Science and Technology Laws Amendment Bill [B42B-2018]: Department response

Meeting report

Adoption of the Meeting Agenda
Ms N Ndongeni (ANC, Eastern Cape) moved for the adoption of the Agenda, and Ms D Christians (DA, Northern Cape) seconded the adoption.

Presentation by the Department of Science and Innovation
Mr Lihle Hlophe, Senior Legal Officer, Department of Science and Technology, provided a presentation on the comments from a member of the public on the clauses of the Science and Technology Laws Amendment Bill. He said that a public member first commented on Clause one and suggested an addition on section five of the CSIR Act by adding directive of the Auditor-General (AG), in terms of the Public Audit Amendment Act, which dealt with the removal of a Board member by the Minister. He said that the Department’s response to the suggestion was that it could not find such a provision in the Act. However, at the moment if there was a recommendation or directive from the AG to the Minister, then it would fall under the requirements of Section seven-eight sub, which dealt with the Minister removing a member as a result of misconduct, incompetence or any other reasonable grounds.

He said that the public member recommended that the Bill should include that before a member of the Board could be removed, there should be a fair disciplinary hearing held in terms of the National Treasury (NT) Regulations. The Department could not find any NT Regulations that dealt with disciplinary procedures for Board members of the public entities. In terms of Clause two, he said that the public member commented that concerning the amendment of the Admission of Section 9(B) of the CSIR Act, as a former Board member himself, he noticed that Board members did not attend Board meetings, but attended committee meetings that they chaired. He came to the conclusion that the remuneration of Board members was higher when they chaired committee meetings than when they attended Board meetings. The public member also added that the Accounting Authorities, given the power under the Public Finance Management Act (PFMA), needed to ensure that Board members were not part of the committees.

Mr Hlophe said that in terms of section eight, subsection 7c, of the CSIR Act, a member of the Board ceased to hold office if he/she was absent on three consecutive meetings without the permission of the Board; so the concern by the member of the public would be addressed by the Act. He added that the committees of the Board were at the discretion of the Board to ensure its effectiveness; the Board would delegate, to its committees, some of its functions so that they were dealt with effectively. In terms of section nine (sub five) of the Act, the Board remained accountable for the conduct of the Board Committee, so it was not that the committee was a separate entity from the Board itself.

Mr Hlophe indicated that in terms of clause three, the public member recommended that the Select Committee considered the applicable provisions of the PFMA that the Executive Authority, and not the Accounting authority, appointed the CEO, and recommended that the Minister should the executive authority in terms of the PFMA to appoint the CEO.

Mr Hlophe said that the Bill proposed that the Board shall, in consultation with the Minister, appoint the CEO of the entity. He also said that the Department could not find any provision in the PFMA that dealt with the appointment of CEOs of public entities. The proposed appointments, as seen on the Bill, were in line with the recommendations of the Presidential Review on state-owned enterprises. He said that in terms of Clause four, the public member stated that he respectfully disagreed with the admission of the Clause 3B because he did not think the Board members should have any financial or other interests in the decision of contract, as it was the true depiction of cryptocracy, fraud or corruption. This addition from the public member was exactly what was being said in the clause – that should any Board member have an interest in any matter, he or she should not participate in that meeting and should not be allowed to vote in that meeting.

He also said impromptu meetings that were held after a meeting concluded were unlawful. He said that in terms of Clause five, which was about the remuneration of committee members who were not employed by the state and who are not Board members, the public member recommended that the committee should discuss the implications of this Amendment with the new President’s SOE Counsel. This was due to remuneration being a big problem among public entities where executive managers give themselves inflated salaries, bonuses and annual increases. Mr Hlophe said that in terms of the Bill, the Department proposed that all remunerations, allowances and other benefits for all the entities would be done in terms of the National Treasury directives; so the Board members and the entities could not give themselves allowances or bonuses that were beyond the provisions from Treasury.

Mr Hlophe indicated that in terms of Clause nine, which was about the Minister making regulations, the public member recommended that the Department should add a condition that those regulations made by the Minister should be approved by Parliament. Mr Hlophe said that regulations were made in terms of the Act and the Minister had been authorised by Parliament to make regulations that were in line with the Act and not beyond the Act. He said the Act stated that the Minister would only inform and send the regulations to Parliament after their promulgation.

He said that in terms of Clause 10 of the Bill, which was about the delegations by the Board and by the CEO, the public member recommended that the delegations of powers to the Board admitted to an annual review and must form part of the signed resolution. Mr Hlophe said that Section 19, subsection three of the Bill, specifically stated that delegations must be written so any unsigned resolutions had no legal force or effect. He explained that the Bill was trying to ensure that even if there was a new Board, the delegations that had been done by the previous Board would form a track record and the new Board would see them. The delegations were also subject to such conditions, as the Board would determine and include the review of such delegations and could not be fortified in the Act, but on the delegation itself.

He said that in terms of Clause 11, which was about the appointment of the executive officer of the Academy of Science of South Africa, the public member stated that his comments were similar to those he had made about the appointment of the CEO of the public entities; he also did not recommend that this entity was registered with Treasury as a public entity and it was unnecessary to appoint an executive officer. Mr Hlophe said that the Department also referred to what it said about the appointment of the CEOs that it was in line with the Presidential Review Committee Action three. He said that the Academy was governed by its counsels who were nominated by the members of the Academy from their numbers and were appointed by the Minister. He said that although the Academy was not listed in the PFMA, it remained the only Academy that was recognised by SA government as an Academy of Science in the country, and therefore could not function as a unit of the Department.

Mr Hlophe said that in terms of Clause 27, which dealt with the secondment of employees of the entities to other entities or entities receiving seconded employees from other entities, the public member recommended that the word “seconded” not be included in the Bill, as it could be a financial burden of the entity if an employee was paid by the entity while being seconded. Mr Hlophe said that the Bill provided for secondment as an option to the entities and the specifics of each secondment would be in terms of the institution’s secondment policy and the contract with the other institution to the secondment. He added that all the entities had policies that dealt with secondment and what the Bill did was authorising secondments if there was a need to do a secondment and if it would be in the interests of the said entity to do a secondment.

In terms of Clause 32, the public member expressed concern that there were many entities that appeared to duplicate their roles and objectives, and he proposed a merge of South African Agency for Science and Technology (SAASTA) advancement with the Technology Innovation Agency (TIA). Mr Hlophe said that the SAASTA was not a listed entity in the PFMA as it was only a business unit of the National Research Foundation, which was another entity of the Department and therefore could not be merged with the TIA because their mandates were different.

He said that In terms of Clause 34, which was about the disqualification or prerequisites for the appointment of Board members to the entities, the pubic member said that he was unsure of the reference to permanent resident South Africans’ skills and knowledges enriched by international cooperation, but there must also be exercise of due diligence and care to avoid foreign companies stealing intellectual property by planting foreign researchers in research and scientific entities. The public member also asked about the kind of contract signed by a permanent resident with an entity with regards to intellectual property and restraint of trade. Mr Hlophe said that Clause 34 of the Bill empowered the Minister to appoint citizens and permanent residency holders as members of the Board and was not dealing with researchers. Although that was the case, Board members with permanent residency status signed the same contract of services that all other Board members who were citizens signed, and were also subjected to the same security checks that all members were subject to.

Discussion
Mr M Bara (DA, Gauteng) asked for clarification of the use of the words “shall” and “may” in section 10, in reference to consultations with the Minister. He also asked how the Board was responsible for the appointment of staff. Lastly, he asked about the instances where regulations contradicted the legislation, and which methods could be employed to avoid those contradictions.

Ms A Maleka (ANC, Mpumalanga) asked for clarity on which functions of the Board could be delegated to the Chief Executive Officer (CEO) and whether or not that would create conflict. She also asked about the measures that were in place to ensure that the delegation of functions would never place the entities under jeopardy.

Ms D Christians (DA, Northern Cape) asked for clarity in terms of clauses eight and nine. She also asked at what point the appointment of a CEO came before the Portfolio and Select Committee. Should the Portfolio and Select Committee have an issue with the appointment of the Chief Executive Officer, what steps can be taken?

Ms N Ndongeni (ANC, Eastern Cape) about the implications of being a Board member in terms of what qualified or disqualified a person to become a member of the Board.

Mr Hlophe replied to Mr Bara’s question regarding Section 10 by explaining that the word “shall” was used on the Bill to express that it was mandatory that the Board appoints a CEO in consultation with the Minister. He added that the word “may” was used to express that it was not in every instance that the acting CEO would make a decision – such as in the absence of the CEO; in the case where the CEO was present, the decision shall be made by the CEO.

He replied to the question regarding the appointment of staff by the Board by clarifying that the Board determined the conditions of how the appointment of staff would be made, which meant that the Board would be responsible for the policy of appointment, and the CEO would implement that policy by appointing the staff. The Board did not appoint the staff but rather determined the conditions of the appointment of staff. In terms of the regulations and contradictions, he said that the Minister was only empowered to make regulations that were within the confines of the Act and not beyond the Act this meant that before the promulgation of the regulations, a Chief State Law Advisor was consulted to certify the constitutionality of the regulations so that they do not contradict the legislation. After the promulgation, the Minister still had a duty to promote the regulations to Parliament.

Mr Hlophe replied to Ms Maleka’s question about the delegation of the functions of the Board. He said that the Bill stipulated that the Board would delegate certain functions but did not specify those functions. Some of the Acts stated that a specific function of the Board could not be delegated and such a function would be expressed in the Act and then the rest could be delegated to the CEO. In terms of the checks and balances of measures made for the functions, he stated that there must be a resolution of the Board that stated that the particular functions were delegated to the Board or to the CEO.

He responded to Ms Christians’ questions in terms of clause eight and nine which referred to Section 14 of the CSIR Act, by stating that the CISR was promulgated in 1988 before the PFMA came into effect and there were provisions on how the CSIR would invest its funds; when the PFMA came, it also provided, where its funds were available, for investments and where its funds were not available. He said that what the Department was now removing those provisions from the CSIR Act, as the PFMA was applicable to the CSIR, and every provision of the PFMA must be followed by the entities. The Department did not want one provision of the CSIR Act of the entities to be in conflict with the PFMA, which was why the council was removing all the entities that were catered for in the PFMA.

Concerning the issue of the liquidation, he said that what the Department was saying in terms of clause nine was that these entities were creatures of statutes created by Parliament with a mandate and objectives; whenever the entities were liquidated, Parliament must state how they must be liquidated because there was still a mandate, as some of these entities still had movable and immovable assets and employees. In such cases, Parliament must explain the liquidation process.

He responded to the question about regulations on the appointment of CEOs by stating that in this instance, in all the entities of the Department, the appointment of the CEOs did not go to the Portfolio Committee; the Board consulted with the Minister and the appointment was approved by the Cabinet. In terms of the Presidential Review Committee, only the entities that were listed as major entities of the country went to Parliament.

Mr Hlophe replied to Ms Ndongeni’s question by stating that the Act provided the prerequisites for members to be appointed in the Board of the CSIR and the requirements differed according to different entities and the mandates of those entities. He also said that there were disqualifications listed as well – such as mental illness, commitment of fraud or dishonesty; these applied whether before or after a member’s appointment into the Board. There was a section on the Act that stated that if a member had been dismissed from a position of trust due to misconduct before, he could be removed from a Board position or can be disqualified before entry.

Ms Christians asked what measures were in place to address misuse, as well as wasteful and unauthorised expenditures and in what way did the Department enforce accountability through consequence management. She also asked what solutions were there for intellectual property (IP) rights.

Mr Hlophe responded to Ms Christians by saying that all the entities’ Acts provided mostly in section two after their establishment that their provisions, in terms of the PFMA, shall be applied to the institution; so whatever that they did must be in line with the PFMA and if they contradicted it, that would be considered as misconduct.

He indicated that all issues of IP rights were determined in terms of the Publicly-Funded Research Act (PFRA), which determined how IP issues were managed. He said that whenever the Department or any of its entities provided funding for research to any other institution – whether it was governmental or non-governmental – there would always be provisions in the contract that the provisions of the PFRA would apply. If the CSIR was involved in any of the Coronavirus-related issues and there was use of public funds, then the council’s agreements needed to include the provisions of the PFRA.

The Chairperson stated that all affected stakeholders were consulted with regards to the formulation of the Bill. The office of the Chief State Law Advisor, who certified the Bill as constitutionally compliant, as well as the Department of Planning, Monitoring and Evaluation, exempted the application in respect of the Bill and the Bill was published for public comment on the Government Gazette of November 2017, inviting all interested parties to submit their comments within 60 days. He added that the Department of Science and Innovation (DSI) also published the Bill on its website inviting all interested parties to submit their comments within 60 days and on the closing day of the call for comments, submissions from two organisations were received. These were from the Western Cape Provincial Government as well as the Technology Innovation Agency. He said that the DSI reviewed the comments received and reviewed the Bill accordingly where necessary and responded to both organisations in writing.

The Chairperson then asked Members to suggest what the way forward should be for the Bill.

Mr Bara suggested that the Committee scheduled another meeting where the Members would discuss each clause of the Bill – which would also afford the Members an opportunity to double-check if there were any points of clarity or additions needed on the Bill, before they could adopt the Bill.

Ms Ndongeni agreed with Mr Bara’s suggestion.

The Chairperson also agreed and said that there would be an arrangement of the date in which the meeting would be held.

The meeting was adjourned.