Election of Chairperson; Public Protector Report on Toyota Quantum Panel Vans: DTIC, NRCS & SABS input

Meeting report

Opening Remarks
The Committee Secretary opened the meeting, stating that the Committee did not have a permanent Chairperson following the death of the previous Chairperson in December 2021. However, he had been informed that the majority party had made a recommendation in respect of a Chairperson. In terms of Parliamentary Rule 158, he called for a nomination for a Chairperson.

Ms J Hermans (ANC) was nominated and elected unopposed.

Mr M Cuthbert (DA) complimented the Chairperson and wished her well. He had  enjoyed working with her as Acting Chairperson.

Mr F Mulder (FF+) congratulated the Chairperson on behalf of the FF+.

Mr Z Burns-Ncamashe (ANC)  offered his full support to the Chairperson, stating that the ANC took the position of Chairperson of a Portfolio Committee very seriously.

The  Chairperson stated that the Public Protector’s Report regarding the illegal conversion of goods carrying Toyota Quantum Vans into Passenger Carrying Minibus Taxis had been referred to the Committee. The Committee was required to consider the content of the report and the recommendations by the Public Protector. The Committee was to submit a report on actions being undertaken in response to the report. The Department of Trade, Industry and Competition (dtic), the South African Bureau of Standards (SABS) and the National Regulator for Compulsory Specifications (NRCS) had been requested to provide plans and an update on action in respect of the Report by the Public Protector (PP).

Mr Stephan Hanival, Acting DDG: Industrial Competitiveness and Growth, dtic, introduced the delegation. He indicated that the Department and each entity would report separately, commencing with the Chief Director: Technical Infrastructure, dtic, Dr Tshengedzeni Demana, who was supported on the platform by members of the Technical Structures team. Ms Jodi Scholtz, the Administrator of the SABS would present on behalf of that entity and Mr Edward Mamadise, the CEO, was in attendance with his team from the NRCS.

Mr Hanival stated that the presentations would commence with clarifying the legal mandate of each entity and would then indicate what action was being taken in respect of the PP report.

Presentation by the DTIC
Dr Demana said that he would go through his presentation quickly as SABS and NRCS would provide the detail. The matter related to the dtic’s work in respect of localisation but the complaint dealt with by the Public Protector referred to the process of regulating illegally converted vehicles that were already operating on public roads. Owners had been required, at the time, to take the vehicles to the Department of Transport (DoT) so that they could be modified. Although the report suggested otherwise, it is legally permissible to convert a vehicle. The challenge lay in policing and keeping vehicles that had been converted illegally off the roads as such vehicles did not undergo a homologation process but many had been licensed. Fraud could take place where the illegal conversions were licensed and registered as up to 16 seaters instead of three seaters in the e-NaTIS system. The DoT conceded that there was a possibility that front-line staff at the licensing offices had altered information on the e-NaTIS system, thus opening the system to manipulation and fraudulent activities.

The NRCS and SABS had written to the Department seeking permission to take the Public Protector Report
on review, especially as the entities felt they had been incorrectly held accountable while there were no findings against the Road Traffic Management Corporation that had the responsibility to remove those vehicles from the roads. However, in the interest of collegial working relations and cooperative governance, the Department had not supported a review through the court system. The Department had encouraged the development of two Memoranda of Agreement and their signing – one between NRCS and SABS and the other between DoT and NRCS.

He stressed that the findings were not against the dtic. In hindsight, he believed that the matter should have been taken to court to correct the report as, year after year, more and more illegally converted vehicles were licensed.

(See Presentation)

Presentation by SABS
Ms Scholtz focused on the role of SABS in the PP’s Report. She expressed concerns about the legal errors in the PP’s report but she focused on the actions taken in response to the PP Report. She had taken internal legal opinion on the report, but the period for requesting a review had prescribed. There were no findings against SABS, nor actions to be taken by SABS. However, SABS did not have the policy tools that the PP required SABS to implement, nor the powers that the PP assumed SABS to have.

It was important to highlight that the PP’s Report did not grasp the role of the SABS in the matter in order to place answers to the Committee’s questions in context. A key point was that SABS was not a Regulator but conducted tests as a service provider and based on instructions from the customer. The SABS tested vehicle samples received from SA Taxi Finance at the time and that was the extent of the SABS’ involvement in the matter.

Ms Scholtz stated that SABS was very conscious of the carnage on SA roads, but the entity was limited by its mandate and there was nothing further that SABS was able to do.

(See Presentation)

Presentation by the NRCS
Mr Mamadise emphasised that vehicle modifications were permitted in terms of the law. However, some of the vehicles identified by the PP as illegal vehicles had been converted via the backdoor and had not been legally tested and registered as modified vehicles. It was not the legal mandate of the NRCS to stop vehicles from operating on the road. That would be ultra vires: it was the responsibility of the law enforcement authority to check, register and sanction vehicles, as appropriate. The NRCS did not agree with the findings of the PP Report.

In order to deal with illegal activities regarding import and export of motor vehicles, the International Trade Administration Commission (ITAC) had commissioned a working group which comprised of stakeholders,
Including amongst others, the NRCS. As part of the task team, the NRCS was made aware of 2 353 illegally converted panel vans.

One suggestion was to close the “loop-hole” where taxi operators, were using taxi vehicles under the banner
of “long-distance”/ “group touring” vehicles although operating as taxis. The Special Investigating Unit had investigated alleged corruption in relation to registration of illegally modified taxis at the Vereeniging licensing office but the Unit had found poor administration and incomplete documents at that licensing office.

Responses to the challenge included the fact that all modifications of motor vehicles were now required to have the homologation support documents from the original equipment manufacturer (OEMs) which authorised the modifiers/builders to carry on with a second tier vehicle approval. The NRCS had initiated a project to review Automotive regulations as part of the safer vehicles 2025 project to ensure that the regulations incorporated technological advancement, including self-driving cars, electric cars, etc. and also incorporated findings of the vehicle fires, panel van conversions and conversion of motor vehicles, including ambulances.

The NRCS recommended that the requirements for all vehicle modifications should be reviewed and that there should be a standardisation of vehicle modifications for passenger-carrying vehicles, regardless of its purpose. The entity also recommended the review of relevant legislation and that the responsibility of
different government entities so that cross-cutting mandates could be addressed.

(See Presentation)

Discussion
Mr S Mbuyane (ANC) expressed concern about the dtic’s statement about the PP misunderstanding the roles of the SABS and NRCS. That was not an issue as the Department had decided not to take the report on review, so the recommendations of the PP were binding and now had to be addressed. There was no point in addressing concerns. He wanted to know what the dtic would be doing going forward.

Mr Burns-Ncamashe requested that, in future, the presenters should not use abbreviations throughout the presentation as new Members on the Committee would not understand and would be lost during the presentation.

He noted the mention of a Memorandum of Understanding (MoU) between SABS and the NRCS but he expressed the opinion that MoUs without a practical programme did not produce a positive result. An MoU was an understanding that entities were entering into a relationship. That was one thing, but what were the two entities doing to mutually reinforce their working relationship in practical terms? The issue was about ensuring quality standards for safety and so on, which was important in the light of the carnage on SA roads. What were the practical measures that the dtic and the entities undertook to update the specifications for the automotive industry and to curb those modifications done through irregular means? He did not like talking about illicit practices within an industry as that was referred to as something “black” while the masterminds were always referred to as “white collar” criminals. They sat in their cosy offices manipulating while other people were doing the dirty jobs. What was the Department doing to stop those practices?

Mr C Malematja (ANC) said that one had to remember the responsibility of deployment or the responsibility given to one. The entities should never speak as if they operated from different countries; they had to work jointly to save lives. Every year the public was given the statistics of many people who had died on the roads.

He asked whether SABS had considered rendering a complementary assessment service in order to improve the effectiveness of the two entities. Was SABS not able to pick up the irregular conversions and non-compliance of vehicles, notwithstanding that it was not a regulator? Noting that SABS did not set specifications, it nevertheless appeared that there was a direct correlation between testing vehicles for national standards and vehicle safety standards. How did SABS ensure that safety standards were implemented?

Ms R Moatshe (ANC) asked the NRCS what measures had been adopted to oversee consistent compliance by manufacturers, importers and builders (MIBs) with the necessary specifications. What measures were in place to improve the NRCS surveillance strategy to combat non-compliance, if any? What sanctions or penalties were imposed in that regard? What measures were in place to improve the responsiveness of the NRCS to concerns of non-compliance?

Ms Scholtz took note of Mr Burns-Ncamashe’s point about the use of the acronyms and the difficulties that posed for those not in the sector. She explained that the MoU between SABS and the NRCS was a governance framework. In addition, there was lots of interaction on a technical and laboratory level. Regular technical meetings and regular discussions on test reports were held and she and the CEO of the NRCS met where technical staff could not resolve issues. The MOU guided the process, but it was underpinned by many practical interactions that took place on a daily and a weekly basis.

Ms Scholtz stated that it had taken 400 days to write a national standard from commencement to publication date. That process had been reduced to 300 days and management monitored for any team that was taking too long in completing a standard.

SABS provided conformity assessment services to a number of players, including the NRCS, and that was governed by a Service Level Agreement in terms of turnaround times. Concerning picking up the safety risks, Ms Scholtz stated that SABS had experts in testing and assessment but the technical expertise resided in the voluntary technical committees where experts came in on a voluntary basis to help with the development of standards. SABS staff would not know if other standards were available. It was possible to consult with the technical committees to find out if there were other standards, but the technical committees really monitored standards and informed SABS when it became necessary to review a standard. The technical committees were responsible for requesting a review of standards, where applicable.

The SABS was raising awareness of standards but that awareness was not quite there as yet, although SABS currently raised awareness via webinars, talks and engagements, talks at industry associations, etc.  Plans were in place for developing awareness in the coming year. The Minister of Trade, Industry and Competition, Minister Patel, had given strategic direction to the entities for the new financial year and that had included a discussion on creating an awareness of standards.

Mr Mamadise agreed with Mr Mbuyane that the PP report was binding now that the time for review had expired and hence the NRCS was implementing all recommendations of the Report, despite concerns. He had provided detail of those concerns so that Members could separate fact from fiction.

He informed Mr Burns-Ncamashe that all abbreviations used were contained in slide 35 to enable Members to understand the abbreviations, but he would take his concerns into consideration in future presentations. Regarding the MoU, he declared that the NRCS was not naïve about MoU’s: it was not simply a nice thing to have. In this case, it formed a platform for engagement between the entities on matters of mutual interest and collaboration. A structure, known as the a steercom, had been set up in response to the MoU which allowed the entities to engage on various issues, such as testing, development of standards, conformity assessment, issues of facilities, especially as the two entities were sharing laboratories. The NRCS was able to recommend changes to standards and so on to SABS through its work on technical committees and the like.
 
In addition to the MOU, the entities had identified a need for Service Level Agreements (SLAs) to strengthen the relationship and the collaboration between NRCS and SABS in the interest of the SA public.

Project 2025 was a safer vehicles project initiated by the NRCS to review automotive regulations as part of checking that regulations incorporated technological advancements in the field, including self-driving cars, electric cars, etc. and would also incorporate findings of vehicle fires, panel van conversions and the conversion of motor vehicles, including ambulances. He explained that the review was a lengthy process as it involved stakeholder consultations, the publication of standards, a period for public comments and consideration of comments and inputs. The process could take up to a year.

Regarding measures put in place to address issues raised by the PP, he stressed that the NRCS could only do what was in its mandate and scope as per legislation as it was a creature of statute. A task team had been established to look at all the issues and gaps identified by the PP. The NRCS would present a report once the review was complete and that would contain all findings and recommendations to improve measures.

Mr Mamadise informed Ms Moatshe that there were two ways of ensuring consistent compliance. The first was the approval process where all manufacturers and importers of vehicles applied for approval by submitting a sample for assessment and documentation on the vehicle for which they were seeking approval that showed it was in line with the legislation for compulsory specifications. If all was correct, NRCS issued a Letter of Authority (LOA). The second method was through the market surveillance strategy which was informed by the risk-based approach, whereby high-risk manufacturers and builders of motor vehicles were subject to visits by inspectors.

One recommendation was the issue of introducing an assessment of the conformity of production of vehicles. Section 15 of the NRCS allowed the entity to respond to non-compliance via various methods which included confiscation of the product, destruction of the product, etc. but in terms of the MIBs, the only power for ensuring compliance was to withdraw registration of a company. To obtain a certificate of compliance, a client needed to submit a sample for assessment, but the client would have to ensure that all other vehicles in that production line met the same standard as observed in the sample.

Regarding improvements, the NRCS had introduced a risk-based approach which allowed its resources to be focussed on high risk manufacturers and which allowed the entity to issue Directives, dependent on what was found. There were a number of different consequences, which included returning a product to a foreign country outside of SA, destruction of the goods or any other measures that the NRCS had regulated. In relation to the MIBs specifically, section 7 of the NRCS Act gave the entity powers of de-registration of an MIB if it were found to be non-compliant, and that had been done in the case of the Umgeni Auto Traders.

Regarding the concerns of non-compliance, the NRCS had processes to manage any such concern, including the registration of a complaint and to allocate that complaint to a specific unit in the NRCS which meant that the head of the relevant unit would investigate and provide feedback in relation to the complaint. In light of the PP report, the NRCS had established a task team to look at vehicle conversions, which was a further step to looking at conversions in general, and risks in specific. He was waiting for that report.

Ms N Motaung (ANC) asked how many of the 1 300 annual MIB inspections were found to be non-compliant.
Did the NRCS conduct surveillance on MIBs involved in vehicles carrying passengers? What mechanisms were in place to detect vehicles that were non-compliant?

Mr Duncan Mutengwe, Acting: Chief Operations Officer, NRCS, added to the point about the task team in the Motor Vehicle Unit and its ability to respond to complaints. The task team ensured that when a complaint was received, including a complaint from a member of the public who was not happy with a vehicle, things were attended to immediately so that the entity did not end up in the media.

He responded to Ms Motaung’s question about the number of non-compliances in the 1 300 MIB companies. He explained that the figure of 1 300 was, on average, the number of MIBs that the NRCS had the capacity to investigate in a year. He could not quantify the number of non-compliances, but they usually included non-adherence to original specifications approved for the vehicle. Non-compliances were usually found in the trailer manufacturing sector, but also in other components in the vehicle manufacturing processes. The NRCS would invoke section 15 of the NRCS Act or regulation 44 of the National Road Traffic Act, which meant that those vehicles could not be registered. A lot of work was being done in the trailer sector as that was where there was a great deal of non-compliance.

Mr Mamadise added that practical steps being taken with stakeholders included the MoU with the Department of Transport (DoT) which had created a platform for the two organisations to engage on issues identified in the inspections of the MIBs and which enabled the NRCS to highlight findings in relation to motor vehicles.

Mr Hanival agreed with Mr Mbuyane regarding the  Public Protector’s Report. He explained that the dtic had accepted the report of the PP and the presentations had attempted to focus on the remedial actions put in place to respond to that report. He also agreed with Mr Burns-Ncamashe that the illicit economy was problematic but the dtic and entities had tightened up the tools that were available to them, such as the tightening of surveillance and standards, but no one could rest easy until the illegally converted panel vans were off the road. Enforcement was a challenge for the dtic and the entities, but they were working with DoT that was in a position to follow up the matter. He believed, very strongly, that there should be consequence management for officials who had licensed the vehicles, but that too was not in the remit of the dtic.

The Chairperson noted that the purpose of the meeting had been to check the implementation of the action plans in response to the PP Report. Because the Committee had received three separate presentations, she asked for a single document that set out the action plans that had been submitted to the PP so that the Committee could undertake oversight of the matter.

Mr Hanival agreed to compile the requested document.

The Committee Secretary reminded the Chairperson that the Committee had to submit a report in that regard. He requested that the report be received from the dtic within seven days.
                                                       
Closing Remarks
The Committee Secretary informed Members that the following meeting would be on Tuesday 1 March 2022 when the Committee would receive a briefing from the dtic on its 2021 Annual Incentive Report. The Committee would receive a status report on the investigation into the National Lotteries Commission by the Special Investigating Unit on Wednesday, 2 March 2022.

The meeting was adjourned.