Hansard: NCOP: Unrevised Hansard

House: National Council of Provinces

Date of Meeting: 28 Nov 2017

Summary

No summary available.

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Minutes

TUESDAY, 28 NOVEMBER 2017

PROCEEDINGS OF THE NATIONAL COUNCIL OF PROVINCES


The Council met at 14:03.


The House Chairperson: International Relations and Members Support took the Chair and requested members to observe a moment of silence prayers or meditation.


NOTICES OF MOTION


Mr D L XIMBI: Hon Chairperson, I hereby give notice that on the next sitting day of the Council I shall move on behalf of the ANC:

That the Council —

debates the role of Mayor Patricia De Lille in trying to cover up allegations of corruption in the


Foreshore Freeway tender and the R43 million loss in the MyCiti bus service fare system;

notes that in a sworn affidavit, Mr Craig Kesson, the executive director in the mayor’s office has made shocking allegations against Mayor De Lille. He apparently tried to notify the mayor about the attorney’s opinion on 31 August, and the mayor asked him to make sure that the issue go away and should not reach the Council;


and further notes that on 6 September, he told De Lille he was worried about the concerns expressed over Whitehead’s role in the losses relating to the MyCiti matter and the mayor alleged that the commissioner was being unfairly singled out because of allegations made in other forensic reports about other directors had not been submitted to the Council.


I so move.



Mr L B GAEHLER: Hon Chairperson, I hereby give notice that on the next sitting day of the Council I shall move on behalf of the UDM:


That the Council —


notes that the three notorious Eastern Cape hit man who killed five people in a space of three months have been sentenced to life imprisonment;


also notes that three of their accomplices were sentenced to 35 to 40 years imprisonment;


further notes that the SA Police Service has been working tirelessly on this case for seven years. [Interjections.]


Mr T C MOTLASHUPING: Hon Chairperson, on a point of order.


The HOUSE CHAIRPERSON (Ms M C Dikgale): I am sorry hon Gaehler, hon Motlashuping.


Mr T C MOTLASHUPING: Hon Chair, my point of order is: I want us to be procedural. We are dealing with notices of motions, and then later motions without notice will follow. Just sit down and allow people who must do the motions.


The HOUSE CHAIRPERSON (Ms M C Dikgale): Thank you very much, hon Gaehler. That is what we have been trying to explain all along. Hon Motlashuping. Hon Gaehler, which motion are you moving?


Mr L B GAEHLER: Chairperson, here is the person who is disturbing me. [Nankumtu ondimoshayo.]


The HOUSE CHAIRPERSON (Ms M C Dikgale): Hon Gaehler, which motion are you moving?


Afrikaans:

Mnr L B GAEHLER: Ek is deurmekaar.


English:

The HOUSE CHAIRPERSON (Ms M C Dikgale): Alright, thank you, very much.


Mr L B GAEHLER: Just keep quiet man.


The HOUSE CHAIRPERSON (Ms M C Dikgale): Hon Gaehler, please start from the beginning.


Mr L B GAEHLER: Hon Chairperson, I hereby give notice that on the next sitting day of the Council I shall move on behalf of the UDM:


That the Council —


notes that the golden handshake has been used to purge public servants who are no longer in the good books of the executive;


acknowledges that there is a great and urgent need to fight corruption and use public monies sparingly in support of sustainable socioeconomic development;


believing that the golden handshake syndrome is not consistent with the need to build a developmental state that is responsive and capable to driving development;


further debates the eradication of golden handshakes in the public sector.


I so move.


Mr M T MHLANGA: Hon Chairperson, I hereby give notice that on the next sitting day of the Council I shall move on behalf of the ANC:


That the Council —


notes with utmost concern the excessive growth of debt owed to municipalities which is estimated around R117 billion;


further notes that the national departments owe municipalities R2,3 billion, while provincial departments owe municipalities R3,1 billion and that municipalities themselves owe an estimated amount of R34,6 billion to creditors of which 77% is owed to Eskom and water boards;


debates intergovernmental debt and the nonpayment of service rendered between the various spheres of government and across government departments.


I so move.


MOTIONS WITHOUT NOTICE


LAND BANK BEATS DIFFICULT ECONOMIC CONDITIONS


(Draft Resolution)


Mr O J SEFAKO: Hon Chair, I hereby move without notice on behalf of the African National Congress:


That the Council –


notes that the Land Bank has beaten difficult economic conditions worsened by adverse weather conditions, to report a R57,3 million profit for the half-year to September 2017;



also notes that the bank is a specialised agricultural financial institution that is wholly owned by the state although it receives no subsidies from the government;


further notes that the bank’s profit for the six months was 71,8% higher than the profit for the matching period a year ago; and


congratulates the Land Bank on its strong financial performance and hope that it will intensify its program of support to agricultural development.


Motion agreed to in accordance with section 65 of the Constitution.


COMRADE MOCHUBELA JACOB DIES



(Draft Resolution)


The CHIEF WHIP OF THE NCOP: Hon Chairperson, allow me to rise without notice:


That the Council -





notes with a great sense of loss the passing of the late Comrade Mochubela Jacob Wesi Seekoe on the fateful day of 14 November 2017;


further notes that Comrade Wesi spend his entire life in service of the people of South Africa under the umbrella of the African National Congress;


also notes that Comrade Wesi left South Africa in 1960 to join the ANC mission in exile serving under different capacities;


notes that whilst in exile Comrade Wesi attained a number of academic qualifications including a Doctor of Philosophy, PhD, in Nuclear Physics in the former Soviet Union;


acknowledges that upon return from exile he served the ANC under different capacities including as a Deputy Secretary of the Interim Leadership Core of the ANC in the Free State;



notes that he was laid to rest on Saturday, 24 November 2017, in an official funeral in Bloemfontein; and


sends its deepest condolences to the family of Comrade Wesi and the ANC.


Motion agreed to in accordance with section 65 of the Constitution.


DEMI-LEIGH NEL-PETERS CROWNED MISS UNIVERSE 2017


(Draft Resolution)


Mr L V MAGWEBU: Hon Chairperson, on behalf of the Democratic Alliance I hereby move without notice:


That the Council -


notes that on Sunday, 26 November 2017 in Las Vegas, in the United State of America, USA, the 22-year-old proudly South African, Ms Demi-Leigh Nel-Peters was crowned Miss Universe 2017; and





congratulates Ms Nel-Peters for her phenomenal achievement and wishes her success in her future endeavours.


Motion agreed to in accordance with section 65 of the Constitution.


INKOSI VELA SHEMBE DIES


(Draft Resolution)


Mr J M MTHETHWA: On behalf of the African National Congress I hereby move without notice:


That the Council –


notes with sadness that the leader of the Nazareth Baptist Church, Inkosi Vela Shembe has passed away on Thursday, 23 November 2017;


also notes that Inkosi Shembe died of natural causes at his home in Port Shepstone in KwaZulu-Natal;



further notes that the final logistical arrangements for the funeral have not yet been done and further developments will be made public on Wednesday; and


sends our heartfelt condolences to his family and the church at large, and wish them strength in this difficult time.


Motion agreed to in accordance with section 65 of the Constitution.


HITMEN SENTENCED TO LIFE IN PRISON



(Draft Resolution)


Mr L B GAEHLER: I hereby move without notice on behalf of the UDM:


That the Council -


notes that three notorious Eastern Cape hitmen, who killed five people in a space of three months, have been sentenced to life in prison while three of their



accomplices were sentenced to 35 years of imprisonment;


further notes that the SA Police Services has worked tirelessly on this case for the past seven years;


commends the SA Police Services, SAPS, for a job well-done in helping keep the society safe from dangerous criminals; and


further commends the Eastern Cape Criminal Justice system for heavily punishing these offenders.


Motion agreed to in accordance with section 65 of the Constitution.


16 DAYS OF ACTIVISM AGAINST GENDER VIOLENCE CAMPAIGN


(Draft Resolution)


Ms L L ZWANE: Hon Chair, on behalf of the African National Congress I hereby move without notice:



That the Council -


notes that the period of 25 November to 10 December 2017 marks 16 Days of Activism Against Gender Violence Campaign, which is an organising platform by individuals and organisations around the world to call for the prevention and elimination of violence against women and girls;


further notes that the theme of the campaign for 2017 is: “Leave no one behind: end violence against women and girls” which reinforces the Unite campaign;


recognises that Unite to end violence against women initiative was launched in 2008 by the then United Nation, UN, Secretary–General, Ban Ki-moon, for a world free from violence for all women and girls around the world;


takes this opportunity to express its support to the

16 Days of Activism against gender violence.



Motion agreed to in accordance with section 65 of the Constitution.


DA LEADS MODIMOLLE-MOOKGOPHONG LOCAL MUNICIPALITY



(Draft Resolution)


Mr C F B SMIT: Hon House Chair, on behalf of the Democratic Alliance I hereby move without notice:


That this Council –


congratulates the now DA-led Modimolle-Mookgophong Local Municipality under the political leadership of the Mayor Councillor Marlene Vermaak Van Staden on turning around the previously bad govern municipality under the ANC that left it basically bankrupt with over R250 million in debt;


notes that particular importance is the council’s appointment of two new section 56 managers on 26 June and confirmed appointments on 17 November, with the



manager of corporate support services starting on 1 December 2017 already;


further notes that three boreholes have been connected, a new pipeline that was installed to replace the old pipeline and a new pressure tower that has been built;


also notes that the main road through Vaalwater was resealed, repainted and received new signage and the main road through Mookgopong has been redone with new robots, sidewalks and signage and it is of ward class, I invite Limpopians to get off the N1 and drive through Mookgophong to experience the DA difference; and


also notes that the Modimolle-Mookgophong Local Municipality is an upcoming rising star and has set an example to all other municipalities ... [Time expired.]


The HOUSE CHAIRPERSON (Ms M C Dikgale): Hon Smit, your time has expired. Your motion without notice will now become a



notice of a motion and will be printed in full on the next Order Paper. The hon member Dlamini!


DEFAULTING MUNICIPALITIES TO PAY THEIR DEBTS



(Draft Resolution)


Ms L C DLAMINI: Hon Chair, I move without notice on behalf of the people’s movement, the African National Congress:


That the Council -


notes that the Department of Water and Sanitation has issued notices to 30 defaulting municipalities demanding that they make arrangements to pay their share of R10,7 billion owed to the various water authorities before 8 December;


also notes that 30 municipalities are among 186 local government structures that owe money for water already supplied and used and that close to
R7 billion of this debt is older than 120 days; and



further takes this opportunity to call on municipalities to work with the Department of Water and Sanitation to find a long-lasting solution to the astronomical debt owed to water boards for the provision of water.


Motion agreed to in accordance with section 65 of the Constitution.


REMEMBERING A SIGNATORY TO THE GENEVA CONVENTION



(Draft Resolution)


Mr M D MONAKEDI: Hon Chairperson, I hereby move without notice:


That the Council -


notes that today marks 37 years since Oliver Reginald Kaizana Tambo declared the African National Congress a signatory to the Geneva Convention of 1949 and Protocol 1 of 1977 on the humanitarian conduct of war at a ceremony held at the headquarters of the



International Committee of the Red Cross in Geneva on

28 November 1980;


further notes that to this day, the Geneva Convention of 1949 and its additional Protocol remain at the very core of international humanitarian laws that regulates the conduct of armed conflict and limiting the effects of armed conflict, specifically to the protection of innocent civilians who are not taking part in the hostilities and those who are no longer participating in the hostilities and such as the wounded, sick and shipwrecked soldiers and prisoners of war; and


as part of our national honour of the vigilant and visionary leadership of O R Tambo and his contribution to the liberation of our people, takes this opportunity to reaffirm South Africa’s commitment to the Geneva Convention of 1949 and Protocol 1 of 1977 on the humanitarian conduct of war.



Motion agreed to in accordance with section 65 of the Constitution.


CONGRATULATES ALL MUNICIPALITIES WITH CLEAN AUDIT



(Draft Resolution)


Mr J J LONDT: Hon Chairperson, on behalf of the Democratic Alliance I hereby wish to move a motion without notice:


That this Council –


congratulates all the municipalities who have shown a commitment to the voters by handling their finances in such a manner that the Auditor-General, AG, awarded them clean audits;


notes that with 80%, the DA-led Western Cape had the highest proportion of municipalities with clean audit opinions in 2015-16, followed by the KwaZulu-Natal, KZN, with 18% and the Eastern Cape with 16%;



further notes that the poorest performing provinces, unfortunately, are: North West, Northern Cape and the Free State;


also notes that Gauteng was the only province with 100% of the municipalities receiving unqualified audit opinions, with the exception of the DA-led Midvaal — the only municipality to obtain a clean audit and the Western Cape performed exceptionally well;


takes special notice of the Swartland Municipality which recently got notified that they will receive seventh consecutive clean audit, the same goes for the West Coast District Municipality and the Mossel Bay Municipality will get the sixth consecutive clean audit; and


thanks them and say keep up the good work.


The HOUSE CHAIRPERSON (Ms M C Dikgale): Thank you, hon Londt. Is there any objection to the motion? In light of the objection the motion may not be proceeded with, the motion



without notice will now become a notice of a motion. Order, hon Smit! The hon Khawula!


KWAZULU-NATAL’S ATTENDANCE IS COMMENDABLE



(Draft Resolution)


Mr M KHAWULA: Hon Chairperson, on behalf of IFP I move without notice:


That the House –


applauds the consistent 100% attendance of the KwaZulu- Natal delegates in this House as can be reflected by the attendance today in spite of the nonattendance by some provinces like Free State with one delegate,
North-West with only three delegates, and others;


We want to say to Bab’uMthethwa and KwaZulu-Natal, keep up the good work.


Motion agreed to in accordance with section 65 of the Constitution.



TODAY MARKS 66 YEARS SINCE THE DEATH OF CLEMENTS KADALI



(Draft Resolution)


Ms G G OLIPHANT: House Chair, on behalf of ANC I move without notice:


That the House –


notes that –


today marks 66 years since the death of Lameck Koniwaka Kadali Muwamba on 28 November 1951;


also notes that Lameck Koniwaka Kadali Muwamba who was also known by his adopted name, Clements Kadali, was born in April 1896, near Bandawe Mission station in the then Nyasaland, which is now known as Malawi and migrated to South Africa in 1915 where he became a prominent leader of the Communist Party of South Africa, now SACP, and a provincial organiser of the African National



Congress organiser in what is now called the Eastern Cape Province; and


further takes this opportunity to pay its homage to this ferocious giant of the fight against cheap labour and the oppression of our people.


Motion agreed to in accordance with section 65 of the Constitution.


CORRESPONDENCE FROM THE EXECUTIVE MAYOR OF THE OR TAMBO DISTRICT MUNICIPALITY REQUESTING INTERVENTION IN THE STOPPING OF THE MUNICIPAL INFRASTUCTURE GRANT ALLOCATION TO THE MUNICPALITY


(Consideration of Report Select Committee on Appropriations)


Mr C J DE BEER: Hon Chairperson, hon members, the committee report as follows:


The Executive Mayor of OR Tambo District Municipality in the Eastern Cape Province wrote a letter requesting the NCOP to intervene in the stopping of the district’s Municipal



Infrastructure allocation. Upon initial enquiries, National Treasury informed the Committee that, following extensive consultation with the Department of Cooperative Governance and the District Municipality, a decision was made to stop the transfer of R90 million grant of the municipality’s Municipal Infrastructure Grant, MIG, allocation of R609 million in the 2016 financial year. Reasons given for the stoppage included improper reporting by the District Municipality, non registration of projects and the slow take- up of projects.


The Select Committee convened a meeting, which was attended by the Executive Mayor, accompanied by the two MMCs for Finance and Water and Sanitation and officials from the District Municipality, the Eastern Cape MEC for Finance and his officials, National Treasury officials, officials from the national and provincial departments of Cooperative Governance and officials from the Municipal Infrastructure Agent, MISA.


The objectives of the meeting included:



Whether the stopping of the funds was in line with the Division of Revenue Act.


What were the challenges within the municipality that led to the allocated MIG funds being stopped?
What are the implications of this action on service delivery? Whether measures and steps were taken by both the National Treasury and the transferring department to support and strengthen the capacity of the municipality as envisaged in section 154 of the Constitution?


What measures were put in place to mitigate against any negative impact on service delivery within the municipality because of the funds being stopped?


What are the options available to the Committee in dealing with this matter? Are there lessons to be learned from this exercise that could help to avoid similar incidents in future?


Committee had the following observations:

The stopping of the funds was in line with the provisions of



section l9 of the Division of Revenue Act, which stipulate that National Treasury may in its discretion or at the request of a transferring officer stop transfers listed in schedules 4 and 5 pertaining to anticipated under spending on programmes or allocations in the financial year by a municipality.


The issuance of noncompliance letters to the District Municipality by the Department of Cooperative Governance indicated that the municipality was not ready to implement its MIG projects at the beginning of the 2016/l7 financial year. Despite constant reminders from the Department of Cooperative Governance for the submission of MIG Project Management Unit expenditure, the municipality did not comply and therefore any expenditure on Project Management Unit costs would be noncompliant.


With regard to the challenges within the municipality, MIG projects for 2016/l7 were not yet confirmed as of 7 June  2016; Noncompliance with monthly reporting on the performance of the MIG; MIG spending was below 40 percent by 30 December 2016; and MIG expenditure figures captured by the Department of Cooperative Governance and National Treasury were



different, and this was a major issue, from what the municipality had in its records. It would appear that the inaccurate MIG reporting is related to capacity constraints in the finance and projects departments.


Under-spending compromises service delivery and the stopping of funds unfortunately worsen the situation. All the same, inaccurate reporting also has the potential to compromise value for the money spent and might lead to negative audit findings related to irregular and unauthorised expenditure.


Measures were taken by both the National and provincial Treasuries, as well as the national and provincial Department of Cooperative Governance waited too long before intervening despite warning signs that there were capacity challenges within the municipality. The Committee, however, noted with concern the failure by municipal officials to attend meetings aimed at addressing challenges within the municipality. In addition, there is no indication that the municipality requested support.


Measures put in place to mitigate against any further negative impact on service delivery. The Minister of Finance



indicated that, although the stopped funds have already been reallocated, National Treasury would consider additional allocations to the municipality in the new financial year, while the first transfer would be increased to accommodate any shortfalls.


Recommendations are that steps should be taken and measures put in place by both the national and provincial Treasuries, as well as the national and provincial Department of Cooperative Governance to support and strengthen the capacity of the municipality, as envisaged in section 154 of the Constitution.


Both the national and provincial Treasuries, as well as the national and provincial Department of Cooperative Governance should put in place adequate verification systems on Municipal Infrastructure Grant spending.


The National Treasury should consider additional allocations to the municipality in the new financial year after the actual spending has been determined. The municipality should conduct a skills audit among its staff to ascertain whether the



senior officials and all other financial officials meet the prescribed financial management competency levels.


By failing to report correctly, the municipal manager and senior managers, as well as all relevant officials, committed financial misconduct. The municipality should ensure that officials responsible for the inaccurate reporting are held accountable for the poor performance. National Treasury should consider strengthening the provisions of the Division of Revenue Act by including the following clauses:
Make provision for the need of approval by Parliament when funds to municipalities are stopped as is the case in section 2l6(3) of the Constitution when funds to a province are being stopped. To include clauses that strengthens the consultation processes regarding the stopping and withholding of funds.


On 20 July 2017 we received a progress report on the progress made in this municipality and this Select Committee for Appropriations will do a visit to the municipality early in 2018. Thank you. [Applause.]


Debate concluded.



Question put: That the Report be adopted.


Declaration of votes made on behalf of the Western Cape and KwaZulu-Natal.


IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.


Report accordingly adopted in accordance with section 65 of the Constitution.


Declaration(s) of vote:

Mr O S TERBLANCHE: Chairperson, on behalf of the Western Cape, it is with dismay that we continue to point out year on year the continuous decline of service delivery to our people. The National Treasury’s declining influence over the budget has become even more evident under the current government and its leadership. The Western Cape takes note of the revised consolidated deficit projections for the 2017-18 financial year. The deficit has now increased even further from 3,1% of gross domestic product, GDP, to 4,3% of GDP, it is not a very good story to tell.



The Western Cape highlights the fact that not enough focus has been placed on the equitable share to the provinces.
Municipalities throughout the country continue to falter in their commitments to Eskom, which have huge ramifications for business and the economy. We further reiterate the serious and urgent support required relating to the severe drought in our province, for argument’s sake.


Chairperson, the Auditor-General has also revealed the performance of the municipalities with regard to their audits. Operation Clean Audit 2014 has plainly faltered. There was also unauthorised expenditure by 45 municipalities and entities of R2,23 billion, an increase of R1,66 billion over the previous year, and fruitless and wasteful expenditure of R130 million. The O R Tambo District Municipality has suffered similar fruitless and wasteful expenditure. Chairperson, the Western Cape does not support this report. Thank you.


Mr L P M NZIMANDE: Hon House Chairperson, the KwaZulu-Natal will vote in favour of the report. The report spells out what needs to be done. We do not believe in grandstanding, Chair, like the Western Cape. We believe that the measures that are



put in place are sufficient to support and capacitate the municipality. In terms of the recommendations that are contained in the report, the departments must demonstrate clearly their plans of support to municipalities.


We further, Chair, alive to the fact that this district municipality despite the capacity, has delivered and it does deliver services to the people. Whether monies are taken back, but they continued to offer support and the evidence is there when you visit O R Tambo District Municipality.
Therefore, Chair, we declare that in our view as KwaZulu- Natal, capacity of municipalities is important, but also that accountability should be of prime in all our work that we do. In all of that, Chair, those are procedural and processes, but service delivery to the people must always be prioritised in the midst of any other technical glitches and issues that we might have. We therefore declare in that order, Chair.
Thank you.


Voting:


Debate concluded.



Question put: That the Report be adopted.


Declaration of votes made on behalf of the Western Cape and KwaZulu-Natal.


IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape and North West.


AGAINST: Western Cape.


Report accordingly adopted in accordance with section 65 of the Constitution.


CONSIDERATION OF REPORT OF SELECT COMMITTEE ON APPROPRIATIONS

– JOINT STUDY TOUR TO MALAYSIA



Mr C J DE BEER: Hon Deputy Minister, welcome. The Select Committee on Appropriations, having undertaken a joint study tour with the Portfolio Committee on Economic Development to Malaysia from 14 to 18 August 2017, wish to present the following report.



Since independence in 1957, the Malaysian public sector has been the driving force of national development. Malaysia‘s budget is closely associated with the long and medium term economic development plans of the country. Malaysian budget is a reflection of the government’s economic objectives and policies.


The public sector has undertaken a series of reforms and transformation initiatives in order to meet the growing demands for greater accountability and transparency regarding the government’s performance in its entirety, of which planning and budgeting processes have been at the core of these reforms.


The Malaysian government has adopted the Outcome Based Budgeting process to overcome weaknesses of implementation, monitoring and evaluation in past planning and budgeting systems. The Outcome Based Budgeting, OBB, emphasises the achievement of programme results or outcomes rather than just efficiency in spending.


The purpose of the tour was to learn from Malaysia, as a country that has long followed and implemented long-term



development planning to achieve certain objectives such as economic growth and employment, as well as reducing income inequality. Malaysia’s budget is also closely associated with the long and medium-term economic development plans of the country.


Considering the slow growth nature of the South African economy with low growth prospects and limited budgetary capacity to spend, it is important that scarce public resources are directed towards the National Development Plan, NDP, goals and social welfare programmes that will boost economic activity and preserve living standard. Parliament has an important role to play in terms of oversight over both policy and budget implementation.


During the study tour, the delegation met with various stakeholders and makes the following observations: The South African government rates favourably compared to the Malaysian government on the open budget index rating. The relatively low score implies that the Malaysian government provides only limited information to its public.



Malaysia has established an Economic Planning Unit, EPU, which is the principal government agency responsible for the preparation of development plans for the nation. The unit was established in 1961 as the Economic Secretariat of the Economic Committee under the Executive Council of the then Federation of Malaysia. Its objective was then to focus on development planning on major problems in plan execution and all forms of foreign aid.


Presently, the EPU’s main function is strategic planning, resource allocation, monitoring and evaluation as well as stakeholder facilitation. The unit is situated within the Office of the Prime Minister, who is also responsible for the drafting and the tabling of the national budget.


In Malaysia, the revenue raised in terms of state laws are kept by the state concerns, and the country does not have the system of equitably sharing of the nationally raised revenue like the South African system of the provincial equitable share and the local equitable share.


In Malaysia, the projects in various spheres of government that are related to the country’s long-term transformation



policies are funded centrally from the consolidated fund. The approach seems similar to the South African funding of the integrated development planning projects in municipalities by sector departments in various spheres of government. The funding of the projects in various spheres is also similar to the South African system where sector departments fund projects via indirect conditional grants in other spheres of government.


In Malaysia, the development targets are not only set in economic terms but also in socioeconomic terms.


In response to the country’s slow-moving developments progress, the Malaysian government in 2009 introduced the new development methodology that focused on the impact and results. This is known as a Big Fast Results programme and is aimed at accelerating Malaysia’s development progress. This approach is similar to our Operation Phakisa that was introduced in 2014 in order to unlock our country’s economic potential in various sectors.


Some of the lessons learned during the visit was that from the East Asian economic crisis, the Malaysian learned the



importance of being resilient and competitive as an economy, as well as the need for a driven growth through science and technology, research and development, and human capital development, in order to minimise the impact of the external sector on the Malaysian economy. In fact, subsequent measures put in place were able to minimise the impact of the 2008-09 global financial crisis in Malaysia.


The situation in Malaysia is unlike in the Parliament of South Africa, where there are portfolio committees, standing committees, joint committees as well as select committees that are appointed on a permanent basis to focus on their areas of responsibility such as finance, economic development etc.


Select committees in Malaysia are particularly appointed when Members of Parliament want to investigate something rather than merely debating on it just like the appointment of the ad hoc committees in the South African Parliament.


The legislative process in Malaysia is similar to the South African model, except that the national budget-related or Money Bills together with the budget speech are presented by



the Prime Minister, and not the Minister of Finance as is the case in South Africa.


Public participation in Malaysia takes place during the executive process while in South Africa public participation is done during both the executive and the parliamentary processes.


Malaysia has emerged as a model for other countries pursuing transformation. Providing affirmation of their plan is one that works and offers valuable lessons for us to learn from.


The committee will for this reason in the course of its oversight work engage all relevant stakeholders and role players on the things observed and learned during the study tour as measures and systems of good practice. Chairperson, I table this report for consideration. [Applause.]


Debate concluded.


Question put: That the Report be adopted.



In favour: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.


Report accordingly adopted in accordance with section 65 of the Constitution


CONSIDERATION OF ANNUAL REPORT OF JOINT STANDING COMMITTEE ON INTELLIGENCE FOR THE FINANCIAL YEAR ENDING 31 MARCH 2015


Mr J P PARKIES: Hon Chair, hon members, the report that I am going to present is a report of the 2015 financial year and the content of the report is not relevant more so if one is to adumbrate on the recommendations of the report and so I will do exactly that because we still have to go for a particular debate. I want to table this report with the recommendations stipulated in the report that the Joint Standing Committee on Intelligence makes the following recommendations. That the Minister of State Security should prioritise capacitation of governance structures with specific attention to Risk Management Unit; Internal Audit Unit and ICT. The Minister should address unlawful disclosure of classified information and unnecessary leakages, the department should liaise with other relevant departments to



implement tight security on borders. Due to emerging cyber threat, South Africa has to develop the National Cybersecurity Policy Framework to ensure co-ordinated and integrated approach in dealing with this kind of threat. The Intelligence Academy needs to establish and sustain engagements with strategic partners, like higher education, government, regulatory bodies and foreign intelligence services. The rapid change in technology requires the National Communications Centre to continuously improve and enhance its capacity and processes in order to face the new challenges. The Intelligence Services Oversight Act needs to be amended and the committee is busy dealing with that in line with the General Intelligence Laws Amendment Act.


The Minister of Police has to ensure that there are adequate resourced satellite police stations to combat crime. The Minister of Police should address shortages of resources especially technology that assist in intelligence gathering to minimise human trafficking, drugs and car hijacking.
Inadequate vetting in the intelligence community regarding both procedure and the vetting of officials is of serious concern. Officials must first complete vetting processes. Economic intelligence needs to be built as an important,



critical unit of growth and future interventions. The term of office of the judge for intelligence should be extended to allow the enhancement of co-operation between the judge and the intelligence community. I hereby table this report. I believe you will agree with me when I say the content thereof is not irrelevant, it is still important in our country. I thank you. [Applause.]


Debate concluded.


Question put: That the Report be adopted.


IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.


Report accordingly adopted in accordance with section 65 of the Constitution.


CONSIDERATION OF REPORT OF SELECT COMMITTEE ON SECURITY AND JUSTICE – SUSPENSION FROM OFFICE OF MAGISTRATE MS V T GQIBA, CHIEF MAGISTRATE AT EAST LONDON, TABLED IN TERMS OF SECTION 13(4)(B) OF MAGISTRATES ACT, 1993



CONSIDERATION OF REPORT OF SELECT COMMITTEE ON SECURITY AND JUSTICE – SUSPENSION FROM OFFICE OF MR P S HOLE, REGIONAL MAGISTRATE AT KIMBERLEY


CONSIDERATION OF REPORT OF SELECT COMMITTEE ON SECURITY AND JUSTICE – SUSPENSION FROM OFFICE OF MAGISTRATE MS X B STUURMAN, ADDITIONAL MAGISTRATE AT EAST LONDON, TABLED IN TERMS OF SECTION 13(4)(B) OF MAGISTRATES ACT, 1993


Mr J M MTHETHWA: The Select Committee on Security and Justice, having considered the Magistrates’ Commission’s report, dated 13 September 2017, on the suspension of magistrate Ms V T Gqiba, the magistrate at East London, tabled by the Minister of Justice and Correctional Services in terms of section 13(4)(b) of the Magistrates Act 90 of 1993, reports as follows. The Magistrates’ Commission charged Ms V T Gqiba with two counts of misconduct.


Charge one relates to the magistrate being guilty of misconduct in terms of regulation 25(i) of the Regulations for Judicial Officers in Lower Courts, No R361 of
11 March 1994, read with regulation 26(17) of the regulations and section 16 of the Act, in that on or about 23 March 2015



and at or near East London she made a false or incorrect statement, knowing it to be false or incorrect, with a view to obtain any privilege or advantage in relation to her official position or duties or to the prejudice of the administration of justice.


Charge two relates to the magistrate being guilty of misconduct in terms of regulation 25(i) in that on or about
24 March 2015 and at or near East London she submitted to the Department of Justice and constitutional development a subsistence and transport claim for travel and allowance expenses, purportedly relating to an official trip to Pretoria on 23 March 2015, well knowing that in truth and in fact the claim she submitted was false in that she travelled to Pretoria to further her personal interests.


The Magistrates’ Commission at its meeting held on

25 August 2017, considered the documents as required by regulation 26(22) read with regulation 26(19) of the regulations, and resolved to recommend to the Minister that the recommendation of the presiding officer be accepted and that Ms Gqiba be suspended and removed from the office of magistrate.



The Magistrates’ Commission noted that Ms Gqiba’s conduct, of which she was found guilty, is so serious that it justifies her removal from office. Her conduct displayed dishonesty, which puts her integrity as a judicial officer in serious doubt and renders her unfit to hold the office of magistrate. The Minister of Justice and Correctional Services suspended magistrate V T Gqiba from office on 13 September 2017.


The Select Committee on Security and Justice notes the High Court application of magistrate Gqiba to set aside the sanction of her suspension as magistrate. However, we further note that the High Court application does not suspend the committee’s legal obligation in terms of section 13(4)(c) of the Magistrates Act of 1993 to pass a resolution for the suspension of magistrate Gqiba.


The Select Committee on Security and Justice, having considered the disciplinary proceeding reports from the Magistrates’ Commission, and the Minister’s suspension and removal of Ms V T Gqiba from the office of magistrate, reports that it concurs with the suspension and recommends that the National Council of Provinces confirms Ms V T Gqiba’s suspension and removal from the office of magistrate.



The Select Committee on Security and Justice, having considered the Magistrates’ Commission’s disciplinary hearing progress report on the provisional suspension of magistrate, Mr P S Hole, a regional magistrate at Kimberley, tabled by the Minister of Justice and Correctional Services in terms of the Magistrates Act 90 of 1993, reports as follows.


Mr Hole was appointed to the office of the magistracy on

1 September 2009. On or about 2010, the regional court president laid a complaint of misconduct against him with the commission. On 27 November 2011, the commission ...


Mr L V MAGWEBU: Chairperson, point of order: With due respect to hon Mthethwa, it is not ... He is referring to Mr /hoʊl/.
It is not Mr /hoʊl/ but Mr /hɔ:leə/. He may be misleading.

Just to correct him. I personally know the gentleman he is referring to. It’s /hɔ:leə/ tata; /hɔ:leə/.

The HOUSE CHAIRPERSON (Ms M C Dikgale): Thank you very much for the correction hon Magwebu. [Interjections.]



Mr J M MTHETHWA: Thank you. Mr Hole was appointed to the office of the magistracy on 1 September 2009. On or about 2010, the regional court president laid a complaint of misconduct against him with the commission. On
27 November 2011, the commission formally charged him with 10 offences of misconduct. The charges against Mr Hole were based on transcripts of court records which contain various remarks, utterances and discussions by Mr Hole, which inter alia displayed an abuse of judicial power; contained discussions, remarks and comments on matters pertaining to the magistrate’s profession in a manner which brought the judiciary into disrepute, which is detrimental to the image of the office of magistrate and which does not uphold and promote the good name, dignity and esteem of the office of magistrate and the administration of justice; contained remarks causing the regional court president Mr K M Nqadala to be ridiculed in public, by using the court as the platform to do so.


The misconduct inquiry against Mr Hole commenced on

15 October 2012 and was finally concluded on 07 June 2016.

The presiding officer considered all the mitigating and aggravating factors and recommended that Mr Hole be suspended



and removed from office as contemplated in section 13 of the Magistrates Act 90 of 1993.


Having considered the documentation presented to the Magistrates’ Commission as required by regulation 26(19) read with regulation 26(22) of the Regulations for Judicial Officers in Lower Courts, 1994, the commission at its meeting held on 25 November 2016 resolved to recommend to the Minister that Mr Hole be removed from office on the grounds of misconduct in terms of section 13(4)(a)(i) of the Act.


The commission is of the view that Mr Hole's conduct as set out in the charges, of which he was found guilty, is so serious that it justifies his removal from office. The Minister confirmed the suspension and removal from office, as well as the withholding of Mr Hole’s salary as recommended by the Magistrates’ Commission.


Having considered the disciplinary proceedings report from the Magistrates’ Commission, the Minister’s suspension and removal of Mr P S Hole from the office of magistrate and the recommendation to withhold Mr P S Hole’s remuneration, the Select Committee on Security and Justice reports that it



concurs with the suspension and recommends that the National Council of Provinces confirms Mr P S Hole’s suspension and removal from office, and confirms the withholding of Mr P S Hole’s remuneration.


The Select Committee on Security and Justice, having considered the Magistrates’ Commission’s report dated
18 August 2017 on the suspension of magistrate Ms X B Stuurman, an additional magistrate at East London, tabled by the Minister of Justice and Correctional Services in terms of section 13(4)(b) of the Magistrates Act 90 of 1993, reports as follows.


Ms Stuurman was appointed to the office of magistrate on

5 May 2003. Ms Stuurman was charged with 18 counts of misconduct, contained in three separate charge sheets dated
12 July 2013, 7 November 2013 and 3 December 2014. The Magistrates’ Commission’s person to lead the evidence at the misconduct hearing withdrew charge two contained in the first charge sheet. Ms Stuurman placed all the remaining charges in dispute. The presiding officer, with both parties in agreement, had the charges set out in the second and third



charge sheets dated 3 December 2013, renumbered for purposes of convenience and continuity.


The misconduct charges against Ms Stuurman relate to various incidents which occurred during 2011 and 2014. Ms Stuurman would insult and belittle a number of clerks employed at the East London Magistrate’s Court. She would, both at the office and in open court, use offensive language, be discourteous and disrespectful, raise her voice and shout at, not only, clerks and their supervisors in the presence of other staff members, attorneys and members of the public, but also her peers, a senior magistrate, the chief magistrate, the judicial head of office and local attorneys. She would issue and publish emails to administrative staff using offensive language.


Ms Stuurman refused to accept a notice of motion from the respondents’ attorneys, the sheriff of the Magistrate’s Court East London and the chief magistrate’s secretary. Ms Stuurman failed to adhere to a prayer as set out in the notice of motion. She published a document in the media in which she discussed, remarked and commented on matters pertaining to



her profession, which was detrimental to the image of the office of magistrate.


On 12 December 2016, the presiding officer delivered her judgment and found Ms Stuurman guilty on 17 counts of misconduct. On 16 and 17 January 2017, the presiding officer considered all the mitigating and aggravating factors. The presiding officer imposed a sanction and submitted her reasons for recommending to the Magistrates’ Commission in terms of regulation 26(17)(b) of the Regulations for Judicial Officers in Lower Courts, 1994, that Ms Stuurman be removed from office as contemplated in section 13(4)(a)(i) of the Magistrates Act 90 of 1993. The Minister of Justice and Correctional Services suspended magistrate Stuurman from office on 18 August 2017.


The Select Committee on Security and Justice, having considered the disciplinary proceedings report from the Magistrates’ Commission and the Minister’s suspension and removal of Ms X B Stuurman from the office of magistrate, reports that it concurs with the suspension and recommends that the National Council of Provinces confirms Ms X B



Stuurman’s suspension and removal from the office of magistrate.


Debate concluded.


Mr D L XIMBI: Hon Chairperson and hon members, this is the Report of the Select Committee on Security and Justice on the International Arbitration Bill [B10B-2017.] The National Assembly referred the International Arbitration Bill [B1OB- 2017] to the National Council of Provinces and subsequently, to the select committee for concurrence on 24 October 2017.


The select committee enquired into the subject of the Bill and invited the Department of Justice and Constitutional Development to brief the select committee on the purpose and content of the Bill on 1 November 2017. Concerning the background to the legislation, in 1976, South Africa signed the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the New York Convention without reservation.


The New York Convention creates a uniform international framework that allows parties to international commercial arbitration agreements to enforce foreign arbitral awards.



The convention is widely considered as being the foundational instrument for international arbitration.


The convention is ratified by 154 countries. This means that, in principle, an arbitration award can be enforced in any of these countries. At present, the Arbitration Act 42 of 1965 is applicable to both domestic and international arbitration but ... [Interjections.]


The HOUSE CHAIRPERSON (Ms M C Dikgale): My apologies, Mr Ximbi.


Mr D L XIMBI: Come again!


The HOUSE CHAIRPERSON (Ms M C Dikgale): Are you busy with the sixth order?


Mr D L XIMBI: Yes!


The HOUSE CHAIRPERSON (Ms M C Dikgale): So, he’s supposed to read the sixth order?


Mr D L XIMBI: Which one is the sixth order, what is it?



The HOUSE CHAIRPERSON (Ms M C Dikgale): The one that deals with the Legal Practice Amendment Bill. Is that right?


Mr D L XIMBI: Oh, that one? Thank you very much, Chair, for that.


The HOUSE CHAIRPERSON (Ms M C Dikgale): Just for clarification, hon Ximbi, please take your seat! The hon Mthethwa read the fourth, the fifth and the sixth orders of the day. Is that so? Okay! We then have to do the voting before we do the seventh order of the day. Hon Mthethwa, you did that, is it not so?


He is saying he is not done. Let’s check with the Table staff. They should help us because ... [Interjections.] He did and he is finished. Hon Mthethwa, the last one is the one that deals with the issue of Ms Stuurman. So, you have finished. We are now going straight to the voting.


The CHIEF WHIP OF THE NCOP: Chair, it is not necessarily a point of order, but I’m just rising that hon Ximbi was almost halfway to complete the statement that he was reading under the subject in the seventh order. So, I thought that he



should be allowed to complete thereafter we vote on all of them.


The HOUSE CHAIRPERSON (Ms M C Dikgale): The procedure is that first we need to deal with the fourth, fifth and the sixth orders, thereafter we vote. We can then allow the secretary to read the order of the day which will be followed by calling hon Ximbi. Thank you very much. I understand that what you’ve said would make sense, but we have to follow the procedure.


Debate concluded.


Question put in respect of the fourth order: That the Report be adopted.


The CHIEF WHIP OF THE NCOP: Chair, I know the circumstance facing hon Parkies. He has indicated earlier that he is not in a very good state of health and I’m here standing as the Chief Whip of the NCOP and from Free State, otherwise I would not be here. So, Free State agrees with the report.





Report accordingly adopted in accordance with section 65 of the Constitution.


The HOUSE CHAIRPERSON (Ms M C Dikgale): Before we continue with the fifth order, hon Farber, you wanted to rise on a point of order?


Mr W F FABER: Chairperson, I wanted to try and assist by saying that hon Seiso has become Chief Whip so that the Chairperson ... [Inaudible.] ... vote, then reswap again and come and vote again. Otherwise it can only be eight provinces, Chair


The HOUSE CHAIRPERSON (Ms M C Dikgale): Hon Faber, please allow the House to continue!


Debate concluded.


Question put in respect of the fifth order: That the Report be adopted.





Report accordingly adopted in accordance with section 65 of the Constitution.


The HOUSE CHAIRPERSON (Ms M C Dikgale): Hon Faber, are you still on the same point of order?


Mr W F FABER: Chairperson, I need to assist here. It can only be eight provinces. I think my hon Chief Whip is trying to explain because he is trying to run for the Free State position then back to become a Chief Whip. But it can only be eight provinces. We also agree with it from the Western Cape. But we cannot accept ... [Interjections.] [Inaudible.]


The HOUSE CHAIRPERSON (Ms M C Dikgale): Hon Faber, thank you very much for your concern. The hon Chief Whip is from the Eastern Cape and he tried to explain from Free State and thus I have agreed with the explanation. Hon Labuschagne, you are not in the House. What is your point of order?



Ms C LABUSCHAGNE: Chair, I must say I support hon Faber. I’m a little bit confused here. We vote as provinces as Provincial Whips. The Chief Whip’s appointment is the Chief Whip of the NCOP. There is no notice given in this Council that he is standing in as the head of the delegation for the Free State.


Actually, the Chief Whip cannot stand in as the head of the delegation. According to the Rules, he’s a Chief Whip.
Therefore, he cannot represent the province as the head of the delegation, except if it has been given to him. So then, if he is the head of the delegation of the Free State he must sit in the position of the Free State. Thank you.


The HOUSE CHAIRPERSON (Ms M C Dikgale): Thank you very much, I will come back to address that point. Let me notice the hand of hon Rayi before you, hon Zwane.


Mr M RAYI: Hon Chairperson, there is no Rule that says that the Chief Whip cannot vote here, even now we are going to be dealing with section 75 where every permanent delegate has a right to vote. He has been sent here by his province. He can therefore vote for his province, but he can also vote as an



individual in terms of section 75 and also section 77. There is no specific Rule that hon Labuschagne can refer to.


The HOUSE CHAIRPERSON (Ms M C Dikgale): Thank you very much hon Rayi, let’s just clear the confusion and then we will come back with the ruling. Anyhow, the hon Parkies is here. Can we allow the House to continue, hon members? We will check on that one and address it.


The fact that the Chief Whip comes from Free State is the fact that forces us to agree, but we will come back on the ruling. Do you want to come in, hon Khawula, over to you! Oh, hon Khawula, before you say something, the hon Zwane wanted to speak on this matter. Hon Zwane, please accept my apology, hon member.


Ms L L ZWANE: Chairperson, I actually wanted to request the hon member that is opposing the voting of the hon Chief Whip to quote the section that he is not allowed to vote. My second issue is, now that hon Parkies is here, can we not rerun the vote if there is an issue?



The HOUSE CHAIRPERSON (Ms M C Dikgale): We are about to vote on the sixth order of the day; we are not going back to this issue, hon Zwane!


Mr M KHAWULA: Chair, on the similar matter, I asked a question last week and the ruling or the explanation from the Chairperson of the Council was that the delegate has to be authorised by the leader of the delegation of the province.
So, we cannot just stand here and explain issues. We need to have authority. You have to be authorised by the leader of your delegation. That is what the Chairperson of the Council said.


The HOUSE CHAIRPERSON (Ms M C Dikgale): Thank you very much, hon Khawula. I was here in the House and I really understood what the Chairperson of the Council was trying to explain because the matter is not the same. The member from the Western Cape who was in the House was not from the same party with the one who was in the House.


Also, before the representatives from the Western Cape walked out of the House, they did make it very clear that they are not supporting the Bill, that is why the Chairperson put it



very clear that we are not going to allow the hon members from the Western Cape to vote because we already knew the position. It’s different, hon member. Can the members allow me to continue with the proceedings of the House?


Debate concluded.


Question put in respect of the sixth order: That the Report be adopted.


IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.


Report accordingly adopted in accordance with section 65 of the Constitution.


CONSIDERATION OF REPORT OF SELECT COMMITTEE ON SECURITY AND JUSTICE - REVISED DRAFT RULES, 2016, SUBMITTED TO PARLIAMENT ON 10 FEBRUARY 2016, RULES OF PROCEDURE FOR APPLICATION TO COURT IN TERMS OF THE PROMOTION OF ACCESS TO INFORMATION ACT, 2000 (ACT NO. 2 OF 2000)



Mr J M MTHETHWA: Chairperson, the Department of Justice and Constitutional Development informed the select committee that the purpose of the Promotion of Access to Information Act, PAIA, amendment was to bring about uniformity to the court rules as well as to accommodate necessary amendments stemming from the Brümmer Constitutional Court judgement. Mr Brümmer, a journalist, sought access to certain information held by the Department of Social Development under the provisions of the Promotion of Access to Information Act.


During the committee consideration and reporting, the Revised Draft Rules 2016, was submitted to Parliament on 10 February 2016. The Select Committee on Security and Justice considered the matter on 21 September 2016 and after approving the Revised Draft Rules published the report in the Announcements, Tablings and Committee Reports, ATC, on 21 September 2016.


Section 32(1) of the Constitution of the Republic of

South Africa of 1996, guarantees everyone the right of access to any information held by the state; and any information that is held by another person and that is required for the exercise or protection of any rights. Section 32(2) of the



Constitution requires that national legislation be enacted to give effect to the rights under subsection (1)(a) and (b).
The Promotion of Access to Information Act, Act 2 of 2000, has ultimately been enacted to give effect to the rights under subsection (1)(a) and (b). The Rules Board for Courts of Law is authorised, in terms of section 79(1) of the Promotion of Access to Information Act, to make rules of procedure, subject to approval by the Minister, for, first, a court in respect of applications in terms of section 78; and, second, a court to receive representations ex parte referred to in section 80 (3)(a) of the Promotion of Access to Information Act. Section 79(3) of the Promotion of Access to Information Act provides that any rule made under section 79(1) must, before publication in the Gazette, be approved by Parliament.


The PAIA rules committee, PRC, of the Rules Board, in fulfilling its mandate of reviewing the rules of courts on an ongoing basis, identified certain shortcomings in relation to some of the rules so promulgated. These shortcomings, together with some considered judicial pronouncements such as the Brümmer case, resulted in the Rules Board resolving to embark on a holistic revision of the entire rules. These



revised PAIA rules were subsequently approved by the Rules Board at its meeting held on 20 March 2015. The principle underlying the revised PAIA rules is that the rules formulated in terms of section 79(1) of PAIA should make provision for the existing procedure of High Court Rule 6 and magistrate’s’ courts Rule 55 to govern applications for access to information in terms of the Promotion of Access to Information Act.


In addition, the applicant now has a period of 180 days to bring the relevant application to court for appropriate relief in relation to an event contemplated in section 78(2) and (3) of the Promotion of Access to Information Act, and the court can condone noncompliance with the stipulated period where the interests of justice so require.
Furthermore, ex parte application must be made under oath or affirmation of the truth thereof and must be supported by documentary proof where applicable.


The select committee in considering the matter had no objections to improve the Promotion of Access to Information Act legislation and the Select Committee on Security and Justice, having considered the subject of the Revised Draft



Rules, 2016, submitted to Parliament on 10 February 2016, rules of procedure for application to court in terms of the Promotion of Access to Information Act, Act 2 of 2000, referred to it, reports that it has agreed to the Revised Draft Rules without proposing further amendments. I so move.


Debate concluded.


Question put: That the Report be adopted.


IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.


Report accordingly adopted in accordance with section 65 of the Constitution.


LEGAL PRACTICE AMENDMENT BILL



(Consider of Bill and of Report thereon)


Mr D L XIMBI: Chairperson and hon members, the National Assembly referred the Legal Practice Amendment Bill to the



National Council of Provinces and subsequently to the select committee for concurrence on 14 November 2017.


The select committee requested an informal briefing from the Department of Justice and Constitutional Development on the subject of the Bill and invited the Department of Justice and Constitutional Development to brief the select committee on the purpose and content of the Legal Practice Amendment Bill on 8 November 2017. The select committee further instructed the department to brief the committee on the amendments made by the Portfolio Committee on Justice and Correctional Services and the concerns raised by the public during the portfolio committee’s public participation process and how this was addressed by the portfolio committee.


In 2014, the Legal Practice Act was promulgated to curtail some of the challenges within the legal profession and, more specifically, to advance transformation within the legal profession. The Legal Practice Act also made provision for a transitional body, namely the national forum, which would serve as an interim body for three years until the establishment of the SA Legal Practice Council. In
February 2018, the three years, as set out in the Act, will



come to an end, hence the Legal Practice Amendment Bill, which will ensure the transition from the national forum to the SA Legal Practice Council.


During this time, the transitional national forum was responsible for developing election procedures for constituting the SA Legal Practice Council. The transitional national forum comprised 16 legal practitioners – eight attorneys from the SA Law Society, five advocates from the General Council of the Bar of South Africa, and one representative from the National Bar Council of South Africa, National Forum of Advocates and Advocates for Transformation. The forum was required within 24 months to make recommendations, amongst others, for the establishment of the provincial councils and their areas of jurisdiction, composition, functions and manner of election. The forum was further required to set all the practical vocational training requirements that candidate attorneys must comply with before they can be admitted by the court as legal practitioners and prepare and publish a code of conduct for legal practitioners, candidate legal practitioners and juristic entities.



Therefore, the Legal Practice Amendment Bill seeks to achieve the following. The Bill seeks to amend the Act to address practical and technical issues, including the transitional provisions of the Act. The Bill seeks to establish insurance schemes, medical aid schemes, medical benefit schemes, pension funds, provident funds, pension schemes or benevolent schemes for legal practitioners, for employees of legal practitioners and for the officials and employees of the council. In addition, the Bill seeks to further regulate the prescription of the areas of jurisdiction of the provincial councils and to provide that only practising legal practitioners may perform certain acts or render certain services. The Bill further regulates the duties of banks to furnish the council or the board with a signed transaction history in respect of a trust account, for the period determined by the council or the board, as the case may be.


The Bill provides for the duration of the national forum and provides for the national forum to make rules and the Minister to make regulations on the recommendation of, and in consultation with, the national forum. The Bill also seeks to clarify the matter of the transfer of assets, rights, liabilities, obligations and staff of the statutory law



societies to the council or provincial councils as well as to provide for the dissolution date of the law societies.
Because the national forum did not complete all the work it was meant to in the period it was afforded, an amendment was made during the deliberations of the Portfolio Committee on Justice and Correctional Services. This afforded the national forum until 31 October 2018 to complete its work, upon which the forum would cease to exist.


The select committee, in keeping with the principle of facilitating public involvement in the legislative processes of the NCOP, agreed to facilitate public participation by advertising the Bill on the parliamentary website and other parliamentary social media platforms and stakeholder platforms between 15 and 20 November 2017. The select committee received two submissions: one from the National Bar Council of South Africa and the second from Clearlaw SA. However, the submissions received by the two correspondents were similar to the submissions received by the Portfolio Committee on Justice and Correctional Services. Further, some of the amendments fell outside scope of the current Bill, and some had been addressed by the amendments made by the Portfolio Committee on Justice and Correctional Services.



The Legal Practice Amendment Bill was adopted by the committee without amendments on 22 November 2017 and published in the Announcements, Tablings and Reports on
22 November 2017. The select committee considered the subject of the Legal Practice Amendment Bill referred to it and reports that it has agreed to the Bill without proposed amendments. The Select Committee on Security and Justice recommends that the Council approve the Bill. I thank you.


Debate concluded.


The HOUSE CHAIRPERSON (Ms M C Dikgale): Thank you very much, hon Ximbi. We really appreciate the work of the select committee. Unfortunately, we have to defer the decision on the Bill because we don’t have a quorum in the House.


Unfortunately, I have to check whether there are political parties that want to make declarations. As there are no requests for declarations of vote, we proceed. I shall request the secretary to read the Ninth Order of the day.


Decision deferred.



INTERNATIONAL ARBITRATION BILL



(Consideration of Report and of Report thereon)


Mr D L XIMBI: Chairperson, thank you for this opportunity. The National Assembly referred the International Arbitration Bill, B108 of 2017, to the National Council of Provinces and subsequently to the Select Committee on Security and Justice for concurrence on 24 October 2017. The Select Committee enquired into the subject of the Bill and invited the Department of Justice and Constitutional Development to brief the Select Committee on the purpose and content of the Bill on 1 November 2017.


The background to the legislation is as follows: In 1976, South Africa signed the Convention on the Recognition and Enforcement of Foreign Arbitral Rewards, the New York Convention, without reservation. The New York Convention creates a uniform international framework that allows parties to international commercial arbitration agreements to enforce foreign arbitral awards.



The convention is widely considered as being the foundational instrument for international arbitration. The convention is ratified by 154 countries. This means that, in principle, an arbitration award can be enforced in any of these countries.


At present, the Arbitration Act 42 of 1965, is applicable to both domestic and international arbitration but is outdated. The International Arbitration Bill was developed to meet the specific requirements of international arbitration, while the Arbitration Act will apply only to domestic arbitration. Post 1994, it was clear that many of our laws relevant to the field of international trade and investment were redundant and ineffective.


In July 1999, the SA Law Reform Commission published its report on international arbitration, proposing that the United Nations Commission on International Treaty Law, Model Law, be adopted for use in international commercial arbitration in South Africa. The United Nations Commission on International Treaty Law, Model Law, serves as a guidance tool for states reforming and modernising their arbitral laws. In this way, the country would align itself with international best practice.



The commission also recommended that the Model Law be adopted with a minimum of changes: To promote the harmonisation and uniformity of national laws relating to international arbitration procedures; and to make our law on international arbitration more user-friendly and attractive to foreign parties and their lawyers. However, legislative reform was not forthcoming at this stage.


The importance of this Bill International arbitration has grown exponentially in the course of the last decade as a means of resolving disputes arising in the course of international trade. In Africa, foreign direct investment has grown by 85,3% between 1994 and 2013.


Asian and African economies have increasingly embraced international arbitration as an accessible and preferred means to resolve disputes. However, many African counterparties - typically, state-owned entities - wish to avoid the traditional European arbitral institutions and, instead, are opting for an ad hoc route, including domestic African arbitration centres or regional options.



The majority of arbitrations involving an African party still take place outside of the continent. The five most widely used seats are London, Paris, Hong Kong, Singapore and Geneva. The primary factor driving the selection of a seat is its reputation and recognition.


There are concerted efforts to create the requisite infrastructure for international arbitration to take hold in Africa. From a structural standpoint, this includes not only establishing the necessary modern arbitration legislative framework but the emergence of new arbitration centres in different jurisdictions. This is why the passing of this Bill is important to South Africa.


Therefore, the aim of the Bill is to improve access to justice services and to ensure the realisation of the National Development Plan’s target of expanding trade and investment, and positioning South Africa on the world’s international arbitration stage. The International Arbitration Act will align South African international arbitration law with international best practice and should go a long way to establishing South Africa as a venue of choice for international arbitrations.



The select committee, in keeping with the principle of facilitating public involvement in the legislative processes of the NCOP, agreed to facilitate public participation by advertising the Bill on radio media, on the Parliamentary website and other parliamentary social media platforms and stakeholder platforms, between 1 and 10 November 2017.


The select committee considered the subject of the International Arbitration Bill, B1OB of 2017, emanating from section 75 of the National Assembly, referred to it, and reports that it has agreed to the Bill without proposed amendments. The Select Committee on Security and Justice recommends that the Council approves the Bill without amendments. I so move, Chair.


Debate concluded.


The HOUSE CHAIRPERSON (Ms M C Dikgale): Thank you very much hon Ximbi. We will continue to appreciate the work of the committee. Anyhow, I was supposed to put on the question. I am failing to do that because we don’t have a quorum in the House. So, we will defer the decision on the Bill.



Anyway, I must first allow political parties to make their declarations if they so wish. [Interjections.] Okay, thank you very much. Let me take this opportunity to welcome our Deputy Minister. Hon Deputy Minister Mkongi, you are welcome in the House. [Applause.]


DEBATE ON THE INCREASE IN CARD FRAUD THAT CONTINUES TO ROB SOUTH AFRICANS OF THEIR HARD-EARNED INCOME RESULTING IN LOSSES OF OVER R600 MILLION A YEAR


Mr C J DE BEER: Hon Chairperson, hon Deputy Minister and hon members, South Africans have lost almost R4,5 billion to credit and debit card fraud since 2010, according to the South African Banking Risk Information Centre.


In 2016, credit and debit card fraud in South Africa amounted to over R600 million – it is actually R717,9 million. One in three South Africans has experienced card fraud in the past year. Card payments constituted 61% of all payment transactions processed in South Africa during 2016, with over
60 million debit cards and nearly 8 million credit cards in circulation.



A report by the South African Banking Risk Information Centre, SABRIC, shows that credit card fraud increased by 13% from R331,4 million in 2015 to R374,4 million in 2016. Debit card fraud increased by 3,1% from R333,2 million to
R343,5 million.


About 52% of debit card fraud occurred at ATMs in contrast to the 3% for credit cards. Card not presented, CNP, fraud on credit cards has increased by 18,9% from 2015 to 2016 and account for 46,8% of the losses. Despite the high levels of fraud, a large portion of South Africans, which is 45%, indicated that they are happy with the way their banks dealt with these crimes, with only 16% and 14% stating that they were somewhat unhappy or very unhappy.


If we look at a geographical distribution of credit card fraud, provinces affected the most are Gauteng and Western Cape and KwaZulu-Natal. These provinces had 85,9% of all credit card fraud losses in South Africa. Gauteng accounts for 57,2% credit card gross fraud losses, followed by Western Cape at 16,1 % and KwaZulu-Natal at l2,7%.



All provinces showed an increase during 2Ol6 with the exception of Western Cape. The biggest increases, when comparing 2015 and 2016, occurred in the Eastern Cape up by l48%; North West l27,9%; Northern Cape 95,7%; and Free State 89,9%.


Any increase in card fraud is of great concern to the industry as well as the ever evolving sophistication of tactics used by criminals. Criminals will always be on the lookout for gaps and weaknesses in order to defraud victims specially our older and vulnerable people.


The banking industry’s figures show that 48% of all credit card fraud and 79,7% of debit card fraud losses occurred in South Africa. Cards fraudulently obtained by criminals were used to conduct cash withdrawals at ATMs inside South Africa.


If we look at debit card gross fraud losses, lost and or stolen debit card fraud losses increased by 39,9% in 2016 and accounts for 79,7% of the total debit cards gross fraud losses in the country. In an attempt to overcome changes in business processes linked to chip pin cards, criminals



proceeded with modus operandi such as shoulder surfing, card jamming or card swapping and card theft.


Lost and or stolen card gross fraud losses are currently at the highest level ever reported. Gauteng, Western Cape and KwaZulu-Natal accounted for 67,9% of all debit card losses in South Africa.


Increases in debit card fraud between 2010 and 2016 if we look at provinces: Eastern Cape up from Rl5,2 million to R2l,7 million; Free State up from R4,1 million to
R9,6 million; Gauteng from R58,9 million to R101,5 million; KwaZulu-Natal from R23,8 million up to R44,8 million; Limpopo from R3,9 million to R13,4 million; Mpumalanga from R
5,7 million up to R15,8 million; Northern Cape, that is my province, from about R1 million up to R3,1 million; North West from R4,1 million to R16,6 million; and Western Cape up from R9,6 million to R23,5 million.


An overview of ATM transactions - cash withdrawals - pertaining to credit card fraud in 2016 shows that 3% of the gross fraud losses on all South African issued credit cards were reported as cash withdrawals at ATMs in the country. An



exceptionally high percentage of the losses related to account takeovers and false applications. Again this majority of transactions occurred in Gauteng followed by Kwazulu-Natal and Western Cape.


Counterfeit Credit card fraud accounted for 26,4% of the gross fraud losses on credit cards. The majority of losses associated with counterfeit credit card transactions occurred within South Africa. The highest gross fraud losses in respect of counterfeit credit card fraud related to purchases at grocery stores, cash withdrawals at ATMs, purchases at department stores, liquor stores and service stations.


Although counterfeit credit card fraud is no longer the greatest fraud loss category, it remains a concern as it still accounts for a large portion of fraud losses. Criminals are currently abusing the fall back option, resulting in an increase seen in the number of transactions occurring in South Africa. This is particularly noteworthy in transactions related to credit cards.


South African issued credit cards are frequently used by criminals on the African continent in countries such as



Namibia, Botswana, Zimbabwe, Kenya and Lesotho. Most of these transactions are fraudulent cash withdrawals at ATMs.
Fraudulent transactions have also been reported in Mauritius lately. This emerging trend could relate to the increase in merchants registering their business in other countries in order to circumvent rules applicable to South Africa.


A number of five cross border countries with the highest recorded financial losses due to CNP and counterfeit fraud during 2016 were: United States, Canada, United Kingdom, Netherlands and China. According to the Financial Fraud Action United Kingdom, gross fraud losses on United Kingdom cards, debit and credit cards, increased by 18% from January to December 2015 compared to the same period in 2014. South Africa mirrors the United Kingdom trend with increases in card not presented cases and lost or stolen card fraud.


It is also crucial that we look at risky behaviour: Consumers in Europe, Middle East and Africa are taught to ignore e- mails and calls requesting details about their bank accounts, although consumers in the United Arab Emirates and South Africa respond to the scammers more frequently.



South African consumers were also the biggest offenders when it came to other risky behaviour and 28% of respondents indicated that they did not lock their phone when they were not using it, 26% respondents said they had thrown papers or documents with account numbers, for example bank statements, in the trash bin, 18% said they had used online banking or internet shopping without security software or on a public computer, 5% responded to calls or e-mails asking for banking details.


These are the things that we have to address and sensitise our people, when we are in our constituencies, to be aware of. The Payment Association of South Africa refers to two developments in South Africa. The first one was a project that facilitated the world’s first truly interoperable biometric verification and is now recognised as the third type of customer verification method after signature and a pin and the second one is the increased adoption of contactless technology during 2016.


While traditional fraud trends continue to be monitored and addressed, a number of technology developments have



introduced new, non-traditional risks that need a fresh approach to fraud management.


Efforts to rescue the card payment system continue to receive priority attention. The number one priority is to ensure the South African payment system remains safe, secure and relevant. In order to protect themselves against potential fraudulent attacks, financial institutions need to find ways of implementing effective anti-fraud strategies.


There are five main challenges facing financial institutions in their fight against card fraud: Accurately defining payment fraud; fraud departments work in silos; current techniques do not detect fraud quick enough; too often fraud is considered a competitive issue; and optimising working practices in financial institutions.


Financial institutions around the world need to review their anti-fraud strategies and techniques. The goal of any anti- fraud strategy should be a real time detection and prevention system spanning all channels. It demands security measures that allow banks to detect and prevent fraud when it happens across the globe.



The creation of public awareness of various bank related crimes and educating the public on how to protect themselves must be our key focus area. We look forward to the inputs by members in this debate. Thank you House Chair.


Mr O S TERBLANCHE: House Chairperson, South Africans are robbed of over R600 million a year of their hard-earned income due to credit and debit card fraud and it is still steadily on the increase. Despite the aforementioned fact, it is hard to imagine life in our modern world without the convenience of these little plastic wonders called credit and debit cards for a large percentage of our citizens. They, the middle class, and their more affluent brethren and sisters, carry a range of these cards in their wallets ensuring them their chosen lifestyles in the fast lane.


These people are the prime targets of the major banks and institutions, offering them even more cards on a daily basis. This group earns enough money to make it possible to service the monthly minimum instalments required.


Credit cards are issued by banks and other financial institutions to individual customers, offering a



predetermined credit line based on their personal circumstances. It will allow the customers to borrow and spend up to an agreed limit. Interest is then charged on credit balances until the balance is cleared.


This financial wonder has unfortunately also attracted the attention of criminal elements in their fraudulent activities. Credit card fraud takes place when criminals steal credit cards by whatever means to source the victim’s funds illegally. These victims of identity and card fraud often suffer substantial financial losses. It may even result in blacklisting and a struggle to regain their good financial reputation.


Chairperson, the extent of these criminal activities is severe. On the 25 April 2017, the latest data from the South African Banking Risk Information Centre, Sabric, shows that South Africans have lost almost R4,5 billion to credit and debit card fraud since 2010. During 2016 alone, gross losses due to credit card fraud increased by 13%.


Sabric chief executive officer, Kalyani Pillay, explains that while any increase is of concern to the industry, the ever-



evolving sophistication of tactics used by criminals is also of great concern.


It is clear that this situation is spinning out of control and has severe implications for both the individual and the economy. Individuals can and must do everything in their power to protect themselves against this crime, such as guard online information; clear logins and passwords; be alert; monitor bank and credit card statements; verify mailing addresses; monitoring credit reports; shred sensitive information; consider identity theft protection; pick the right service provider; fraud alerts; and credit freezes.


Karl Westvig, the chief executive officer of Retail Capital, on the 25 May 2017 stated the following: regulations protecting South Africans against credit card fraud are among the strictest in the world. Generally most payments online done through a legitimate company are safe and Payment Card Industry Data Security Standard, PCI DSS, compliant.


Despite the aforesaid quote, South African criminals still find ways to get their hands on other people’s money. The South African government also introduced legislation like



FICA and NCA to curb this crime wave and the Banking Association South Africa, Basa, issued the following tips to avoid becoming a victim of crime fraud: never let the card out of your sight making payments; report any suspicious behaviour; never accept help from anyone at an ATM; be familiar with the ATM construction to notice foreign objects; never use an ATM that is tampered with; and report suspicious objects or people loitering around ATMs.


South Africans may come to the conclusion that we have made great strides to combat this crime and may also wonder why then is this crime stubbornly on the increase? This is indeed the case until you check the performance on the criminal justice side. This crime does not receive any special attention by the police in their latest crime statistics report. It is dealt with under the wider definition of commercial crime.


However, mention is made that these crimes threaten the wellbeing of the economy and how it is on the increase in even the smallest of towns throughout the country. The net result of this approach is the reason why we don’t have any visibility as far as this crime is concerned. It disappears



among the general case docket overload of detectives and does not get the attention it deserves.


The only solution to turn this tide is to reinstate the specialised units that is properly trained, equipped and managed. Chairperson, it is high time that the Ministers of Police and Finance be directed to take appropriate action to ensure that credit card fraud gets the attention it deserves. Parliamentary oversight is also necessary on a regular basis and will certainly contribute immensely to curb this crime. I thank you.


The DEPUTY MINISTER OF POLICE: Thank you very much Chairperson. Hon members and special delegates, fellow colleagues, comrades and friends, I am highly inspired that as a House located at the cutting edge of co-operative governance, this House, the NCOP, is rising to the occasion on fundamental challenges facing our people on the ground, united in their diversity. This topic represents one of the critical security challenges that is affecting all our people globally and domestically, and cannot be isolated from other financially related crimes like illicit financial flows. In



his state of the nation address in 1995, the late President Mandela had this to say:


The situation cannot be tolerated in which our country continues to be engulfed by the crime wave which includes murder, crimes against women and children, drug trafficking, armed robbery, fraud and theft. We must take the war to the criminals and no longer allow the situation in which we are mere sitting ducks of those in our society who, for whatever reason, are bent to engage in criminal and antisocial activities.


This is a call to war against crime and criminality in our society in all its manifestations. South Africa cannot win the war against crime as long as we continue with the myth that fighting crime is the sole responsibility of the state. This should involve broad mobilisation and partnership across society. This is particularly so in the light of the reported increase of collusions and cartels, including organised crime. Together with all our people, we must declare our malls, streets, shopping centres and places of leisure, crime free. We must take the war onto the doorstep of criminals.



Since the 1st of April 2017, we have taken this war to the ugly face of criminals in South Africa. We do this committed to serve and protect our people from the terror unleashed by criminals against our communities.


South Africans have lost almost 744,4 million to credit and debit card fraud since January this year to September. The latest fraud data from the Directorate for Priority Crime Investigation and their stakeholders show this is on the increase — a combined increase of 4% from 716,7 million compared to January-September 2016.


Organised crime groups are increasingly involved in fraud. Financial market diversification, greater levels of economic activity and technology developments have created more and more opportunities for fraud.


Card fraud is the fraudulent acquisition and/or use of debit and credit cards or card details for financial gain. The following methods of card fraud have been identified in South Africa: acquiring legitimate cards from financial institutions by using false supporting documents; stealing legitimate credit and debit cards; creating counterfeit



cards; hacking into company databases to steal customers’ financial data; and card skimming.


Importantly, organised crime groups are involved in sophisticated card fraud because they are motivated by the potential monetary gains. Criminals engaged in card fraud may also be linked to other organised crimes.


In market capitalism — economic activities driven by self- interest — consumers want to maximise their satisfaction, business people wish to maximise their profits and workers want the highest possible income for a given amount of work.


According to Adam Smith in his well-renowned book, The Wealth of Nations in 1776, said the following:


Every individual ... generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it ... he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was not part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently



promotes that of the society more effectually than when he really intends to promote it.


This is a challenge we are facing in South Africa of crass materialism, conspicuous consumption and conspicuous greed. The question of card fraud that is haunting our people daily is no different to bank collusions, construction company collusions, steel company cartels and bread company gangsterism.


We need to attack card fraud in our country with the same vigour and enthusiasm ... in our war against both commercial and economic crimes in the Republic of South Africa. This requires sophisticated capacity and capabilities on the side of the state to counter and curb these predatory forms of crimes.


The illegal movement of money or capital from one country to another when these funds are illegally earned, transferred or utilised is a cause for concern. The Financial Intelligence Centre reports suspicious transactions to various institutions, and referrals to the SA Police Service are referred by Crime Intelligence ... and to the Priority Crime



Management Centre, PCMC — either the national office or directly to the provincial offices. So the Hawks are busy dealing with this particular issue.


The SA Reserve Bank also reports cases directly to the serious commercial crimes unit in the jurisdiction of the offence. The majority of cases reported are contraventions of exchange control regulations and card fraud. For example Mr Ming ... [Inaudible.] ... Chang from China opened 13 accounts at First National Bank, FNB, and Capitec. The bank cards and pin numbers were given to Chang. Money to the amount of one million was deposited and withdrawn in China. The amount may increase as the investigation continues. The suspect is a Chinese national and the warrant of arrest has been issued.
So, this is an international problem and it must be dealt with in that way.


In the second example, the complainant alleged that one of the employees of the company ordered stock by using the company’s name. The complainant alleges that he never authorised the ordering of stock or goods, nor did the employee seek authorisation to order the stock or goods. The stock or goods ordered by the employee was from outside the



borders of the Republic of South Africa and false documents were submitted to Investec bank limited.


The complainant further alleges that the employee knows the company’s procedures and therefore contravened the exchange control regulations to the value of 40,717 million.


Another example is a company called Optera Logistics that effected various payments to foreign beneficiaries under the category of freight imported. There are no records that Optera Logistics made payments for imports at the authorised dealers prior to effecting such payment for freight imports. The value of this is 546 million.


This is a crisis and a problem that is facing the country. We are calling on all our people to be vigilant, especially during the festive season. We must make all our malls free of crime. People must not ask assistance from these good-looking young boys wearing nice shoes and nice suits from Italy, and who have arrogated unto themselves the responsibility of waking up and going to help people at automated teller machines, ATMs. They are not employed to do the job. We have



security guards and we have police officers. Ask assistance from the police, not from good-looking criminals.


We are also calling on all those who are involved in illicit financial flows to desist from that because the money that we use to build schools, to fund higher education and to fund the health of our people is taken by business criminals that are taking money from South Africa to a foreign land ... and not benefit the people of the Republic of South Africa. They don’t want to pay taxes and they don’t want to invest in the country because they want the government of the ANC to fail. We are not going to fail. We are going to work with those partners that are committed, primarily to the Republic of South Africa before any other foreign land.


With those words, we are calling on all our people to be vigilant during the festive season. [Applause.]


Dr Y C VAWDA: Allow me, first and foremost, to acknowledge the presence of our supreme forces, irrespective of whatever our perceptions might be. I greet you all with assalamu alykum.



Hon Chairperson and hon members, in an increasingly financialised and digitalised economy, the use of electronic banking and card services together with the use of information technology, this is increasing all the time, not only in the banking industry but industry in general in this country. And of course, this is a welcome phenomena. This creates opportunities for job creation, poverty alleviation and this is something that we do very much welcome indeed.
But the truth is, together with these opportunities; also go the opportunities for increased crime.


Since 2010 alone, over R4.5 billion has been stolen through credit card fraud. This is a serious issue and it is growing all the time. It is robbing innocent hard working South Africans of the money that people so desperately need to put food on the table.


But hon Chair, this is also impacting on our tourism industry. Visitors that come into South Africa, irrespective of whether they come here as business people, as holiday makers or even coming here for health or other reasons, people are increasingly becoming victims of this type of



crime and crime in general. It is estimated that every year some R600 million is stolen and this figure is increasing.


Financial and cybersecurity have unfortunately not kept up with the skill and the sophistications with which criminals are able to steal card information. This makes it imperative for the government to put money and resources into technology and skills which can be used to fight credit card fraud; this has been done to an extent, but needs to be dramatically improved.


While technology and the digitalization of money are important in tackling credit card fraud, what must also be done is to improve the understanding of people around how credit cards work, and what information they can and cannot share or make public. As people are often conned into sharing their credit card information with criminals or are simply not aware of what they can and cannot share with others.


Keeping credit card information to oneself is vital to defeating credit card fraud as over 66% of credit card fraud in this country occurs through card not present fraud; which simply means when there is neither the card holder nor the



card present during the fraudulent transaction. That is why we reiterate the warning issued by the South African Banking Risk Information Centre that banking crimes and credit card fraud could be very prevalent over the festive season and that all South Africans should be alert to this.


We are also aware of the view that banks and government should put more effort into educating credit card holders on how to best to prevent credit card fraud and also on what to do when they are victims of credit card fraud; as many people report these crimes only when it is too late for anything to be done.


Hon Chairperson, the systems used at Automatic Teller Machines, ATMs, or rather the lack of security systems within this ATM system for the withdrawal of funds is totally inadequate. There should be greater security built in at the point of withdrawal. Greater responsibility should be taken by banks to ensure that fraud does not take place in the first instance. Banks have a greater role to play here and are abrogating their responsibility in this regard.



With regard to cybercrime, which is leading to fraudulent bank transfers, here again it is the bank that should be playing a greater role to ensure that this does not take place in the first instance.


But like all crime in South Africa, credit card fraud stems from the systemic inequality, poverty and unemployment that define our society.


As long as a privileged few have control of the economy and land, people in South Africa will continue to look for means and ways to put food on the table. Therefore, the only long- term solution to ending the mass credit card fraud this country experiences is changing the ownership patterns by expropriating land that is unused and underutilised, nationalising the commanding sectors of the economy, state- led industrialisation and the provision of free quality education for all.


Hon Deputy Minister, the vigour and passion with which you advocate for the fight against crime, your government would do a lot better to expand that kind of energy into redressing the socioeconomic discrepancies in this country.



All other solutions will fail as they do not go to the root of the problem and as the EFF we believe that this is how, not only, credit card fraud but crime in general can be ended. Thank you very much, Chairperson. [Time expired.]


Mr M D MONAKEDI: Hon Chairperson and hon members.


Chairperson, card fraud is indeed expensive for companies, for the South African economy and for individual consumers. It is thus no surprise that this crime is reported to be costing South Africa hundreds of millions of rands every year.


What is most disturbing is that this fraud occurs in spite of the existence of such stringent laws and regulations such as the Financial Intelligence Centre Act, FICA 38 of 2001, the National Credit Act NCA 13 of 2005 and the Payment Card Industry Data Security Standard PC, DSS.


The FICA was introduced to fight financial crime and movement of monies derived from unlawful activities. The NCA prohibits issuance of credit cards to, and thus their use by, people who do not qualify for them.



The PCI DSS, on the other hand, requires that if you are going to store credit card information, you cannot put it somewhere where it is going to be easily accessible. The card should at all times have password protection and other encryptions.


The PCI DSS relates specifically to debit and credit cards and the protection of names, card numbers, passwords and Personal Identification Numbers, PINs. It provides both a measure of compliance and of security to anyone dealing with credit cards through 12 compliance requirements, which include protecting stored cardholder data and having secure systems and applications.


The PCI DSS are updated at all times as new methods of bypassing security are discovered. For example, card providers have introduced chip cards and authentication using PINs in recent years after the older magnetic stripe technology was found not to be secure enough.


Now banks, in line with this, are using a two-factor authentication, where you have to put in a one-time PIN separately. With chip and PIN cards, the credit card data is



stored on a tiny computer chip not a magnetic stripe — and customers punch in a digit PIN, normally a four-digit PIN, instead of signing the screen.


The chip reduces fraud because it contains a cryptographic key that authenticates the card as a legitimate bank card and also generates a one-time code with each transaction.


This means that thieves can’t simply take account numbers stolen in a breach and emboss them onto the magnetic strips of a random card, or programme them onto the chip of a random chip card, to make fraudulent purchases at stores or make unauthorised withdrawals at ATMs.


There are also new authentication processes like voice, fingerprint or iris recognition that have been introduced though these are not yet widely used in South Africa. These measures are applauded and we want to implore the stakeholders, especially the banks, to keep on updating these security standards.


However, as the SABRIC Report stated, the credit card fraud still persists. As the new technologies revolutionise the way



we socialise and do business, unfortunately, fraudsters also come up with new technologies to steal our monies, including from the poor.


As earlier by the Deputy Minister and other speakers, criminals use methods such as card skimming and counterfeit card fraud, which still remain a big problem in South Africa. Here criminals use increasingly sophisticated technologies to catch unsuspecting victims. Some of the devices that criminals use are ATM-mounted card skimming devices, which work similarly to hand-held card skimming devices, but are fitted on an ATM.


These devices are difficult to recognise as they are manufactured to match the look of the ATM it is installed in. There is also card trapping, which is a form of skimming.
With this method, fraudsters don’t use card trapping to copy the card data, but to make sure your card is trapped in the cash dispenser.


They will seize the opportunity of you leaving and looking for help to get hold of your card. Cards can be trapped in ATMs in several ways. One method is to put a device in the



machine, and uses tape, wire or thread in order to hold a card in. Criminals afterwards retrieve cards using tweezers.


The PIN can be obtained through observation or by putting an overlay device on the keypad that can record PINs. Even cellphones are now used in committing card fraud. Armed with a smartphone and a thermal imaging attachment, criminals can easily steal your PIN.


Because you leave behind a thermal signature when you press buttons, criminals can use a smartphone with a thermal imaging attachment to figure out your PIN. Because there is a time lapse between the time you press the first and last buttons, it is easy to figure out what your PIN is.


If a card is skimmed, bank customers are unaware. It means, therefore, that if victims fail to check their bank statements, a criminal could repeatedly withdraw money every day to the card’s limit until it is cancelled or the bank’s anti-fraud systems determine something is fishy.


The SABRIC’s recent card fraud report showed that 1 377 hand- held skimming devices were recovered by either the SA Police



Service, SAPS or bank investigators over the last decade. There is also the so-called card-not-present or CNP fraud.


This mostly occurs in the form of phishing, where unsuspecting consumers give their details to illegitimate sites which collect details and use them in other transactions.


Hon Chairperson, there is no doubt that preventing this kind of crime involves a wide range of strategies extending from hard regulation, tapping into the law, to soft regulation using codes of practice and technological solutions.


However, we must also be proactive in the prevention of this crime and these are some of the practical measures that we must use in order to protect ourselves against this crime.
These might sound as clichés, but they remain very important: For instance, before you withdraw money at an ATM, you should always inspect the machine and cover the number pad with your free hand when entering your PIN; and never accept help from strangers when using an ATM, as the Deputy Minister emphasised.



The credit card companies and issuers should also come to the party and do the following: Ensure that the banks and or police inspect the ATMs regularly; Reinforce efforts to ensure compliance by retailers; Continue to seek more secure technologies such as chip and one-time PIN and other eventual successors; Work to ensure that everyone who handles credit card numbers has received the best possible training; And, finally, think ahead of the challenges of credit card fraud by devising appropriate technology.


Focusing on these issues will make an important contribution in our efforts to reduce card fraud. We cannot, and should not, allow criminals to deprive us of enjoying the benefits of e-commerce that are brought by using cards. I thank you. [Applause.]


Mr B G NTHEBE: I think all the speakers are appreciating that we are not actually entering. We are in an era of extreme connectivity. It is an era called an era of artificial intelligence. As we all know that every system of society will grow from the womb of another system. The Fourth Industrial Revolution will surely grow from the womb of the Third Industrial Revolution. What is quite interesting is



that, it is going to give us opportunity but opportunity comes with responsibility.


The responsibility that when we engage and hon Mkongi was quite eloquent about it when he said it is a collective effort. The police will play their part but consumers have a responsibility not to respond to unverified information, so that you don’t fall prey to the unsuspecting processes.


The week that falls between the periods 12-18 November 2017 was International Fraud Awareness week and the government and corporate mark this week yearly and during the third week of November. It encourages business leaders and employees to proactively take steps to minimise the impact of fraud by promoting antifraud awareness and education? The organisations such as the Association of Certified Fraud Examiners offer free resources and encourage creativity on how people can add their voices to the campaign to combat financial crime, fraud and corruption?


Fraud is not a new phenomenon in our society, but we have to acknowledge that it is changing faces. The new technologies have radically changed the way that we do business, how we



work and socialised. Increasingly we are living in an always on, always accessible culture. We are able to conduct many financial transactions on our mobile phone and that has made us more vulnerable to fraud than ever before to fraud and corruption


We do not have the luxury as a nation to isolate ourselves from the era of digital connectivity. We have to embrace the Fourth Industrial Revolution, while at the same time improving our capabilities to fight against financial crime. The greatest concern in the financial sector is the ever evolving sophistication of tactics used by criminals.


The card fraud statistics released by the South African Banking Risk Information Centre, SABRIC, reflects an overall increase in card fraud in the year 2016, if you compare it to 2015. We acknowledge that card fraud is a global and national phenomenon. In South Africa the most affected provinces were alluded to by hon de Beer, giving correct information.


The Campaign against card fraud is that every South African, irrespective of their level of education or social stratum is a potential victim of card fraud. An old lady in the town of



Soebatsfontein in Namaqualand, who uses the South African Social Security Agency, SASSA, card, would be potentially defrauded just as easily as the CEO of a large multinational company. The only difference would be in the scale, sophistication and impact on the person and their family.


In the village where I was born in Taung, there is allegedly a former police officer in custody as we speak who was caught defrauding SASSA recipients of their cards and having deducted all the money through the cards and such a former police official is now arrested and the police are on in charge with regard to making sure that justice is served.
This is just to indicate that, it is not just by the look of things that people that you think you can trust are always trustworthy.


Criminals are always on the lookout for gaps and weaknesses in the system in order to defraud the next unsuspecting victim. Every transaction we do is a potential opportunity for fraudsters and scam artists to defraud unsuspecting persons.



There has been noticeable proliferation of recent years of crimes such as card skimming or card cloning whereby a device is used to fraudulently copy bank customer details stored on the magnetic stripe on a debit or credit card. In fact, one of our colleagues in the National Assembly was defrauded when the card was with her in her possession but they were able to deduct money. This is just to show the sophistication part of the whole thing. However, the majority of skimming incidents in South Africa are recorded around ATMs and, to a lesser extent, at retail merchants when bank cards are presented for payments?


It is time we heed the calls by the South African Police Service for greater and more dynamic collaboration between consumers, business and law enforcement agencies. The financial services sector has to play a leading role by putting in place more robust risk mitigation measures to tackle card fraud. However this needs a collective effort from all the pressure groups. The banks have done work in recent years to add more security features on bank cards and automated teller machine, ATM’s. Hon Monakedi was just indicating one of the OTP which is one of the sophisticated models to identify whether the bank is responding to the



correct person. However, the best weapon to prevent card fraud as well as crime in general is always awareness and awareness all the way.


Our banks send out regular warnings to consumers about how to avoid falling victim to all manner of scams and fraud out there. These warnings come in a form of Short Message Service, SMS, and email and on ATM screens every time one goes to withdraw money.


They include some basic tips such as advice to customers to look out for such as including that customers must never let their cards out of their sight and all those things that other members have touched on.


Many consumers of financial services do not bother to check their bank statements regularly for suspicious transactions. People often forget their cards at ATM machines, and some throw away their receipts carelessly after a transaction, while many do internet banking at public places such as internet cafes without considering the possibility that ill intention of some people around them might also tap into that possibility.



Unfortunately, fraudsters exploit our natural inclination to trust our fellow human beings. The campaigns have been launched in countries like the United Kingdom, UK, to raise awareness. The Be Card Smart online initiative was launched in the UK to advise credit card customers about the dangers of fraud. It came in response to findings that fraud carried out throughout the internet, phone and mail order shopping cost nearly £162 million and in our case it will be about
R3 billion in the first six months of the year and there was about 60% increase over a period of one year.


The campaign was created with all the associations in the UK and as more and more of us are shopping online with our cards, we all need to take an active role in protecting our personal information by working together to combat the fraudsters. Adverts are placed in newspapers in the run up to the busy Christmas shopping period warning customers.


What is clear is that in order to combat card fraud and similar crimes, we need to encourage participation of our people in campaigns. The Fraud Awareness Week giving us an opportunity once a week in a year to focus specifically on fraud prevention. Some of the activities during the Fraud



Week International, that we can learn from as South Africans include: printing posters and leaflets that are downloadable from the websites; business leaders must talk to the employees and facilitate discussions; lobbying our councillors to take resolutions in council meetings declaring support for week; lobbying trade unions to also be part of the process encouraging public representation as well as public figures to post on social media; business such as fast food outlets and restaurants where many of us go to have meals must be encouraged to put fraud alert information; and the Parliament, legislatures and government departments and the corporate sector could copy the example of the Orange Telecoms which developed a company-wide communication strategy including how do they assist to the Fraud Awareness Week.


In conclusion, we need a bit common sense in order to fight fraud. We must never send money or give our card details to people we do not know. We must never give personal information like Personal Identification Number, PIN, to people via email, on social media or even over the phone. If one receives a suspicious email or social media link at work,



they must contact information technology, IT, support services immediately to verify it.


We must learn to strengthen our passwords and instead of using information that might be available publicly like birthdays. Since we all have smartphones and tablets which means we can access the internet from just about anywhere with ease, we must keep in mind that the modern day fraudster too can have easier access to our information.


Hon Terreblanche says the state must do more, I think the state has done more already in terms of legislative framework that is there to cut and one of the members stood up here and said South Africa is one of the best countries in terms of legislative framework guarding against that.


Hon Mkongi is correct that, it is a collective effort by all and hon Vawda; I think it is a discussion for another day.
The fourth industrial revolution is not necessarily going to create jobs. It is going to displace labour. Thank you Chairperson.


Mr F ESSACK: Hon Chair, thank you for the opportunity. My fellow South Africans out there, it’s always great to be at the podium to debate about matters that matter to all of us. Every day we continue to be inundated with the declining economy and the recession that continues to take its toll on South African consumers and families struggling to meet with their financial commitments.


This further fuels the use of credit cards which have become so freely available to consumers from various institutions looking to make lucrative profits. It is now a fact that some 50% of all credit-active South Africans are not in good standing with their creditors. I would like to point that the National Credit Regulator receives the majority of its funding from this very institution — Parliament, whilst the balance of funding is raised through credit bureaus and debt counsellors, of course.


Some two years ago, the then Public Protector launched an investigation into the National Credit Regulator and the National Consumer Tribunal. Not much seems to have come out of these investigations thus far. Majority of our citizens


continue to bear the brunt of illegal and exorbitant charges on credit cards month on month and year on year.


Chairperson, the question arises, “How much is being done to educate our population regarding consumers’ rights and the National Credit Act in South Africa? How is this being addressed at national school level? These are questions we need to think and apply our mind to. Banks, furniture stores, retail clothing chains and major supermarkets continue endlessly to offer credit cards and extended loan repayments
- hon Makue is aware of that, offering a minimum repayment of 10% monthly at ridiculously exorbitant interest rates of 20% plus compounding monthly.


Stolen cards can be reported quickly by card-holders but a compromised card can be hoarded by a thief for an extended period before fraudulent use. The card-holder may only discover fraudulent use after weeks or months when receiving a billing statement, which of course you may never receive as an ordinary South African in the rural areas, due to the lack lustre performance of the SA Post Office.


Everyday South Africans continue to shop online with the highest losses to credit card fraud being recorded in the tourism and hospitality services including travel agents, hotel accommodation and direct marketing occurring on our mobile phones daily. Again, my colleague hon Makue will understand where I am coming from. It is not surprising that the SA Banking Risk Information Centre, which hon De Beer has alluded to revealed that Gauteng residents lost the most to credit card fraud compared to any other province in 2016, with losses amounting to R93,1 million. You should take note and hon De Beer confirmed that the only province that had the reduction in losses was of course none other than the Western Cape in his words.


The Eastern Cape had the biggest increase in losses, with an increase of 148% from R35 million in 2015 to R8,7 million in 2016. This was followed by North West, hon Motlashuping, where losses increased by 127,9% from 2015 to R2,9 million. In conclusion, it is thus high time that this House calls for the reinstatement of properly trained and equipped specialised units and that this House also allocates more time for parliamentary oversight and begin to receive regular feedback from the Ministers of Police and Finance. I thank


you. Sadly, I don’t see the hon Deouty Minister who seems to have disappeared because I wanted to ...


The HOUSE CHAIRPERSON (Ms M C Dikgale): Hon Essack, he did not disappear, I have a note here ...


Mr F ESSACK: Fellow South Africans, I thank you for the opportunity.


The HOUSE CHAIRPERSON (Ms M C Dikgale): Hon Essack, the Deputy Minister did not disappear. I have his note here, I am still going to make some announcement. It is not all over ... [Interjections.] Please take your seat. He is out of order.


Mr C J DE BEER: Hon Chairperson, some members are sometimes mischievous, as you can see. As we are approaching next Tuesday, they will become more mischievous. Thank you to all members for your contribution to this debate. It is a very important debate where all members acknowledge and agree on the impact of card fraud and the extreme connectivity that we are facing. We must be aware of the environment that we are in.


As highlighted by the hon Deputy Minster, the Hawks are cracking down on fraud and we would propose that they work close together with the banks’ anticard fraud systems.


As highlighted, the criminals use sophisticated methods. Yes, hon Nthebe, Soebatsfontein is in my constituency. There are very poor people but they are very proud people.


Afrikaans:

Ek is trots op hulle.


English:

What is our responsibility? It is to make our people more aware. Next week, we are going into a constituency period and this becomes part of our agenda because we have to report back on what we have done the last quarter of 2017. It must be part of this action plan. Through that programme, we must connect better with our communities.


The Financial Sector Regulation Bill was sighed into law in the past few months. There is a need for Parliament to give the implementation agents time to implement the legislation, but it is our responsibility to call the Reserve Bank and the


different institutions to come and account to Parliament on progress made, with reference to the Financial Sector Regulation Act. We must hold them accountable because that is our role in Parliament.


We must also provide stakeholders with an opportunity to present their practical experiences with the implementation of this Act, and closer monitor the implementation of the recommendations that Parliament made through its committees.


Yes, we can do more if we work together to achieve our targets and have a safer South Africa and an ideal one without criminals. We thank every member for their contribution. Thank you.


The HOUSE CHAIRPERSON (Ms M C Dikgale): Hon members, let me take this opportunity to thank the Deputy Minister in absentia.


Debate concluded.


The Council adjourned at 17:03.


 

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