Follow-up: Remedial Action relating to Public Protector’s Report; Committee Report on DTIC Quarterly Performance

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Trade, Industry and Competition

09 March 2022
Chairperson: Ms J Hermans (ANC)
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Meeting Summary

Video (Part 1)

Video (Part 2)

Draft Concept Document on Oversight (Not made available)
Letter from the Acting DG to the Portfolio Committee (Confidential)

23 Feb 2022

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

Report No. 37 of 2018/19 on an investigation into the illegal conversion of goods carrying Toyota Quantum panel vans into passenger carrying minibus taxis to transport members of the public for reward

Tabled Committee Reports

The Portfolio Committee on Trade and Industry met via a virtual platform to receive a briefing from the Department of Trade, Industry and Competition and two of its entities, the South African Bureau of Standards and the National Regulator of Component Specifications on the remedial action taken in order to comply with the Public Protector’s Report  No. 37 of 2018/19 on the Conversion of Quantum Panel Vans into Taxis.

There were no direct adverse findings against the Department of Trade, Industry and Competition but the Minister of Trade, Industry and Competition was mandated to take urgent and appropriate steps to harness and foster good, effective and efficient working relations between the South African Bureau of Standards and the National Regulator of Component Specifications. In order to comply with the mandated remedial action, the Department had facilitated the signing of a Memorandum of Understanding between the Bureau and the Regulator to formalise areas of cooperation and collaboration. Joint Working Committees had been established across the two entities and there were mutually agreed programmes and projects, while management meetings between senior officials from the two entities would deal with ongoing operational matters. The Department requested the Portfolio Committee to facilitate a meeting with the Portfolio Committee on Transport at which the Department of Transport and its entities could provide a progress report on the implementation of the Public Protector’s report and, specifically, its ongoing work to remove the remaining illegally-converted panel vans that continued to operate as taxis from the road. Neither the Department, nor its entities, could not respond to the mandate to ensure that illegally converted taxis were taken off the roads as that action was not within the scope of their legal mandates.

The Bureau was not mandated to undertake any remedial action. The Regulator informed the Committee that it had established a dedicated team of 100 inspectors to inspect all registered manufacturers, importers and builders (MIBs) of motor vehicles. A Service Level Agreement with the Department of Transport set out the roles and responsibilities of each party and promoted regular engagement. The Regulator pointed out that the Department of Transport was the policy owner of all matters relating to vehicles, adding that the automotive regulatory system was fragmented between national Departments, as well as between national and provincial competencies. The Committee was provided with the details of seven specific remedial actions taken by the Regulator in response to the Public Protector’s report.

Members expressed concern that, because the Department had not taken the report on review, it set a precedent as to what could be expected from the Department and its entities. What re-enforcing measures had been implemented between the two entities, apart from the MOU. What practical steps had been taken to ensure an acceptable standard in terms of the product itself? Had the two entities considered offering conformity services to improve their effectiveness? Why had there had been a need for the actions that they had taken, if there were no direct adverse findings against the Department and its entities?

The Committee discussed its report on the Department’s performance for Quarters 2 and 3 2021/22. Members noted that localisation could not be achieved without beneficiation and suggested that the two processes be linked in the report. It was agreed that Members take the report to their party caucuses for approval.

The Committee Secretariat presented a Proposed 2022 Oversight Visit Programme. The document noted that two rural provinces had not been visited by the previous Committee, i.e. Limpopo and Mpumalanga. It was suggested that a visit be made to each province to engage with industrial parks, SEZs, the Black Industrial Programme, Incentive schemes in Agri-processing and border posts. Regarding a study tour, the Committee Secretary acknowledged that study tours were not yet permitted by the Speaker but he suggested that the Committee could look into the possibility of undertaking a study tour to one or more African countries to look at  trade facilitation, ease of doing business and implementation of AfCFTA and SADC FTA or foreign Economic Offices. The most suitable country would be Ghana.

The Committee indicated that the proposals relating to study tours, was too wide-ranging and needed to be more focused and re-considered.
 

Meeting report

Opening Remarks
The Chairperson introduced the agenda. The Committee had recently been briefed on the Public Protector’s Report No. 37 of 2018/19 on the systemic investigation into the illegal conversion of goods-carrying Toyota Quantum panel vans into passenger-carrying minibus taxis to transport members of the public for reward. The focus today would be specifically on the remedial action taken. In addition, the Committee’s report on the Department of Trade, Industry and Competition’s performance will be considered.
 
Presentation on Implementation of the Remedial Action Prescribed by the Public Protector’s Report Regarding Toyota Quantum Vans
Ms Malebo Mabitje-Thompson, Acting DG of the Department of Trade, Industry and Competition (dtic), introduced her colleagues on the platform: Mr Stephen Hanival, Acting DDG: Industrial Competition and Growth and Dr Tshenge Demana, Chief Director, Technical Infrastructure. The two dtic entities implicated in the report, the SA Bureau of Standards (SABS) and National Regulator for Component Specifications (NRCS), were represented by Ms Jodi Scholtz, Administrator, SABS and Mr Edward Mamadise, CEO, NRCS. The NRCS would provide the detail of the actions taken in response to the Public Protector (PP) Report. Mr Hanival would provide an overview.

Mr Hanival stated that the presentation was supplementary to the previous briefing to the Committee on the engagement of the Department and the two entities with the report. The dtic had complied with the mandated Remedial Action by facilitating a Memorandum of Understanding (MoU) between NRCS and SABS to formalise areas of cooperation and collaboration. Joint Working Committees had been established and there were mutually agreed programmes and projects, while management meetings would deal with ongoing operational matters.

Mr Mamadise stated that the NRCS had established a dedicated team of 100 inspectors to inspect all registered manufacturers, importers and builders (MIBs) of motor vehicles. A Service Level Agreement (SLA) with the Department of Transport had come into effect on 01 April 2021. The SLA set out the roles and
responsibilities of each party and promoted regular engagement. He pointed out that the Department of Transport (DoT) was the policy owner of all matters relating to vehicles, adding that the automotive regulatory system was fragmented between national Departments, as well as between national and provincial competencies. He listed seven specific ways in which the NRCS itself had responded to the report.

Mr Hanival stressed the need the for Portfolio Committee to facilitate a meeting wherein the DoT and its entities could provide a progress report on the implementation of the Public Protector’s report and its ongoing work to remove the remaining illegally-converted panel vans that continued to operate as taxis.

(See  Presentation)

The Chairperson thanked the Acting DG and invited comments and questions.

Discussion
Mr Z Burns-Ncamashe (ANC) informed the meeting that according to established case law, when findings and remedial actions were made by the PP, they were binding in every respect. Unless they were put on review, they remained findings to be executed. That meant that if there were any reservations or ill-feelings about the findings of the PP, nothing could be done about it as, in legal terms, the matter was considered trite. It would not be helpful for the dtic or the entities to hold any reservations.

He asked what re-enforcing measures had been implemented between NRCS and the SABS, apart from the MoU. What practical steps had been taken as it was all about safety measures to protect citizens and commuters and ensuring an acceptable standard in terms of the product itself. The issues might not be limited to the purview of dtic. There were other role players, i.e. in that case, the DoT. Engaging DoT became key and critical and necessitated joint Portfolio Committee meetings. If not, and the matter  was not handled properly, there would be adverse effects in terms of compromising the quality of standards overseen by the dtic and its entities.

Secondly, he asked whether SABS and NRCS had considered offering conformity services to improve their effectiveness?

Mr Hanival said the dtic would re-consider its approach to the PP Report. Even if the remedial action was implemented, he agreed that the findings that were not accurate needed to be corrected and that would be borne in mind by the Department going forward.

Ms Scholtz explained that SABS was mandated to set standards. The relevant technical committee had been provided with the information on the illegally converted Quantum panel vans and an amended standard would be gazetted as soon a consolidated viewpoint was reached by the technical committee.

She added that SABS did offer conformity services on a voluntary basis. Companies had to approach SABS, which would issue an audit report and would indicate if the product were approved following an audit.

Mr Mamadise stated that the NRCS had no ill-will in respect of the report. It had dealt comprehensively with it, had addressed all findings and had reported to the PP on the actions taken. The PP would have to advise whether she found the steps adequate. He agreed with Ms Scholtz’s comments. Over and above the MoU, SABS and NRCS had SLAs that operated on very a practical level. The latest SLA dealt with procedures regarding testing. Those were steps on the practical level that Mr Burns-Ncamashe was speaking of.

The Chairperson noted the recommendation contained in the presentation and the question for the Committee was about how to assist in getting the 1,900 illegally modified vehicles off the roads as they were carrying passengers . She asked the Committee’s approval to take the matter to Mancom (the Committee management committee) to determine whether a joint Portfolio Committee should be set up or whether a sub-committee should be established.

Mr S Mbuyane (ANC) referred to a letter from the Acting DG to the Portfolio Committee. He referred to bullet numbered (1.2):” The dtic had chosen not to challenge the report although there was evidence of misunderstanding of the mandate of the entities.” That statement suggested that the Acting DG did not agree with the PP Report. He thought that the Department was still regretting that the report had not been taken on review. Could the Acting DG clarify what she meant by that point? He was confused because the Department and entities were talking about responses to the report, such as the MoU, but the letter seemed to contradict the view that the Department was happy about responding to the PP.

Ms Mabitje-Thompson explained that the Department was trying to contextualise the mandates of the entities that had been cited in the report. The highlighting of the fact did not mean that the dtic rejected the report. Already actions had been taken in response to findings in the report. Because there were limitations in relation to the mandates of the dtic and its entities to being able to respond to the report, dtic had reached out to the Portfolio Committee to assist in dealing with the matter of the safety of passengers, which had been the core of the complaint made to the PP. That matter was not in the purview of the dtic, nor its entities. The dtic could not ensure the safety of commuters without the support of DoT. The dtic had made a decision to prioritise the resolution of the core complaint above taking the PP on review.

She accepted that the price for not challenging the report meant that the report went into case law, as Mr Burns-Ncamashe had indicated. The issue had been raised because taking taxis off the road did not conform to the legal framework under which the entities and the dtic operated.

Mr Mbuyane did not understand. Why had there had been a need for the actions that they had taken, if there were no direct adverse findings against the Department and its entities? They were doing it, but they were not committed because they did not believe the findings implicated them.

He informed the Chairperson that he would seek further clarity outside of the meeting.

The Chairperson explained that the PP had advised the Minister of Trade, Industry and Competition to take urgent and appropriate steps to harness and foster good, effective and efficient working relations between
NRCS and the SABS. That was what the responses were about.

Mr Burns-Ncamashe stated it was about looking at the doctrine of precedent. When dealing with the findings of the PP, one had to deal with them with a high degree of circumspection, because until the findings were reviewed by a court of law, they remained a point of reference for future purposes. He accepted that the decision not to review the report was about being corrective in the interest of the citizens but that meant that matters had not been put into proper perspective and would, in the future, remain as a point of reference and used in making future findings and recommendations. He thought that maybe that was the point that Mr Mbuyane was attempting to make.

Mr Burns-Ncamashe suggested that the Acting DG should ask what were the implications of not putting the findings to a review process, while accepting the remedial action required. He had tried to make the matter as clear as possible.

Mr C Malematja (ANC) said that he supported Mr Mbuyane. The Acting DG’s letter was confusing when she said that there were areas in the directive which could not be addressed because the entities did not have the mandate to do so. It seemed the two entities were collaborating (indistinct). The dtic had to decide whether to take the report on review or not. It could not be both ways.

Ms Mabitje-Thompson clarified that it was not all of the remedial actions that were being questioned. There was one that was beyond the mandate of the entities, i.e. the one about dealing with vehicles already on the road. That was why the dtic required the support of the Portfolio Committee to address that directive. She could take the report to a legal advisor to determine whether anything could be done about the single finding as the period during which one could take the report on review had expired. She had explained the basis of the decision of the dtic to go ahead and address those findings that it was able to address.

Ms Mabitje-Thompson clarified the point made that there were no findings against the dtic, SABS and NRCS. The only remedial action that the dtic was instructed to undertake was to ensure collaboration between the two entities and the dtic could never question that kind of action. It was the second half of the complaint that addressed the vehicles on the road; that dtic could not attend to.  It was beyond the mandate of the dtic and solely the mandate of the DoT and its entities.

Mr Hanival stated that remedial action was fully accepted and was being implemented but the NRCS did not have a legal or regulatory mandate to inspect taxis that were already on the road. That was the purview of the Road Traffic Management Corporation (RTMC), an entity of DoT, and SAPS, Metro Police, and Traffic Enforcement at national and provincial level. They all had a concurrent responsibility. The dtic was, however, prepared to work with RTMC and DoT to get the illegally converted taxis off the road.

He assured the Committee that the situation would not re-occur because the NRCS now had 100 inspectors who were inspecting current vehicles requiring vehicular changes before they went on the roads. The dtic had no legal mandate to take taxis off the road; the local and provincial officers had to stop the vehicles and check whether they had been legally converted and, if not, take them off the road.

Ms Mabitje-Thompson concluded with a request for the Committee to attend to the request for an engagement with DoT.

First Draft of the Portfolio Committee Report on dtic for Quarters 2 & 3, 2022 on financial and financial Performance for 2021/22
In making the presentation, the Committee Secretary stressed that the report covered the two Quarters from 1 July to 31 December 2021.

He scanned through the report and focused on input by the ANC into the conclusions and recommendations. The concluding remarks referred to targets not met by the dtic which showed a decline in performance; the lack of uptake by Film and TV producers to tell the South African story; the importance of the Special Economic Zones (SEZs) and Industrial Parks to the economy, but that they should be targeted at rural areas; Conclusions also addressed the need to accelerate the revitalisation of Industrial Parks in the rural areas; underspending in the Industrial Financing Programme and the need to reduce the time lag between application for funding and acceptance; ensuring the longevity of Black industrial companies, especially in rural areas. Other points included the need for dtic and the Competition Commission to ensure there was not an over-concentration of particular industries; the need to raise awareness of, and to implement, the Master Plans. Lastly, there was a real concern that the B-BBEE Commission was operating as a trading entity and not an independent entity.

The ACDP input encouraged the local film industry to tell SA stories; stressed the need to address structural reforms to drive foreign and local investment; the need for a seamless intergovernmental approach across the three spheres of government to ensure critical success the SEZ programme; noted the extensive work done by dtic on the African Continental Free Trade Area (AfCFTA).

Mr Thring suggested that the Minister of Trade, Industry and Competition should incentivise the establishment of film studios in provinces, other than the Western Cape, where there was a focus on international and Hollywood films. Other provinces would be more likely to tell the African story.

Mr Thring felt very strongly that the report should contain a reference to beneficiation in the body of the report and in the concluding remarks. It was essential for the country to beneficiate and that beneficiation should, especially, be implemented in the SEZs and Industrial Parks as that was the best way to create jobs. If not, SA exported raw materials to other countries for them to create the jobs there.

Mr Mbuyane stated that localisation could not be achieved without beneficiation and suggested that the two processes be linked in the report.

Mr Burns-Ncamashe added that beneficiation was relevant not only to SA but also to the region and in respect of the AfCFTA. Conscious and deliberate values chains would result in the export of finished products.                                                                                                                                                                                                                                                   

The Committee Secretary requested that Members take the report to their party caucuses for approval.

Mr Mbuyane asked whether other parties did not intend to participate in the report. They could not later object to the report, although it might be that they would abstain from supporting the report.

The Chairperson noted Mr Mbuyane’s comment.

Proposed 2022 Oversight Visit Programme for the Portfolio Committee on Trade and Industry -Draft concept document
The draft concept paper was developed following a request by the Chairperson. The secretariat had taken into account which provinces had been visited by the Portfolio Committee in the previous administration.

The paper introduced the concept of oversight, explained oversight visits and focus areas. The document noted that two rural provinces had not been visited by the previous Committee, i.e. Limpopo and Mpumalanga. It was suggested that a visit be made to each province to engage with industrial parks, SEZs, the Black Industrial Programme, Incentive schemes in Agri-processing and border posts.

It was suggested that the first visit be from 19 to 22 April 2022 and that would be to the SABS and NRCS in Gauteng and then the Committee would visit Mpumalanga. It was proposed that the second visit would be to Limpopo from 16 -19 August 2022.

Regarding a study tour, the Committee Secretary acknowledged that study tours were not yet permitted by the Speaker but he suggested that the Committee could look into the possibility of undertaking a study tour to one or more African countries to look at  trade facilitation, ease of doing business and implementation of AfCFTA and SADC FTA or foreign Economic Offices. The most suitable country would be Ghana.

The Secretary stated that it might also be important, in the light of the industrialisation policy, to visit Germany, Japan or Korea.

Mr D Macpherson (DA) stated that the latter part of the document, relating to study tours, was too wide-ranging and needed to be more focused. He suggested a sub-committee should be formed to prepare a document. He did not believe that the Committee could go to several places and deal with several issues. The focus had to be narrowed as the Committee would only get one shot at getting approval for a study tour.

Mr Mbuyane said that the visits spoke to the core mandate of the dtic. The SEZs were very important – the two mentioned in Mpumalanga and Limpopo had not even broken the ground. It was also important to see the Industrial Parks as a lot of work had gone into them and the Committee wanted to see results.

The Chairperson noted that the Committee had adopted the draft document. She suggested that Mr Macpherson’s suggestion be taken to Manco as there was sufficient time to consider a more focused approach. No applications could be presented regarding an application for overseas visits until the moratorium on overseas visits was lifted.

Closing Remarks
The Chairperson proposed that Manco discuss the possibility of a meeting with the Portfolio Committee on Transport, or alternatively whether a sub-committee should be formed.

The meeting was adjourned.
 

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