SABS administration; National Credit Amendment Bill: outstanding clauses

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Trade and Industry

29 August 2018
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Portfolio Committee met with the recently appointed Administrators of the South African Bureau of Standards (SABS) for a briefing on the current state of affairs at SABS. The Committee then completed the clause-by-clause reading of the National Credit Amendment Act.

The Minister of Trade and Industry had appointed three senior officials at the Department of Trade and Industry as Co-Administrators of the South African Bureau of Standards following the dismissal of the SABS board. The Administrators were working at developing a turnaround strategy but their work had been hampered by various legal processes as the former SABS board members had filed for a court order against them and the Minister. Various other legal and investigative processes were also underway.

Together with the SABS executive management, the Administrators were undertaking a diagnostic analysis of SABS. The immediate interventions included resolving outstanding certificates and permits, while the decision to stop partial testing was being reviewed. Current challenges impacting SABS included the long turnaround times for testing samples; lack of facilities to test against some standards referenced in compulsory specifications; and limited capacity of some laboratories to perform certain tests.

The investigation into the testing certificate handed to Eskom following the testing of Tegeta Mines coal was not yet complete. The Minister had ordered a forensic investigation but that had been delayed, firstly, as a result of the former board legal challenge and then because Eskom believed that the forensic auditors had a conflict of interest. There had been discussions between the Ministers of Trade and Industry and Finance and the Administrators were hopeful that the investigation would soon be completed. Due processes could then be followed.

Before questions could be posed discussion, the Committee discussed the parliamentary and legal positions in respect of questioning the Administrators about the legal processes.

Members asked for the full details of the court applications by the former SABS board members. Why did it take so long for DTI and the Minister to act on the matter? Had any criminal charges been laid against board members or the CFO? Why had a turn-around strategy not been received by the Committee to date? Why had 108 employees approached the CCMA? Members understood the need for stability and continuity but asked how efficient was it to fill executive positions with people who were already holding full-time jobs. SABS needed R1.6 billion for recapitalisation – had Treasury been approached? How was SABS going to find the funds and what would happen if the money was not forthcoming?

Members said SABS processes were a concern. How sure was SABS that the certificates they were handing out were not tainted? SABS had talked about partial testing – how sure was SABS of the test results? What type of complaints had SABS received and what measures had SABS put into place to address them?

Committee Members engaged in discussion on the responsibility of the Committee, or individuals in the Committee, for the state of affairs as a result of some Members not having supported an earlier proposal to dismiss the board. Certain Members queried whether the Committee was effective in undertaking its mandate of oversight and holding the various entities to account. Certain Members felt that DTI was failing in its oversight function. The Committee agreed to a further briefing when the turnaround strategy was available and some of the investigations had been completed.

The Committee addressed the two outstanding clauses in the National Credit Amendment Bill. Changes to the Bill had given Magistrates the power to reduce the rate of interest on debt but the Committee had been required to ensure that the interest on secured debt could not be reduced to a zero rate of interest in the debt review process. Amendments were made to Clause 12 and Clause 29 which made it clear that the rate of interest for secured debt could not be reduced below the repurchase rate of the South African Reserve Bank plus the applicable percentage indicated in the industry guidelines.

The clauses were approved without objections or amendments. The Committee would meet the following week to vote on the adoption of the Bill.

Meeting report

South African Bureau of Standards (SABS): Administrators’ report
Ms Jodi Scholtz, Chief Operational Officer at the Department of Trade and Industry (DTI), was one of three Co-Administrators at SABS. She was accompanied by Mr Garth Strachan, DDG: Industrial Development Division at DTI, a Co-Administrator acting as CEO at SABS. The third Co-Administrator was the Chief Director for Technical Infrastructure Institutions, Dr Tshenge Demana.

Ms Scholtz stated that the Minister of Trade and Industry had placed SABS under administration on 2 July 2018. The Co-Administrators, together with the SABS executive management were undertaking a diagnostic analysis of SABS. The immediate interventions included resolving outstanding certificates and permits while the decision to stop partial testing was being reviewed.

Current challenges impacting SABS included the long turn-around times for testing samples; the lack of facilities to test against some standards referenced in compulsory specifications; and limited capacity of some laboratories to perform certain tests.

Ms Scholtz spoke about the involvement of SABS in the alleged false certificate for a coal test for the Tegeta/Brakfontein mine. Minister Rob Davies had issued an instruction to the then SABS board to carry out a forensic investigation into the matter. The forensic investigation had been delayed because Eskom contended that the auditors had a conflict of interest arising from the fact that the company was the external auditor for Eskom. The Ministers for Trade and Industry and Public Enterprise were addressing this.

Discussion
The Chairperson appreciated that SABS was beginning to return to its core business.

Ms C Theko (ANC) found it difficult to engage in a report that was sub-judice. She asked that she be called to order if she overstepped the mark. She was pleased to see progress at SABS and the intervention by the Minister was welcomed. The Committee had heard that there had been stakeholder complaints. What type of complaints were they and what measures had SABS put into place to address them? She was concerned about management operations. She understood the need for stability and continuity but how efficient was it to fill executive positions with people who were already holding full-time jobs at DTI?

Mr D Macpherson (DA) told Ms Scholtz that Parliamentary Rule 89 said only that no Member may reflect on a court of law while a judicial decision was pending. He, therefore, required that the full details of the court applications by the former SABS board members be made available to the Committee. He welcomed the appointment of Mr Strachan, whom he knew as a good and honest man who would bring an important change in culture at SABS. Why did it take so long for the DTI and the Minister to act on the matter? It had been in the public domain for some time and the current events were a response to his parliamentary question on the bad state that SABS was in at the time. How did a MP have more grip on what was going on, than a Department did? It was on the basis of his questions that investigations had started. Had any criminal charges been laid against any of the Board or the CFO? Why had a turn-around strategy not been received to date? 108 managers had approached the CCMA – was the matter too be settled at the CCMA or outside of the CCMA?

The Chairperson asked Members not to hand over their questions to another Member.

Mr Macpherson asked the Chairperson to give a ruling on Rule 89. ‘Sub judice’ did not prevent Members from discussing matters in court, just not pending decisions. Unless a judicial decision was pending, Members were not precluded from reflecting on the case-related issues. She would know that the Speaker had ruled on the matter, and that Members had been allowed to discuss matters before the courts in the House. He asked her to reaffirm that ruling and allow the Committee to discuss matters before the court. Mr Macpherson asked the Chairperson to rule on the matter.

The Chairperson acknowledged her role as a member of humanity and subject to error. However, she worked from latest Rule Book, which was what she was required to do. In the latest edition, Ninth Edition, it said under Matters Sub-Judice 89, no members may reflect on matters in a court of law on which a judicial decision was pending. If questions asked were covered by that rule, they could be answered, but nothing that was pending. She did not want any further engagement on the matter and confirmed that she was going to follow that rule until she saw anything in writing to the contrary.

Mr S Mbuyane (ANC) said that the matter was sub judice. The meeting was talking about forensic investigation and disbandment of the board and the appointment of the Co-Administrators but if one spoke of a forensic investigation, the outcome of that forensic investigation was yet to come. Members had been told that there was an interim board. He did not understand what was happening and needed clarity. The forensic investigation was about a SABS certificate but the presentation stated “outstanding certificates were being handed out”. How sure are they that the outstanding certificates were not part tainted? Also, SABS had talked about partial testing. How sure were they of the testing results?

Mr D Mahlobo (ANC) welcomed the presentation but the investigation was not getting the urgency that it deserved. At the previous engagement, Members had indicated that the investigation had already taken longer than it deserved. He suggested that matters such as a conflict of interest required a legal opinion, not the Minister. A legal opinion would lay the matter to rest. The Executive did not have time to deal with this. Since the SABS certificate for Tegeta coal had impacted on other, bigger issues, he asked if SABS had approached law enforcement agencies. The matter had been in the public eye. An action plan was required and the Committee was pleased to know that they were stabilizing what threatened to harm the reputation of SABS. Those were good interventions.

Mr B Radebe (ANC) said that SABS had come to report too soon. The turnaround strategy had to be based on an investigation. Any strategy would be incomplete without an official record on what had transpired. He was interested in the Administrators. They were all very good and could turn SABS around. He saw that there were vacancies and he wondered if there was any way to use highly qualified graduates who would not be a drain on finances. Nevertheless, it was very early days and he wanted the team to report back early next year.

Mr J Esterhuizen (IFP) said that Mr Koko, former Acting Head of Eskom, had indicated that Brakfontein Mines coal had been given a ‘clean bill of health’. However, it had taken so long to be investigated. That was a problem.

The Chairperson stated that Ms Scholtz would answer the questions but the Committee had asked for the team to return with a strategy framework. Although SABS could put out a “few planks”, that was not the strategy and the Committee would have to re-engage with them at a later stage.

Mr Macpherson had to bring Rule 89 to the Chairperson’s attention before Ms Scholtz responded. It was important. According to the 2004 Guide to Procedure, the Chairperson had to impose the Rule in such a way as to apply a minimum obstacle to debate. Members should be allowed to discuss a matter before a court, although not the merits of that matter. He asked for a ruling that Ms Scholtz could discuss the nature of the criminal case so that Members could proceed. If she ruled against that, he asked for a parliamentary legal Advisor to provide an opinion.

The Chairperson repeated that no Member might reflect on the merits of a court case – nothing more and nothing less. She appealed to Members to listen to the ruling: the merits, nothing more or less.

Mr Radebe appreciated what she was saying but the records of the meeting would be public and evidence provided in the Committee could no longer be used in a court of law. Committee Members should not pressurise SABS officials because they should not jeopardize the case. They should have an option to answer; it should not hamper their case in court.

The Chairperson informed Mr Radebe that the matter had come up in the Steinhoff matter and they would hear more about it from the legal advisors at the next meeting and all Committee Members had to attend. Members could raise the issues but not the merits. She was not going to comment on whether Mr Radebe was correct or not.

Mr G Cachalia (DA) reminded the Chairperson of a precedent set in the Public Enterprises Committee when Minister Brown had been forced to answer on matters that were sub judice and that matter had been related to the SABS matter.

The Chairperson thanked Mr Cachalia. She had indicated that the matters had to be addressed as openly as possible. Also, the Committee would be returning to the matter. The meeting was just for an interim report. The Committee would be allocating two and a half hours when a fuller report was available. There was only one and a half hours available. Probably, if Members were going to tackle everything, three hours was needed. The meeting was just for an early understanding.

Ms Scholtz informed Ms Theko that the major complaints were about the time it took SABS to test. This would also be referenced in the Annual Report. There were two SABS positions that had been re-distributed: Corporate Services and Enterprise Development. Ian Plaatjies had been acting as the Chief Digital Officer and he had held the Corporate Services position previously. The Executive team felt that he would be a capable caretaker. At a General Management level, most posts were filled which meant it was about general oversight. A similar situation applied to the Enterprise Development post. The general and senior managers were competent and that gave the team comfort.

Ms Scholtz informed Mr Macpherson that the basis of the court process was questioning the appointment of board. Her team would be filing opposing documents the following week, which would mean that the documents would then be public and she could send copies to the Members. The Minister of Trade and Industry had appointed herself, Garth Strachan, Shabeer Khan, the DTI CFO, and a number of her DTI colleagues to be on a task team looking into SABS, its core mandate and various legislation, etc. The Minister had consistently been working on the SABS challenges. The take-over of the administration had come as a result of that previous work and from the reports provided to the Minister.

SABS had not yet received the final forensic report and so no charges had been laid as yet. Once the Administrators had the report and had consulted with the Minister, the matter would be addressed. The question of the 108 SABS employees who had gone to the CCMA would be addressed by Ian Plaatjies. She thanked Mr Mahlobo for his comments which she would take as inputs. The team would return and present their plans for a turnaround strategy. They had a plan but details were still coming up and the plan was being revised. She was aware that the industry associations were quite hungry for the intervention. She thanked Mr Radebe for his comments. They were trying for stability in steering the ship whilst being aware of the financial situation but they would be exploring all options.

Mr Garth Strachan admitted that there was an unacceptable delay in the forensic report but the Minister had requested an independent forensic investigation team. The then board had agreed to a forensic investigation but it had obviously involved a procurement process. Ultimately SizweNtsalubaGobodo (SNG) had been approved as forensic auditors, and they had begun their investigation. However, Eskom had stated that because SNG was the external auditor of Eskom, there could be conflict of interest. SNG had responded that its auditing and forensic units were completely separate business units and so there was no conflict of interest. The Administrators had raised the matter with the Minister of Trade and Industry who had engaged with the Minister of Public Enterprises, the shareholder of Eskom. The conflict of interest concerns were being resolved and the investigation should be completed in due course. Interviews still had to be completed with Eskom employees. A National Treasury Report had since been issued so there had to be an engagement with Treasury. Mr Strachan admitted that the process had taken too long but the Administrators were being careful not to make legal mistakes to jeopardise the investigation.

Mr Ian Plaatjies confirmed that 108 managers had approached the CCMA in connection with the paying out of bonuses in 2016/17, the de-linking of salaries to the performance of the organisation and an increase of the bonuses. Those issues had been addressed and resolved. There were a few managers left that had additional and unreasonable demands. SABS would be defending the case the following day and would not be settling outside of the CCMA as SABS had a very high prospect of success.

In terms of the validity of current certificates and the Eskom certificate, they were two completely different matters. The Eskom matter had been a test report issued following a test of the Tegeta coal. The permits that had expired was a different process and involved a very rigorous process. SABS was re-sampling before re-issuing certificates.

Ms Scholtz told Mr Mbuyane that the forensic investigation was a separate matter to the board matter. The board matter was about performance and the understanding of the mandate in relation to performance. It was also a matter going to court but was separate from the legal inquiry into the testing that had come about as a result of the Eskom Inquiry.

The Chairperson asked if SABS would be re-testing everything. She was concerned about the integrity of the SABS certificate.

Mr Plaatjies responded that the issue was about partial testing. SABS was reviewing that practice and would come back with a response but SABS would act in the interest of the public and stakeholders, as well as the industry.

Mr Macpherson noted that the board had been removed as a result of its lack of performance over time. However, performance, or lack thereof, happened over a period of time. Sometimes it was a gradual decline and sometimes it was a steep decline. Why had it taken the Minister so long to act if SABS had been declining for so long? It mirrored a pattern that he had seen across a number of entities, including the National Gambling Board (NGB), National Regulator for Compulsory Specifications (NRCS) and now SABS, over the past four years. It pointed to a big oversight problem in DTI. What measurements were being put in place so that performance failures were picked up and dealt with? SABS required R1.6 billion for recapitalisation. What interactions were taking place with National Treasury to secure the funding? Could the entity function without recapitalisation?

Mr Macpherson reminded the Chairperson that at the last interaction with SABS, he had put it to the Committee to support the Minister’s decision to dismiss the board but the Committee had rejected that and had not wanted to support the Minister’s position. The Committee had been slow in its parliamentary responsibility of oversight of entities. He was disappointed at the brief time the Committee had that day with SABS as Members could only get a snapshot of the situation. It allowed those things to happen in the entities. It should be a lesson for Committee. The Committee should support the decisions of the Minister and not reject his decisions. The Committee needed to get its teeth into the entities. The SABS issue had happened over months and the Committee really needed to examine its approach.

The Chairperson informed Mr Macpherson that she had allowed him the full one and a half minutes because it was an important matter. She reminded him of the individual MP’s oversight which was a constitutional obligation, as well as that of the Committee’s. The Committee’s oversight had been raised well before the NGB matter. The Committee was calling on the Auditor-General more and more about performance. The Committee had asked the Auditor General what should alert an MP, who was not a forensic expert, to performance challenges and, together, they had tried to draw up a list so that when the Auditor-General Report came to the Committee, Members should see an orange or yellow light long before it became red. It did point to oversight that was not as effective as it should be.

The Committee had an obligation but every MP also had an obligation to know when to ask the critical questions. The Committee was engaged in a post-mortem, and had been doing so six months earlier. The Committee wanted to get in before a post-mortem in future. No one would disagree with that.

Mr Esterhuizen said that Mr Strachan was on record as saying that that policy coherence and alignment was a constraint in government and he agreed 100%. The time factor was a concern. The problem had occurred in August 2016 and it was now August 2018. The coal test had resulted in Mr Singh, former Eskom CFO, signing a guarantee of R1.68 billion to Tegeta Mine. There were enormous consequences for SABS and that had happened when the entity did not act according to its mandate.

Mr Mbuyane was partially covered by the responses but his challenge was that that it was too early for SABS to have answers to the questions. SABS should have terms of reference and a turnaround strategy. The Committee could not get a response vis-à-vis those forensic investigations and the challenges that were to be investigated. He supported Mr Radebe’s call to give SABS more time to deal with the issues and then to make a presentation. MPs wanted to challenge SABS but there were a lot of issues. He needed clarity on the presentation. The Minister and SABS seemed to be conflicted on the situation. The Committee should get both together in a meeting so that the Committee could get the full story.

Mr Radebe wanted to give assurance to the Chairperson that she had run the Committee very well. The Committee could not be conflated with the Executive. The Committee could not accept anything that came from the Executive willy-nilly. At the previous meeting, there had not been a letter about SABS. The Committee had taken the right decision and the Chairperson was running the Committee very well.

Mr Mahlobo said there were certain things that the Committee should do. The Committee should welcome the fact that there had been an intervention in SABS by the Executive on governance. There was a Board and a team of Co-Administrators. That was progress. The Committee had not resolved to interfere with the decision of the Minister. It was just a statement to suggest that the DA was more interested in the matter than the ANC but their own Minister from the ANC had intervened. Interventions had been made when there were systems failures. The team was capable but there had not been much time since July. The outstanding matter was a detailed, operational turnaround plan. They could see the elements of the plan were there but detail was needed. The Committee needed to be guided on how much time to give them.

There were grave concerns. The testing of Tegeta coal had caused public concern. However, it had been delayed because procurement took a long time. The dispute was a legal matter and the Administrators should get a legal opinion. Other matters were being investigated by law enforcement agencies. Had the test certificate been reported to law enforcement agencies? There was some perceived criminality in that matter. The Human Resource matters had been attended to. The last issue to be noted was that the last meeting was ugly between the previous team and the administration of DTI. People had had documents and it had become a quasi-investigation. The Committee should ask the Minister to keep the Committee abreast of developments about those who had taken the Minister to court because there had seemed to be an issue with the document and the court had to adjudicate the matter. What was a reasonable period for the team to return so the Committee could perform its oversight duties?

Mr Cachalia thought that there was a degree of frustration that needed to be put right. Mr Mahlobo had said that Members should acknowledge and appreciate intervention. It had to be acknowledged and understood that the intervention had been tardy in spite of the very relevant questions the DA had repeatedly asked. When the Minister had taken action, Mr Cachalia had put forward a proposal to support the Minister’s action but the ANC had chosen not to support the motion. That had to be acknowledged. Those two facts stood in contradiction and that had to be understood.

The Chairperson reminded all Members of the Committee that the Minister was obliged to keep the Chairperson abreast of such actions. She had not received the letter from Minister to keep her updated at that time and she was not about to say that she had received it. She had an obligation as an MP to act responsibly and within Parliament Rules and the Constitution. She knew that Members would like to have a stronger and deeper engagement. Members had been deeply disappointed that an entity that had been a star for ten years, had fallen. But how was it that such a star had fallen? The Committee had learnt a lot but had to move on.

The Chairperson stated that the Members did want SABS to return to the Committee for a longer meeting, but Members had also wanted an interim report to find out whether the haemorrhaging of good governance had been stopped. What was happening right now? How much time was needed for a report on turnaround strategies and progress in the investigations?

Ms Scholtz appreciated the comments from the Portfolio Committee. She reiterated that the Co-Administrators had been seized with a number of legal challenges. The SABS former board had also been directors on the board of SABS Commercial. They had been appointed in terms of the Companies Act. The SABS board had had a shareholder meeting on Monday 27 August 2018 and had taken steps to remove those directors from SABS Commercial. A number of steps had been taken. There had been meetings with the executive team to address the “burning platforms”.

On DTI oversight of its entities, Ms Scholtz responded that DTI had a governance framework in place and which guided the actions of the Minister and senior DTI officials. Minister Davis had deployed finance people to the audit risk committees in the entities to get an early warning system on some of the burning platforms and challenges. Minister Davies met with the Auditor General quarterly to look at the entire portfolio and all the concerns were raised in those meetings. The Minister then called the responsible people to account.

When the forensic report was presented, the team would engage with it and follow due process. There had been no engagements with Treasury as yet. The team was still in the process of trying to understand the exact amount and then to divide it into short, medium and long-term strategies. SABS had already engaged with the DTI CFO. The Minister had been clear in his terms of reference. The Administrators had been instructed to do the diagnostics and then develop a turnaround strategy by 31 January 2019. Ms Scholtz added that it might take longer.

Mr Strachan noted that departmental officials often found themselves in a difficult position but he had to say that he supported the remarks of Mr Macpherson and Mr Cachalia. He agreed that urgency had to be a watchword. The Minister had been seized with the SABS issue and there had been an ongoing process. There were key moments, such as when accreditation had been withdrawn by the South African National Accreditation System (SANAS), when the Minister had engaged. Academic, legal and policy experts had been invited to address the problems at SABS. The third key moment was when the Minister had requested the board for a turn-around strategy and the Minister had not accepted the board’s strategy. The Minister had driven a process that had taken time but had built a credible process. One had to fix what was broken and not change what was not broken.

Finding R1.6 billion was the wrong way of approaching the matter of recapitalisation. Operational issues had to funded but one could not just throw money at the problem. Fortunately, the SABS management and staff were capable. He was looking at an incremental deployment of funds as SABS had a public mandate as well as a commercial mandate where it competed with other private commercial players. It was a complicated situation and required a carefully calibrated approach. Once the forensic report had been compiled, it would go to the Minister and then DTI would refer the matter to the appropriate law enforcement agency.

He added that the Administrators had reviewed the leadership structure and created an interim organisational executive. They had identified the resolution of outstanding customer certificates as a priority task. Good progress was being made following the implementation of an optimised ICT system.

Dr Tshenge Demana remarked that the SABS matter had been a long process. In November 2016, the Minister had met with the board to discuss some of the difficulties related to the Standards Act but that had not helped because the board had not implemented the processes as agreed. He reiterated that it had been a long engagement.

The Chairperson stated that the next meeting date would be arranged between them but she would like the relevant documents as soon as possible. She thanked the SABS Administrators for introducing themselves in their other hats and looked forward to their next presentation.

National Credit Amendment Bill: two outstanding clauses
Dr Masotja, DTI DDG for Consumer and Corporate Regulation, noted the two clauses that had not been approved the previous day, Clauses 12 and 29. She read what the technical team had prepared as Adv van der Merwe was working on a Bill in another Portfolio Committee.

Clause 12
12(b) – The technical team had to look at secured and unsecured loans. There had been a discussion the previous day on linking the interest rate to the repo rate, preferably without using the word ‘repo’. The technical team had two suggestions for Clause 12.

The team suggested the deletion of the reference to the maximum ‘may be zero’ as that was addressed in Clause 29 and the deletion would allow for a differentiation to be made between secured and unsecured debt. Secondly, it proposed adding ‘as prescribed’ to link the clause to the regulations that would be made under Clause 29 (Section 171). The Magistrate would be required to follow the prescripts in the regulations which had to reflect the Task Team Agreement Guidelines. The regulations would differentiate the minimum percentage on secured and unsecured debt and would require the Magistrate to first apply incremental reductions. The DDG read the new version of Clause 12(b).

Ms Theko noted that the clause referred to ‘the maximum interest’. It had been decided the previous day to refer to the ‘maximum rate of interest’.

The Chairperson agreed that ‘rate of’ should be added. The technical team had agreed to create consistency.

The DDG re-read the final version of Clause 12(b) as follows:
…the following subparagraph: ‘(ccA) determining, as prescribed, the maximum rate of interest, fees or other charges, excluding charges contemplated in section 101(1)(e), under a credit agreement for such a period as the Magistrates’ Court deems fair and reasonable but not exceeding the period contemplated in section 86A(d); or’

Mr A Williams (ANC) asked why the technical team had removed the phrase ‘maximum may be zero’ from the clause. It said ‘may’, not ‘must’ and so should be left in.

The Chairperson explained to Mr Williams that Clause 12 had to be read in conjunction with Clause 29.

Ms Theko wanted legal advice on the sentence because what was printed was different from the instruction given to the technical team the previous day.

The Chairperson stated that she was satisfied as the team had clarified that the words ‘rate of’ had been omitted in error but that the words had been put back in the clause.

Mr Mahlobo agreed that the two clauses had to be taken together. He suggested that Clauses 12 and 29 be read together so Members could determine if they were covered.

The Chairperson reassured all Members that even those in technical team who were not physically in the room were within verbal reach and would indicate if there was a problem with the clauses.

The DDG assured Committee Members that Clauses 12 and 29 were the result of collaboration between the Parliamentary Legal Advisor, National Treasury, DTI and its entities.

Clause 29
The wording in Clause 29 had been aligned with the Judicial Matters Amendment Act 2015 for ‘repurchase’ and the South African Reserve Bank. A consequential amendment had been made, i.e. a reference to section 87(1A)(b)(ii)(dd) because the power of the Tribunal had previously been separately housed in section 86. The team had removed as much discretion as possible for the Magistrate and Tribunal as well as for the Minister in determining the content of the guideline. Finally, the clause provided for a differentiation of secured and unsecured debt where a Magistrate was considering the matter.

The DDG read the revised Clause 29:
(bB)(i) must make regulations relating to orders that can be made by the Magistrate’s Court and the Tribunal in sections 86(7)(c)(ii)(ccA) and 87(1A)(b)(ii)(dd); and
…(ii)(bb) replicate the requirements set out in the industry guidelines issued by the National Credit Regulator under the Debt Review Task Team Agreements, 2010;
(cc) clearly distinguish between the reduction of interest rate that may be determined by a Magistrate for unsecured debt, which reduction may be to zero, and the reduction in interest rate for secured debt, which reduction may not result in the rate being less than the repurchase rate plus such percentage as indicated in this regard in the industry guidelines contemplated in paragraph (bb), where the repurchase rate is the interest rate set by the Monetary Policy Committee of the South African Reserve Bank as its policy rate and reflects the rate at which commercial banks borrow rands from it as the central bank of the Republic of South Africa, thereby serving as benchmark for bank lending in the market; and
(dd) require the Magistrate’s Court and Tribunal to first apply incremental and proportional reduction when the maximum interest, fees or other charges are considered; and…’

The Chairperson believed the Committee’s requirements had been effectively captured.

Ms Theko identified an inconsistency at the end of Clause 29(dd) where the wording was ‘maximum interest’ instead of ‘maximum rate of interest’ as in Clause 12.

The DDG agreed with Ms Theko and added ‘as maximum rate of interest’ in (dd)

The Chairperson thanked Ms Theko for spotting that point.

Mr Mahlobo formally moved that Clauses 12 and 29 be approved.

Clause 12 was approved by the Committee.

Clause 29 was approved by the Committee.

The Chairperson stated that the clause-by-clause reading was completed. The Committee had another meeting so she would address the amendment to the Memorandum the following week.

The Secretary noted that the clause-by-clause reading had been completed so Adv van der Merwe could submit the Bill to the Joint Tagging Mechanism (JTM) together with the certificate from Legal Services confirming that the Bill was constitutional. The Committee would be able to adopt the Bill on 4 September 2018 as well as the Committee Report on the Bill.

Mr Macpherson noted that a minority report should be added to the Committee Report on the Bill.

The Secretary agreed but stated that it would have to be approved by the Committee.

Closing remarks
Mr Williams thanked Adv van der Merwe who had done an exceptional job on the Bill. It would never have been completed without her assistance.

Mr Mahlobo said that he had come late to the Committee but the Chairperson and the secretariat had steered the Committee well. He thanked DTI and rest of the technical team. He urged them to keep up the good work which had improved as the Bill had progressed. He thanked the former the Chairperson of the Subcommittee, Mr Williams.

Mr Macpherson informed the Secretary that the Committee could not “decide” whether to adopt a minority report. The Committee could not reject the minority report. However, the wording could be adapted if the comments were not an accurate reflection. Could the draft be sent to Members before 4 September 2018?

The Secretary agreed to send the report with the Bill.

The Chairperson informed the meeting that minority comments would be reflected but their accuracy had to be agreed to by the Committee. She thanked the Director General who had come in halfway through the meeting. She appreciated the NCR CEO for walking the process and for her contributions. She thanked all Members for their hard work, especially the ANC and the DA who had been at the meetings almost all of the time. She noted that Mr Alberts (FF+) and Mr Esterhuizen (IFP) had been there at critical times. The Chairperson extended her gratitude to the Committee staff.

The Committee Secretary explained that once the amendments had been inserted in the Bill, it would go to Creda Printers which printed the Bill. When it was returned, the Committee staff would proof read it and would submit a corrected version to Members on either Friday 31 August, or Monday 3 September.

The meeting was adjourned.

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