Listeriosis & Ford Kuga: National Consumer Commission & NCRS progress report

Meeting report

National Regulator for Compulsory Specifications (NRCS) presentation

Mr Edward Mamadise, Acting CEO, National Regulator for Compulsory Specifications (NRCS), presented a status report on: Letters of Authority (LOAs) and roll-out of the risk-based management (RBM) system; the listeriosis outbreak; and investigations on the Ford Kuga fire incidents.

Status report on Letters of Authority (LOAs) and roll-out of the risk-based management (RBM) system

Mr Mamadise stated that, on LOAs and roll-out of the RBM system, 1 641 automotive approval applications were carried forward from 2016/17 financial year, and the total applications received between 1 April 2017 and 31 January 2018 amounted to 4 497. This was quite a huge improvement from the previous year. Of the 3 507 applications finalised, 96% were finalised within 120 days, with a total of 810 applications on hand. In respect of Chemicals, Materials and Mechanicals (CMM) approvals, 58 applications had been carried forward from 2016/17, and 324 applications had been received between 1 April 2017 and 28 February 2018. 315 applications had been finalised, which represented a 57% achievement rate within 120 days. In the case of Electro-technical LOAs, 3943 applications were on hand as at 31 January 2018. He pointed out that the number of applications processed in January went down as some staff members were on leave at the time.

There had been electro-technical interventions implemented, which saw six candidate inspectors being recruited, and assuming duties on 1 April 2017. The impact of the recruitment had been significant as the throughput from candidate inspectors in 2017/18 period contributed 30% of processed applications to date. Other interventions that had been implemented included: manual implementation of the Risk Based Approach

(RBA), and the checklists (Low, Medium & High Risk); and pre-screening prior to assigning applications. This meant that renewal applications were now separated and expedited. Low risk applications had also been placed in a separate queue with shorter turnaround times. Low risk application constitute 30% of applications, medium risk 60%, and high risk 10%. A 30 day cut off period would be enforced to allow for applicants to address findings.

On the development of RBM policy, there has been a marked improvement in turnaround times compared to previous financial period owing to the implementation of the policy. Dynamics which impacted on turnaround time for electro-technical applications processing were as follows: three staff members going on leave during the review period. There were as also cases of applicants trying to cheat current risk-based approach (RBA) manual system by declaring new applications as renewals, which slows down the renewals queue.

On the way forward, NRCS was looking into moving towards product/technology specialisation by focusing resources on areas of greatest need; appointment of preferred group of Test Laboratories – which would reduce the probability of the submission of non-compliant applications by ensuring technical and administrative requirements are met; working with large retailers to achieve self-compliance; full implementation of RBA; improvement of pre-screening to enhance low risk, medium risk, and high risk separation; and ICT modernisation. He indicated that there were delays in the implementation of its ICT modernisation project due to the resignation of the Chief Information Officer, which NRCS was in the process replacing. Currently, NRCS IT department does not have the adequate skills to take on this project.

Status report on Listeriosis outbreak

Mr Mamadise indicated that the Department of Health delegated to NRCS, as a competent authority, the responsibility to regulate canned meat products and the processing facilities of canned meat products. However, canned meat products are not affected by the Listeriosis outbreak. There is currently no Compulsory Specification (VC) for processed meat products and NRCS does not regulate processed meat products. A standard was developed with the view to regulate processed meat products, however due to disagreements with the Industry; the regulation was deferred to the Department of Health. The final draft of the processed meats Compulsory Specifications was accepted during a full stakeholder meeting on the 7 March 2014, however, the industry argued that the operational costs for levies presented were too high. A levy sub-committee comprising of members from the manufacturers, retailers, Consumer Goods Council of South Africa (CGCSA), South African National Consumer Union (SANCU) and NRCS was subsequently set up to further deliberate and come up with a solution. No agreement was reached. The subcommittee met with the Department of Trade and Industry on 7 October 2014 where manufacturers presented their proposed self-regulation model. The meeting noted that the identified risks emanating from the NRCS risk and impact analysis reports which were done in consultation with the stakeholders should not be ignored. This matter ended up with only compositional quality regulation with the Department of Agriculture, Forestry and Fisheries, which will reference certain provisions of the South African National Standards (SANS) 885. The notice of the proposed regulation was published as follows: Regulations regarding the classification, packing and marking of processed meat products intended for sale in the republic of South Africa, NO.663 of 07 July 2017 under the Agricultural Product Standards Act, 1990 (ACT No. 119 OF 1990). The hygiene requirements are not part of this proposed regulation and will still be only covered in the general requirements for all foodstuffs under the Department of Health.

Ford Kuga update

Mr Mamadise said the NRCS met with Ford Motor Company of Southern Africa (FMCSA) in September 2017. FMCSA reported on the recalls made and incidences where some of the reworked vehicles were reported to have burnt. As a result, the NRCS decided to make follow-up engagement with FMCSA in order to monitor progress on the recall process. There is a significant difference between the engine cooling system layout diagram of their Ford Kuga 1.6L eco-boost model and that of the 1.5L model being their later model that replaced the 1.6L eco-boost. The NRCS was still trying to determine the exact cause of the fires because some of the reworked vehicles were reported to have caught fire. The NRCS deemed it necessary to seek for an expert who can conduct an independent investigation on the cause of the fire. Another fire incident was reported on 22 February 2018. Unlike the previously reported cases, this vehicle was a 2016 1.5L Ford Kuga model, which was not covered by the initial recall.

The NRCS will therefore be embarking on the following: request an urgent corrective action on the 1.5L Ford Kuga fires; appoint an Investigator to investigate the cause of the fire. Should the vehicle be non-compliant as per the compulsory specification, the NRCS will consider suspension of the identified model from the NaTIS system until such time that the NRCS is satisfied that the vehicle is compliant. This process requires engagement with FMCSA. The NRCS will also identify the systems and components covered by the compulsory specification and that are, under normal working situations, subjected to elevated temperatures and ensure that they comply with the relevant compulsory specification.

Discussion

Mr D Macpherson (DA) commented on the status report on listeriosis outbreak. Members now know that for four years‚ manufacturers were aware of the hygiene risks that could lead to an outbreak of a disease like listeriosis, but resisted regulations. The claim for culpability was now moving rapidly towards manufacturers for turning a blind eye to these risks which had claimed the lives of 180 people. The Committee had to consider how it could move forward with this information. It had to be interrogated how this had been allowed to happen.

Ms S Van Schalkwyk (ANC) commented on the January 2018 backlog in the processing of LOA applications, which NRCS explained as owing to staff shortages. She asked why the NRCS could not remedy the situation by coming up with a fall-back plan such as recruiting temporary staff for the duration of the absence of said staff.  

Ms P Mantashe (ANC) expressed concern that another Ford model had caught fire recently as indicated by the NRCS. She asked whether NRCS assessments could give South Africans some assurance that they were safe at the hands of FMCSA. Her suspicion was that they could also be problems with other models from the same company.

Mr S Mbuyane (ANC) asked about NRCS mandates in terms of the NRCS Act. Was the NRCS able to detect cases of attempted fraud by applicants during the LOA approval processes? What was being done to reduce the incidence of such cases? What was NRCS doing to address the challenge of inadequate IT resources and critical skills shortage? He expressed concern that there had not been any breakthrough on the possible causes of Ford Kuga fire incidents.

The Chairperson said the Ford Kuga issue was serious. The NRCS had been asked about the issue nine months ago. What were the challenges and impediments in relation to Kuga standards? Why were the cars not all off the road? Further, she requested a full explanation for the reasons which allowed these cars to remain on South African roads. South Africa should not just accept the safety specifications of the European Union. The country should be able to say we are a sovereign country and should be looking into developing own safety regulations. These cars have been removed from the roads in United States, so why were they still being allowed into South Africa? She called on the NRCS and the National Consumer Council (NCC) to provide a written clarification on this. The Committee would establish what legal powers Parliament has to request these vehicles removed from South African roads. She noted that the final draft of the processed meat compulsory specifications was accepted during a full stakeholder meeting in 2014, but the industry argued that the operational costs for levies presented were too high, and consequently, no agreement was reached. This was absolutely shocking. What is the cost of a human life? This type of behaviour from the industry could not be tolerated. She further requested the names of the associations and/or retailers that were averse to the levies.

Mr Mamadise pointed out that the inspection of processed meat was not NRCS’ principal mandate but the Department of Health’s. The Department of Health could then choose to delegate the function. There was a process that was initiated which would have seen the function of inspecting processed meat delegated to NRCS. However, as indicated, the process could not be finalised. The stakeholders which resisted NRCS compulsory specification included manufacturers and retailers. Their names would be mentioned in a written response to the Committee. On the January application processing backlog, the review of applications was a highly specialised process and thus the NRCS was not able to recruit temporary human resources to stand in for the inspectors who were absent on leave as the training of an inspector to full competence took 24 months. The ICT modernisation project had not yet been concluded mainly because of the resignation of the Head of ICT. However, the vacancy was soon to be filled as the recruitment process had been kick-started and was expected to complete by the end of the month. Management was doing everything to manage the processes. He suggested that the Kuga questions be responded to after the NCC presentation.

Mr Bongani Khanyile, General Manager: Electro-technical, NRCS, further clarified why there were processing backlogs in January, owing to staff on leave. The work of the NRCS was highly technical and the recruitment and accreditation of evaluators is comprehensive. Therefore, the time to fill vacancies for those on leave was always a challenge. In as much as NRCS was aware that people were going on leave, the time to train stand-in personnel was not on its side. However, candidate inspectors still on training were roped in and worked under the supervision of experienced inspectors. The measures put in place had worked.

Mr Macpherson believed things had gotten slightly better than they were at the NRCS but expressed concern about its inability to process applications on time. The NRCS was always working on deficits and clearing backlogs. This was a continual cycle. He asked for an indication on the clearing times for the low and medium risk applications. The Committee wanted to assist the NRCS to fully implement the risk-based approach.

The Chairperson asked how NRCS categorised applications into the various risk categories. What measures were in place to ensure the NRCS is not abused? On staff going on leave without being replaced, there surely were lead times before people went on leave. The human resources department should work on this. 

Mr Mamadise replied there was still more that needed to be done to address backlogs. It was hoped that the processes would be accelerated. The clearing times for low and medium risk applications were 30 and 75 days respectively.  The implementation of the risk-based approach had been finalised and staff training on same was underway. He indicated that a human resource policy review and finalisation was underway, and included a framework on succession planning. This would be effected going forward.

The Chairperson said notwithstanding the verbal responses, the Committee would want written responses. NRCS’ human resource policy was a challenge which was raised by the Committee four year ago. Its review and finalisation had to be expedited.

National Consumer Commission (NCC) briefing

Mr Ebrahim Mohamed, Commissioner, NCC, said the unprecedented, spontaneous and hazardous fires that characterised the Ford Kuga 1.6 Eco-boost phenomenon invited a protracted approach. The National Consumer Commission (NCC) resorted to two inter-related processes that were undertaken by the same personnel or team of investigators on both fronts, and the said processes are: Product Recall and Investigation. The NCC prioritised the Product Recall process to arrest the phenomenon of South African consumers either losing their vehicles or, getting incinerated whilst driving them and losing their lives.   

On the Ford Kuga product recall process, Ford Motor Company of South Africa (FMCSA) had on the one hand never undertaken a Product Recall process as provided for in terms of the Consumer Protection Act. On the other hand, this was perhaps one Product Recall that the NCC has had to handle thus far, which evoked the kind of public interest that the Ford Kuga 1.6 Eco-boost one, generated. As against other Product Recalls that the NCC undertook in the ordinary course of its work, the Ford Kuga Product Recall process received close monitoring from the Executive. Over a period of eight months (from when the recall was announced in January to 23 August 2017), the NCC closely monitored the recall process and demanded fortnightly updates from FMCSA.

FMCSA divided the Product Recall process in discussions with the NCC into two phases or steps, with Phase 1 spanning the period from announcement of the Ford Kuga recall in January 2017 to the end of July 2017. That Phase of the Recall currently stood at 98% vehicles repaired as of 16 February 2018. Phase 2 of the Recall started in August 2017 and as at 16 February 2018, it stood at 89%. Besides the Engine Coolant related Product Recall, there were two additional recalls relating to the Ford Kuga that the NCC coordinated. One recall related to the Vacuum Pipe in the said vehicles and the other, related to the Lower “B” Trim Insulation which also has potential to cause fires. The Vacuum Pipe repairs stood at 83% and the Lower “B” Trim Insulation stood at 73%. All of these recalls remain open and FMCSA was providing the NCC with periodic updates. The last updates the NCC received from FMCSA was on 16 February 2018.

The Ford Kuga investigation has three broad objectives to it. The overarching objective is to establish whether FMCSA and/or Ford Motor Company USA and/or Ford in Valencia-Spain, perhaps committed “prohibited conduct” as contemplated in the Consumer Protection Act (CPA), stemming from them supplying the Ford Kuga 1.6 Eco-boost into the South African consumer market. At a more direct level, the investigation seeks to determine whether the five (5) different categories of complainants who lodged complaints with the NCC, have any recourse located in the CPA. The categories of complaints lodged with NCC range from: those specifically relating to burnt Ford Kugas; those alleging defects, other than fires; those alleging economic loss as a result of alleged drop in the value of the Ford Kugas and therefore, the trade-in or resale value; and consumers who have apprehension that their safety and lives are at stake and therefore do not wish to drive the Ford Kugas. The last category did not per se relate to Ford Kugas but rather, other Ford models that exhibited the same issues as plaguing the Ford Kugas, namely, alleged fires and defects. In respect of the last category of complaints, FMCSA and its attorneys had already raised an objection and, thereby sought to characterise the investigation as being against the entire “Ford Brand”. The NCC had however explained that it could not exercise “wilful blindness” nor turn aggrieved Ford consumers away, simply because their complaints happen to relate to models other than the Ford Kugas. Thus, Ford had been provided with those complaints to elicit their response and where applicable, to provide recourse to the consumers or update on recourse provided and report to the NCC.

Mr Mohamed said the one cloud that the NCC has had to clear relates to the Country of Origin of the four, 556 Second Generation (2012 & 2014) Ford Kuga Models. Fears and concerns in South Africa, expressed in various media platforms, were that the Ford Kuga was redirected from markets where it was recalled, and dumped in South Africa. Linked to this allegation, though also not carried in a formal complaint, was the narrative that the Ford Kugas sold in the South African market, are the same as the Ford Escape which was the model recalled in foreign markets, as a result of spontaneous fires.

Besides the specific issues raised in the different categories of complaints referred to above, the NCC was looking into the possible infringement of Consumer Rights to Safety and Quality Goods. More particularly, the NCC investigators were looking into the following additional issues: foreseeability of the fires, and unenthusiastic response from Ford compared to alleged speedy response in other jurisdictions or markets.

On status of the investigation, the final phase of interacting with FMCSA and consumers was underway and the NCC intended to wrap this up by end of March 2018.The process of drafting the Report was underway and as evidence and information was coming forth, the investigators are incorporating it into the Skeleton or Draft Report. The target date for finalising the Report and having it approved was 30 April 2018. A balance has had to be struck between the Product Recall vis-à-vis the investigation process, and acting hastily on the one hand and on the other hand, ensuring that the end-product of the investigation process will be worth the paper it is written on.

In conclusion, the bulk of the work relating to the Product Recalls and the Ford Investigation was almost complete and the investigators are tidying up the process. There is an arrangement between them and the attorneys for FMCSA that the NCC will provide them with the draft findings and recommendations prior to approval of the Final Report.

Discussion

Ms Van Schalkwyk asked if the Ford vehicles assembled in Spain took South Africa’s weather conditions into consideration. It seemed these cars were being dumped on the African continent.

Mr Mbuyane sought clarity about the allegations that some Ford Kugas which were recalled overseas went on to be allowed into South Africa. 

Ms L Theko (ANC) said she was satisfied with the work being done by NCC and urged the Committee to wait for the final report on the Ford Kuga investigations before taking a position. She wanted to know if FMCSA was cooperating with NCC investigators.

The Chairperson noted that the fear and concern in South Africa, expressed in various media platforms, was that the Ford Kuga was redirected from foreign markets where it was recalled, and dumped in the country. These were concerning and distressing allegations. Further, it was a very serious problem that there was no constructive response from NCC on these allegations, more than twelve months since the last Committee discussion on the matter. The Committee would ask the Parliamentary Legal Advisor for come up with Parliament’s legal position on the Ford Kuga matter. It would be irresponsible for Members to revert to the public with a message that Parliament had no power to stop the Ford Kuga from being driven in South Africa. How many complaints had the NCC received from Ford Kuga owners for each of the five complaints categories?

Mr Macpherson said there was no doubt that the Ford Kuga had problems, hence FMCSA had agreed to take steps to rectify them. He was not comfortable with some Members’ call for the banning of the car on the basis that there might not be enough scientific and statistical evidence to defend such a stance. The Committee had to be circumspect and a bit of cautious when dealing with such a serious issue. However, the Committee should stick to legal prescripts and available instruments for recourse.

Ms Mantashe reiterated that the Committee was more concerned about the safety of consumers; not placating industry or stakeholders. If banning the car would prevent loss of lives, then the Committee would pursue that route. There was need for concrete assurances that FMCSA products, assembled both in and out of the country, were still safe for use.

The Chairperson asked if the identified phases adequately addressed the risk of fires. In terms of the outstanding vehicles for the full product recalls, were there delays in finalising this?  What was it that could be done in the interest of consumer safety? How many complaints had the NCC received for each of the five categories of complaints? She asked NCC to prepare a submission as the Committee was going to make a follow-up.

Ms Prudence Moilwa, Divisional Head: Enforcement, NCC, assured the Committee that the investigations on Ford Kuga fires were at an advanced stage, and the findings would be presented soon. However, the NCC believed that making the sensitive information public before FMCSA was given a chance to respond would put the status of the investigations at risk. In terms of the law, a company under investigation had to be given a chance to respond before the findings are finalised. Determinations had been made and NCC had formed a view on most of the questions by Members. All the presented information would find detailed expression in the final report. She noted that negotiations with FMCSA were underway and one of the interventions agreed upon would see consumers exchange the recalled Ford Kuga for other vehicles they were comfortable with driving. The overarching objective was to address the plight of consumers. The NCC was in liaison with Ford to ensure that the company comes up with a consolidated strategy to ensure that consumer concerns are fully addressed.

Mr Mohamed said concerns about the suitability and standards of imported vehicles for the South African climate were valid and had to be looked into holistically. He reassured the Committee that the NCC report would be finalised by the end of April. The NCC had been successful in the recall process and in ensuring consumers were not being inconvenienced in the process.

Ms Theko said FMCSA would have to be present during the NCC’s next scheduled appearance before the Committee, on the first week of May. 

NCC update on Listeriosis outbreak

Mr Mohamed indicated that after the Minister of Health’s public announcement, the NCC acted swiftly upon learning who the source of the bacteria was, and ordered a product recall in terms of Section 60 of the Consumer Protection Act. Accordingly, the two identified manufacturers were issued with notifications on 4 March 2018, by the NCC. The Commission required the entities to carry out a recall programme on terms required by the Commission. The terms specified on both notices on an urgent basis were; to notify the Commission by filling in the notification attached to the guideline attached by 6 March 2018; immediate uplifting and quarantine of the products from the market; immediate notification of all trading partners; and notification to all competent authorities both local and international.

The Commission held urgent meetings with both manufacturers on 5 March 2018 and invited the Department of Health and Department of Agriculture, Forestry and Fisheries to the meetings. The purpose of the meetings were to ensure that the manufacturers understood what was required from them and why, and to agree on timelines for submission of required information and documentation. The following was agreed upon:

• Tiger brands undertook to provide the NCC by 6 March 2018, with a complete list of products that are affected by the recall. This had been done.
• Tiger Brands undertook to continuously conduct testing for Listeriosis at their manufacturing plants. This activity is ongoing.
• The NCC undertook to upon receipt, ramp up Tiger Brands’ recall and communication strategies to ensure that their measures are adequate. The Department of Health will be called upon by the NCC to assess the disposal part of the recall strategy.
• Tiger Brands undertook to provide the NCC with a list of all their export trading partners by 6 March 2018. This had been done.
• The parties agreed that the NCC will be the focal point for all correspondence to regulators. 
• The Department of Health undertook to provide Tiger Brands with a copy of its testing [NICD investigation] results by end of 5 March 2018.
• Tiger Brands undertook to provide the NCC with weekly recall progress reports.
• Tiger Brands to provide the NCC with the number of their contact centre or helpline by
  6 March 2018. This had been done
• The parties agreed that over and above the weekly progress reports Tiger Brands would provide updates to the NCC at any time when requested, to ensure that the NCC is able to apprise Minister or Parliament with up-to-date information.
• The parties agreed that Tiger Brand would directly engage with the Departments of Health and Agriculture on technical / scientific matters.  

The Tiger Brands products identified for recall in the notification as confirmed by the National Institute for Communicable Disease (NICD) are: Enterprise Polony; Enterprise Smoked Russians; and Enterprise Frankfurters. It was agreed at the meeting with the manufacturer that the recall will include all ready to eat meat products produced by enterprise foods. The NCC has received a complete list of more than 100 different products types that are affected by the recall. The RCL Foods product identified for recall in the notification as confirmed by the NICD is Rainbow Chicken Polony. The following was further agreed upon:

• RCL Foods undertook to provide the NCC with a completed recall notification as well as draft copies of all related strategies, i.e. recall strategy, communication strategy and disposal plan by Tuesday 6 March 2018
• RCL Foods undertook to provide the NCC by 6 March 2018, with a complete list of products that are affected by the recall. This had been done. RCL Foods undertook to continuously conduct testing for Listeriosis at their manufacturing plants. This activity is ongoing. The NCC undertook to upon receipt, ramp up RCL Foods’ recall and communication strategies to ensure that their measures are adequate. The Department of Health will be called upon by the NCC to assess the disposal part of the recall strategy. RCL Foods undertook to provide the NCC with a list of all their export trading partners by 6 March 2018. This had been done.
• The parties agreed that over and above the weekly progress reports RCL Foods would provide updates to the NCC at any time when requested, to ensure that the NCC is able to apprise Minister or Parliament with up-to-date information. They also agreed that RCL Foods would directly engage with the Departments of Health and Agriculture on technical / scientific matters.  

Discussion

Ms Van Schalkwyk noted that consumers had not been fully conscientised about how to discard the listeria contaminated food products. It was only days after the Minister’s announcement that consumers were told that the products may be returned to retailers. It was also not clear how the retailer would dispose of them as well. Environmental safety was paramount and should be properly communicated with the public.

The Chairperson asked if there were any other plants other than the one in Polokwane where listeria had been identified. Also, was there any substance in Tiger Brands recent comment that it was taking exception for being singled out as the only brand implicated when many other brands were or could be involved?

Ms Moilwa noted that before the Minister’s recent announcement, the Commission had been meeting together with a multi-sectorial task team of stakeholders on a regular basis since December 2017, to develop strategies to deal with the outbreak. Other than Limpopo, the bacteria was found in Wolwerhoek, Sasolburg, and in Germiston, Gauteng. However, the distribution of contaminated food products could be country-wide. Therefore, all products even those not listed were recalled as a precautionary measure. Listeria is found everywhere but the one deadly strain was the ST6, which was identified at the Limpopo plant. Tests were still ongoing in liaison with the World Health Organisation in terms of providing guidance on the disposal of the products. The general consensus was that incineration would be the best form of disposal to ensure that there was no cross-contamination. The disposal of listeria contaminated food products was a process being monitored by the Department of Health and processes emphasised the need to prevent cross-contamination. On communication strategy, the Commission had requested a communication plan and recall strategy that would reach public spaces from Tiger Brands. The NCC was also holding radio interviews to ensure that communities are kept well-informed. The Commission was making all efforts to get the message out there.

The Chairperson noted that, after concerns on the lives of people, there was the impact of the outbreak on trade. She asked for a well-informed written response on this issue. She reiterated that communications around the outbreak have been poor. This sort of message needed to be repeated again and again. More had to be done because the communities who needed to hear it may not be receiving the information. She urged NRCS and NCC to work together to establish synergies. The Committee would call the stakeholder back to hear about progress.

The meeting was adjourned.