Implementation of Zondo Commission Recommendations: DTIC & CIPC input

Meeting report

The Chairperson opened the meeting noting the purpose was to receive an update on the implementation plan on the Zondo Commission of Inquiry recommendations about 15 Committees in Parliament were monitoring the implementation of the recommendations of the Commissions, particularly the President’s response plan. This Select Committee was one of the committees responsible for monitoring the implementation of these recommendations.

CIPC on implementation of Zondo Commission recommendations

Adv Rory Voller, Commissioner, Companies and Intellectual Property Commission (CIPC), outlined the ongoing efforts to address the State Capture Commission Report (Zondo Commission Report) recommendations. The Department of Public Enterprises (DPE), in collaboration with law enforcement agencies and state-owned companies (SOCs), had been actively engaged in the process.

One significant aspect highlighted during the meeting was the challenge faced by SOCs in gathering the necessary evidence to support delinquency applications under Section 169(2)(b)(i) or (ii), read with Section 162(3). Despite the Department's best efforts, progress had been slow, and only one SOC had managed to submit a delinquency request, currently under analysis by the CIPC. The interaction with the State Attorney's office, specifically regarding the delinquency referral, had resulted in a favourable judgment for the Special Investigating Unit (SIU), with ongoing follow-up to determine any potential appeals.

In addition to the focus on SOCs, the CIPC was actively pursuing private sector entities implicated in the State Capture report. Companies were required to demonstrate steps taken to address governance matters outlined in the report. Compliance notices had been issued, leading to a 38% increase in closed cases. Notably, one case was slated for criminal investigation, two compliance notices had been prepared, and two matters had been referred to the State Attorney for proceedings against implicated directors (Yakhe Kwinana and Edwin Sodi).

A detailed overview of private sector entities investigated revealed varied outcomes. Some entities, like LSG Skychefs South Africa and BidAir Group, had successfully closed their investigations following satisfactory responses. With ongoing engagement, others, such as JM Aviation South Africa and Swissport South Africa, had progressed to compliance notices. However, entities like Nkoki Inc., Air Chefs, and Airbus Southern Africa, had had their matters resolved and investigations closed. Notably, certain entities, including Glencore Operations South Africa and Glencore Holdings South Africa, had provided comprehensive responses resulting in closed investigations.

Adv Voller also provided updates on the status of entities like EOH Holdings and Blackhead. In the case of Blackhead, Edwin Sodi's resignation from the Pty Ltd, following its conversion and his subsequent criminal charges, were highlighted. Further, due to non-compliance with compliance notices, the report underscored the initiation of court adjudication for three private sector entities, namely Swissport South Africa, JM Aviation, and Homix.

Finally, he touched on the State Capture Commission's recommendation to amend Section 162 of the Companies Act, extending the time bar for applications to declare directors delinquent beyond two years. The Department had been mandated to respond to this recommendation, which suggested an extension to five years based on research from the specialist committee on company law, aligning with practices in other countries such as New Zealand. This proposed amendment aimed to enhance accountability and governance within corporate entities.

See attached for full presentation

Discussion

Mr M Mmoiemang (ANC, Northern Cape) appreciated the Department's work concerning the task emanating from the Zondo Commission. This gave confidence to the nation in terms of the message that had to be sent by Parliament to hold those responsible to account, including ensuring that corrective steps were taken into consideration.

Was any interaction taking place between the Department of Trade, Industry and Competition (DTIC) and the Department of Public Enterprises (DPE) concerning some of the directors that had been implicated by the Zondo Commission?

What was the attitude of the state-owned enterprises (SOEs) towards the work of the CIPC? Were the SOEs getting the CIPC’s cooperation regarding the anticipated delinquency proceedings?

Mr T Brauteseth (DA, KwaZulu-Natal) indicated that State Capture and the presentation represented a tiny piece of the puzzle, as a lot was happening that had not been uncovered. Adv Voller had made an offer to provide the Committee with the list of infractions by the companies. Although this was a high-level presentation, the Committee needed to understand what those companies were involved in. This was because this could be something as simple as not having a relevant tax certificate, or it could be something worse. What actions had the CIPC taken with the relevant authorities per infraction?

The Chairperson agreed with Mr Brauteseth, indicating that more detail still needed to be provided on the involved companies. Furthermore, the information that would be provided to the Committee should indicate the names of the directors that were being pursued.

Regarding the companies that were said to be untraceable, what attempts had been made to ensure that they were found, given that they should already be registered with the CIPC?

There seemed to be some delays in interacting with the DPE. Perhaps in future amendments, it would be ideal for the CIPC to have the investigating powers so that it does not have to rely on the interaction of other entities, which might be deliberately stalling the investigation process.

CIPC's response

Adv Voller said the CIPC would provide the Committee with details on some of the matters that had been presented. The investigating team had all the details, which would be shared with the committees.

The CIPC was investigating all the entities that fell within the scope of the DPE, such as Transnet, South African Airways (SAA) and others. Although these entities had not been mentioned in the presentation, they would be mentioned in the additional report that would be provided to the Committee.  

The cross-functional team was working well and there were regular meetings. Adv Voller indicated that he was unsure if the DPE sometimes could not find the required information or the precise reasons for the delays. The CIPC also got frustrated at the speed with which some of these matters and the information needed were given.

However, many of the matters were ready to be taken to court regarding disqualifications. The CIPC’s powers were in certain areas contained within Company Law, without powers in criminality such as matters of fraud, corruption and theft, which the CIPC could not investigate. However, the CIPC worked closely with the relevant entities to receive information so that the application could then be taken to court.

Adv Voller agreed with Mr Brauteseth, saying that the areas at which the CIPC was looking spoke to the heart of many company law and governance failures, but not to financial forensic analysis and financial failures. This was a small part of unravelling what had occurred within the State Capture investigation.

One of the areas that the CIPC looked at was linking the scattered puzzles. A programme at the CIPC provided the ability to mine the data collected, including linking certain individuals, to track the common names of individuals who might be colluding in certain companies. Therefore, the CIPC was looking not only at the names provided in the Zondo Commission, but was also attempting to drill down to look at those who played the advisory role in these matters, such as the auditors and accountants.

Regarding the companies that had disappeared, Adv Voller indicated that this was a tricky terrain to navigate because once a company had been liquidated, the CIPC still had the relevant names on the register, but sometimes people disappeared. This was something that the CIPC was working on with the relevant security agencies to ensure that those who needed to account were held accountable.  

Ms Malebo Mabitje-Thompson, Acting Director-General, DTIC, said that the Department would submit a comprehensive report to the Committee. It was hoped that the presentation had indicated the Department’s responsibility to ensure that the recommendations of the Zondo Commission were implemented, including pursuing all the necessary avenues to ensure that those highlighted in the report were held accountable, without fear or favour.

The Chairperson thanked the departments for the briefing. The Committee would do its part in processing the Companies Amendment Bills. 

Committee minutes

The Committee adopted the meeting minutes of 7 and 14 November 2023.

The meeting was adjourned.