Committee Legacy Report; Progress report on implementation of the Zondo Commission recommendations

Meeting report

Opening comments:

The Chairperson welcomed all to the meeting and he noted the absentees with apology.

He mentioned that the Committee was nearing the end of its term and the Sixth Parliament. The meetings they had now were to wrap up their work, including the legacy report, whose final draft would be presented to the Committee for engagement today. The Committee would also receive an update on implementing the Zondo Commission recommendations regarding the State Owned Entities (SOEs) and what the Department was doing to handle the ongoing issues. He again welcomed everyone and noted the absence of the Minister.

Draft Committee Legacy Report

Mr Disang Mocumi, Committee Secretariat, then took the Committee through the draft legacy report.

Discussion

Mr N Dlamini (ANC) wanted to emphasise the importance of benchmarking, since the Committee was not really able to do this. He made an example of jurisdictions that had to decide on their ports, whether owned by the state or collaborated with the private sector. The Committee had not yet experienced the benefits of such benchmarking in their work. Perhaps the next Parliament could make better informed decisions using benchmarking. For example, Transnet decided to eliminate its sitog (sp) scheme, and since then, the efficiency levels have decreased. It would have been beneficial to conduct a study to assess the impact of such a decision taken. Oversight visits and study tours could not be separated. Study tours allowed for the enhancement of oversight activities - this was a good idea to propose to the incoming Parliament.

Dr M Gondwe (DA) suggested they advise the incoming Parliament to monitor the implementation of the ‘GBE Consortium report’ commissioned by National Treasury in September 2023. Eskom had committed to implementing the recommendations of the report, and the incoming Parliament could request a briefing from Eskom about the progress made.

Ms O Maotwe (EFF) suggested the report be revised in a manner that it was coherent, as it was not structured at the moment. On the table of contents; it read currently that the introduction was right at the bottom - this should appear on top. The report should also include a background of who the Committee was and their goals. Following this should be the purpose of the report, and the Committee focus which would include the functions of the Committee (then she read out the items from the draft report). Following this should be ‘outstanding matters’, then the ‘challenges experienced’, and lastly, the recommendations. The report at the moment was not coherent.

She wanted Members to reflect on the work of the Committee in unbundling of Eskom, and the progress made since the Minister proclaimed that there would be an unbundling of Eskom. Load shedding existed when Members entered the Committee and it still existed after five years of their term. What did the Committee do in spite of the load-shedding issue? What lessons could they impart on the incoming Parliament?

She reflected on the dismissal of the Director-General of Public Enterprises, noting it was strange for a DG to be dismissed. She asked what impact this had.

The report needed to reflect on the South African Airways (SAA) sale for R51. What happened in this matter? The Committee could not hold anyone accountable as information was lacking, rendering them clueless. The employees of SA Express were still distraught over the shutdown and their salaries being deducted. Funeral cover, and medical aid had not yet been paid to them.

She said she was mainly covered by the previous comments.

Perhaps the House needed to determine whether or not an entity was privatised or not - the Minister should have the powers to do so. Parliament needed to have the power and not the Executive, so that they could have easier access to the information which they required. This would be better than an individual making such a decision.

Mr F Essack (DA) was grateful for the detailed legacy report. He noted the letter received from Denel about its turnaround strategy. Denel had been problematic regarding its losses in investments, and this was a huge problem for the fiscus, which should be highlighted in the draft report. In his time in the Committee, he could say that nothing much had been done about the impoverished community for the last five years, in so far as the land claims being successful. He suggested that the incoming Parliament focus on these issues.

The investment placed over the years in the SOEs was at a dead loss, and this should be suggested to the incoming Parliament to focus on the return on the investment.

He commended the Secretariat for putting together the draft legacy report of the last five years. The oversight visits did not provide the Committee with the desired exposure.

Ms N Mhlongo (EFF) suggested the work on the Electricity Regulation Amendment (ERA) Bill be added to the legacy report. The Committee was supposed to follow up with the Department of Mineral Resources and Energy but the Department had cancelled and rescheduled with the Committee twice, but still remained unavailable. This was an outstanding matter to deal with.

She recommended the legacy report reflect on doing away with the Department of Public Enterprises even though the Committee was not responsible for policy making. All the SOEs should report to their respective line departments. The Committee fully supported this.

Ms V Malinga (ANC) agreed with the comments and suggestions made by her colleagues. She noted that maybe the report was following the set template set by Parliament. She asked if the audit outcomes had been captured in this report. She was worried that the Committee was ending the term with the Richtersveld issue of deceiving people - was this included in the report? She asked that the report reflect on the challenges, the work done, and the issue of insufficient oversight during the term. They should advise the incoming Parliament accordingly on how to have effective oversight. Since entering Parliament, the Committee had received only one document on the matter of SAA. She welcomed the legacy report.

Ms J Mkhwanazi (ANC) welcomed the report and acknowledged the good work done by the Secretariat. She noted that the SAA issue had not yet been finalised, and this should be included in the report. They would soon be able to refer this matter to the Speaker. The report correctly reflected the work done by the Committee.

The Secretariat thanked the Committee for their suggestions. He said there was definitely room for improvement regarding the structure - he would look into this and return with an amended report for final adoption.

Mr Essack said the Committee should thank Ms Lee Bramwell, Committee Researcher, for her effort during the term, in guiding and assisting the Committee wherever necessary.

Progress: Implementation Plan On Judicial Commission of Inquiry into State Capture Recommendations by The Portfolio Committee On Public Enterprises

Mr Rodney Mnisi, Committee Content Advisor, then took the Committee through the presentation on the progress report on implementing the Zondo Commission recommendations.

Introduction

-Parliament developed an Implementation Plan in response to the findings of the Judicial Commission of Inquiry

-It’s purpose is to give effect to the Recommendations in the Report of the Judicial Commission of Inquiry into allegations of State Capture, Corruption and Fraud in the Public Sector, including Organs of State.

-The Implementation Plan was then referred to the Committee for actioning

-The presentation therefore aims to share progress report towards attaining and/or achieving its set objectives regarding the plan.

Department of Public Enterprises Responses

In furthering the Commission’s recommendations, the Department has been working with law enforcement agencies, state-owned companies, and other organs of state to among others:

1. Pursue delinquency proceedings against former directors of State-Owned Companies (SOCs) implicated in state capture;
2. Ensure that civil and criminal proceedings are referred to relevant authorities for investigation, with the view to prosecute where necessary;
3. Individuals who fail to exercise their fiduciary responsibilities are disciplined by their professional bodies;
4. Individuals implicated in state capture are red-flagged and/or prevented from accessing employment across the three spheres of government and
5. Reforms are introduced to enhance measures meant to ensure the maintenance of good governance in SOCs.

Director delinquency

In furtherance of the DPE’s obligation to implement recommendations of the Commission, the Department is working with law enforcement agencies to pursue 94 cases of delinquency proceedings against 73 former directors. The breakdown is as follows:

1. Eskom (13 cases).
2. Transnet (25 cases).
3. SAA (25 cases).
4. Denel (9 cases).
5. Alexkor (22 cases).

Eskom: The DPE led the launch of delinquency proceedings with CIPC against four former directors of Eskom on 30 April 2023. The cases are recurrently under investigation by CIPC.

DPE referrals to professional bodies

The DPE referred six cases relating to former board members and SOEs, as well as accounting and law firms implicated in state capture to their respective professional bodies. The breakdown is as follows:

1. SAA -  4 cases.
2. Denel – 1 case.
3. Transnet- 1 case.

The Department is reviewing profiles (CVs) of the implicated former directors to ensure that all those who belong to professional bodies are identified.

This is to ensure that former directors are referred to their relevant professional body for discipline; and that evidence from successful referrals is used to support delinquency proceedings

Board appointment

-Cabinet in December 2022 mandated the DPSA, in consultation with key departments, to establish a task team to review the DPSA Guide and provide a plan of action.

-The review will consider mechanisms for a centralised database and independent oversight body as the State Capture Commission recommends.

Vetting and integrity assessments

-The DPE is working with Department of Public Service and Administration (DPSA), Presidency, National Treasury and Cooperative Governance and Traditional Affairs (COGTA) to develop a database that will be used to maintain the list of officials who were dismissed or who resigned to avoid being disciplined on cases related to state capture, fraud and corruption. The database will be used to ensure that the individuals do not resurface elsewhere across the three spheres of government.

-Twenty-five former senior executives of Eskom identified and ready for inclusion in the database. Work continues with all SOEs to identify individuals listed in the database.

See attached for investigations concerning Transet, SAA, Denel, Eskom and Alexkor

Discussion

The Chairperson opened the floor for engagement.

Mr Dlamini welcomed the report although he felt not much progress was provided on the Transnet CNR contract. There were people involved in this case beyond politicians and directors, which required justice. He reminded everyone that the state had lost billions of Rand during this transaction. This should not be taken lightly.

Dr Gondwe said she had a few comments to make. She was concerned that the presentation outlined the investigations under the different SOEs but did not provide progress in this regard. She thought that they would receive an update on the progress related to the investigations. This should be addressed.

She agreed with the ‘DPE referrals to professional bodies’. She agreed this would be regarded as evidence towards any delinquency proceedings which were brought against the implicated individuals.

She asked for more progress on the Board appointment process. How far was the DPSA with the review of the Board appointment process? She noted that Cabinet mandated the DPSA to review this guide in consultation with other departments over a year ago. Was there any movement in this regard?

She agreed with the development of a database by the DPSA for the purpose of retaining a list of officials who were dismissed, to face disciplinary hearings and seeking employment elsewhere. This was very much needed. How far was the DPSA in developing such a database? Could they ask the DPSA to extend the framework of developing lifestyle audits for officials working in various departments to SOEs? These officials should also be subjected to lifestyle audits.

They had seen the issues with SOEs due to the disjuncture, in developing norms and standards for officials in governmental departments. Who regulated the conduct of officials working in SOEs? They should ensure that they were all subject to the same standards and norms, as with the other departments. She was concerned about the lack of progress reports and said that the incoming parliament should look into this.

Ms Maotwe agreed that the progress on investigations into corruption at state entities was lacking.

She recalled the alleged overpayment of R4b which was said to be paid over to Stefanutti Stocks and others. She did not see mention of this in the report, and it did not indicate which investigations were conducted for which projects. What happened to the R4b overpayment? In the Stefanutti Stocks, there was an allegation of work being incomplete at Kusile Power Station to the value of R110m, was this being investigated? And what was the outcome thereof if this was investigated? Many companies were listed in the Zondo Commission as being overpaid by R400m. What was the outcome of such an investigation?

Mr Essack said that since much had been said, he was mainly covered on the database issues. He referred to slide 10, where 25 former senior executors of Eskom were included in the database. This was an urgent matter and as such should be highlighted. He was hoping for a more detailed report on the progress of the issues of these individuals. He did not want to report what others had already said. Across the board, the cadre deployment policy had shone light on how this had killed the economy. This needed to be resolved. He requested a more detailed report on all these investigations.

Ms Malinga welcomed the report. She corrected Mr Essack on his pronunciation of the word ‘cadre’.

She wanted to know how much had been recovered from the state capture processes and asked if she had perhaps missed this. How many prosecutions had been conducted? They were lagging behind with implementing the Zondo recommendations.  

Ms C Phiri (ANC) welcomed the report and she agreed with what had already been raised.

Ms Mkhwanazi said she was also mainly covered by the issues already raised especially on the issue of prosecution and felt it could be further emphasised in the update report.  

Ms Mhlongo said she agreed with Ms Maotwe. She requested feedback on the case further referred to for investigation from the Zondo Commission, and any other cases referred to law enforcement agencies such as SAPS. What was the progress in this regard? What were the consequences for those who were investigated?

Mr Mnisi noted that most of the comments were on how to improve the report and he would take this into consideration.

On the procurement of 1 064 Transnet locomotives, the allegations concerned irregularities of the procurement by Transnet. This was correct - the investigation was concluded and supported by the Special Investigation Unit (SIU). The SIU also assisted with certain recoveries and court processes. There were many people involved.

Mr Mnisi said he would try to provide a more detailed report in future – this update is very short due to the time constraints.

He noted there were many investigations which had yet to receive outcomes. They were working with more than 70 slides.

Regarding the update of progress made on the board appointment process, the DPSA is currently working on this. They have ways of conducting lifestyle audits.

He updated Members on the BB Investment investigation involving Eskom. It was found that the contract was unlawful and invalid and did not comply with Section 217 of the Constitution. They reached a settlement outside of court to the value of R1.577 billion to Eskom. This was still ongoing, but there were disciplinary and terminal referrals. He would revise this matter and try to include it in the report.

Closing

The Chairperson thanked Mr Mnisi for the responses. He updated Members on the next Committee meeting. All would receive communication on this.

The meeting was adjourned.