Telkom, Huawei vs Screamer Solutions: elbowing small enterprises by big companies

Small Business Development

06 September 2017
Chairperson: Ms R Bhengu (ANC)
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Meeting Summary

The Committee commenced the meeting by deliberating on the behaviour of senior officials of the Department of Small Business Development (DSBD). was noted with dismay by the Chairperson, as well as by other Members, that DSBD officials had not complied with deadlines set by the Committee in respect of a number of issues, most notably the appointment of members to the Small Business Advisory Council. The Committee Content Adviser confirmed that attempts had been made to ensure that DSBD officials acted in compliance with Committee directives, but they still had not followed them. Members were unanimous that this matter should be treated with urgency.

Turning to the dispute between Telkom, Huawei and Screamer Solutions, the Chairperson pointed out the importance of small, medium and micro enterprises (SMMEs). The reason the government had set aside 85% of repairs and maintenance in the telecommunications domain was in order to ensure SMMEs acted as an engine for job creation. However, the behaviour of Telkom and Huawei had taken business away from SMMEs like Screamer Solutions, and it was for this reason the companies had been called together to gain a better understanding of the situation.

Unfortunately, Telkom had sent a letter saying that they would not attend the meeting, as they were not supposed to be called to Parliament. Huawei had a representative, but he argued that his company had not received an invitation and he was therefore not in a position to speak on their behalf, and had come only to listen to the proceedings. This response elicited a negative response from the Members, especially after the Committee Secretary showed proof that he had sent an invitation to Huawei. In the course of the discussions, a representative from the Chinese Consulate of Cape Town calmed the situation down and apologised for the misunderstanding with Huawei, and promised to provide them with assistance so that such a scenario would not be repeated. The representative from the Chinese Consulate also promised to make sure Huawei came back to render an account to the Committee.

After this, the Chairperson said she would send a letter to Telkom to inform them that the Committee had a constitutional mandate to call them when they believed there was a matter for which they had to account. The Committee endorsed this decision.


Meeting report

Committee matters

Mr H Kruger (DA) made reference to the Committee’s oversight visit to Witbank, and said the Small Enterprise Development Agency (SEDA) was not cooperating in relation to the registration of cooperatives and was an issue which needed to be dealt with. He asked what the way forward concerning the company involved with the IKAP project.

The Chairperson said it was a matter which would be discussed at the end of the meeting.

The Chairperson asked for consideration and adoption of the Committee’s minutes of 28 June.

Mr R Chance (DA) and Mr X Mabasa (ANC) moved the adoption of the minutes.

Mr Chance went on to explain the importance of putting a tracking mechanism in place to see whether the recommendations which the Committee made were followed through.

The Content Advisor described the tracking tool for the Committee. It had been circulated to the Director General and other senior officials in the Department, but there had been a non-compliance rate of 80%.

Mr Chance wanted to know what the Committee could do to remedy this scenario.

Mr Kruger said the tracking tool issue must be added to the weekly minutes so that they could act as an oversight mechanism to see where there was a problem.

The Chairperson said that steps had been taken to address the matter and a meeting needed to be scheduled with Departmental officials in that regard.

The minutes of 23rd August were moved for adoption, but the Chairperson said that she was dissatisfied with the behaviour of the DG, and Mr Chance suggested that the feeling of dissatisfaction should be reflected in the minutes. He reminded the Committee that the Small Business Advisory Council was supposed to have been in place since April. The Chairperson said that it was in the interests of the Committee to address these issues seriously.

Mr Chance was of the opinion that the Minister should be censured for the lack of action.

Mr Kruger said he would be unhappy if the DG accepted a bonus payment this year.

Mr T Mulaudzi (EFF) was concerned that the Committee was always talking about the lack of action on the part of the Department, and suggested that a meeting should be arranged with the DG and other directors.

Rev Meshoe said the Department’s 80% non-compliance was unacceptable.

Mr N Capa (ANC) said that the matter should be deferred until after the presentations had been made.

The Chairperson acknowledged that non-performance and non-appearance before the Committee did harm towards achieving the pro-poor agenda.

The minutes were subsequently moved for adoption by Mr Kruger.

Huawei “not invited”: Telkom not attending

The Chairperson said the National Development Plan (NDP) had set a target of 11 million jobs to be created by 2020, and small, medium and micro enterprises (SMMEs) would contribute 90% of them (9.9 million). In November 2007, the government had directed that 85% of services should be carried out by SMMEs in the domain of repairs and maintenance in the telecommunications sector. Screamer Solutions had been bullied by Huawei. Telkom had refused to attend the session on the basis of being exempted from being summoned to give account to Parliament. The Chairperson denied that such a claim was valid, and referred to Chapter 4 (56) of the constitution which stated otherwise. Considering the Committee and Parliament operated within the dictates of the constitution, if they summoned entities, they had to accept these summonses.

The Chairperson said there would be a follow-up letter to Telkom to state that they were not exempt from coming to Parliament, and that the Committee was disappointed with its response.

Mr Chance was of the opinion that Telkom was behaving in an arrogant and unacceptable manner, especially considering their status as a listed entity with domestic and international exposure.

Rev Meshoe said Telkom must provide proof of their exemption from accounting to Parliament.

The Chairperson agreed that there was a problem of attitude on the part of big companies, and added the Group Executive did not have an understanding about the separation of powers.

Mr Xuechuan Sun, Key Account Solution Manager: Huawei Technolgies South Africa, said his company had not received a letter of invitation, and he therefore could not respond on behalf of the company with regard to the allegations made against them. He suggested that if a letter was sent, the company would assess it and could answer questions at a later stage.

Mr Mulaudzi believed this was a show of arrogance, and that Huawei should show respect to Parliament or they would be kicked out of South Africa.

Mr King Kunene, the Committee Secretary, said the letter to Huawei had been sent on 30 July.

Mr Sun refuted this claim, saying he did not believe the email address used had been the correct one.

Mr Kunene said he had called the Huawei offices to confirm if the email had been received, and the secretary had acknowledged receipt. In addition, it was the same address which had been used to contact Huawei the previous year.

Rev Meshoe asked if there was any email communication available between Mr Kunene and the Huawei secretary who had acknowledged receipt of the invitation from the Committee.

Mr Chance asked whether Mr Sun was based in Cape Town or China, and whether Huawei had had any communication with the affected party after being informed of the invitation.

Mr Kunene said he had no email correspondence between himself and the secretary.

Mr Mulaudzi believed the Committee Secretary had done his job. The representative from the Chinese Consulate should be aware that Chinese companies were disrespecting Parliament and a formal apology was required.

Mr Chance warned against making conclusions, and wanted to hear what the representative from the Chinese Consulate had to say.

Ms Tia Yong-Mei, of the Chinese Consulate in Cape Town, said she would report this matter to the Consul General, enquire about the person who had answered the phone call, and obtain the correct email address in order to report at a later date to the Committee and the Chairperson.

Mr Chance said that since there were no representatives from Telkom or Huawei present, there was no need for them to continue with the session.

The Chairperson thanked Ms Yong Mei for informing Huawei about their invitation to Parliament. The Chairperson said she would allow Screamer Solutions to make their presentation, and went on to remind those present of the importance of the Cabinet resolution to set aside 85% of maintenance and repair work for SMMEs, and how it contributes to job creation and poverty reduction. It was also noted that these deliberations were not meant to punish anybody, but rather to serve as a way to understand the nature of the problem at hand.

Mr Mulaudzi requested that Screamer Solutions should not make their presentation, since the other parties concerned in the matter were not available and because resolutions had already been taken to address their absence

Mr Chance said that the request for information was in order to establish a level playing field, and although Telkom was exempt from the Public Finance Management Act but not exempt from being summoned to Parliament. 

The Chairperson said that she herself and those concerned usually met beforehand for the sake of clarification, and she wished to see Telkom and Huawei, as well as Screamer, to get a better understanding. In the future, she wanted to avoid such a misunderstanding.

The Chairperson thanked all those present for their attendance.

The meeting was adjourned.


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