Minister on Third Cellular Licence: discussion

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04 April 2000
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Meeting Summary

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Meeting report

4 April 2000

Executive involvement in the regulatory process around the granting of a third cellular licence was defended on the basis of a resolution of the National Assembly dated 10 November 1999. Amid indications of a clear conflict of interest involving at least the chairperson of SATRA, his recusal was deemed necessary to avoid any embarrassing legal action, which could undermine the bidding process. Whilst the investigation by the Auditor General was justified, a full judicial commission of enquiry was advised against. Since although there were tensions within the SATRA Council along with various allegations by councillors against fellow councillors, no concrete evidence had emerged.

It was categorically stated by the Minister that neither she nor the President had indicated, directly or indirectly, who they had wanted as the third cellular operator in the country.

Address by Minister on the third cellular licence controversy
The Minister of Communications, Ms Ivy Matsepe Casaburri, addressed the committee on the issue of the third cellular licence and the controversy and speculation around this.

The Minister pointed out that the Gobodo Report [a report commissioned by SATRA to investigate how confidential information had been leaked to the City Press Newspaper. It produced no conclusive findings] was something that she had come to know about via media speculation. She had written to SATRA to find out whether they had in fact commissioned, received and discussed such a report. Four SATRA councillors had replied in a letter saying that SATRA had commissioned and received such a report but had not discussed it. They had given reasons for the report not being discussed. The chairperson, Mr Maepa, had written a separate letter and had communicated a different view of the issue. This indicated some tension and differences within the SATRA Council. Members of Council at that time had suggested that it would be good if the President initiated an investigation which he did.

One of the issues raised by Gobodo Report was that some information had been stumbled upon which suggested that there may be a conflict of interest with SATRA and some "members" of a consortium which formed part of one of the contenders for the third cellular licence. It was stressed by the Minister that there was no attempt to undermine the integrity of the particular company however there seemed to be certain links to it. Nevertheless the information obtained was felt by the Minister to be largely due to rumours and speculation.

The Auditor-General's report, commissioned by the Portfolio Committee, picked up where Gobodo had left off. The first report by the Auditor-General, in December suggested that there were people in certain consortia who were linked with some of the applicants but there was no clarity on whether such persons were actually linked with the Council at all. The President at this stage cautioned any other investigation since he felt that one could not go on a wild goose chase and say that there was indeed something sinister unless certain substantive links were made. The group of people in this trust/consortia were respectable South African citizens who had just received a big business deal in Malawi and it would not be fair to raise all kinds of speculation about them when no truth to these allegations could be ascertained.

When nothing further transpired from the Auditor General by January 2000, the Minister suggested that affidavits be obtained from the councillors in order to test the information already obtained by the Auditor General in this matter. This was done.

In addition the Minister added that the Gobodo Report on the SATRA Council, as well as the Portfolio Committee's Report on the SATRA Council (accepted by Parliament) had not been discussed by SATRA. She had expressed her grave concern about the leadership of the Council to the President since it was unacceptable for Council to fail to discuss such reports. This was another indication of the acrimony that existed within the Council.

The Minister had suggested, given the history of acrimony within Council, that an independent observer be present during the adjudication process to ensure that it went smoothly without acrimony in order to preserve the integrity of Council. There was unanimous agreement on this by the SATRA chairperson and all the councillors. Mojanku Gumbi, the legal advisor to the President's Office had recommended Judge Semenia for this task.

It transpired from the preliminary report of the Auditor General that there was a person who had an interest in the consortium and he was in fact a business partner of the chairperson of the Council - Mr Nape Maepa. It was however added that the registrar of companies' records, were often not up to date and it was possible that this finding was based on old records. The Minister then met with the chairperson of Council and raised this issue with him. He could not remember signing any form in which he had de-registered himself from the company.

This matter was once again raised in the final Auditor General report. The Minister told the chairperson that there may be a perception that a conflict of interest existed if someone who had been the chairperson's partner was also a member of a company which had an interest in the third cell phone licence application. Without the chairperson there, this perception would not be there any longer and she felt that it would be better for the chairperson to recuse himself. This request was also made on the basis of the chairperson's affidavit to the Auditor General. The affidavit stated that he had told a certain partner of his that if the partner became involved in an application for the third cellular licence, he would have to recuse himself. She impressed upon the chairperson that there would be a negative impact on the industry should the process be challenged subsequently on the strength of an allegation that there was a conflict of interest. The chairperson agreed that going back to the drawing board would be "too ghastly to contemplate for the industry."

On the day of the adjudication by SATRA, the Minister was informed that the chairperson had recused himself but had subsequently changed his mind. The Minister went to the councillors' meeting place and remonstrated that she could not understand the chairperson's position since she was faced with the potential conflict of interest as well as the proof of the affidavit. She was worried about the perceptions which would be created and what would happen to the industry.

On the following day the president and the Minister received a letter from the chairperson confirming his recusal. She said "was not aware of anything suggested in the media that the President had ever discussed with her". She said that "regretted the suggestions in the media". She wanted the integrity of the President and herself to be respected. At no stage did the President indicate, directly or indirectly who he wanted as the third cellular operator in the country.

After SATRA's recommendation the Minister went through all the applicants' documentation and fully applied her mind to the task. She did not ask SATRA any other questions except to request the documents relating to the applications. The Minister had as yet not received any indication from SATRA regarding who the recommended preferred bidder was. She was also not told by any political person who this preferred bidder should be.

Ms D Smuts (DP) thanked the Minister for her frankness in confirming a degree of involvement by the executive quite beyond what had been of concern to the DP. She wanted confirmation that the President himself was involved at so early a stage - his suggestion to the Minister that the auditors should do an investigation to avoid wild goose chases since some prominent South Africans were involved. She wanted an indication of what date this had occurred.

The Minister said that it was in fact the Portfolio Committee which had asked the Auditor General to do an investigation. It was as a result of this report that the presidency had said that the process should go on. It was not the president 'that was involving himself' but rather she was giving a report to the president before the end-of-year holidays in order to indicate where the matter stood, since this matter was in the public eye.

The chairperson, Mr N Kekana (ANC), referred members to the resolution of 10 November 1999 where the National Assembly had stated that two actions had to be taken. "Firstly the Auditor General had to undertake an audit and secondly the relevant executive authority was requested to take urgent steps to safeguard public confidence in the SATRA Council and to restore its credibility pertaining to decision making including evaluating the conduct of each individual councillor's behaviour and performance in office." By "relevent executive authority" was meant either the Minister, the President or any Executive person designated to deal with this matter.

Ms Smuts pointed out that that the DP was not part of this resolution.

The chairperson agreed, saying that the DP objected to the resolution.

The Minister added that the briefing to the Presidency was precisely in the context of this resolution.

Secondly Ms Smuts said that the Minister had said that she herself had raised the issue of Mr Maepa's position with the Presidential Legal Adviser, Mojanku Gumbi. Was this done at a stage when Mr Maepa had indicated that he would not recuse himself? She wanted confirmation of this. She also wanted confirmation that Mojanku Gumbi had also spoken to Maepa and suggested that recusal was appropriate.

The Minister said that she had gone to the President to suggest that an independent person should observe the adjudication process. She suggested that the President be the one to assist in obtaining such a person. This task was given to the Presidential Legal Adviser, Mojanku Gumbi. The Minister told Mojanku Gumbi of the situation that had arisen and told him about the report. Mojanku Gumbi recommended Judge Semenia to be the independent observer on the same day. Judge Semenia had been briefed by the Minister, together with Mojanku Gumbi because Gumbi had found him. This was not because the chairperson had not yet recused himself.

Whilst Ms Smuts appreciated the frankness, she pointed out that what was on record was a degree of involvement by the executive in what ought to have been a completely independent regulatory process. This left one very concerned.

Ms S Vos (IFP) said that the Auditor General had stated in his report that he had neither the time nor the resources to investigate the issue fully and hence his report was inconclusive. She wanted to know whether the Minister had any knowledge of any direct or indirect links of other councillors, other than Councillor Maepa, to any of the consortia in any way.

The Minister said that according to the auditors, in December there had been numerous allegations and counter allegations made within SATRA itself - which was part of the Minister's problem. The very reason for bringing Judge Semenia into the process to observe was to make sure that these difficulties did not factor into the adjudication process. According to the auditors there were three councillors:Councillors Maepa, Funde - and his membership of the Electricity Board - and Ms Gosa. Subsequently Maepa's affidavit spoke for itself. Eddy Funde did not deny his involvement in the Electricity Board and claimed that there was no conflict of interest.

Ms Vos asked whether it had been brought to the Minister's attention that SATRA's legal adviser had in fact said that there was no conflict of interest with regard to Councillor Maepa.

The Minister was not aware of a legal advisor's opinion that there was no conflict of interest.

An oposition party committee member said that the announcement of the third cellular company was a major happening in South Africa. After the reports in the papers in the past few weeks, the whole process seemed to be very clouded. He asked whether the Minister envisaged appointing a commission of enquiry to investigate and clarify the matter.

The Minister said that government and Parliament had no objection to investigations. However one could not spend millions of rands on investigations which went on wild goose chases. One needed to have concrete evidence and not speculative allegations. The SATRA situation was difficult because the allegations and counter allegations were coming from within SATRA but with nothing substantive to back them up. This was of great frustration for the auditors working for the Auditor General. When the potential intended applicant was announced, many people came forward with all kinds of allegations which the National Intelligence Agency had looked at but they led nowhere. She said that she could have a commission of inquiry to investigate which would make lots of money for lawyers and auditors but end up exactly where the Auditor General was. Only with concrete evidence before her, would the Minister be prepared to undertake further investigation.

Mr S Abram (UDM) said that the weekend press printed a statement by Chairperson Maepa in which he claimed to know certain things. The Minister had now given her account. He wanted to know what motivated Mr Maepa to say these things in the press. One accepted that the investigation had shown that Mr Maepa's business partner was involved in a trust, which in turn was an applicant. If this was true then there was a serious case of there being some form of interest involved. One needed to find out what Mr Maepa's version was. Did the Minister take any steps, in the light of the statement made by Mr Maepa over the weekend, to verify the content of what he had said.

The Minister had not spoken with Mr Maepa on the content of what he had said. Neither had Mr Maepa offered to deny what was in the paper. At the opening of the SADC radio frequency spectrum conference (which the Minister had opened the previous day) Mr Maepa was also present and had had an opportunity to speak to the Minister and say that he had been misquoted but he had failed to say anything. What was interesting for the Minister was that this allegation had allegedly been made on affidavit. She said that she would like to have access to such an affidavit since this was a serious allegation against the Minister and the President. The Minister said that from the beginning she had given the chairperson, Mr Maepa, the benefit of the doubt and in this same spirit, she wanted to deal with the allegations calmly. When the Gobodo Report came out no one could accuse the Minister of having expressed an opinion until the Minister herself had gone through a copy of the report. This was precisely because she did not want to be seen to be getting into a battle when she did not know whose battle it was and whether she should in fact be engaged in it.

Mr Abram said that despite the Minister's caution in wanting to take any further action in respect of Mr Maepa, since the Portfolio Committee had a responsibility to recommend persons to bodies like SATRA, it was important that Mr Maepa appear before the committee. The committee could then obtain his version and see whether he stood by what he had said in the press. His affidavits would also then be requested.

Mr R Pieterse (ANC) said that in previous meetings with councillors, they had admitted that there was tension amongst themselves however the councillors said that this would not undermine the bidding process and prevent the preferred bidder from emerging. Even the bidders had confirmed that they were happy with the process being followed. He wanted confirmation that the process to ensure that the preferred bidder be chosen, had been completed and if not how far this was from completion.

The Minister said that the tension did still exist within the Council. However in the light of the councillors knowing that they were undertaking an important national task, she was prepared to give them the benefit of the doubt in assuming that they would be able to put their differences aside. Even though she did not get an answer from the Council on Saturday 1 April as expected and had as yet not received such answer, she would still give them the benefit of the doubt. If their delay was in the interests of doing their work thoroughly in order to arrive at a good decision then she would be happy. She certainly hoped that this delay was not because of any tension in the ranks. The SATRA Council had indicated the previous day that they would give a decision for the latest by Friday 7 April.

An ANC member stated that from the Minister's explanation she felt that the process of bidding was clear and thorough. If any person or political party wanted to challenge the process of choosing the preferred bidder then they were welcome to do so in the high court. The various consultative processes had been explained, as well as the steps taken by the Minister. SATRA itself had also been called to the committee and the Auditor General's report had been explained and presented to the committee. On the side of the ANC the matter was closed and if any one wanted to open it, the High Court was there.

The Chairperson raised an issue, arising from the committee's 10 November 1999 report. There was a concern raised on the role of the "consultant" especially Afcent. When asked about the role of Afcent, SATRA said that they had redefined the scope of the work of Afcent limiting it to providing "some analysis of but not the comparative assessment of all the applications". In the Financial Mail of Friday 31 March, a question was asked to B.D.O. Spencer (of the consultants) on this issue and the same conclusion was reached namely that the scope of the work of Afcent was limited to providing "some analysis of but not the comparative assessment of all the applications". Many media reports had alluded that consultants indeed did do a comparative assessment of all the applications. Only the Financial Mail has in fact tested this with what the Consultants themselves say. The chairperson asked the Minister whether in the recommendation itself there were any indications that the Council of SATRA had differed with the consultants on the point of providing a comparative assessment of the applications.

The Minister said that she could not remember whether the recommendations made any reference as to how this matter was dealt with. Nevertheless in any situation where you have asked consultants, you would look at the consultants' assessment but in the final analysis it is your decision and one cannot be dictated to solely by other's opinions. This issue was important since one of today's newspapers (04 April 2000) seemed to indicate that a decision had already been made and government was going to decide one way. She recalled the saying: "it ain't over till the fat lady sings, and this fat lady hasn't sung at all!"

The committee member asked the Minister whether she was planning to make public the investigation by the NIA? The Minister said that she had no intention of doing this.

Ms Vos said that there were clearly hugely problematic issues, which had arisen throughout the entire process involving the councillors alluded to by the Minister. There were various allegations involving alleged bias by several councillors. She had a problem that although there were various allegations made with regard to direct and indirect interests involving several councillors, yet pressure was put on only the chairperson, Mr Maepa, to recuse himself. This was problematic because the information given to the Auditor General about Maepa had not been tested legally. This information was based on allegations made by various councillors and it was public knowledge that there was dissension of quite an ugly nature within the Council.

The Minister was not too sure why the Auditor General did not test this information. There were many things that the auditors had not test - for example the issue of "so and so was a lawyer in the United States but was not one in South Africa but was purporting to be one". There were thus all kinds of things being said but no concrete evidence. This was the problem of the auditors. The lawyer issue had been picked up by Gobodo, but had not been followed up by the auditors. This indicated that they did not see this as substantively material to the investigation. If it was material this would have been a dereliction of their duty.

Ms Vos said that the Auditor General did make it clear that he did not have the time or the resources to do a complete investigation. Clearly these allegations had not been tested legally.

The Minister said that she had left it to the auditors to determine whether there were red lights flickering. They could not simply only follow the smoke. She could have said that there was a budget to follow every trace of smoke but this was not possible. Whilst no one was interested in covering up any impropriety, by the same token no one wanted to open up cans of worms which had nothing to do with the issue at hand. The Auditors were concerned with the fractious nature of the allegations, which came from councillors as well as Council staff. A choice had to be made and it had been decided that the integrity of the Council, the bidding processes, the auditor general's office, the Minister and indeed the President had to be respected and not undermined by persons with hidden agendas or wild allegations. The decision, which was made, had to be good for the country

Mr Abram said that whilst the decision which was made had to be good for the country, it was important that the allegations made were cleared. He suggested that a preliminary investigation be undertaken in respect of Mr Maepa's statement. Such preliminary investigation should ideally find that the whole process concerning the adjudication was beyond reproach before the Minister made any decision. This would be in the best interests of the country.

The Minister cautioned the members against drawing the conclusion that the delay in SATRA's decision indicated a division. There were six bidders and it could be that the thorough assessment of the applications and revisiting of all positions were causing the delay.

Mr Magashule (ANC) said that it was clear that the Minister and the Government had been very transparent in all its activities. In various activities in Parliament and in other departments and bodies, despite recommendations being made there always had to be decisions taken. In any body there would be differences of opinion and views. It had been Parliament's decision to get the Auditor General to investigate. Nobody should be allowed to set the agenda of the Minister. She should be calm and coolheaded when taking her decision. The allegations in the media should not determine the agenda and set the pace for the Minister.

The chairperson invited the Minister to make her concluding remarks. Ms Smuts, on a point of order stated that she would be surprised if Mr Maepa would accept the proposed invitation suggested by Mr Abrams, to appear before the committee, given the fact he had expressed a problem/ dispute between himself and the chairperson of the committee. She nevertheless supported the proposal for Mr Maepa to be invited to put his case.

The chairperson interrupted and said that this was not a point of order and said that Ms Smuts was an opportunist by using an incident, which had taken place in the past in order to support her position. There were no differences between himself and Mr Maepa. Nowhere on the agenda of the meeting was there any room given for resolutions to be passed. The meeting was simply to obtain information from the Minister.

The Minister said that her understanding in terms of the Act was that SATRA had to make a recommendation. The decision lay with the Minister and she had to take the flack for the decision - not that SATRA made - but that she made having looked at all the evidence before her. She ended by calling for better, more objective and more accurate journalistic work by the media.



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