Questions and Replies

Reply:

As previously advised through parliamentary reply PQ77, the Department has instituted a review into various matters relating to the effectiveness and efficiency of the competition authorities, which includes a forensic investigation into certain items identified in the Auditor General Report and the results of the investigation is awaited.

In addition to the above, I refer the Honourable Member to the published annual reports of the Competition Commission which deal with irregular spending matters for relevant years in some detail, including where appropriate, matters related to consequence management in relation to officials.

In relation to a financial management strategy to control expenditure, the Commission advises that it has done the following:

• a) Revised its Supply Chain Management (SCM) policy to tighten controls.
• b) Brought in additional capacity in the Finance Division to improve compliance and overall financial management.
• c) Rationalised its level of activities in order to fit in the budget and generate savings to cover the previous year’s budget.
• d) Adopted austerity measures including curtailment of case work, litigation as far as possible is insourced, filling of vacancies reprioritised only critical posts are filled, international delegations are reduced to one official approved by the Commissioner, only the Commissioner and Deputy Commissioner travel business class. All other staff travel economy class irrespective of the flight duration, all strategic meetings or planning sessions are held in the Commission’s premises.

The wider review of the Commission readiness for the implementation of changes to legislation that I have referred to, will also address some aspects of improved technical management of financial matters and financial controls.

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Reply:

No vehicles were purchased for the Minister or the Deputy Minister during the years 2016-17, 2017-18 and since 1 April 2018.

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Reply:

I am advised by the Competition Commission that the total amount paid to Mokwana Incorporated Attorneys is R 3 644 724,90 for the period from January 2015 to December 2018.

The scope and nature of the work is investigation and litigation.

Eight cases were involved, covering litigation (six cases); review of electronic data (one case) and work connected to a raid on the premises of an entity (one matter).

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Reply:

I am advised by the Competition Commissioner that the contract of the former CFO, Mr Molathlegi Kgauwe came to an end on 14 March 2019 and has not been renewed. The Competition Commission recruitment process is underway and the Commission will employ a new CFO in due course.

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Reply:

The Department does not own any buildings, properties or facilities. Since 2009, the department has been accommodated in the dti Campus together with 3 of its 4 entities.

The dti campus is an ideal location which hosts 3 of the Economic Cluster Government Ministers, departments and their entities in close proximity making it an ideal economic campus.

The value of the rental is R1 006 539 per month and the purpose is for office accommodation, parking and storage.

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Reply:

The Competition Act sets out a clear ‘public interest’ set of criteria that the competition authorities are expected to apply when considering an application for approval of a merger or acquisition. These criteria include the impact of employment. In addition, other criteria include the impact of a merger on industries and regions, as well as small business and the export performance of South Africa.

When considering a merger, the authorities are also expected to consider the impact the transaction will have on competition in a sector, which may serve as a proxy under certain circumstances, for economic growth.

In undertaking the assessment of mergers and acquisitions, the Commission considers among others, public interest issues such as the impact on smaller businesses and envisaged jobs losses. Where there is a possibility of employment losses from a merger or acquisition, the Commission will typically look to prevent that. In this way, mergers that simply aim to generate efficiencies from shedding labour can be prevented from doing so through conditions aimed at preventing retrenchments. Similarly, mergers and acquisitions may enhance employment by requiring that merging parties create enterprise development funds.  

The new Competition Amendment Act, 2018, strengthens the public interest provisions of the legislation that impact employment and economic growth considerations. This is inter alia through the new provisions on economic concentration and market structure; the improved role for the executive on public interest matters; and changes to the prohibited-practices regime that can help to open up markets to new entrants and young entrepreneurs.

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Reply:

I have been provided with the information in the table below, from the department and its entities, on the number of tender briefings held in 2018.

DEPARTMENT / ENTITY NAME	NO OF TENDER BRIEFING in 2018	BREIFINS COMPUSLORY
Economic Development	02	Yes, briefings were compulsory.
Competition Tribunal	02	Yes, briefings were compulsory.
Competition Commission	03	The office accommodation briefing was compulsory and the other two were not compulsory.
IDC	04	Yes, briefings were compulsory
ITAC	None	N/A

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Reply:

I have been furnished with the following data related to imports and exports of flat steel and long steel products:

Exports from South Africa between 2009 and 2018:

Table 1: Steel Export statistics (Tons)

Imports to South Africa between 2009 and 2018:

Table 2: Steel Import statistics (Tons)

ITAC advises that South Africa’s imports of steel originate mainly from the China, the UK, Japan and Germany. South Africa exports steel mainly to Zambia, Zimbabwe, the Democratic Republic of Congo and Mozambique.

Export destinations and import sources change from time to time however, and a more detailed study would need to conducted to see the changes in the composition of import/export trading partners.

A number of government initiatives are geared to increasing the level of steel beneficiation in South Africa. These include the expansion of localization in the processing of local scrap metal, support for steel-industry initiatives and the localization requirements for the use of steel in public infrastructure projects.

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Reply:

I am advised that for the period set out in the Question, the Economic Development Department did not incur any expenditure relating to travel privileges of former members of the Executive after they left the Executive, nor were any expenses incurred by the Department in relation to the spouses or widows of former members of the Executive after they left the Executive.

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Reply:

The Competition Commission set up a Market Inquiry under the current provisions of the Competition Act, in 2014 to consider the state of competition in the private healthcare market, covering a large number of services across the value-chain.

An independent Panel was appointed by the Commissioner to preside over the market inquiry, chaired by ex Chief Justice Sandile Ngcobo, and it engaged Experts as panellists and a number of specialists to support the Chairperson and Panel of Experts.

The Commission decided that a mix of skills would ensure that the Panel oversees and evaluates both legal (administrative, procedural) and technical (healthcare, health and competition economics) aspects of the inquiry. In addition to the mix of skills, the Commission also had to consider the independence of the various panel members. In particular, the Commission had to seek experts with relevant sector-specific experience that would not result in a conflict of interest. Details of the individual panel members appointed by the Commission to oversee the HMI are reflected in greater detail in Table 1 below:

TABLE 1: Panel members

Panellist	Reasons for selection
Chief Justice Ngcobo (Rtd)	Justice Ngcobo, in his capacity as the Chief Justice of the Constitutional Court was the head of the judiciary in the Republic of South Africa.
Dr Cees van Gent (Netherlands)	Dr van Gent has both competition economics, regulatory and health economics experience from the Netherlands. Unlike locally based competition economists, he has not presided over any matters that may be reviewed during this inquiry.
Professor Sharon Fonn	Professor Fonn is the Dean of Health Sciences at Wits. She brings sector and system-wide experience.She is a well-respected academic with extensive publications.
Dr Ntuthuko Bhengu	Dr Bhengu has public and private sector experience. He has also worked in nearly all parts of the private healthcare sector, bringing experience from all relevant markets.
Dr Lungiswa Nkonki	Dr Nkonki holds a PhD in health economics. She is an academic and has no conflicts of interests in the sector.

The total amount spent by the Competition Commission on the Market Inquiry into the Private Healthcare Sector since its establishment in 2013 amounts to R196 949 637.

The detailed breakdown is as follows (Table 2):

Table 2: cost breakdown

No	Description	Amount
1	Legal Expertise & Litigation	R12,537,881.16
2	Healthcare Sector Experts	R5,627,139.65
3	Data Warehousing & Actuarial Services	R13,486,040.63
4	Data De-Identification & Security	R9,598,784.61
5	Economics Experts	R38,959,579.39
6	Media and Communications	R1,391,211.99
7	Panel Members	R36,794,302.06
8	Human Resources and Operational costs	R78,554,697.51
Total	R196 949 637

 

In respect of the Panel Members, payments were made as follows (table 3):

Table 3: Payments made to Panel Members.

Panel Members	Total
Justice Sandile Ngcobo	R5 929 016
Dr Ntuthuko Melusi Bhengu	R9 716 935
Cees Van Gent	R11 748 087
Dr Sharon Fonn	R3 328 763
Dr Lungiswa Nkonki	R6 071 501

In respect of the specific query in the Parliamentary Question regarding a certain law firm, I am advised that Ndzabandzaba Attorneys were not appointed to represent the Commission in the Market Inquiry and accordingly no monies were paid to them.

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Reply:

No, the budget of the Economic Development Department is not used to subsidise any industries in the country.

The Industrial Development Corporation (“IDC”) does provide concessional funding to a number of industries and sectors, including its Black Industrialist Programme and Gro-E Youth Programme, to encourage youth entrepreneurship. This support is provided across the country. Further details of IDC programmes may be found in the Integrated Report on the IDC’s website: https://www.idc.co.za/images/2018/IDC-IR-2018-Final.pdf.

In the past EDD has raised R95 million for the Downstream Steel Competitiveness Fund utilising funds paid over to the National Revenue Fund as a result of penalties imposed on ArcelorMittal South Africa for its role in cartels in the steel industry. The funds raised by EDD has been used for concessional funding to provide support to qualifying smaller competitors and downstream players. Funding has been approved for companies in Gauteng, Eastern Cape, Mpumalanga, KwaZulu-Natal and North West.

 

Similarly, EDD has raised R250 million for the Agro Processing Competitiveness Fund utilising funds paid over to the National Revenue Fund as a result of penalties imposed on Pioneer Foods for its role in the bread cartel. Funding has been approved in 42 deals to provide concessional funding for companies in Eastern Cape, Western Cape, Free State, North West, Mpumalanga, Limpopo, Gauteng and KwaZulu-Natal.

The work of EDD in competition matters has resulted in R4.5 billion raised from private companies to support small and medium business and black-owned businesses in a number of industries including agriculture, construction, manufactured consumer goods and spaza shops. The impact of this support has been across the country.                            

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Reply:

Motor vehicles purchased since 1 April 2015

Yes, the Competition Commission purchased motor vehicles in each financial year since 1 April 2015. Expenditure has been disclosed in the relevant annual financial statements.

Details of the purchases are as follows:

2015/16 Financial year

• One Toyota Corolla was procured at a purchase price of R 271 566.
• One Audi A4 was procured, at a purchase price of R 430 212.
• One Toyota Hilux was procured at a purchase price of R242 012.

2016/17 Financial year

• Two Toyota Corolla vehicles were procured, at purchase prices of R 270 795; and R282 275 each.

2017/18 Financial year

• Two BMW 3-series vehicles were procured, at purchase prices of R420 800 and R425 700 each and two BMW 5-series vehicles were procured, at purchase prices of R621 501 each.

 

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Reply:

The Competition Act provides for the Competition Commission to enter and search premises of persons who may have information relating to an investigation in terms of the Act. These enter and search actions by the Commission are a vital part of the gathering of information on prohibited actions, including participation in cartel activities, price fixing and tender rigging and they constitute a highly specialised activity and hence trust in a service provider is essential.

The Commission therefore relies on proven expertise as the results of such actions in the form of the evidence gathered that are subject to challenge and scrutiny by the courts. I have been advised that the Commission has been trying to increase the number of potential providers and has been bringing in other service providers to ensure that there is adequate expertise.

Of the 12 enter and search actions that have been undertaken since 1 April 2015, three have been referred to the Tribunal for prosecution. Nine of the 12 are still under investigation by the Commission. In the case against the Furniture Removals Companies, 25 of the 30 respondents have already settled with the Commission for a total of R15 069 172.

Since 2008, enter and search actions have contributed to successful cartel investigations which have resulted in R463 million in settlements and penalties imposed by the Competition Tribunal.

Since 1 April 2015, there are five (5) forensic service providers that have been utilised, namely:

1. Century Technical Solutions (Pty) Ltd,
2. Exactech (Pty) Ltd,
3. Matlama Consulting (Pty) Ltd,
4. eCybersystems (Pty) Ltd, and
5. Itsamaya Consulting.

Prior to 1 April 2015, the Commission had used the services of Exactech (Pty) Ltd, Matlama Consulting (Pty) Ltd, Cyanre, Computer LAB and Forensic Investigation Recovery Management (Pty) Ltd. Currently Century Technical and Exactect are still the preferred providers, given their expertise, but the other service providers are building their capacity.

A total of 12 enter and search actions have been undertaken since 1 April 2015.

Of these 12, each service provider participated in the following:

1. Century Technical Solutions (Pty) Ltd - 12 of the 12 enter and search actions
2. Exactech (Pty) Ltd - 11 of the 12 enter and search actions
3. Matlama Consulting (Pty) Ltd - 4 of the 12 enter and search actions
4. eCybersystems (Pty) Ltd - 3 of the 12 enter and search actions, and
5. Itsamaya Consulting - 1 of the 12 enter and search actions.

(d) The costs per enter and search action are as follows:

No.	Enter and search actions	Date of action	Service Provider/s	Cost to CC	Total per Raid
1	CC v Human Communications and Others	23 September 2015	Century Technical Solutions (Pty) Ltd	R275 700,00	R275 700.00
2	CC v Furniture Removal Companies	30 September 2015	Century Technical Solutions (Pty) Ltd	R3 693 086,00	R5 131 767.04
			Exactech (Pty) Ltd	R1 309 295,70
			Matlama Consulting (Pty) Ltd	R129 385,44
3	CC v Totalgaz and Others	14 October 2015	Century Technical Solutions (Pty) Ltd	R397 176,00	R933 417.83
			Exactech (Pty) Ltd	R10 486,83
			Matlama Consulting (Pty) Ltd	R525 755,00
4	CC v Glassfit and Others	23 March 2016	Century Technical Solutions (Pty) Ltd	R2 690 273,01	R4 747 743.30
			Exactech (Pty) Ltd	R1 016 679,60
			Matlama Consulting (Pty) Ltd	R1 040 790,69
5	CC v PG Bison and Sonae	31 March 2016	Century Technical Solutions (Pty) Ltd	R2 225 250,00	R3 326 335.06
			Exactech (Pty) Ltd	R1 101 085,60
6	CC v Mpact and Others	26 May 2016	Century Technical Solutions (Pty) Ltd	R1 005 700,00	R1 583 149.93
			Exactech (Pty) Ltd	R341 114,20
			Matlama Consulting (Pty) Ltd	R236 335,73
7	CC v Maersk and Others	28 September 2016	Century Technical Solutions (Pty) Ltd	R1 917 956,00	R4 130 992.54
			Exactech (Pty) Ltd	R2 213 036,54
8	CC v Wilmar Continental Edible Oils and Fats (Pty) Ltd & Others	08 December 2016	Century Technical Solutions (Pty Ltd	R1 619 004,00	R3 017 837.08
			Exactech (Pty) Ltd	R1 398 833,08
9	CC v Fresh Produce Market Agents	23 March 2017	Century Technical Solutions (Pty Ltd	R3 496 379,78	R8 966 439.38
			Exactech (Pty) Ltd	R5 470 059,60
10	CC v Feedlots Association of South Africa and its Members	14 June 2017	Century Technical Solutions (Pty Ltd	R4 504 140,00	R11 574 533.60
			Exactech (Pty) Ltd	R3 693 011,60
			eCybersystems (Pty) Ltd	R3 377 382,00
11	CC v Automatic Sprinkler Inspection Bureau and its Members	03 August 2017	Century Technical Solutions (Pty Ltd	R5 487 504,00	R12 374 792.49
			Exactech (Pty) Ltd	R1 975 524,00
			eCybersystems (Pty) Ltd	R4 777 680,00
			Itsamaya Consulting	R134 084,49
12	CC v Altech UEC South Africa (Pty) Ltd and Others	16 November 2017	Century Technical Solutions (Pty Ltd	R 659 893.96	R1 710 768.34
			Exactech (Pty) Ltd	R 536 603,68
			eCybersystems (Pty) Ltd	R514 270,70
	Grant Total	R57 773 476.59

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Reply:

(a) No.

(b) In the previous administration (2009-2014), members of the Gupta family were present at public or official functions or meetings that I attended, and as with other attendees, engaged with me at the events. Outside of such occasions, the following invitations or requests were directed at or received by me or by my office for bilateral meetings with members of the Gupta family:

(i) In approximately late 2011, my office received a request from a member of the Gupta family to meet with me. As no information was provided to warrant a meeting with me, I declined the request and directed my office to refer them to meet with one of my officials instead, as is standard practice with many requests by business people for bilateral meetings. They did not take up the offer and no further effort was made by them subsequently to follow up on this request.

(ii) Personal invitations to celebrate Diwali were received on more than one occasion, which invitations I declined. In addition, sometime in early 2013 I received an invitation to attend a wedding involving relatives of the Gupta family in Sun City, which invitation I declined.

While this does not relate to a member of the Gupta family, in February 2010 on the day of the State of the Nation Address, Mr Duduzane Zuma came to briefly introduce himself to me at my offices in Parliament. No specific request was made by him at the meeting nor does my office have any record of a request for a follow-up meeting.

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Reply:

The department conducts asset audits on a quarterly basis. I am informed that the Economic Development Department does not have any art work or any other heritage assets.

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Reply:

The Economic Development Department, Competition Commission, Competition Tribunal and ITAC have not awarded contracts to any of the mentioned companies.

With regards to the IDC, I have been furnished with a reply by the CEO of the IDC, Mr Geoffrey Qhena, to the question, which I quote as follows:

“In 2015, the IDC has awarded a contract to Vox Telecommunications (Pty) Ltd. Details are as listed below:

(a)(i) Name of the Firm	(b)(i) What service was provided	(b)(ii)(aa) what was the value of the contract	(b)(ii)(bb) and length of contract	(b)(iii) who approved the contract	(iv) was the tender duly approved in terms of Treasury and procurement Guidelines
Vox Telecommunications (Pty) Ltd	Rightfax software license	R185 057 (Excl. VAT) over three years	Three years	IDC’s Procurement Committee	Yes

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Reply:

The Economic Development Department, Competition Commission, Competition Tribunal and ITAC have not borrowed funds from any entity in the People’s Republic of China.

With regards to the IDC, I have been furnished with a reply by the CEO of the IDC, Mr Geoffrey Qhena, to the question, which I quote as follows:

“IDC has borrowed funds from two Chinese Financial Institutions: a development finance institution (China Development Bank); and a commercial bank (China Construction Bank). Table 1 below provides details on loans raised with these institutions.”

Table 1: IDC arrangements with Chinese Lenders

Name of the Institution:	(1). China Construction Bank (CCB)	(2). China Development Bank (CDB)
Loan Type:	Bilateral loan	Bilateral loan	Short-term facility	Bilateral loan
Amount:	50,000,000	75,000,000	50,000,000	100,000,000
Currency:	USD	USD	USD	USD
Reference Rate:	3 months Libor	3 months Libor	3 months Libor	6 months Libor
Period concluded:	12 November 2015	13 October 2016	25 May 2018	23 April 2014
Tenure:	5 years	5 years	1 year	10 years
Repayment terms:	Bullet	Bullet	Bullet	Amortising

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Reply:

I have been furnished with a reply by the CEO of the IDC, Mr Geoffrey Qhena, to the question, which I quote as follows:

“The IDC in the ordinary course of business does not have sight of court judgments handed down against its clients by third parties, unless it is within the realm of liquidation and/or business rescue process.”

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Reply:

I have been furnished with a reply by the Commissioner of the Competition Commission, Mr Tembinkosi Bonakele, to the question, which follows below:

“(1a) The Commission has paid the firm R 71 686 012.28, which includes payments made to various Advocates as well as VAT, for the period January 2015 to August 2018. The sum comprises of the following components:

Fees paid to attorneys: R50,7m

Fees paid to advocates: R11,8m

VAT: R8,6m

Ndzabandzaba Attorneys was briefed on 31 cartel cases. For completeness, some of these cases involved a number of respondents per case. For example, the Furniture Removal case involved 46 respondents engaged in over 7000 separate instances of collusion, the Automotive Components case involved 61 respondents engaged in 310 separate instances of collusion, whilst the Foreign Exchange (Forex) case involves 23 respondents, among others.

(1b) The nature and the scope of work rendered by the law firm include assisting the Commission with prosecution of cartel cases, negotiating and concluding settlement agreements on behalf of the Commission, giving legal advice on cartel cases and briefing legal counsel to appear at the Tribunal and higher courts on behalf of the Commission. Ndzabandzaba Attorneys has also assisted the Commission with High Court applications for search warrants.

The majority of cartel cases handled by Ndzabandzaba Attorneys have been resolved through prosecution and settlement that were confirmed by the Competition Tribunal. The law firm successfully negotiated settlements to the amount R594 million and has a 100% success rate on prosecutions at the Competition Tribunal thus far.

(2) Yes, the work included active participation in the so-called dawn raids conducted by the Commission. The Commission briefed Ndzabandzaba Attorneys to prepare applications for search warrants in the High Courts.

The firm provided the above mentioned services in respect of the following cases between 2015 and 2017:

1. CC v Stuttaford Van Lines and Others
2. CC v Totalgaz Southern Africa (Pty) Ltd and Others
3. CC v PG Bison (Pty) Ltd and Another
4. CC v Maersk South Africa (Pty) Ltd and Others
5. CC v Fresh Produce Market Agents
6. CC v Beefcor (Pty) Ltd and Others
7. CC v Wilmar Continental Edible Oils and Fats (Pty) Ltd and Others
8. CC v Altech UEC South Africa (Pty) Ltd and Others
9. CC v ASIB and its Members

The High Courts granted all the applications for the search warrant in respect of the above cases made by Ndzabandzaba Attorneys on behalf of the Commission. Where warrants were challenged these were successfully defended except in one case where the decision is still subject to an appeal process.”

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Reply:

a) The IDC publishes details of its impairments and write-offs in its Annual Reports, details of which are contained on page 76 of the 2017/18 Annual Report. For ease of reference, the information is set out below:

				2017/18		2016/17	2015/16	2014/15	2013/14
Write-offs per annum (net of recoveries) R’million	3 025		1 329	2 045	1 363	520

The IDC Board sets an impairment threshold of a maximum of 20% of the value (at cost) of the IDC’s investment portfolio. As of the last financial year, impairments equaled 17,4% of investments measured at cost, following the accounting standard used by the Corporation. However, if measured at market value, impairments equal 10,4% of the current market value of the investment portfolio.

Over the past 5 years, the highest level of impairment at cost was 18,2%, in 2014.

The function of an impairment threshold is to provide the management with the appropriate “risk appetite” that should be followed in approval of projects. :

• If the IDC had a impairment threshold target that was set too low or at zero, it would need to only lend to, or invest in, projects that are guaranteed to succeed, or which are fully covered by security for its investment. The effect of this would be that the IDC would not be able to support many viable projects that carry a degree of risk.
• If on the other hand the IDC had a risk threshold that was set too high, it is likely to invest in many more projects, however it is also likely to lose significant sums and eventually would deplete its capital base and become unsustainable.
• The current impairment level thus seeks to strike a balance and in general is less conservative than the ratios and levels that a commercial bank would apply, as is necessary for a development finance institution.
• The IDC will write off a loan or investment which has been impaired, in whole or part, where the prospects of recovery is remote, taking into consideration any security which may reduce the extent of the potential loss.

b) With respect to the loan amount and details of recipients, the IDC has advised that it does not disclose the details thereof as these were approved prior to 1 April 2017, when a client confidentiality policy was in place, regarding the companies with which it transacted. Following review, the IDC changed its policy on client confidentiality effective from 1 April 2017.

The IDC has disclosed in their 2017/18 Annual Report, that the single largest write-off is in respect of SCAW South Africa, a steel and engineering company that the IDC has a majority shareholding in during the period.

I draw attention to the following comment in the IDC’s 2017/18 Annual Report, that provides additional information:

“The IDC mini-group recorded a R2.8 billion profit (after capital profits), the same as the previous year. Net interest, dividend and fee income increased by 35% compared to the previous year. Increases in operating costs were contained at 1.5%. The cost-to income ratio (excluding cash resource income, impairments costs, and income from mature listed investments) improved to 39% from 46% in 2017.

Of concern is impairments and write-offs which more than doubled from the previous year. This increase was impacted by Scaw where the introduction of strategic equity partners resulted in a significant write-off (R1.6 billion) and a R1.8 billion impairment of Foskor facilities. Higher levels of impairments resulted in the ratio for impairments as a percentage of the portfolio at cost increasing to 17.4% from 16.7% in the previous year. The interventions currently underway at these two subsidiaries, which both recorded losses higher than expected, as well as the establishment of a dedicated department to monitor and manage subsidiaries and other material investments is expected to address this issue.”

Source: IDC Annual Report, 2017/18

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Reply:

I have been furnished with a reply by the CEO of the IDC, Mr Geoffrey Qhena, to the question, which I quote as follows:

“The IDC approved a total funding amount of R185 million for Glodina Lifestyle (Pty) Ltd (“Lifestyle”) to acquire a division of KAP Homeware (Pty) Ltd (“KAP”). No amount has been approved to affiliates of KAP in so far as this transaction is concerned.

Following a partial draw down by Lifestyle, it was discovered that the shareholder did not conform with the KAP sale and purchase agreement and the IDC loan agreement and the planned sale was therefore cancelled. A forensic investigation was carried out by IDC Internal Audit which resulted in criminal charges being laid in May 2018 against the shareholder in Lifestyle for misrepresentation.

The matter has since been referred to the Johannesburg Commercial Crimes Unit. IDC has since concluded a sale and purchase agreement with KAP with the intention to resuscitate the Glodina business. The IDC’s intention is to start the recommissioning of the plant as soon as possible.”

In addition to the above reply by the IDC CEO, I am advised that the Department reviewed the claims and counter claims of the various parties to the transaction prior to the institution of formal court proceedings. In light of the court proceedings, the Department will monitor their outcome and take any steps that are warranted, based on additional information that comes to light.

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Reply:

I have been advised by the Commissioner of the Competition Commission, Mr Tembinkosi Bonakele, of the following:

1. The Competition Commission undertakes investigations into collusion and cartel activities in the economy and in the course of carrying out its responsibilities, it is privy to commercially sensitive information which may result in significant competition penalties being imposed on affected parties and the possibility of criminal charges being brought against individuals. In addition, significant vested interests in the economy may be affected by the work of the Commission.

2. The Competition Commission and senior staff have been subject to a spate of criminal acts, the source and purpose of which is not yet apparent in spite of these having been reported to the law-enforcement agencies, which warranted in the opinion of the Commission, the provision of security to a limited number of senior officials in order to ensure the safety of persons and sensitive information.

3. The criminal acts comprised of the following:

• on 25 May 2017 the Deputy Commissioner, while returning from a work assignment, was held at gunpoint and his work computer laptop, tablet and mobile phone, among other things, were taken.
• On 8 August 2017 there was a security breach at the Commission premises and two laptops containing sensitive evidence were stolen from the Cartels Division. This followed incidents where laptops and mobile phones belonging to, amongst others, the Commissioner were stolen under what the Commissioner described as ‘mysterious circumstances’.
• On 9 September 2017, the Chief Financial Officer (CFO) was robbed at gun-point.

4. The Commission took measures which included the provision of private security to four senior staff members; terminating the services of the security service provider at the Commission premises; and commissioning a security assessment by a private service provider. The report pointed to some security gaps in the security of the Commissioner, the Deputy Commissioner and the Divisional Manager for Cartels. Further work is also being done on IT security systems and further upgrades will be done subject to budget availability.

5. In addition to the above, and following the request by the Commission, SAPS covers the security of former Chief Justice Ngcobo who is currently heading a panel appointed by the Commission to conduct a Market Inquiry into private healthcare, with the Commission providing vehicles for the SAPS members assigned to the former Chief Justice.

6. The total costs for the various Protection Services amount to R14,9 million, as follows:

• June 2017 – 31 March 2018 = R 14 607 748.
• 1 April 2018 – August 2018 = R 373 304.

7. The State Security Agency was approached to further investigate these incidents and it undertook to conduct a comprehensive assessment on the security requirements of the Commission and its report is imminent. The detailed security assessments will inform any further decisions on this matter, including whether to continue with security measures and the appropriate level of such services.

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ADDITIONAL INFORMATION

(1c) The total cost for providing private protection services from June 2017 to 31 March 2018 is R14 607 748. Total cost for providing private protection services from 1 April 2018 to August 2018 is R373 304. From June 2017 to March 2018 the cost reflect the amount for outsourced private security services. The security arrangement was revised and there was a reduction on the intensity of the services and most were insourced. The R373 304 is the total for outsourced private security services since 1 April 2018 until 31 August 2018 Total of cost of both period amounts to R14 981 051.

Reply:

I have been furnished with a reply by the Commissioner of the Competition Commission, Mr Tembinkosi Bonakele, to the question, which follows below:

“The number of law firms briefed by Commission between 1 January 2015 and 1 January 2017 is seven (7). The amount indicated below excludes costs for Council and VAT.”

NO	Name of Law Firm	Number of Cases	Total cost for all cases, excluding costs of Council and VAT
1.	Ndzabandzaba Attorneys	31 cases	R10 018 442,45
2.	KBK Attorneys	1 case	R 130 599,21
3.	Mokwana Incorporated	3 cases	R 191 574,74
4.	Ndobela Lamola Inc	2 cases	R 914 762,64
5.	Cheadle Thompson & Haysom Incorporated Attorneys	5 cases	R 4 191 731,01
6.	Maponyana Ledwaba Attorneys	1 case	R 76 317,54
7.	Knowles Attorneys	1 case	R 17 956,18

-END-

Reply:

The Economic Development Department, ITAC, Competition Commission and Competition Tribunal do not have land investments.

Attached as Annexure ‘A’ is information on land owned by the IDC. The properties are part of the IDC’s overall portfolio.

-END-

Reply:

The IDC provides information on business partners that it funds, on the IDC website.

Details regarding investment date, value and shareholder details of IDC clients may be accessed at:

https://www.idc.co.za/images/DISCLOSURE_OF_IDC_FUNDED_BUSINESS_PARTNERS_FROM_1_APRIL_2017_-_31_MARCH_2018.pdf

I also refer the Honourable Member to the reply to Parliamentary Question 1575, of 18 May 2018.

 

-END-

Reply:

The information regarding dismissals and labour disputes faced by EDD is provided in the Annual Report of the department. Information on the 2017/18 financial year will be available in the report to be tabled in Parliament on 30 September 2018. Reports regarding previous years may be obtained at the following website: www.economic.gov.za

For entities that do not report details in their Annual Reports, I am advised as follows:

a) In respect of labour disputes:

• ITAC – none
• Competition Tribunal – none
• Competition Commission – 3 on issues of misconduct or individual disputes
• IDC – 4 involving disciplinary matters

b) In respect of staff dismissals:

• ITAC – 2
• Competition Tribunal – none
• Competition Commission – none
• IDC – 16

The reasons for dismissal range from unprofessional conduct, insubordination, theft and dishonesty, absenteeism and abscondment. In none of the cases were severance packages paid by the entities.

-END-

Reply:

I have been furnished with a reply by the CEO of the IDC, Mr Geoffrey Qhena, to the question, which follows below:

“ (a) This matter is now subject to litigation in an effort to recover IDC’s exposure of R287.5million. The R287 million is made up of R37.5 million remaining capital of the original R250 million loan and R250 million return on the original loan.

(b) There is a litigation process ongoing. We currently await the conclusion of that process. With respect to reference to “litigation” this means that IDC has
instituted legal action to recover the R37,5 million as well as the R250 million in accrued interest. The R37.5 million is the remaining amount of the original
principal amount of R250 million. Oakbay Resources has repaid a total of R212.5 million. The accrued interest remains at R250 million.”

-END-

Reply:

I have been advised by the Competition Commission that since 1 January 2017, nine law firms have been briefed on cartel cases, at a cost to date of R16 600 363. Details on law firms and number of cases can be found below.

Law firms briefed	Number of cases	Amount paid per law firm
1. Ndzabandzaba Attorneys	7 cases	R 10 519 266
2. Ndobela Lamola Incorporated	4 cases	R 567 736
3. KBK Attorneys	1 case	R 114 244
4. Mokwana Attorneys	3 cases	R 1 062 232
5. Mogaswa Incorporated Attorneys	3 cases	R 1 266 873
6. Tiyani Vukeya Attorneys	1 case	R 83 215
7. Morare Thobejane Incorporated	5 cases	R 1 074 747
8. Le Roux & Du Plessis Attorneys Inc.	1 case	R 1 650 734
9. Madlanga & Partners Inc.	1 case	R 261 316

-END-

Reply:

a) The rationale behind Government’s imposition of import duties on imported steel was to protect local steel manufacturing capacity from the surge of imports resulting from the global oversupply of steel.

South Africa is the only African country with this manufacturing capability and the steel industry is strategic to the country, given its linkages with other sectors of the economy.

The extremely low-priced imports of primary steel products originating mainly from Asia were harming local steel producers, as demonstrated by declining market shares, reduction in sales and production volumes, low capacity utilisation, declining employment and investments. The local producers were in a deteriorating competitive position in part attributable to escalating costs. Evraz Highveld Steel and Vanadium Ltd, the sole domestic manufacturer of heavy structural steel, ceased manufacturing and filed for business rescue.  When industry applied to the State for assistance, Government considered the application and approved a request for increased import duties.

In the case of the largest steel producer, government placed a reciprocal commitment on the company to increase its level of capital spending in order to improve its overall competitiveness; and the company agreed to save jobs that would otherwise have been lost as a result of retrenchments.

b) The overall impact of duties on the amount of steel imported into the domestic industry has been positive between the 2016/17 and 2017/18 financial years. This is evident from the decline in import volumes of flat and long steel products over the periods mentioned (see below table). However, imports of certain coated flat steel (galvanised) products are showing an increasing trend. This may be due to the importation of niche products and ultra-thin galvanised flat products which are not locally manufactured or they may reflect in part a circumvention of duties by importers. ITAC has been requested to monitor this and to take appropriate steps where warranted.

-END-

Reply:

Changes in the prices of petrol, diesel and other fuels are published by the Central Energy Fund on their website: http://www.cefgroup.co.za/petrol-price/.

As of 6 June 2018, the price of both grades of Petrol (i.e. unleaded and lead replacement) has increased by 82 cents per litre.

The change in the price of petrol is typically a function of both changes in international exchange rates (particularly the US Dollar-Rand exchange rate) and the change in international product prices (particularly crude oil).

For June 2018, the depreciation of the rand contributed roughly 30 cents of the increase in the price of petrol, while changes in the price of international product contributed roughly 52 cents to the increase. As an oil importing country, South Africa is unavoidably vulnerable to changes in international markets.

According to Stats SA, the price of fuel for consumers increased by 3.6% between April and May 2018, and 9.4% over the 12 months to May 2018. This is in line with petrol price inflation over the period since 2010.

This is expected to have both a short-term direct impact on inflation, and a long-term indirect impact on inflation. A study by the South African Reserve Bank, published in the Journal of Energy in Southern Africa in February 2017, found that a 10% year-on-year increase in the price of petrol resulted in a 1.2 percentage point increase in headline inflation across the economy over the long-run.

The cost of fuel has an important impact on overall inflation in the economy. These effects are both direct and indirect. Higher petrol prices directly impact the consumer in terms of higher fuel costs and higher public transportation costs. Higher petrol prices indirectly impact consumers, as an input cost, which will ultimately increase the cost for goods and services rendered.

Fuel prices also impact on the cost of production. The impact varies by sector. In a reply provided to parliament to a similar question, my colleague the Minister of Trade and Industry, discusses the direct and indirect impact on the manufacturing sector and current efforts to diversify sources of energy.

Fuel price inflation is challenging to manage, given that South Africa imports the bulk of its fuel and is therefore subject to changes in international market prices.

Fuel levies are applied to the price of fuel, and are used to raise funding for transport infrastructure. This investment in transport infrastructure reduces transport costs in the economy, which in turn enables more economic participation by businesses as well as households and in turn can moderate overall inflation.

Finally, it should be noted that according to an independent tracking service (www.globalpetrolprices.com), the price of petrol in South Africa at the pump is in line with the global average, and amongst the lowest when compared to non-oil-producing countries.

-END-

Reply:

The Competition Commission is investigating a number of cases of collusion and other uncompetitive behaviour in different sectors. However, as a matter of policy, the Competition Commission does not disclose which sectors it is currently investigating nor which sectors it is not investigating, unless such disclosure is warranted and in the public interest. Disclosing such detail may risk compromising any current or potential future investigation if prematurely released.

-END-

Reply:

1) I am informed that the department had a total of thirty-six (36) SMS members for the 2017/18 financial year.

Of these 36, 28 SMS members submitted by 30 April 2018 – the DPSA due date. The DPSA granted an extension for the 8 non-compliant SMS members to submit. On 31 May 2018, 7 of the 8 SMS members submitted. The 1 outstanding SMS member who has not submitted is on suspension since 9 March 2018. Of the 7 who subsequently submitted by 31 May 2018, official non-compliance letters were sent to =6 of them to provide reasons. A letter was not sent to the seventh official as the department is aware of her maternity leave.

Names (i) and ranks (ii) of the affected 8 SMS members are listed below:

NO	NAMES (i)	RANK (ii)	Letter Sent
1	Mr MP Kepadisa	Director	Yes
2	Ms MK Kopeledi	Chief Director	Yes
3	Ms W Mapira	Chief Director	Yes
4	Mr LL Maqekoane	Chief Director	On suspension
5	Ms S Shoba	Director	Maternity leave
6	Dr KM Sikhitha	Chief Director	Yes
7	Ms T Van Meelis	Chief Director	Yes
8	Mr B Zondo	Director	Yes

2) I am further advised that non-compliant SMS members have not been charged as yet and a submission/ report is currently being prepared by the Human Resource section to the Head of Department, with reasons from affected officials and recommendations from the Ethics Officer (EOs). The HOD must assess reasons provided, make a final decision, implement sanctions/corrective measures and to report back to the Department of Public Service and Administration (DPSA) by 30 August 2018.

3&4) Regarding officials suspended on full salary, one (1) official is currently suspended on full salary. Details of the suspension are indicated below

FINANCIAL YEAR	POST LEVEL	TYPE OF SUSPENSION	AMOUNT	NO OF DAYS (CALENDAR)
2018/19	14	Precautionary Suspension (Full pay)	R 198 733.36	72

-END-

Reply:

I am informed that the Economic Development Department and its entities: the IDC, ITAC, Competition Commission and Competition Tribunal, do not have sexual harassment cases reported during the 2016 and 2017 financial years.

-END-

Reply:

Details of vehicle accidents/incidents owned by the Department over the three financial years are as follows:

• 2015/16 - Four (4), three incidents involved chips/cracks on windscreens, and the 4th vehicle was written off. Total cost of repairs in 2015/16 amounted to R20 876.13

• 2016/17 - 2 (Two) - one vehicle was involved in a pile-up accident, and the other one involved a windscreen replacement. No vehicle was written off. Total cost of repairs for 2016/17 amounted to R36 534.03

• 2017/18 - 3 (Three) - one vehicle had bumper repair, and the second vehicle a fog light and bottom bumper grill had to be repaired. The third incident involved repair of rear light glass. No vehicle was written off. Total cost of repairs for 2017/18 amounted to R12 918.00

• Since 1 April 2018 - No accidents have occurred.

Details on tracking devices are not made publicly available.

-END-

Reply:

Normally a Conference of this nature would cost in excess of a million rand for travel of an international speaker, fees associated with the speaker (a Nobel Laureate in Economics), flights for local delegates, accommodation, venue and catering.

The Ministry arranged to have the event done in partnership with the University of Witwatersrand, who provided the venue and certain costs associated with the event.

The Economic Development Department paid R46 124 for the event, to cover part of the cost of catering and travel for local delegates. The Economic Development Department did not incur any costs at all for Professor Stiglitz, as he was already in the country at his own cost on business unrelated to the Department and he did not charge a speaker’s fee for speaking at the EDD event.

-END-

Reply:

I am advised that the Economic Development Department and its entities, the Industrial Development Corporation (IDC), ITAC, Competition Commission, and Competition Tribunal do not have incidents of racism reported to Human Resources in 2016 and 2017.

-END-

Reply:

H&M is reportedly the world’s second largest clothing retailer, with stores ion a number of countries, including in South Africa. Earlier this year, the company featured an advert of a black child wearing a sweatshirt with the words “coolest monkey in the jungle” etched on the front.

The company was widely criticized for insensitivity and some responded with outrage. The company issued a public apology and hired a diversity leader to strengthen company sensitivities.

It had been known for some time that the company has not used South Africa as a source for the manufacture of clothing. EDD reached out to the company to draw to their attention to the fact that the African continent is not purely a consumer market for goods but also a source of clothing and textiles. The Swedish ambassador also facilitated discussions between the company and government as well as NGOs.

During the discussions, it was acknowledged that every single item in a H&M store from assets, stock in trade and consumables is imported. The Department and some of the NGOs pointed out that a full and complete mea culpa would preferably include using South Africa as a source for clothing and other consumables, which would create local jobs and help to bring down levels of unemployment in the country.

Government is encouraging a number of retailers to localize more of their sourcing as a means of creating local jobs and some retailers have already responded positively, as reported to Parliament on more than one occasion, with positive results for the country.

H&M acknowledged it had not previously considered South Africa as a sourcing market and undertook to send a technical delegation to South Africa to identify local capacity. EDD arranged a meeting between H&M and a retailer who had invested in local sourcing to show the opportunities in local industry. EDD arranged for H&M to visit a number of factories in Johannesburg, Cape Town and Durban in late May 2018.

We are engaging the company further and look forward to a positive response based responsible corporate sourcing that creates manufacturing jobs in South Africa.

-END-

Reply:

As indicated in Parliament, I have met with both the Minister of Public Enterprises and the Minister of Transport to raise concerns regarding local procurement and to advise of the availability of local production capacity. Both Ministers support the drive to localize production of rolling stock and components.

The Honourable Member will be aware that changes have been effected recently to the boards of both affected State-owned Companies, namely Transnet and PRASA.

Further announcements will be made when additional developments occur or policy pronouncements are made.

-END-

Reply:

Economic Development Department

There are two (2) criminal cases that were reported to SAPS in terms of Prevention and Combating of Corrupt Activities Act, Act 12 of 2004, relating to theft. Both cases have been investigated. In the first matter, the investigation was closed with the second matter is before the courts.

ITAC

Two cases have been reported to the SA Police Service (SAPS) to date. Bothe cases were followed up by the accounting officer. Neither case was successfully prosecuted.

Competition Tribunal

The Competition Tribunal has not had any cases relating to the Prevention and Combating of Corrupt Activities Act, Act 12 of 2004 referred to the SA Police Service (SAPS) and or Directorate for Priority Crime Investigation (DPCI).

Competition Commission

Two (2) cases have been reported to the SAPS and none have been referred to the DPCI.

The update from the SAPS is that they are investigating the two (2) cases. The Commission has received the update based on the follow up it has been making with the SAPS. None of the two (2) cases has resulted in a conviction at this stage.

IDC

The Industrial Development Corporation has referred seven (7) cases for investigation to the SAPS relating to the Prevention and Combating of Corrupt Activities Act from 01 April 2004 to 31 March 2018.

All seven (7) cases referred to the SAPS for investigation were investigated by the SAPS. None of the cases were directly referred to the Directorate for Priority Crimes.

All the cases referred to the SAPS were followed up by the respective IDC accounting officers. The respective forensic investigators and the General Counsel have followed up on the progress of the matters with the SAPS. None of the cases related to the Prevention and Combatting of Corrupt Activities Act has resulted in a conviction, as the matters are still ongoing.

-END-

Reply:

The Economic Development Department, ITAC, Competition Commission and Competition Tribunal do not own land and currently rents office space.

The IDC owns property which is retained as part of its overall investment portfolio.

Details on land owned by the IDC has been provided in Parliamentary Question 3605 in November 2017 and Parliamentary Question 978 in March 2018.

-END-

Reply:

Neither a spouse nor an adult family member accompanied me on any official international trips in the past five years nor since 1 April 2018.

-END-

Reply:

The International Trade Administration Commission of South Africa (ITAC) and the Economic Development Department has on an on-going basis considered the impact of the price preference system (PPS) for scrap metals, which looked inter alia at declared levels of exports, feedback from individual companies affected by the PPS and consideration of the efficacy of the rules that are in place. One input into the assessment was a report by Genesis Analytics.

The Genesis Analytics Report was based on interviews with a sample of companies and considered the economic impact of the PPS. The cost of the Genesis Analytics study was R828 210.

The Genesis Analytics Report identified both benefits and challenges with the operation of the system.

The Department tabled data on trade flows on scrap metal to parliament as recently as September 2017, which indicated a significant decrease in volumes from 2014 to 2016 of 60%, and a decline in value from R5.8 billion in 2014 to R1.9 billion in 2016.

Government is considering various options on strengthening the impact of measures to ensure greater local use of scrap metal, to address the needs of the national infrastructure programme, reverse the previous deindustrialization of the foundry and steel mini-mill sector and to contribute to the country’s climate change goals. These include consideration of the extension of the PPS, adjustment of the rules applicable to the PPS, its replacement with an export tax on scrap metal or other means to ensure that a greater level of locally-collected scrap metal is in fact processed locally and an announcement will be made on conclusion of the review.

-END-

Reply:

Fighting corruption is a major part of the focus of the Administration, and as shown by research results previously released, corruption can have a damaging effect on economic growth and job creation. Lifestyle audits can play an important part in identifying corruption and following the President’s pronouncement on the matter, consideration is being given to lifestyle audits in circumstances where on a risk-analysis basis, it is warranted or may assist with the fight against corruption. Neither the department nor its entities have conducted lifestyle audits in the past three financial years. The department and its entities will implement any directive issued by the relevant government agency.

Until such a directive has been finalised, the following anti-corruption and conflict of interest arrangements apply:

In respect of the Department, government has put in place a Financial Disclosure Framework for all Middle Management Staff (MMS), Senior Management Staff (SMS) and all employees entrusted with public funds. The framework is aimed at preventing conflict of interests by requiring designated employees to disclose their financial interests. The said are required to disclose their shares and other financial interests held in any private or public company or any other corporate entity recognised by law.

The said employees are also required to disclose their directorships, partnerships, the name, and type of business activity, of the corporate entity or partnership and the amount of any remuneration received for such directorship or partnership.

In respect of Minister and Deputy Minister, an Executive Disclosure and Parliamentary Disclosure framework is in place.

The Industrial Development Corporation (IDC) has set out its Fraud Prevention Policy and Plan in Annexure N to the IDC Corporate Plan (2018/19 – 2022/23). The IDC ensures comprehensive background checking is carried out on prospective employees, including at least verification of previous employment details, academic qualifications, citizenship and the existence or otherwise of a criminal record. We act within the relevant legal prescripts in this regard. The IDC also has recently implemented procedures to ensure comprehensive background checking is carried out on potential service providers. The Corporation embraces a “know your supplier” culture, which minimises financial crime in procurement and simultaneously makes the Corporations zero tolerance culture towards financial crime visible to service providers.

The Competition Commission has a Declaration of Financial Interests policy in terms of which all employees are required, on an annual basis and whenever there is a change during the year, to declare their financial interests such as ownership of shares in companies, directorships and trusteeships in companies and trusts, as well as ownership of properties. The policy also requires employees to declare any gifts they receive during the year. The Auditor-General, as part of its annual audit, requires members of the senior management team of the Competition Commission to submit information on related parties, ie close family members and business associates. The Auditor-General interrogates the information by ascertaining whether any of the service providers who did business with the Competition Commission during the financial year are linked to related parties of senior management.

For the Competition Tribunal, all part-time members are required to declare any conflict of interest on the court record before they attend a hearing. The Tribunal has an anti-fraud policy in place and all employees, consultants and contractors are required to sign an anti-fraud charter, and all staff sign a Supply Chain Management (SCM) disclosure on an annual basis.

For ITAC, in terms of their HR policies and procedures, all employees are required to disclose their financial interests annually by completing the ITAC Financial Disclosure Forms which must be approved by the Chief Commissioner. In case of the Chief Commissioner, his form is signed by an EXCO member. In addition, ITAC has a Fraud Prevention Policy aimed at setting the tone against any acts of corruption in the workplace.

-END-

Reply:

I have been advised by the CEO of the IDC, Mr G Qhena that 128 Companies have become beneficiaries of the Black Industrialist Programme since 1 April 2017. The name of each of the beneficiaries of the Black Industrialist Programme and value approved is attached in Annexure A.

The list provides details of approvals from 1 April 2017, in line with the decision to disclose IDC business partners from 1 April 2017 onwards. Since 1 April 2017, the IDC publishes the names of all beneficiaries of funding.

In the interest of transparency, I wish to draw attention to the availability of the full list of all recipients, not only Black Industrialists, for the financial year ending 31 March 2018, which may be found on the IDC website at:

https://www.idc.co.za/images/DISCLOSURE_OF_IDC_FUNDED_BUSINESS_PARTNERS_FROM_1_APRIL_2017_-_31_MARCH_2018.pdf .

-END-

Reply:

The International Trade Administration Commission of South Africa (ITAC) and the Economic Development Department has on an on-going basis considered the impact of the price preference system (PPS) for scrap metals, which looked inter alia at declared levels of exports, feedback from individual companies affected by the PPS and consideration of the efficacy of the rules that are in place.

The International Trade Administration Commission of South Africa (ITAC) is responsible for the administration of the price preference system (PPS) and therefore the export control guidelines (rules) that are used to administer the Price Preference System (PPS) for scrap metal.

ITAC identified a set of challenges in the administration of the PPS that related to abuse and circumvention of the policy intent of the PPS and decided to review the guidelines.

On 11 December 2015 ITAC published proposed amendments to the PPS guidelines and throughout the first half of 2016, I am advised that it engaged extensively in a process of consultation with industry. In the second half of 2016 ITAC began to engage the department on its final determination on the amendments.

During 2016 and 2017, the Department in turn engaged with some investors in the metal manufacturing sector on the operation of the PPS and ITAC commissioned additional research. The Department reported on the trade statistics regarding scrap metal to Parliament in September 2017, which showed a 60% decline in the export of scrap metal between 2014 and 2016. During 2017 and 2018 the State has been reviewing an appropriate action in respect of the PPS to ensure that government policy deepens local beneficiation into the future.

The department is of the view that the ITAC amendments to the guidelines would strengthen the administration of the PPS.

The amendments by ITAC to the PPS guidelines have been finalised. ITAC will determine a suitable date of implementation, taking into account, at a policy level, the review of the PPS by government.

-END-

Reply:

I have been furnished by the named entities with the information furnished below.

a) ITAC has a total number of four (4) consulting firms or companies currently contracted to provide services within the organisation. Refer to the table below:

Name of Consultant	Service Provided	Start Date / Time Period / End Date	Monetary Value in Rands	Name and Position of each individual who signed off on each contract
Document Warehouse	Records management	3 Nov 2016 - 2 Nov 2021	R12 000.00 pm	Chief Commissioner
Wilmar Brokers	Assets insurance	1 April 2015 - Till Cancel	R242 508.00	Chief Commissioner
Careways	Employee Health and Wellness Programme	1 Oct 2017 - 30 Sept 2020	R477 831.68	Chief Commissioner
EOH	Microsoft Licencing	1 Dec 2017 - 30 Nov 2020	R1 996 995.81	Chief Commissioner

b) EDD: A total number of two (2) consulting firms or companies were contracted with EDD during April and June 2017. Refer to the table below:

Name of Consultant	Service Provided	Start Date / Time Period / End Date	Monetary Value in Rands	Name and Position of each individual who signed off on each contract
21st Century	Job Evaluation	April 2017	R64 638	Director General
Indlela growth strategies	Recruitment related project management	June 2016	R222 023.84	Director General

(C) COMPETITION TRIBUNAL has a total number of eight (8) consulting firms or companies currently contracted to provide services in the organisation. Refer to the table below.

Name of Consultant	Service Provided	Start Date / Time Period / End Date	Monetary Value in Rands	Name and Position of each individual who signed off on each contract
Altimax	AFS compliance review	2015-04-01 (36 months)	R450 223, 62	Chairperson and Tribunal EXCO sign off on procurement process.
BLX Solutions	Reporting tool (Qlikview) support and development	2016-11-01 (36 months)	R489 316, 50	Chairperson and Tribunal EXCO sign off on procurement process. SLA signed by COO.
KPMG Incorporated	Internal Audit	2015-04-01 (36 months)	R1 417 438,84	Chairperson and Tribunal EXCO sign off on procurement process. SLA signed by the Chairperson.
Paprika Graphics and Communications	Annual Report Design and printing	2016-04-01 (36 months)	R322 682,27	Chairperson and Tribunal EXCO sign off on procurement process. SLA signed by COO.
Podrouzek	Case management software support and development	2016-07-01 (60 months)	R655 704,00	Chairperson and Tribunal EXCO sign off on procurement process. SLA signed by COO.
Pro-Publico Consultancy	Policy Consultancy	2015-05-01 (36 months)	Rate per hour	Chairperson and Tribunal EXCO sign off on procurement process. SLA signed by COO.
4Design Creative Media	Website support and development	2010-09-01 (Green contract)	R13 500,00	Chairperson and Tribunal EXCO sign off on procurement process. SLA signed by COO.
4Design Creative Media	Website support and development	2017-10-01 (Deviation extension)	R301 000,00	Chairperson and Tribunal EXCO sign off on procurement process. SLA signed by COO - Janeen de Klerk

 

(d) COMPETITION COMMISSION: has a total number of 87 consultants for the 2017/18 financial year. The approval of these services and contracts were done in line with the Competition Commissions internal delegation of authority. In most cases, one consultant may have been appointed on more than one case or activity and that may span over a number of years.

Consultancy/ Type of Service Provided	Nature of Service	Period	Monetary Value
Economic Experts	The following consultants were utilised for economic advisory services as and when required Acacia Economics Pty Ltd AC Nielsen Marketing & Media Pty Ltd Alexander Forbes Business Metrics Consultants Pty Ltd DNA Economics Dr Joachin Vermooten Genesis Analytics IMS Health Impact Research International Meridian Economics	Assignment duration	R 105 405 951
Sector Experts	The following sector and forensic experts were utilised as and when required as, Bizz Consult Bureau for Food and Agricultural Century Technical Solutions Control Risks Ecyber Systems Pty Ltd Ethel Teljeur T/A Sizwe Gas Exactech PTY LTD Kasturi Mooaliyar	Assignment duration	R 68 427 072
External Legal Services	The following were contracted for legal services as and when required AC Ndzabandzaba Adv A Bhana Adv M Le Roux Adv NH Maentja Adv J Wilson Adv P Ngcongo Adv H Rajah Adv N Muvangua Adv M Lekoane Adv B Lekokotla Adv A Hassim Adv T R Mafukidze Adv K Moroka Adv Kazee Adv PG Seleka Adv V Notshe Adv C Dauds Bowman Gilfillan Bradeley Conradie - Halton Cheadle Cheadle Thompson & Haysom Incorporated De Louw Le Roux and Deofrann Du Plessis Dept of Justice & Const Development Adv D.I. Berger SC (S ATTORNEY) Fasken Martineau Gildenhuys Malatji Inc JE KLAAREN KBK ATTORNEYS INC Maenetja Attorneys Maponya (Johannesburg ) Inc Mike Brierley Consult CC Mkhabela Huntley Adekeye Inc Mokgwasa INC Mokwana Attorneys Morare Thobejane Incorporated Nandisile Mokoena Ndobela & Lamola Incorporated Ngeno & Mteto INC	Assignment duration	R 105 289 244
Inquiry Support	The following experts and consulted were used for Inquiry Consult and Support as when required Inquiry Consult and Support BASE 36 Clint Oellerman Dr Lungiswa Nkonki Professor Sharon Fonn KPMG Service Proprietary Limited Lulama Mtanga Dr Ntuthuko Melusi Bhengu Sipho Mtombeni	Assignment duration	R 68 848 687
Bioss- Southern Africa	Psychometric Assessments	Once-off	R 10 317
Control Risks	Business Continuity	Once-off	R 49 494
Deloitte Consulting JHB.	Finance	Assignment duration	R 1 330 380
Deloitte & Touche No 2	Finance	Assignment duration	R 290 700
FRRW Consulting	Recruitment	Case duration	R 677 160
FTG Business Advisory Services (PTY) LTD	Recruitment	Assignment duration	R 615 932
Hiside Eventing PTY LTD	Strategic Planning Facilitation	Once-off	R 48 923
Isendlu Business Companion	Survey	Once-off	R 491 910
Kelly A Division of Kelly Group Ltd	Recruitment	Once-off	R 318 242
Key Careers and Consulting	Recruitment	Once-off	R 154 323
Kwakuhle Staffing Solutions	Recruitment	Once-off	R 396 296
Michael Page International SA	Recruitment	Once-off	R 280 000
Paul Bowning	Recruitment	Once-off	R 182 000
Price Waterhouse Coopers Incorporated	Change Management expert	assignment duration	R 919 165
QA Auditors INC	Finance	Once-off	R 706 800
Rangewave	IT	Once-off	R 1 479 264
SAGE Talent Solutions	Recruitment	Once-off	R 106 974
Sustainable livelihood Consultant	Research	Once-off	R 1 024 846
The Coaching Center	Executive Coaching	Once-off	R 254 106
The Dream Team	Strategic Planning Facilitation	Once-off	R 39 900
Thomson Reuters	Research	Once-off	R 90 938
Tibane Group	Strategic Planning Facilitation	Once-off	R 75 750
Towers Watson	Data Analysis Health Inquiry	Inquiry duration	R 2 017 837
Work Dynamics	Job Evaluations, HR	Once-off	R 68 578

e) Industrial Development Corporation: The Industrial Development Corporation uses consultants for expert advice and insight on certain transactions across industries and sectors which the IDC operates in. There are two types of consultancy contracts: those where the IDC is the only client and those where a consultant is appointed to render work to an IDC client which is funded on a cost sharing basis with its clients as part of an IDC business support grant. We provide details below of consultancy contracts for work rendered specifically for the IDC (excluding work commissioned on a cost-sharing basis with IDC clients):

I am advised that contracts are signed-off by specifically delegated IDC officials.

Consultancy agreements for consultancy work rendered to the IDC:

No.	Name of the Consultancy Firm	Name of each Consultant	Description of Services	Start Date	continue Duration	Contract Monetary Value
1	Umoya Consulting (Pty) Ltd	Adrian Crewe	Development and execution of Industrial Policy Media Strategy for the Industrial Policy Support Fund (IPSF) of the dti, which is administered by the IDC	1-Nov-16	2 years	R1,740,000
2	B and M Analysts (Pty) Ltd	Julia Wedgwood	Development of a chemicals sector strategy for the Industrial Policy Support Fund (IPSF) of the dti, which is administered by the IDC	6-Dec-16	Phases 1 - 4 completed within 9 months (6 Dec 2016 until 5 Sept 2017) Phase 5 is ongoing support for 2 years	R1,247,502
3	Rothschild (SA) (Pty) Ltd and Identity Capital Partners (Pty) Joint Venture	Paul Bondi, Rudy Scholtz, Lumka Mlambo	Transaction Advisory Services for Scaw Metals	1-Jan-16	30 Months	R22,725,000
4	SAB&T Chartered Accountants Incorporated t/a Nexia SAB & T	Ndumi Medupe, Tando Mbatsha, Mohamed Koor, Rajen Kistan	Risk Management consulting services on an as needed basis	1-Aug-17	3 years	R495,810
5	Hatch Africa (Pty) Ltd	Peter Raymond, Cornelia Holtzhausen, Abre Smit Johnny Kalala, Doug Belle, Max Clark, Ashleigh Maritz, Jan Lategan, Ivor Poultney, Ian du Plessis, Greg Traquair, Lisa Stowe	Independent review of Foskor business operations	25-Oct-17	18 weeks	R2,406,688
6	OABS Development (Pty) Ltd	Ryan Newborn, Daan Louw, H. Oosthuizen, Michael Brink, Andrew McEwan, Muedanyi Ramantswana	Development of the forestry investment program for the Industrial Policy Support Fund (IPSF) of the dti, which is administered by the IDC	9-Jan-18	8 months	R800,325
7	PWC	Zulfah Murray, Barry Reynolds, Corne Conradie, Sebenzile Mathebula	Implementation of IFRS 9	6-Jun-17	3 years	R2,941,415
8	Riscura Solutions	Malcolm Fair, Monika Kraushaar	Diversification of IDC listed equity portfolio	10 Nov 2015	First phase completed during FY 2017 and now awaiting regulatory approval for implementation phase.	R1,500,000 Deliverable 1 at a cost of R439K has been paid. Deliverables 2 to 4 is dependent on approval to proceed with implementation of the diversification project.
9	Agricultural Research Council (ARC)	Dr Alayinka Aiyegoro Sydwell Langa Ziyanda Dlamini Lehlogonolo Moeng	Reduction of post-harvest losses in tomato fruits by enhancing the shelf-life through the use of fungul probiotics: increasing the economic power of smallholder farmers done for the EDD through the agro processing competitiveness research grant.	01 Jul 2015	2 years 9 months	R1,550,000
10	OABS Development (Pty) Ltd	Professor Andre Louw Dr. Danie Louw Urbanus Badenhorst Johannie Pienaar	A study on potential product development for the commercialization and value add to beef products done for the EDD through the agro processing competitiveness research grant.	01 Aug 2016	2 years	R1,676,223
11	Luhlaza Intergrated Sustainable Solutions	Ntombifuthi Monedi-Noko Mosimo Macatsha Zandile Fuyane Yannias Nuapia	A study on the agricultural development of alternative medicine in South Africa done for the EDD through the agro processing competitiveness research grant.	01 Aug 2016	2 years	R1,734,238
12	LHA Management Consultants (Pty) Ltd	Dr, Oliver Damm, Ralph Triebel, Dr. John Barnes, Prof. Dawie van Vuuren	Prefeasibility study for the development of metal powder production capability for the additive manufacturing (AM) industry	01 May 2018	4 months	R1,722,500
13	Golder and Associates	Etienne Roux	Provide expert advice on African Chrome groundwater monitoring	23-Jan-2014	3 year (continuing until final site closure)	R7,537 per month

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Reply:

1. (a) What number of (i) case backlogs does the Competition Commission have and (ii) days has each case been backlogged for, (b) what was the average time line, in days, from receiving a complaint to resolving a case in (i) 2015, (ii) 2016 and (iii) 2017 and (c) how does the commission monitor the (i) settlement agreements reached and (ii) progress on each agreement

The Competition Commission advises that it has a total of 64 cases on backlog in cartel matters, with the periods of backlog differing by case, with the complexity of cases largely driving the period of the backlog.

The following table provides information on the average time taken for different cartel investigations as well as enforcement/other abuse of dominance and restrictive practices, for the past three years:

Category	Average no. of days to complete all cases
	2015/16	2016/17	2017/18
Cartels	1044 days	684 days	1061 days
Enforcement Other- abuse of dominance, restrictive practices	396 days	329 days	254 days

All settlement agreements concluded between the Competition Commission (“the Commission”) and respondent firms are presented to the Competition Tribunal (“Tribunal”) for confirmation as consent orders of the Tribunal in terms of section 49D of the Competition Act 89 of 1998, as amended (“the Act”). Once so confirmed by the Tribunal, a consent order may in terms of section 64 of the Act, be served, executed and enforced as if it were an order of the High Court.

Where a settlement agreement contains an on-going commitment or undertaking by a respondent firm to pay penalties or to perform remedial action, performance is monitored by the legal and economic teams of the Commission.

(2) Have any cases been referred to the National Prosecuting Authority for prosecution; if so, what are the details of the cases?

The Commission has referred certain cases to the relevant criminal investigation agency for criminal investigation. The Commissioner advises that further details of the cases cannot be disclosed at this stage because they are subject to ongoing criminal investigation.

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Reply:

(a) The NEF has not yet been incorporated as a subsidiary of the IDC. Technical work has been completed and includes an assessment of the regulatory and governance requirements to ensure that all applicable regulatory framework, including the PFMA, are complied with. Following completion of a review of legislative implications, the modalities of incorporation will then be considered by Cabinet.

(b) The R500 million has not been drawn as yet, as certain conditions precedent flowing from the review and approval are still to be met, namely National Treasury approval and formalization of processes by Cabinet.

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Reply:

The Economic Development Department, ITAC, Competition Commission and Competition Tribunal do not own land and currently rents office space. Attached as Annexure ‘A’ is information on land which IDC owns. The properties are part of the IDC’s overall portfolio.

 

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Reply:

I am not aware of any work undertaken by the Industrial Development Corporation in partnership with the Public Investment Corporation to assess the economic cost of public sector corruption. The question may be referring to work undertaken for the PICC (Presidential Infrastructure Coordinating Commission) by the IDC, on the potential economic cost of corruption, details of which were provided to the Honourable Member last year in response to Parliamentary Question 2843 published on 15 September 2017, and which is reproduced below for ease of reference.

“The information on the cost of corruption was based on an economic modeling exercise that sought to quantify the cost of the reduction in real capital spending that results from corruption and the impact on decreased spending in the SA economy on goods and services. While the full extent and thus real costs of corruption is unknown precisely because by its nature it is concealed, a calculation was done based on a scenario where corruption results in a 10% increase in costs; this increase was then modeled into the data-sets to obtain GDP and employment effects.

The purpose of the modeling exercise was to show that corruption is not a ‘victimless’ crime and that the opportunity costs of improperly and unlawfully diverting resources for private gain, comes at a significant cost to economic growth, job creation and service delivery. There is a compelling case for immediate and decisive action against corruption, based on the costs it imposes on the economy, on jobs and on the poor. The results of this modeling exercise were referred to in my speech at the 11th Annual Competition Law, Economics and Policy Conference on 31 August 2017 as well as at other public gatherings and were also shared with the Committees of the Economic Cluster, in Parliament, on 10 October 2017.

During my address to the 11th Annual Competition Law, Economics and Policy Conference on 31 August 2017, I noted the following:

Neither corruption in the public sector (with its private sector counterparties) nor collusion between large firms are victimless crimes. Corruption takes resources away from housing, jobs, social grants, education and health facilities. Collusion increases the costs of doing business, it stunts the dynamism and competitiveness that is needed and it has a negative impact on growth and jobs.

A World Bank study on competition in South Africa noted the following:

“In the case of four cartels in maize, wheat, poultry and pharmaceuticals – products which make up 15.6% of the consumption basket of the poorest 10 percent – conservative estimates indicate that around 200 000 people stood to be lifted above the poverty line by tackling cartel overcharges”.

We recently began doing work to quantify the cost of corruption in the public sector, based on just a 10% increase in the price of infrastructure projects as a result of corruption...Based on our modelling, it leads to at least R27bn foregone annually in GDP and the loss of 76 000 jobs that would otherwise have been created. So corruption is not only an ethical issue, it is also a profound issue of delivery, of growth, of services to the poor.

There are some troubling matters to address in looking at corruption and the collusion therewith by professional firms, from auditors to lawyers and others.

The culture of rampant acquisition is spreading so widely that the professional standards of integrity that is a hallmark of functioning institutions, are under enormous pressure. One of its outcomes is a fraying of the social compact that all societies need and unless we act with resolution, we will not build a society that achieves the vision of the constitution, indeed, we will betray it.

There are things we can do, practical things, while the wider battle to ensure integrity in the public and private sectors, is pursued.

One of the provisions in the Construction industry Settlement Agreement that I referred to earlier, is an Integrity Commitment that CEOs of the seven largest companies signed publicly and I want to briefly quote from it:

“ In my capacity as CEO of [name of company], I do hereby declare and affirm that:

1. I will conduct business, and will do everything in my power to ensure that the company and all of its associated companies (‘the Group’) conducts business in South Africa, in accordance with sound legal and ethical practice;
2. I will not be involved, and will do everything in my power to ensure that no one in the Group is involved, in any kind of bribery, corruption, collusion or unfair means of furthering our business interests;
3. I will do everything in my power to instil a culture of integrity, honesty and transparency in the Group consistent with this declaration
4. I will develop and actively promote codes of conduct imposing ethical and legal standards on all personnel in the Group that are aligned with international best practice for the construction industry and impose appropriate penalties on those who don’t comply; and
5. I will use my best efforts, and take firm steps, in line with and pursuant to my executive management authority, to expose, confront, eradicate and prevent collusion and corruption in the construction industry and in all the construction industry’s dealings with public entities, private sector institutions and with each other.”

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