Public Protector on Report: discussion

Meeting report

AD HOC COMMITTEE ON REPORT NO 13 BY THE PUBLIC PROTECTOR
18 April 2000
DISCUSSION WITH THE PUBLIC PROTECTOR

Documents handed out
Report No 13 by The Public Protector

SUMMARY
The panel from the Public Protector’s Office assured the committee that everything that had been found to be suspicious was dealt with in the Report. Nothing indicated that a further probe was necessary and the process they had embarked upon was a ‘’thorough process’’. The panel commented that with hindsight the Attorney General should perhaps have disclosed the change in accounting policy to Parliament instead of giving an abridged version. However the fact that he did not do so has gained an import now that it did not have at the time and that the Attorney General could not have foreseen. They agreed with the ANC that if full disclosure was given, the present issue may not have arisen.

Further the Public Protector found that the Minister, while he did not act mala fide, did not act in the spirit of Sections 181(4) or 41(1) of the Constitution in that he ‘’interfered’’ with the functioning of an organ of state (the Attorney General’s Office).

In this regard a broad interpretation was given to the word ‘’interfere’’. Advocate Baqwa said that interference could be interpreted to mean the disruption of the normal functions of an institution. The Minister had affected the integrity of the Attorney General and affected his relationship with other institutions and in this way the Minister had interfered. Advocate Baqwa admitted that while it may be a broad interpretation of interference it was an appropriate interpretation. The feeling was that if the Minister had thought something was wrong, then he should have sat down with the Attorney General and questioned him to get answers. He should not have made the statements which he had made about the Attorney General to Parliament and to the press. By doing this he had brought about the disrepute of the institution (the Attorney General’s Office). The Minister had a right to be unhappy with the state of affairs and then to investigate but a proper process had to be followed because the integrity of the institution had to be considered.

They said that a constitutional lacuna existed in that while there were requirements in Section 181(4) in the Constitution, there were no mechanisms to enforce them or punitive measures to be followed if they were contravened.
Advocate Baqwa suggested that if Parliament believed that a member had not acted correctly then they could hand the matter over to a specific committee which dealt with these transgressions. No one, not even Ministers, are above the Constitution.

MINUTES
Section 6 (R 1450 million payment on 1 April 1997)
Dr Luyt (FA) asked what was meant by ‘’cash flow’’ (in Paragraph 6.3 of the Report ).
The panel replied that they were referring to the cash flow statement as prepared by the SFF. It was prepared to enable the SFF to see what cash they had on hand and did not take into account long term cash items (for example, depreciation). Thus it was only to look at the physical cash on hand.
The cash flow forecast was reviewed by management and by the Board. Thus they were aware of the cash flow position.

Section 7 (Corporate Governance)
A committee member (ANC) asked the panel if they found that the affairs [at SFF] were not conducted properly.

Advocate Baqwa replied ‘’In some respects but not in all’’. SFF was a Section 21 company run on fairly sound principles but not without problems.

The member continued by commenting that there were suspicions of manipulation of the Board by the general manager.

Advocate Baqwa said that there were suspicions of this but they had found no evidence to support these suspicions.

The member then asked if they had investigated all aspects of these suspicions.

The panel replied that they had investigated those aspects which related to alleged irregularities. They had conducted interviews with members of the Board and found no evidence to support the suspicions. There was ‘’unhappiness and discomfort of Mr van Zyl’s management amongst certain employees’’ and the Public Protector had probed them to give instances of where he had acted improperly or where he had withheld information from them but no tangible evidence had been given.

Dr Luyt asked if they had reason to believe that Section 424 of the Companies Act (which deals with the fiduciary duty of the board members) was transgressed?

Advocate Baqwa said that they had no reason to believe that this was so. They recommended that executive members be brought onto the Board because there was potential for manipulation even if there was no manipulation. In terms of Section 424 however they found no improprieties on the Board.

Dr Luyt asked if the manager was a member of the Board and Advocate Baqwa replied that he was not.

A committee member referred the panel to Paragraph 1.20 of the executive summary (the issue of distrust between the roleplayers) and asked if the distrust existed between the parties who were appointed by the previous government and those people appointed by the new government. He asked if the distrust arose because of where their loyalties lay.

Advocate Baqwa said that he thought that ‘’communications were bedevilled’’ which meant that issues which could otherwise easily have been resolved now created problems. The context of the paragraph was that certain parties felt that they came from different sides and there were definite undercurrents. Because of these feelings there was a ‘’built-in suspicion’’ and everything that was said by the various parties was doubted.

Dr Luyt asked if Price Waterhouse Coopers had done the audit.

Advocate Baqwa said this was correct. The Attorney General did not perform all government audits due to resource and time constraints. Sometimes there is an audit done by private firms. These firms audit on a rotating basis for the Attorney General. However they do not simply ‘’do their own thing’’. They have to comply with generally accepted government standards for auditing.

A committee member referred to Paragraph 7.32 of the Report (which indicates that the Board minutes did not include details of things that were supposedly discussed at those meetings). He asked if this was in line with the secrecy provisions.

Advocate Baqwa replied that this was not the case - this had in fact been a dereliction of duty. They had questioned Members of the Board on the discussions at the meeting then compared this to the minutes of the meeting to see if there were any gaps and differences between the two. After interviewing the Board members however they were satisfied that there were no irregularities but that the minutes were not taken properly.

The member then asked if they could exclude the possibility that something might have been wrong.

Mr Gibson (DP) interjected to say that the member seemed to be dying to find something wrong and suggested that perhaps he wanted the panel to ‘’suck something out of their thumb’’ to satisfy him that something was in fact wrong.

The ANC took exception to this comment and the Chair ruled Mr Gibson out of order.

Mr Gibson insisted that they were wasting his time with this ‘’ridiculous line of questioning’’.

Mr Landers responded that he was free to leave if he so wished.

The panel responded to the question anyway and said that nothing was found to indicate impropriety. Everything that was found to be suspicious was dealt with in the Report and nothing indicated that a further probe was necessary. Advocate Baqwa said that the process they had embarked upon was a thorough process and they had not suggested that there be a forensic audit because there was insufficient evidence of fraud to justify a further probe.

Dr Luyt commented that the auditor did look at a possibility of a transgression of Section 424 (relating to the fiduciary duties). He said that it looked as if the member was trying to find guilty people again. He agreed with Mr Gibson that they were ‘’busy with the wrong thing’’.

There were no questions on Section 8.

Section 9 (The Attorney General’s Reports to Parliament )
Mr Gibson asked why Minister Maduna after he had become aware of the true state of affairs on 24 June 1997 continued to say that there was a physical loss. He said that this was inexplicable to him and asked if the Minister had explained himself.

Advocate Baqwa said that the Minister was interrogated seriously on this point. The Minister had explained that he had persisted because he was not satisfied with the explanation that had been given to him. He felt that if the explanation was that simple then the Attorney General would simply have indicated this to Parliament. He felt sure that there was more to the situation. Also this time, the management audit was underway and he was confident that they would find irregularities.

Ms Jana (ANC) asked Advocate Baqwa if it was correct that the Public Protector found that the Minister did not act mala fides.

Advocate Baqwa said that this was correct. Initially they were worried about malicious intent against the Attorney General but after investigation they found this not to be the case.

Ms De Lille (PAC) referred to Paragraph 9.114 of the Report (specifically the reference to Section 181(4) of the Constitution). She noted that the Public Protector felt that the Minister had interfered with an organ of state as envisaged in this section. She asked the panel how they interpreted the word ‘’interfere’’ and why they thought the Minister had interfered. She asked if Advocate Baqwa ascribed that interference to the statement the Minister made in Parliament .

Advocate Baqwa said that the Attorney General was the watchdog of the State and that the Minister should have sat down with the Attorney General and questioned him to get answers if he thought that something was wrong. He should not have made the statements which he had made about the Attorney General to Parliament and to the press. By doing this he brought about the disrepute of the institution (the Attorney General’s office). The Minister had a right to be unhappy with the state of affairs and then to investigate but a proper process had to be followed because the integrity of the institution had to be considered.

Dr Luyt and Ms Jana asked related questions. Mr Luyt asked if it was incumbent on the Attorney General to tell Parliament of the change in accounting policy. Ms Jana asked if it was not incumbent on the Attorney General to have been clearer in his report and tell Parliament about the change in accounting policy) especially in light of the change from secrecy provisions to transparency.

Advocate Baqwa replied that there was no requirement on the Attorney General to disclose the change in accounting policy to Parliament . Such a requirement would only exist if Parliament had received reports from the Attorney General on previous occasions and now needed to be made aware that a change was taking place. Because this was Parliament ’s first time receiving information there was no need to disclose the change as the new accounting policy was the only policy which was relevant to the new government. Further the change in policy did not affect the money which government would receive. The bottom line profit in both reports was the same.

Advocate Baqwa said that he understood that a sense of duty spurred the Minister on but there could have been a proper investigation by the Minister. This was an error which the Minister himself admitted during the investigation.

Advocate Baqwa commended the Attorney General for publishing information with regard to the SFF as early as he did (prior to the complete lifting of the secrecy provisions). Also there were no precedents to guide the SFF and the Attorney General as to what information to publish. Thus he commended the Attorney General for erring on the right side (moving away from secrecy).

Ms Jana said that she understood this point but continued that precisely because it was the first financial statement to Parliament and precisely because of the history of secrecy, the Attorney General should have provided a complete and not an abridged financial statement.

Mr Landers said that it was not enough to say to the committee that there was no reason to give a full financial statement to Parliament . ‘’This is inadequate’’.

The panel replied that ‘’technically there was no reason to disclose the change in accounting policy’’. They agree that it may have been better to give a full disclosure because the present issue may then not have arisen. They questioned the Attorney General at length on this and with hindsight the Attorney General perhaps should have disclosed but ‘’he did not’’ and this is a ‘’fact which has gained an import now that it did not have at the time that the Attorney General could not foresee’’. (They referred the committee to Paragraphs 9.45 9.46 and 9.47 of the Report which fully explains the position.)

Advocate Baqwa reiterated his earlier point and said that he understood Mr Landers point that transparency should have been fully exercised but that if the information was disclosed, government would not have been in a better position. ‘’It could have been better but it was not wrong because it was not done.’’

Mr Gibson again asked if he was correct in saying that the Minister still did not believe it even after it was explained to him. He also asked if the financial statement presented to Parliament was presented to the Public Accounts Committee.

[Ms Jana asked the Chair to call a point of order by saying that Mr Gibson had asked the former question ‘’at least twenty times’’ already. She continued by asking if he was ‘’braindead’’. The Chairperson called her to order on the latter comment but agreed that Mr Gibson’s first question had already been answered.]

The panel then proceeded to answer his second question. They said that the financial statement had been presented to the Public Accounts Committee which did not audit every single thing. They can talk informally to the Attorney General to see if there are any particular areas which need to be investigated. The Minister picked up the difference between the two accounts. It was insignificant whether or not the Public Accounts Committee knew of this.

The Chairperson referred the panel to Paragraph 9.118 and 9.119 and asked them for suggestions on how to fill the ‘’constitutional lacuna’’ [of requirements in the Constitution with no mechanisms to enforce them].

Advocate Baqwa said that the Minister did not act in the spirit of Section 181 or Section 41(1) of the Constitution. The Minister should have enquired more before he made certain inaccurate statements and should be sanctioned for not having followed a proper process. One must take cognisance all the time when dealing with other organs of state because there were certain special relationships which have to be assumed. One had to act in a certain manner.

The system operates according to the Constitution which sets certain prescripts. If something in the system does not go right (that is the Minister did not follow a proper process) then ‘’Parliament must redirect, they cannot just leave it’’. They would be setting the wrong precedent as the ordinary person in the street will wonder what the value of the Constitution is. There must be a consequence for incorrect behaviour. If the Constitution is the supreme law of the land, then it must be seen to be so. Parliament must assure the electorate that ‘’nothing will be swept under the carpet’’ and always recognise the Constitution as the supreme law of the land. One cannot set a precedent that Minister’s "can do anything and treat institutions anyhow".

Ms Jana said that the constitutional requirements were in place but there were no mechanisms in place to enforce these. She asked if there were international precedents which could guide them in drafting legislation to fill this ‘’constitutional lacuna’’.

Advocate Baqwa suggested that if the committees in Parliament found a member that had not acted correctly, then they must hand the matter over to a specific committee which deals with such transgressions. For example in US legislation when the President acts inappropriately the legislature does not deal with the matter it is referred to transgressions committee. Perhaps in South Africa there should be a constitutional transgressions committee. An analogy would be Canada’s disciplinary committee for judges which works well. The best thing in South Africa may be a similar approach with a such a parliamentary committee.

The Chairperson noted that Advocate Baqwa was focusing on Parliament and the executive but that this should apply to all organs of government.

Ms De Lille said that the Report referred to sections 181 and 92(3) of the Constitution and asked if the Public Protector had also looked at Section 91(2). This Section refers to the powers of cabinet including their power to dismiss ministers. She said that Cabinet was collectively responsible and if the President was ‘’keeping quiet’’ about the issue, then this amounted to them condoning the matter. She agreed that Parliament has not put mechanisms into place to deal with such transgressions and that there was a vacuum. She asked if the President could act on this (as an alternative to Advocate Baqwa’s suggestion of creating a parliamentary committee to deal with the matter).

Advocate Baqwa said that they had considered this and that they had referred to Section 92 in the Report but that he ‘’thought this was a matter totally separate’’. Going this route would mean that Parliament was abandoning its duty and they would be ‘’telling the executive to check themselves’’. For this reason they had decided not to go that route.

Mr Landers said that when a member stands in the House and makes a disparaging point about a Chapter 9 institution, they are asked to withdraw that statement. Recently in fact Tony Leon had been asked to retract such a statement. He asked Advocate Baqwa if a penalty of this nature would also be appropriate in the present case.

Advocate Baqwa said that it sufficed for that particular forum. Unfortunately that cannot be equated with the current situation. Using this penalty for this situation would be ‘’making light of something quite serious’’.

A committee member asked if Section 181(4) had been transgressed and if the Minister had interfered with the functions of that institution. He also asked whether the Attorney General had gone to the Minister to explain the true state of affairs after the Minister had made an incorrect statement to Parliament .

Advocate Baqwa said that it depended on the interpretation of the word ‘’interfere’’. You could look at the interference as the disruption of the normal functions of an institution. The Minister affected the integrity of the Attorney General and affected his relationship with other institutions. In this he agreed that the Minister had interfered. He said that it may be a broad interpretation of interference but it was an appropriate interpretation. Although the Minister did not actively obstruct the functions of the office, his actions still amounted to interference.

Mr Gibson said that it was shocking that they had not updated the Powers of Parliament Act and that this was the fault of Parliament . He agreed that such matters should not be referred back to the President because that would mean that Parliament was abdicating their responsibility. Further the presidential spokesperson had already said that Minister Maduna’s career would not be affected by this incident (clearly showing that they had already pre-judged the matter). He agreed that there should be some kind of censure. For example, they could pass a vote of no confidence in the person who had made the transgression. He asked the panel if they agreed with him.

Advocate Baqwa said that he ‘’balks at being prescriptive’’ and said that there was a wide range of possible reactions and that he would ‘’stop there’’.

Ms Jana then commented that she was going to take her lead from Mr Gibson by being repetitive and asked if it was correct that they had found that the Minister had not acted mala fide [referring to Paragraph 9.120]. She asked him to explain the paragraph.

Advocate Baqwa said that the Minister had thought that something was wrong and that Baqwa could not draw the inference that he was being malicious. They looked at the background, his evidence and at what was driving him. In the light of this, they had found that while the Minister did not act mala fide, he still acted incorrectly.

Ms Jana asked if his proposal that Parliament must put such punitive mechanisms in place was of a general nature and not related to this specific case.

Advocate Baqwa replied that they needed to put legislation in place for the future but that there should be some sort of action in the current situation.

Dr Luyt said that they must not rule out the idea of civil proceedings and the Chairperson replied that they would come to that during their deliberations.

Mr Mangena (AZAPO) asked the Chair if he did not get the sense that the committee understood the Report and were now repeating themselves. He suggested that they end the discussion and move onto the deliberations.

Ms De Lille agreed but the Chairperson said that they still had to look at two remaining sections.

Section 10 – There were no questions.

Section 11 (Summary of recommendations)
The Chairperson said that the panel had made a number of specific recommendations regarding the running of SFF. He asked if they had received any feedback.

Advocate Baqwa said that they were going to follow up on this when they completed their submissions to this committee.

The committee indicated that they were now ready to debate amongst themselves. The Chairperson thanked the panel for elucidating and presenting the Report .

Advocate Baqwa commented that they would like to get the sense that their recommendations are given serious consideration.