General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill: public hearings

NCOP Finance

23 November 2022
Chairperson: Mr Y Carrim (ANC, KZN)
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Meeting Summary

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The Select Committee on Finance met to conduct public hearings on the General Laws (Anti-Money Laundering and CombatingTerrorism Financing) Amendment Bill. It received oral submissions from the four organisations: NPO Working Group; Helen Suzman Foundation; Cause for Justice; and Congress of South African Trade Unions.

The Bill amends five pieces of legislation to satisfy the technical compliance deficiencies (deficiencies relating to the adequacy of laws and legal frameworks related to the 40 FATF Recommendations) that were identified in the Mutual Evaluation Report. The Amendment Bill addresses deficiencies in at least 14 of the 20 recommendations, including an appropriate enhancement of powers and procedures for regulatory authorities.

The NPO Working Group expressed a need for there to be an independent non-profit organisation register outside of the Department of Social Development. The Helen Suzman Foundation raised the issue of the urgency to ensure compliance with the Financial Action Task Force (“FATF”) Recommendations, and the importance of proper public consultation. Cause for Justice expressed that there was a need for adequate public participation in the legislative process, and a need for and justification of legislative intervention. Its main concerns were the irreconcilability between the General Laws Amendment Bill B versions, and the Draft NPO Amendment Bill; and how the Department of Social Development would implement the registration of NPOs. In its presentation, the Congress of South African Trade Unions (COSATU) expressed that it and the South African Clothing and Textile Workers’ Union (SACTWU) believed that the provisions of the Bill, including those to ensure greater transparency of the actual owners of companies, would help to address serious gaps in South Africa’s existing legislative framework and to further capacitate the state to tackle corruption, tax evasion, money laundering and terrorism financing. COSATU also observed that it was critical that the gaps that we have identified with regards to the definitions and provisions dealing with public access to company ownership be addressed in the Bill and Regulations if to meet its progressive objectives.

The Chairperson made various comments and suggestions to both Parliament and the civil society organisations, and expressed that the Committee was willing to work over weekends if necessary to give enough time to the Bill, so that it would not be “rushed” through Parliament. He also encouraged the National Treasury and the civil society organisations to find compromises where they were able to do so. He also asked the Treasury to respond to the seeming contradiction between the current Bill and the NPO Amendment Bill (which had yet to be tabled in Parliament). Members raised the following issues (among others): The NPO registration backlog; if Parliament created a bill that was unimplementable; why Parliament had not addressed the concerns of non-government organisations; whether the Bill would be “window-dressing” in an attempt to show how South Africa was trying to do what the Financial Action Task Force asked, or achieve its purpose when it was made into an Act.

National Treasury highlighted that it was aiming to achieve an appropriate balance in addressing the concerns raised. It was also seeking to make sure that it addressed the FATF-identified deficiencies. The only way South Africa was going to avoid grey-listing, was in part getting the laws in place, which the Bill in front of the Committee sought to do, but also ensuring the laws that were passed were effective in addressing the objectives. Passing laws was “half of the exam” that South Africa needed to pass. The other half of the exam was to demonstrate effectiveness. Treasury was mindful of that, and was not simply going to be satisfied by passing a law that it thought had no reasonable prospect of being implemented effectively. That would run counter to the Treasury’s principal objective, which was avoiding grey-listing.

Meeting report

The Chairperson stated that the General Laws (Anti-Money Laundering and Counter-Terrorism Finance Amendment Bill (GLAB) had come to the Committee very late. He was not specifically blaming the National Treasury (the Treasury) officials in the meeting, who sought to do the best they could in the current circumstances. Ultimately, it was not the Committee’s doing. The Committee was “extremely unhappy”, as it indicated in its report on the earlier version of the Bill, which included changes to the Financial Intelligence Centre (FIC) regulations. He reminded Treasury that it had to come back to the Committee at 14:00 on Friday to reply. The Committee did not want to hear that it did not have enough time.

The Chairperson said that the circumstances of the Bill was Treasury’s doing, particularly the Director-General (DG) and Ministers of Finance over the last few years. Both the stakeholders in the meeting and those not present were welcome to come back; it was a two-part process. He asked presenters to summarise their key points so it was covered adequately in the Committee’s report. It did not have the powers that the Standing Committee on Finance (SCOF) had in respect of a Bill of this nature. But the Committee did have an important role, and it would play it to the fullest.

The Chairperson also reminded Members that the Committee had four other submissions that people did not want to speak to, in addition to those that would be presented. Those submissions were just as important as the oral submissions. Those had to be given the same weight as the people who appeared for oral submissions. He had already primed the Committee staff to prepare an overview of those four submissions, and hopefully the overview would be completed by the following night, or by Friday at 13:00. The overview would set out what the Committee thought were the key issues that had emerged from the public hearings. On the Treasury’s side, it would prepare to reply to civil society stakeholders.

NPO Working Group Submission
Ms Nicole Copley, Specialist Consultant, NGOLaw (on behalf of NPO Working Group), presented.

Main concerns and comments about the Bill:

• A multi-pronged approach supported (data held by relevant institutions) and also a tailored approach to beneficial ownership. Consideration given to privacy rights appreciated.
• FIC registration is suggested as an alternative to compulsory non-profit organisation (NPO) registration for at-risk non-profits. This option is still preferred.
• A parallel process to (over the longer term) conduct a full scan of the non-government organisation (NGO) sector and assess risks is supported (timing could be better).
• NPO Working Group supports a move of the NPO registry out of the Department of Social Development (DSD) to be an independent but public, properly funded, credible and operational structure or the sector builds a new institution.

Details highlighted:

• Foreign associations: Foreign non-profit companies and foreign trusts are already required to register in South Africa under s23 of the Companies Act and s8 of the Trust Act. The NPO Working Group made suggestions for amendments and motivated them.
• Lining up boards: The current reference in the NPO Act definition of ‘office bearers’ to ‘executive’ position is to those who manage/administer- the management team employed by the organisation. A correction to the NPO Act is required to ensure that it is the same ‘fiduciaries’ being referred to and tracked across all three types of legal entities. (If the amendment is not made then Voluntary Associations would not have to disclose details of their board, but those of their CEO and senior managerial staff.)

[Please see the document for the details]

Ms Ann Brown, NGOLaw (on behalf of NPO Working Group), presented the section titled Not the NPO Directorate, which was a central part of the NPO Working Group’s (NWG) submission. The following issues were highlighted:
• The NPO Register being out of date;
• The work done by many non-profits does not fall within the scope of the DSD;
• The expense for the DSD in accommodating what the current Bill required;
• The lack of a DSD budget to provide staff to collect, process and store data to support profiles/subscribers of over 270 000 currently registered organisations.
• The age and resulting insecurity of the system;
• The DSD data systems are inefficient, and do not have sufficient granularity of data to monitor NPOs; and
• The current system only keeps record of registrations and does not have the capacity to monitor compliance and legitimacy of these registrations.

The NWG also proposed an Independent NPO Registrar. In sum: “DSD has a heart and soul for the betterment of humankind, whilst the NPO Directorate needs a Head and Administrative focus.”

[Please see the document for the details]

Ms Copley added that the NGWG felt that when going into the process, those who drafted the Bill had an inaccurate take on the NPO Directorate, i.e. where it sat, how it was, and how it did not function. There was “surprise and alarm” in the meetings when the details of the various levels of dysfunction were articulated by the NGO Working Group. The NPO Directorate was not part of the Bill, but it was deeply linked to the issues in the Bill in that the NWG also thought that in terms of enforceability, there needed to be a huge upgrade of the NPO Directorate if that limited compulsory registration was to stay with the Directorate. The details of the NWG’s proposals were in its written submissions. It felt that the issue of the Directorate was crucial – it was not just about passing a Bill, it was whether it could be policed and whether it could work. It was also about whether the upcoming Financial Action Task Force (FATF) review would show that any of those matters had been implemented. The NWG felt that the NPO Directorate as it stood under the DSD would not be able to implement those provisions in any way that was useful in terms of constraining the financial issues which it sought to constrain.

Helen Suzman Foundation Submission
Ms Chelsea Ramsden, Senior Legal Researcher, Helen Suzman Foundation (HSF) presented. She was accompanied by Mr Anton van Dalsen, Legal Counsellor, HSF.

The HSF remains apprehensive about processing the Bill and the Draft NPO Bill in separate proceedings. Consequently, the HSF advocates that the two Bills be withdrawn in order for them to be consolidated. The process must be combined to be more efficient and effective and prevent any contradictory outcomes arising from concurrent processes.

In addition, aside from being processed by separate departments, the HSF is unaware of how the proposed amendments in the Bill and the Draft NPO Bill can be reconciled.

The HSF would like to draw the Committee’s attention to two pertinent points. First, it is unclear how the proposed amendments in the Bill and the Draft NPO Bill can be read together as they offer contradictory amendments to section 12 of the Act. In terms of section 12(1)(b), the Bill requires mandatory registration of NPOs in two instances, where the NPO: a) ‘makes donations to individuals or organisations outside of the Republic’s borders; and
b) provides humanitarian, charitable, religious, educational or cultural services outs of the Republic’s borders.’

Whereas the Draft NPO Bill provides differently:
a) Section 12(1): ‘Any nonprofit organisation that is not an organ of state may apply to the Office of the Registrar for registration’
b) Section 12(5): ‘Any nonprofit organisation, including foreign nonprofit organizations that intend to operate business within the Republic must be registered in terms of this Act before operate and shall be subjected to the provisions of this Act and any other laws of the Republic‘

c) Section 2(f): ‘facilitating voluntary registration of nonprofit organisations and compulsory registration for foreign organisations operating within the borders of the Republic of South Africa.’

Therefore, not only are the registration requirements different between the Bill and the Draft NPO Bill, but the requirements contained in the Draft NPO Bill actually contradict itself. The situation is made worse as the Bill introduces an offence for any NPO that fails to register if it is required to do so.

Secondly, the HSF submits that it is odd and potentially counter-productive that a more integrated process to manage the Bills has not been designed. They are introduced by separate departments, and the Bills and comments received in respect of each will be processed by different committees.

This concurrent approach to amending the Act cannot be considered efficacious or strategic. Therefore, the HSF submits that an integrated approach should be adopted for the Bills' consideration and processing.

The HSF submits that given the absolute lack of clarity and irreconcilability of the amendments to the Act, both Bills must be withdrawn, and consolidated with only one department, either the Committee or the Department of Social Development, responsible for the introduction of a new Bill and the processing of any comments received.

Mr van Dalsen supported the suggestion from the NWG that the FIC Act (FICA) be used in order to keep an eye on certain NGOs. It was a much more sensible approach. The DSD did not have the capacity to police an Act of that nature. Including it in the FICA arrangement was a much more sensible and effective manner of dealing with the problem.

[Please see the document for the details]

Cause for Justice Submission
Ms Liesl Pretorius, Attorney, Cause for Justice (CFJ), presented.

Main concerns:
• Need for adequate public participation in legislative process
- Question 1: Likelihood of the legislative amendments achieving their purpose
- Question 2: Existence of less restrictive means to achieve the legislative purpose

• Need for and justification of legislative intervention
In summary and conclusion
• These questions are complex, requiring proper consideration of the constitutionality of
intended implications and unintended consequences, and of the constitutional rights and
interests at play.
• It is our firm conclusion that the legislation as it stands does not pass the requirements of
factor (e) of section 36(1) in that it does not employ the least restrictive means to achieve
its purpose.
• We are also convinced that if the legislation is not amended, it will not establish a rational
relationship between the limitations imposed by it and the purpose for which is it
proposed.
• This means that it will not comply with the requirements of section 36(1) and will be unconstitutional.

The Chairperson asked Ms Pretorius to slow the pace of her presentation a bit, as the Members were not lawyers.

The Chairperson suggested that the Committee Secretary give Parliamentary Legal Services (PLS) the meeting recording so it could help the Committee independently. It could not have the Treasury tell it what was legally sound and what was not, and whether or not constitutional rights had been trodden on. The Committee would have to refer CFJ’s submission to Adv Frank Jenkins and his colleagues from PLS.

The Chairperson felt that the issues that CFJ was dealing with were in the domain of PLS. Members were free to comment on the legal issues, but he felt that since he was not a lawyer, he did not fully understand the issues raised.

Ms Pretorius felt that those issues impacted on the practicality of the Bill, which informed policy.

The Chairperson interjected. CFJ said the constitutional issues were important because they influenced policy. The issues provided the parameters for policy, and were linked to policy. It was easier to deal with that, because the Committee could look at the clause, see what the CFJ was doing, and do exactly that.

In summary
-Need for adequate public participation in legislative process:
• Re-open/grant general extension of the call for comments for at least a further 10 days.

-Need for and justification of legislative intervention:
 • Likelihood of the legislative amendments achieving their purpose (Question 1
  • Existence of less restrictive means to achieve the legislative purpose (Question 2).

-Improved proposals.

-Problematic proposals:
• General concerns
• Clause 9: Amendment of section 2 – ‘Objects of Act’
• Clause 11: Amendment of section 12 – ‘Requirements for registration’
• Clause 17: Amendment of section 29 – ‘Offences and contraventions’

-Recommendations:
• Registration preferred option: CFJ does not support the compulsory registration of any (or any     particular limited subset of) NPOs. CFJ prefers and supports registration remaining completely voluntary.
• Registration alternative option: CFJ would support registration being made compulsory for a
rationally identified ( i.e. constitutionally defensible), appropriate limited subset of ‘at risk’
NPOs only.
• Administrative sanctions: Specify what the ‘prescribed administrative sanctions’ are or identify
an official authorised to prescribe such sanctions in Regulations.

[Please see the presentation for details]

Congress of South African Trade Unions (COSATU) Submission
Mr Matthew Parks, Parliamentary Coordinator, COSATU, presented.

COSATU supported the Bill in respect of fighting corruption. Austerity budget.

It proposed amendments to the following areas:
• Definition;
• Publishing information;
• Personal data; and
• Updated records.

• In conclusion: COSATU and the South African Clothing and Textile Workers’ Union (SACTWU) welcome the Bill and its provisions as a positive step to ensuring that South Africa remains in compliance with its international objectives and avoid a possible grey-listing.
• COSATU and SACTWU believe that the provisions of the Bill, including those to ensure greater transparency of the actual owners of companies, will help to address serious gaps in our existing legislative framework and to further capacitate the state to tackle corruption, tax evasion, money laundering and terrorism financing. When company ownership is opaque, these crimes thrive.
• Workers cannot afford for Government to be soft on crime, in both the public and private sectors. Failure to deal with these cancers eating at the heart of the state, the economy and our fabric as a nation are dire.
• Whilst COSATU and SACTWU support this important Bill, it is critical that the gaps that we have identified with regards to the definitions and provisions dealing with public access to company ownership be addressed in the Bill and Regulations if to meet its progressive objectives.

[Please see the presentation for details]

Discussion
Mr D Ryder (DA, Gauteng) commented that the image of an octopus on NWG’s title slide was relevant, because Parliament was trying to do many things with one piece of legislation. He had raised a concern in his motion the previous day in the House: If Parliament tried to put together a bill in response to the situation that South Africa was facing with the FATF, and in doing so, it created a bill that was unimplementable, then obviously it was actually going to be counterproductive. If Parliament created legislation that could not be enforced, it was going to set South Africa up for failure. Especially because a cursory reading of the situation was going to confirm that the law was unimplementable. That was some of the concerns across the board.

A lot of the proposals around NGO registration were to house it in the DSD. The DSD already could not manage the small role it had in the registration process. He asked for clarification on what the changes in the Bill were between version A and version B. Opposition from the NGOs had been there as soon as the draft was published. He wanted to know why Parliament had not addressed the concerns of the NGOs. The NGOs had legitimate concerns. There was a general consensus that South Africa wanted to beat grey-listing. Parliament wanted to do as much as it could to ensure that South Africa was compliant. But Parliament could not pass fraud legislation. NGOLaw had commented that perhaps the Treasury was “too far down the lane”, and it could not go back. CFJ asked if the Bill was achieving its purpose – when it became an Act, would it achieve that, or was it just “window-dressing”? Was it window-dressing in an attempt to show how good South Africa was, and that it was trying to do what the FATF asked? There were alarming facts put before the Committee, such as a ten-year backlog in NPO registration. That was “really scary”. Donors to NPOs and NGOs relied on that NPO number to give some credibility. If there was a ten-year backlog in registration, there was probably a ten-year backlog in ensuring that organisations were still legitimate. There was a bigger question to ask. There was the FIC, which had a role to play in keeping records of “who was who in which particular zoo”. There was the Companies and Intellectual Property Commission (CIPC), which had a role to play. The Master’s Offices were looking after the trusts, and the FATF indicated that that was a problem. Now, the Bill wanted to bring the DSD in as well, which would be a case of replicating structures or processes, and probably replicating systems that needed to back the NPO register up. Of course, there would be numerous tenders going out, so various entities would not be able to benefit from each other’s technology. That would create “huge hassles”.

Mr Ryder observed that there was a distinction made between the reporting institutions versus the accountable institutions, and the proposal that came out of that as well, which he felt that the Treasury needed to comment on. Rather than reinventing the wheel, the proposal that came out of NGOLaw’s presentation was very useful. He agreed with CFJ on the issues around public participation, and the constitutionality of that. The Bill’s public participation process “did not look like it was going to stand up. He felt that the Treasury needed to use the Committee to assist it, and perhaps open a short window for some additional public participation, particularly noting version B of the Bill, and the very short window that was on there. Noting that the Bill was a very complex piece of legislation, that it was “an omnibus octopus”, yet Parliament found itself with one challenge getting it through – there was one aspect of the Bill that was problematic. He felt that the Treasury needed to be congratulated for the Bill, but on the other hand, needed to receive the message that had been given to it. He gave the example of his mother running a knitting and sewing group for charity. The group had an account to buy tea and cake, and probably champagne once a year. Was such a group required to jump through those particular hoops, since it had very low volumes going through that account? The group was not doing international transactions with its account; was it required to jump through the same hoop as an NPO that was generating millions in donations, or high volumes of donations, and doing overseas transfers and donations overseas, etc.? The current Bill was a “one size fits all” approach, and he was not sure it was going to work.

The Chairperson observed that some of the issues he raised were addressed to the Treasury more than the NGOs. The Treasury had come across those issues on the National Assembly (NA) side. The Treasury would have a chance to give more thought-out replies in the meeting on Friday.

Mr M Moletsane (EFF, Free State) had a question for Treasury. The Bill was given to the Treasury in 2017. It was only tabled to Parliament this year in June, which put pressure on Parliament to deal with that Bill. What were the reasons that caused the delay in tabling the Bill in Parliament? Did the Treasury believe that Parliament would make the submission deadline come next year?

The Chairperson observed that some of those issues were more appropriately responded to by Treasury. Today’s meeting was the first time that the Committee was dealing with civil society. It was the Committee’s first take on it, and there was no such thing as jumping to any conclusions or making any decisions. He was offering his own views as a Member of the Committee, but also providing some broader guidelines to the Committee as a whole in his capacity as Chairperson. He emphasised that none of what he said had to be accepted by anybody in the Committee.

The Chairperson observed that most if not all Members were “very, very sympathetic to NGOs”. Members had been pleading with NGOs to participate more actively in Parliament, and some Members had written about that for years. Before 1990, some Members were involved in a sector of civil society organisations, and so on. Members were not going to retreat from that, regardless of age. “Now more than ever, the governing party and the state needs NGOs”. South Africa was “an increasingly failing state”. It was not a failed state, but was increasingly failing. The governing party was increasingly weakened, “as the peasants in Mongolia knew” and there was nothing to hide; even the governing party knew it. If one looked at the documents of the governing party and its alliance partners, and if one looked at what happened yesterday on the streets of the country, the big metros particularly, there was a greater focus, even by the governing party, by the ANC, on the importance of links with civil society. There was also a greater focus on the need for civil society organisations to “consolidate this democracy”, including under the conditions of the 2008 crisis, the Covid-19 crisis, the social unrest of July 2021, floods in KZN and a myriad other problems that South Africa had.

The Chairperson observed that the NGOs in the meeting were presenting the view that they were being circumscribed, curtailed, restricted, and undermined by the government and by the National Treasury. He asked why the Treasury would want to do that, when it was aware of the “parlous state” of the budget. It was an understatement about the budget and South Africa’s failure to deliver and get value for money. The Treasury, too, had been calling on civil society every now and then to monitor spending and what value society was getting for that spending. Secondly, could civil society organisations show what was being done that was not required by the FATF? There were “glimpses” of it in what was presented. The Treasury could then tell the Committee why it was doing what it was doing. To what extent was that required by the FATF?

In the Chairperson’s opinion, NGOs were “very divided”. NGOs also did not have a federal structure. Some politicians had been pleading for that since SANGOCO (South African NGO Coalition) collapsed. When the NWG said it was speaking for NGOs, perhaps it could tell the Committee a bit about who it was, and how many organisations it represented. The number of organisations did not ultimately matter: Even if an individual made a public submission, as against powerful business, labour federations and big NGOs, that one citizen, if there was merit in what they were saying, the Committee had to take it as seriously as it took an organisation as COSATU. Which NPOs did the NWG represent? With CFJ, who was its organisations or individuals, or what membership did it have? It was important just to have a sense of that, because one should be careful about saying “NGOs” – where were all the other NGOs? Nonetheless, submissions were treated on the merit of what they said. It was interesting that the NGOs that had surfaced in the meeting, apart from the HSF, were ones the Chairperson did not know, despite being in Parliament for “thousands of years”. The previous day, 13 organisations appeared before the Committee on the tax bills. He asked if an underlying concern in the presentations was a fear that a “draconian state” was emerging. He had to look beyond the surface of what people were saying, just as the NGOs had to do when looking at what he was saying. NGOs would try to locate what the Chairperson was saying in a particular context. Ultimately, he could not see why the Treasury would want to undermine NGOs, which would be foolish. He wondered if there was an underlying fear that a draconian state was emerging, and using the FATF requirements in relation to grey-listing to contain and curtail NGOs. His own view was that since South Africa was currently a “weak state”, it was not capable of doing that. One might argue that because the state was becoming weak and the governing party was failing to secure the support it used to, now it would have to turn to an “autocratic” approach to curtail NGOs. Personally, he did not see it that way; it was “never an issue” in all the structures he served in. He was clear that one could not romanticise NGOs. Other NGOs (not the ones in the meeting), at least the larger and better-known NGOs, had similar feelings as politicians on matters such as divisions over power, patronage, use and misuse of funds, “overleaning” on donors to get support, etc. There was no monolithic NGO structure prevailing in South Africa. Interestingly, COSATU, who was “very powerful” was not saying the same things as the other NGOs.

The Chairperson mostly agreed with what COSATU was saying about beneficial ownership. The Committee had to deal with a similar issue when it dealt with the Financial Sector Regulation Bill. Some Members were not happy with that. COSATU was picking up the same issues that some Members who were on the NA side had raised. He was interested in hearing what the Treasury had to say about “not being more open”; what was wrong with beneficial ownership being exposed publicly?

On relationships: The NGOs that presented seemed to know each other. Were they part of a federation of NGOs? Then could the NGOs show the Committee how what the Treasury was doing was over and above what was necessary? More importantly, have the NGOs done some comparisons with how NGOs had been treated in other societies, especially developing societies, and also in developed societies? The FATF could not have one set of rules for developing societies and another set of rules for developed countries. Presumably, its rules and regulations applied to all countries. The Chairperson asked if the NWG could send a list of all the organisations that it represented. If the NWG was representing 245 organisations, should their delegation not be more representative of the country's demographics?

The Chairperson felt that the Committee needed some guidance from the legal team. How much of what was being submitted fell within its purview? How much fell within the DSD? A question to the NGOs was if they had engaged with the other bill? Had the NGOs raised all those issues with the DSD and the Portfolio and Select Committees which oversaw it?

Regarding the contradiction on the Treasury’s side between the current Bill and the other related bill: There was a need for that contradiction to be sorted out at the Executive level, otherwise it would “hold up” the Committee. That was not the Committee’s issue. The Committee would have to engage with the Portfolio Committee and Select Committee on the DSD. He asked the Treasury how much it had engaged with the Department. How was it possible that the Cabinet could introduce two bills more or less simultaneously, and there were contradictions between them?

The Chairperson observed that the DSD did not have the capacity to register NGOs. There was a 10-year backlog, but the Chairperson was not sure if that was an accurate figure or not.

[Ms Copley wrote in the chat box: The 10-year backlog is in compliance oversight – non-compliant organisations have not been excised.
In the B version knitting clubs need not register – only those who transfer funds or conduct knitting activities cross-border.]

[Ms Brown wrote in the chat box: NPO Working Group interacts with over 245 organisations. The working group was mandated by 170 NPOs to take this issue forward and represent them. The network reaches over 10 000 large and small community organisations.
NPO Working Group has engaged with DSD on the NPO Amendment Bill 2021.]

The Chairperson was not sure if the FIC had the capacity. The state generally was not strong. Could the Treasury or the NGOs respond on that topic? When the issue was raised on the NA side, what did the NA Committee say in respect of that proposal that the FIC takes responsibility for the registration of NPOs?

On the matter of the public hearings, the Chairperson’s own take on it was the following: The Bill had been in the public domain since it was first introduced. NGOs also had to show a measure of activism. Presumably, since NGOs felt so strongly about the Bill, they had been engaging with it even from the moment it was gazetted for public comment. He did not know the extent of the Treasury’s consultation with NGOs, and perhaps they wanted to reflect on that. The NGOs were there in the NA process, and from what the Chairperson knew, it was delayed for three weeks. The public hearings were pushed back at the NGOs’ request. There had also been lots of media publicity around the Bill. The National Council of Provinces (NCOP) could not do much until it got the Bill. Then there were internal practical problems with the printing. He assumed that everyone was familiar with the issues at hand. The country was in a very perilous situation. While it was true that even if the Committee passed the Bill before it rose, and it was promulgated by the President before the February meeting of the FATF, it was not as if it would stop the grey-listing. The FATF required the institutions of state that dealt with money laundering and terrorism financing, etc. to be operative and effective. Such institutions had not been as effective as they should be, though they were beginning to be effective. It was a test of how many people were taken through the court process, and how many were prosecuted, and how expeditiously they were prosecuted. What was important about the Bill was that it showed intent to act from Parliament's side. But the Bill needed to be complemented by effective oversight over those institutions by the respective parliamentary committees in both Houses.

The Chairperson observed that the delegates had received the current version of the Bill on the previous Friday afternoon, and were appearing before the Committee that day. But delegates would appear on the coming Friday if they wanted to. Delegates would also appear the following week when the Committee processed the Bill. In the Committee, people were allowed to make submissions until the day the Committee voted on the Bill. If delegates were talking about public participation, the Committee had said that it was not ideal. He had been saying that, and the Committee had put many of the statements he had on public participation into the Committee's report on the Bill. Mr Ryder also raised that issue. The Committee was "acutely, excruciatingly aware" of the constraints. But it had not had that sort of situation for many years, and he had been around for a long time. The last experience he had had of that sort of pressure was on the NA side when it was reaching the December 2000 local government elections. The responsible committee at the time was processing the amendments; if it did not get those done in both Houses, South Africa would not have had elections on 1 December. Members of Parliament (MPs) had to rush, and "worked 24 hours a day". MPs sat from morning until night, and were exempt from the House. If the Committee had to do that for the current Bill, then it would do so, and it would seek exemptions. He had alerted the NCOP powers that be when the Committee was in KZN the previous week. It had said it would give the Committee the full exemption. Given the circumstances, he did not think it was "the end of the world". Civil society colleagues had been with the Bill since it was with the NA. Colleagues were engaging with the NA then, and were engaging with the NCOP then. Presumably, colleagues were monitoring the changes that were being made. The version that had come on Friday would not have come as a "shock". Colleagues would have to decide whether they were going to go to court (which was their right) to say the Bill was squeezed through the process, and they were unhappy. His experience was that half the time that civil society went to court over a bill (which was a legitimate thing to do), it was because it was unhappy about a provision in a bill, so it went to court. In most instances (in South Africa and elsewhere), the court said that Parliament had to redo the bill, and much of what was done in the first instance was repeated. Perhaps the odd thing would be changed here and there. Civil society could go back to the court and say that Parliament just went through the process nominally. He also asked civil society colleagues if they thought the quality of their inputs would be substantially different if they were given another month. Very good inputs had been made. Presentations had been made professionally. The Chairperson could not see how much different the submissions would have been if there was more time.

On keeping the door open: People could come to the Committee anytime. If people wanted to make further representations, people could do so. He did not think that many more people would come. On the NCOP side, it usually got very few public submissions, except on section 76 bills. The previous day, there were 13 submissions, which was unusual. It also received four other submissions, which were brief and also overlapped with what the civil society colleagues had said. Members would have to look at improvements to the Bill. It showed that the public hearings helped, because when the colleagues went to the NA, it did take them seriously. The NA Chairperson was "harsh" on the Treasury, and there had been some improvements to the Bill. He had been following what had been reported in the media.

On what was constitutional, and what was a policy matter: The Chairperson observed that when people presented what they felt were constitutional problems with the Bill, it was not like an abstract, scientific argument that everybody could agree with. There was usually an ideological underpinning of it. To some extent, it was possible that the stream of thinking that civil society colleagues had followed the relationship between the individual and the state. The colleagues had a right to that. Collin Eglin, a South African politician, Raenette Taljaard (previously the director of the HSF) and others expressed that. It was very compelling. His comments on the constitutional issues and its relations to policy were not outside of an embedded ideological disposition. How was it that the Treasury's lawyers were there, the State Law Advisors and Parliamentary Legal Services had all said "okay" to the Bill? The legal teams could not bring a Bill to Parliament unless it was constitutionally sound. The ultimate arbiter of that was the Constitutional Court (ConCourt). Why did the colleagues think that they were "absolutely right" and the legal teams were "absolutely wrong"? It was ultimately for the highest courts to decide.

On the issue of public hearings: Just as it was imperative to look for the Committee to look for compromises, so it was on civil society to say that "whatever our differences, there are times when we come together". Ultimately, all were part of one country, even if on the ground, most did not see it that way. Whatever the differences in the case of the Bill, the stakeholders were in a unique situation. Treasury needed to be held to account. But where were the compromises that civil society was offering? He did not see it. He asked if the Treasury could also offer some compromises. He also wanted to hear a "less dogmatic, more conciliatory view" from the Treasury. If one was talking about public participation, the Treasury would have to work over the weekend and sort things out. If by Friday at 17:00, the Committee and the Treasury were still as far apart as they were currently, then it would have to work over the weekend. He remained unconvinced that the Bill needed to be rushed. What was the harm in Parliament sitting the whole of Saturday and Sunday? What was the problem with civil society coming to a meeting over the weekend? He encouraged stakeholders not to make public participation the big issue; he was not convinced it was so. It had "impacted on the Committee negatively", but it could save time. Perhaps if the Committee had an extra month, it would have spent 40 hours on the Bill. If need be, the Committee would spend 60 hours on the Bill in the next ten days. He suggested keeping Sunday available if need be. If the Treasury could negotiate with civil society on Thursday, and then come to a formal conclusion, that would be helpful. He encouraged looking for compromises. On civil society’s side, when it made presentations, the Treasury turned down some of its proposals. The Chairperson asked why the Treasury turned down some of those proposals. What did the Treasury say in response?

The Chairperson observed that there was “a lot” in what he had said. The civil society organisations would be engaging with the Committee on Friday. The Bill was “too important” to make public participation something “abstract”. The Committee could do it concretely, and spend 60 hours on the Bill; that would not be a problem. The Committee could also seek exemptions from the House. Some of the Members had more flexibility, since alternative Members could attend a meeting in their place, such as was the case with the DA. The Committee could perhaps meet while the House was sitting, and then stop if Members had to take part in debates.

Mr E Njadu (ANC, Western Cape) remarked that the Chairperson had raised many points on how to look at the related bills. He emphasised the issue of public participation, and supported what the Chairperson said on that issue.

The Chairperson asked if Mr Njadu was prepared to work outside of the normal parliamentary hours. The Committee could seek an exemption after it had consulted the minority parties. The NGOs would be able to make themselves available. The Committee would do the same number of hours “as if the Bill was tabled last year” if the NGOs wanted, but he encouraged the meeting not to make public participation “an issue”. He asked if people could speak to the comments they had put in the chat box, since people who were not following the meeting via Zoom would not be able to see it.

Responses

Ms Copley said that NWG did not want to stop the Bill. The NWG understood that the Bill needed to go through. The presentation it made was on amendments that it thought could be made. The bigger question of the location of the registration was something that the NWG thought was part of a bigger process.

On the complaint about public participation: From her perspective, it was prior to the Bill emerging that there was not enough broad consultation from the sector. When the Bill first emerged, it was a “surprise item” to many. That was why it had been such a rush to wrangle with and deal with the Bill, because it did have such large implications. That process from then on had been very short.

To give the Treasury credit, there was a legal opinion that was gained in answer to the NWG’s last submission on constitutionality. She felt that the Treasury heard the voices of the NPOs in the room and compromised despite some of the parts of the opinion. The Treasury had made major amendments, and had adjusted from the blanket approach of “every knitting club in the country had to register” to defining a specified class of organisation that is required to register.

She echoed the Chairperson’s sentiment on a lack of organising body NGOs. It was regrettable. Her hope was that the engagement process might lead to such a thing. Her colleague Ms Brown posted in the chat box that there were about 10 000 large and small non-profit community organisations that were in the reach of the NPOs who had worked together in the NWG.

On ideology: The exposure of beneficial owners against the right to privacy was the crux of the ideological argument. Since NPOs were so broad, there were some in the room who would say, “let’s know the names of everybody at the bottom of everything; show all of their dirty underwear and let it be known”. There were also organisations that ran homes for people with disabilities, and whose beneficiaries may be from groups that were marginalised. Such organisations would want to make sure that their beneficiaries were protected, and that there was not an exposure of the names of the people on their boards, who may represent those persecuted or marginalised groups. She observed that in the previous presentations that were made, there were people who thought that the Bill was a draconian opportunity being taken. Some colleagues, especially those who remember the Fundraising Act and how that was used to control NGOs during apartheid, did fear that. There was a case in Pakistan, where that sort of legislation was used, and many non-profits were deregistered on ideological grounds. There were many who made presentations in previous rounds of public participation who referred to international studies. For her, coming out of that was where there was a compulsory registration of non-profits, it was generally with a body that had an independent credibility, and was not reporting inside a government department, which was also NWG’s main contention.

Mr van Dalsen said that against the background of a potential grey-listing, the HSF understood the need for that legislation. The HSF was not against the legislation in principle. It did not necessarily see the legislation as some draconian measure to achieve other things. The HSF wanted to underline the importance of finding a mechanism that achieved what it was supposed to, without getting involved in areas that were not relevant for the current purposes. It was absolutely essential that an efficient mechanism was put in place. That was why Ms Copley put forward the FICA proposal, which the HSF supported. It was a logical way of dealing with that matter, without having to get involved in other areas. The existing FICA legislation provided the background and the structure for what Government needed to do in that area.

He did not want to go down the route of discussing public participation further. He thought it was a very short time frame, and the HSF did what it could within a short time frame.

Ms Pretorius said that CFJ thought that the objectives of the Bill were laudable. CFJ agreed with avoiding grey-listing, and it did not want money laundering and terrorism financing through the South African NPO sector at all. CFJ’s approach was to look at how when legislation was passed, it met laudable objectives, and that it passed constitutional muster. Nobody wanted their hard work being done in the Department, by parliamentary committees and by stakeholders to be in vain. CFJ saw the objective of the Constitution as being the effect to maximise fundamental rights and freedoms. It did not necessarily think that the Treasury was trying to undermine or curtail NPOs. She thought that there was a situation where grey-listing was looming for South Africa, and people were trying to find ways to avoid it. CFJ was saying to make sure that what was proposed would actually achieve that. All wanted a piece of legislation that achieved avoiding grey-listing. CFJ was very grateful that the Treasury had listened to stakeholders – there had been “tremendous improvements” to the Bill. There were a few small things that CFJ suggested could be tweaked. It was not suggesting those tweaks because it wanted the Bill to go away, but because it wanted the Bill to be effective. CFJ wanted the Bill to make sure that with the NPOs that were affected, it would not be open to constitutional challenge, and that whoever oversaw the oversight role could do their job, and would be effective at preventing money laundering. The FATF did not require that all NPOs be registered. There were several things that CFJ noted: NPOs that were already registered for tax exemptions could be excluded from that. NPOs that were already registered with the South African Revenue Service (SARS) as public benefit organisations (PBOs) and foreign companies already registered with the CIPC could also be excluded. NGOLaw had made very good proposals on that matter. That was a way to limit the subset of NPOs that needed to register. It made the legislation more constitutionally sound. The moment that those small tweaks were made, CFJ would say that the legislation was “good to go”. The government would then have a good piece of legislation that achieved its objectives, and would also maximise the freedoms of the NPO sector. It was also not to the benefit of the NPO sector that NPOs were misused for money laundering and financing of terrorism.

Mr Parks responded to Mr Ryder on the issue of the NPO registration backlog. The solution was to capacitate the DSD. One should not seek shortcuts with laws because departments were “not bothered” with capacitating themselves; they had to do some real work. COSATU appreciated the Treasury’s efforts to resolve some of the concerns raised in the NA.

COSATU’s “foundation” was that time frames and requirements had to be complied with. South Africa had to avoid grey-listing, and the consequences, if it failed to do so, were quite dire. COSATU appreciated that the SCOF gave additional space for public participation, albeit not in ideal conditions. To be fair to Parliament, it was a problem across many departments that COSATU saw time and again, where departments took two or three years, even five to six years, on bills. Then departments finally “woke up” and brought the bills to Parliament. COSATU had seen this with nearly every department, and it did have a negative impact on progressive laws which would benefit society. It had a huge impact on Parliament’s public participation process.

In reply to Mr Moletsane: COSATU itself asked why departments delayed in submitting bills time and again. He felt that it was because departments “did not feel a sense of urgency at many times”. It really did put Parliament in a crisis. For example, as South Africa approached elections in 18 months, it meant that all bills had to get to Parliament by February or March 2023, otherwise there would be another two or three years’ delay.

In response to the Chairperson: COSATU was pleased that the Chairperson mentioned comrades in Mongolia. It had been quite a while since the Chairperson mentioned the peasants in Outer Mongolia. (The Chairperson interjected to jokingly remark that Mr Parks was “out of order”). Mr Parks remarked that that group of people were “historical allies of revolution”. Even in Mongolia, one would see the consequence of a large amount of mining investment in that country if the state did not have the capacity to deal with corruption. If the state also did not have the capacity to deal with huge amounts of capital, there was also the possibility of corruption. In the last decade alone in South Africa, society had seen the issue of the decapacitation of the state. There was a “pandemic of corruption”. There were also real victims of corruption, such as a municipal worker who did not get paid, a nurse covering for two or three vacancies, schools with declining infrastructure, and police stations with a declining headcount. COSATU had seen the impact on its members, and there was a real consequence of corruption. It was critical to rebuild state capacity. There needed to be checks and balances, and COSATU thought that those were in the Bill. It appreciated that NGOs were not keen about some parts of the Bill, and it would be good if they were able to find compromise with the Treasury and the DSD. COSATU had to comply with the Department of Employment and Labour (DEL) in terms of its own registration requirements. It was a “nuisance” at times, but it was for the greater good, because if trade unions did not have that compliance, then some of its comrades would “misbehave”, and there would be the consequence of decapacitation of the trade unions as well. The laws were there not because trade unions and others enjoyed them, but to make sure that all abided by the spirit and the objectives, etc.

On beneficial ownership: COSATU would have liked to see more clauses in the Bill giving more granular detail. COSATU hoped that the Treasury would provide for that detail in the regulations, and would come to COSATU when the President signed the Bill towards the end of the year. It hoped to get things done by the first quarter of 2023. There needed to be full transparency, and there needed to be access to beneficial ownership and who owned a company, not just for the issue of terrorism, but also for the issue of corruption, etc. There had been times when Parliament passed progressive laws, but departments ignored them. He observed that the SCOF from the previous Parliament had spent a lot of time on the Public Investment Corporation (PIC) Amendment Act to say that there needed to be full disclosure of all PIC investments to the public, to Parliament, etc. That Bill was signed into law a year and a half ago, but it still had not been effected. The PIC still declined to disclose those investments to the public. Departments and entities needed to be “chased” to make sure that they implemented laws.

The Chairperson observed that the civil society organisations would have read Treasury’s submissions the previous day if they had a chance. The organisations needed some time to consult with their seniors. It was not the “final reply” from the Treasury.

Mr Vukile Davidson, Chief Director: Financial Sector Policy, National Treasury, observed that there was a huge range of issues that had been dealt with in the submissions and in the follow-up questions and discussions. He addressed the issue of communicating to the NGO sector about why Treasury was doing the Bill process, and why the Bill was critical. A lot of the focus had been on the “medicine”, and perhaps not enough on the “nature of the disease”. The purpose of the Bill was to, as he assured stakeholders, narrowly meet the identified deficiencies that the FATF identified in the mutual evaluation to avoid grey-listing. The Treasury did not have a broader aim to affect how the NGO sector operated beyond that narrow objective. Treasury believed that the design and the subsequent amendments that it made to the clauses reflected the narrow purpose that the Treasury had. Grey-listing would disproportionately affect NPOs and remittance service providers. That was not just the Treasury’s view, it was the empirical evidence of other countries that had been grey-listed. That was because the people and sectors most affected by grey-listing were those that had traditionally had difficulties in providing stringent customer due diligence or proof of identity for receiving and sending money. It had seen such effects in sub-Saharan Africa, and Oceania, where countries in those regions had been “massively affected” by the effects of grey-listing and de-risking. A consequence of grey-listing was that the people most affected would be those that did not have the ability to formally identify themselves for the receiving and sending of funds. The Treasury wanted to underscore that all stakeholders were “trying to row in the same direction”. Like the Committee, Treasury acknowledged the critical and central importance of the NGO sector. For the NGO sector to continue its important work, a credible financial system that would allow the sector to receive and send funds required for its operation was really important.

Mr Davidson observed that several of the submissions had previously been submitted to the SCOF, and Treasury had responded to those formally. Treasury would give the additional submissions a detailed response by Friday. It noted that in relation to the NGO Act amendments, provisions were currently contained in the B-Bill, which were amended in the NA, which broadly took into account the submissions that were made to the Committee. That had been reflected in some of the engagements and submissions by the NGO sector in the meeting. That reflected extensive consideration and engagement that the Treasury undertook, both within the Committee and bilaterally with affected stakeholders, including those who had made submissions to the Committee.

Treasury aimed to achieve an appropriate balance in addressing those concerns. It was also seeking to make sure that it addressed the FATF-identified deficiencies. Mr Ryder made a very important point, which was that there was no use passing a Bill that would not be implemented. Something that the Chairperson had touched on was that the only way South Africa was going to avoid grey-listing, was in part getting the laws in place, which the Bill in front of the Committee sought to do, but also ensuring the laws that were passed were effective in addressing the objectives. Passing laws was “half of the exam” that South Africa needed to pass. The other half of the exam was to demonstrate effectiveness. Treasury was mindful of that, and was not simply going to be satisfied by passing a law that it thought had no reasonable prospect of being implemented effectively. That would run counter to the Treasury’s principal objective, which was avoiding grey-listing.

Mr Davidson observed that the HSF alluded to a misalignment between GLAB and the NPO Amendment Bill. Treasury had been working very closely with the DSD throughout the entire process. The NPO Amendment Bill was not currently before Parliament. The current Bill was before Parliament, and having been passed in the NA, was in front of the NCOP. That would mean that the NPO Amendment Bill would need to align with the new law. Treasury wanted to reassure the HSF that it was working closely with the DSD. The NPO Amendment Bill was not currently tabled in Parliament, but when it did get tabled, through the engagements that it had with those colleagues, and the fact that the Bill would have hopefully been passed, would require that those amendments were aligned to what the Treasury was currently doing.

Mr Davidson observed that the extensive comments submitted by the law firm Webber and Wentzel would be considered very carefully, and presented to the Committee on Friday. An important point was mentioned by one of the presenters in the meeting. It was that the Treasury had obtained a legal opinion on the constitutionality of the NPO amendments that it was proposing in the current Bill. The opinion was submitted when the Treasury wrote to the chairperson of the SCOF. It provided a copy of that to the Chairperson. It was happy to resubmit that, to address any lingering concerns of the constitutional nature that were dealt with in that opinion.

Mr Davidson wanted to clearly state that the Bill was not given or developed by the Treasury in 2017. The report that was submitted by the FATF, which represented the basis of the Bill before the Committee, was published in October 2021. From that period onwards, Treasury had been closely engaging with the relevant departments. Because of the nature of the Bill being an omnibus Bill, a lot of the aspects did not fall within the areas of competence of the Ministry of Finance. From October 2021, the Treasury received the mutual evaluation report, then developed the Bill, engaged with government departments, and went through the Cabinet process. The Bill was ultimately tabled in Parliament in August 2022. There had been significant complexity in drafting the Bill. The Bill was “nowhere near” the 2017 timeline that the Treasury had had.

Responses to SeCOF GLAB (initial draft) (the National Treasury)

Ms Jeannine Bednar-Giyose, Director: Fiscal and Intergovernmental Legislation, NT, wanted to summarise the amendments made to the Bill in the SCOF. Mr Ryder mentioned that it would be helpful to get a brief sense of the amendments. Ms Bednar-Giyose presented slides that showed the specific provisions that were amended, and the nature of the amendments that were made in light of public comments received in the SCOF.

Approach to registration of NPOs

• In light of the comments regarding the proposed mandatory registration of all NPOs under the NPO Act, and after careful consideration, drafting refinements were proposed to the Standing Committee on Finance, which were adopted by the National Assembly.
• Not all NPOs will now be required to register (the tabled version of the Bill required the registration of all NPOs).  The following NPOs will be required to register:
• Any NPO that makes donations to individuals or organisations domiciled in a foreign country, including when such individuals are physically in South Africa;
• Any NPO that provides humanitarian, charitable, religious, educational or cultural services outside of South Africa’s borders.

Ms Bednar-Giyose added that the provisions had been amended to specifically narrow the category of NPOs that would be required to register. In light of the specific concerns raised regarding constitutionality, especially the impacts on the rights of freedom of association, conscience and religion, and the rights of cultural and religious organisation, the Treasury took those comments seriously. It requested a legal opinion from Senior Counsel to look at the required licensing provisions in the Bill. Ultimately, the final provisions that were provided in the B-Bill took into account recommendations that were made by the Senior Counsel opinion.

• Wording is included to make it explicitly clear that the Directorate does not have the discretion to refuse registration if the requirements of the Act are complied with. Currently, section 13(2) provides that if the applicant for registration complies with the requirements of the Act, then it must be registered.
• Similarly, wording is included to make it explicitly clear that the grounds on which a non-profit organisation could be deregistered could not be exercised only in respect of non-compliance with requirements in the Act. Currently, the grounds for cancellation as set out in section 20 are non-compliance with requirements of the Act, or non-compliance with a provision of its constitution, which has not been rectified after receipt of a notice contemplated in that section.

While talking to the next page of her presentation, Ms Bednar-Giyose added that concerns had been expressed about the potential power of the NPO Directorate to require NPOs to make changes to their constitution. Wording was now included to make it explicit that the Directorate could not require an NPO to change its constitution. It only may refuse registration if the constitution did not cover the matters required in terms of section 12(2). Those were objective categories of matters that needed to be provided for. It did not say how NPOs must provide for those matters, or aspects about the activities of the NPOs. The scope of the powers relating to amendments of the NPO’s constitution were similarly clearly delineated.

Treasury also highlighted in the SCOF that all of the public powers that the Directorate had in terms of legislation needed to be exercised in accordance with the Constitution of South Africa, in compliance with the Bill of Rights, and in compliance with the Promotion of Administrative Justice Act (PAJA). The Treasury considered providing for that explicitly, but advice was received from the State Law Advisors that was not necessary and required drafting practice, because that did necessarily apply.

• It is submitted that as the powers of the Directorate have been very clearly delineated through the addition of explicit wording, and in light of the application of the Constitution and the PAJA, the powers of registration, deregistration, and the power to require amendments to be made to an NPO’s constitution may not be exercised in a manner that would potentially infringe on the rights to freedom of association and freedom of religion.

• A legal opinion from Senior Counsel was obtained, which analysed particularly the provisions in the Bill relating to the licensing of NPOs.  Counsel concluded (based on an assessment of the constitutional jurisprudence and the application of section 36 of the Constitution) that generally the provisions were constitutionally sound, with the exception of the reference in the tabled version of the Bill in the amendments to section 12 of the NPO Act to “prescribed licensing requirements” and “transitional arrangements” that NPOs that would now be required to be licensed would be subject to.
• It was proposed that those references be removed, and that the licensing of NPOs who would be required to be subject (to registration) should only be subject to the objective requirements and processes contained in sections 12 to 14 of the NPO Act.

Ms Bednar-Giyose added that the only additional relevant aspects would be the timeframes within which NPOs must register. The time frames would be specified in a notice that would be published in the Government Gazette. The proposals were adopted in the SCOF.

In section 12, where many amendments were made, section 12(1)(b) clearly defined the limited scope of the NPOs who needed to be registered. In paragraph (c), references to transitional arrangements or subsequent regulations and licensing requirements had been removed (see page five of the National Treasury document). It also provided that a registered NPO, whether it was in fact registered in terms of the Act or not, must comply with the requirements of that Act. That applied to those NPOs who would be required to register.

The addition of subsection 4 (in section 12) provided the explicit wording that the amendments may only be required to make an alteration to the constitution to ensure that it addressed the required matters specified in subsection 2.

Section 13 of NPO Act

In section 13 of the NPO Act, subsections 7 and 8 were added. Subsection 7 clarified the powers of the director to refuse to register an NPO, which may only happen after there had been noncompliance with the requirements for registration, or had failed to address noncompliance that they had been notified of, as referred to currently in the Act. If there was noncompliance with licensing requirements at the time of application, there was already a process to address that.

It was also provided (in subsection 8) that an NPO that had submitted an application for registration was deemed to be registered unless the director had given notice that they were proposing to refuse to register the NPO, and the processes that needed to be followed in that case had been completed. Ms Bednar-Giyose added that those provisions clearly delineated the powers of the director in relation to registration.

Amendments to sections 18 and 21 of the NPO Act

There was also the addition of a requirement that the information that must be submitted relating to office bearers of NPOs must be kept up to date. That was in response to submissions that were provided to the SCOF.

In section 21, a new amendment would be included to explicitly state that “the director may only cancel the registration of a non-profit organisation as contemplated in section 20 and this section.” That clearly limited the scope of the powers.

Amendment to section 29 of the NPO Act

• In response to concerns raised in submissions regarding the proposal in the tabled version of the Bill would create offences for NPOs, the Bill now proposes to create contraventions that would be subject to administrative sanctions.

Previously, such sanctions would include fines or potentially a period of imprisonment, in accordance with criminal procedure. In response to recommendations, these contraventions would be designated as contraventions of the Act, and would not be offences. Such contraventions would be subject to an administrative sanction.

[Please see the document attached to the meeting on 25 November 2022 for details.]

Further responses

Ms Bednar-Giyose responded to the comments from COSATU and SACTWU: The concerns about public access to information that would be gathered in terms of the legislation relating to beneficial ownership were noted. Access to the information would be provided in accordance with regulations that would be subsequently promulgated. The regulations would be developed by the relevant ministers in consultation with the Minister of Finance, and would be published for consultation prior to promulgation. It would be attempted to appropriately take into consideration the importance of access to information in the development and promulgation of those regulations.

In response to the HSF: Treasury would engage with colleagues in the DSD, who it had been working with on the Bill, in relation to supporting the DSD with the further processing of their legislation, also taking into account the important submissions that had been made in that process.

Treasury would provide a more detailed response on Friday, particularly regarding the submissions relating to the Directorate and the capacity and situation of the Directorate in terms of legislation and the ability to effectively perform the functions.

The Chairperson observed that there were comments in the chat box, and responded to the following:
[Mr William Bird, Director, Media Monitoring Africa, wrote in the chat box:
From the get-go the NPO Working Group has supported the Bill in principle.
Mr Ryder wrote:
The ability to implement is going to be key.
Mr Bird wrote:
I think the NGOs who participated have understood the key issues; our concern was that the responses were not proportionate and appropriate to addressing the challenges identified by the Treasury. We had put forward suggestions and solutions.
Ms Copley wrote:
We are well acquainted with each other because we have been in so many meetings together over the past weeks.
Mr Bird wrote:
The simple reality is that the initial draft and indeed proposal on the table form the DSD was patently unconstitutional and out of touch with international law.
Ms Jenny Wright wrote:
Each submission made by the NPO Working Group has been updated based on the latest documents provided i.e. this submission was updated based on what was in the B version of the bill just out.
Mr Bird wrote:
But the DSD has asked for public comment on the draft Bill! where they had failed to make the changes we noted.]

There were comments from William Bird, Director, Media Monitoring Africa. He read Mr Bird’s comment, and the Chairperson noted that the issues Mr Bird raised had been covered. The Chairperson also read Ms Copley’s comments, and Mr Bird’s further comments about the Bill being unconstitutional. The Chairperson said that only in so far as that conflicted with the Committee’s Bill would it have to deal with that issue. That issue needed to be taken to the DSD (as it seemed to have been).

The Chairperson said that the matter of DSD asking for public comment would be dealt with by the relevant Portfolio Committee, Select Committee and department. There was no guarantee that if one made submissions, that the Executive and Parliament were obliged to accept them.

Mr Bird would receive a copy of the legal opinion received by the Treasury. The Chairperson had not looked at the opinion. He asked the Committee Secretary if he could send the opinion to the Members and others who were in the meeting from civil society. The Chairperson asked Mr Davidson to send the legal opinion to the Committee Secretary again, after which it would be sent to all Members.

Closing

The following day after the House rose, the Members had a Committee meeting with the Select Committee on Appropriations (SeCoA). Friday from 10:00 to 13:00 was SECOA, and 14:00 to 17:00 was the Committee.

The Chairperson observed that Ms Bednar-Giyose gave an extensive reply – it gave the opportunity for civil society stakeholders (when they came to the meeting on Friday) to have a better sense of what was done. He hoped that the Committee would get the Treasury’s submissions by Thursday evening. Friday was a busy day for the Committee. He requested that the Treasury send its submissions to the Committee Secretary by 20:00 on Thursday to send out to the Members. He requested that the Committee received the Treasury’s legal opinion by that afternoon, in the next hour or two. Looking at what both delegates from the Treasury had said, the Treasury’s changes had been more substantial than the Chairperson thought. The Committee had not looked at the Bill clause-by-clause; it got briefings from the Treasury. Some of what Ms Bednar-Giyose was hard to follow, but the Members would get a chance to read it. The document that she presented could also be sent to Members.

The Chairperson thanked the civil society stakeholders, the Treasury team and the Members. He reminded the civil society stakeholders that the meeting on Friday was at 14:00.

The Chairperson made closing remarks. Of course Parliament had to pass a bill that was constitutionally sound. But the Members were not lawyers. COSATU was not affected by the constitutional issues. He asked if lawyers from the civil society stakeholders could settle the constitutional issues in a subcommittee meeting, which would include the lawyer from Parliament, and the lawyer from the Treasury. The lawyers would then bring the outcome of that to the Committee. That could be done over the weekend. If necessary, the Committee could have a meeting from 14:00 to 17:00 on Sunday, or from 10:00 to 13:00. The Committee could not do Monday. The other option was Members to reply to the Chairperson via WhatsApp. There could be subcommittees, e.g. one for the DA, one for the EFF. The Chief Whip and Chairperson could chair those subcommittees, and they could meet on Sunday morning to deal with the policy issues. The Committee could also see what happened on Friday, then decide whether it would meet on Sunday.

The meeting was adjourned.
 

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