Foreign Service Bill: input by Department of Trade and Industry

Meeting report

Foreign Service Bill: Department of Trade and Industry comments

The Chairperson recognized the presence of representatives from the Department of International Relations and Cooperation (DIRCO) and from the Department of Trade and Industry (dti). He commented that different representatives from DIRCO seemed to be attending the presentations by different departments.

Ms Pumla Ncapayi, Deputy Director General, Department of Trade and Industry, stated that the dti had submitted comments on the Foreign Service Bill in 2014. It still had concerns with some provisions of the Bill.

The dti manages the network of foreign economic offices to bolster South Africa’s trade, investments and promote exports in the foreign countries. The Bill is therefore very important for the dti to carry out its mandate. Dti has 44 offices across the world, 32 Foreign Economic Representatives (FER) as well as 48 Marketing Officers (MO). The dti offices abroad operated under the auspices of DIRCO.

She then proceeded to outline the main concerns of the dti on the Bill, as follows:

• Financial Implications: The Bill provides in the definitions that all staff appointed by the dti at a foreign mission will be under the control and supervision of DIRCO and that the Director General of DIRCO will be the head and accounting officer. This is not in line with the Public Finance Management Act (PFMA) which provides that management and accountability should be with the accounting officer of the relevant national department for whom those staff work.
• Mandate of the dti: Clause 2 is not clear on which department will be in charge of coordinating trade negotiations and investment promotion. Dti therefore proposed that a Memorandum of Understanding (MoU) will be required for implementation of the Bill.
• Human Resource Management: Clause 5 is not clear on the role of national departments when recalling its officials. Dti proposes that there should be a subclause which should allow a Department to recall or transfer its employee according to department policies. Clause 6 needs clarity on who has the mandate to train officials at the Diplomatic Academy.
• Governance: In clause 7 and further clauses, there was nothing said about any coordinating mechanisms for departments and DIRCO,
• Clause 8 is not clear on who is responsible for budgeting and payment when buying assets. The Bill needs to clarify asset transfer, Alternatively, this topic could also be dealt with in the proposed MoU.
• In clause 9, it was proposed that other relevant departments must be consulted on the content of the Foreign Service Administration Manual and Code of Conduct for the Foreign Service.
• In relation to clause10 the delegation of power, especially financial powers, should be clarified by the proposed MoU to avoid negative audit findings.
• In relation to offences in clause11, the Bill is silent of whether prosecution under the Bill will supersede the Vienna Convention.
• Other departments must also be consulting when drafting the regulations as referred to in clause12. 

Discussion

Ms S Kalyan (DA) thanked the dti for a concise presentation. She asked if any of the recommendations made by dti prior to 2014 were incorporated in the Bill. She asked who actually administers the budget of the dti in the missions? The Department of Home Affairs had given a presentation earlier to the Committee, in which it suggested that it would like DIRCO to take over the responsibility for collecting money in the missions. She asked where, in the Memorandum, anything was said about the Ambassador’s spouse and relatives being considered for employment in the embassies? She pointed out that DIRCO had been unable to provide an asset register for many years and this was a point of contention with the Auditor-General. She asked why dti was handing over assets to DIRCO and whether dti recovered the costs from DIRCO’s budget?

Mr S Mokgalapa (DA) asked on the status of the MOU, and whether dti had any existing MoU with DIRCO. He also asked whether this had been raised in any meetings between the two departments on the Bill, and on the MOU. He also questioned what was currently happening in relation to collection of revenue, repeating that the Department of Home Affairs had given the Committee a different impression on what was happening currently. He asked if the 48 Marketing Officers were regarded as Associated Relationship Partners (ARPs), suggesting that in his view the Head of Mission must have authority over everybody in that Mission. He asked for clarity whether dti was suggesting that its employees should not report to the Head of Mission. He also asked if it was dti who carried out (if it did indeed do so) security clearance on those who were seconded to go on trade missions? He wondered if dti was ever invited to DIRCO to provide training for diplomats, and how else the dti might engage in order to strengthen the diplomacy. In relation to the 32 foreign economic representatives (FERs), he asked how did dti ensure that they were trained, in order to align their work with that of the Head of Mission and to ensure that there is no conflict?

Mr L Mpumlwana (ANC) would have liked, in addition to some of the problems listed, to have heard dti reflecting upon what positives there were in the Bill, and he also said that he would have liked dti rather to come up with proposals on what might be included instead. He noted that the MoU is not in front of the Committee. He made the point that dti should give more careful consideration to the principle that the only department that has a right to represent the President in the management of foreign affairs is actually DIRCO. Using the analogy of not having two bulls in one kraal, he suggested that it would be very difficult to have people working in a mission who are not accountable to DIRCO or the Head of Mission. Dti should put itself in the shoes of DIRCO. It was DIRCO who would be held responsible in the foreign country when there might be an allegation against a diplomat or employee in a foreign mission. Dti should consider the importance of DIRCO in the foreign country. For that reason, he agreed that DIRCO must have authority to discipline any person in the foreign country without needing to refer back to whoever would have been the line manager, should that person have been working within South Africa. If a person is declared persona non grata, the Head of Mission and thus DIRCO would be responsible. He asked that the new draft wording, suggesting what dti wants to be in the Bill, should be reduced to writing and referred back to the Committee for further consideration.

Ms D Raphuti (ANC) enquired what happens on a daily basis in the mission. Ambassadors are well versed in many things and she agreed that they are in a foreign country, representing the country and the President. She noted that there is competition in the missions. She asked if the dti was paying rent for space in those missions or if it is “squatting”. She asked if the ambassadors knew where the dti staff reported and whether all the people working in the missions would have meetings involving all the departments. She proposed that the Bill must be fine-tuned and the Committee Members could perhaps pay a study visit to other countries to see what can be done to make the Bill stronger, what other models might be available. She also asked for an organogram showing lines of responsibility for people in the missions. Finally, she asked who then must be held responsible for the qualified audit reports that the Committee was seeing for DIRCO.

The Chairperson clarified that Ms Raphuti was referring to the audit reports that were qualified on the basis that DIRCO's asset register was not drawn to the satisfaction of the Auditor-General.

Ms T Kenye (ANC) stated that South Africa does not have policy objectives as to work in the overseas missions, and this was the reason for this Bill. She wanted to know the precise role of dti in the missions. She asked dti to elaborate further on the Cabinet Memorandum of 2013 She said that the main reason behind this Bill was to curb the problems in coordination and alignment of government departments as presently it seemed that people were going abroad and doing similar things without proper coordination.

Mr M Maila (ANC) pointed out that dti appears not to have a problem with clause 4 of the Bill which provides that the Head of Mission is responsible for management and administration of his or her Mission and all members of the service in the foreign mission. He asked then how the dti offices operated at the moment and whether they were independent within the Mission? He pointed out that Ms Raphuti had mentioned that qualified audit reports had been given and he asked who was paying for the audit fees, when the Auditor-General audits dti offices in the Missions.

The Chairperson noted that he was not commenting on the Bill as such, but rather was of a more political nature, as he had noted that much of what had been said went to the heart of the relations between departments. This presentation had been helpful and the Committee has taken note of the concerns, which would be conveyed back to DIRCO, particularly in relation to the proposed MoU. He asked about the geographic spread of the FERs, since DIRCO has 126 missions and dti has 44 foreign offices? He asked if the FERs had capacity to negotiate for the country; he also wondered why they were called “economic representatives” rather than “trade representatives”, since there was now also a Department of Economic Development in South Africa. Surely dti’s principal mandate is to identify trade opportunities in the country and advise the Mission?South Africa has a trade deficit with many developed countries and therefore needs a formidable multi-disciplinary team to open up the markets – and he wondered why, having only 32 FERs, dti appeared to be not dealing with other potential markets? The Committee will hopefully visit other countries, to see how they operate without legislation, but rather using codes and ethics, and countries that have similar laws in place.

Ms Ncapayi responded to the proposals, and wanted to point out, from the outside, that the dti did welcome the Bill and saw it as a positive move to strengthen existing systems. This presentation had been geared to focusing on provisions that still are problematic in implementation. For example, the dti was concerned about the function of the accounting officer under this Bill in relation to each of the departments, from a practical standpoint, and that was why she had mentioned the PFMA position. She believed that the proposed MoU will help address issues of competition and mandate. She agreed that benchmarking will be positive, in order to develop the South African legislation.

She pointed out that the dti recommendations made in 2014 were not incorporated in the Bill, hence the presentation today in which the same issues are still being raised.

She noted that the dti budget is administered by dti and the dti handles the delegations of FERs in the missions.

Speaking to the Cabinet Memo 3 of 2013, she noted that there was a recommendation from the Department of Public Service and Administration for dti to make a submission on the possible employment of spouses and relatives of the transferred officials in the missions. The submission was addressing what the Head of Mission should consider in relation to employment of a spouse or relatives in the missions. Dti made recommendations that it should be consulted where the opportunity is one that could provide skills to further dti mandates.

The handover of assets under the PFMA is done in October. In practice, dti buys the assets and on transfer, the asset is captured in the DIRCO accounting books in the relevant mission. There is an MoU in place focused on financial management, not human resources or mandates in the foreign office. Dti had had interactions with the former and current officials, on what DIRCO was putting forward. For instance, it had dealt with matters around permanent staff recruited with the missions, and engagements had looked into, for instance, what the Bill envisages on compensation, including instances such as where DIRCO phased out the mission, like it did in Zambia, without input from dti or Washington.

The bulk of the 48 marketing officers are locally recruited in the foreign country, although some are South African nationals. Dti will present the specific numbers. The marketing officers report to dti and where dti does not have offices, they report to the Head of Mission. Dti is invited by DIRCO to train diplomats, and the two departments have an annual plan on the training schedule. Dti employees are given training on the mandate of the Mission, in order to align their work with that of the Head of Mission. The FERs are trained what the government is pushing as priorities, based on the budget and the President’s State of the Nation Address. FER recruitment is guided by the country’s foreign policy.

She noted that the dti would be happy to make further submissions as to what wording could be used in the Bill. However, the proposal for the MoU was intended as one where the dti could then point out to DIRCO what it envisaged could be strengthened. Overall, however, also, the Bill should be clear on what provisions may be regarded as superceding anything contradictory and it should also make it clear as to whether other policies should cease to have effect once the Bill becomes law.

She added that the Auditor-General gives dti its audit plan as it pertains to the foreign office and there had been a number of findings which have resulted in dti tightening controls in its offices. The presence of dti in a country depends on the presence of DIRCO. For instance dti opened an office in Sudan where DIRCO has just established a Mission. All of dti offices are based in DIRCO missions.

Mr Mpumlwana asked if dti is then “a squatter” in the DIRCO offices.

The Chairperson also pointed out that this question also needed to be tied into how the 126 missions of DIRCO were covered by 44 dti offices. He asked if the Ambassador was in charge of everybody working at the relevant mission.

Ms Kalyan asked for clarification on the assets. For instance, if dti buy a computer for dti officials to use, but for practical purposes hand the asset over to be used in the DIRCO office, does dti claim any money back from DIRCO, when presumably the asset goes onto DIRCO’s books.

Ms Raphuti pointed out that dti did appear to be “a squatter” in the DIRCO offices and said that National Treasury did not appear to have been totally honest when it claimed to have written a letter to the Missions. She complained that it was unnecessary that the Committee might have to ask the same questions or if someone would have to visit the same mission twice, once to audit DIRCO and then to audit any “squatters”.

The Chairperson sustained a point of order objecting to the reference to dti as “squatters”.

Ms Raphuti continued that there is a duplication no proper governance and this must be watched very closely. People entrusted with the money of the country were seemingly going overseas to audit first one department, then travelling there again to audit the other. She recommended that the Chairperson should take the Committee to the missions to look for best practices.

The Chairperson stated that dti is housed in DIRCO’s office. The Committee will engage the Auditor-General (AG) on asset management on whether the officials at the AG are aware of assets in the missions. He would ask if the assets were put on the same register, or were listed separately, based on the source of the asset.

Mr Mpumlwana noted that the dti had not answered his request to consider having a meeting with the DIRCO, instead of coming to the Committee because the Committee had no idea whether the proposals being made would work; he wanted the dti to commit to a time frame to get this resolved.

Ms Kalyan raised a point of order that this meeting was specifically asking dti to comment on a Bill, yet Mr Mpumlwana was asking dti to bring a draft with its proposals. The Committee could not ask the dti to do that. The responsible Minister (of International Relations and Cooperation) had tabled the Bill and brought it to Parliament and it was not within its mandate for this Committee to ask dti to draft a new Bill.

The Chairperson noted that the Committee had not yet come to a determination on the way forward. The process is ongoing, as it started with the tabling of the Bill, then a public seminar in Pretoria. Hearings with all departments affected by the Bill were to be held, then public hearings, and finally the Committee would be going through each clause in the Bill. Only when comments had been collated could the Committee ask DIRCO to go back to another department and consult as this Committee had the power to ask DIRCO to do that. No timeframe could be determined at this stage.

Mr Mpumlwana reiterated that he felt the dti comments to be negative, and he had asked the dti to say what it would see as a positive Bill. He pointed out that the Department of Public Works, when addressing the Committee, had proposed that certain clauses be added, and he thought that if there was conflict with the PFMA, the dti should come up with its proposals on what the wording should be to replace any clauses with conflict.

Mr Seraki Matsebe, Parliamentary Liaison Officer, DIRCO, clarified that the Departments of Public Works and of Home Affairs, when they appeared before the Committee, had made proposals on what clauses they would like to see amended or added and it could be helpful if the dti made similar proposals.

Ms Lineo Mosale, Committee Content Adviser, reminded the Committee that this was a public hearing and dti called to had been called to the Committee to make comments on the Bill. The submission by dti cannot be rejected on the basis that the dti should have consulted with the DIRCO, nor could they be instructed to do so first.

The Chairperson commented that when all the hearings had been held, the Committee will advise DIRCO what the other departments have said and then DIRCO can respond.

Ms Ncapayi said that dti is guided by DIRCO on location of offices and priorities of the country. The FERs have capacity to negotiate deals, in line with the training they get before deployment.  The training focuses on polices of the government, principles of the National Developmental Plan and implementation, the New Growth Plan and anything articulated as priorities in SONA by the President. When dti had resources, all FERs would come together for an annual conference, but since the budget was cut, this had not been possible. However, when they assumed their duties they would already have received between six and nine months training, before being sent to the missions. The Marketing Officer (MO) is locally recruited as a support function to the FERs. Other countries had shown that it is important to have a local MO who can negotiate within the local dynamics and open doors that would not be possible for a South African to reach alone.

She added that the current MoU between dti and DIRCO is limited as it focuses on allocation of financial resources but it does not focus on the areas highlighted in the presentation. There is an ongoing process with DIRCO in how to strengthen the MoU to ensure that it covers all the relevant areas.

Mr Mokgalapa asked if there are 32 FERs in 44 foreign offices and 48 MOs and asked that dti break down the numbers for the Committee. He questioned that surely there should be equal numbers of FER and MOs.

Ms Ncapayi responded that the spread of FERs is informed by South Africa’s trade and investment policy in the countries. For example, there is one office in Brussels for the European Countries while other offices may have more than one dti officer present, depending on the organogram. The MOs are content people who support the FER and have relevant experience in the field locally. In London, for instance, there is one FER supported by 2 Mos. There is a locally recruited MO in Milan and Turkey. In some of the offices, dti relies fully on DIRCO’s support. In Geneva, the office is at ambassador level, supported by senior officials focusing on trade and negotiation topics on services and goods. In the BRIC region, South Africa has two FERs in India supported by MO and trade secretaries. There are two FERs in China, one in Brazil and one in Russia.  The FER are seconded from the dti to the missions. In Africa, a senior official is based in Addis Ababa, supported by Head of Mission, and there is one each in Nigeria, Zimbabwe, DRC, Kenya, Angola and Senegal. The dti assists with a strategy to augment with the current scenario, rather than having a country-focused approach, in terms of work by the FER. Resources are limited and the dti cannot serve all the 126 missions itself. For this reason, a regional perspective is better.

The Chairperson commented that there were some political parties in Parliament who feel that the Missions are not serving national interests. There are many diplomatic missions but the economic deficit still exists. South Africa could do what the EU has done and consolidate the missions by region, so the approach would be different at each level. The understanding of national interest has historical context as well, and Members have been concerned on how to leverage this, in the interests of the country. It is clear that dti does not have the resources to cover every mission. That was why the Committee was asking about the spread. The worst weakness is when a local MO must speak for South Africa, and he believed that the only way out of this weakness would be for the Committee to engage the other Committees on what has been observed. There is no reason to have only one person in EU, because when the EU attended in RSA, they would attend as a group. He suggested that perhaps the Committee needed to discuss matters with the Minister and the Department of Economic Development, so that DIRCO, dti and the Department of Economic Development could work together for a united front to support the SONA and speak as one in the foreign missions.

Ms Lynne Smillie, Director, dti, clarified the position in regard to assets between dti and the DIRCO. She said that all assets that are on the dti register are transferred to the DIRCO register in October and the lists are very detailed.

Mr Mpumlwana commented that dti would have been given the budget for the assets in the first place, and he enquired therefore what, at the time of the transfer, was recorded as the value of the assets, and the amount of the original allocation. He wanted to know how the DIRCO and dti accounts would be cross-referenced with each other.

Ms Smillie added that dti invests in the assets, but they were the transferred to the DIRCO books. The assets would continue to be used by dti although they appeared on DIRCO books. Dti accounts for the assets.

Mr Galapagos asked how this would be recorded when the Auditor General does random auditing – would they be recorded under both DIRCO and dti asset registers and values.

Ms Smillie said that the transfer of assets is done merely on to the lists in the the asset register under DIRCO, to avoid double accounting, but the dti still remains responsible for the asset.

The Chairperson said that the Committee would need to engage with the Auditor-General on how the assets are coded in the accounting systems to show where the asset comes from originally. It could be that DIRCO puts everything on the register, and this was the reason why it was getting qualified audit reports.

Mr Mokgalapa asked how many officials were ARPs in each mission.

Ms Ncapayi responded that it would differ. Some locally recruited staff are on DIRCO’s establishment, there may be two dti officers and the trade secretary is on DIRCO’s line. It would change, based on the organogram of the mission.

The Chairperson asked that the dti delegation should convey back to the Director General of dti the concerns raised by the Committee. Speaking to the MO, he asked how, for instance, an American could tell Americans to invest in South Africa and how a German could promote South Africa’s trade interests properly – and what would happen if that individual were to be faced with a conflict with his own national interests. He commented that the realities on the ground were important, not questions of politics, and South Africa therefore had to get things right on a practical level. He believed that it should be South Africans, well trained and connected, who must further the nation’s interests.

Ms Ncapayi clarified that the dti had taken steps and trained those in the embassies and high commissions on how to articulate the government’s priorities without compromising national interests. The Marketing Officers do not have access to all issues and narratives used, as they are not South Africans and they are not fully security-vetted for all purposes.

The Chairperson thanked the dti and said again that when the Committee had concluded the hearings with all departments it would be telling DIRCO what it should check and with whom it should consult further, so that the Bill was in the best possible format by the end of the process.

He enquired from the Members on whether the process of meeting each affected department every Wednesday will allow the Committee to finalise everything on the Bill, aiming for its assent by 2019.

Mr Mokgalapa said it is better for the Committee to be focused rather than rushed, and for the Committee to engage properly. He liked the detailed approach which allowed for more thorough engagement, saying it was preferable to setting aside only 15 minutes for short presentations as in this way the Committee could get better clarity on issues, and this would hopefully avoid the Bill being sent back later in the process.

The meeting was adjourned.