The Portfolio Committee on Small Business Development heard briefings from Vodacom, Ericsson, Mobax and also Huawei, Telkom and Digiwire Technology. These briefings were follow-ups from previous meetings and included the matters relating to Neela Trading and Mobile Diesel Power Systems (MDPS). The issues related to big business that subcontracted management services and the problems that arose consequent to the engagement between the management service and the small businesses. The Committee was angered by the way in which big business seemed to treat small businesses and had no qualms in seeing small businesses forced to close down. The Committee queried whether big businesses adhered to the laws of the country in respect of the implementation of government policies and transformation.
The Chief Executive Officers of the corporate businesses had not been invited to brief the Committee, but the people responsible for equity management and management relations because they had a better understanding of government policies and how businesses should implement economic transformation. However, Committee Members had some issues with the Vodacom representatives in terms of what decisions they were empowered to take. The representatives of Vodacom focused on Vodacom’s relationship with Mobax because, although Mobax had outsourced to Neela, Vodacom’s relationship was with Mobax. Mobax had started as a white-only company but currently was 51% black-owned company with 38% black female ownership. Neela was responsible for three areas in KwaZulu-Natal and provided for 1 400 sites.
The representatives from Vodacom had met with first Mobax and then Neela to understand their perspectives. There had been a lot of emotion to be dealt with and they had to determine whether various statements that had been made were factual or emotively driven. The success of those meetings had led to Vodacom being able to facilitate a dialogue between Neela and Mobax on 26 and 27 February 2019 and the two parties had reached an agreement. Vodacom had provided free legal services to avoid additional costs for the two small businesses. Vodacom would hold regular workshops with all its SMMEs to discuss and solve grievances of small businesses, as well as other mutually important issues.
During discussions there were allegations of particular named persons in Vodacom and subcontracted management services that were creating enormous problems with small businesses. The Committee warned that if Vodacom did not deal with bad apples within the company who spoke their mind, Vodacom would find itself in boiling water and the name of Vodacom would be tainted.
A further matter was the relationship between Ericsson, a former management contractor to Vodacom, and Mobile Diesel Power Systems, a small business. Mobile Diesel Power Systems provided an emotionally charged presentation explaining that it had worked for Vodacom since 2002 and prior to that had worked for a company that had subcontracted to Vodacom. However, a falsified report and systems failures within Vodacom and Ericsson had led to the termination of the contract held by Mobile Diesel Power Systems, leaving the owner with massive debt and, apparently owing to certain managers, an inability to obtain new contracts. The owners had been unemployed for 22 months and still owed money to banks for equipment that they could not use.
The Chairperson revealed that the Committee was in possession of proof of racism practices by Vodacom against black SMMEs by paying them far less for the same work done by white-owned SMMEs. Vodacom came under heavy criticism for allowing its subcontractor, Ericsson to resort to arbitration with Mobile Diesel Power Systems which Members described as a bullying tactic against small businesses and a strategy aimed at “shutting up” Parliament from raising the matter.
In terms of Huawei, which was contracted to Telkom for management services, and Digiwire Technology, the Committee wanted an explanation for Huawei’s delay in paying invoices and issuing clearance certificates to Digiwire Technology. Digiwire provided a complex explanation of issues relating to her business relationship with Huawei and claimed to have evidence that Huawei was not Black Economic Empowerment qualified and had failed in multiple other ways to comply with the laws of the country. She also claimed to have information that Telkom had acted in contravention of certain laws and had taken her case to several Ministers, Heads of departments and was considering approaching the Zondo Commission.
The Committee instructed Huawei to resolve the matter by 9 April 2019 and to issue the Committee with a report.
The corporates were reminded that they had a responsibility to assist small businesses and not to resist transformation which worked against government policies and the laws of South Africa.
The engagement with Enel Green Power and ‘My Clan Name is African’ was cancelled after Enel Green Power sent late apologies for being unable to attend the meeting. Owing to time constraints, the Committee postponed its deliberation of the Legacy Report.
The Chairperson welcomed all entities and informed the Committee that Vodacom, Telkom, Ericsson and Huawei would brief the Committee on their progress reports on matters with their specific contracts with SMMEs. There was still an arbitration case between Ericsson and Mobile Diesel Power Systems (MDPS). Vodacom’s facilitation of contracts had resulted in a conflict between Neela and MDPS.
Mr H Kruger (DA) asked to add Mobile Diesel Power Systems to the discussion with Vodacom as there was also a dispute between Vodacom and Mobile Diesel Power Systems (MDPS). The agenda suggested the MDPS matter was related to Ericsson.
The Chairperson explained that a challenge had arisen when Vodacom had outsourced supervision of SMMEs (Small, Medium and Micro Enterprises) to Ericsson. She hoped that Vodacom would explain why that function had been outsourced and the problem that had arisen when Vodacom had contracted Ericsson to oversee the work by smaller contractors that were actually approved Vodacom service providers. The companies were already working for Vodacom, when Ericsson was contracted. When Ericsson exited, it was replaced by Mobax and a challenge arose as MDPS had not been part of the group of approved Vodacom service providers.
Then there was also the issue of Telkom and Huawei and Digiwire and the Committee would require Telkom as the owner of the contract to brief it on what was done by Huawei, what their policies were and what services they provided in terms of Digiwire.
She said that it was not the CEOs of the corporate businesses that had been invited to brief the Committee, but the people responsible for equity management and management relations had been invited because they had a better understanding of government policies and how businesses should implement economic transformation.
Discussion with Vodacom prior to presentation
Mr Themba Kinana, the Executive for Public Policy, Stakeholder Engagement and Corporate Affairs at Vodacom, thanked the Chairperson and the Committee for the opportunity to explain Vodacom’s position in relation to SMMEs.
Mr H Kruger (DA) asked Mr Kinana if he had a mandate from the Vodacom board to take decisions at that day’s meeting or whether he had to take issues back to the board. Was he a decision-maker or was he just a spokesperson?
Mr Kinana said that he and Ms Lynda Marthinus, Executive Head: Black Empowerment Enterprise at Vodacom had a mandate to conclude on matters which related to SMMEs as discussed at the meeting. He would provide context. In the previous meeting, the CEO had decided to form a committee to close matters relating to SMMEs and he was on that committee and was mandated to make decisions at the meeting, but it obviously depended on the issues. It was probable that he and Ms Marthinus would be able to resolve all the issues that day but he could not pre-empt what might arise.
Mr Kruger tabled his concern because there had been a lot of negotiations before by the Deputy Minister and himself and Themba Kinana and a lot of solutions had been discussed but when he had discussed those issues with Mr Andries Delport, Chief Technology Officer, Mr Delport had not been aware of any mandate given to Mr Kinana by Vodacom and that Mr Kinana had been acting on his own.
Mr X Mabasa (ANC) asked if the question of a mandate could be discussed later to avoid any embarrassment for Mr Kinana. The Chairperson could take care of Mr Kruger’s concerns and involve the Committee.
The Chairperson explained that the responsibility of the stakeholder management was to educate companies on how to implement government policies and transformation. How the CEO over-ruled that person was at the discretion of the CEO which determined the relationship the company wanted to have with Parliament. The CEO was focussed on internal issues but the company was part of the country and only a company against transformation would reject the recommendations made by a representative who had engaged with the Portfolio Committee. The same applied to the Minister in deciding whether to accept or reject the advice of the Committee: it was her choice but people could take her to court or to the Constitutional Court or the Public Protector. Parliament was mandated to see that policies and the laws of the country were adhered to by companies and citizens. Policies of companies could not be in conflict with the laws.
The Chairperson added that if the company decided to reject the decisions of that African man (Mr Kinana), the Committee could not change the company. The country, and Parliament, could decide how to deal with such a company and one of the things that could be done was to take punitive action and take away their licence because the company was not adhering to the policies of the country. People in decision-making positions did not look at the mandate of the person and some people also used salary to reject recommendations. For example, a Minister received a bigger salary and thought she could decide, but a Minister reported to Parliament.
The Chairperson stated that companies came to Parliament because they adhered to the laws of the country. People like Themba Kinana managed the relationship between the company and Parliament because they understood the laws. It depended on whether CEOs appreciated that or did not want to appreciate that.
Mr Kinana put it on record that he had met with the Deputy Minister and Mr Kruger and he had done his best in that meeting but he was not aware of what Andries Delport had said to Mr Kruger. He would take it up from his side and give the Committee an update on the matter. What he did know was that the CEO had formed a coordinating committee of two members to deal with the matter and those two members were Themba Kinana and Lynda Marthinus. In a meeting that he had attended, Mr Andries Delport had been told that those two people would deal with the matter and close the matter. Mr Kinana and Ms Marthinus had spoken to Mr Delport the previous day and he had not raised the matter. They would take it with a good heart and ensure that they came back to the Committee with the facts.
Mr Kinana apologised for the fact that the CEO was not in attendance as they had taken a facilitated approach. It should not be viewed as undermining Parliament. None of the senior managers were in attendance as he wanted the two members of the Committee to deal with the matter and close it. He did not want differing angles impeding progress in the matter. The two companies, Mobax and Neela would testify to the neutrality of the process and how decisions had been taken, up to the point where they were able to table a progress report.
Mr Kinana thanked the Committee, including the Chairperson, for being frank and honest with him and Ms Marthinus, and being harsh as that had had taught them so many lessons. At the beginning, everyone had held stances that were very far apart, but as a result of the Chairperson’s hard approach, meetings that had been held in Pietermaritzburg and in Parliament had been productive and the progress report was a credit to the Chairperson and Committee. He recognised that there was a long way to go but he was grateful for the support and guidance.
Presentation by Vodacom
Mr Kinana and Ms Lynda Marthinus would make the presentation, focusing on Vodacom’s relationship with Mobax because, although Mobax had outsourced to Neela, Vodacom’s relationship was with Mobax. The presentation would focus on progress made by Vodacom in dealing with the situation as it had decided to work with both parties to consolidate trust. The contract agreement would benefit both parties. The briefing would show the steps taken to address the matter to date. Identified gaps had been addressed.
He added that Mobax, which was in the meeting and could critique him, had started as a white-only company but currently was 51% black-owned company with 38% black female ownership. Neela was responsible for three areas in KwaZulu-Natal and provided for 1 400 sites. Neela was also present.
Ms Marthinus assured the Committee that a letter giving them a mandate had been issued to the group Chief Technology Officer (Mr Delport) at Vodacom.
The Chairperson said that she had written a letter to the CEO of Vodacom and asked Mr Kinana to clarify who the CEO of Vodacom was.
Ms Marthinus confirmed that a letter had been received by Mr Shameel Joosub, CEO of Vodacom, seeking his attendance at Parliament.
The Chairperson wished to confirm that she had sent the letter to the Group CEO and not to Mr Delport.
Ms Marthinus stated that at the time the matter relating to Ericsson and SMMEs had arisen, she had been on holiday in Cape Town and had been summoned to an urgent meeting on the matter. The Group CEO, Mr Joosub, asked her and Mr Kinana, to reach an amicable solution. The roles of Ms Marthinus and Mr Kinana within Vodacom left them independent of the business being handled and Ms Marthinus had recommended that she and Mr Kinana handle the matter as neutral employees of Vodacom. That position had been accepted by all members of Vodacom Executive, including Mr Delport and the Group CEO, Mr Joosub. It was important that the context be laid down so that she and Mr Kinana not be seen as a black mouthpiece of Vodacom but as people with authority as a result of their particular portfolios.
Ms Marthinus continued her presentation to the Committee which dealt with Vodacom’s relationship with Mobax, Neela Trading, and Vodacom’s role in the development of SMMEs, a progress report on its relationship with Neela Trading and the way forward with SMMEs. She said that she and Mr Kinana had met with Mobax and then with Neela to understand their perspectives. There was a lot of emotion to be dealt with and they had to determine whether various statements that had been made were factual or emotively driven. The success of those meetings had led to Vodacom being able to facilitate a dialogue between Neela and Mobax on 26 and 27 February 2019 and the two parties had reached an agreement. Vodacom had provided free legal services to avoid additional costs for the SMME.
Mr Kinana said that a workshop with SMMEs would be held soon to discuss and solve grievances of the affected small businesses. He added that the Committee would be given a full report on the workshop within seven days of it taking place. He reminded that Committee that, in the meetings to resolve the issues, he and Ms Marthinus had acted as facilitators and had never represented Vodacom.
Mr Kinana added that Vodacom had decided that it would hold an annual summit with 250 SMMEs that were doing business with Vodacom.
Ms Marthinus said issues which would be discussed at the workshop would include invoicing, operations, health and safety and contracting. The health and safety issues raised ,such as driving without seatbelts etc. were not only Vodacom health and safety regulations, but national and provincial law. The workshop would also look at ways to solve disputes between Vodacom and small businesses without the involvement of other parties.
Mr Kinana added that the Committee would be invited to participate and to explain how Vodacom could work in a better way with SMMEs. The SMMEs would be given the opportunity to air their views and concerns. That was what the Committee had inspired Vodacom to do.
Presentation by Neela Trading
Neela Trading stated that the facilitators, Mr Kinana and Ms Marthinus, had met with Neela Trading. Neela Trading thanked the Committee for its intervention and, especially, the Chairperson for her tireless efforts.
The Chairperson asked Mobax to make a presentation.
Presentation by Mobax
Mobax thanked the facilitators, Mr Kinana and Ms Marthinus, for their independence and for the way in which they had structured the sessions with Mobax and with Neela. Mobax was looking forward to the workshop at the end of the week and looked forward to working together in a beautiful country (South Africa).
Mr Kruger asked for clarity from Vodacom about their policy. If he were a contractor for Vodacom and Vodacom sub-contracted the same activities to a third party, what would happen to him if there was an agreement that he would do some work for Vodacom. As his contract was with Vodacom, he understood that Vodacom would honour its contract with him. Secondly, Mobax took over from Ericsson. So, as he understood the situation, Vodacom had contracted Ericsson and when Ericsson withdrew from the contract, Vodacom had contracted Mobax, so where did the subcontractor stand in terms of who would honour the contract?
Mr R Chance (DA) said the disputes between the corporate businesses and SMMEs was due to a lack of communication. Suitable solutions that were mutually beneficial should be found. Without the intervention of the Committee, the problem would still be in existence. The summit was a very good idea. He assumed that the amount of executive time spent on the contract was disproportionate as it was a relatively small contract for a billion Rand enterprise. Vodacom’s presentation showed lessons had been learned that could be applied across Vodacom’s supply chain and in its relationship with all its subcontractors, including those in the supply chain.
He suggested that the Committee should raise the matter at the Sixth Parliament to encourage big corporates to take small businesses seriously and treat their supply relationships as important. It was important to develop good relationships with suppliers and not to squeeze them for big business to earn bigger profits. Capacity building within small businesses was critical for the country’s economy. He said there was a need for a greater supply chain of small businesses, not only to supply big businesses in the country, but also to export their services.
He suggested that Vodacom should take heed of proceedings at the Committee meeting for further discussions at the proposed workshop that it would be holding with SMMEs, and to document the method of dealing with such issues. A contract of relationship, as discussed with all parties, should be developed and a method found to resolve problems before the parties entered into an ugly situation in which, in most cases, the victims would be the small businesses.
Mr Chance said small businesses were not in a position to challenge big corporates as they operated on tight budgets and did not have the necessary cash flow or capacity to seek legal advice. He applauded Vodacom’s offering of legal services to resolve the matter as enlightening and hoped that the workshop would also solve the problems. He added that partners who entered into a contract to benefit commercially should not see it as a boxing match to knock one another out. If Vodacom could approach it from such a perspective then a win-win situation could be achieved.
Mr S Bekwa (ANC) said when the disputes of SMMEs with Vodacom had arisen, Members had had difficulty in understanding the issue at first, but with the guidance and leadership from the Chairperson, Members had a better understanding. He said one could understand the frustration that Neela Trading had gone through as they had to run a business at a big loss. He was pleased that Vodacom had taken responsibility to solve the matter with Neela as Vodacom had subcontracted to Mobax who then outsourced to Neela. He said there were many other small businesses who failed owing to the same challenges, and what the SMMEs had gone through was a lesson to all departments. He also thanked the Chairperson for her guidance and said the matter would definitely be raised in the Sixth Parliament.
The Chairperson reminded everyone that it was very important to understand where the country was coming from and where it was going to. The country had policies called Black Empowerment and one had to ask oneself what had informed the policy. The policy was informed by the fact that Blacks were the original people of the country and all others had come either to colonise Blacks and or came as slaves. The owners of Neela’s were descendants of slaves who had been brought to work in the sugar cane fields. For Neela to be where it was, was to be commended. Neela did not have the advantages of Mobax in 2002. The original owners of Mobax were not part of the oppressed and exploited people in South Africa.
The Chairperson stated that that was the political, economic and social environment that people in the country lived in. She did not want to use the harsh term of racism in business but that was what it was when Mobax failed to appreciate that Neela was owned by people who came to South Africa as slaves which was why Neela qualified for the BEE policy. The people who started Mobax came from a background that was painful to the people who were sitting there and the people who were running the country. Vodacom and Mobax had been educated. If people did not want to be reminded of the sins of the past, they had to adhere to transformation and if they did not understand, they should allow themselves to be educated.
The Chairperson noted that Mobax had been working with Neela for over a year without having a contract, which was unprofessional. If anyone had been killed servicing a generator, that person would have had to be compensated. Neela would have had to pay the compensation, but it would have not had a leg to stand on to claim that compensation from Mobax as there was no contract.
The Chairperson recalled that Vodacom had said that its policy was to pay within 14 days and it was working to reducing that. A contractor to Vodacom had to adhere to that policy but Mobax sat with invoices for more than two months. Mobax Had failed to pay Neela’s invoices for January or February and it was already March. She added that Mobax had no right to bulldoze and bully Neela when Mobax was violating the policies of Vodacom and the country. She appreciated the fact that Vodacom had changed its mind. Vodacom had taken responsibility for the contract and no longer said that it was Ericsson’s problem.
Response by Vodacom
Ms Marthinus appreciated the comments made by Mr Chance around the recognition of Vodacom’s journey. Unfortunately, there were silos in a big corporate such as Vodacom, but the one lesson that Vodacom had learnt was that when one was too close to something, one did not see the impact of one’s actions. Sometimes it took someone from outside to point out those things. It had been a learning curve. She was called the bulldog because she kept fighting and never let go and one thing that she had learnt in her role and her mandate was that one should look back and look at the impact on the corporate and the country. She thanked Mr Chance for his comments.
Ms Marthinus responded to Mr Kruger’s comments. To put it in context, Vodacom had a parent group, Vodafone, which put it in a global ops-based business and with the global as well as local recession had driven companies to look at cost efficiency and a company would evaluate whether it was cost efficient to put everything into one basket. For that reason, outsourcing of certain functions to a management institution had become practice. What happened when a contract moved over to e.g. Mobax, the suppliers that were on a direct contract, were moved over for the duration of that period. If a supplier had a contract for a five-year contract and a management firm was contracted after two years, that supplier served the rest of the contract period under the new management entity. After the expiration of that contract, then the contract had to be re-negotiated. A contract was not just about pricing; it was about health and safety, log-in evidence, and even about invoicing requirements. Obviously, that meant that invoices moved back and forth. Moving to a management company was sometimes not of mutual benefit so it was a constant pendulum that entities followed, locally and globally, but normally that was the practice.
Mr Kinana told Mr Kruger that, as Ms Marthinus had said, Vodacom was constantly evaluating all the models and the exercise allowed Vodacom to do the necessary introspection. He added that the Chairperson had been continually asking the question and Vodacom had not answered the question. Vodacom was working with Neela but had brought Mobax on board. Even in writing the report, Vodacom would be stating that that was the model but it would ask whether the model was working as it should.
Mr Kinana informed Mr Chance that the summit was a result of the Committee pushing Vodacom and he should thank the Committee, not Vodacom. It was only because the Committee had pushed Vodacom , that it did introspection. Even MDPS would be considered because Vodacom had worked with MDPS and could well work with the company again. The Committee had wanted to hear all the SMMEs. Vodacom had met with the lady in QwaQwa and had worked on her issues but she had come back to say that not all the problems had been resolved. He and Ms Marthinus was working on the issues on a daily basis but they could not work on over 200 at one go so Vodacom was creating an office to deal with SMMEs. Not everyone appreciated the value but, thanks to Neela, they were all there dealing with the issues.
He also thanked Mr Bekwa because it was his Committee that had got them to where they were. Sometimes one had to humble oneself and when they had all sat down in Pietermaritzburg, they had all faced the situation.
Mr Kinana informed the Chairperson that Vodacom would be looking specifically at invoicing. He asked for time to go and deal with all the issues. He assured her that Mobax was in a different space from where it had been three months earlier. He said he and the bulldog (Ms Marthinus) had also moved out of their comfort zone, as had the Group CEO.
Ms Marthinus asked if she could inform the Committee of the changes made to the invoicing periods and payment days. Early payment days for SMMEs were down to one day of invoice. During the 2018/19 financial year which ended 31 March 2019, Vodacom had already paid over R800 million to SMMEs. Obviously, the next step was to get it flowing down to the other entities that Vodacom worked with, but one had to be mindful of the cashflow of other entities. The Small Business Act required payment to any SMME within 15 days that qualified as an SMME.
The Chairperson asked how Mobax would be penalised for not paying Neela within 15 days.
Ms Marthinus replied that Vodacom’s understanding was that there were issues that related to the invoices.
The Chairperson stated that they did not want to go back to those issues. If Neela was being paid by Vodacom, they would have solved the issues. Neela had been working for Vodacom for ten years and Mobax was a new company that had only been there one year. There were policies for paying. So who lacked the capacity between Neela and Mobax? She was not saying that Vodacom should respond there but it had to see the issues as the Committee saw them. On the issue of cashflow, Ms Marthinus did not have to speak on behalf of Mobax as that was its issue. If the company had applied to manage the contract, knowing that companies that were contracted had to be paid within a period of time, it was Mobax’s issue to pay the companies within the required period of time. It did not become Neela’s issue. It was not the issue of Parliament or the policies of the country. By failing to do so, Mobax was violating the policies of the country.
Vodacom should not to treat Mobax with kid gloves as it would put egg on Vodacom’s face. Vodacom had to be as strict with Mobax as Parliament was with Vodacom.
The Chairperson noted that it was tricky to deal with an issue that had gone to arbitration. Nevertheless, she said when Ericsson took over as contractor, Neela had not received work for seven months which had put the company in severe difficulties. Neela had continued working for Vodacom on direct contract. She reminded Ericsson that Parliament had taken a decision that Neela Trading would not be compensated for the loss they suffered, but that their scope of work should be expanded by giving them public maintenance work. It had not happened. When the matter had been discussed in Pietermaritzburg, Ericsson had said that it had not been part of the contract between Neela and Vodacom. Prior to that arrangement, Ericsson had refused to act on what had been agreed between Neela Trading and Vodacom.
That brought her to the question asked by Mr Kruger: If he were a contractor to Vodacom and Vodacom sub-contracted the same activities to a new third party brought in to manage on behalf of Vodacom, was that third party bound by the original contract? Ericsson kept saying that it was not bound by that contract, and that included Mobile Business Supplies. A new contract had been negotiated by Ericsson with Vodacom. That was not what Vodacom had said to Mr Kruger, who was a Member of the Portfolio Committee.
The Chairperson noted that Vodacom had said that a company contracted to manage on its behalf, was bound by the policy of Vodacom, and also Vodacom was bound by the contract that had been signed before Vodacom outsourced the management part.
The third question was whether Vodacom outsourced to a company for it to take some of the work from the small businesses that it found there in order to increase its scope of work. If Neela was deploying generators and then Mobax was sub-contracted to manage Neela, could Mobax come in and deploy generators themselves? That meant that they were taking the work of the small businesses that they were supposed to be managing.
The fourth question was why, when Vodacom was outsourcing, there was a particular rate of pay, but when Vodacom outsourced to a company to manage on behalf of Vodacom, the company came with new rates that were below the rates paid directly by Vodacom. It did not make sense to her. Vodacom had said that it was doing what was being done globally but it was reducing the “slice” of smaller companies by bringing in a service provider to manage administration on Vodacom’s behalf. Those service providers were also profit-driven and to gain a bigger slice, they would squeeze bigger profits from the businesses below them.
The Chairperson was not expecting a response at that moment, but those were things that Vodacom would have to address because from the Committee’s perspective, the middleman always took from the subcontractor and not from Vodacom.
Ms Marthinus asked the Chairperson if it would please the Committee if Vodacom provided a written response to the questions put, and if that was in order, could Vodacom be granted a seven-day period to respond?
The Chairperson said that the response should include why, if certain work was done by Mr King, Vodacom would pay King R2 500 for the job and for the same job done by Ruth she would get paid R500 for it. What made the difference? Was it the colour of her skin? Why was it expensive when done by King but not when done by Ruth? Was that not racism in business? She wanted to be specific. She had all the information about what was paid to white-owned SMMEs and to black-owned SMMEs and there was a was a difference in the rates.
Mr Kinana stated that if the proposal by Ms Marthinus was acceptable, Vodacom would supply the responses. As he had said, when Vodacom had discussions with the Chairperson, it learnt every day. It should not be personal. He would go back and consider the points that she had made. He agreed with Mr Chance that Vodacom should provide a report on its engagement with the SMMEs but he would also include responses to the specific issues. He stated that during the meeting in Durban when Mobax and Neela came together, the CEO of Mobax and the Chairman, ‘Uncle George’, had exchanged words. It was clear that the businesses had been longing to speak with each other but because of the way that they were working and because they did not trust one another, they had not spoken. But, in that meeting, they had spoken as adults and found one another.
Mr Kinana said that they would also add the issue of pricing to the agenda. The workshop would be held in Gauteng so that if any of the Vodacom executives were needed to explain something, that person could be called immediately and the issues could be cleared up. He appreciated the candour of the Chairperson. The issues that she had raised would be included in the workshop. It was better to deal with the issues than just to paint the wall that was cracked. Vodacom would create a business case that others in South Africa could utilise. It was wrong for the practices of the past to determine how people related to one another. It could not be. Once he and Ms Marthinus had found the element of racism, they could work on it. He had heard that there were elements of racism in Vodacom that viewed Neela in a particular way. He and Ms Marthinus were working on that.
The Chairperson stated that she would add her two cents’ worth.
Mr Kinana stated that he had not wanted to go into that detail because he did not want to scare Mr Kruger who had been looking at him as if to ask whether he knew that colleagues in Vodacom viewed Neela as “two cents or five cents”. Those were the issues that they were dealing with. To be honest, it had been painful. Even when Mr Kruger referred to Andries’ (Delport) concerns, he and Ms Marthinus had had to push back because Andries could not use his position to determine how Vodacom should relate to SMMEs. He could not. He was aware of what Mr Kruger was raising but he had wanted to rise above it and ask what it was that South Africa wished to see in respect of how SMMEs related to big business. That was an agenda. He was not concerned with what might relate to him within Vodacom. What mattered to him was what they could get something out of it the process and be proud of what the Committee and he, as a South African, could achieve that would mean that all the big businesses saw their relationships with SMMEs in a different light.
Mr Kinana would go to the workshop with everything that the Chairperson had raised and with Ms Marthinus who was working on reducing the number of days before payment - that was work in progress. They would work on a business model with a trickledown effect. The issue was about presenting a report that everyone could be proud of, even if it was not perfect, but which everyone could engage with. He was honest in saying that there had been resistance in Vodacom and he and his colleague had been asked why they were wasting their time on Mobax and Neela as if they had no other work to do. He and Ms Marthinus were doing it for the good of the country. Even he had called her in Cape Town when she was on holiday, he had told her that, birthday or no birthday, there was work to be done.
Mr Kinana thanked the Chairperson because she had been harsh in order to make them resolve the matter. One day his Executive, Steven Barnwell, had wanted to cry in a meeting because he thought that the Chairperson was being personal, but Mr Kinana had asked for an adjournment and had explained to Steven that that was just the way politicians talked because they were getting pressure from their constituencies.
He confirmed that he would send the report to the Committee within seven days.
The Chairperson stated that the only pain that she lived with from having served as Chairperson of the Portfolio Committee was that one company that had worked for Vodacom for many years, Mobile Diesel Supplies, was out of business as a result of the restructuring by Vodacom and the outsourcing of management to Ericsson and the relationship between Ericsson and Mobile Diesel Supply was not managed well and that had resulted in Mobile Diesel Supply going out of business. That was the pain that she would walk away with. She had sat down with Mobile Diesel Supply and Heidi (Heidi-Anne Thuynsma) had cried because they had been unable to afford medical expenses for the parent that they were looking after. That was the pain she would carry for the rest of her life.
The Chairperson had written a very harsh letter Vodacom Group CEO. Everyone should know where the Committee came from. She found it unacceptable for Mobax to give Mobile Diesel ten days’ notice of the termination of a contract which put the company in a situation where it had to deal with the banks that had financed all the cars that MDPS had acquired and where it had to deal with all its employees within those ten days before the contract ended. She added that Mobile Diesel had worked for ten years for Vodacom before Mobax took over from Ericsson. Mobax had had no experience in the business. If Mobile Diesel had not been providing a good service, the contract would have been ended long before. Mobax did not have the contract – it was a Vodacom contract and Vodacom had started Mobile Diesel when it had had no experience. Mobax had just come into the space. Management of relationships was very important.
The Chairperson added that the Committee had been responsible for protecting small businesses but that small business had closed down. She might not be around when arbitration was completed but she was exiting the Fifth Parliament with pain.
Mr Kruger stated that, unfortunately, he was going to give Mr Kinana another pain. Mobax was willing to give the company that was just talked about work, but Mr Delport had refused to allow Mobax give them work. That was totally unacceptable. That was the second pain. The company sitting behind him wanted to restore its dignity but one person had refused to allow Mobax to give them work. That could not be. That was not acceptable. The fact that reports had been changed to discredit that company and to leave it in the state that it was, was unbelievable and it was not acceptable that a company that had tried to discredit a small business was still working in South Africa.
Mr Kruger said that they had talked about the situation at a meeting in Durban last year, and Members of the Committee had advised Ericsson not to use bully tactics.
The Chairperson called on Vodacom to be honest and to deal the “bad apples”. She said Ericsson’s behaviour was a result of certain managers within Vodacom who were racist and who did not understand the policies of South Africa. Those people were still in Vodacom and the company was not doing anything about it. Vodacom’s subcontractors had employed a former Vodacom employee who had been bullying small businesses. She added that the same person had been employed by Ericsson to lead the contractors and he now worked for Mobax and was known as Mr Praveen Maharaj and the other people were Sunil Maharaj, Barnwell and Delport. If Vodacom was prepared to sit with those people, they would not get anywhere. Vodacom could have good policies but unless Vodacom dealt with those people, even the next Portfolio Committee would deal with those matters.
The Chairperson asked how (Mr) Delport could say to Mr Kruger that he did not care and that the negotiations would never happen. It was like the Deputy President standing up in Parliament and saying that he was stating the views of Cabinet and he did not care what the Minister of Finance had said. Nevertheless, the government would only be judged on issues agreed upon and pronounced by Cabinet. If Vodacom did not deal with bad apples within the company who spoke their minds, Vodacom would find itself in boiling water and the name of Vodacom would be tainted.
Mr Kruger asked that it be put on record that Delport had never spoken directly to him. He had heard about it from another source. He did not want to give Delport a back door. He added that Mobile Diesel’s problems had started when an employee had asked the owner for a loan of R500 000 but he had turned down the request from the employee and then the bad journey of false reports had started.
Ms Marthinus informed the Chairperson that she could not speak on any of the matters raised, emotional as it was and she had to keep herself in check and she had to take the matters to her executives immediately after the Committee meeting. She was not sure whether anyone was aware of the fact that a meeting held on 19 December 2018 had triggered an email between MDPS attorneys and Vodacom’s litigation process. The request was that the matter be heard in the Durban High Court and Vodacom had agreed, saying that it was more than willing to go in albeit the litigation process was between MDPS and Ericsson. Vodacom was being called into it because the arbitration process had not worked because arbitration had excluded Vodacom. The only way to have all the parties speaking to the point was through the litigation process. On 14 January 2019, Vodacom had sent an email asking for the date of litigation. Vodacom was still waiting for a summons to be served on it. That was where the situation stood at present.
The Chairperson said that what Ms Marthinus had explained, actually put small business against the wall. Everything being discussed put on the table the environment in which small businesses operated. The litigation process required lawyers, and for a small business which had been closed for two years, it would mean selling one’s house for legal fees. She said that it was a lesson for Parliament and the Department of Small Business Development to focus on issues affecting small businesses and how to protect them. She said the Committee had an Ombud Bill but the Committee had felt it had been too early to process it. She said that the Committee would note the challenges faced by small businesses in its Legacy Report for the Sixth Parliament. Parliament and the Department had a responsibility to create a conducive environment for SMMEs and cooperatives to operate in and to provide the 11 million new jobs targeted for 2030.
Mr Chance said that one of the provisions of the Bill was to enter into the alternate dispute process without either side bringing lawyers into the process. He hoped that the Sixth Parliament would give the Bill top priority and pass legislation which that Committee had had an opportunity to pass, but had not passed. It would assist small businesses to receive better assistance.
The Chairperson said that she did not want to get into the politics of the situation but informed Mr Chance that the Committee had never rejected the Bill on the basis that it was not needed, but the policy was premature because there were other matters which had needed to be addressed properly before Parliament could get into the Bill.
Mr Kruger said that he had done his own research. Vodacom’s efficiency rate was between 97% - 99% when it had had contractors but it had dropped to 80% after Vodacom had outsourced the administration contracts. He said that the people who were affected the most were the poor people whose calls were dropped. Phone calls made by people in Kokstad, for example, dropped to 70% owing to no signal. Kruger said it was mainly the poor people who suffered, and children who wanted to do homework on their parents’ cell phones but were unable to reach the internet services as there was no signal. That situation had started when Vodacom had outsourced its management work.
The meeting was adjourned for a tea break.
Ericsson and MDPS
Ms Marthinus briefed the Committee on Vodacom’s position on the arbitration between Ericsson and MDPS. Vodacom had been excluded from the arbitration since there had been no contractual relationships between Vodacom and the parties. Vodacom had not had a contract with MDPS at the time when Ericsson embarked on arbitration with MDPS. However, Vodacom had agreed to purchase generators that it no longer used from MDPS at a market-related price, and payment to MDPS had been effected at the end of December 2018.
Ms Marthinus added that the attorneys of MDPS had realised that the only way to bring in all three parties was via the courts. Vodacom had agreed to appear in the Durban court but counsel had informed Vodacom that counsel was only available after mid-January 2019. To date, Vodacom had not received a summons. Her understanding was that MDPS was favourable towards a court process but no summons had been issued to date.
Mr Kinana said that, when Ericsson entered into arbitration with MDPS, he had thought it best to remove himself, as had Vodacom. Everyone had agreed with the position. The Committee had been informed of that stance. In December, Peet (Thuynsma) from MDPS had called to say that Vodacom had not yet made a payment and he had facilitated that payment. He had dropped everything else to make the payment, which he had made and he had phoned Peet to inform him that payment had been made. Two weeks prior to the meeting that day, Peet had phoned him again to say that there were still problems.
Mr Kinana informed the Committee that because the Ericsson- MDPS matter was in arbitration, he and Linda (Marthinus) had moved with speed on the Mobax – Neela issue. Because there had been the intention of a court process, he and Ms Marthinus had put a greater distance between themselves and MDPS. He admitted that his decision not to get involve in the arbitration between Ericsson and MDPS had caused a bigger distance between Vodacom and MDPS. It could have been managed better by all the companies involved but the legal process had overtaken all other processes. Mr Kruger had raised several issues on the matter and Mr Kinana agreed that he could have managed it better
Presentation by Ericsson
Mr Mahomed Essop, VP Head: Legal Affairs at Ericsson, said that Ericsson had concluded an arbitration agreement on 20 July 2018 with MDPS and everyone was aware of that, including Vodacom. For the record, he said there had been two agreements with MDPS, one with Vodacom and one with Ericsson. After the arbitration, the parties had followed the timeline process and had filed their pleadings. In conclusion, Mr Essop said that Ericsson would enter into a pre-trial process once the date for arbitration was finalised.
Mr X Mabasa (ANC) said that he thought the Committee would have been briefed in more detail by Ericsson.
Presentation by MDPS
Ms Heidi-Anne Thuynsma, the wife of the Managing Director of MDPS, gave an emotional briefing to the Committee. She acknowledged that she was not a speaker, but a devoted, loving wife supporting her husband who had been served a grave injustice. She said that circumstances had not changed and that she and her husband had been unemployed for 22 months as a result of Vodacom and Ericsson not honouring their contract, which, she said, they had had no intention of honouring. MDPS had worked for Vodacom since 2002 and prior to that had worked for a company that had subcontracted to Vodacom. MDPS had had a very good working relationship with Vodacom. MDPS had started as a one-man business and Vodacom’s demands and requirements had made the company grow and require more equipment, vehicles and staff, forcing the company into excessive debt.
Multiple failed systems had come to light and both Vodacom and Ericsson were aware of them and had played the blame game. In the same month that MDPS was suspended, management had circulated a statement stating that the suspension was not fair, but a result of political goings on. MDPS and its staff had received death threats from a WhatsApp group, and indicating unlicensed fire arms would be used. A concerned member of the WhatsApp group had sent screenshots and voice recordings to the company. The information had been sent to Vodacom, Vodacom KZN and Mr Delport as well as Parliament.
There had been an acknowledgement that the monitoring system was inaccurate and the system had never been implemented as agreed. MDPS staff had been given petrol cards with the wrong information printed on them and no training on how to use them because Vodacom had run out of money for the system. An inadequate amount of R650 diesel was permitted per day for running Vodacom’s generators. Vodacom and Ericsson were aware of the problem. Ms Thuynsma presented WhatsApp messages to the Committee that notified staff and subcontractors that there were problems with the cards but that there were no funds to rectify matters.
MDPS had proof that its diesel report had been tampered with and shared between Ericsson and Vodacom. Ericsson had not paid for a 2016 invoice and had told MDPS to take it to Parliament. Another invoice was subject to arbitration. Vodacom had not only ruined the credibility of MDPS but had caused a huge ripple effect on those small businesses that MDPS had supported.
Vodacom had lied to Parliament when Mr Themba Kinana had said that the diesel dispute was between MDPS and Ericsson. Emails would prove that Vodacom had chosen not to be part of the process. Mr Kinana and Mr Delport had offered to meet with MDPS in Cape Town the previous year, but the meeting had not taken place and when MDPS had spoken to Mr Delport during the lunch break in Parliament that day, he had known nothing of the proposed meeting. It was all stalling tactics to keep MDPS quiet.
Ms Thuynsma said that MDPS had had to close down and the owners were forced to sell most of the vehicles and generators while their staff were left without work. She said MDPS enjoyed good relations with Vodacom until Vodacom had outsourced its management administration to Ericsson. The problems for MDPS started when MDPS turned down a request for a R500 000 loan by a Vodacom/Ericsson manager in KwaZulu-Natal. They were threatened that they would not receive any contract work. Soon thereafter MDPS was forced to close down and false reports were also made against them. After the previous parliamentary meeting, MDPS had spoken to Mr Kinana and he had said that he had three proposals for them but there was, firstly, a need to meet with Mr Delport.
Ms Thuynsma stated that Vodacom had prevented MDPS from getting work on three occasions. MDPS had been offered work in the Eastern Cape by Mobax but on each occasion, Vodacom would not give MDPS permission to work. She had taken the 17 accusations by Ericsson and had personally found evidence disproving each one. She also had email evidence that Ericsson was firing South African staff in order to employ staff from outside of the country.
Ms Thuynsma thanked Parliament for intervening in respect of the sale of generators although it was not the main problem. She had also stated that the amount offered for the generators was R500 000 less than the amount requested by MDPS and that difference, plus the sale of the vehicles at less than cost, had put MDPS back into debt. She concluded by saying that Vodacom and Ericsson had permanently damaged the reputation of MDPS and doors had closed in its face. The wrongful accusations had ruined her and her husband’s lives. The entire saga had started with Vodacom and Ericsson KZN management demanding financial backhands and when MDPS had refused, it was told that it would cost them. The diesel cards given to MDPS were incorrect, but no other cards had been incorrect. The company should have been allowed to keep on working while the issues were being resolved. Vodacom and Ericsson had refused to see the truth. Big businesses dragged things on until the small businesses ran out of funds. No bully tactics or death threats would stop her from proving the innocence of MDPS.
Ms Thuynsma informed Ms Marthinus that it was Vodacom that had suggested to MDPS that it should not go the arbitration route but should follow a legal process. She said that MDPS would succeed and she thanked the Chairperson and the Committee for allowing her to share the truth of the MDPS story.
Mr Chance said the MDPS situation was different to that of Neela with whom Vodacom had reached an amicable agreement. He could see that the expressions of the Vodacom representatives were very different from what they had been an hour previously. He had no reason to doubt that MDPS would be fighting if it did not believe that it was right and was telling the truth about how the company had been forced to close down. Ericsson and Vodacom had caused much harm and emotional turmoil to MDPS and had questions to answer.
Mr Chance questioned why Mr Delport had been allowed to dictate the terms when the Vodacom representatives had received instructions from its CEO that they should take control of the relationships with suppliers. A conversation with the CEO was overdue. If the MDPS diesel records had been tampered with, that was a criminal act that had to be exposed in the media, even if it was not a sexy issue like the Gupta and Eskom matters. He added that it was a problem that the matter had been covered up by corporates in South Africa. South Africans and the Committee should know about such matters. He was shocked that it had been going on for 22 months. The Committee had first met with MDPS nearly two years earlier and it was the deep pockets of corporates that had allowed it to happen. The determination from MDPS was evident.
Mr Kruger said the fact that no one had opened a case against the company (MDPS) accused of theft, surprised him. Vodacom had decided that MDPS was guilty and was punishing the business. Under normal circumstances a business would open a case of theft to let the courts decide whether one was guilty or not, but it seemed Vodacom had decided MDPS was guilty based on false reports. He concurred with the business proposal which Themba (Kinana) had discussed with him and he had been very happy about it as it had seemed to be a good solution to the proposal. The business was to be sold and the owners would mentor the new owners but he had heard nothing further from him. He had no idea who had stopped the business proposal but had heard rumours that it had been stopped by Mr Delport. He could not make sense of how one person at a big corporate business could rule over the lives of others. He described the closure of MDPS as a sad story.
Mr N Xaba (ANC) said that he did not know the response of Vodacom but the South African Parliament had heard of big names in corporate companies who had thought they could manipulate small businesses and not treat them with fairness. He was not sure if Vodacom was part of such acts and that the truth would be revealed. The Committee did not know who to name in its Legacy Report in which Vodacom would be mentioned. He advised that Mr Kruger should note a case number as a crime had been committed. The Committee was against oppression and would not be part of doing injustice to anyone. Vodacom’s response to allegations was not known yet, but the company must know that the Committee would be ready to stand with those who were being oppressed and denied proper assistance.
Ms N Mthembu (ANC) said she agreed with the Chairperson that Vodacom should deal with the “rotten apples”. It was not right that someone should be named but no action had been taken against that person. One person in a company should not have the authority to disregard decisions taken by others in the best interests of small businesses. MDPS’ presentation clearly indicated an element of corruption by Vodacom. The Chairperson had been very emotional about it. It was also difficult for her to come in when she had seen how people had been affected. She said that contracts to MDPS had not been given business because they had refused to be part of corruption. Those people should be investigated.
Ms Mthembu said the people at Vodacom accused of corruption and greed were frustrating small businesses and should be investigated. The matter should go deeper and the facts should be presented.
The Chairperson pointed out what she had seen happening there. Vodacom had closed its eyes and ears when certain people’s names were mentioned in relation to corruption. That was how some people treated small business. An email had mentioned the “two cents friends”. There were no consequences within Vodacom and the behaviour and practices continued.
The Chairperson reminded Ms Marthinus of her responsibility in terms of Vodacom’s Small Business Development Programme. It should be in her interest to deal with the issues. Ms Marthinus’s report had failed to mention the names of people who had tampered with report on MDPS. She pointed out that Ms Marthinus had chosen to protect those at Vodacom who had tampered with the documents, failing in her responsibility to protect SMMEs. The report contained nothing about cleaning its reputation. She added no action had been taken against those accused of tampering with the documents and Vodacom had allowed Ericsson to proceed with arbitration against MDPS. Ms Marthinus had not taken on her responsibility of making the Vodacom CEO take action against those people.
The Chairperson noted that Vodacom had allowed Ericsson to get away with murder. Ericsson had presented arbitration that was going to prolong the matter. A matter that was in arbitration did not allow Parliament to engage. However, Ms Marthinus was sitting with evidence that a report had been tampered with, which was an internal matter. Why did she not take on the managers who made statements which had allowed MDPS to suffer. What did she think the situation would have been if, after all the noise about state capture, the President had kept quiet and not appointed the Zondo Commission? Why did she not investigate? Why did her investigations not address the issues that were wrong when her responsibilities were to small businesses?
Addressing Mr Shiletsi Makhofane, Government Relations, Ericsson, the Chairperson asked why he was not behaving like Themba and stepping in as he was the stakeholder manager at Ericsson. He was supposed to see that the playing fields were not level and his responsibility was to guide Ericsson on government policies relating to SMMEs. He had to indoctrinate those people on the policies of the country but he had kept quiet about the bullying tactics against MDPS. He had to make Ericsson change.
The Chairperson stated that Mr Makhofane had failed to step in to stop Ericsson’s arbitration against MDPS. She knew that it was not only the small companies that had been ridiculed. Parliament had been ridiculed and the intention was to stop Parliament. The intention was to get rid of Neela and MDPS so that no small companies would go to Parliament to report what big companies were doing to them.
The Chairperson added that it was not only those companies that had come to Parliament. Others had come to Parliament. But some of those complainants had become traitors and the Committee was aware they were in the pockets of the corporate businesses. Boniswa had come to Parliament complaining about invoices but all of a sudden she no longer responded to Parliament. She knew that Boniswa had met Mr Delport and had been captured. She now went to other companies and tried to dissuade them from coming to Parliament to complain about the big companies. Boniswa warns them that they will be out of business like MDPS. MDPS was out of business, not because it had been found guilty in a court of law, but because a report exonerating MDPS had been changed because MDPS had refused to be part of the corruption engaged in by certain managers.
The Chairperson asked why Vodacom had closed its eyes and ears when the corruption by certain managers was pointed out and those corrupt people were then absorbed into companies to which Vodacom outsourced the management of maintenance services. Why had the issues not been followed up, such as the case of a former teacher, who had been fired for mismanagement of funds, had been employed by Vodacom and when Vodacom had outsourced management, that person had joined the contracted management team? When small business cried to Vodacom that that person was asking for money for the small companies to get contracts from Vodacom, the corporation said that it had done an investigation and the person was clean. Why was that?
There was a forensic audit report within the Department of Small Business Development that followed an oversight visit by the Portfolio Committee which had proved that what corporations told Committees in Parliament was not what was actually happening on the ground. The Auditor-General had been asked to conduct a forensic investigation and the Office of the Auditor-General had reported to the Committee the previous week that it had given its report to the Minister and the Accounting Officer of the Department.
There had been action as a result of the observations of the Committee about the Small Enterprise Finance Agency (SEFA). SEFA had immediately investigated and had reported to the Committee about the immediate action taken against those within SEFA that had been found guilty. The Department had not jumped in the same manner. Why was the Department risking its reputation by protecting bad apples? Did it not think that people would see through its actions?
The Chairperson asked why Vodacom and Ericsson had not reacted. Did they think that people would not see through what was presented in Parliament? Vodacom and Ericsson had contradicted each other and said that those they were not bound by the contracts with Ericsson. Why had Vodacom and Ericsson allowed Mobax to dictate to SMMEs, and allowed Neela to work for more than a year without a contract? The Committee had seen pictures of situations that had put employees of Neela at risk while Mobax had simply sat in their offices awaiting reports. Where Mobax saw an opportunity to make more money by taking what had been done by the small companies, it had put that in the contract. Was that what Ms Marthinus was responsible for in Vodacom? Was she responsible for allowing Vodacom to work with middlemen to kill small businesses? Was that the transformation at Vodacom that Ms Marthinus was talking about? When would Vodacom get rid of its bad apples?
Ms Marthinus said that she had a brief response but that Mr Kinana would respond to the issues as his name had been mentioned 500 times. Only the Chairperson had mentioned her.
The Chairperson explained that she had referred to Ms Marthinus because of the position she occupied in Vodacom and that the two of them should be working together and so they should be seeing things the same way.
Ms Marthinus was aware of the int made by the Chairperson but wanted to refer to the point made by Mr Chance when he had referred to the mandate from the CEO, Mr Shameel Joosub, that she and Mr Kinana enjoyed. Her mandate had been to resolve the Neela matter but she was unable to expand on the situation with MDPS as the matter had not been excluded from her mandate as a result of the process that was unfolding with MDPS. She stated that she loved it when people challenged or questioned her seriousness about empowering SMMEs and driving transformation. She had wanted to call her CEO and say that they would be having a talk immediately. She dealt with every single component of Black Economic Employment from membership of boards to employees, etc. Mr Kinana could vouch for the fact.
Ms Marthinus said that when an SMME had a complaint, it came to her and she dealt with the matter from start to finish. The MDPS matter had not crossed her table. In the same way that she had surrendered a birthday weekend to deal with the Mobax matter with urgency, she would have dealt with the MDPS matter.
Mr Bekwa reminded Ms Marthinus that Vodacom had made the necessary arrangements for payments to the MDPS in December 2018. What had her involvement been in that process?
Ms Marthinus stated that Mr Kinana would deal with that.
The Chairperson interjected. She stated that Ms Marthinus had been involved and had allowed the arbitration process in an attempt to shut the mouth of the Committee instead of supporting small businesses.
The Chairperson reminded Ms Marthinus that she had been part of the delegation of Vodacom and had heard the discussions in Parliament on the MDPS matter and was aware that Ericsson was going for arbitration against the MDPS. She had allowed Ericsson to take that route and had failed to intervene in the matter. Hearing the matter in Parliament should have been enough for Ms Marthinus to intervene. She did not need a letter about MDPS to cross her desk. Parliament had not contacted her or Mr Kinana about the matter because of the strategy employed by Ericsson who had brought an advocate to the meeting in Pietermaritzburg that she and Mr Kruger had been delegated to attend. That strategy employed by Ericsson had closed the avenue that would have allowed Ms Marthinus to take a deeper look at the matters. Ms Marthinus could not say that she had not been aware of the matter.
Ms Marthinus admitted that she, on her part, had made an error. Sometimes one was so focussed on the issue that one did not look at what was directly in front of one. Two and a half years earlier, the Chairperson had praised her but had raised that issue. She was partly responsible for an unfinished matter for the Committee as it neared the end of the Fifth Parliament. At the time, she had not paid attention to what the Chairperson had meant as she had been too busy defending all her other work.
Mr Kinana gave an undertaking that he would address the matter of those responsible for tampering with the MDPS report with the CEO at Vodacom. In his view, the issue should have been managed better. They should not have taken a backseat when arbitration had been mentioned. An entity was failing due to systems that had failed. One suggestion had been bringing on board young black people. He admitted that he had put Vodacom first and had failed the Committee. He admitted that he and Ms Marthinus had not addressed the matter in the best way.
The Chairperson asked if he recalled that the Chairperson said that there should be a common understanding by those people that the corporates had put in a position to assist SMMEs.
Mr Kinana thanked the Chairperson for that lesson that had been very important to him and Ms Marthinus and which had made the journey easier. Once arbitration had been decided upon, he and Ms Marthinus had pulled back when probably they should have got more involved. He joined Ms Marthinus in saying that they had failed the Committee and they had failed their mandates and for that he apologised. However, he wanted to take up the issue of the names raised in the meeting, particularly because he had raised the issue with Mr Delport, Chief of Technology, asking him not to get involved anymore. The names of Praveen Maharaj and Sunil Maharaj was another common denominator.
The Chairperson added the name of Andrew Barnwell.
Mr Kinana agreed that there had been a man by the name of Steven Barnwell in the beginning. He had since confessed, although Mr Kinana would not say what he had confessed, and had moved out of KZN into another business. Mr Kinana said that he spoke of behalf of Mr Barnwell who had changed and daily spoke on the issues, saying that that was what the Chairperson of the Portfolio Committee was expecting from him. He had become an ambassador in relation to the matter.
Mr Kinana asked the Committee to allow him to go back to Vodacom and explain who was in the purview of the Committee.
Mr Kinana added that another issue was the fact that KZN cropped up frequently. The CEO had said that KZN managers should not be involved in the contracts. That was why the Mobax and Neela contracts had been moved out of KZN and were being managed from Head Office, unless an operational issue involved the companies. Had the MDPS issue been moved out of KZN, things might have been managed better.
On the payment issue, Mr Kinana stated that Peet (Thuynsma) had approached him in December about the payment and he had facilitated the payment because, in the earlier Portfolio Committee meeting, Vodacom had committed to assisting with the financial burden of MDPS by purchasing machines at a market-related price. He had not been privy to details of the purchase price. It was true that the homes of MDPS owners were to be repossessed, so he had understood that it had been an intervention to assist financially and nothing more.
Mr Bekwa said that Ms Marthinus had said that after the matter of arbitration had been raised, Vodacom had decided to pull out. But, in the previous meeting, after arbitration had already been instituted, there had been the issue of payment. What was the position of Vodacom because it had paid the people but then said that it had not been involved?
The Chairperson added that the ‘tools of trade’ were not only the engines, or generators, in question but also the vehicles that had been financed by the banks. When the contract had been cancelled, money had been owed on the vehicles. When the bank had repossessed vehicles, the amount raised from the sale was less than that owed, so the banks had gone for the owners of MDPS.
The Chairperson stated that the reason that she had requested the Department of Small Business Development (DSBD) to attend the meeting was for officials to understand the need to put in place a different financing model for small businesses which should not be subjected to commercial bank loans. When contracts were cancelled, small businesses were left in debt. Which company would give ten days’ notice of cancelling a contract when the contractor had bought vans and generators to service the contract? Vodacom thought that it had relieved the debt of MDPS but the company had still been left with debt.
Mr Chance pointed out that time was passing and the Committee still had another presentation awaiting it, and the Committee needed to consider its legacy report.
Mr Chance added that the Watergate scandal had taught everyone one thing and that was that the cover-up was often worse than the crime and that was what had happened in that situation. He asked whether Vodacom had the gumption to go back to the original crime as once the legal route had been triggered a whole set of events had inevitably taken its course. Did Vodacom have it to go the Neela route with MDPS?
Mr Kinana requested that he and Ms Marthinus be permitted to take the seven-day route so that all the issues could be clarified, issues that had been raised could be considered and they could sit down with the CEO and see whether the balance of forces was the same. Vodacom needed time for introspection and the corporation had to address the issue of people who had been named. He reminded the Committee that regardless of whether the arbitration or litigation route was followed, there were issues of reputation at stake as well as moral and ethics issues about how some people had behaved. He requested seven days to finalise the report.
Ms Marthinus stated that she understood that she and Mr Kinana were being requested to mitigate and facilitate a MDPS process. She stated that her response was a resounding agreement but she had to investigate whether the legal process allowed for her engagement on the sidelines. She had a fiduciary duty to Vodacom and so she had to check that issue.
The Chairperson said that she had written to the CEO and not to the two representatives present. What the Committee saw was a cover-up by Vodacom and Ericsson because of the people involved. If the process had taken two and a half years to date, by the time the legal process was complete, MDPS would have been wiped out.
The Chairperson was also concerned because there would be a different Committee in place that would not have the same in-depth understanding of the matters.
Ms Marthinus confirmed her resounding agreement. She assumed that the Group CEO would handle the fiduciary duties.
Mr Chance noted that a client instructed the lawyers, not the other way around and the Vodacom CEO would have to have a very close conversation with Ericsson about that matter.
Mr Makhofane noted that the process had brought a lot to light and had resulted in the company reviewing its policies. South Africa was an important market for Ericsson and it did not take the feedback lightly. He wanted to clarify a couple of matters. Corruption actions had to be reported and he asked whether the emails that had contained threats had contained any reference to Ericsson, in which case the company would require copies of the emails. He said that Ericsson would investigate allegations of corruption and proper action would be taken against those found guilty. The decision regarding arbitration had to be considered. Arbitration had been considered because it was one of the ways of finding a resolution to the matter with MDPS. However, if it was taking too long, other ways of concluding the matter would have to be considered. He said he would go back to the CEO to discuss ways to solve the matter which would be more acceptable to the Committee.
The Chairperson stated that Ericsson had brought an advocate, and not just any advocate, but an arrogant advocate, to undress MDPS and Neela because the strategy was to frustrate the process, take the Committee out of it and ensure a cover-up. It was the same as when Ericsson said that it was not responsible for the loss of seven months’ income by Neela and Neela could not claim from Ericsson. However, Vodacom had said that its contracts had to continue, with only a change of name, when a new management contractor took over the management from Vodacom. The same thing applied to MDPS. New management firms could not make changes to operations as they did not have the expertise.
The Chairperson explained that her constituency was Port Shepstone where people often stopped her on the streets to ask about the Vodacom/ Ericsson dispute with MDPS.
The Chairperson added that there had been an admission that things could have been looked at differently but Ericsson’s arbitration was a strategy to frustrate small businesses and to prevent the Committee from intervening on the matter. She called on Mr Makhofane to assume his position at Ericsson and to work in the interest of small businesses, and not be delayed by technocrats. His job was to manage relationships and not to manage the Committee.
Mr Makhofane stated that the parties would have to go back and say that the arbitration was not resolving the matter as quickly as the parties would like. During the facilitation he would look at the points made by Vodacom. He reminded the Committee that the arbitration was between two parties and it was those two parties that would have to have talks on how matters could be resolved in order to meet the requirements of the Committee.
The Chairperson commented that the arbitration process was intended to be a process of the survival of the fittest. Ericsson was coming to its sober senses.
Mr Kruger asked whether Vodacom and Ericsson would both report back to the Committee within seven days.
Mr Bekwa appealed to Vodacom to assist with talks between Ericsson and MDPS as the arbitration would not help MDPS.
The Chairperson agreed that that would be the route to go, unless Vodacom did not care about its reputation.
Mr Kinana said that Vodacom would engage with Ericsson and see what could be done, although he reminded the Committee that Vodacom did not have a contract.
The Chairperson reminded everyone that the root cause was the doctoring of the report by managers at Vodacom to protect those in Ericsson.
Telkom and Huawei on Digiwire Technology
Mr Siyabonga Mahlangu, Group Executive: Regulatory Affairs and Government Relations at the Group Telkom introduced himself and his team, the Group Relations Executive and the Parliamentary Liaison Officer. Huawei was represented by Ms Christina Naidoo, COO, Huawei Technology Africa, and Herman Kannenberg, Head of Department for Legal Affairs at Huawei South Africa.
Mr Mahlangu said that after the November 2018 meeting with the Committee, Huawei was going to have discussions with Digiwire Technology and Telkom had maintained a safe following distance, watching how the discussions proceeded. Telkom had its views about how the negotiations had progressed but he suggested that parties present their reports and that thereafter Telkom would be willing to answer any questions that the Committee Members might have.
Presentation by Huawei
Ms Naidoo thanked the Committee for the opportunity to present a progress report on the matter of Huawei and Digiwire Technology. She said that the complaint by Digiwire Technology had been about an outstanding invoice payment to Huawei for plus-minus R818 000 which was due to Digiwire and about site clearance certificates for completion of work in order that Digiwire could keep its membership at the CIBD (Construction Industry Development Board). After the last meeting in Parliament, Ms Naidoo had called an executive meeting to discuss the issues raised in Parliament on the Digiwire matter.
Ms Naidoo explained that the Committee had formed a Task Team to specifically look into the outstanding payment. The Task Team had included an internal audit member to ensure that an independent view was reached. Members of Huawei who had previously found that there was no money owing to Digiwire, were excluded from the team. The internal team had found that Huawei was indeed compliant in the CIBD matter. The service of a third party was also commissioned to determine whether the team’s findings were correct and to give an objective opinion. The intention of both actions was to give feedback to the company so that it knew whether it was doing the right things or not and whether any changes to policy were necessary.
Ms Naidoo indicated that Mr Kannenberg had been involved in the negotiations on both matters and he would provide a report.
Mr Kannenberg repeated the issues on hand and added that Digiwire had been deregistered by CIBD as a result of outstanding certificates. He said a company task team which included their internal audit committee, had found that a duplicate payment had been made to Digiwire. An invoice from Digiwire in the amount of R378 000 had been paid, thereafter the name of the site had been changed and the invoice for R378 000 had been re-submitted. Huawei internal controls had failed to pick up the submission of a double invoice by Digiwire and a second payment had been made. An internal decision had been made to deduct the R378 000 and a payment of R818 000 less the R378 000 duplicate payment had been made to Digiwire.
Mr Kannenberg stated that Huawei had been unable to verify any of the claims submitted by Digiwire. There were no purchase orders or certificates of completion. Despite that, Huawei had taken an internal decision to pay the outstanding amount of R818 000 less the R378 000 duplicate payment as an ex-gratia payment in full and final settlement of the issues between Huawei and Digiwire. The payment had been made towards the end of 2018.
With regard to the CIBD certification and deregistration process, Mr Kannenberg said that, as indicated by Ms Naidoo, Huawei had appointed an external law firm, Norton Rose Fulbright, to investigate and to provide feedback in regard to Huawei’s obligations and to indicate whether the company had fully complied with the CIBD regulations. Norton Rose Fulbright had reported that Huawei’s work completion certificates had complied fully with the regulations of the CIBD in that it indicated fully the work that had been done and had referred to a quantity surveyor and that substantial completion of work had been done at the particular sites. Huawei had gone further and requested Telkom to sign alongside Huawei on another work certificate, which was not a requirement of CIBD regulations or the contract. That certificate had been issued to Digiwire. He added that the external law firm had found that there had been no deregistration by the CIBD of Digiwire. On 19 January 2019, Digiwire had been a fully paid up member of CIBD and that registration had not lapsed.
Mr Bekwa asked about the invoiced amount.
Mr Kannenberg stated that the exact amount on the invoice had been R818 416.88.
Mr Bekwa noted that two investigations had found that no money was owed to Digiwire. But still Huawei had paid an amount of over R300 000. Why was that amount paid?
Mr Xaba remarked that his understanding was that Huawei had conducted internal investigations and thereafter had appointed lawyers to check on Huawei to see whether it was correct. The report had stated that Huawei was correct. He did not know if appointing lawyers to come to the same conclusion as Huawei was a fair process because no external body would find the company paying it to be in the wrong. Had Huawei just wanted a report to say it was legally okay because he was a legal advisor. He did not think that it was possible to investigate oneself.
Mr Kannenberg stated that the money had been paid ex gratia. It was not an acknowledgement of money owing, but simply an offer of settlement. He explained that there were immense costs involved in travelling down to all the parliamentary meetings and a lot of time had been taken by executives to assist, to audit, etc. A settlement took place when two parties disagreed but one party paid something so that the matter was settled.
Mr Kannenberg stated that his view as the Chief Legal Advisor of Huawei was that the company had fulfilled all its legal obligations but his view could have been questioned so an objective third party had been approached to verify, or correct, his view. He agreed that the law firm had been paid but law firms did not work free of charge. The Committee would have to raise its queries on the impartiality of the external law firm with the firm directly. Mr Kannenberg stated, with respect, that Norton Rose Fulbright was one of the biggest law firms in the world and its approach in providing legal advice could not be questioned in the way in which the Member had done.
Ms Naidoo informed the Committee that the payment had been made at her insistence because she had walked out of Parliament stating that she would resolve the matter. She could accept that the R378 000 was going to be taken back and, from governance processes, she had no grounds to stand on. She had appealed to the Task Team to get extra approval to do as she had asked because of the public image had been created that Huawei was fighting for R818 000. Like everyone else, she was also responsible for transformation and she did not want all the good that her company did forgotten because people were only looking at the non-payment. That was why the balance of the R818 000, i.e. R440 000, had been paid.
Ms Naidoo added that the additional legal opinion was not about arrogance but just to give comfort that Huawei had gone even further in trying to resolve the matter.
Mr Xaba temporarily took up the position of Chairperson.
Mr Bekwa asked for a follow-up. He stated that Parliament did not need comfort; it needed what was right. He did not think there was any point in appointing someone to come up with the same legal finding. Maybe Huawei could note the point.
Regarding the so-called duplicate invoice, Mr Chance asked if Huawei thought that the duplicate invoice issued by Digiwire had been a mistake or had been issued with fraudulent intent.
Ms Mthembu asked that Ms Naidoo give more clarity on her statements as it came across as suggesting that Huawei had been forced by the Committee to pay Digiwire. She said Huawei disputed that they owed the money but they seemed to say that they had been pressurised by the Committee to make a payment.
Ms Naidoo stated that the Committee had not pressurised Huawei to make the payment but that it was a decision made by the company in light of its reputation. She added that the company stood firm that no outstanding money was owed to Digiwire and the payment was made in good faith.
Mr Bekwa thought that Ms Naidoo had said the settlement had been an agreement between Digiwire and Huawei.
Mr Kannenberg responded to Mr Chance. Huawei could not establish any intent of fraud with regard to the duplicate invoice.
He informed Mr Bekwa that the payment had been made in the guise of full and final settlement and had stated that if Digiwire accepted the payment that would conclude the matter and that would be full and final payment. Digiwire had indicated through their actions in the past week or so that they did not accept the settlement which left Huawei at the crossroads regarding the next steps.
Mr Chance also asked how far apart the duplicate invoices had been issued and how far apart payments were made to Digiwire and whether Huawei had received acknowledgement from Digiwire that there had been a double invoice.
Mr Kannenberg said he was unable to give the exact dates at that moment as to when the two payments had been made to Digiwire but he would provide the information at a later stage. He had seen the two invoices and it was as clear as daylight that it was for the same work. He said in his view it could have been a mistake as there was a change in the name of a site which could have led to the confusion on both sides.
The Acting Chairperson asked Mr Chance to give a simple summary of the Committee’s understanding of the situation.
Mr Chance suggested that Digiwire should be heard first.
The Chairperson returned.
Presentation by Digiwire
Ms Velosh Govender, Director: Digiwire Technology thanked the Committee for the opportunity to present her response. She applauded the Chairperson and Members for their understanding of what SMMEs were faced with at ground level. She expressed unhappiness with the manner in which had Huawei treated Digiwire.
She asked whether Huawei had supplied the Committee with proof of 31% black women-owned share-holdings involvement, evidence of work permits issued to the Chinese people being trained in South Africa, and proof of the R500 000 CSI programmes invested in, as well as the proof of Skills Transfer Training for South Africans. Huawei had invested in a R1.4 billion campus and 60% of the trainees were South Africans and 40% Chinese.
Ms Govender stated that she wished to begin her input by stating that she had also been told by a Huawei official to “pick a finger” because Huawei was politically connected. In a telephonic conversation with Mr Herman Kannenberg, he had told her “as we speak, they are on their way to headquarters”. She had not been sure what he had meant at the time but she would elaborate on the matter because not all Committee Members had been copied in on her emails. The following day the President’s visit to China and to the offices of Huawei had been reported on in various media. She then responded to Mr Kannenberg’s comment via an email asking what the outstanding payments to Digiwire had to do with the President’s visit to China and Huawei’s offices. She had never received a reply to her email.
However, Mr Kannenberg had written to Ms Govender informing her that Huawei had appointed an international legal team to do their investigations. She said that particular legal team, Norton Rose Fulbright, had probed into her portfolio at the CIBD, which was confidential. She wanted to know why confidential information was given to Huawei Technologies because she was a registered CIBD member, as was Digiwire, and she had proof that Digiwire’s CIBD registration had expired due to non-submission of the Work Completion Certificate, which Huawei had failed to issue. She had been accused of lying to the Committee. She had a copy of the email which stated that her registration had expired.
Ms Govender read an extract from Creemer Engineering News stating that builders were not allowed to be employed in construction without CIBD registration.
Ms Govender said Digiwire had consulted two different lawyers to liaise with Huawei. A letter had been sent to Huawei by the second set of lawyers detailing the need for a Completion of Work Certificate. In response, Huawei’s legal representative, a Mr Charl Odendaal, who obviously worked under Mr Herman Kannenberg, had responded as follows: “Thank you for your email. Kindly take note that your client attends to actual contractual matters whereas Huawei does not. Huawei is not obliged to be registered with the CIBD”.
Ms Govender stated that it raised the question as to why Huawei was in construction and why it was that the main contractors, Huawei, had received a multi-million rand contract from Telkom during the period when Telkom was not exempted from the Preferential Procurement Policy Framework Act (PPPFA).
Ms Govender said that she had sent emails to Huawei, which had been ignored, asking for proof of Huawei’s 2015/16 Black Economic Empowerment (BEE) certificate because she was in possession of proof that Huawei’s BEE certificate had expired in 2014 and had zeroed in 2016.
She said the outstanding payments occurred as staff often changed at Huawei, that there was no proper handover, no sign-offs and no documentation. She rejected Ms Naidoo’s statement that the payment was made as “a kind and good gesture”, implying it was a favour done to Digiwire. She said the amount which was outstanding was R2.2 million which had escalated with interest.
Concerning the outstanding payments, Ms Govender said that Digiwire had never denied an overpayment and she had personally gone to Huawei to sort out the matter. But when she arrived at Huawei, the staff were on lunch and she had waited for an hour in her car. Nobody had answered her telephone calls and she could see that her number was blocked. Maladministration at Huawei was evident. She added that Huawei had informed Digiwire they would only pay them for five line items per site that Digiwire built and not the ten line items incurred. Those costs had to be absorbed by Digiwire. Ms Govender blamed bad administration for the fact that not all ten line items were included in requests for quotes.
Ms Govender also spoke of how late payments had affected the company negatively. She said that the R800 000 which Huawei decided to pay after the R378 000 deduction, she had sent them an updated statement to alert them that that was not the only amount outstanding, but there was an outstanding payment of R1.7 million. Huawei had made a payment of R400 000 after 25 months and another payment in October/ November 2018. A SMME could not sustain its business without finances and Digiwire subsequently had had to close down and had lost 65 staff members. She added that late payments and the failure to issue Work Completion Certificates should not be dealt with in isolation.
She said Huawei’s failure to issue the Work Completion Certificate had led to the expiry of Digiwire’s CIBD grading. The level of registration determined the size of a contract that a construction company could be awarded. She explained that the CIBD and its Outsource Committee had taken a decision not to downgrade their contractors due to the recession or the economy over a period of three years. It was based on that decision, that Digiwire’s gradings had been re-activated. To date, Digiwire still did not have the Work Completion Certificates outstanding from Huawei. Those certificates required a tender number.
Ms Govender stated that she had prepared a media article, had met with National Treasury and various government Ministers and Heads of departments to take the matter forward. Ms Govender said she also met with the Department of Public Works and the Minister of Public Works and the Minister of Small Business Development. She challenged Huawei to prove that it had been BEE compliant. She added that Telkom received exemptions from requiring BEE certificates over a period of time but ,as a Schedule 2 company, Telkom still had to comply with other regulations. She was listening to Minister Gordhan’s testimony (at the Zondo Commission) very closely as he had been a Minister of Finance and she wanted to know if he had signed off on the BEE exemption. Essentially Telkom had been exempted from the Preferential Procurement Policy Framework Act (PPPFA) effective from July 2016 and Digiwire’s work with Huawei had begun in 2015 and was completed in 2016. Telekom would have had to comply with PPPFA requirements. It was bigger than a payment issue. She had lost her business. She had such a lot to talk about but she was trying to keep focussed on the current issues.
Addressing the matter of payments, Ms Govender stated that Digiwire had begun working for Huawei in September 2015. The first payment had been made on 22 December 2015. Why Ms Naidoo said that the amount was a final payment was because some time in 2015 Telkom had introduced a contractor to manage Huawei - which Ms Govender viewed as a massive conflict of interest as Telkom had contracted a non-construction company - and then Telkom had intervened and managed Telkom’s sub-contractors. She said she was at all the meetings. At those meetings, Telkom and Huawei had decided that Digiwire should focus on the feeder sites to meet their deadline for completion of those sites. When she had requested the minutes of that meeting recently, Ms Naidoo, and other staff linked to the emails, denied that such a decision had been taken at the meeting. But she had been at all of the meetings.
Ms Govender said Digiwire had done quite a bit of work in 2015 and, after it had completed four sites at the end of November 2015, Telkom decided that Digiwire should stop working on the sites and work on the feeder sites because Telkom had a deadline to meet, so all the work completed over six weeks by Digiwire was not compensated. Ms Govender had emails to prove it. Digiwire had worked on the Holiday Inn, Woodmead, site for ten days. Digiwire had worked on other sites as well and she had communicated that in emails but after the last Portfolio Committee meeting, she had decided to send proper invoices and subsequently Huawei had decided to pay the amount which it wished to pay, deducting the over-payment.
Ms Govender believed that her company and her rights had been infringed upon. She read a statement: “Small businesses contribute to local economies by bringing growth and innovation to our communities. Small businesses also have to stimulate growth by providing employment opportunities to people who may not be employed by larger corporations. As an SMME company, black woman-owned and an entrepreneur rendering services in advanced technology and construction, and contributing to the South African economy, Digiwire regretted losing almost three years of business due to unresolved issues with Huawei.”
Ms Govender called on the Committee for further advice. She was not just dealing with a private company, but also with a state-owned enterprise. She asked for advice on PAJA (the Promotion of Administrative Justice Act). Were they going to be dealing with payment issues, administrative issues or were they going to turn the page over because the contract had been awarded to a non-construction company? She wanted to know from the Portfolio Committee what they were going to do next.
Ms Govender stated that she had had interactions with the “Chairperson of the Committee that fell under the Department of Public Works”. That person had asked her to report the matter to the CBE (Council for the Built Environment). She had to get back to Telecommunications at Ministry level and also the Department of Small Business Development about the strain that Digiwire had taken and she had to report to the BEE Commission, which was why she was tracking down the BEE status of Huawei, and she had been advised to report the matter to the Zondo Commission of Inquiry, but she had not yet got to that level. The list went on and she could report on a lot of things. She was not in a position to take it to litigation as she had closed down her business, but the list went on and she could speak about a lot of things.
Ms Govender said that it was draining, but she would like to introduce Koogan Govender, CEO of the organisation and he would like to say something.
The Chairperson reminded Ms Govender that she was chairing the meeting and asked Telkom to respond.
Mr Xaba said Members refused to compromise their work commitments and took matters of Parliament seriously. He said the gestures from Telkom and Huawei representatives forced him to call for order. He stated that the Committee was part of the Parliament of South Africa and that Telkom and Huawei should not equate Parliament to a company, as it was Parliament that applied law and order.
The Chairperson supported Mr Xaba’s statement and referred to the body language displayed by Mr Mahlangu and his colleagues. She said if they looked into a mirror, they would understand what Mr Xaba was referring to. She added that there was non-verbal communication which said a lot to Members. Non-verbal communication was interpreted in the same way that verbal communication could be interpreted. When they looked at one another and smiled or frowned, that could be interpreted as “she is talking nonsense”. She said that was the kind non-verbal communication displayed during the meeting.
Mr Xaba said the issue of a “gesture in kind” payment and the delay in payments to Digiwire of 39 months to 25 months and outstanding payments. He asked Huawei how it would rate its relations with people, and its ethical conduct, which was basic to human behaviour, and came before payments.
The Chairperson asked how big businesses paid small businesses as far as interest on late payments was concerned. She said if one defaulted on payments, one had to pay the arrears with interest and that would apply to in the cases of Digiwire, Neela and MDPS.
Ms Naidoo confirmed that Huawei had 31% shareholders are black women-owned by Emansipa Investors, Habiba Surtee and the Patinee Family Trust. She said she was in possession of all the necessary documents showing that Huawei was compliant with BEE requirements and had a tax clearance certificate which she would hand over to the Chairperson. Huawei had already provided the Committee with documentation on training and enterprise development, etc but would provide updated documentation on those activities by the Friday.
Mr Kannenberg stated that he had just logged onto the CIBD website and it showed Digiwire as active. The reason that he had logged on, was to show that that was public information and not Digiwire’s confidential information.
The Chairperson stopped him and reminded him that Huawei’s responsibility was to issue Digiwire with the Work Completion certificate which that company would submit to the CIBD and not to check with the CIBD if Digiwire was compliant or not as that was none of his business. She said Ms Govender had stated that the certificate had remained active because the company had been given a grace period due to the economy. She reminded Huawei not to deviate from its responsibility but to comply with the rules of the country.
Mr Kannenberg stated that he had responded to the point about the Work Completion certificate while the Chairperson was out of the room. However, he and Ms Naidoo had indicated that they were more than willing to sit down with Digiwire and the CIBD to find out why there was a confusion with the certificate. Huawei had obtained confirmation from a legal investigation that it had met the requirements of the Work Completion certificate but Ms Govender insisted that Digiwire had been de-registered because there was something wrong with the certificate; hence the offer to sit down with Digiwire in the presence of CIBD to resolve the confusion. If the problem was an administrative or clerical problem, Huawei was more than happy to resolve it.
Mr Mabasa said it would have been more fruitful if the intention was to meet to solve the problems. He said South Africa was one of the few countries in the world where big businesses did not pull along small businesses as they grew. He added that big businesses in other countries, like Germany, were proud to work with small businesses in the manufacturing, making of car parts, etc as those companies looked at growing the whole country. He called on big businesses to look at the spirit of the President and to support him, not as a person but as the President of the country. He reminded big businesses that they could not grow without small businesses as they need a thriving economy to make good profits.
Mr Mabasa said it was very frustrating to listen to what had been revealed in the meeting as they were only getting the tip of the iceberg. The Committee was not talking of poor big businesses. He was sure that there should have been more big businesses present at the meeting. He made it clear that he was referring to established businesses and that a commitment to solve the problems would be better than more discussions.
Mr Kruger asked Mr Kannenberg which finger Ms Govender had chosen when he had asked her to “choose a finger”.
Mr Kannenberg said that Mr Kruger should raise the issue with Ms Govender as he could not recall asking Ms Govender to choose a finger. Mr Kannenberg gave a commitment that the problem with the certificates would be solved.
Mr Chance said that it appeared Ms Govender was raising many issues which went well beyond the scope of the contract. She had raised issues of public procurement. She had referred to close relationships between government and well-connected international companies that might have a political and business agenda. He said she had raised the possible exposure of corrupt practices of collusion and coercion which often polluted relationships between businesses and between government and businesses. He suggested that it was a matter which the Committee should look into at another time.
Mr Chance said that it was clear that something had gone wrong at some point in the relationship between Digiwire and Huawei and he hoped that the meeting arranged could resolve that so that some type of justice could be obtained. Ms Govender said that she had valid claims of payments of R2 million for work carried out over a six-week period and he could not understand why Huawei found it difficult to pay. Ms Govender claimed that there were problems with administration and documentation at Huawei. Huawei lost contracts and important documentation had been lost when staff changes had taken place.
He added that Ms Govender admitted that she had not sent invoices but had sent emails and WhatsApps but had got her act together and now sent out the invoices. Neither party was faultless and what was required was a little humility on the part of both parties. There had to be acceptance that there was no easy answers but if the discussions focussed on solving the problems, it could be done.
Mr Chance noted that Telkom had a number of questions to answer, and he hoped that Mr Mahlangu would be given the chance to respond shortly. There were questions such as, did Telkom take responsibility for supplier relationships? Telkom was responsible for the entire supply chain. He knew that Telkom had an incubation programme, a solutions lab, but there had to be a proactive and progressive approach in the real world.
Mr Xaba asked for timeframes for when issues would be addressed.
The Chairperson said that the Committee would like Huawei to finalise the matter before 7 May 2019. Those who thought that the Portfolio Committee would cease to function when Parliament rose on 20 March 2019 were in for a surprise. The Committee was meeting again on 9 and 10 April 2019 to finalise another serious matter.
The Chairperson called on big corporates, stakeholders and state-owned enterprises not to look down on small businesses as they were the engine room for job creation. She said big companies continued to embark on a robotic labour force which did not include small businesses. Money was not everything. Those who knew the history of the country knew that consumer boycotts had had an effect on big companies. She did not want to encourage people to use those approaches but she warned big corporates against exploiting small businesses and pushing Parliament because Parliament would legislate and it would not be nice! Government would have to tax big businesses to pay for people who were unemployed. They had to create jobs and not build prisons. She encouraged big businesses to make themselves familiar with the policies of the country and to recognise the role of small businesses which were able to turn the businesses around. The issues that the Committee was dealing with were common.
The Chairperson exhorted the parties to resolve the issues.
The Chairperson stated that the owner of the small business ‘My Clan Name is African’ had arrived in Cape Town the previous night to meet with the Committee to discuss issues of stakeholder management in Enel Green Power (EGP). The previous afternoon after 17:00, EGP had stated that it could not attend because it still had that mentality that Parliament was not important and could not tell the company anything.
Enel Green Power (EGP) and ‘My Clan Name is African’
Representatives of Enel Green Power (EGP) informed the Committee that they were unable to attend the meeting. Their attitude was: “Who was this black woman to take them to Parliament?” Ms Kolisa Xinindlu, Director of My Clan Name Is African, a small business, could not make her presentation due to the absence of EGP.
The Chairperson was concerned about the treatment My Clan Name is African had received from EPG. She said that My Clan name is African had been brought in to facilitate community engagement for EPG. EPG had refused to pay My Clan Name is Africa because it did not understand how South Africa was demarcated in villages. The social engagement facilitator knew that everyone had to be consulted or there would be divisions in the community.
EGP had insisted that the broader consultation with the community consist of only 100 people and not the 300 (as requested from the community) who had attended meetings. She said it was important to have proper consultation with the broader community and not just a few. She commended Ms Xinindlu for her efforts to consult the broader community to prevent any divisions amongst the people on the proposed energy project.
The Chairperson said that if EGP refused to be taken through the learning process, EGP would find that it would not have a licence to engage in green power. She said a letter would be sent to EGP for another meeting before 7 May 2019. However, should the Committee not be able to meet, then a recommendation would be made to the Sixth Parliament to look into the matter and EGP would be dealt with in the way that Parliament dealt with such people.
The Chairperson indicated that Parliament would pay Ms Xinindlu for her trip to Cape Town.
The Chairperson abruptly declared the meeting closed.
The meeting was adjourned.
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