Transkei Road Transport Corporation (TRTC) petition: Special Investigating Unit & Department of Labour hearing

NCOP Petitions and Executive Undertakings

18 April 2018
Chairperson: Mr D Ximbi (Western Cape, ANC)
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Meeting Summary

The Transkei Road Transport Corporation (TRTC) Petition dealt with the alleged failure by TRTC to pay pension monies and severance packages to former employees subsequent to its liquidation. The Special Investigating Unit (SIU) gave a briefing on the proclamation mandate of the SIU investigation, facts shown by the investigation and its outcomes, and the litigation regarding termination benefits.

The briefing noted that the SIU was mandated by Proclamation R. 2 of 2003 to investigate certain allegations of maladministration and malpractice following the liquidation of the Transkei Road Transportation Corporation (TRTC). The extent of the mandate of the SIU was set out in the schedule to the proclamation. This schedule limited the SIU's scope to: - (1) The acquisition of assets belonging to the liquidated TRTC by Umanyano Transport and the Department's involvement in this matter. (2) The transfer of assets belonging to the liquidated TRTC to Umanyano Transport and the Department's involvement in this matter. (3) The registration of motor vehicles belonging to the liquidated TRTC in the name of Umanyano Transport and the Department's involvement in this matter. However, the proclamation did not mandate any investigation into termination benefits payable to the former employees of the TRTC.

The facts shown by the investigation were that in the period following the appointment of liquidators and auctioneers to assist with the winding up of the affairs of the TRTC, a period of chaos, intimidation, harassment and lawlessness followed. The SIU found that assets and vehicles belonging to and registered in the name of the TRTC were either stolen or sold, or were irregularly registered in the name of Umanyano Transport. The assets included bus depots and busses used by TRTC. The SIU investigation restored control over some fixed property and this was sold by an auctioneer for R2 669 214, resulting in a recovery for the fiscus.

The briefing noted that a court case was lodged by the former TRTC workers against the Premier of the Eastern Cape where they claimed breach of contract and thus claimed damages. The claim by the former TRTC workers was dismissed.

The Department of Labour gave background on how the Unemployment Insurance Fund (UIF) works noting that a company needs to be registered with the Fund and also contributing to the Fund in order for the employees to benefit from the UIF. However, in the case of the 62 employees that worked for TRTC it appeared that they were not registered with the UIF and therefore could not benefit from the Fund.

Alexander Forbes, one of the stakeholders that was supposed to attend the hearing, sent an email indicating that it was unable to attend due to prior commitments, but assured the Committee it would establish the latest status on any unclaimed benefits towards the end of the week.

Members said there should be a reopening of the SIU investigation because the previous scope had been limited and some stakeholders needed to be called to come and account on the liquidation of TRTC. Members were not happy about the non-appearance of Alexander Forbes but agreed the Committee would await its response by the end of the week before the Committee makes its resolution on this matter. The Committee agreed that the forensic investigation of liquidation of TRTC should be reopened and it will consult with the Chairperson of the National Council of Provinces 

Meeting report

Ms B Engelbrecht (Gauteng, DA) said that there are no ANC Members in the meeting and therefore no quorum; they cannot continue with this hearing according to rules and regulations of Parliament.

The Chairperson said the point raised by Ms Engelbrecht is noted, but they do not need a quorum for this hearing.

Ms Engelbrecht insisted that she will contest that and make it clear that if there is no quorum the hearing is invalid.

Dr Mimi Gondwe, Content Adviser, agreed with the Chairperson that in a hearing they do not need a quorum. It should also be remembered that in the Committee's strategic planning session, they had taken a resolution that the Chairperson even on his own should go ahead with hearings for the sake of ensuring that the Committee deals with petitions if other Members are not available.

The Chairperson said the TRTC hearing today is straightforward. They have held hearings about TRTC before and heard submissions from various stakeholders, and they have also made recommendations and adopted resolutions as a as a Committee. They have referred this matter to the Select Committee on Finance, Portfolio Committee on Labour, and Standing Committee on Finances. They have also resolved that National Treasury must be part of this. The Committee gave them six months to come back to the Committee. Unfortunately, the Committee did not get any joy from these stakeholders. Members have received the TRTC hearing documents which are very clear about the TRTC employees not getting their benefits such as UIF, pension funds, and severance packages.

Now the petition has come back to the Committee, which is why they have called the current stakeholders. It should be mentioned that Alexander Forbes, which is one of the administrators of the TRTC funds, when they appeared in the first hearing indicated to the Committee that it has 440 beneficiaries who did not claim and had submitted claim forms but it was struggling to get hold of the beneficiaries who are entitled to funds.

The Chairperson said they have received a report from the Portfolio Committee on Labour but the Committee needs some assistance from the Department of Labour about the TRTC employees who did not receive UIF benefits. This is the reason for this hearing because the assistance of these various stakeholders is needed to ensure that TRTC employees get their money and the matter can be finalised for good.

Mr L Gaehler (Eastern Cape, UDM) said he would like to hand out some documents which highlight the plight of the TRTC employees which is very serious because most of the ex-workers die without receiving their pension monies and their children are struggling to go to school.

Mr S Mthimunye (Mpumalanga, ANC) asked why Alexander Forbes is not present at this hearing.

The Chairperson said Alexander Forbes had sent an email indicating that it is "unable to attend due to prior commitments", but it assured them to establish the latest status on any unclaimed benefits towards the end of this week.

Mr Gaehler said in 1994 the SIU through its office in uMthatha was mandated to collect the assets of TRTC and was involved in the selling of those assets. TRTC had various assets through the former Transkei region, buses and immovable assets. Once assets are liquidated, the first concern should be to pay the workers. What the Committee is interested in is what happened to those monies from the sale of those assets because the workers did not get anything from that.

Mr Mthimunye wondered what the Department of Labour has done about the matter.

Special Investigating Unit submission on TRTC investigation
Adv Andy Mothibi, Head: Special Investigating Unit, thanked the Committee for inviting them to be part of the hearing and to indicate what the role of the SIU was during that time. Mr Hechter led that investigation and will be able to appraise the Committee on this matter. The Committee is well aware of the SIU mandate is to investigate maladministration, corruption and malpractice matters based on a proclamation signed by the President. In this event at the time the SIU received allegations of maladministration, corruption and misappropriation in the affairs of this entity, TRTC.

Therefore, the process would be that SIU would have put together a proclamation requesting it to be signed appropriately by the President at the time, which was done, and the investigation proceeded. Part of what SIU does during its investigation is when they find there is misappropriation or maladministration, there is a need for recovery of the actual assets or the monies from them which the SIU recovers before they are lost.

The Committee will hear from his team that there was some recovery in this instance. When they recover any assets of a state institution such as TRTC, the SIU keeps the money or assets in a trust account. Once the investigation is completed and the report is submitted to the President then afterwards there will be an interaction between the state institution concerned in conjunction with the relevant Treasury so that whatever monies or assets have been recovered should appropriately be taken back to the relevant accounts, either the state institution itself or through the direction of the relevant Treasury. This proclamation was issued in 2003 for SIU to investigate, and the Committee will be apprised on what actually occurred and what SIU did.

Mr Gerhard Visagie, SIU Head: Civil Litigation, said the SIU was mandated by Proclamation R. 2 of 2003 to investigate certain allegations of maladministration and malpractice following the liquidation of the Transkei Road Transportation Corporation (TRTC). The extent of the SIU mandate was set out in the schedule to the proclamation. This schedule limited the SIU's scope to: - (1) The acquisition of assets belonging to the liquidated TRTC by Umanyano Transport and the Department's involvement in this matter. (2) The transfer of assets belonging to the liquidated TRTC to Umanyano Transport and the Department's involvement in this matter. (3) The registration of motor vehicles belonging to the liquidated TRTC in the name of Umanyano Transport and the Department's involvement in this matter. However, the proclamation did not mandate any investigation into termination benefits payable to the former employees of the TRTC.

Mr Visagie said the investigation showed that in the period following the appointment of liquidators and auctioneers to assist with the winding up of the affairs of the TRTC, a period of chaos, intimidation, harassment and lawlessness followed. The situation became so volatile that the liquidators were forced to abandon their attempts to wind up TRTC. The assets of TRTC were then vandalised or were misappropriated. An entity formed by former TRTC employees, known as Umanyano Transport, was very prominent in the misappropriation of the property of TRTC. The SIU found that assets and vehicles belonging to and registered in the name of the TRTC were either stolen or sold, or were irregularly registered in the name of Umanyano Transport. The assets affected included bus depots and busses.

Mr Visagie said the SIU investigation restored control over some fixed property and this was sold by an auctioneer for R2 669 214, resulting in a recovery for the fiscus. The SIU recovered rental due to the state to the amount of R450 000. Nine houses that were lost were recovered for the state and were sold for R600 000. The SIU obtained several eviction orders to evict non-paying tenants from the property that belonged to the TRTC. The TRTC had previously leased several depots in various towns from local municipalities. These depots were returned to the municipalities, even with some improvements. The TRTC Head Office was handed over to the Zimbane community, with the consent of the local municipality, as a large portion of it fell within their tribal lands.

Mr Visagie said it came to the attention of the SIU that the compensation due to former TRTC employees and in particular the question of a contractual obligation to assist them in finding future employment, was comprehensively dealt with in a judgment of the High Court of South Africa (Eastern Cape High Court: Bhisho) in case no. 203/2000 (Lungile Elliot Siyepu and 508 others v Premier of the Eastern Cape). It was common cause in that matter that the Premier fully complied with undertakings at the liquidation of TRTC to assist with payment of salaries over a future period, leave pay, accrued bonuses, pension payments and also the payment of severance packages. The only real question was whether the Premier was contractually bound to honour an undertaking to assist former TRTC employees to secure employment in a new transport arrangement.

The former TRTC workers claimed breach of contract and thus claimed damages (as opposed to specific performance by way of employment). The Court was left with the question of whether the undertaking by the Premier to assist with securing employment was legal and enforceable and whether this obligation was actually complied with. The Court ultimately found that there was no common intention that this clause will have a contractual effect. It found that the plaintiffs were compensated for the impact of the liquidation and could not succeed on a contractual basis to claim damages because the Premier did not find jobs for them. The Court found that the creation of new entities in the transport industry by the Premier was indicative of creating a climate to enable them to find jobs and there was no contractual obligation to create a new entity similar to TRTC. The claim by the former TRTC workers was accordingly dismissed.

Adv Mothibi said given the work the SIU did and the view the Committee has of the court judgement, of importance is that the SIU find out what became of the recovered monies and assets as that money would have been put in the trust account and would have been paid out at some point. If not, they have to do it, and submit a written report to the Committee. His colleague has committed that SIU does that within a week.

The Chairperson thanked the SIU for the information.

Mr Gaehler was happy with the scope of work the SIU had done, which is very clear now. However the court case was not based on all the TRTC workers, the entity had about 1400 workers. So, there were two groups there. Secondly, if that judgement said the workers should be paid their severance packages by the Premier there was something wrong because some of them appealed that judgement. Why would Alexander Forbes confirm that there was money for workers? Therefore, there is something wrong with that judgement.

Thirdly, errors were made in the SIU investigation about the assets, and it is a human error. In dealing with the workers, Mr Gaehler had gone to the SIU offices in uMthatha to find out about the TRTC bank account but unfortunately Mr Hechter was not there. There is a First National Bank account of TRTC in uMthatha which has an amount of about R18m in it. Therefore the SIU did not check that account. Mr Gaehler had got a copy of the records from the former TRTC financial director. So, it is quite true that some the workers were not fully paid. Some workers tried to appeal the court judgement but it cost them a lot of money to appeal.

The letter from Alexander Forbes confirmed that there is still money for the workers. And what is very important is to understand is what happened to the money from the sale of the TRTC assets, which unfortunately the SIU does have because its mandate was to investigate not to liquidate. If SIU could find out where that money is, they can then deal with the payment of the workers. There are whole lot of packages the workers did not get, and as already mentioned some of the workers died in poverty, their children are unable to go to school, and there is a whole lot of human suffering.

Mr Gaehler said SIU is not to be blamed for this since its job is to investigate, but somewhere there is a problem. He does not believe in an area like uMthatha one can sell nine houses for only R600 000 as he is from there and the SIU would agree. He does not believe one gets only R2.6m for the sale of all the depots in Transkei. This means that there should be an investigation to find out what really happened to that money, how those assets were sold so cheaply. If they read the document he submitted it shows that there are a lot of funds sitting with Alexander Forbes. Therefore, Mr Hechter cannot be blamed, but he has missed the TRTC bank account in uMthatha in his investigation, and workers got a raw deal in all of this.

Mr Mthimunye said as a new member of the Committee he is not familiar with the background of the petition, but reading from the documents circulated it seems that Alexander Forbes did not appear before the Committee and it is still not appearing at present. The recommendations of the hearing are that Treasury is to spearhead the investigation. This investigation is to include all the affected stakeholders such as the Department of Labour, the Department of Transport, and the Eastern Cape Provincial Government, and the implicated financial institutions which included FNB, PricewaterhouseCoopers and Alexander Forbes. The investigation is to entail, inter alia, an internal audit into the number of TRTC employees prior to the liquidation, the TRTC employees which received benefits, and so on.

Mr Mthimunye said he failed to understand how they would arrive at a conclusion on this matter. He noted with a serious concern that Treasury is not present at this hearing who was supposed to spearhead this. He suggested that this matter should go for a forensic investigation to determine who did what and also look at the Bisho court judgement. After the forensic investigation and evidence gathered, they need to go to court again for it to make another determination as a court order which becomes an obligation in law for the Eastern Cape Provincial Government as the successor as it has to carry all the problems this organisation left behind.

Mr Mthumunye said he does not understand why Alexander Forbes is not appearing before the Committee. If it did not pay the pensions to the workers, it must explain why it did not do so after such a long time. Maybe it has something to hide.

Ms T Wana (Eastern Cape, ANC) asked how many TRTC depots there were. She asked for clarity about TRTC freight services because there were trucks and trailers. What about the long distance freight services outside of Transkei? Was any person made accountable for this? How many banks were used by TRTC for long distance and local operations and freight services? What about the engineering services at TRTC? How many months did it take to pay the workers after the liquidation?

Mr Visagie responded that it is very important note that there is another key stakeholder that needs to appear at this hearing. That is Ernst & Young who were the actual liquidators. The Committee has noted a number of stakeholders not present that are supposed to answer to the questions posed by Members.

On the question of the money in the FNB account that that is an asset that appears immediately after liquidation so the liquidators are the ones who will be able to answer that question. The SIU got the proclamation in 2003, which is almost 8 years after the liquidation. They can only talk about what they have found and what was left by the time they got there. They know that a lot of vehicles were stripped. They have an inventory that showed the vehicles that were left at TRTC when they became involved with their investigation, and it is amazing to see the value of those vehicles, which amount to nothing because they were stripped. The question is what happened to the recovered vehicles and freight services and other huge trucks. Again it is a question that should be posed to the liquidators especially Ernst & Young. There was also a liquidator called Mr Hoff who is no longer in South Africa.

Mr Visagie replied about the depots, saying that a significant number of the depots were leased from municipalities so they did not actually belong to TRTC. Depots in IDutywa, Mount Frere, Qumbu, Ntabankulu and Bizana were not owned by TRTC but leased from the municipalities and were handed back. The one depot that was sold off through auction was the uMthatha depot which is the one referred to in the recoveries.

Mr Visagie said they are sorry they are unable to account for all the assets and what happened to them, and even the question of the FNB account. It is a question that had to be answered by the liquidators themselves.

Mr Gaehler said the depots were under the Permit to Occupy (PTO). So, it is not true that they were leased from municipalities. He agreed with Mr Mthimunye that they reopen this investigation because the mere fact that there is money in the FNB account says there were mistakes that were made. They also have to investigate those properties that were sold at a lesser price because that cannot be true. They know that the SIU was just doing its investigation but the culprits are the liquidators. In that investigation they should also locate the moneys that are with Alexander Forbes because at the end of the day the workers must be paid. It should be noted that no money was received by the workers from the Premier's Office.

Mr Mthimunye asked if the judgement delivered at Bisho was linked to the SIU investigation.

Mr Visagie replied that the Bisho court judgement was based on the case brought by TRTC workers against the Premier of the Eastern Cape. It was not part of the SIU investigation. Alexander Forbes has indicated that there is money for some workers who have not claimed it and for some reason have not come forward to claim the benefits. Therefore, it is a question of that money being held by Alexander Forbes for claimants to come forward.

Mr Mthimunye asked what role the Department of Labour played in this matter and how it has assisted.

Ms Wana agreed to the reopening of the investigation. She suggested that they should include the Financial Services Board in this investigation because they were dealing with lot of money here. There was even an allocation for TRTC from the EC Provincial Legislature before the entity was liquidated. Secondly, the Department of Labour should give them a report because this is an exploitation of workers.

Department of Labour comments on TRTC workers
Mr Teboho Maruping, Unemployment Insurance Fund (UIF) Commissioner: Department of Labour, explained how the UIF functions. The key element is firstly they need the company to register. Secondly, the company must declare its employees on a monthly basis. The company must also collect its contributions from the employees and pay them to the UIF. Once that has been done, upon the need arising for UIF to process claims, claimants will come to the Department of Labour to make claims as per defined rules, which is six months of UIF payments for an application whether for maternity, death or any other situation.

Mr Maruping said they have checked the 62 employees from TRTC to make sure they were on their records or the company was registered with the UIF and contributing to the Fund. Their records reflect that the company was not registered, not declaring employees and not contributing. That being the case it meant that they do not have funds that spoke to the workers in question as there was no money contributed to the UIF for the workers in question. Therefore, the UIF is unable to process any claim for these workers because the workers did not meet the rules. They have also gone through the list of the 62 claimants one by one and none of the claimants' claims were processed with TRTC. Claims they have processed were for claimants that worked for other companies after they left TRTC.

Mr Maruping said that with regard to disputes, CCMA processes in the Labour Department are triggered by the people concerned. For example, if workers have a complaint that they want to raise, it triggers that complaint by the workers going to the CCMA, and CCMA has to process that matter within 30 days. However, it does not work the other way round. The CCMA does not go to the people concerned. The CCMA has to be advised by stakeholders otherwise that could constitute interference. He said that provident and pension funds are not within the scope of the Department of Labour.

Ms Engelbrecht thanked the SIU for reporting back to the Committee. She asked if the SIU was able to pick up any irregularities during its investigation that the Committee should be aware of.

Mr Gerhard Visagie, SIU Head: Civil Litigation, said in terms of consequence management, several criminal cases were opened but whenever people had to be arrested there was unrest in the area, and none of the cases went further. No disciplinary action of any official was taken as far as he is aware. As commented by Members, the SIU is a creature of statute. It can only operate with the four corners of its empowering Act. It gets its mandate from the President, reports to the President, and can only do what the President tells it to do. The mandate of the SIU investigation deals only with the assets of TRTC. So, it only relates to that limited area. They could not look at freight and other areas that were not linked to Umanyano Transport because in other towns outside uMthatha there were other entities that were created in the transport space that took over transportation functions.

Mr Visagie said he has a mandate from his head that should there be specific issues the Committee wants them to look at again the Committee can put that in writing and they will have to approach the President for a new mandate to do that because this matter is closed. However, SIU expresses its willingness to support the Committee to deal with any follow up taking into account the difficulty that this happened over 20 years ago.

Mr Heinrich Hechter, SIU Manager, said the Committee should be aware of the actual liquidators will be able to answer about irregularities. There was lot of intimidation of the auctioneers and liquidators, pointing of firearms and theft of the assets. Mr Young formed an integral part of the liquidation and will be able to explain to the Committee exactly what happened back then at TRTC, especially the groups that were formed by the workers themselves like Umanyano, Masibambane and the other groups. Also the Department of Transport officials should be called to hear from them what happened back then after liquidation and those are the people that could shed light on what happened to those assets.

The Chairperson appreciated the explanations from the SIU and the Department of Labour and released them from the meeting so that the Committee could make a resolution on the hearing. He requested the Department of Transport to make a submission in writing since there was not enough time for it to present to the Committee at that moment.

Ms Engelbrecht said she wanted to lodge a serious objection. They did not have a quorum and the Chairperson allowed the hearing to continue. However, now the Committee has to make a resolution based on the hearing with Members who were not present from the beginning of the hearing. The questions that some Members asked had been covered by the SIU before the late Members came in. They are embarrassing themselves. How can they make a resolution when some Members were not present when all the briefing was provided.

The Chairperson said they should understand that they are in a meeting and the meeting is still ongoing. They requested only the stakeholders to leave so that the Committee could take a resolution. They need to take this issue forward
Mr G Michalakis (Free State, DA) said a few weeks ago this Committee took the resolution that they will deal with petitions that fell within their jurisdiction. For the sake of the petitioners, they will refer those petitions that strictly do not fall within their jurisdiction to the correct place because it is in the best interests of those petitioners. He proposed that they refer this petition to a body that is best equipped to solve this petition, and bring this petition in line with the resolution they took few weeks ago.

Ms Engelbrecht agreed with Mr Michalakis. She referred to what the SIU presented this morning that there was a court case in the Eastern Cape High Court in Bisho. It found that the Premier fully complied with the undertakings of the TRTC liquidation to assist with payments of salaries for future period, accrued bonuses, pension payments and severance packages. This matter has been dealt with comprehensively legally by those who had the jurisdiction to do that. The Committee could not get into something that has been dealt with. There is prima facia evidence and decisions have been made. They need to refer to that court case and to stick that as a Committee.

Mr Gaehler said he differed with his colleagues because when the petition first came before the Committee they were aware that there was a court case and they took that petition knowing there was a court case. A copy of the court judgement was given to the Committee back then. Secondly, what they have agreed on is finalising this petition. Therefore, they cannot dump the work they have been doing because this was work in progress when they took that resolution. They need to finalise the TRTC petition, which is where they are at now. It is only a section of the workers that went to court, the majority of workers did not go to court. And the resolution of that court case was not implemented and SIU is agreeing with them on that.

Therefore, they need to find a way forward. He suggested that they have a forensic investigation as already suggested by Ms Wana because there are some monies they need to be accounted for which should have been accounted for when the TRTC was liquidated. They are asking the SIU to reopen the investigation so that those monies can be accounted for. Secondly, the Constitutional and Legal Services Office in Parliament should look at that court case because there seems to be flaws. Lastly, there are monies of workers lying at Alexander Forbes, and the question is why these monies were kept for over 20 years. They need to request the Financial Services Board to investigate these monies and finalise this petition.

The Chairperson said Members agreed that the petition should be referred back to the SIU for a new investigation.

Mr Michalikis requested that a timeframe be put on the investigation so the Committee can finalise the petition and assist the poor community.

Ms Engelbrecht suggested that they convene next week in light of the letter from Alexander Forbes so that it responds about the monies it has at its disposal - indicating how much has not been claimed and why it has not been claimed. This will assist the Committee in making a decision.

Mr Mthimunye said the behaviour of Alexander Forbes leaves much to be desired. The forensic investigation into this matter is urgently required and the Premier's Office in the Eastern Cape should commission this investigation.

The Chairperson said they need to sit with the legal adviser and consult with the Chairperson of the National Council of National Provinces (NCOP) for a new mandate on the reopening of the forensic investigation. He thanked Members for their participation in this hearing.

The meeting adjourned.

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