State Capture Inquiry into ex-Mineral Resources Minister: Terms of Reference / Witnesses; Committee DMR Budget Report
25 April 2018
Chairperson: Mr S Luzipho (ANC)
Parliamentary Legal Office: Terms of reference for oversight inquiry into alleged governance failures and maladministration issues within DMR
Parliamentary Legal Office: State capture inquiry into DMR conduct
A Parliamentary Legal Adviser presented the envisaged terms of reference to the Committee. The background to the inquiry was the release in 2016 of a report by the then Public Protector, that contained findings that pointed to governance failures and maladministration in the DMR, and information on conflict of interest on the part of the previous Mineral Resources Minister, the Hon. Mosebenzi Zwane. The National Assembly rules empowered the Portfolio Committee (PC) to initiate an inquiry into alleged governance failures and maladministration within the DMR. The Committee held a meeting to question the Hon. Zwane about alleged state capture, from which he excused himself. The Committee agreed that the state capture allegations were serious, and resolved to institute an inquiry in line with the mandate of Parliament. The terms of reference would be that there would be question and answer sessions, during which the Hon. Zwane and other relevant persons would testify before the PC. The inquiry would focus, inter alia, on on the role of Hon.Zwane and the DMR in facilitating the sale of Glencore assets; non-compliance with the PFMA resulting in fruitless and wasteful expenditure; alleged breaches by Hon. Zwane of the Constitution and legislation pertaining to conflict of interest; the handling of mining rehabilitation funds by the DMR, and whether the dismissal of DMR officials was subject to external influence. The PC would conduct the inquiry by subpoenaening witnesses to attend meetings at a designated time and place. Witnesses could make written submissions, but it would not absolve them from appearing in person. Witnesses could be accompanied by legal representatives, but such would not be allowed to answer on their behalf. Witnesses would not be allowed to cross-examine other witnesses, but would be allowed to make representations on the draft PC report. The inquiry was not a court of law, and would not pronounce an innocent or guilty verdict. Academics and researchers could do briefings, but would not be cross-examined. There would be preliminary closed meetings to finalise witnesses. The PC could call further witnesses as the inquiry progressed. The process was subject to adaptation and change.
In discussion, there were remarks and questions about criteria for openness of proceedings; self-incrimination and implications for fairness; legal consequences of refusal to answer; the position of officials who were no longer employed by the DMR; the possibility of implicated persons who were not subpoenaed, to request to appear; the role of legal representatives; the confines and scope of the inquiry; outsourcing of the evidence leader function; timeframes, and travel costs of private persons and the PC itself. The Chairperson was especially concerned about the administrative and legal credibility and effectiveness of the process, also against the background of the time factor. He asked questions about the separation of powers between the legislature, the judiciary, and the executive; amendments to the terms of reference; the possible calling back of witnesses, and availability of witnesses. He was also concerned about conflicting political positions within the PC. He concluded with a request that the Legal Adviser and the Committee Secretary draw up a process that included what Members had said in the meeting, with an indication of an envisaged time of conclusion. A preliminary list of witnesses was handed out, but not discussed.
The draft DMR Budget Vote and APP report was considered and adopted with amendments. The recommendations in the report included: The DMR had to present on outstanding strategies, notably women in mining and the coal strategy; the DMR had to present a plan to address the backlog on the MTSF goal for rehabilitation of ownerless and derelict mines; the DMR had to report on its mineral beneficiation strategy; a sustainable model had to be developed to eliminate reliance on debt financing; the DMR had to commit to a timeline to reduce acting positions in the Department and entities; the CGS had to craft a long term HR retention strategy, to ensure that the institution did not lose valuable intellectual capital.
Introduction by the Chairperson
The Chairperson set out the agenda for the day. There had to be the finalisation of the terms of reference for the inquiry, with a briefing by the evidence leader. A letter was written to the House Chairperson about the state capture inquiry, stating where the PC was in terms of decisions taken.
In addition, the DMR Budget Vote and APP report had to be considered and adopted, as well as outstanding minutes.
Apologies were received from Mr Lorrimer (DA) and Mr Jafta (AIC).
Terms of reference for oversight inquiry into alleged governance failures and maladministration issues within the Department of Mineral Resources
Adv Fatima Ebrahim, Parliamentary Legal Adviser, presented. The background to the inquiry was the release in 2016 of a report by the then Public Protector, that contained findings that pointed to governance failures and maladministration in the DMR, and information on conflict of interest on the part of the previous Minister, the Hon. Mosebenzi Zwane. The National Assembly rules empowered the Portfolio Committee (PC) to initiate an inquiry into alleged governance failures and maladministration within the DMR. The Committee held a meeting to question the Hon. Zwane about alleged State capture, from which he excused himself.
The Committee agreed that state capture allegations were serious, and resolved to institute an inquiry in line with the mandate of Parliament. The terms of reference were that there would be question and answer sessions, during which the Hon. Zwane and any other relevant persons would testify before the Committee. The inquiry would focus, inter alia, on the role of Hon. Zwane and the DMR in facilitating the sale of Glencore assets; non-compliance with the PFMA resulting in fruitless and wasteful expenditure; alleged breach by Hon. Zwane of the Constitution and the Executive Members Ethics Act as regarded conflict of interest; the handling of Mining Rehabilitation Funds by the DMR, and the question of whether the dismissal of DMR officials were subject to external influence. The Committee would conduct the inquiry as follows: Witnesses identified would be subpoenaed to attend meetings at a designated time and place. Witnesses could make written submissions, but it could not absolve a witness from appearing in person. Witnesses could be accompanied by legal representatives, but such would not be allowed to answer on their behalf. Witnesses would not be allowed to cross-examine other witnesses, but would be allowed to make representations on the draft Committee report. The inquiry was not a court of law, and would not pronounce an innocent or guilty verdict. Academics and researchers could do briefings, but would not be cross-examined. There would be preliminary closed meetings to finalise witnesses. The PC could call further witnesses as the inquiry progressed. The process was subject to adaptation and change.
Mr H Schmidt (DA) remarked that a good way forward was spelled out. The only damper was the implication that not all meetings would be open. State capture meetings had to be open. Proceedings had to be open as far as possible, and closed only when it was required. He was glad to see that there was no fixed list. He had been looking at leaked emails. There was direct implication, and also some names mentioned. He would like to supply a list of names mentioned. He referred to the right to fair trial versus self-incriminating evidence. He asked to what extent people could be compelled, if they did not want to answer questions, and what the legal consequences could be of refusing to answer questions. Expert witnesses had to inform the PC of what state capture entailed. It could be helpful for scenario setting but could not be regarded as evidence. The most important point was that meetings had to be open.
Mr M Matlala (ANC) asked about point 9 on page 2, which stated that the inquiry would take the form of question and answer sessions during which the Hon. Zwane and other relevant persons would be required to testify before the Committee. He asked if the formal question and answer procedure would be followed with persons who were no longer employed. He asked if they were liable to testify. He asked if a person who had made a mistake during previous employment could be called to account.
Mr T Rawula (EFF) asked if the evidence leader would be able to indicate whether meetings were to be open or closed. Ms Ebrahim had indicated that she herself and the Chairperson would act as evidence leaders. He asked about the position of the PC as a whole. He asked about considerations that would apply for choosing whether a meeting had to be closed. It was noted in the terms of reference that lawyers could not answer for those who testified, but the question was what the role of such lawyers was to be. He asked if there already was a list of expert witnesses. He asked if the terms of reference allowed for people who had an interest or who were implicated, but not invited, to request to appear before the Committee if they felt that the narrative had misled the Committee. He asked if there were definite timeframes, or whether it was to be an indefinite process.
Nkosi Z Mandela (ANC) asked if the terms of reference implied that the PC would confine itself to the Glencore matter and maladministration in the DMR. Previously the Vrede dairy project was considered, but it was decided that it was outside of the PC mandate, and rather a DAFF issue, also to be dealt with at the provincial level. The Committee had been eager for some time to conduct an inquiry, but there were hurdles, and the time factor was a concern. He asked if it would be possible to conclude the inquiry during the term of the Fifth Parliament. He asked if someone within the Parliamentary Legal Services would be availed to act as evidence leader, or whether it would have to be outsourced. He asked if funds would be available for outsourcing. He asked how much time would have to be granted to ensure public participation, whether two weeks or a month could be considered for submissions. He asked what would happen if Glencore operational management, identified as witnesses, would have to be sat with in Switzerland. He asked if it would be possible for the PC to go there.
The Chairperson remarked that there would be issues that the PC would have to discuss in Committee, to further its own process. It would have to be a political decision within the confines of an administrative system. He himself was interested in administrative and legal issues. Members were not protected as to their political statements.
Adv Ebrahim replied that only the planning meetings would be closed. There were private individuals who had information but feared for their jobs and personal security. There had to be closed preparatory meetings. She referred to self-incrimination. The powers and privileges provided for the taking of an oath, and required that documentation be produced, even if it was incriminating, or exposed the witness to criminal proceedings. But there would be protection, as evidence under oath was not to be used against a witness in a court or a place outside Parliament, except for perjury or charges related to documents, or evidence required. Things said by officials could not be used as evidence in an HR process, it was limited to criminal proceedings. The powers and privileges made an offense of false or misleading evidence, and could lead to a fine or imprisonment of no more than two years. That provision had not been tested or used by Parliament to her knowledge, but it was available. Expert witnesses would not be required to take an oath. They were to provide content and background to a convoluted technical issue. The PC could leave out what was irrelevant. She answered Mr Matlala about persons no longer employed. Any person could appear, not only those officials currently employed. The PC could not order the dismissal of previously employed officials. There were other legal issues around criminal liability. In terms of the PFMA the AO had to recover all monies lost, whether the officials were still in the department or not. She answered about lawyers. Some witnesses would feel more comfortable if there was a lawyer present. The PC was not to engage with legal advisers, as it would not be a court of law. There had to be a mandate from the PC to contact expert witnesses. Section 59 prescribed that for public participation and the involvement of civil society, the PC could call public submissions. Time frames could not be hard and fast. There was a preliminary time table. It could not be known beforehand how many days would have to be devoted to a witness. She answered about limitations of the terms of reference, and whether the Vrede Dairy Products issue could be inquired into, for instance. The inquiry would have to be limited to mineral resources, and hence to the DMR. No one PC was to usurp the terrain of others. There might be issues connected to the matters listed, the terms of reference could be amended as the inquiry progressed. People had to know what they would be questioned on, otherwise officials could say that they did not remember. Who was to be evidence leader was a resource issue. There were only nine legal advisers. It was a political function, and Members had more protection. Her role would be to ask opening questions, but after that Members would have to ask. She could work together with the Content Adviser, the Committee Researcher and the Secretary. It was not possible to say what resources were available.
The Chairperson commented that he was concerned about the credibility of the process, and how best to conduct the inquiry. He was not opposed to a preliminary process, but it had to be asked what was being entered into. He would have to meet with the Legal Adviser. The PC had to decide in Committee who was to be called as a witness. People could object to their names mentioned in a meeting. If a person was to say that he was not comfortable to go public, the question was on what grounds the request for an in camera meeting was to be considered. If a witness testified in favour of the State, he would be favourably considered. If a witness was willing to admit, but was not comfortable to do so publicly, an in camera session would have to be considered. It had to be decided how to deal with the travel costs of private individuals. There was a clause that prescribed that if a person could not afford to fly down, that person had to be transported. The subpoena gave latitude in key areas of financial implications. He had to ask a difficult question about separation of powers between the executive, the legislature and the judiciary. The legislature was independent, but the question was if it could enjoy the privileges of another arm of state, according to the terms of reference. Judge Zondo was dealing with the veracity of emails. The question was whether the relation between the legislature and the judiciary would be complementary, or whether there would be contestation. Down the line the PC might be at risk of encroaching on the mandate of the judiciary. The judiciary was the final arbiter about what was constitutional. He asked if the judiciary could assist the PC legally, in terms of its mandate. He asked if the judiciary could verify the authenticity of the emails, or not. The question was if a Parliamentary inquiry could go into the authenticity of emails. He would assume that Parliament could only take a political overview that tested the application of authority by the Executive, without having to prove the veracity of the email. He was concerned about fair process as it related to the preliminary process. Mr Rawula had pointed out the possibility of getting stuck in the preliminary process. If interest was to be prioritised, it could stall the process. The preliminary process had to be exhausted before the inquiry could proceed. Evidence had to be collated and the relevance discussed. That could become a process on its own, and had to be led by a legal adviser. The process had to be opened up for a time to receive submissions. The time table had to be based on what had been collated. To go all the way with the preliminary process could imply amendment to the terms of reference, and having to do some things all over again. The time factor had to be considered. He referred to the last bullet on the document that set out a preliminary list of witnesses. Pressure on Optimum was applied by Eskom, not the DMR, which just accepted the new buyer. If Eskom conducted an inquiry, the question was who would be more affected between the DMR and the Committee. There would be a crossing from one side to the other. If it did not happen, the first part of the terms of reference on the transaction would be watered down. The PC did not know the Eskom findings about Tegeta. Potentially there would have to be consultation down the line with others about the matter.
Adv Ebrahim replied about travel costs. The Powers and Privileges Act provided that the Speaker had to bear the costs, when witnesses were called. Possibly it had to come from the Committee section, but officials would have to look at it. The Chairperson was spot on about the separation of powers. The fact that certain issues would be dealt with in a different forum, did not prevent Parliament from engaging. Parliament had an oversight function, irrespective of what any other organ of state might be inquiring into, and irrespective of whether a matter was before the judiciary or not. The inquiry was not intended to find anyone guilty or not guilty. The object was to ensure better management of departments, and to advise departments to put in better processes. If the inquiry uncovered relevant criminal issues, it could be referred to the Hawks, for instance, or the Public Protector could look into the matter. Oversight had to hold the Executive and officials accountable. The parallel process was not a problem. As it concerned objections to names being mentioned, it had to be borne in mind that no verdict was to be passed. It could be stated that further investigation could be heard at other forums.
Mr Schmidt asked the Chairperson if he was to be the evidence leader. He agreed with Adv Ebrahim that the parallel process did not present a problem. Departments could be held to account. It was different to a judicial inquiry.
The Chairperson replied that the PC had to discuss the process, to establish certainty. The PC could be told that Mr Piers Marsdon was not available. When the timetable was drawn up, the evidence leader had to decide what evidence was relevant to the Committee. Where there were consistent issues, there had to be assistance from a legal adviser who understood the field. It would not do to have someone who had to re-orientate themselves. The question was if there was someone available with the right legal background, who could handle the administrative side of the process on behalf of the PC. He asked Adv Ebrahim if she would be available to lead the PC as legal adviser.
Adv Ebrahim responded that her instruction was to assist the Committee. She was also a dedicated resource to other Committees, and each insisted that they were more important than the others. There were nine legal advisers who served 40 Committees. Five inquiries were currently running. Eskom had a dedicated evidence leader, who was not from Legal Services. Legal advisers sat on that committee in conjunction with the designated Advocate. It was expected of Parliamentary Legal Advisers to be jack of all trades.
The Chairperson suggested that Adv Ebrahim and the Secretary draw up a process that was near final to deliver to the PC. It had to include what Members were saying, and what she saw as a point of conclusion. When dealing with the DMR, other people had to be excluded. There had been an acting DG in the DMR from January 2016 until November 2017. If that person was to be called in the preliminary process, he might have to be called back as further information came in. Other people might also have to be called back. Many people would want to submit, but the person all was anchored on, the former Minister, would have to be called last, rather than to call him earlier and then other evidence would come in. Calling people back would imply restarting the process. There might be people who did not have a chance to state their case in the preliminary process, and then new evidence would come in. He told Adv Ebrahim that she would have to be an octopus. If other Portfolio Committees had to be assisted, the pace of the inquiry would be subject to her availability. There was the problem of potentially conflicting positions in the PC. Sometimes all the Members agreed, but did not agree with him. Members did not see him as being objective. Some people might not be readily available. He did not know if it would be necessary or possible to make a trip to Switzerland, but the possibility could not be ruled out. The question was how it could be determined if a transaction was fruitless. The PC would have to be prepared to be led, administratively and legally. He remarked, to general laughter, that only Members who were already in the PC in 2015/16 could go to Switzerland. It had to be borne in mind that time was not on the Committee’s side. The Committee had to adhere to the Parliamentary programme.
Minerals Portfolio Committee: DMR draft Budget Vote and APP report
The Chairperson read out the observations made by the PC, on page 26 of the report. Salient issues included delays with finalising the review of the Mining Charter; a lack of demographic representation in senior management in many entities; unsustainability in the financial and operating model of the State Diamond Trader; the large number of acting positions in the DMR and its entities; and the ratio of baseline to MTEF funding for for the CGS, which continued to be unfavourable. Despite its concerns, the Committee noted that the DMR performed better than many other government departments, and that its entities were responsible and well managed.
The Chairperson remarked that a succession plan had to be added to the HR retention strategy. There had to be mobility, as well as retention. There were more mines but fewer inspections. The AGSA had remarked that budget cuts could have implications. He was concerned that with budget cuts there were reduced targets, but the Department was still not achieving targets, which could lead to further budget cuts. There was a lack of clarity about skills required in mine health and safety.
Mr Rawula referred to bullet 1. Delays with the review of the Mining Charter were linked to the timeframes given. He referred to the comparison of DMR performance to other departments. The Committee ran the risk of causing aspersion. He agreed with bullet 4, that the number of acting positions posed a stability risk. He asked if there was a motivation to reduce acting positions by 100 percent.
Mr Schmidt referred to the transparency and openness of social and labour plans. He asked if it was published by the DMR or the mines.
The Chairperson advised that it be added to the recommendations. He told Mr Rawula that the review of the Mining Charter was not subject to timeframes. Delays in the processing of the MPRDA rested with the NCOP. A rider had to be added that the PC appreciated the keen interest to fast-track legislation and regulations. But a definite commitment had been given about the Mining Charter review, and the PC could not observe on the management of the process. He was uncomfortable about the observation (bullet 3) that the DMR performed better than many other departments. It could be stated “as per” AGSA findings on financial management. The Department was one of four which had received clean audits. There were many departments with their entities that did not perform well with financial management. The PC was not saying that there were no other departments that were performing well. In terms of a stick and carrot approach, it was essential that the Department was not only to be addressed when it was doing badly.
Mr Matlala referred to page 3 of the report. The DMR had spent its budget and received a clean audit report.
The Chairperson referred to HR matters. There was a need to know how people were trained internally, with reference to how training was directed in terms of positions and gender. The CFO had said that a report would be available on the following day, but it could be extended until Thursday of the following week.
The Chairperson proceeded to read out the Committee recommendations, which included:
The DMR had to present on outstanding strategies, notably women in mining and the coal strategy; the DMR had to present a plan to address the backlog on the MTSF goal for rehabilitation of ownerless and derelict mines; the DMR had to report on its mineral beneficiation strategy; a sustainable model had to be developed to eliminate reliance on debt financing; the DMR had to commit to a timeline to reduce acting positions in the Department and entities; the CGS had to craft a long term HR retention strategy, to ensure that the institution did not lose valuable intellectual capital.
Ms Nyambi referred to a quote from the SONA 2018, in which the President stated that “Mining is another area that has massive unrealised potential for growth and job creation in mining”. She asked why the sentence had to end with “in mining”.
The Chairperson replied that changes could not be made to a quote from the SONA.
The Chairperson asked for a move for adoption of the report.
Nkosi Mandela moved for adoption, and Ms Nyambi seconded.
The report was adopted with amendments.
Minutes of 14 March, and 18 and 19 April were adopted without amendment.
The Chairperson asked the Committee about what was to be done in the following week. He sympathised with Adv Ebrahim about her commitments besides the inquiry. He advised that Members discuss the matter with their political parties. If Adv Ebrahim were to assist the PC, it would differ from how Public Enterprises dealt with Eskom, where they relied on someone who was not in Parliamentary Legal Services. If Adv Ebrahim was called on to assist, Parliamentary Legal Services would be left with eight people. It was an area of concern, and it could not be concluded by the following week. There was a public holiday in the following week, and MPs could not be forced to travel on a public holiday.
Mr Schmidt advised that Adv Ebrahim and the Secretary work out a timeline and compile a list of witnesses, but with the approval of the Committee. He would advise that the Committee not sit in the following week. The PC had to sit on who had to be called, and when.
The Chairperson agreed that there would be no sitting in the following week.
The Chairperson adjourned the meeting.