Engagement with Minister of Trade and Industry with regards to the Companies and Intellectual Property Commission & Broad-Based Black Economic Empowerment (B-BBEE) Codes of Good Practice

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Trade and Industry

19 May 2015
Chairperson: CIPC update
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Meeting Summary

The Minister of Trade and Industry appeared before the Committee to address the concern over the recent and widely publicised resignation of the Commissioner of the Companies and Intellectual Property Commission (CIPC), Ms Astrid Ludin. The Minister also addressed the confusion that arose with the introduction of the new Broad-Based Black Economic Empowerment (B-BBEE) Codes.

The Minster said during a visit to CIPC, the Department of Trade and Industry (DTI) delegation was presented with a memorandum from the CIPC staff. The memorandum had complaints about governance issues, complaints on the closure of the call centre and there were also demands that certain individuals should be fired. It was decided that a task team be developed to go into the details. The task team was represented by the then CIPC Deputy Commissioner, Adv Rory Voller and individuals from the office of the DTI Director-General, the Ministry and the National Education, Health and Allied Workers Union (NEHAWU). A forensic investigation was launched alongside the task team investigation. The forensic investigation did not find that Ms Ludin was involved in any kind of personal “looting of the institution”, but it did find that there were some substantive matters on procurement in terms of a number of contracts with entities that were contracted, specifically in the ICT space. There were significant irregularities that related to the appointment of accounting firms and the recommendation was that disciplinary action be considered against Ms Ludin in terms of Section 38 of the Public Finance Management Act (PFMA) for approving a contract awarded to one of those companies without ensuring compliance to the proper procurement processes, approving a second contract worth R997 million to another of those companies without ensuring compliance and approving a flawed deviation memorandum regarding the two independent contractors for the refurbishment of a building. The report was handed over to the DTI legal department and the legal advice to the Minister was to proceed to ask Ms Ludin to indicate why she should not be suspended. That was the last correspondence the Minister had with Ms Ludin before receiving her letter of resignation. The Minister denied having a strained interpersonal relationship with the former Commissioner.

The CIPC provided an update on what been taking place at the entity over the last few weeks and what was being done to stabilise the environment. A divisional bargaining forum was being reconstituted and an Acting Divisional HR Manager had been appointed. CIPC had an approved structure of 634 posts (445 filled). Negotiations were ongoing with regard to lifting the moratorium on the filling of vacancies. CIPC currently have 43 self-service terminals (SSTs) deployed, across Johannesburg and Cape Town. In collaboration with Transnet, two additional SSTs would be deployed in the Carlton Centre in Johannesburg and two would be launched on 29 May 2015 in Saldana in the Western Cape and an additional two would be launched in De Aar in the Northern Cape in June 2015. Another 5 SSTs would be deployed to Buffalo City Municipality in East London and three would be deployed to Nelspruit where the offices were currently being renovated. Collaboration with DTI centred on the integration of company registration and the issuing of the BEE certificate. To date, 6 641 certificates had been issued through CIPC and a meeting was held on 15 May 2015 with the BEE Unit on additional rollouts to government agencies and awareness campaigns. Integrated services with SARS focused on a real time link so that tax numbers were issued upon company registration. New Unstructured Supplementary Service Data (USSD) was being developed to be implemented toward the end of July 2015. This new development should result in a 70% reduction in calls on the query resolution system. CIPC also provided automated company registration services through its collaboration with the Department of Home Affairs (DHA) using the Home Affairs National Identification System (HANIS) identification verification system. The Education and Awareness Division of the organisation would be provided with registration devices in order to register immediately in rural areas when on education and registration workshops. The website was available 99% of the time with an average response time of 4 seconds.

The Minister said collective schemes, community schemes and broad empowerment were important and DTI had confronted a number of “dodgy” employee share ownership programmes (ESOPs). It was the motivation for putting a cap on the number of points that could be earned. Upon reflection, the Department “had taken a rather large sledgehammer to hit a fly” and it sent a message that these schemes were not encouraged, when in fact the opposite was the case. On Friday, it had been gazetted that the notice was withdrawn and it was “back to the status quo”. A task team had been appointed to look at the “mischief” and how it would be fixed in a smarter way. There was currently absolute legal certainty on how many ownership points get awarded for broad-based schemes. The Minister issued a new government gazette (no. 38799) on 15 May 2015 which withdrew the clarification issued on 2 May 2015. Full points (25) were awarded for broad-based ownership and ownership points would not be used when dealing with broad-based schemes, but rather the fronting provisions and positive campaigns would be used to get real BEE schemes going.

Mr G Hill-Lewis (DA) accused the Minister of inconsistency in applying policy in light of the differences on how the recommendations of the forensic investigation into the conduct of the former Commissioner were applied as opposed to the recommendations from the forensic investigation into the conduct of the Chairperson of the Companies Tribunal. He surmised that it gave credence to Ms Ludin’s claims that there was a deliberate effort to get rid of her. Despite the fact that a new gazette had been issued, there were no certainty among the business community in terms of the implementation of the new B-BBEE codes and that the Department lacked effective communication skills since most publications and businesses were not even aware of the gazette. Mr Macpherson (DA) agreed and said the DTI currently had a “schizophrenic knee jerk reaction” to BEE and the implementation thereof and he claimed that there was no certainty in the Department anymore.

Members commended CIPC for the implementation of the recommendations made by the Committee and the Department, especially on the rollout of the self-service terminals. Some Members objected to comments made by members of the DA and the Chairperson cautioned against unsubstantiated assertions. These related to CIPC’s reporting on the call centre figures and NEHAWU’s role in CIPC’s labour relations issues.

Meeting report

Engagement with the Minister of Trade and Industry with regards to the Companies and Intellectual Property Commission (CIPC)

Mr Rob Davies, Minster of Trade and Industry, said the CIPC saga really started in 2014 during his visits to the Department of Trade and Industry (DTI) entities. During their visit to the CIPC, the DTI delegation was presented with a memorandum from the CIPC staff. The memorandum had complaints about governance issues; it had complaints about the matching and placement of individuals as a result of the changes in the labour force of the CIPC, there were complaints on the closure of the call centre and there were demands that certain individuals should be fired. During the engagements, it was decided that a task team be developed to go into the details. The task team was represented by the then CIPC Deputy Commissioner, Adv Rory Voller, and individuals from the office of the DTI Director-General, the Ministry and the National Education, Health and Allied Workers Union (NEHAWU). Before the report was concluded, representatives from NEHAWU withdrew and the rest of the task team continued and identified how many people were disadvantaged by the matching and placement exercise. There had been agreement by all parties that there should be a forensic investigation to attend to the allegations of mismanagement that were put forward. The task team, towards the end of last year, reported its proposals and he was asked by the former Commissioner to write a directive to implement the recommendations that had come out of the task team. There was a debate and discussion on whether there was an authority to write such a directive and whether it would be viewed as interference in the management of the CIPC. An amicable arrangement was reached to go along with the key recommendations and this was happening alongside the ongoing forensic investigation. The overall intention was to stabilise the institution and to create a basis on which it could continue with the important reforms it was instituting against a background of quite a fractious history. These reforms were the roll-out of the kiosks, the interactions with the South African Revenue Services (SARS) and the Department of Home Affairs (DHA) to use biometric data, the simplification of the registration process for companies and the arrangements with banks. The fundamental objective was to create and institution that provided an efficient and cost effective service to clients. In terms of the fractious environment, it was decided that there should be a forum on labour relations matters which was offered as a service to all entities to support institutions to achieve better labour relations environments. In just the past week in engagements with entities on their Annual Performance Plans (APPs), the National Regulator on Compulsory Specifications (NRCS), without any prompting, thanked the Department for the role DTI was playing to try and sort out some of these matters.

The Minister said the forensic report did not find that Ms Ludin was involved in any kind of personal “looting of the institution”, but it did find that there were some substantive matters on procurement in terms of a number of contracts with entities that were contracted, specifically in the ICT space. There were significant irregularities that related to the appointment of accounting firms and the recommendation was that disciplinary action be considered against Ms Ludin in terms of Section 38 of the Public Finance Management (PFMA) Act for approving a contract awarded to one of those companies without ensuring compliance to the proper procurement processes, approving a second contract worth R997 million to another of those companies without ensuring compliance and approving a flawed deviation memorandum regarding the two independent contractors for the refurbishment of a building. The report was handed over to the DTI legal department and the legal advice to the Minister was to proceed to ask Ms Ludin to indicate why she should not be suspended. That was the last correspondence the Minister had with Ms Ludin before receiving a letter of resignation. Adv Voller was then appointed as the Acting Commissioner and his mandate was not to deviate from the programme of modernising and improving the services of CIPC. Members would see by the report Adv Voller would present that there was a higher degree of stability at CIPC. It was never the intention or desire to get rid of Ms Ludin, but the intention was rather to stabilise the environment of the institution and to overcome some of the problems that were as a result of the instability.

Input by the Minister of Trade and Industry on the Broad-Based Black Economic Empowerment (B-BBEE) Codes of Good Practice

The Minister said the main thrust of the new Codes was to strengthen those parts of the B-BBEE Codes which would allow people to become real and effective participants in the productive economy in this country. New elements had been singled out which was the new category called ‘Supply Development’. It meant that big companies needed to do what had been seen as happening in Asian countries where economies were being successfully industrialised; working to ensure that suppliers could actually perform required tasks and that they were involved in a number of projects or programmes that strengthened capacity and brought them into the supply chain. There should be active involvement in skills development to have effectively run enterprises, because non-involvement effectively meant no contribution to the empowerment of people. The change in the law would see the appointment of a commissioner who would be looking at cases where fronting was taking place and would come up with appropriate remedies. If 40% of the target was not being met, the penalty was to move down one place. The purpose was to incentivise new kinds of behaviour and involvement. It should be said that the only real players in the enterprise development space were companies seeking equity equivalence. The practice in the past where anybody who was involved in supply development relationships could simply approach small black suppliers to get verification certificates at a price was also “nonsense”. An affidavit would now have to be submitted and if dishonesty was suspected, it would be referred to the commissioner. The red tape and cost that impacted many small companies had been removed. The thrust was to strengthen B-BBEE as a tool in bringing black people into important roles and positions in a productive economy. Collective schemes, community schemes and broad empowerment were important and DTI had confronted a number of “dodgy” employee share ownership programmes (ESOPs). It was the motivation for putting a cap on the number of points that could be earned. Upon reflection, the Department “had taken a rather large sledgehammer to hit a fly” and that a message was sent out that these schemes were not encouraged, when in fact the opposite was the case. On Friday, it had been gazetted that the notice was withdrawn and it was “back to the status quo”. A task team had been appointed to look at the “mischief” and how it would be fixed in a smarter way. There had been 18 months of phasing of the new Codes and everybody had had good opportunity to get to know the Codes because they had not been rushed through.

Input by the Director-General

Mr Lionel October, Director-General, DTI, emphasised the point by the Minister that there was currently absolute legal certainty on how many ownership points get awarded for broad-based schemes. The Minister issued a new government gazette (no. 38799) on 15 May 2015 which withdrew the clarification issued on 2 May 2015. Full points (25) were awarded for broad-based ownership and ownership points would not be used when dealing with broad-based schemes, but rather the fronting provisions and positive campaigns would be used to get real BEE schemes going.

 CIPC update

Adv Rory Voller, Acting Commissioner, CIPC, said the aim of the presentation was to update the Committee on what been taking place at CIPC over the last few weeks and what was being done to stabilise the environment. In terms of staff engagement, a general staff meeting was held on 4 May 2015 with the Department and organised labour. The staff and NEHAWU pledged support to service delivery stability and close engagements with the Agency Management Unit of the DTI and NEHAWU were held to address mutual interest matters. A divisional bargaining forum was being reconstituted and an Acting Divisional Manager: HR had been appointed. There had been concern after seven contract staff members had not been employed after matching and placing exercise and five of the seven accepted new permanent positions as call centre staff. The CIPC had an approved structure of 634 posts (445 filled). Negotiations were ongoing with regard to lifting the moratorium on the filling of vacancies. The new call centre model and implementation plan had been developed and the CIPC organisational structure would be reprioritised to address the completion of call centre staffing, with the initial phase already being operational.

CIPC currently have 43 self-service terminals (SSTs) deployed, across Johannesburg and Cape Town. In collaboration with Transnet, two additional SSTs would be deployed in the Carlton Centre in Johannesburg and two would be launched on 29 May 2015 in Saldana in the Western Cape and in De Aar in the Northern Cape in June 2015. Another 5 SSTs would be deployed to Buffalo City Municipality in East London and three would be deployed to Nelspruit where the offices were currently being renovated. Adv Voller gave an overview of the integrated services and SST rollouts in collaboration with the Industrial Development Corporation (IDC) and the four big banks (ABSA, Standard Bank, FNB and Nedbank). Collaboration with DTI centred on the integration of company registration and the issuing of the B-BBEE certificate. The service had been available since September 2014 and was officially launched by the Deputy Minister on 14 April 2015. To date, 6 641 certificates had been issued through CIPC and a meeting had been held on 15 May 2015 with the BEE Unit on additional rollouts to government agencies and awareness campaigns. Integrated services with SARS focused on a real time link so that tax numbers were issued upon company registration. CIPC continued to enhance and develop new automated services as per its strategy. New Unstructured Supplementary Service Data (USSD) was being developed to be implemented toward the end of July 2015. This new development should result in a 70% reduction in calls on the query resolution system. CIPC also provided automated company registration services through its collaboration with the Department of Home Affairs (DHA) using the Home Affairs National Identification System (HANIS) identification verification system. In order to improve accessibility, the next phase was to make this technology available to interested third parties to offer company registration. The Eduaction and Awareness Division of the organisation would be provided with registration devices in order to register immediately in rural areas when on education and registration workshops.

Adv Voller said that 13 948 companies had been registered between 1 May 2015 and 14 May 2015 with 952 BEE certificates issued. The website was available 99% of the time with an average response time of 4 seconds. He gave an overview of the turnaround times and said all turnaround times for Intellectual Property were within the published Service Delivery Standards.

Discussion

The Chairperson asked that comparative data on the number of company registrations in relation to other countries be provided in future.

Mr G Hill-Lewis (DA) said it had been very concerning to learn how unstable the CIPC was for the first time in the media when the news broke and in terms of the forensic report. This Committee was charged with oversight over the CIPC and the Department should play open cards by tabling forensic reports for the Committee’s perusal before it led to resignations. He asked for confirmation if the resignation of Ms Ludin would become effective on 1 June 2015. It was odd that the former Commissioner received a letter of request for reasons why she should not be suspended, but the Chairperson of the Companies Tribunal did not receive such a letter for a forensic report that contained far more serious allegations. It seemed to be an inconsistent application of policy across the entities which reinforced the perception that there was some kind of deliberate effort, spearheaded by NEHAWU and aided and abetted by the Minister to get rid of Ms Ludin. This was also reinforced by the fact that the Committee had never heard of nor seen the forensic report and the forensic report the Committee did interrogate was far worse. He asked that the forensic report referenced today be handed over to the Committee. The CIPC presentation stated that website availability was at 99%, but it also stated that the electronic turnaround times were still seven working days and those two statements did not correspond with one another. There was no reporting on the call waiting times and there had been a fairly surreptitious effort to remove it from the reporting. He asked that the call waiting times be regularly reported to the Committee, because it was one of the most underperforming service delivery standards at CIPC.

The Chairperson cautioned Mr Hill-Lewis against using adjectives such as “surreptitious”, because it had certain connotations without validity.

Mr Hill-Lewis said it was his view and the Chairperson was entitled to her own view. The lack of policy certainty, apart from the obvious unstable labour environment and electricity issues, was one of the greatest inhibitors to investment in South Africa, according to businesses at large. The absolute legal certainty the Director-General mentioned came after two weeks of complete confusion and simply because a gazette was issued last week did not mean that businesses knew about it. Businesses were still uncertain on what was expected of them in terms of BEE. He did not agree that there was “absolute legal certainty” and there was no currency in the business community on what they were supposed to do. There should be a concerted effort made to meet with businesses and explain how the messy confusion came about, what the current situation was and what was required of them.

Adv Voller explained that there was no correlation between website availability and the seven working days it took to register a company. It was not an automated process and it had a human component. The call centre would be reported on at the next reported cycle. It was not included now, because the organisation was still in the process of setting up the additional call centre. 

Mr D Macpherson (DA) said what was seen at the CIPC was a worrying trend in DTI and there was no certainty in the Department anymore and it was equally concerning for the business community as well. The CIPC had never been as unstable as it was now and it seemed that ‘interpersonal issues’ between the Minister and the former Commissioner had led to this mess. He quoted an interview Ms Ludin had with Business Day, dated 20 April 2015 where she stated: “I am resigning because I am no longer willing to exercise the role of the Commissioner without the support of the Minister of the Department of Trade and Industry to whom I report, in the face of sporadic illegal industrial action intended to create a climate of intimidation, and allegations of misconduct and corruption intended to discredit me and some members of my management team”. She went on to say that frankly that she did not have a good relationship with the Minister. He asked how someone was supposed to operate in an entity without the support of their principal. Clearly the issues with NEHAWU contributed to the instability at the CIPC and according to Ms Ludin, by not supporting her with the illegal industrial action taken by NEHAWU, it seemed that the Minister condoned such actions. He asked if the Minister still maintained that “interpersonal issues” had nothing to do it. DTI currently had a “schizophrenic knee jerk reaction” to BEE and the implementation thereof. The reason according to DTI for the new clarification was because of fronting and he asked the Department to cite how many cases of fronting had been investigated and where legal recourse had been taken. Uncertainty created job losses and the fallout on this backward and forward issue on the Codes was immense. He asked what engagement the Department had with industry bodies and what impact assessment had been done with the original clarification at the beginning of May. There was concern that there was an idea that NEHAWU had to be pacified to make the CIPC work. The CIPC should not be held ransom to a union and the moratorium should be lifted if that was what was needed to make the institution work. There was clearly protected interest from the top of CIPC as opposed to protecting the interests of South Africans.

The Chairperson cautioned Members to be “sober” in their choice of unproven adjectives.

The Minister said the hyperbolic remarks on the uncertainty in the Department would be rejected outright because it had no merit. Ms Ludin’s resignation was effective form 1 June 2015, but she had leave due to her. The events surrounding Ms Ludin’s resignation had been described as it unfolded. When a forensic report came out it was firstly the duty of the Executive to act on the recommendations of the report. It was not expected to come to Parliament with the forensic report and to ask for advice. There was not an inconsistency in terms of the policy, because this Committee had had considerable discussions on the matter concerning the Companies Tribunal and was aware that the recommendations in that forensic report were quite different from the recommendations in this particular case. Sometimes it could be anticipated that the result of the process would lead to a fairly minor sanction if any sanction at all, but it was still the duty to follow the processes under the PFMA. Digitisation was a process that potentially had a number of HR management challenges that went along with it, because manual processes were being replaced with digitised processes. As the Acting Commissioner showed, there had been no diversion from the reforms that were in place and the same strategic direction was being followed. The hope was that it would happen in a way that addressed a number of the human resource issues more proactively. Similar issues had come up at the NRCS, under previous leadership and the Department was able to come up with a solution. That had been the aim at CIPC, i.e. to stabilise the organisation.  The demands presented to the Department demanded, among other things, that the Commissioner be fired, but the Department opted to rollout a process to try to understand what the issues behind the demands were and to create a base for the institution to move forward. The aim was not to micro manage people, but the problems often exploded in the faces of the Minister and the Director-General. In a meeting with CIPC staff, the Minister told the staff that he supported the then Commissioner in the strategic direction she was taking the organisation in to ensure the organisation was measured in the indexes of competitiveness rather than on the front pages of newspapers. There were no ‘interpersonal issues’ with Ms Ludin, but at the end of the day the question was whether managers of entities were prepared to accept the support, advice and the role DTI played. The former Commissioner had both strengths and weaknesses but the Department would never condone illegal actions. The moratorium was in the realm of the Commission for Conciliation, Mediation and Arbitration (CCMA) and not a decision of NEHAWU. Unions did not call all the shots, but a constructive dialogue with the Union was needed to bring people on board. A full time Commissioner would eventually be appointed, but for now the job of the Acting Commissioner was to proceed with rolling out a better service for company registrations and to create a greater level of stability within the staff complement. He had been in office for a little over two weeks and some things were improving and continuing as a result of the dialogue had had been happening. The forensic report contained various types of information on individuals, not only on the former Commissioner, but the information that could be released, would be as soon as possible. In all these cases, advice from the forensic investigation and the legal department the Department had received had been followed. There had been consensus that the forensic investigation should proceed to deal with the allegations.

The Minister accepted that there had been a communication issue in terms of the new Codes and even those that were not allowed to read the “banned” publication, the Cape Times, probably saw the article in its business section that showed they did not know what happened on Friday. Some of these reports talked about the negative effects on investors, but there were no specifics on which investors were now reconsidering investing because of this. For those who believed that BEE was still important, because that was not the case for everybody sitting here, the DTI’s approach had been to learn while doing and if something created problems, the Department was self critical and would be prepared to fix it. The process to appoint a commissioner to look at the fronting cases was underway and there were no statistics available as yet. There was a lot of information on fronting and it led to the statuted definition in the Bill and a lot of the cases were complex fronting. For 18 months the Department had been telling people about the new Codes and this was one issue on the side of a very fundamental and important process.

Mr October replied that there had been bad management of labour relations at agencies in the past and it had led to strikes at NRCS and labour unrest at the South African Bureau of Standards (SABS). It was in that context that the Department, on the request of the Minister, looked into the matter. The Department was in the process of establishing a centralised bargaining forum for the DTI and its agencies and CIPC would be a full participant in this centralised bargaining forum. It was recommended that senior qualified HR managers be appointed, because even though DTI had triple the staff of its agencies, there were no labour problems because grievances had been institutionalised to be dealt with on a monthly basis through a bargaining chamber. A similar structure was being established for all the agencies to deal with wages and other issues and each entity should have a divisional or entity chamber that dealt with matters specific to the institution. Legal certainty was an objective fact and was not dependent on pronouncements in newspapers. The Department had been in personal contact with a number of CEOs who had done BEE transactions in the past month and were currently busy with transactions on JSE listed companies. The Department had also been in contact with Business Leadership South Africa (BLSA) and Business Unity South Africa (BUSA) who had communicated the changes to the gazette to their members. A full announce would be made during a press conference by the Minister this week.

The Chairperson noted that CIPC had already appointed a HR Manager and she asked who it was.

Adv Voller replied that CIPC appointed Mr Logan Chetty who had been the HR manager at the former Companies and Intellectual Property Registration Office (CIPRO).

The Chairperson said it was a crucial appointment and clearly a positive response to some of the challenges the organisation had been facing.

Mr N Koornhof (ANC) said he was very pleased to that CIPC’s collaborations with the banks, SARS and other entities in terms of the integrated services were going well. He asked the Acting Commissioner to confirm that none of the problems would be recurring. There had been a moratorium on penalties for late returns because of the problems experienced by the organisation. He asked when the moratorium would be lifted.

Adv Voller replied that the moratorium had already been lifted.

Ms P Mantashe (ANC) said the rollout of the self-service terminals was very good news, especially how it would affect people in rural areas who had been challenged to access the service. People had a right to embark on labour action and the fact that people were aggrieved should not be blamed on the Department. She requested Mr Macpherson to withdraw his statement to that effect.

The Chairperson said she thought that Mr Macpherson’s comment that the DTI was unstable was actually directed at the CIPC. The Committee had maintained that it was absolutely critical that all businesses developed positive working relations. The Committee, quite rightly had been focusing on the governance concerns at CIPC, and in so doing might have lost sight of the progress Members themselves had called for. There should be governance and progress and she noted the strides CIPC had been making. The allegations made against Ms Ludin were serious, especially in terms of the PFMA. All entities should understand the importance of governance and labour relations. The Committee had been concerned regarding the Codes and acknowledged that the Department might have used a stronger measure than intended to remedy the situation. An 18 month stretch was a long time for people to get used to the Codes but the Committee might wish to invite the delegation back to get a better understanding.

Mr Hill-Lewis said the issue was not that the Minister should come to Parliament to ask for advice on these kinds of reports, but it would be useful for the Committee to know about the investigation before it became front page news. At the very least the Committee should be given the report to make their own conclusions. The other forensic report recommended that the cost be recovered from the Chairperson of the Companies tribunal and it proved an inconsistency in applying policy. The Governor of the Reserve Bank was not just a commentator and he had stated this week that the biggest threat to the South African economy was a lack of policy certainty from the government. The issue on the BEE Codes the last two weeks had exacerbated that concern and it should be acknowledged. The Codes might be clear in the legal sense, but it was far from clear among businesses and a lot more work needed to be done to undo what happened in the last two weeks. Although businesses had 18 months to implement the Codes on 1 May 2015, an extremely confusing communication was made on 2 May which was followed by a clarification and then followed by a clarification of the clarification. It was not a matter of “learning by doing”, because the Department also had 18 months to be clear and precise by what was meant by certain aspects of the Codes. He asked who was consulted before the 2nd of May notice was issued, because it seemed that no industry body had been consulted.

The Minister said he did not think there was uncertainty or confusion about the fundamental drift of the new Codes. There had been a bit of a side show on one issue and the Department had already acknowledged that a mistake had been made. There had been consultation before and those consultations had led to the identification of “mischief” in terms of a number of these collective schemes. Further communication would be done, not least because the media was not aware of the change in the gazette. In terms of policy uncertainty, government took that message seriously across the board and there was a high degree of policy certainty with regard to empowerment and industrialisation development. BEE always had to be very carefully explained to investors, but it had never been said by any of those investors that it was not the right direction. The Department apologised to everyone and promised to do better next time.

The Chairperson thanked the Department and the Minister. The Minutes of the Committee would be dealt with in due course and if the programme of the Committee had not changed, the updated document on transfer pricing would have been brought to the meeting. The document would be distributed electronically to all Members and she asked for input on when the report would be voted on.

Mr M Kalako (ANC) said the schedule had been complicated by the budget debates for which Members had to prepare.

The Chairperson said the Committee’s position on transfer pricing needed to be tabled and scheduling of the meeting would be discussed with the Committee Whip.

The meeting was adjourned.

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