Mr Williams could forward the details on the banks and unsolicited credit to be investigated. Approximately R600 000 had been budgeted for Strategic Objective 1.

Ms Mafuleka replied that NCR had funding constraints, because there were no funds to procure or acquire office space. The surplus accumulated was comparing the actual income against the actual expenditure, but that surplus was expected to be absorbed during the Fourth Quarter. Due to the delay in the implementation of the National Credit Amendment Act, NCR had not been collecting what was budgeted for and expenditure had to be realigned.

Mr Hill-Lewis said in terms of African Bank, just because a loan was on the ‘good book’, i.e. performing well, it did not mean it was not also reckless and it was not good enough to simply separate good and bad loans. It was important that all the loans be investigated to identify every single reckless loan.

The Chairperson said the issue of depreciation needed to be addressed. She referred to the projected income not generated by the registrants and sked how it impacted the performance of the NCR.

Ms Mafuleka replied that depreciation had always been called over expenditure, because it was not budgeted for and it was grouped under administrative costs. The delay in the implementation of the National Credit Amendment Act did negatively impact the NCR’s collecting abilities and the entity would not be able to collect the whole R23 million for the Fourth Quarter. R10 million of the R23 million was projected to be collected and R8.2 million was collected in the remainder of the Third Quarter. There had been a hope during the 2014/15 financial year that the proclamation would have been signed timeously, but the NCR focused on curbing expenditure when the signing was delayed. A deficit of about R2 million was anticipated at the end of the financial year if the entity was unable to collect above R10 million.

Mr Kumaran Naidoo, Chief Financial Officer, DTI Group, said normal business accounting standards dictated that depreciation should be budgeted for. National Treasury required the presentation of a balanced budget, i.e. sufficient cash income to cover expenditure and that was why entities presented their income and expenditure excluding the depreciation. Capital expenditure was defrayed over a number of years and maybe an accrual accounting should be presented to the Committee. NCR’s budget had been quite significantly cut this financial year and it affected service delivery. DTI during the adjustment period allocated an additional R5 million, but NCR could not start any projects until there was a commitment from DTI on that R5 million. DTI had a number of entities that were struggling to secure premises and a holistic solution needed to be applied.

The Chairperson thanked the NCR and the input from the Department.

National Lotteries Board (NLB) Third Quarter Financial and Non-Financial Performance

Prof Alfred Nevhutanda, Chairperson, NLB, gave an overview of the operational mandate and said the Lotteries Amendment Act provided the NLB with an opportunity to plan for a better structured organisation, which should respond to the funding needs of people in a credible and expeditious manner.

Ms Charlotte Mampane, Chief Executive Officer, NLB, provided a summary of the NLB’s strategic objectives and outcomes. The NLB had 17 indicators for the Third Quarter with 12 (71%) being achieved and 5 (29%) not achieved. The five targets not achieved related to obtaining approvals for the IT Sustainability Strategy, the Corporate Social Responsibility Strategy and the Integrated IT System.  Standard operating procedures needed to be aligned to the Funding Model. This target was delayed because the NLB was awaiting publication of the Regulations before being finalised. The Funding Model aimed to have a minimum of 5% allocated to each province. The provinces currently allocated below 5% were the Free State (3%), Mpumalanga (2%), North West (4%) and the Northern Cape (3%).

In terms of risk management, Ms Mampane said quarterly reviews of the strategic, operational and project risks were conducted to determine the impact of the implemented proposed controls. Risk appetite and tolerance were monitored throughout the quarter to ascertain whether the organisation was operating within set tolerance and appetite levels. A review of the assurance provided by the three lines of defence on the strategic risks of the organisation was conducted for the quarter under review. Meetings between officials of the South African Police Services (SAPS), the National Prosecuting Authority (NPA) and the NLB were held during the quarter under review. These were meant to cement the working relations between all parties and to ensure that line of communications regarding feedback on cases were clarified.

Mr Jeffrey du Preez, Senior Executive: Grant Funding, NLB, said the legislated target per province was a minimum of 5% and the legislated targets per sector provided for Charities (45%), Sports (22%), Arts (28%) and Miscellaneous (5%). Disbursement statistics showed Mpumalanga (2.05%), North West (2.94%) and the Northern Cape (3.95%) as the provinces getting the lowest allocations. In addition to the existing provincial offices in Limpopo and Eastern Cape, offices had been established in KwaZulu-Natal, Mpumalanga, North West, Northern Cape and the Western Cape. In terms of monitoring and evaluation, Mr du Preez provided an overview of the indicators, the number of organisations that was allocated disbursements and the number of beneficiaries reached.

Mr Phillemon Letwaba, Chief Financial Officer, NLB, showed that lottery ticket sales for the Third Quarter amounted to approximately R1.2 billion and the 34% contribution to NLDTF amounted to R414 million. An analysis of material variances showed that Goods and services were below budget by 34% due to under spending in advertising and savings in consultancy fees and legal fees. Compensation of employees was 6% above budget due to the implementation of the staff salary increases at a higher level than at budget (8.5%), as well as bonus payment slightly higher than budget.

Discussion

Mr Williams asked what percentage under goods and services was attributed to consultants and what progress had been made since the 2013/14 financial year on the Auditor-General’s findings and supply chain management. He also wanted to know in terms of disbursements to provinces, why Mpumalanga was so low and continued to be low and what was done differently in Limpopo that increased their disbursement so dramatically.

Mr Letwaba replied of the total goods and services budget of R280 million, R20 million was budgeted to spent on consultants, but through concerted efforts to use internal resources, approximately R5.6 million had been spent on consultants to date.

Prof Nevhutanda said the Premier of Mpumalanga was visited more than once and he facilitated meetings with different MECs to explain how the NLB worked. The main problem in the province was organisation because non-governmental organisations (NGOs) were few and some did not have financial statements and it was a requirement by the Act. Witbank and Middleburg in Mpumalanga were the only areas accessing the funds. There was a recent meeting with mayors and MECs and hopefully the information would be disseminated to organisations. Grant funding had also been struggling to secure an office in Mpumalanga and the office should be accessible to address this concern. Limpopo and Eastern Cape were the first provinces to be given offices. The current targets were Mpumalanga, Free State and Northern Cape and the Premiers of these provinces were on board and were cooperating.

Mr Du Preez confirmed that a Grant Funding office had been opened in Mpumalanga.

Mr Hill-Lewis asked what the revenue spilt on the sports pools, what the status of the 2013 backlog applications was and what the current timeline for conclusion of the backlog applications was.

Mr Letwaba replied that there were various games being run by the Operator and the exact percentage revenue split was not readily known, but the Lotto contributed approximately R2.4 billion (almost 50% of total revenue as at the end of December 2014), Lotto Powerball contributed R1.3 billion, Sport stake contributed R221 million and Wina Manje (scratch card) contributed  R66 million. Of the revenue generated by the Operator 34% went to the NLDTF, 20% was government shareholding for the Minister’s discretion, 10% was distributed in terms of the current licensing, another 10% went to the National Empowerment Fund (NEF) and the rest was used by the Operator to run operations.

Mr Du Preez replied as far as the 2012/13 backlog was concerned, outstanding applications in terms of sport and charities had been dealt with. The only sector with outstanding applications was arts and there were not sufficient funds to complete those applications in terms of the current financial year. The current regulations provided for three time frame indications. The applicant would be notified on the outcome within 30 days of adjudication, the successful applicant was supposed to return the grant agreement to the NLB within 30 days of receipt and after receipt of a compliant grant agreement, funds needed to be paid within 60 days. NLB had started to do an analysis of the time frames and the draft regulations were looking to include an overall time frame from submission to conclusion.

Mr Koornhof asked if the Committee at some point would get a breakdown of salaries and board meetings.

The Chairperson confirmed that the Committee would need to get the information.

Mr M Kalako (ANC) asked what ‘miscellaneous’ on the financials consisted of and what criteria was used to allocate and monitor funding.

Prof Nevhutanda said ‘Miscellaneous’ as a category was given 5% and it was created to cater for either organisations that did not fall into either of the categories, for organisations that needed funding when the call for applications was not yet opened or emergency funding for disasters.  The criteria used were captured in the call for applications and projects would be adjudicated based on the setup of the call. NLB monitored the projects and that was why beneficiaries reported frustrations, because applications could be approved, but when the project was assessed, many applicants were found to be deceitful in their applications.

The Chairperson asked for comment on the NLB’s irregular expenditure as well as the misalignment of the targets in the APP.

Ms Mampane said NLB took time to go through the audit findings and worked closely with DTI for guidance on technical indicators.

Mr Letwaba replied that NLB was working very closely with DTI and the NLB Audit Committee on the audit matrix and only two findings relating to the IT policy, were still awaiting the Board’s approval. There had been some irregular expenditure in previous financial years which had been subsequently condoned and the focus was now on policy and controls to ensure it did not recur.

The Chairperson asked whether the NLB incurred irregular expenditure in the Third Quarter.

Mr Letwaba confirmed that NLB did not incur irregular expenditure.

Mr Naidoo said the Department kept a close eye on all its entities. In terms of irregular expenditure, contracts could be entered to in previous financial years and payments could be made in subsequent financial years and he confirmed that no irregular expenditure had been incurred in this financial year.

The Chairperson thanked NLB and said that other questions and queries would be forwarded to the NLB in writing. She asked if there could be an outline provided to the Committee that gave indication of when contracts were committed and to and when payments were made. This would give the Committee a better understanding on the past irregular expenditure incurred.

Companies and Intellectual Property Commission (CIPC) Third Quarter Performance Report

Ms Astrid Ludin, Commissioner, CIPC, said 2014 was a year of great change in the CIPC. These changes included the renovation of the office environment, new ICT infrastructure, computer upgrades, moving of staff and it caused processing delays. The new website was launched in September 2014 with initial teething problems relating to the database. A summary of operating results, performance analysis and key findings of customer and stakeholder survey where 900 customers and 46 stakeholders were interviewed was provided. CIPC received an overall satisfaction rating of 6.30 out of 10. Stakeholders were less satisfied with the CIPC (4.70) compared to customers (6.38). Service Excellence and Communication received the lowest satisfaction ratings among both customers and stakeholders. Stakeholders tended to be less satisfied with CIPC across all attribute dimensions, as compared to customers.

Ms Ludin showed that overall, the most preferred medium of communicating with the CIPC is via email (43%), followed by the transactional website (24%). Interestingly, although almost half of the respondents have used the CIPC’s query resolution system, only 1% mentioned that this is their preferred point of contact with the CIPC.  Across all segments, Email and the Transactional Website were the most commonly used mediums of communication. The front end website received similar average rating scores across all demographic segments and notably, stakeholders tended to rate all statements slightly lower than customers, particularly the time efficiency of the front end website. Across all segments, the Self-Service Terminals received similar ratings, because once again, stakeholders tended to give lower rating scores on self-service terminals. CIPC removed the call centre indicator from the reporting due to difficulties in measuring such an indicator. On all service excellence attributes, stakeholders gave the CIPC a lower score compared to customer ratings.

Ms Ludin said communication was an area requiring urgent improvement. The three most urgent improvement areas in terms of the CIPC’s communication were identified as ccommunicating information about the CIPC’s news, campaigns and events, making it easy to get in touch with the CIPC and improving the response rate to queries and requests logged on to the query resolution system. Service excellence was another area requiring urgent improvement. The three most urgent improvement areas in terms of the CIPC’s service excellence were identified as being able to consistently provide quality service, handling client queries and requests to their satisfaction and decreasing the number of service-related problems experienced by clients. The CIPC was performing well on all of the other key attribute dimensions which were measured (i.e. systems and processes, reputation, leadership and vision as well as the CIPC’s mediums of communication). Since these attributes were also important to clients, they were leverage attributes, and need to be maintained in order to ensure that they did not become urgent improvement areas in the future.

Ms Ludin concluded to say that the Third Quarter Performance was affected by a number of factors, mostly stemming from changes in the organisation. System issues had been largely addressed and performance had improved in the Fourth Quarter.

Discussion

Mr Hill-Lewis said he disagreed that the reporting on the call centre indicator could be removed. It was an important way the public engaged with CIPC and it was also one of the most common complaints that there was a lack of response from CIPC.

Ms Ludin replied that the only reason the CIPC proposed the removal of the call centre indicator was based on the findings by the Auditor-General, which highlighted the difficulties in measuring such an indicator. The query resolution indicator would be included next year where the Commission could still be held accountable.

Mr Williams agreed and said the reporting on the call centre should not be removed because many complaints had been received from constituents about the problems at the call centre. He asked what happened that the percentage of companies registered electronically within three working days dropped from 98% to 4%. The Auditor-General’s report highlighted irregular expenditure, reliability of information and record keeping as problems and he asked how would these issues be addressed.

Mr Rector Rapoo, Acting Senior Manager: Companies and Close Corporations, CIPC, said the CIPC had been going through challenges in the Second and Third Quarters. A new online system had been introduced and there had been labour unrest. The system was now stabilised and the percentages would increase.

Ms Ludin replied that most of the irregular expenditure was as a result of the ICT issues and it partly historical in aligning contracts to the financial year end. A lot of time had been spent on this matter in the current financial year and it had improved quite substantially. The Third Quarter report reported on the condoned irregular expenditure and the CIPC was not quite yet at the level it wanted to be. This year had been focused on consequence management. The CIPC was very reliant, in terms of record keeping, on the extracted reports and the reconciliations made to the business systems. CIPC had put in a lot of work, in addition to working closely with the Auditor-General in ensuring the reliance of the records.

Mr Koornhof said the CIPC was really harming the economy because of the red tape companies had to endure just to register. The issues had been unpacked many times and although the past financial year had been a stormy time for the CIPC, he asked for a commitment that at the next meeting with the Committee, CIPC would be performing optimally according to all the targets.

Ms Ludin replied that the CIPC registered 34 000 companies in the Third Quarter with 16 000 registrations in the first month of the Third Quarter. There was sufficient system capacity, but other systems in the Commission needed to be aligned. The self service terminals which provided fully automated services were quite substantial and important that would assist both clients and staff. All the basics had been put in place and CIPC just had to deliver results. The management of the CIPC committed to turning things around, but not everything was under control of management and the risks around this needed to be managed. The changes that had been introduced in September 2014 on the new e-service substantially reduced the red tape and it generated a lot of efficiency within the organisation.

Mr Chris Williams, Chief Technology Officer, CIPC, replied that the CIPC had embarked on a programme around infrastructure upgrading and the introduction of new systems and new business processes. All the processes were new to the organisation so there was an adjustment. CIPC was positive and optimistic that performances would improve, especially from an ICT perspective. The self service terminals required no additional documentation. Customers did not have to pay immediately now, because the transaction could be stored and processed on receipt on payment and it contributed significantly on the reduction of red tape.

Mr Kalako said the presentation essentially dealt with research and surveys on public and stakeholder perception. He asked if there were any other critical components CIPC could highlight as it related to the work of the Commission.

Ms Ludin replied that the most important issue for CIPC was accessibility and the survey was very important to get feedback o how accessible CIPC really was. The self service terminals provided a big opportunity and the challenge would now be to make the service available on a national basis. In 2014, 10% of the registered companies did so using self service terminals which was an astonishing number if it was taken into consideration that it was primarily from one office in Pretoria. The aim was to make service available nationally, with CIPC staff assisting.

The Chairperson proposed that if Members had any more questions, it should be forwarded to CIPC in writing. She emphasised her concern with the organisation’s ICT, because a lot of money was spent on ICT and it seemed that the wrong economic measures were being applied. She asked CIPC to come up with a formal proposal in terms of ICT, because it kept on coming up in the Auditor-General’s report and in CIPC’s own analysis.

Committee Business - The Companies Tribunal

The Chairperson said upon consulting her notes, she realised that Mr Hill-Lewis had requested the annexures. She apologised, because the first letter that went to the Department did not request the annexures. A letter was then immediately sent to the Department to request the annexures. The annexures (over 70) were so huge that it could not be opened, but hard copies would be available the following day.All Members should have a package of the letters, responses as well as the legal documents from Parliament. At Thursday’s meeting it had been made clear that consultation with Parliament’s legal offices took place. She had been advised through an SMS, that at that stage the names should not be revealed and therefore, a clean document had not been received. She confirmed that Members received the full response from Parliament’s legal office.

The Chairperson said after making the Minister aware that the information he provided so far in response to what had been requested had not sufficed, he responded in that regard. The Chairperson confirmed that she received a further letter before the meeting by hand, dated 24 March 2015, from the Minister and it referred to the Companies Tribunal report. It indicated that it comprised of a panel of lawyers that would serve as Tribunal Members and the rates payable to these members were determined by salary scales emanating from National Treasury. It further indicated that Tribunal Members were paid for time spent on the cases. The report (the Chairperson clarified that this report referred to the report Members received that was blacked out in certain areas) clearly acknowledged that there were a number of internal control weaknesses that needed to be addressed. The Minister previously indicated that he intended writing to the chairperson of the Audit Committee to ensure that these control gaps were addressed. The Minister’s letter quoted that: “this had now been done”. It further quoted that: ‘I have been given the assurance the audit committee will play its oversight role in this regard. The recommendations in the forensic report at the Companies Tribunal indicate that the allocations are unproven as it was not followed through with evidence. At the time of its establishment, robust systems were not in place to measure time spent on cases and we then paid according to the claims submitted. This internal control gaps have now been rectified and the policy governing how fees are to be paid and calculated is in place.’

The Chairperson said it was important to study the report because it also addressed the measures the Committee was entitled to take. The report also indicated that the Chairperson asked for clarification on the route the Committee should and could pursue. It referred to the report submitted in December 2014 by Mr Grant Thornton pertaining to the review of the claims and it also referred to Mr Hill-Lewis being given a redacted version of the report. Mr Hill-Lewis requested that the Committee asked for the full and unedited report, including the addendums. It indicated the actions taken by the Chairperson as well as the responses by the Minister, in particular the response that indicated that without certain evidence, access to records, CCTV footage and a sworn statement from the whistle blower, no findings could be made and the allegations were not confirmed. The response from the Minister did not include the full report as requested, but it indicated that DTI was of the view that in terms of the Protection of Information Act (PAIA), the full report should not be released to protect the privacy of third parties. It addressed the regulatory framework as specified in Section 9 of PAIA which stated that the Act aimed at balancing the right to access to information with any rights, including the rights to reasonable protection of privacy, commercial confidentiality and good governance. Section 34 specifically dealt with the mandatory protection of privacy of a third party who was a natural person. Consent to such disclosure was provided for in Section 48 and the process to inform the relevant third party was provided for in Section 47. The Chairperson went on to read through the appropriate legislation from PAIA as it related to the received legal opinion. Section 37 provided that the information officer should refuse access to a record if the disclosure would constitute a breach of a duty of confidence owed to a third party in terms of an agreement. The information officer could also refuse the request to access of a record if the record consisted of information supplied in confidence by a third party, the disclosure of which could reasonably be expected to prejudice the future supply of similar information or information from the same source and it was in the public interest that similar information or information from the same source should continue to be supplied.

The Chairperson urged Members to go through the relevant legislation as it pertained to the advice the Committee had been provided with. The advice stated that DTI refused access to certain information on the grounds of certain sections in PAIA. According to Section 25 of PAIA, reasons for the refusal should be given to the requester, which was Mr Hill-Lewis. Although the documents did not specifically refer to a duty of confidence, the edited report was marked ‘confidential’. Sections 37 and 44 appeared the most relevant and there were impediments existing to DTI making a full copy of the report, including addendums available. Clause 4 of the Act dealt with appeals against decisions and Section 74 allowed the requester to lodge an internal appeal to the relevant body against the decision of the information officer of a public body. Chapter 2 dealt with court applications and these avenues provided Mr Hill-Lewis with remedies. The Committee could use its constitutional powers set out in Section 56 of the Constitution to summons any person to appear or to produce documents to obtain the full report. Confidentiality of the information contained in the report could be treated as such in accordance with rules 152, 155 and 157 of the Rules of the National Assembly. The use of constitutional powers related to the constitutional mandate of the National Assembly and its Committees. Among the documentation members would see a letter requesting advice in this regard.

The Chairperson referred to comments made by Mr Hill-Lewis in reference to Thursday’s meeting. It was made clear during the meeting that her ruling was made on the basis that fresh information would allow the matter to be pursued. It was also not a question that the Management Committee decided not to pursue the matter, but rather that the Management Committee dealt with the Committee Programme to see when issues could be fit in. It was unfortunate that Mr Hill-Lewis did not indicate that the decision was also informed by advice that had been sought from the Parliament Legal Office. Caution should be taken against labeling committees as automatically wanting to protect and prevent the disclosure of any perceived corruption. If there was corruption, it was very important that the Committee dealt with it under its mandate. The information at hand had repeatedly indicated that the allegations were unproven.

Mr Hill-Lewis confirmed that he was not provided with reasons why the full report had not been released to him and perhaps DTI could provide those reasons. It did not make much difference because careful reading of the report made it very clear who the report was talking about. If you looked at the amounts, it could be deduced that those were the amounts the Chairperson and the Deputy Chairperson of the Companies Tribunal charged as a daily rate. The report itself and the minister’s response showed that the investigation could not be completed because there was no CCTV footage and time registers, but it should be noted that it was the job of a chairperson to set up those control mechanisms. It was also made clear in the report that there was no signed affidavit by the whistle blower and the Chairperson and the Deputy Chairperson of the Companies Tribunal did not cooperate with the investigation. It was a serious matter when there was a forensic investigation ordered by the Minister and two senior civil servants did not comply with the investigation. The Chairperson and the Deputy Chairperson of the Companies Tribunal should be asked on what basis they thought it was acceptable to not comply with the investigation ordered by the Minister. There were still very serious matters to be dealt with in this regard and this matter could not just be set aside. The Chairperson and the Deputy Chairperson of the Companies Tribunal should appear before the Committee with the Department, preferably the Minister, to go through the report and to ask the difficult questions that needed to be asked. Just addressing the control mechanisms did not go far enough to satisfy the Committee and its oversight function that nothing was wrong.

The Chairperson said to move forward on this issue required a decision by the Committee and there needed to be a quorum for such a decision. She proposed that Members be given an opportunity to go through the documents and to study the report before making an informed decision.

The Committee agreed.

The Chairperson thanked everyone for their input.

The meeting was adjourned.

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