National Consumer Tribunal & Companies Tribunal on their 2016 Strategic & Annual Performance Plans

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Trade and Industry

05 April 2016
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The National Consumer Tribunal (NCT) presented the tribunal’s strategic and annual performance plan (APP), and said that the first goal of the tribunal was the effective and efficient management and adjudication of cases brought before the it. The matters referred to the tribunal were in two categories -- debt rearrangement applications (DRA) and non-debt rearrangement applications (non-DRA). The two other strategic goals of the tribunal focused on contributions towards an efficient and effective consumer regulatory environment, as well as ensuring an effective and efficient organisational environment through information communication technology (ICT) interventions.

The two core programmes of the tribunal were identified as ‘adjudication’ and ‘administration’. The alignment of the tribunal’s strategies to the national development plan (NDP), the medium term strategic framework (MTSF), and the Department of Trade and Industry (DTI) were expounded upon.

Estimated timelines for each of the programmes were highlighted. A target of 75 days had been set to finalise DRA cases, while the timeline for non-DRA cases was reduced from 150 days in the previous financial year to 70 days for the 2015/16 financial year, based on a new calculation method. Only one NCT case had been overturned since the inception of the tribunal.

A target had been set for the tribunal to have structured engagements with specific external stakeholders, such as the regulators -- the National Credit Regulator and the National Consumer Commission, which were key filing parties to the tribunal -- and other parties that filed cases with the tribunal.

A target of 24 briefing papers had been set for the current financial year. These briefing papers were aimed at updating members of the tribunal on the latest legislative developments.

17 172 cases were projected as the caseload to be handled in the current financial year. This target was close to the three-year forecast prepared in the previous financial year, as 17 178 matters had eventually been filed in the 2015/16 financial year.

The budget of the tribunal reflected a grant allocation, and additional grant/donor funding. It was emphasised that additional funding of up to R16 million would be required in the 2016/17 financial year. The tribunal had increased its filing fees so as to cater for the additional funding that was required.

The challenges facing the tribunal in terms of the high caseload were expounded upon. The NCT had received a total of 9 589 cases in the 2014/15 financial year, while 17 178 cases had been received in the current financial year, which translated to a 79% increase in its caseload. Greater oversight had been implemented to deal with this high caseload, by ensuring that fulltime tribunal members handled DRA and non-DRA cases, starting from September 2015. With respect to non-DRA cases, 82 out of the 270 cases had been finalized, 73 cases were incomplete, and 37 were before the Jury Court for hearing. 24 judgments and rulings had been issued by the NCT in the third quarter, while 23 matters had been set down in the fourth quarter.

Questions raised by Members focused on the aspect of the NCT budget that catered for the expected increase in its caseload; the average number of days for finalising non-DRA cases; what the new calculation method for non-DRA cases was; rumours about resignations from the NCT and other HR issues facing the tribunal; the dispute with the Registrar that had required an internal audit report on him, the findings of the report, and the attendant consequences; the proposed funding models of the tribunal; developing other funding windows to mitigate the tribunal’s financial challenges; the content of NCT’s youth development programme; the plans of the NCT to increase the cases being handled despite the reduction in the allocation made within its budget to cater for such increases. The Members also sought clarity on the expansion in the NCT’s mandate emanating from the National Credit Amendment Act (NCAA) that required an additional six part-time members, one fulltime member and a deputy chairperson during a performance period, as well as the means by which NCT planned to increase the complement of the tribunal to 20, and the funding of such members.

Companies Tribunal (CT) presented its 2016/17 strategic and annual performance plan, pointing out that the strategic planning process of the tribunal was derived from the Companies Act (CA). The tribunal had two programmes, which were adjudication and administration.

The strategic objectives formulated for programme 1 focused on timeous and effective adjudication of matters brought before the tribunal, especially since the tribunal offered alternative dispute resolution (ADR) services. Tribunal services were also rendered to parties free of charge. This contributed to the cost effective nature of dispute resolution adopted by the tribunal.

The strategic objectives for programme 2 focused on the promotion of sound corporate governance through the establishment of an appropriate governance framework, policies and structures. Other objectives included efficient case management through the use of technology, raising awareness among members of the public about the tribunal’s procedures, building a body of knowledge around company law within the tribunal, recruiting and retaining competent staff, and embarking on outreach programmes around the country.

Factors considered in developing the strategic plan included an anticipated increase in the tribunal’s caseload, leading to strengthened partnerships with the courts and the broad-based black economic empowerment (B-BBEE) Commission; the need for continuous improvement in the regulatory environment, especially with regard to ensuring compulsory attendance of respondents to ADR sessions; challenges with human resource (HR) capacity; limited revenue; as well as challenges concerning the availability of space and hearing rooms for cases.

The introduction of an electronic case management system, and the piloting and partial implementation of it, had been projected for the current financial year. The tribunal had also targeted the production of a research report that would focus on measuring its effectiveness and impact in delivering its mandate. A target of 80% staff training had been set for the current financial year. Staff retention was another area being considered by the tribunal, as the current staff complement of the tribunal was 15, as opposed to the staff establishment of 28 posts.

Targets had been set for resolving cases. These included a target of 35 days for resolving cases after the completion of filings, 25 days for resolving ADR cases from the date of receiving such applications, enquiries would be resolved within four days, and there was a target of 28 business days for resolving an average of 15 applications.

80% of the tribunal’s budget was spent on administration, while the remaining 20% catered for the adjudication programme. The tribunal’s major source of funding emanated from the grant allocation provided by the DTI, which was about R15 million in the 2016/17 financial year, R15.8 million for 2017/18 financial year, and R16 million for 2018/19 financial year. The main expenditure of the tribunal was the members’ fees and compensation of employees. A decline was anticipated in the expenditure, since the funds used to cater for goods and services were sourced mainly from the surplus funds of the tribunal.
A request for an increase in the tribunal’s baseline had been sent to the DTI.

Question raised by MPs focused on whether or not the tribunal charged for the services it rendered, and whether it had considered charging for them where the need arose; the number of cases of a transformative nature that had been handled by the tribunal; the part of the budget that catered for the anticipated increase in cases; whether or not the IT section of the tribunal was up to date; the number of fulltime and non-fulltime members of the tribunal, and the payments for such members in the previous financial year; a breakdown of the performance bonuses paid to any of the tribunal’s staff; a clear explanation of the remuneration policy adopted by the tribunal; the assessment of the outreach programmes embarked upon; whether or not all ADR processes were voluntary; as well as clarity on the strategic relationships of the tribunal with the B-BBEE Commission and the courts, and the means of replicating such relationships in other provinces.
 

Meeting report

The Chairperson welcomed the delegates from the Department of Trade and Industry (DTI), the National Consumer Tribunal (NCT) and the Companies Tribunal. She said the agenda had been shortened due to the need to vacate the venue, as it would be needed for another parliamentary sitting.

Mr G Hill-Lewis (DA) objected to the rescheduling of the meeting to cater for an internal caucus meeting of the ANC, saying that it was unprecedented and unacceptable. The meeting with the NCT had been requested for a long time and there were pertinent issues to be discussed, as well as salient questions to be asked. The shortening of the agenda would only mean that MPs would have a truncated question time. A second engagement session with the NCT was suggested, depending on whether or not a need arose for that purpose.

The Chairperson responded that the room had been booked earlier by the ANC and the Committee had found it difficult to change the venue for the meeting at short notice.

Mr B Mkongi (ANC) agreed with the Chairperson but also said that it was not criminal for the ANC to have its own caucus, and it should therefore not be insinuated at the meeting that it was a criminal act. Members should only note that some entities would have to come back to the Committee to be properly engaged with.

Briefing by National Consumer Tribunal (NCT)
Ms Hazel Devraj, fulltime tribunal member, said the first strategic goal of the NCT was to effectively and efficiently manage and adjudicate on matters brought to the tribunal. It had been broken into ‘debt rearrangement applications (DRA)’, which comprised the bulk of the filings received at the NCT, and ‘non-debt rearrangement applications (non-DRA)’, which referred to the tribunal’s opposed matters and the bigger cases received by the tribunal. This goal was in line with Section 142 of the National Credit Act (NCA), which that provided that cases should be dealt with expeditiously. It also addressed the issue of whether or not the decisions reached by the tribunal were substantively and procedurally correct. This referred to matters that had been taken on appeal or review and the outcome of such decisions. Up till now, the NCT had been overturned in only one matter since inception.

Strategic goal 2 dealt with the contribution to an efficient and effective consumer regulatory environment. It was critical for the NCT to ensure cooperation and partnership amongst its external stakeholders through on-going engagements. The identified stakeholders were the regulators and the filing parties brought before the tribunal. The NCT was therefore ready to engage with these stakeholders to inform them of the processes being followed by the NCT, as this was an important step in the adjudication process. Capacity building was a new area of law under this goal. It was important for the tribunal to build capacity through research papers and approved reading papers in terms of consumer protection and credit related matters. This was aimed at increasing the knowledge base in the organisation, since the NCT was a knowledge institution.

Strategic goal 3 focused on ensuring effective and efficient organisational management. The key areas to the goal were the need to support adjudication, effectively manage the tribunal’s finances, enabling Information Communication Technology (ICT) support, and ensuring that the NCT was adequately resourced.

The core programmes, which had been divided into ‘adjudication’ and ‘administration’ were highlighted (see page 4 of the attached document).

The NCT had aligned its mandate to the National Development Plan (NDP) through various means. One such alignment was the focus on youth initiatives through the employment of interns and a contingent pool of young people to help out with cases during peak periods. In terms of fighting corruption, the NCT adjudicated cases fairly; it dealt with issues around conflict of interest and declarations; it ensured that it had the necessary sound governance structures in place; and it also dealt with fraud management.
In terms of building a capable and developmental state, NCT had provided public access, as well as provision of redress through a Motion Court process. Ensuring active citizenry spoke to the NCT’s access to remote areas through ICT interventions. The tribunal had also aligned itself to NDP’s overall impact service delivery.

With regard to the NCT’s alignment to the medium term strategic framework (MTSF), it had set out the process to be adopted to deal with outcome 4, as well as the various activities that the tribunal would engage in. Some of the activities included the procurement of services from local suppliers; prioritizing the black economic empowerment (BEE) suppliers; reduction of the regulatory burden within the NCT (some of the rules had been amended to ensure the simplification of the NCT forms for the filing procedure; and to ensure service by email by agreed consent between the parties); interaction with regulatory stakeholders through organised workshops with key stakeholders and the issuance of practice notes where necessary; the training and development of NCT staff; participation in the collective bargaining forum; interactions and engagement with staff; employment opportunities for youths; and youth development.

The NCT’s alignment to the Department of Trade and Industry (DTI) focused on creating a fair regulatory environment. The link between its strategic goals and its support for the Consumer Corporate Regulatory Division (CCRD) was highlighted.

In the NCT’s programme 1, which dealt with adjudication, estimated timelines had been set to finalise cases. A target of 75 days had been set to finalise DRA cases. This was the same target that had been set for the 2015/2016 financial year. The same target had been kept due to the huge increase in cases brought before the tribunal. Although a greater increase in cases had been projected, the NCT would still keep the same timelines.
As for the non-DRA matters, a new calculation method had been adopted. In the past, the tribunal had finalised matters from the close of pleadings (excluding postponed matters) within a period of 150 days. The timeline had, however, been reduced to 70 days in order to deal with matters as quickly as possible.

The percentage of positions overturned on appeal had been increased to over 5%, as more judgments would be given since more matters would be heard. As indicated earlier, the NCT had been overturned in only one matter since inception. There were matters that had been appealed, and for which NCT was still awaiting decisions.

The quarterly milestones for programme 1, showing how the tribunal would monitor the key performance indicators (KPIs) on a quarterly basis, were highlighted.

With regard to programme 2, which dealt with administration, NCT planned on having structured engagements with external stakeholders. The type of stakeholders that would be engaged with had been specified. It had also highlighted the number of engagements it would like to hold. The stakeholders were defined as the regulators – the National Credit Regulator and the National Consumer Commission, which were key filing parties to the tribunal -- and parties that filed with the tribunal such as the Registrars, State Counsels, and so on.

The NCT had targeted 24 briefing papers in the financial year. The briefing papers were aimed at updating its members on the latest legislative information and development.

In the field of human resources (HR), a target of 85% had been set as the percentage of positions filled in order to ensure that the NCT was adequately resourced to fulfil its mandate. It currently had a small staff component in relation to the annual performance plan (APP).

As for ICT, it was said that NCT had gone through a process of implementation of the Case Management System (CMS) in previous years. The three-year APP period would focus on the website’s interface to ensure that parties were updated on the status of their cases.

From a financial perspective, it was important to consider reliable budgeting and forecasting models that could be implemented to ensure that the tribunal worked within its budget, especially because of the budget constraints.

The HR perspective in the APP focused on the employment of youths through structured opportunities and the appointment of interns.

In terms of the caseload projected during the APP period, a total of 17 172 cases had been projected for the 2015/2016 financial year. It was important to note that the tribunal’s caseload was very unpredictable. However, the three-year forecast that was prepared last year was close to what eventually obtained, as the NCT had recorded 17 178 matters that were filed in the 2015/16 financial year.

The budget in the APP showed a grant allocation, and additional grant/donor funding. There was also an additional amount that would be required over a three-year period. Additional funding of R1.6 million would be needed for the 2016/17 financial year. However, the NCT had increased its filing fees for DRA matters from R100 to R200, effective from February 2016, in order to cater for the additional funding needed. For the subsequent financial years, 2017/18 and 2018/19, amounts of R4 million and R8 million had been budgeted respectively. The tribunal had ensured that different systems were put in place to maximize its levels of efficiency and deal with its higher cases. It foresaw the need to implement the decisions support system through the ICT interventions in order to deal with the issues identified in the budget over the next three years. This would help in dealing with cases faster and reducing cost. For instance, in the current financial year, the NCT had introduced the Motion Court process which had resulted in a significant cost saving initiative, to the point where the tribunal began dealing with 32 cases in a day, as opposed to eight cases previously.

The Chairperson asked who the donors of the donor funding were.

Ms Devraj replied that the donor funding referred to the funding allocated by the National Treasury for the funding of interns.

Mr Willem Strauss, Chief Financial Officer (CFO), NCT said that there was an arrangement with National Treasury. The donor funding was made available by the United Nations specifically for youth development. The NCT was planning to put forward a proposal to source donor funding for its internship programme.

The Chairperson said that it was important to specify which donor funding was being referred to.

Ms Devraj said that the NCT would brief the Committee on all its cases on 18 May 2016. In light of the challenges faced with the high case load, she said that the tribunal had received a total of 9 589 cases in the 2014/15 financial year, while 17 178 cases had been received in the current financial year, which translated to a 79% increase in its caseload. In dealing with this high case load, it had implemented greater oversight, with the fulltime tribunal members dealing with the DRA and non-DRA issues from September 2015. Key challenges had been identified. The solutions proposed to meet the challenges identified, was to start the Motion Court process -- a concept which had been developed in August 2015 and became effective from November 2015. The benefit of this court process was reflected in the ability to finalise 8 898 non-DRA cases between November 2015 and March 2016. Another benefit of the Motion Court was that it allowed greater accessibility in the sense that the tribunal could go to the provinces where the parties were located, adjudicate on the matters, and the parties could receive their audit on the same day. The Motion Court had also helped with saving of costs and efficiencies, so that 32 matters could now be adjudicated upon on the same day.

The NCT had 270 non-DRA matters, of which 82 had been finalised in the current financial year, while 73 matters were incomplete due to filing procedures that were yet to be met. There were 37 hearings at the Jury Court. Hearings had been grouped together to help with efficiencies. The tribunal had also ensured that hearings took place in different locations in order to increase the number of matters to be heard. Matters were being closely tracked to ensure that cases were set down for hearing as soon as pleadings were closed.

The tribunal had issued 24 judgments and rulings in quarter 3 and set-downs had been issued for 23 matters in quarter 4. This buttressed the points earlier raised on the challenges of the high caseload faced by the tribunal.

Discussion
Ms P Mantashe (ANC) wanted to know which part of the budget catered for the expected increase in the caseload.

Mr G Hill-Lewis (DA) expressed his disappointment at the non-attendance of either the Registrar or the Chief Operating Officer (COO) of the NCT at the meeting. He wanted to know why the average number of days to finalise non-DRA cases was not given; what the new calculation method for non-DRA cases was; if the rumours about the number of recent resignations from the NCT and other HR issues were true; and in the respect to the dispute involving the Registrar, what necessitated an internal audit report on the performance of the Registrar, what the result of the internal audit report was, whether any action had been taken against the Registrar based on the report, and what the attendant consequences were.

Mr Mkongi wanted to know what the tribunal’s proposed funding models were; what other funding windows (apart from the donor funding) existed to mitigate the challenges faced with funding; how the tribunal would cater for the proposed additional member of the tribunal, especially with the challenges it already had with funding; what the actual strategic responsibilities of this additional member would be in the tribunal; what the content of the youth development programme of NCT was; if NCT had researched the ages of the youths participating in these development programmes; and what strategy had been adopted for youth development, that would particularly educate consumers.

The Chairperson wanted to know how the NCT planned on increasing the number of cases handled while the allocation made in the budget for this purpose had been reduced; she sought clarity on the expansion in the NCT’s mandate emanating from the National Credit Amendment Act (NCAA) that required an additional six part-time members, one fulltime member and a deputy chairperson during a performance period; how the NCT would increase the complement of the tribunal to 20; and how the members would be funded.

In addressing the source of the funds that would cater for the expected rise in cases, Mr Strauss said that the fees paid to the part-time tribunal members were accounted for under ‘goods and services’ within the budget. When the budget had been prepared for the APP, the budget showed a decrease in the forecast for 2015/16, from R23.6 million to R21.6 million for the 2016/17 financial year. The decrease was a result of two components, one of which was that the NCT had budgeted for the appointment of one fulltime tribunal member. The time spent by that the appointed fulltime member as a part-time member, which was originally calculated under goods and services, would then move up to the ‘compensation of employees’ section. The other move resulted from the anticipated efficiencies that would be gained through the ICT intervention, motion courts and other methods that would reduce the cost of adjudication per case. However, there was still a growth in the total cost due to the anticipated increase in cases. It seemed the adjudication cost was reducing, but the DTI had indicated that it would not allow the appointment of a fulltime member. The effect of this was that the position of fulltime member would move back to ‘goods and services’ whenever another budget was prepared in future.

The NCT’s consideration of different funding models focused on increasing efficiencies through the case management systems, as tribunal members had a time aspect that enabled them to adjudicate on cases they had been paid for. Through the ICT interventions and the decision-support system, the NCT could deduce the time that tribunal members had to spend specifically on the DRA matters so that they could be finalised in earnest. The time savings would result in cost savings. This model of constantly increasing the number of cases handled by each tribunal member per day would help in reducing the cost of adjudication in the long run.

In terms of where additional funding would come from, he said that the NCT had submitted a motivation for additional funding to the National Treasury three years previously.

Ms Devraj said that NCT had initiatives in place that would help with funding the expected rise in cases. These initiatives included the ICT interventions, motion courts, and the grouping of cases.

The tribunal had targeted 70 days for finalising non-DRA cases for the next three years. In quarter 3, an average of 150 days was calculated for finalising matters. With regard to the new calculation method, it was said that in 2015/16 financial year, the NCT had calculated the days from close of pleadings to the date that the judgment was issued. However, in the current financial year, the calculation would not only start from the close of pleadings, but would also include matters carried forward from the previous financial year, as well as matters that had been postponed. The time periods for the postponement request would, however, be excluded. Further responses on the timelines set for each of the cases would be given during the discussion with the Committee that would take place on 18 May 2016. The discussion would also address the causes of delays, where the delays had been caused by NCT, and what had been done to stop such delays.

With respect to the rumours around HR issues, she said that the recent resignation had been that of the HR Manager, who had resigned a few months ago. The internal audit report on the Registrar, based on the dispute with the Registrar, emanated from the performance information that had been submitted for the Registrar and two senior officials within the Registrar’s unit. The HR governance committee, in reviewing the performance assessment, noticed certain disputes in the assessment and the performance information that supported the assessment. The chairperson had therefore requested that an internal audit be carried out. The NCT was currently in the process of conducting an external review. The result of this review was yet to be finalized, but should be finalised by May.

Mr Strauss said further that at the end of December 2015 (the end of the third quarter), the NCT had 41 positions on its staff structure, out of which six positions were vacant. At that time, the vacancy rate was about 13%. However, in the fourth quarter, the HR manager resigned in January and steps were being taken to fill the position. It was the only position that was currently vacant at the Senior Management Service (SMS) level. The other vacant positions were on the lower levels of staff.
Ms Devraj said that the key responsibility of the additional tribunal member would be to adjudicate on cases.

The content of the youth development programme did not deal with research. Instead, it dealt with the internship programme already put in place by the tribunal, where youths would be appointed and taken through a structured internship training that would help them obtain the needed experience for the positions. The internship period was one year. Vacancies and roles in junior positions were also filled by the participants of this internship programme. Another aspect of the youth development programme was the bringing together of a contingent pool of youths to assist the peak periods of NCT cases. More focus was placed on cases and case law relating to the cases before the tribunal.

Mr Farhad Lockhat, Senior Case Analyst, NCT, said that the extra members of the tribunal were employed on a part-time basis, and were not paid on an on-going basis, except on the days when they were involved. The cost of paying the part-time members would remain the same. It was the availability of members that would increase, and not the cost.

Mr Mkongi wanted to know if it was an accounting principle to place the cost for part-time members under ‘goods and services’ instead of ‘compensation of employees’, or if it was the method adopted by the NCT itself. What had been the success rate of NCT’s adjudication process in the previous years?

Mr N Koornhof (ANC) said that budget reflected a reduced allocation for goods and services for 2016/17 financial year because of saving measures, but the allocation increased for 2017/18 and 2018/19 financial years. He asked for an explanation for this, and wanted to know if the NCT had considered the need for savings for those subsequent years.

Mr Hill-Lewis asked if the 75 days referred to were business days or calendar days, and it was confirmed that it was the former. However, he wanted to know the average number of days it took to conclude a non-DRA matter, based on NCT’s current calculations; whether the chief executive officer (CEO), COO and Registrar had received a performance bonus in the previous financial year; and what the amount of such performance bonuses was for each of them.

Mr J Esterhuizen (IFP) wanted to know if the expansion of the NCT’s mandate by the NCAA would mean that more cases would be referred to the courts, and whether a person could approach thr NCT and a civil court at the same time.

The Chairperson said that more questions surrounding the grant funding, applications and mitigations, and a complete explanation on the funding models, would be put forward in writing to the NCT for a response to the Committee.

The CFO said that it was an accounting principle to place the cost of part-time employees under ‘goods and services’, as employees were accounted for only where there were employer-employee relations, and this was reported to the National Treasury. However, fees paid to the tribunal members were for the hours worked by them, and no employer-employee relationship existed in such cases. Tribunal members were appointed by the State President, and they reported directly to the executive chairperson on adjudication.

Ms Devraj said that the tribunal could only issue a judgment to parties, who could appeal to the High Court in cases where such parties were not satisfied. In giving an indication of the success rate of the NCT’s adjudication process, it was reiterated that the NCT had been overturned in only one matter since its inception.

Mr Lockhat said further that there was a 99% success rate with the granting of DRA applications for an order of debt review placement.

Referring to the budget for goods and services for the next two financial years, Ms Devraj said that efficiencies could be introduced only to a certain extent, seeing the rate at which cases brought before the tribunal was increasing. This explained the percentage increases for the next few years.

The CFO added that the huge increase for goods and services in the 2014/15 financial year compared to that of the 2015/16 financial year was as a result of the increase in the NCT’s case load. Also, efficiencies that were currently being put in place had not yet been introduced in the NCT’s case management system. The cost therefore came from the old cost model. The decrease in the next financial year would be as a result of the fulltime member who would be appointed to the tribunal in the current financial year, which would reduce the number of hours that part-time members had to be available. This would in effect reduce the cost. The decision support system would also reduce the cost of adjudication. This efficiency would have been worked out in the 2016/17 financial year, after which the NCT would have to develop new efficiency methods that would reduce costs in the subsequent financial years.

Ms Devraj said that the non-DRA cases had been finalised within 150 days during the 2014/15 financial year. The number of days for finalising non-DRA cases in the current financial year would be sent to the Committee in writing on 6 April 2016, along with other responses. However, the calculation commenced from the close of pleadings to the date of issuing the judgment. Postponements were excluded.

Performance bonuses had been paid out to the CEO and the COO. Performance bonuses were yet to be paid to the Registrar, one senior case analyst and one senior records officer, because the performance information for these staff members was in dispute. The amounts paid out as performance bonuses would also be sent in writing to the Committee.

The Chairperson agreed that responses on issues around bonuses should be sent to the Committee in writing by Thursday, 7 April 2016, as it amounted to specific issues relating to the budget. The Committee said in its report that the NCT had requested additional funding. Other issues could be responded to on 18 May 2016.

Briefing by Companies Tribunal (CT)
Ms Agnes Tsele-Maseloanyane, fulltime tribunal member, Companies Tribunal (CT), said that the strategic planning process of the tribunal was derived from the Companies Act. The mandate of the CT was to adjudicate applications made in terms of the Companies Act (CA), which included applications for exemptions from establishing a social and ethics committee, applications dealing with directorship disputes, as well as applications on name disputes. Its function in providing assistance in dispute resolution, as provided for by the Act, referred to its mandate to conduct mediation, conciliation and arbitration as a form of a voluntary dispute resolution mechanism. The tribunal had been able to deal with directorship disputes and shareholding disputes, using this mechanism.

The CT had two programmes under its strategic objectives -- adjudication and administration.

Two strategic objectives had been formulated for the adjudication programme, which were to adjudicate applications timeously, fairly and in a transparent manner, since the tribunal offered alternative dispute resolution (ADR) services; and to resolve disputes in a cost effective, informal and timeous manner. Parties were not charged for the services rendered by CT, and this contributed to the cost effective nature of dispute resolution.

The strategic objectives of the administration programme included the promotion of sound corporate governance through the existence of the correct governance framework, policies and structures; ensuring efficient case management through the use of technology; ensuring that the appropriate procedures and policies regarding the tribunal were put in place and members of the public were enlightened on the said procedures; building a body of knowledge around company law through the equipping of the research division within the tribunal, so that the tribunal could compare itself with similar entities around the globe in order to aid continuous improvement of its practices, as well as getting updated on the development around the law, as this could impact on some of the decisions reached by the CT; recruiting, appointing, developing and retaining competent staff, especially since the CT was faced with limitations around HR; and education of the members of the public and raising awareness on the tribunal. The tribunal had raised awareness in the previous financial year through visits to Tshwane, Limpopo, Ekurhuleni, Soweto, East London, Durban and Kimberley, where members of the public had been enlightened on the services provided by the CT which they could access.

The contextual overview of the tribunal referred to some of the factors that were considered while drafting its strategic plan. The CT envisaged an increase in its caseload, since it had begun to strengthen its partnership with the courts and the broad-based black economic empowerment (B-BBEE) Commission. Hence, it was expected that some cases would be referred to the tribunal from these partners, especially for ADR services. As mentioned earlier, there would be an increase in awareness and accessibility to the services of the tribunal through the use of technology. In some instances, the tribunal would go to the locations of the parties to adjudicate on their cases.

There was a need for a continuous improvement of the tribunal’s regulatory environment, especially in covering up some of the existing gaps, which would lead to greater effectiveness of the tribunal. One of the areas being considered was making attendance of ADR sessions compulsory for the respondents in a matter or complaint lodged by an applicant, as it had been noticed that most respondents did not attend these sessions because it was voluntary to do so.

The CT was faced with challenges of HR capacity. There was a 50% vacancy rate at its senior management level. The tribunal was currently not in a position to fill these vacancies due to financial constraints. However, it would continue to look at ways of improving its efficiencies and delivering its services to members of the public.

As indicated earlier, the tribunal was faced with limited revenue. A budget deficit had also been anticipated, but the tribunal would engage with the DTI to deal with this. The deficit was currently being managed through use of the surplus that had been accumulated when the tribunal had started without any staff complement.

There were challenges regarding the availability of space and hearing rooms, as the tribunal’s budget did not provide for accommodation. The tribunal made use of the DTI’s accommodation for its hearings. Sufficient hearing rooms were needed, particularly for conducting ADR.

With regard to the tribunal’s strategic drivers and enablers, the entire strategy was focused on performance and service delivery to the people of South Africa. The goal of the tribunal was to render its services to people in a cost effective manner. The strategic enablers included the tribunal’s mandate, the Companies Act, the vision and strategy of the tribunal; governance structures of the tribunal, which included the audit and risk committee and the human resource and remuneration committee that oversaw good governance within the tribunal; as well as the legislation and training committee that ensured that the staff was updated with developments as the need arose; both the members of the tribunal and the CT staff; the budget, even though it had been indicated that the budget was limited in terms of the tribunal’s requirements; having the right information technology that would help with efficient management of cases; and the monitoring and evaluation process in measuring performance in order to ensure continuous improvement in the work of the tribunal.

The strategic goal for the programme on adjudication was to adjudicate and make orders in relation to any application brought before the tribunal. The performance indicator was measured by the percentage of decisions and orders that had been issued within 30 working days after the date of the final hearing. The current estimated baseline was 85%, while the target for the new financial year was 90%. The current estimated baseline for the percentage of allocated decisions was 90%, while the target remained 90%. The target had not been increased, as the tribunal had stretched itself in attaining these targets, and mostly because of the resource constraints faced by the tribunal. The target for ADR cases had been increased from 70% to 75% because of the nature of such cases.

The tribunal also anticipated an increase in its budget spending, and there may be no room for savings. It would, however, ensure that there were no instances of fruitless, irregular or wasteful expenditure.

An electronic case management system would be introduced to help with efficient case management. The estimated baseline for the previous financial year was to have a draft case management business process mapping in place. The target was to pilot and partially implement the system by the end of the year.

Another output of the tribunal was to produce research reports. The tribunal had produced a research report which focused on a comparative analysis of similar institutions with similar mandates as that of the CT. There was a target of producing one research report that would focus on measuring its effectiveness and impact in delivering its mandate.

The size of the organisation had made it necessary to look into issues of staff training and multi-skilling. Although this output had not been set in the previous financial year, the tribunal carried out training for its staff. The current target was to train 80% of its staff.

Staff retention was another important aspect. The tribunal had set its staff retention target at 85%. The current staff complement of the tribunal was 15 people, as opposed to the staff establishment of 28 posts.

In relation to advocacy services offered by the tribunal, a target had been set to host a seminar. A seminar on ADR had been hosted in the previous financial year, with approximately 200 people in attendance. The target for the next financial year was to host a seminar on corporate governance, business ethics, and a social and ethics committee.

With respect to the number of media engagements, the tribunal would continue to release media statements that would raise the profile of the organisation. The tribunal would also participate in radio interviews for the purpose of reaching out to the public.

Another method adopted for increasing the reach of the tribunal was the participation of the tribunal in outreach programmes and/or exhibitions. Targets had been set to participate in outreaches in Kimberley, Bloemfontein, Port Elizabeth, Potchefstroom, Mogale City, Emalahleni, Richards Bay and Mafikeng.

Under the service delivery plan -- one of the supporting strategies and plans of the tribunal -- a target of 35 days had been set for resolving cases after the completion of the filing of documents. An average of 15 applications would be resolved within 28 business days. Enquiries would be resolved within four working days. ADR applications would be resolved within 25 days of receipt of such applications. Service providers would be paid within 25 days after services had been rendered, as opposed to the 30-day period in the previous financial year.

Some of the strategic risks that had been identified were performance risk, reputational risk, human capital risk, compliance risk, and so on. The reputational risk referred to the voluntary nature of the ADR mechanism that resulted in some parties not participating in the ADR process, and in effect led to instances of failed mediation. There was a need to amend the legislative framework to curb future instances of failed mediation.

Discussion
The Chairperson asked if the tribunal charged for its services.

Ms Maseloanyane replied that the services rendered by the tribunal were free of charge.

Mr Mkongi observed that the flow in the CT’s presentation was different from that of the NCT. He wondered if the reason for this was a policy matter, as the CT had not compared its strategy to the NDP and MTSF (like the NCT), and compared its strategy only to the DTI. He wanted to know the number of cases of a transformative nature that had been brought before the tribunal, especially in cases where people who were placed in positions within a company for fronting purposes were rebelling; what part of the budget catered for the anticipated increase in cases, and the amount of sucha  budget; and if the tribunal’s IT was updated to cater for the changing nature of companies.

The Chairperson expressed concern at the absence of the tribunal’s chairperson at the meeting, as it was important for the Committee to engage with him on a number of issues. It was requested that the chairperson of the tribunal appear before the Committee for further engagement with the MPs.

Mr Koornhof wanted to know how many fulltime and non-fulltime tribunal members existed in the CT; the salaries per annum paid to these fulltime and non-fulltime members; and what the payments for the last financial year were.

Mr Hill-Lewis requested for a breakdown of the earnings of the tribunal’s chairperson, as well as the number of hours he worked. He also wanted to know if the chairperson was still allowed to charge for the number of hours he spent driving to and from work, as had been the case in the previous financial year. A breakdown of performance bonuses paid to any of the tribunal’s staff members was also requested, as well as the basis for such performance bonuses.

The Chairperson added that the remuneration policy that covered bonuses should be called for, as there was a need for a policy to cater for both ordinary members and members of the executive. She wanted to know if members of the tribunal were paid transport fees, apart from their usual remuneration, and the point at which remuneration began.

Mr M Kalako (ANC) wanted to know if the tribunal had considered charging for the services it rendered, especially since it depended solely on the grant funding from the DTI; if the tribunal had assessed the impact of its outreach programmes in the different locations alluded to; and if the uptake of the tribunal’s services was as a result of the outreach programmes.

Mr Esterhuizen asked if there was a maximum value on the amount of fines that could be imposed by the tribunal.

The Chairperson wanted to know if all ADR processes were voluntary; she sought clarity on the strategic relationships of the tribunal in respect of B-BBEE; how soon the tribunal could develop a relationship with courts in other provinces like it had with the Gauteng judiciary; and the reasons for focusing its outreach programmes in the selected cities already alluded to in the presentation.

Ms Maseloanyane said that the CT’s presentation, in comparison with NCT’s, was a matter of oversight and the method of presentation adopted by each institution. It did not mean that the CT did not take into account issues relating to the NDP and the MTSF. For instance, efficiency building within the organisation was linked to the process of building a capable state and institution. Even though the tribunal’s strategy was not explicitly linked to the NDP and MTSF, the said link had been stated differently all through the strategic plan. The tribunal, however, agreed to state these links more explicitly at its presentation to the Committee.

Another indicator in terms of the NDP was reflected in the tribunal’s contribution to youth development through the organisation of internship programmes that focused on engaging unemployed youths, so that they could gain experience in strategic areas, such as research and supply chain management.

No cases of a transformative nature had been brought before the tribunal at this stage. The tribunal had, however, received cases on disputes around non-payment of dividends. It was nonetheless open to cases of fronting, but such cases would be referred to the courts to deal with eventually due to the criminal nature of ‘fronting’.

IT was a strategic enabler, as it helped in the handling of more cases, and ensuring greater accessibility to the tribunal. The CT had been unable to get an appropriate service provider in the previous financial year, but hoped to appoint a service provider that would develop a system that would result in greater accessibility of the public to the tribunal’s services.

The CT had 14 tribunal members and only one was a fulltime member. Both the chairperson and the deputy-chairperson were part-time members of the tribunal. Expenses were not paid for travel time. The tribunal paid only for the kilometers spent in traveling to a particular place to handle a case. Tribunal members were paid in accordance to the rates prescribed by the Minister. The chairperson was paid a daily rate of R7 000, the deputy chairperson was paid a daily rate of R6 000, while tribunal members were paid a daily rate of R5 000. The calculation for payments of cases covered costs for the research, preparation, and delivery of a case. This meant that the calculation of payments would be multiplied by three. For instance, a member would be paid R15 000 for each case, and so on. The payments for the kilometers used would be calculated in terms of the rates prescribed by the Department of Transport (DoT).

None of the CT staff had been paid a performance bonus. Tribunal members did not qualify for such bonuses, as they were not employees of the CT, and were not eligible to receive any bonus.

The tribunal promised to submit its remuneration policy to the Committee. It was noted, however, that the tribunal was in the process of reviewing this policy to reflect the current mandate of the organisation.

The tribunal had considered charging for its services in times past. However, the current Act did not permit this. It would therefore be necessary to amend the Act to allow for the charging of services rendered by the tribunal. The amendment should create a balance between increasing accessibility to the tribunal’s services and catering for the indigent parties.

The outreach programmes embarked upon did not exclude areas on the outskirts. The reason for the focus of outreach programmes on cities was traced to the concentration of the majority of enterprises and potential entrepreneurs within the metros.

Ms Maseloanyane said that she was not aware of the provision that indicated that the CT could impose a fine of up to 10% on companies. The tribunal would respond to the question in writing.

The voluntary nature of the ADR process was a gap that the tribunal sought to fill, as most rich companies who were respondents in matters and could afford to go through a litigation process, often did not feel the need to be involved in an ADR process. There were models in ADR that allowed for compulsory attendance by the parties, and referral to arbitration or the courts in cases of failed mediation. Such models had to be considered.

It was confirmed that the tribunal had been engaging with the both the Judge-President of the Gauteng judicial division and the B-BBEE Commission. The courts were moving into a court-annex mediation process that would ensure referrals to the CT in instances of capacity challenges within the courts. Relations with the B-BBEE Commission would cater for issues on shareholdings.

Ms Irene Mathatho, Chief Financial Officer (CFO), CT, presented the budget forecast of the tribunal over the medium term expenditure framework (MTEF) period. 80% of the budget was allocated to the administration programme, while the remaining 20% was allocated to adjudication programme. The reason for this was that the adjudication catered only for the fees of tribunal members. A large percentage of administration was spent on the compensation of employees.

The CT’s main source of funding was the grant allocation from the DTI, which was about R15 million in the 2016/17 financial year, R15.8 million for 2017/18 financial year, and R16 million for 2018/19 financial year. The increases were way below the inflation, and which explained the financial constraints faced by the tribunal. A decline in the interest received had been anticipated, since the substantial interest previously received was from savings on the surplus that had been approved for retention over the years.
Funds approved by the National Treasury would be used over the MTEF period. Advocacy services could be funded only from the tribunal’s surplus funds.

The main expenditure was comprised of members’ fees and the compensation of employees. The expenditure on goods and services was the operational and administrative expenditure. A decline had been anticipated for this expenditure, as goods and services was funded mainly from the tribunal’s surplus funds. The tribunal had applied to the DTI to increase its baseline, as it was not appropriate to spend its surplus funds going forward.

With respect to the tribunal’s need to charge for its services, it was noted that this issue was dependent on the legislation. It would take some time for such a policy to materialise.

Follow-up discussion
The Chairperson sought more clarity on the remuneration of the members of the tribunal. She also wanted to know if all the case work was done at a meeting.

Ms Maseloanyane explained that members were paid for attending tribunal meetings in accordance with the rates prescribed by the Minister – R5 000 for an ordinary member, R6 000 for a deputy chairperson, and R7 000 for a chairperson. The tribunal members did not have to attend meetings to handle the cases set before them. Cases were handled based on the documents set before the tribunal members. The payment for cases would be calculated to cover three factors -- the research, preparation and decision reached by the tribunal member for each case. The rates of each member would therefore be multiplied by three in calculating payment for each case handled. However, if the case proceeded to a hearing, the tribunal members would be paid for each day that was set for hearing, as well as a daily rate for the writing of their decisions. The remuneration policy would be submitted to the Committee for better understanding.

Mr Hill-Lewis said that the tribunal had informed the Committee during a special hearing held last year, that the remuneration policy was under review. It would be important to note what timelines had been set to complete this review.

Ms Maseloanyane replied that the remuneration policy referred to in the previous year was for members of staff, which dealt with issues of performance and salaries. There was also a members’ claims and allowance policy. These policies would be submitted to the Committee.

The Chairperson said that the legislation provided for administrative fines in Section 175 of the Companies Act. The tribunal was asked to look into the issue of fines in relation to the provision of Section 175.

Ms Jody Scholtz, Chief Operating Officer (COO), DTI said that in its annual strategic sessions with the CT, the Minister had requested that the tribunal look into other income generating strategies. These strategies were currently being developed.

The Chairperson requested that the responses to other questions not resolved at the meeting should be sent to the Committee by Thursday, 7 April 2016.

Mr D Macpherson (DA) said that he had ten copies of an actual constitutional court judgment that spoke to the need for legislators to hold the executive accountable, which he would like MPs to go through and afterward discuss formally by 14.30.

The Chairperson replied that she would not like to enter into a dialogue on the issue raised, and that the matter could be discussed at the next Committee meeting.

The meeting was adjourned.
 

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