The Banking Association of South Africa (BASA) made a further submission on the Banks Amendment Bill. BASA was not involved in the curatorship of the African Bank, but supported the Banks Amendment Bill. BASA engaged in debates about regulatory frameworks. The 2008 G20 declaration was aimed at reforming the global financial system. The Financial Stability Board provided a policy framework for effective resolution. South Africa was a member of G20, and should adhere to international best practice. BASA focused on three of the twelve key attributes of effective resolution regimes: resolution authority; safeguards, and funding of firms in resolution. It had to be asked who would bear the burden of failure. The G20 Toronto declaration stated that taxpayers were not to ultimately bear the burden. Resolution was not to cause systemic disruption. Shareholders and creditors had to absorb losses. The hierarchy of claims had to be respected. BASA commended the Reserve Bank’s action of placing African Bank under curatorship, but the crisis management and resolution framework had to be upgraded.
In discussion, a Member questioned the stated fact that for BASA the failure of African Bank was unexpected. It was also pointed out that BASA was silent on the constitutionality of the Bill. There was concern about the position of pensioners. Also asked was how binding Financial Stability Board guidelines were. A DA Member suggested that the Bill might face constitutionality challenges. There was concern about the position of subordinated debt holders.
The chairperson of the sub-committee reported on a meeting between Standing Committee Members; parliamentary staff; National Treasury; the curator of African Bank; the Senior Creditors committee, and the Tier 2 Debt holders committee on 9 April. There were two processes: the legislative and the commercial. The global context had to be taken into account. The failure of African Bank would have an economic impact on its employees, which had to be considered. Tier two creditors had identified rule of law issues through legal counsel. Delay in the adoption of the Bill would be progressively more costly to government and the Reserve Bank. All parties had been consulted and the Bill could be adopted. There were no antagonistic interests. The Standing Committee suggested that the commercial process be speeded up and finalised.
In discussion, the Chairperson asked the Committee if the Bill process could be wrapped up within the following 48 hours. The Deputy Governor of the Reserve Bank would inform about progress with the commercial process on the following day.
A Parliamentary Senior Legal Adviser advised on the constitutionality of the Banks Amendment Bill. Three legal opinions on constitutionality were provided to the Committee, two by National Treasury and one by the subordinated note holders. There were two controversial amendments. The first was related to the circumstances under which a curator could dispose of or transfer assets and liabilities. The second was the powers of the curator to authorise funding on behalf of the bank. The first Treasury opinion held that deprivation of property in terms of the amendment would not be arbitrary. The Minister or the Registrar had to authorise transfers and disposals, and their discretion was subject to the provisions of the Promotion of Administrative Justice Act (PAJA). The subordinated note holder's opinion stated the rule of law argument that retrospective legislation could undermine the rule of law. There was also the rationality argument that asked whether the legislation served a legitimate government purpose. It stated that the legislation was supposed to restore public confidence in banking, yet it could allow arbitrary differentiation between creditors. The second Treasury opinion stated that administrative actions in terms of the Bill were subject to PAJA, hence deprivation would not be procedurally arbitrary. Retrospective civil status was not in itself unconstitutional, in terms of the Constitution. The Legal Adviser agreed with the Treasury legal opinion, and recommended that amendments to the Bill proposed by the Treasury be considered by the Standing Committee.
In discussion, a DA member suggested that the curator had excessive powers to subordinate debt as secondary, which could be challenged in Court. There were comments about the urgency of concluding the Bill process. The Chairperson noted that Treasury had initially been vague on urgency. Large amounts of money were involved, and there were consequences for pensioners. The DA commended the ample time allowed for discussion, but would reserve its position. There was a request for details of progress with the commercial solution. The Chairperson advised that the Bill be voted on the next day, and asked the DA to join in a request for a special plenary sitting in the following week to finalise the process. The DA agreed to the request.
The National Treasury went through the Committee proposed amendments, and amendments proposed by Treasury. Amendments were related to the inclusion of section 155 of the Companies Act; the disposal and transfer of bank assets and liabilities; the raising of funding from the Reserve Bank, and administrative actions being subject to PAJA.
In discussion, Members did not raise substantive issues. The term “compromise” was questioned. A Member felt that the definition of equitable treatment could lead to litigation. It was prejudicial to limit borrowing to the Reserve Bank.
The final item concerned developments in the Sikhakhane Commission of Inquiry into an alleged illegal (“rogue”) intelligence unit within the South African Revenue Service (SARS). A report by the SARS Commissioner was still awaited. The Chairperson had been in contact with the SARS spokesperson. As it was an intelligence matter, it had to be decided what the role of the Standing Committee had to be, as compared to that of the Joint Standing Committee on Intelligence (JSCI). The Chairperson deemed it not advisable that the Committee be drawn into a CCMA type role. The Committee could also not function as a commission of enquiry. A DA Member submitted that he had received a brown envelope report on the matter in his pigeonhole, which he wanted Members to read. The suggestion met with acute disapproval from ANC Members. It was felt that it undermined due procedure. The Legal Adviser present commented that the report could be discussed behind closed doors, but the Chairperson and ANC Members were not partial to that. The Chairperson undertook to liaise with the JSCI Chairperson on the matter. The Speaker and Chief Whip would decide which Committee had to deal with the matter.
Banking Association of South Africa (BASA) further submission on Banks Amendment Bill
Mr Mark Brits Senior General Manager: Prudential Regulation, noted that BASA was not involved in the curatorship of African Bank, but supported the Banks Amendment Bill. BASA represented a complex consortium of financial entities, and engaged in debates about regulatory frameworks. BASA did not support or dismiss the views of members. The national regulatory framework consisted of the South African Reserve Bank; the Financial Intelligence Centre; the Financial Services Board, and the National Credit Regulator. The 2008 G20 Declaration was aimed at reforming the global financial system. The Financial Stability Board provided a policy framework for effective resolution. South Africa was a member of G20, and would adhere to international best practice. BASA focused on three of the twelve key attributes of effective resolution regimes, namely resolution authority; safeguards, and funding of firms in resolution. Resolution authorities had to have the power to transfer assets and liabilities of the failed firm to a newly established bridge institution or a third party institution. Transfer of assets and liabilities was not to require the consent of any interested party or creditor to be valid. It had to be asked who would bear the burden of failure. The G20 Toronto 2010 declaration stated that taxpayers were not to ultimately bear the burden. Resolution had to be implemented without causing systemic disruption. Shareholders and creditors had to absorb losses. Resolution powers had to be exercised in a way that respected the hierarchy of claims. The Reserve Bank’s decisive action in placing African Bank under curatorship limited contagion. However, the crisis management and resolution framework had to be upgraded.
Dr D George (DA) asked for an opinion on the legislation from BASA. The legislation was based on the assumption that African Bank was bad for South Africa. There was an omnibus of legislation coming. He asked why the legislation did not apply to African Bank only. He asked if banks were comfortable about initiatives granted to the Minister.
Mr Brits replied that BASA did not involve itself with African Bank. BASA was interested in membership issues. Sensitive issues had to be separated. Banks that funded the R10 billion for the Good Bank did not say why they were doing it.
Mr D Ross (DA) noted that according to BASA, the failure of African Bank was unexpected. Yet it was known for a long time that there was high risk unsecured lending. Key attributes had been set out at the Toronto summit in 2010, but intervention by the South African Reserve Bank (SARB) only came in August 2014. The figure for subordinated creditors was R4 billion, whereas for senior debt holders it was R40 billion. He asked if the worse off principle applied to liquidation only.
Mr Ismail Momoniat, National Treasury Deputy Director General, replied that it was easy to identify a problem in retrospect. In fact the Reserve Bank had been monitoring the situation for two years. The point was that monitoring could not be announced while it was under way. The bank’s reputation would be compromised and there would be a run on the bank. With the curatorship sorted out, it became possible to ask if supervision was tough enough.
Mr Brits added that the bank failure was unexpected because it was known that the Reserve Bank had engaged with African Bank about Ellerines, two years before. The Reserve Bank had a duty of care in place for years.
Ms P Kekana (ANC) noted that BASA was in agreement with the National Treasury. There was no obligation on government to provide funding.
Mr Brits replied that government could take decisions related to events. There was no implicit support for government bail-out. Government would have to decide whether it wanted to bail out a big bank, in the event of collapse. In future there would have to be recovery plans in place beforehand. Key elements could be transformed into a bridge bank. There was a large range of bailable instruments. BASA agreed with the Reserve Bank and Treasury. The final requirement was that recovery not only be from members.
Ms Kekana noted that BASA supported the Bill, but also advocated alignment with the G20. Interest groups had been engaged about the constitutionality of the Bill. BASA was silent on that. There were challenges to smaller players. She asked about the BASA view on retrospectivity.
Dr B Khoza (ANC) said that she personally thought the Bill to be constitutional. She asked about appetite for the Good Bank, and how far people would be prepared to go.
Mr Brits replied that banks had invested R10 billion in the Good Bank because the credit component could be tested and assessed.
Dr Khoza asked if global factors had been considered sufficiently. She asked what the global factors were that influenced the direction taken.
Mr Brits replied that the international financial crisis affected North America and Europe. Banking in the USA differed from the rest of the world. The USA was behind the global curve. The G20 sought to establish a global framework that could pressurise the USA.
The Chairperson noted that there had been a sub-committee meeting on issues, but the whole Standing Committee had to be informed about it. The meeting of the day was a public hearing. The Bill had to be finalised. BASA was the last stakeholder to be heard. BASA did not deal with constitutionality, that was the task of Parliamentary Legal Services. He asked if BASA had solicited a legal opinion, to have constitutionality confirmed by lawyers.
Mr Brits replied that legal opinion had not been sought. There were processes that BASA was not party to. The aim was to implement international best practice.
The Chairperson said that it seemed to him that generally speaking BASA did not consider the Bill unconstitutional. Unconstitutionality was an overused term. 95% of the time constitutionality was not seriously challenged.
The Chairperson said that there had been a sub-committee meeting because second tier representatives had appeared again. There was a stated concern about taxpayers, but the question was what would happen to pensions. Between six and eight million people were affected.
Mr Havemann replied that R8 million had been contributed to pensions. There were 830 000 pensioners who were affected.
The Chairperson asked how binding the Financial Stability Board guidelines were.
Mr Brits replied that adoption of the guidelines had been voluntary. It was to set the country on the right path. The SARB and Treasury could deviate if necessary, but the goal was to build a world-class regulatory system.
Mr Momoniat added that there was no compulsion to adhere to those key attributes. South Africa could make its own laws. The financial sector was globally interconnected through trade links. It was in the country’s own interest to meet those standards. There was time to legislate on key resolutions. It might be necessary to bring out a new resolution bill.
The Chairperson noted that the guidelines were not legally binding. He asked if guidelines had nevertheless to be adopted in full.
Mr Brits replied that BASA interpreted the document. Basel was a very clear document. There were discretionary items. South Africa had to be benchmarked against the Basel text, to check progress. A global framework was being created. South Africa was not to be a black box. BASA was not familiar with the details of the African Bank situation, but it was clear that pensioners would get out less than expected.
Mr Ross said that subordinated creditors were subjected to Reserve Bank oversight, which was lacking. The Bill might have to face constitutionality challenges. He stressed the importance of tier two creditors. He asked how the R7 billion from the Reserve Bank was funded.
Dr Khoza questioned whether it was fair to ask BASA to pronounce on the matters referred to by Mr Ross.
The Chairperson agreed that BASA was explaining a situation, and that the question was unfair. Questions about constitutionality had to be consistent with the role of the entity.
Mr Momoniat responded that property rights were touched on by the Bill, which meant that constitutionality would be contested. Ultimately lawyers would have to show that legislation was in line with what was happening in the advanced economies. Investors could not say that they did not know. They had gone into the bank with open eyes. Rules changed after 2008. There had to be a fiduciary response to investors. Trustees had to be accounted to about pensioners. There had to be accountability to investors. There were high profits and money was pumped in, and then the bubble burst. Subordinated and senior debt funds were concentrated in the same company. The question was whether trustees were watching, and holding companies to account.
Mr Cas Coovadia, Managing Director, said that BASA had full confidence in the Reserve Bank. There were complex issues. He invited the Committee to contact BASA for further elucidation.
The Chairperson noted that there had not been sufficient time for tier two debt holders to respond. The Committee would have to come up with a majority view on the eight issues identified. The tier one reply had been heard. The courts would have to decide on constitutionality, if there were serious challenges.
Report on sub-committee meeting of 9 April 2015
Present at the meeting were Standing Committee Members; Parliamentary staff; the National Treasury; the curator of African Bank; the Senior Creditors committee, and the Tier 2 Debt holders committee.
Dr B Khoza (ANC), sub-committee chairperson, noted that there were two processes: the commercial and legislative process. The Committee reported on the legislative process. The global context had to be taken into account, as well as the complexity of the bank sector. The bank sector was a sensitive one, and decisions taken could impact on how the country was viewed. The economic environment had to be considered, with regard to the impact on employees of African Bank. Issues had to be seen in broad context. It had to be understood why the curatorship option was resorted to. Liquidation would have been disastrous to all parties affected.
The tier two representatives had raised issues about the rule of law. The curator outlined the context, which indicated that choices were limited. Delay with adoption of the Bill would be progressively more costly to government and the Reserve Bank. All parties had been consulted and the Bill had to be adopted. Interests were not antagonistic. The Standing Committee was in support of the commercial process being speeded up and finalised.
The Chairperson asked if the tying up of the Bill within the following 48 hours would prejudice the process. There had been no plenary sitting for quite a while. The powers that be could call a plenary sitting.
Mr Momoniat submitted that the process be proceeded with to conclusion. The subordinated debt holders were not a crucial issue. There were interested parties who wanted the Bill to only apply to African Bank. There was concern about negotiating instruments. Changes had to go to the plenary, and then to the National Council of Provinces (NCOP). The commercial and legislative processes could run parallel.
Analysis of legal opinions on constitutionality of Banks Amendment Bill
Adv Frank Jenkins, Senior Parliamentary Legal Adviser: Constitutional and Legal Services Office, noted that the Committee had been provided with three legal opinions, two from Treasury and one from a group of creditors who held tier two debt instruments (the subordinated note holders).
There were two controversial amendments which sought to broaden the powers of the curator. First, the Bill proposed amendments which dealt with the circumstances under which a curator might dispose of the bank’s assets and liabilities. The Bill authorised the curator to dispose of any assets and liabilities of the bank, subject to section 54 of the Act. Second, the Bill proposed to authorise the curator to raise funding on behalf of the bank, including raising security over the bank’s assets.
For the Treasury opinion 1, counsel was asked whether the Bill was consistent with section 25 of the Constitution, as it allowed the deprivation of property, if in terms of a law of general application, and the law did not provide for arbitrary deprivation. Counsel’s opinion was that the deprivation of property was consistent with section 25, as it would be in terms of the Act and the Bill once promulgated. Deprivation would not be arbitrary, as the disposal or transfer of assets and liabilities would have to authorised by the Minister or Registrar, and their discretion was subject to the Promotion of Administrative Justice Act (PAJA). The raising of funds on behalf of the bank by the curator was subject to the PAJA on procedural and substantive grounds. The opinion recommended that the omission of the role of the Registrar in approving the disposal or transfer of assets and liabilities be corrected, and that the retrospective operation of the Bill be made explicit.
The subordinated note holder's opinion analysed possible exercise of the powers by the curator, Minister and Registrar provided by the Bill, in the light of contractual obligations between African Bank Limited (ABL) and the subordinated note holders. The opinion held that the retrospective operation of the Bill was unconstitutional. The rule of law argument stated that retrospective legislation could undermine the rule of law, as it negated the ability of people to conduct their affairs in “the shadow of the law”. The Bill potentially interfered with vested contractual rights, as it authorised the curator, the Minister and the Registrar to unsettle existing contracts. The opinion also pursued the rationality argument. The legal question was whether the legislation served a legitimate governmental purpose. The Bill sought to maintain public confidence in the banking sector, but permitted arbitrary differentiating between creditors. There was the possibility of incorrect decisions by the Minister that could not be reviewed. The opinion found that raising of funds on behalf of the bank could arguably authorise arbitrary deprivation of property.
The Treasury opinion 2 was based on an amended version of the Bill, which included recommendations made in opinion1. The opinion stated that the inclusion of the provision that all administrative actions taken in terms of the Bill was subject to the PAJA, dealt with objections that the deprivation of property could be procedurally arbitrary. The opinion stated that retrospective civil statutes were not in itself unconstitutional, both in the Constitution and international law. The grounds for review in the PAJA were broad, and a court would find the objection that the Minister or Registrar could act incorrectly without review, to be a narrow scenario.
Adv Jenkins advised that he agreed with the opinions procured by the Treasury. The discretionary powers provided for in the Bill could certainly affect constitutional rights, therefore the exercise of those powers had to be guided by the provisions of the PAJA. He recommended that amendments to the Bill proposed by the National Treasury be considered by the Committee.
Ms Kekana noted that the Standing Committee (SC) had engaged with the Reserve Bank the week before. The sooner the Bill was enacted the better. The Committee had done its best to consult about financial implications. The process had to be concluded.
Mr D Ross (DA) remarked that differentiation could be challenged in court. It could be argued that the curator had excessive powers to subordinate debt as secondary. Tier two debt was subject to Reserve Bank oversight.
The Chairperson said that the Treasury had initially been vague about the urgency of the Bill. The Committee had not been told about the consequences of the Bill. The SC was forced to conclude by the Parliamentary programme. Large amounts of money were at stake. There were consequences for pensioners. He could not recall that retrospectivity had been a serious concern in prior legislation. The question was how effective the arguments about reference to PAJA would be to protect the Committee. People had asked for further submissions. Tier two submissions were heard, and also the tier one reply to that. There was no need for endless discussion.
Mr Ross commended the ample time granted to discussion. The DA would raise its views on the constitutionality of the Bill. It would reserve its position, but would commend the process thus far. It was noted that the Reserve Bank Deputy Governor would pronounce on the commercial solution. The DA did not want a verdict on constitutionality, but would urge that resolution be structured better in future. The DA would state that there had been a lack of oversight.
Mr D Van Rooyen (ANC) asked what would go into a commercial solution. He asked if details would be given. There had not been a presentation on the matter.
Dr George remarked that he got the feeling during engagement with the Reserve Bank that the two parties were in discussion, and were close to agreement.
The Chairperson said that the Deputy Governor had indeed noted that a solution was close. The question was what the options were for a commercial solution. Commercial settlements had to be complementary to the Bill.
Mr Van Rooyen said that the matter could be taken further at party level. It made him feel uncomfortable that commercial solutions were only brought up on the eve of conclusion. There could be agreement to something that would fail to emerge. No solution could go beyond the process.
The Chairperson said that the Bill had to take precedence. A solution had to be negotiated if possible, but it had to be complementary to the Bill. Once the Bill was in Parliament, a commercial solution had to be negotiated against the background of the Parliamentary process. The question was whether the SC would say no to discussion of settlements.
Dr Khoza said that if liquidation was opted for, all would lose, including pensioners. Still the Bill process had to take precedence. The process had to be referred to as much as possible, to satisfy both parties. The Deputy Governor had said that a settlement was close, but everybody wanted as much as they could het.
The Chairperson asked what the Committee thought about the matter.
Mr Momoniat said that the Bill was not affected by the commercial settlement, but there were parties who saw the Bill process as an opportunity for negotiating. The Bill was constitutional, but once power was exercised, the subordinated debt holders could cause delay. The curator and the Reserve Bank had an interest in a commercial settlement. It had to be sorted out with the Deputy Governor of the Reserve bank. If the Treasury and the Reserve Bank reneged, it would cause delay.
The Chairperson said that when the Constitution was at stake, an independent legal opinion had to be sought. The Constitutional court would have the final say. The Committee had done as much as it could do.
Adv Jenkins noted that section 6 of PAJA referred to arbitrary actions taken in bad faith. Power resided in court to look at all issues. There could be review in terms of PAJA or section 32 of the Constitution. It was not possible in South Africa to take administrative actions that could not be reviewed.
The Chairperson stated that the vote would have to take place on the following day. The Bill could not be voted on in the House in the following week, but both parties could request a special sitting. The process had to be finalised on the following day.
Dr George said that the DA would support a special sitting. He would give feedback to his caucus that the process was ready to be concluded.
Committee and Treasury proposed amendments to Banks Amendment Bill: briefing by Treasury
Mr Roy Havemann, Chief Director, referred to the inclusion of Companies Act provisions. It provided a mechanism for the curator and creditors to enter into an arrangement or compromise in terms of section 69(3)(k).
Ms T Tobias (ANC) asked if a different term could be found to “compromise”. The legislation for banks under curatorship was not neutral.
Mr Havemann agreed that it was an odd term, but that was the term used in the Companies Act.
Dr Khoza noted that it was the kind of terminology used in the Insolvency Act. The curator had referred to it.
Mr Momoniat replied that objections to the term would be taken into account. Senior counsel was needed to change wording.
Adv Empie Van Schoor, Treasury Director, legal Services, said that if the Companies Act was incorporated, the language of that Act had to be used. The language of the Insolvency Act could not be used. Different languages could not be used. She agreed that the term was strange, and not defined in the Companies Act. It sounded like “settlement” to her.
Mr Havemann said that the ability of a curator to dispose of assets and transfer liabilities was important in terms of the G20 guidelines. The ability to dispose and transfer could be viewed as intrusive. The curator had to report on whether creditors were treated equitably. (c) (ii) on page 3 referred to the principle that no creditor was to be worse of than under liquidation.
Ms Tobias asked that Adv Jenkins explain what was meant by equitable treatment. She asked how it was defined in the Expropriation Act. She asked how equitable treatment for creditors would be determined in the event of a court process.
Adv Jenkins replied that equitable treatment would be determined in terms of the facts available to the curator. The curator would report to the Minister or Registrar of Banks. The curator would have to motivate why some would receive 30 cents to the rand, and others 50 cents. Section 9 of the Constitution was relevant. How much people would lose, depended on the facts.
Ms Tobias said that the definition of equitable treatment could expose the Treasury to litigation. The question was whether equitability could be measured by a court. It was a grey area.
Adv Jenkins replied that there were different definitions of equitability. The curator and then the Minister had to ascertain if equitability had a legal function.
Dr Khoza said that (c)(ii) sounded more like a legal argument.
Adv Jenkins replied that the intention was objective. People subjected to curatorship had to know that it was probable to challenge in court.
The Chairperson said that the Court would have to decide what was reasonable and equitable. Parliament as policy makers had to guard against leaving too much to the courts.
Mr Havemann noted that (d) on page 3 would apply if the tests under (c) had not been met.
Mr Havemann noted that (j) on page 5 had been controversial, and hence “Reserve Bank” was added.
Ms Tobias said that it was prejudicial to limit borrowing to the Reserve Bank.
Mr Havemann replied that the Treasury would have preferred for it to not be so, but creditors had insisted that it had to be limited to the Reserve Bank.
Mr Momoniat added that there had to be an input from the Reserve Bank on the following day.
Ms Tobias suggested that it could be phrased “a reserve bank”. All countries had reserve banks.
Mr Momoniat replied that it was the norm, as all commercial banks were connected. The Reserve Bank was a last resort. Borrowing was only against security.
The Chairperson said that the only outstanding policy issue still to be raised was funding from the Reserve Bank. The Reserve Bank Deputy Governor would inform about a commercial agreement on the following day. Whatever agreement was reached had to be consistent with the Committee process. The FFC Bill also had to be concluded. The policy issue at stake was that of the appointment of a full-time Chairperson. The issue had to go to the study groups. There had to be a report from the Financial and Fiscal Commission (FFC), about what the Chairperson had been doing during the preceding financial year.
SARS alleged illegal (“rogue”) intelligence unit: update on developments
The Chairperson referred to developments around accusations of an illegal (“rogue”) intelligence unit in the South African Revenue Service (SARS). It was an intelligence matter. The Committee would work with the Intelligence Joint Standing Committee. He had been in contact with Ms Connie September, Chairperson of that committee, and Mr Adriaan Lekay, SARS spokesperson. It was advised that the SC hear SARS and those aggrieved, but the Standing Committee could not serve as a CCMA or a commission of enquiry. The question was what the SC desired to do about the matter. What Mr Lekay was saying was in the public domain.
Dr George expressed concern about developments. He did not want to see SARS undermined. He noted that he had received a report on the matter in a brown envelope. There was a mismatch between what the Commissioner was saying, and the report he received. What Mr Lekay was saying, was troubling. He decided to bring the report to the SC.
The Chairperson asked what Dr George wanted the SC to do.
Dr George replied that he wanted members to read the report. No information was forthcoming from Mr Tom Moyane, the SARS Commissioner.
Ms Kekana said that the SC had to adhere to fair rules of engagement with government. There had to be access to the Sikhakhane report, and the Kroon Commission. To receive a report in a brown envelope was to set a wrong precedent.
Dr Khoza said that Dr George was about to present a faceless report as a matter of fact. She could not see how a faceless report could be used to indicate discrepancy.
Mr Van Rooyen said that a committee resolution about the process was being undermined. To accept a brown envelope report was not part of an agreed upon process. It was contrary to procedures of engagement. The release of the report was illegal, and it could not be discussed in a meeting. The Chairperson had to seek legal opinion. It was unacceptable to express concern about SARS and then to handle the matter in that way.
Mr Ross noted that the Commissioner had said on 25 March that the report would be given when finalised. But Dr George found the report in his pigeonhole.
He was tabling it, but not going public with it. The DA only wanted a discussion of the matter.
The Chairperson said that the question was what the joint Standing Committee on Intelligence would do. It was a pity that Dr George did not inform him earlier. The DA position was contradictory. On the one hand note was taken of what the Commissioner had said, but still the DA wanted a discussion of the report received by Dr George.
Mr Van Rooyen agreed that the Chairperson should have been engaged beforehand. In that case a compromise agreement could have been reached on the process. The route followed by Dr George amounted to grandstanding.
Adv Jenkins said that a Member could make such a request, but then it was up to the SC to decide what to do with it. A report in a pigeonhole did not have to be dealt with in terms of referral mechanisms. The fact was that if the SC did not know who submitted the report, the SARS would simply say that it was not a real report. If there were doubt about which Committee had to deal with the matter, the Speaker and the Chief Whip would have to decide. If the House referred it to the Intelligence Joint Standing Committee, the SC was advised to hold on for the SARS report. But the report received by Dr George could be discussed behind closed doors.
The Chairperson said that an agreement had to be reached between the two Chairpersons. He would contact the Chairperson of the Intelligence Joint Standing Committee. It was not advisable to distribute the report received among Members. It could be handed to the Intelligence JSC. Nobody wanted SARS undermined. The Standing Committee held the executive to account, as well as the SARS. The Commissioner undertook to release a report, and the SC had to give timelines. Dr George should have approached him first.
Adv Jenkins said that the SC could determine its own procedure, and arrange matters with the Intelligence JSC. But the SC could not wait indefinitely for the report.
The Chairperson adjourned the meeting.
- Draft: Standing Committee amendments to Banks Amendment Bill
- Chairperson of sub-committee: Sub-committee meeting, DBSA offices Midrand, 9 April 2015, 10h00
- National Treasury: Banks Act, 1990, showing amendments proposed in Banks Amendment Bill [B17-2014]
- Banks Amendment Bill: input from Banking Association of SA; Bill's constitutionality; SARS alleged rogue unit & Sikhakane Commission: update
- Constitutional & Legal Services Office analysis of legal opinions on constitutionality of Banks Amendment Bill
- Banks Amendment Bill [B17-2014] briefing Note