Questions and Replies

Reply:

The following response was submitted by South African Airways (SAA).

a) SAA did not procure any services from and / or make payments to Mr Mzwanele Manyi. There was no requirement for SAA to procure any services from the identified individual.

b) SAA did not procure any services from and / or make payments to the Progressive Professionals Forum. There was no requirement for SAA to procure any services from the identified organisation.

c) SAA did not procure any services from and / or make payments to the Decolonisation Fund. There was no requirement for SAA to procure any services from the identified organisation.

d) SAA did not procure any services from and / or make payments to the Black Business Council. There was no requirement for SAA to procure any services from the identified organisation.

(i) – (vi) Not applicable.

Reply:

It is not the duty of the National Treasury to collect any taxes, including fringe benefit tax. In terms of the Income Tax Act 58 of 1962 and the Tax Administration Act 28 of 2011, the South African Revenue Service (SARS) Commissioner is responsible for collecting taxes, including fringe benefit tax.

In terms of section 69 of the Tax Administration Act 28 of 2011, SARS is prohibited from disclosing taxpayer information.

Reply:

(1) Many different public entities are responsible for implementation of the Financial Intelligence Centre Act, 38 of 2001 (“FIC Act”), each within their area of jurisdiction. These include the relevant Supervisory Bodies, the law enforcement and security agencies, as well as the South African Revenue Service. The impact of these entities in relation to the FIC Act are reported upon in their respective annual reports and other documents. The Financial Intelligence Centre (“FIC”) can provide an indication of the measurable impact concerning the prevention of money laundering in the period April 2011 to end of March 2016, during which period the FIC:

i) initiated and disseminated 3,908 financial intelligence products to law enforcement and other partner authorities for investigation, with an estimated value of R96.97 billion;

ii) responded to 7,753 requests for information concerning domestic and international criminal investigations in 50 different crime categories;

iii) produced 107 affidavits to support various types of judicial action by the state; and

iv) blocked R794 million worth of suspected proceeds of crime, enabling the return of the funds to rightful owners.

It should be noted that fraud, as a crime category, is an instance of a predicate offence which may generate proceeds of crime and could lead to money laundering, but is not itself expressly included in the objectives of the Act.

The ability to conduct studies to measure the impact of measures introduced of the FIC Act is circumscribed by the extensive nature of the issues and the interlocking elements which, together, make up the anti-money laundering and combatting of terrorism (“AML/ CFT”) framework.

Various attempts have been made by countries and international bodies to determine the extent of money laundering in money terms, as well as the impact of the global standards introduced to prevent money laundering. None of the models used has provided a satisfactory answer.

(2)(a)(b)

Neither the FIC nor the National Treasury have conducted studies on the impact of the FIC Act, nor do the FIC or National Treasury plan to do so. It is not known to the FIC or the National Treasury whether bodies in civil society or the private sector have conducted such a study or plan to do so.

Various bodies have at times referred to amounts relating to the cost of compliance with provisions of the FIC Act. However, the bases for determining these amounts, whether they relate directly and exclusively to compliance with the requirements of the FIC Act (as opposed to broader fraud protection, tax regulation and other regulatory requirements) and whether they reflect costs of specific bodies or the costs across sectors of financial and other institutions, have not been shared with the FIC or the National Treasury. This makes these figures unreliable as an indicator of the cost of implementation of the FIC Act.

(2)(b)

South Africa is fully committed to safeguarding its financial system from being exploited for the purpose of facilitating illicit financial activities such as money laundering and terrorist financing.

It should be borne in mind that the FIC Act is one of a number of pieces of legislation that are aimed at facilitating the protection of the integrity of the financial system, on the one hand, and also the administration of the criminal justice system, on the other. It is a wide-ranging framework with different inter-locking components which cannot be seen in isolation from one another. (Other parts of the legislative framework include the Prevention of Organised Crime Act (POCA), the Protection of Constitutional Democracy Against Terrorism and Related Acts (POCDATARA) the Prevention and Combating of Corrupt Activities Act (PRECCA) and all of the legislation relating to supervision and oversight of the various industry sectors which fall within the anti-money laundering framework, including banks, financial services, casinos and gambling, property and estate agents, lawyers and accountants).

Compliance with the requirements of the FIC Act promotes both objectives mentioned above and thus contributes to making it more difficult for criminals to hide their illicit proceeds in the formal financial sector and to cut off the resources available to terrorism.

The whole framework of measures against money laundering and terrorist financing described above (including the FIC Act) is South Africa’s implementation of global standards. Without these measures the South African financial system will be exposed to exploitation for criminal purposes and South African private sector institutions will not be able to compete effectively in the global financial system. These objectives form the basis for the continued application of the provisions of the FIC Act.

Reply:

1. The Municipal Finance Recovery Service (MFRS) was established in 2007 as a Directorate in the National Treasury within the Office of the Accountant-General in the Chief Directorate: Municipal Financial Management Act (MFMA) Implementation as required in terms of Chapter 13 of the MFMA. The MFRS has a staff complement of 2 officials which consist of a Director and Deputy-Director, whose functions are assisted by other officials and specialist’s experts, when required.

2. The responsibility to intervene in terms of section 139(1) of MFMA lies with the Provincial Executive. During the period 2013/14 to 2015/16 the provincial executive has not invoked section 139(1) of MFMA relating to mandatory intervention as regulated in the MFMA.

However, during ongoing engagements on the implementation of chapter 13, matters relating to the effectiveness of provincial intervention were raised with Provincial Treasuries (PTs), National and Provincial Departments of Cooperative Governance (DCoG), and South African Local Government Association (SALGA). The MFRS requested provinces to approach the MFRS unit for assistance, when required.

 

The following municipalities were assisted in the preparation of financial recovery plans:

• 2013/14 - Mbombela local municipality and Bushbuckridge local municipality
• 2014/15 - Makana local municipality and Baphalaborwa local municipality
• 2015/16 - Tswaing local municipality, NgakaModiri Molema District municipality and Thabazimbi local municipality

The plans are holistic in nature covering, amongst others, institutional, organisational, human resources, service delivery, and financial management including restructuring of budgets, tariffs, administration, capacity and oversight by councils on its implementation. They highlight implementation aspects covering short, medium and long term challenges. Provinces are required to monitor progress and report accordingly to provincial legislatures.

3. The municipalities who were assisted with the preparation of financial recovery plans have with the assistance of the Provincial Treasuries commenced engagements with creditors to conclude realistic payment arrangements.

4. The MFMA provides the enabling legal framework for addressing financial misconduct within municipalities. The MFMA clearly defines when the accounting officer and other officials commit acts of financial misconduct. Therefore, the MFMA sets out the “triggers” for determining whether or not an accounting officer or any of the other municipal officials have committed financial misconduct.

It is important to note that the MFMA merely sets the basis for any action to be taken against municipal officials for acts of financial misconduct. The responsibility for acting against the officials, given the employer / employee relationship, vests with the respective municipal councils. The Minister of Finance has promulgated the Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings in May 2014 to assist municipal councils with executing the latter’s responsibilities. Information regarding whether or not the municipal councils of these defaulting municipalities have acted against their accounting officers or other officials is best obtained from the individual municipalities. The reforms also include disclosure in Annual Reports of actions taken. These reforms are been implemented by municipalities and are subject to the compliance audit undertaken by the Auditor-General.

Reply:

(a)(i), (a)(ii)

The Financial Intelligence Centre (FIC) is responsible for the bulk of the activities related to the administration of the Financial Intelligence Centre Act, 2001 (FIC Act), with the support of a range of other entities such as the relevant Supervisory Bodies and the law enforcement and security agencies, as well as the South African Revenue Service. Comprehensive cost analyses of the functioning of the FIC are done annually in terms of budgeting processes. The total cost of the functioning of the FIC from the entity’s inception to the end of the 2015/2016 financial year is R1 644 786 000.00, which constitutes the major portion of the costs of the administration of the FIC Act.

Additional activities which are relevant to the administration of the FIC Act relate to the functions of supervisory bodies in overseeing compliance with the Act. A variety of entities participate with the FIC in this aspect of the administration of the FIC Act. In the majority of cases the amount of resources these entities expend on the relevant activities associated with the administration of the FIC Act are integrated into the costs of them performing their core functions as supervisory bodies. The figures relating to these amounts are not readily available to the FIC or the National Treasury which makes such an analysis impossible. A complete cost analysis of these aspects of the administration of the FIC Act, in addition to the cost of the functioning of the FIC, has therefore not been done.

(b)(i), (b)(ii)

The private sector is not involved in functions to administer the provisions of the FIC Act. However, certain sectors of financial and other institutions are required to comply with obligations pursuant to the provisions of the FIC Act. It is not known to the FIC or the National Treasury whether the private sector (or any part thereof) has investigated the cost to the sector (or part thereof) of compliance with these requirements, nor is it known whether the private sector (or any part thereof) plans to conduct such an investigation.

Various bodies have at times referred to amounts relating to the cost of compliance with the FIC Act. However, the bases for determining these amounts, whether they relate directly and exclusively to compliance with the requirements of the FIC Act (as opposed to broader fraud protection, tax regulation and other regulatory requirements) and whether they reflect costs of specific bodies or the costs across sectors of financial and other institutions, have not been shared with the FIC or the National Treasury. This makes these figures unreliable as an indicator of the cost of implementation of the FIC Act.

 

Reply:

Please refer to the answer in PQ 2745 submitted on 15 December 2016, herewith attached.

Reply:

The following information is submitted by the South African Revenue Service and cannot be verified by the National Treasury:

1. (a)(i) The total value of Diesel refunds claimed for the period 1 March 2015 to 29 February 2016 was R6, 704, 966, 735 of which R806, 047, 046 were not refunded by 29 February 2016. It should be noted that the rand value represent the amount as supplied by the vendor on the return.

(ii) The total number of Diesel refunds claimed for the period 1 March 2015 to 29 February 2016 was 50, 931 of which 7, 191 claims were not refunded by 29 February 2016. It should be noted that only the returns required during the period in question were included. The information therefore excludes all late returns and / or carry over from previous years.

(iii) Diesel audits are conducted manually and information is only available for ongoing or completed audits. Information for audit cases, ongoing at a specific historic point in time is not available.

(iv)(aa)(bb) The age analysis on value and numbers are as follows:

AGE - Refund claimed, not refunded by 29 February 2016	Volume	Value (R)	% Volume	% Value
0 to 1 Month	2 546	-R 412 278 143.78	35%	51%
2 to 3 Months	1 631	-R 161 455 695.28	23%	20%
4 to 6 Months	1 478	-R 139 218 514.26	21%	17%
7 to 9 Months	1 347	-R 83 750 122.50	19%	10%
10 to 12 Months	189	-R 9 344 571.16	3%	1%
	7 191	-R 806 047 046.98	100%	100%

(b)(i) The total value of Diesel refunds claimed for the period 1 March 2016 to 28 February 2017 was R2, 557, 865, 443 of which R657, 079, 282 were not refunded by 28 February 2017. It should be noted that the rand value represent the amount as supplied by the vendor on the return.

(ii) The total number of Diesel refunds claimed for the period 1 March 2016 to 28 February 2017 was 55, 547 of which 6, 064 claims were not

refunded by 28 February 2017. It should be noted that only returns required during the period in question were included. The information therefore excludes all late returns and / or carry over from previous years.

(iii) The total value of Diesel refunds still being audited as at 28 February 2017 was R237, 115, 712.

(iv)(aa)(bb) The age analysis on value and numbers are as follows:

 

AGE - Refund claimed, not refunded by 28 February2017	Volume	Value (R)	% Volume	% Value
0 to 1 Month	2 607	-R 313 996 337.02	43%	48%
2 to 3 Months	1 262	-R 122 845 855.28	21%	19%
4 to 6 Months	1 015	-R 133 252 934.28	17%	20%
7 to 9 Months	1 088	-R 79 436 521.18	18%	12%
10 to 12 Months	92	-R 7 547 635.00	2%	1%
	6 064	-R 657 079 282.76	100%	100%

2. While I am unable to verify the above data, I have, as you are aware, approved the request by the Tax Ombud, Judge Ngoepe, to undertake a systemic investigation into VAT refunds and related matters given the unusual number of complaints received by the Ombud’s office.

Reply:

The following information is submitted by the South African Revenue Service and cannot be verified by the National Treasury:

1. (a)(i) The total value of VAT refunds claimed for the period 1 March 2015 to 29 February 2016 was R128, 199, 029, 418 of which R18, 132, 500, 365 was not refunded by 29 February 2016. It should be noted that the rand value represent the amount as supplied by the vendor on the return.

(ii) The total number of VAT refunds claimed for the period 1 March 2015 to 29 February 2016 was 341, 167 of which 34, 132 claims were not refunded by 29 February 2016. It should be noted that only returns required during the period in question were included. The information

therefore excludes all late returns and / or carry over from previous years.

(iii) The total value of VAT refunds still being audited as at 29 February 2016 was R12, 211, 133, 733.

(iv)(aa)(bb) The age analysis on value and numbers are as follows:

AGE - Refund claimed, not refunded by 29 February2016	Volume	Value (R)	% Num	%Value
0 to 1 Month	18 199	-R 13 246 824 575.38	53%	73%
2 to 3 Months	6 797	-R 3 049 763 560.52	20%	17%
4 to 6 Months	4 617	-R 1 234 288 282.26	14%	7%
7 to 9 Months	2 980	-R 387 210 521.74	9%	2%
10 to 12 Months	1 539	-R 214 413 425.68	5%	1%
	34 132	-R 18 132 500 365.58

 

(b)(i) The total value of VAT refunds claimed for the period 1 March 2016 to 28 February 2017 was R129, 276, 961, 011 of which R19, 614, 184, 427 was not refunded by 28 February 2017. It should be noted that the rand value represent the amount as supplied by the vendor on the return.

(ii) The total number of VAT refunds claimed for the period 1 March 2016 to 28 February 2017 was 343, 674 of which 43, 650 claims were not refunded by 28 February 2017. It should be noted that only returns required during the period in question were included. The information therefore excludes all late returns and / or carry over from previous years.

(iii) The total value of VAT refunds still being audited as at 28 February 2017 was R17, 345, 095, 383.

(iv)(aa)(bb) The age analysis on value and numbers are as follows:

AGE - Refund claimed, not refunded by 28 February 2017	Volume	Value (R)	% Num	%Value
0 to 1 Month	25 484	-R 15 618 903 496.32	58%	80%
2 to 3 Months	8 159	-R 2 306 849 282.77	19%	12%
4 to 6 Months	5 407	-R 1 167 860 197.89	12%	6%
7 to 9 Months	3 113	-R 372 262 868.44	7%	2%
10 to 12 Months	1 487	-R 148 308 582.46	3%	1%
	43 650	-R 19 614 184 427.88

 

2. While I am unable to verify the above data, I have, as you are aware, approved the request by the Tax Ombud, Judge Ngoepe, to undertake a systemic investigation into VAT refunds and related matters given the unusual number of complaints received by the Ombud’s office.

Reply:

The Office of the Chief Procurement Officer (OCPO) has not reviewed any of these contracts. A letter dated 01 March 2017 was issued to Buffalo City Metropolitan Municipality requesting for documents in order to review the bidding process.

Reply:

No funds have been specifically allocated for nuclear power procurement in the 2017 Budget.

Reply:

In addition to routine meetings (Early Child Development, conditional grant frameworks, guideline for NPO payments, Budget 2017), the National Treasury has met with SASSA and Department of Social Development (DSD) multiple times on the issue of social grant payments upon expiry of the current contract. Two meetings were held between senior management of SASSA, DSD, National Treasury and South African Reserve Bank. Numerous meetings were held of the technical task team established to consider options for payment of social grants, consider pros and cons of different options and provide expert advice on procurement, public finance, financial sector policy and banking to SASSA.

I have also had brief discussions with the Minister of Social Development, telephonically or in person, to discuss the payment of grants.

Reply:

A.  There are 775 Organs of State (OoS) registered on the CSD as at 2017-02-24.

CSD Utilisation by Organs of State
	OoS using CSD (aa)	OoS not using CSD (bb)
i. National	40	1
ii. Provincial	115	8
iii. State-owned entities	236	73
iv. Municipalities	239	14
v. Municipal entities	16	4
vi. Other	24	5
Total	670	105

B.  Annexure A is hereby attached with the name of Organs of State in each case.

Reply:

(i) Minister of Finance	(a) Make	(b) Model	(c) Price	(d) Date
(aa)
(aaa) 2014/15	None	None	None	None
(bbb) 2015/16	None	None	None	None
(bb) April 2016 - current	None	None	None	None
(ii) Deputy Minister of Finance
(aa)
(aaa) 2014/15	Mercedes Benz	E200	R661 387.01	27-01-2015
(aaa) 2014/15	Mercedes Benz	E200	R661 387.01	27-01-2015
(bbb) 2015/16	None	None	None	None
(bb) April 2016 - current	None	None	None	None

Reply:

In addition to routine meetings (Early Child Development, conditional grant frameworks, guideline for NPO payments, Budget 2017), the National Treasury has met with SASSA and Department of Social Development (DSD) multiple times on the issue of social grant payments upon expiry of the current contract. Two meetings were held between senior management of SASSA, DSD, National Treasury and South African Reserve Bank. Numerous meetings were held of the technical task team established to consider options for payment of social grants, consider pros and cons of different options and provide expert advice on procurement, public finance, financial sector policy and banking to SASSA.

I have also had brief discussions with the Minister of Social Development, telephonically or in person, to discuss the payment of grants.

Reply:

 

The following information was submitted by the South African Revenue Service (SARS):

The process of return submission covers the aspect of submitting a return and as such declaring the liability of the taxpayer for a specific period/ year. The submission and declaration does not however automatically entitle the taxpayer to a refund. The return is therefore lodged and not the refund. The assessment result might be an amount due to SARS and not to the taxpayer.  

It is important to note that submissions by taxpayers, where the amount reflects as being due to the taxpayer, do not result in automatic refunds but rather may be credit assessments which may undergo risk evaluation by SARS, prior to being determined to result in a refund.

In general the refund process is subject to certain compliance interventions and follows a standardised process in line with legislation.

These steps include but are not limited to:

• A declaration by a taxpayer is subjected to an automated risk mitigation system

• A declaration is reviewed where risks are identified or refunds are released where no risk is identified.
• Where risk is identified, a generic request for information from clients in support of their declaration is sent to the taxpayer. These requests are made in writing to the taxpayer’s E-filing account or registered address.
• Evaluation by SARS of the data in support of the declaration is conducted, and requests for further specific supporting documentation is sent to the taxpayer where deemed necessary by the auditor. This second request is made telephonically and followed up by a written request sent to the E-filing account or other registered details
• If required an adjustment is made to the assessment

    

As indicated above, all reviews are conducted based on the risk identified by the system and all procedures and legislation is adhered to at all times in dealing with identified cases. The TAA, chapter 5, Sec 40, differentiates between an Audit and Verification. Once again, the compliance interventions determine whether a case will be Verified or Audited. Sec 42 of the TAA requires that a taxpayer be kept informed of progress with an Audit. The same obligations do not exist in the case of Verification.

(a)(i)(ii)(aa)(bb)(aaa)(bbb)(b)      

Based on data that is readily available the following statistics can be provided.

It should be noted that the statistics includes all refunds as a result of current or prior tax year’s returns received. These may also include multiple returns where multiple years were outstanding.

Personal Income Tax (PIT): Refunds processed during these two performance periods that includes refunds paid out for both current and previous tax years

FY 2015/2016	Cumulative Number of Refunds	Cumulative % of Volume	Cumulative Refund Value (R)	Cumulative % of Value
Within 1 day	2 078 529	93.55%	17 636 156 292	89.51%
Within 2 day	2 080 018	93.62%	17 648 106 895	89.57%
Within 3 day	2 081 400	93.68%	17 660 046 629	89.64%
Within 4 day	2 082 565	93.73%	17 671 685 820	89.69%
Within 5 day	2 083 563	93.78%	17 682 211 625	89.75%
Within 10 day	2 093 691	94.23%	17 791 309 571	90.30%
Within 21 day	2 098 039	94.43%	17 834 333 227	90.52%
Within 30 day	2 105 910	94.78%	17 917 459 188	90.94%
Within 60 day	2 131 416	95.93%	18 226 010 663	92.51%
Within 90 day	2 158 953	97.17%	18 588 300 391	94.35%
More than 90 days	2 221 795	100.00%	19 702 139 151	100.00%
Grand Total	2 221 795	100%	19 702 139 151	100%
FY 2014/2015	Cumulative Number of Refunds	Cumulative % of Volume	Cumulative Refund Value (R)	Cumulative % of Value
Within 1 day	2 228 408	92.62%	17 475 039 484	89.19%
Within 2 day	2 231 094	92.73%	17 497 695 274	89.30%
Within 3 day	2 233 430	92.83%	17 517 603 195	89.40%
Within 4 day	2 235 407	92.91%	17 534 051 997	89.49%
Within 5 day	2 237 478	93.00%	17 551 802 975	89.58%
Within 10 day	2 245 757	93.34%	17 629 562 736	89.97%
Within 21 day	2 259 968	93.93%	17 771 765 155	90.70%
Within 30 day	2 269 100	94.31%	17 865 671 786	91.18%
Within 60 day	2 317 618	96.33%	18 342 690 800	93.61%
Within 90 day	2 348 282	97.61%	18 661 029 254	95.24%
More than 90 days	2 405 902	100.00%	19 594 118 415	100.00%
Grand Total	2 405 902	100%	19 594 118 415	100%

Corporate Income Tax (CIT): Refunds processed during these two performance periods that includes refunds paid out for both current and previous tax years

FY 2015/2016	Cumulative Number of Refunds	Cumulative % of Volume	Cumulative Refund Value (R)	Cumulative % of Value
Within 1 day	29 011	73.14%	1 926 857 827	56.18%
Within 2 day	29 084	73.32%	1 941 310 905	56.60%
Within 3 day	29 134	73.45%	1 944 784 101	56.70%
Within 4 day	29 189	73.59%	1 948 683 819	56.82%
Within 5 day	29 239	73.71%	1 952 820 096	56.94%
Within 10 day	29 437	74.21%	1 975 891 033	57.61%
Within 21 day	29 880	75.33%	2 120 522 535	61.83%
Within 30 day	30 190	76.11%	2 168 459 999	63.23%
Within 60 day	31 362	79.07%	2 368 672 630	69.06%
Within 90 day	32 708	82.46%	2 526 549 638	73.67%
More than 90 days	39 666	100.00%	3 429 659 974	100.00%
Grand Total	39 666	100%	3 429 659 974	100%
FY 2014/2015	Cumulative Number of Refunds	Cumulative % of Volume	Cumulative Refund Value (R)	Cumulative % of Value
Within 1 day	31 258	74.11%	1 740 028 825	51.67%
Within 2 day	31 327	74.28%	1 744 623 695	51.81%
Within 3 day	31 382	74.41%	1 753 376 243	52.07%
Within 4 day	31 432	74.53%	1 758 537 723	52.22%
Within 5 day	31 482	74.65%	1 762 717 215	52.35%
Within 10 day	31 684	75.13%	1 780 635 814	52.88%
Within 21 day	32 041	75.97%	1 843 791 302	54.75%
Within 30 day	32 370	76.75%	1 894 872 625	56.27%
Within 60 day	33 393	79.18%	2 054 283 521	61.01%
Within 90 day	34 614	82.07%	2 225 138 970	66.08%
More than 90 days	42 175	100.00%	3 367 388 343	100.00%
Grand Total	42 175	100%	3 367 388 343	100%

Value Added Tax (VAT): Refunds processed during these two performance periods that includes refunds paid out for both current and previous tax years

FY 2015/2016	Cumulative Number of Refunds	Cumulative % of Volume	Cumulative Refund Value (R)	Cumulative % of Value
Paid within 2 days	240 268	67.71%	20 543 123 568	16.14%
Paid within 21 days	282 753	79.69%	77 882 420 639	61.19%
Paid within 30 days	304 595	85.84%	95 477 947 992	75.02%
Paid within 60 days	337 605	95.15%	116 017 076 739	91.15%
Paid in more than 60 days	354 828	100.00%	127 276 361 477	100.00%
Grand Total	354 828	100%	127 276 361 477	100%
FY 2014/2015	Cumulative Number of Refunds	Cumulative % of Volume	Cumulative Refund Value (R)	Cumulative % of Value
Paid within 2 days	249 313	67.51%	24 522 511 615	19.61%
Paid within 21 days	322 604	87.35%	96 674 033 289	77.31%
Paid within 30 days	338 011	91.52%	107 434 615 456	85.91%
Paid within 60 days	357 374	96.77%	118 940 253 003	95.11%
Paid in more than 60 days	369 315	100.00%	125 052 605 017	100.00%
Grand Total	369 315	100%	125 052 605 017	100%

Reply:

The South African Reserve Bank (SARB) is the regulatory authority responsible for the administration of the Exchange Control Regulations (“the Regulations”), as promulgated in terms of section 9 of the Currency and Exchanges Act (Act No 9 of 1933). The SARB has provided the following response to my department in response to this question, based on the publication of Notice and Order of Forfeiture in Government Gazette number 40526 of 2016-12-30 (as attached) in terms of Exchange Control Regulation 22B.

1. (a) and (b) The Financial Surveillance Department of SARB (FinSurv) issued an order on 29 May 2015, in terms of the provisions of Exchange Control Regulations 22A and 22C, prohibiting the withdrawal of all funds standing to the credit of an entity styled Homix (Pty) Limited (“Homix”) in an account held with Mercantile Bank Limited. At the relevant time, Homix had made an application to Mercantile Bank for the transfer of foreign currency to Morningstar International Trade Limited in Hong Kong, ostensibly for the purposes of paying for previously imported goods. The balance in the account amounted to R14 472 075 at the time in question. The relevant order was issued on suspicion that Homix had contravened the Exchange Control Regulations in that it had presented false documentation to Mercantile Bank in support of, inter alia, these pending foreign exchange transactions.

2. An investigation was conducted by FinSurv and finalised during December 2016, the findings of which included that Homix had unlawfully transferred foreign currency from the republic on numerous occasions. Pursuant to the findings of this investigation, the matter was reported to the South African Police Service (Wierdabrug CAS 548/12/2016) for further steps deemed necessary from a criminal prosecution point of view. The above-mentioned amount of R14 472 075,00, together with all interest earned thereon, was, furthermore, declared forfeit to the State in terms of Exchange Control Regulation 22B and the relevant Notice and Order of Forfeiture published in Government Gazette number 40526 of 2016-12-30.

 

Reply:

This information is provided by SARS:

A) We confirm that the certain company (details furnished) did not report this specific incident to Customs.

B) This question must be directed to the State Security Agency.

Reply:

South African Airways has provided the following response;

(a) - (c) please refer to attached Annexure

Reply:

(a) (b) and/or (c) (i) and/or (ii) (aa) and (bb)

It is not possible for me to disclose this information, as the FIC is not able by law to provide such information to the Minister of Finance. Provisions in the FIC Act place strict limitations on the public disclosure of details concerning information reported to the FIC and its activities concerning such information, which prevents it from acknowledging whether it has, or has not, provided information to an investigating agency or any other competent authority (section 29(4), read with section 53 and sections 40 and 41, read with section 60).

While the FIC’s mandate requires that it work in collaboration with competent authorities and agencies in any given investigation, the public disclosure of information relating to matters that may be the subject of an investigation could potentially have negative impact or undermine any such an investigation. It would therefore be irresponsible for the FIC to comment in public on operational matters in which it may be involved.

The information contained in the certificate dated 4 August 2016 as submitted by me on 14 October 2016 to the High Court (Gauteng Division, Pretoria), numbered 1 to 72, refers to reports submitted to the Financial Intelligence Centre (FIC) by various institutions pursuant to their legal obligations under section 29 of the Financial Intelligence Centre Act, 2001 (Act No. 38 of 2001, the FIC Act).

The FIC uses reports such as these, along with other available information to conduct its analysis and produce financial intelligence reports. It is important to note that one (1) STR reported to it does not equate to the FIC reporting one (1) suspicion for investigation. Rather, the FIC may evaluate patterns found across multiple reports made to it before it makes a referral to the law enforcement and other competent authorities for their investigation.

Reply:

1. and (2):

The Minister of Finance has not been informed by Mr Moyane regarding any forensic investigation that has been launched in terms of the South African Revenue Services Modernisation and Technology Programme despite the media coverage on the matter.

I have requested my office to submit this question to SARS to establish the facts. Once the information is obtained, I will respond to this question in more detail.

Reply:

In a previous parliamentary question 2139 [NW2456E], I indicated that there is a lack of accountability and cooperation from the South African Revenue Services top management. I therefore cannot place great reliance on the information that I have received from SARS, particularly in terms of this matter; however, I am able to provide the following in response:

(1) (a) (i) Mr Moyane responded on the 27 October 2016 after a written request from me. Apart from this, SARS has not communicated with me further on the Makwakwa matter beyond what was reported in questions 1894 and 1975, both dated 12 October 2016.

As previously stated, Mr Moyane did not inform me about this matter prior to it appearing in the Sunday Times on 11 September 2016. A meeting was convened at my request on the 12 September 2016 regarding the Makwakwa matter, and thereafter correspondence was exchanged on the 14th and 16th of September 2016, to confirm and follow-up on the meeting. To date, apart from the letter dated 27 October 2016 from Mr Moyane, where he provided his Terms of Reference for the law firm Hogan Lovells (South Africa) Inc, to investigate and conduct disciplinary proceedings related to Mr Makwakwa and Ms Elskie, Mr Moyane has not provided any substantive report on this matter. However, Mr Moyane indicated in his letter that the law firm would conclude the first part of the investigation by 20 December 2016. By 22 December, I have not yet received any such report.

The Terms of Reference do not include the role of Mr Moyane in the Makwakwa matter. Mr Moyane stated in his letter dated 27 October 2016 that he does not accept responsibility for failing to timeously report the Makwakwa matter to the Minister of Finance (as the executive authority of SARS) prior to the 12 September 2016 meeting, as he expected the Financial Intelligence Centre (FIC) to do so. According to Mr Moyane “…the FIC is under a clear legislative mandate to report to…” the Minister of Finance “….. an investigation into Makwakwa”s affairs, taking into consideration the public importance of the matter and Makwakwa’s position within the SARS”. Mr Moyane holds to this view, despite the fact that section 40 of the FIC Act prohibits the FIC from reporting such transactions or referrals, to the Minister of Finance or to any other person other than those permitted to receive such reports.

I will not say more on Mr Moyane’s failure to act in terms of the FIC Act and other anti-corruption legislation at this stage. This matter is also subject to legal action as reported in the media (e.g. charges by Corruption Watch).

  (i) I will not comment on any further communication between SARS and FIC but want to point out the following. I wrote to Mr Moyane on 23 September expressing my serious concern on a media statement issued by SARS stating that there was a lack of co-operation by the FIC on the Makwakwa matter (refer to SARS media release titled “SARS APPOINTS SENIOR EXECUTIVES TO ACT IN MAKWAKWA’S POSITION” dated 16 September 2016). I pointed out that as the executive authority for both the FIC and SARS, I would have expected that before launching a public attack on the FIC, that he would have first requested my intervention if indeed there were any problems of non-cooperation between SARS and FIC. I requested his explanation for the statement, including what impact such statement will have for their future working relationship, and the steps he intends to take to address such breakdown. On the 27th October 2016, more than a month later, Mr Moyane responded, denying “that there is a breakdown of the relationship between the SARS and the FIC” and states that he does not need any intervention from my office, and that his media statement is not a public attack on the FIC and “….does not constitute a drastic step”.

  (ii) Mr Moyane has indicated to my office that SARS had a meeting with representatives from the Directorate for Priority Crimes Investigations (DPCI) on 27 September 2016. This meeting was convened subsequent to an email that had been sent to SARS by DPCI on 15 September 2016 regarding the DPCI investigation into the Makwakwa and Elskie matter. On 30 September 2016, SARS received a written confirmation from DPCI of the meeting that had taken place on 27 September 2016.

I have not had had any explanation from Mr Moyane why he did not contact the DPCI or any other law enforcement agency immediately after Mr Moyane first became aware of the Makwakwa matter after receiving the FIC letter 17 May 2016. Instead, Mr Moyane did not do so for four months and only did so after he was contacted by the DPCI on 12 or 15 September after the media exposure. (I refer the Honourable Member to the SARS response on this matter in PQ 1976 [NW2287E])

2. It is my view that the key issue currently is not any problem related to a lack of co-operation between SARS and the FIC but how best to protect the reputation and integrity of SARS as a critical fiscal institution. The focus must remain on the investigation against Mr Makwakwa, by both SARS and the law enforcement authorities. The issue of co-operation between SARS and FIC is important but must be understood in terms of the role and function of the FIC in terms of the law. As Mr Moyane himself confirms in his letter dated 27th October 2016, there is no breakdown in relationship between SARS and the FIC. This is also the view of the Director of the FIC.

To protect the reputation and integrity of SARS, we need to know why Mr Moyane took more than four months to act effectively after he was first alerted to the Makwakwa matter by the FIC through a letter dated 17 May 2016 and to only act after this matter was exposed in the media. Further, why Mr Moyane takes no responsibility for failing to report timeously to his responsible Minister. Mr Moyane also needs to explain why he continued to allow Mr Makwakwa to remain in his position as part of his top management team, dealing with individual and corporate taxpayers and allowing him to represent SARS at hearings of the Standing Committee of Finance on 23 August 2016 and the Davis Tax Committee on 8 September 2016. These and other matters like that involving Mr Vlok Symington raise serious concerns about the stewardship of a vital fiscal institution. Further consideration will be given to substantially increase the accountability of the top SARS management for their actions and decisions.

Reply:

The following information was submitted by the Public Investment Corporation:

1. There were no investments made outside the mandate. However, there have been some technical breaches as is normal in the ordinary course of asset management business. These technical breaches are as a result of various factors such as changes during portfolio transitioning periods, market movements and currency fluctuations. These technical breaches are recognised by the mandate signed with the Government Employees Pension Fund (GEPF).

2. All technical breaches are reported to the GEPF in accordance with the mandate.

Reply:

This is a highly contentious matter. It has been further complicated by leaking of documents, a concerted campaign of vilification and even the initiation of criminal charges. The trail of injustice that has characterized this process thus far is evident to all. Under the circumstances the Honourable Member will appreciate that I will, based on legal advice, not venture into past or present details except to say that the South African Revenue Service, as a revenue collection agency, plays an important part in enabling the government to deliver services to its people and as such needs to focus on its core mandate.

It should be noted that some of the detail requested has been provided in a response to a previous parliamentary question.

Reply:

This is a highly contentious matter. It has been further complicated by leaking of documents, a concerted campaign of vilification and even the initiation of criminal charges. The trail of injustice that has characterized this process thus far is evident to all. Under the circumstances the Honourable Member will appreciate that I will, based on legal advice, not venture into past or present details except to say that the South African Revenue Service, as a revenue collection agency, plays an important part in enabling the government to deliver services to its people and as such needs to focus on its core mandate.

It should be noted that some of the detail requested has been provided in a response to a previous parliamentary question.

Reply:

The Government Employee Pension Fund (GEPF) has submitted the following:

Yes, in terms of the rules of the Fund, a person who has contributed for more than 10 years qualifies to receive a gratuity (lump sum) and an annuity (monthly pension). The certain person (name furnished) contributed for a period of 42 years.

(a) Not applicable.

(b) Not applicable.

(i) Yes, the pension claim was successfully processed on 28 April 2016.

(ii) Yes.

(iii) The lump sum was paid on 13 May 2016 and the monthly pension (from date of retirement) was paid on 06 May 2016.

(iv) The certain person (name furnished) is divorced and the fund received claim documents from his ex-spouse for her portion of the divorce interest. This had to be finalised first before his pension was paid and the legal department had a backlog which caused a delay in finalising the divorce claim.

(v) There are no outstanding funds. All his pension benefits were paid.

The GEPF would also like to indicate that due to the fact that some of the requested information is personal, it cannot be made available to third party without the written consent of the person involved.

Members of the GEPF could utilise the call centre or walk in centre facilities provided by the GEPF to its members to deal with this type of enquiry.

Reply:

The Registrar of Banks at the South African Reserve Bank (SARB), in terms of the Banks Act, 1990 (Act No. 94 of 1990), is the principal regulatory authority responsible for prudential supervision of banks i.e. protecting depositor funds. Currently there are sixteen registered banks in South Africa. The list is available at:

http://www.resbank.co.za/RegulationAndSupervision/BankSupervision/Pages/SouthAfricanRegisteredBanksAndRepresentativeOffices.aspx.)

The Bank Supervision Department of the SARB receives risk data, as opposed to product information, for the execution of its mandate. This is published in the form of BA returns on the SARB website.

The information required in terms of this question is not part of the information which is received from the banks. We therefore suggest that the Honourable Member should refer this question to the Minister of Trade and Industry, as the National Credit Regulator (NCR) is the competent authority regulating retail lending by registered banks and all other retail lenders. The NCR collects data on specific aspects of retail credit, including data on home loans, and is also responsible for determination of the national norms and standards regarding consumer protection (section 18 of the National Credit Act).

Reply:

1. 

   (a) No, the Minister of Finance was not informed by the South African Revenue Service regarding this matter.

   (b) No to date, the Minister of Finance has not been provided with any formal explanation by SARS on this matter.

 

2. What has appeared in the public domain is completely unacceptable. Mr Symington is a person of great expertise and a person of integrity that I have worked with for many years.

Reply:

The replies below are based on relevant information provided by the Financial Services Board (FSB). Much of the information requested is also available in the annual reports of the FSB, and available on its website. :

(1) No staff member of the National Treasury or the South African Reserve Bank is involved in the management of the Financial Services Board (FSB). I am surprised that the Honourable Member is posing this question, but perhaps the Honourable Member is confusing the role of the Board of the FSB and its Executive Committee. The Board of the FSB is responsible for goverance, whilst its Executive Committee is responsible for management and operational issues, in line with the Financial Service Board Act No 97 of 1990. The Board is comprised of 11 non-executive members, including two National Treasury officials and one South African Reserve Bank official – none of whom is involved in the management of the FSB. The Executive Committee includes as its members, the Registrar and Deputy Registrars, who are directly responsible for supervising various supervisory activities like long- and short-term insurance, retirement funds, collective investment schemes, financial advice and intermediary services providers and financial market infrastructure.

(2) It is not clear what the Honourable Member is requesting, but the FSB does not believe it has driven any person with a valid Financial Service Provider (FSP) licence out of the insurance industry, as long as they comply with the regulatory requirements.

(3) The Financial Advisory and Intermediary Services Act, 2002 (“the FAIS Act”), came into operation on 01 September 2004 amid uncertainty amongst providers of financial services about;

1. the need to be an authorised FSP, and
2. the appropriate structuring of individual financial services business operations in order to meet the requirements of the Act.

At the time, some of the larger entities opted for multiple licences and thus ring-fenced different divisions of their businesses, according to various factors including line of business, province or district. After the implementation of the legislation, many authorised FSPs, opted to lapse their multiple FSP authorisations and consolidated the various financial services businesses into a single FSP.

Certain FSPs voluntarily cancelled their licences and operated as juristic representatives of other authorised FSPs. Others realised that their business did not fall within FAIS regulated activities, which led to the lapsing of their licences and some FSPs whose licences were withdrawn because of non-compliance (other than non-compliance with honesty and integrity requirements), with the FAIS Act, re-entered the industry as representatives of authorised FSPs. The FSPs whose licenses were withdrawn for contraventions due to lack of the character qualities of honesty and integrity, were barred from entering the financial services industry for a stipulated period and also referred to the prosecuting authorities.

Various exemptions have been granted to FSPs and representatives to allow for the progressive realisation of compliance by them with all the requirements of the FAIS Act. In addition, many exemptions have been granted on the basis of the principle that regulatory requirements must be proportionate to the risks the requirements are meant to mitigate, the nature, scale and complexity of the business of the FSP and the cost it imposes on the FSPs whilst at the same time ensuring that the exemptions do not diminish the protection afforded to clients under the FAIS Act.

The number of authorised FSP’s has grown from 5 033 in 2005 to 10 774 as at 11 November 2016.

The requested numbers since September 2004, are as follows

• Declined licences: 2224
• Withdrawn licences: 4451
• Voluntary lapses: 6923

Since the Act came into operation, the number of juristic persons as representatives of FSPs has increased significantly from 173 in 2005 to 3 755 in 2015, thus a significant number of the aforementioned licences that had been withdrawn or lapsed, subsequently became juristic representatives of other FSPs and were not lost to the market.

It should also be noted that certain individuals who were authorised as sole proprietors but whose authorisation was subsequently withdrawn for non-compliance or they have voluntarily lapsed their licenses, re-entered the industry as representatives of other authorised FSPs.

It has been noted that after the self-correction and stabilisation of the market over time, continuous growth in the number of FSP’s has taken place. This trend is also reflected in the number of natural persons registered.

Statistics in terms of race or colour are not recorded by the FSB.

(4) The National Treasury is not involved in the licensing or supervision of financial insitutions, and this is done by the FSB itself. Board Notice 113 of 2015 called for comments on the proposed fit and proper requirements to be prescribed under the Long-term Insurance Act No. 52 of 1998 and the Short-term Insurance Act No. 53 of 1998 (“the Acts”) pursuant to the definition of “fit and proper” in sections 1 of the Acts. The final fit and proper requirements were prescribed in Board Notice 158 of 2015. The board notices and other legislation administered by the Financial Services Board are available on the website of the Financial Services Board (www.fsb.co.za).

Due to the nature of insurance business, it is important that significant owners, directors, managing executives, public officers, auditors and statutory actuaries are fit and proper. The fit and proper requirements are intended to reduce the risk of insurer failure as a result of incompetent, reckless or improper risk management by responsible persons. In addition, these requirements are consistent and compatible with international standards and promote confidence in insurers amongst policyholders, and the public generally. Recent South African and international experience has emphasised the importance of closer supervisory scrutiny of the conduct of individuals in positions of responsibility. In the case of insurers, this additional scrutiny is necessary for the Registrar of Long-term/Short-term Insurance to ensure the on-going safety and stability of insurers and to reduce the risk of loss to policyholders due to mismanagement or misconduct in insurance companies.

The requirements set out in Board Notice 158 of 2015 will affect all persons to whom any of the criteria apply. The Registrar, in assessing whether a person is fit and proper must have due regard to, in respect of directors, managing executives, public officers, auditors and statutory actuaries –

(a) the seriousness of, and surrounding circumstances resulting in, a person not meeting the requirements;

(b) the relevance of the failure by a person to meet the specific criteria to the duties that are or are to be performed and the responsibilities that are or are to be assumed by that person; and

(c) the passage of time since the failure by a person to meet the specific criteria.

In respect of significant owners the Registrar, in addition to (a) to (c) above, must have due regard to –

(a) the nature and scope of the significant owner’s business; and

(b) the structure of any group that the insurer is part of, if applicable.

The board of directors of an insurer may also express the view that a person is fit and proper despite the fact that one of the criteria specified in BN 158 of 2015 is not met. The insurer must then, when notifying the Registrar of the appointment of such a person, declare that one of the criteria is not met and motivate why the board, despite this, is of the opinion that the person is fit and proper. The motivation should address the matters that the Registrar will have regard to in assessing the fit and properness of a person (i.e. seriousness, relevance and passage of time). The Registrar, when considering the information provided, must then apply his mind and inform the board of the applicant if he objects to the appointment or not.

Given the foregoing it is not possible to estimate the total number of persons who have been or will be adversely affected by the Board Notice as insurers in appointing directors, managing executives, public officers, auditors and statutory actuaries are expected to consider whether any of the disqualifications apply to such persons. Also, potential significant owners will likely consider these requirements when deciding to become a significant owner of an insurer.

(5) (a): Yes, the various Registrars of the FSB may make subordinate legislation that is binding on regulated entities. This includes codes of conduct mandated in the primary legislation. Such subordinate legislation prescribes a variety of prudential and other requirements regarding the conduct and operational ability of financial institutions and services providers, and is a legitimate executive instrument to effectively implement the principles and policies contained in the principal legislation enacted by Parliament.

(b) (i): Yes, penalties may be imposed. The Enforcement Committee of the Financial Services Board established under the Financial Services Board Act which consists of external persons with the necessary expertise imposes all monetary penalties with regard to material contraventions.

This Committee is chaired by a retired judge. The particular enabling legislation makes provision for the proper protection of the rights of respondents, including the right of a reply (audi alterim partem), and the right to legal representation. The onus is on the FSB (the relevant Registrar) to prove that the legislation has been contravened.

In addition a respondent may take the Committee on appeal to the High Court of South Africa. The proceeds of the penalties imposed may not be utilised for operational expenses, but are reserved for projects relating to consumer education or protection of the public.

(b) (ii): The Financial Services Board Act, is also available on the website of the Financial Services Board.

The FSB ensures compliance with the legislation administered by it, which is aimed primarily at protecting the investments, savings and retirement funds of the public and may include monetary penalties.

In addition to the Enforcement Committee, the Registrar has the authority to impose penalties for minor non-compliances, e.g. late submissions of prescribed returns. Such penalties are provided for in the legislation relevant to the different industries.

When the “Twin Peaks” legislation is passed by Parliament and signed into law by the President, the “market conduct authority” will be constituted and citizens can be assured of even belter regulation of market conduct.

Reply:

1. The Chief Procurement Office (CPO) of the National Treasury requested in writing 7 contracts on the 01st November 2016. Documentation has been received for 3 contracts.

No	Titles (a )	Scopes (b )	Values (c)
1.	Security	X-Ray Machine	R37 m
2.	Marketing & Media	Global Advertising	R90 m
3.	Ground handling	Washington	R 5 169 710
4.	Crew Transport	Crew Transport at ORTIA, Durban and Cape Town	R21 m
5.	Inflight Services	Wines	R20 m
6.	Inflight Services	Catering in Hong Kong	R47 m
7.	Inflight Services	Cosmetics and Amenity kits	R105 m

2. The above is consistent with the approach of the CPO to, from time to time, review certain tenders above the value of R10m in various government entities to ensure that there was ‘value for money’ obtained by government.

Reply:

1. SAA has granted the National Treasury permission to review contracts.

2. The National Treasury requested the following 7 contracts on the 01st November 2016, currently received documentation for 3 contracts.

No	Names (a )	Scope (b)	Estimated values (c)	Has reviewed (i)	Is reviewing (ii)	Pending approval by the SAA Board (iii)
1.	Security	X-Ray Machine	R37 m
2.	Marketing & Media	Global Advertising	R90 m
3.	Ground handling	Washington	R 5 169 710
4.	Crew Transport	Crew Transport at ORTIA, Durban and Cape Town	R21 m			Awaiting documents
5.	Inflight Services	Wines	R20 m			Awaiting documents
6.	Inflight Services	Catering in Hong Kong	R47 m			Awaiting documents
7.	Inflight Services	Cosmetics and Amenity kits	R105 m			Awaiting documents

3. The above is consistent with the approach of the CPO to, from time to time, review certain tenders above the value of R10m in various government entities to ensure that there was ‘value for money’ obtained by government.

Reply:

(1)(a) The South African Banking Risk Information Centre (SABRIC) has been established by the banks in South Africa specifically to assist the banking industry in combating organised bank-related crimes. SABRIC consistently releases information on different types of criminal activity, including cyber-crime, to assist customers to be more vigilant. Banks themselves have in place sophisticated systems to detect and prevent fraudulent access to customer accounts. Internationally, the issue of technological innovations in the financial sector, and the risks that it can bring from a cybercrime perspective, is a major focus area, led by international regulators in the Financial Stability Board and Basel Committee on Banking Supervision.

(1)(b)(i), (ii) The current legal basis for financial consumer protection is in terms of generic consumer protection legislation. However, it is important to note that Parliament is currently processing the Financial Sector Regulation Bill, which places a strong emphasis on market conduct regulation and the fair treatment of customers in the financial sector. The Bill creates a Financial Sector Conduct Authority, and will result in the introduction of new regulation and standards that aim to better protect financial sector customers.

Currently, banks are required to comply with the Consumer Protection Act 68 of 2008, which provides for the rights of consumers to be protected against, for example false, misleading or deceptive representations (section 41) and fraudulent schemes and offers (section 42).

Banks are also required to ensure continued compliance with legislation such as the Financial Intelligence Centre Act 38 of 2001, the Prevention of Organised Crime Act 121 of 1998 and the Protection of Constitutional Democracy against Terrorist and Related Activities Act 33 of 2004. Banks are specifically required to register with the Financial Intelligence Centre in terms of section 43B of the Financial Intelligence Centre Act. Sections 21 to 45F of that Act address the control measures which banks must implement to combat money-laundering activities and prevent the financing of terrorist and related activities.

Regulation 50 of the Regulations made under section 90 of the Banks Act 94 of 1990, states that a bank must implement and maintain robust structures, policies, processes and procedures to guard against the bank being used for purposes of financial crime such as fraud, financing of terrorist activities and money laundering.

In terms of the Regulation 50, banks are required to facilitate co-operation with relevant law-enforcement agencies, identify customers, recognise suspicious customers and transactions, maintain high ethical standards in all business transactions, provide adequate training and guidance to staff, maintain records of transactions, report suspicious customers and transactions and provide a clear audit trail.

(2) The manner in which a bank mitigates its risk is not prescribed per type of risk (e.g. fraud and financial crime risks) by the Regulator. However, Regulations 33 and 34 of the Banks Act do require a robust enterprise risk management framework for a bank, which includes operational risk, such as fraud and financial crime. There is an obligation on banks to hold capital for operational risk. Banks are allowed to take out insurance against this risk, but this does not influence the regulatory capital requirement.

(3) The manner in which a bank compensates a client depends on the bank’s internal policies and are generally assessed on a case-by-case basis. Clients that are not satisfied with the services of their bank in relation to such compensation decisions can approach the Ombudsman for Banking Services. The majority of retail banks in South Africa are members of the Ombudsman for Banking Services. Going forward, it is worthwhile to note again that the conduct of business of retail banks, including its fair treatment of customers, will be regulated by the Financial Sector Conduct Authority when the Financial Sector Regulation Bill is enacted.

Reply:

This information was provided by the South African Revenue Service (SARS). The Ministry of Finance cannot verify its accuracy.

1. No, SARS as an institution has not established a new anti-corruption and security unit. Currently there is no plan to establish such a unit.

(a) Not applicable.

(b) Not applicable

(c) (i) Not applicable

(c) (ii) Not applicable

(d) (i) Not applicable

(d) (ii) Not applicable

(2) (a) Not applicable

(b) Not applicable

Reply:

This information is provided by the South African Revenue Service (SARS).

1. No. Mr Lebelo was not authorised by SARS to send a letter to the Business Day which was published on 28 November 2016 entitled “Gangster Ratings Agencies”.

2. No, SARS will not be taking any disciplinary action against Mr Lebelo as he wrote to the Business Day in his private and personal capacity.

3. No.

As far as the Ministry is concerned:

(a) Mr Lebelo, as a senior and influential manager in SARS, should not be commenting on a sensitive and serious matter such as ratings in the public domain;

(b) Mr Lebelo’s attack on the ruling party, the ANC, is both from a point of ignorance and unwarranted;

(c) He displays a complete lack of understanding of the role of borrowing money both locally and from foreign lenders in helping to finance our social programmes for the poor. It is the very same poor people and the vulnerable middle class South Africans, the vast majority of whom are black, who will be affected by rising interest rates and prices should the South African sovereign lose its investment grading.

(d) Finally, his letter to the media indicates clearly that he writes in two capacities – one of which is “Group Executive of Employment Relations, SARS”.

(e) Surely, he cannot be allowed to attack the very government that pays his salary on a matter that is of importance to all South African’s – except those who pursue an ignominious agenda against the national interest – with impunity?

(f) The SARS management must account for their lack of action in this matter.

Reply:

1. (a) (i) (ii) the Instruction Note 5 of 2016/17 does not require the supplier to indicate the size or their business. (iii) each supplier get contracted with individual organs of state.

(b) Suppliers have started in July 1, 2016 to directly report their non-payment to government through formal channels, as a result the National Treasury does not have information prior to 1 July 2016 that could have contributed to the closure businesses.

2. (a) A total of 4041 valid invoices were unpaid, to the value of R439 283 025, 63 were received since 1 July 2016. (b) the complaints vary from undisputed invoices to work performed without a contract or purchase order in place. (c)(i) 1342 invoices to the value of R103 541 992,10 were resolved (ii) 2699 to the value of R335 741 033,53 are still not resolved. Annexures attached per Organ of State (procuring entity) from 1 July 2016.

Reply:

Government obligations

Government guarantees and exposure

Government issues guarantees to various state-owned companies. As at 30 June 2016, these guarantees amounted to R469 billion. Of the total guarantee portfolio, 67 per cent is issued to Eskom and 13 per cent to the South African National Roads Agency Limited (SANRAL).

Table 1: Guarantees and exposure amount

see the link: http://pmg-assets.s3-website-eu-west-1.amazonaws.com/RNW2515TABLE.pdf

Source: National Treasury

Only the portion of the guarantees that these companies have borrowed against – known as the exposure amount – is a contingent liability to government. Creditors can call on government to service or pay off the guaranteed debt on which an entity has defaulted. Exposure amounts increased from R264 billion as at 31 March 2016 to R266 billion as at 30 June 2016. Most of the increase is accounted for by Eskom (R2.3 billion), Development Bank of Southern Africa (DBSA) (R20 million) and Land Bank (R88 million).

As part of the bailout of African Bank in 2014/15, the South African Reserve Bank (SARB) provided support on the back of a government guarantee constituting an explicit contingent liability of R7 billion. As at 30 June 2016, the guarantee amount has declined to R3 billion and the Reserve Bank has not realised any exposure against this guarantee.

Power-purchase agreements between Eskom and Independent Power Producers (IPPs) are now categorised as contingent liabilities. This change adds about R200 billion to contingent liabilities in 2016/17. The agreements oblige Eskom to buy power from these producers over a 20-year period at a price agreed to by the National Energy Regulator of South Africa. Government provides support in the form of guarantees to Eskom. In the event that Eskom is unable to purchase power as stipulated, government must buy the power on Eskom’s behalf. The probability of default is low, since the regulator generally approves tariff increases that accommodate these agreements. However, significant deterioration in Eskom’s financial position may increase government’s risk exposure.

In Public Private Partnerships (PPPs), contingent liabilities only arise where contract termination would require the state to reimburse the private partner. As at 30 June 2016, the inclusion of PPPs adds R9 billion to contingent liabilities, of which national PPPs account for 37 per cent and provincial PPPs 63 per cent. Given that none of the contingent liabilities in this category have been realised since the first PPP contract was entered into, they are considered very low risk.

Other contingent liabilities

Government’s other contingent liabilities include the actuarial deficits of social security funds – the difference between the claims owed by these entities and their total assets. Government commitments to the Export Credit Insurance Corporation of South Africa – the net underwriting exposure of the company and its total assets – also fall into this category, as do claims against government departments, and post-retirement medical assistance to government employees.

Other contingent liabilities were projected at R286 billion in 2015/16, R34 billion higher than in 2014/15, due to an increase in claims by exporters and increased exposure of the Road Accident Fund. Over the medium term, these contingent liabilities are projected to increase to R323 billion

Reply:

The sectoral contributions to gross value added are presented in Table 1, over the period requested. As official national accounts data are not published by organisational type, it is not possible to provide the requested breakdown according to the above categories using publicly available data. Private business enterprises dominate economic activity in most sectors, except in the electricity, gas, and water sector, as well as general government services, which are largely concentrated by the public sector. There is also sizeable participation of the public sector in the transport services sector. Nonprofit firms are largely found in the community, social, and personal services sector. Based on estimates from the Annual Financial Statistics Survey 2015 (Statistics South Africa, 2016), co-operative firms contributed little over R10 billion (or 0.12%) to total turnover in 2015, most of which is generated in the trade services sector.

More information on sector level contributions can be obtained from Statistics South Africa.

Table 1: Sectoral composition of total gross value added, 2015-2016

Industry	Gross value added (R million, current prices, 2015-161)	Contribution to total value added (%, 2015-16)
Agriculture, forestry and fishing	89,328	2.5%
Mining and quarrying	285,489	7.8%
Manufacturing	479,595	13.2%
Electricity, gas and water	132,811	3.6%
Construction	146,333	4.0%
Trade, catering and accommodation	549,210	15.1%
Transport, storage and communication	371,604	10.2%
Finance, real estate and business services	750,708	20.6%
General government services	624,277	17.1%
Personal services	215,121	5.9%

1 Total over the period between 2015Q2 and 2016Q1

Source of basic data: Statistics South Africa

Reply:

(1) (a) National Treasury has not conducted any forensic investigations relating to the Municipal Councilors Pension Fund (MCPF)

     (b) This matter was never brought to National Treasury for consideration.

(2) (a) & (b)

It is the responsibility of the organisation concerned to take corrective action, including commissioning of an investigation when allegations of corruption or fraud are reported or uncovered.

(3) (a), (b) & (c)

If the Honourable Member has any information on the allegations relating to this matter, I would encourage him to pass the information onto the relevant law enforcement agencies so that the matter can be investigated.

Reply:

NATIONAL TREASURY (NT)

 (a) Yes, refer to attached table.

 (b) Yes, refer to attached table.

 (i) National Treasury established an investigative unit with effect from 1 January 2010 within the Office of Accountant-General.

(aa) Refer to attached table.

(bb) Refer to attached table.

(cc) Refer to attached table.

NATIONAL TREASURY (cont.)

Office of Accountant-General : Forensic Investigations & Special Performance audits
Name of Institution (aa)	Internal Forensic Report	External Audit Report	Investigation Subject Matter (bb)	Investigation Team (OAG & Co-sourced firm)	Financial Year Ended (cc)
NT			Fronting by Service providers- Transversal contract of health services	OAG Team	2010/2011
NT			East and Southern African Association of Accountant-General – Fraud	OAG Team	2012/2013
NT			Municipal Finance Improvement Programme: Procurement Fraud & CV fraud by SiverSolution: Phase1&2	OAG Team & KPMG	2013/2014
NT			Transversal Contract RT41-2011 ME on Health Fronting: Phase 1	OAG Team	2013/2014
NT			Transversal Contract RT3-2012: Collusive Bidding: Phase 1	OAG Team	2014/2015
NT			Irregular Appointment of a Service Provider	OAG Team	2014/2015
NT			Transversal contract RT26-2015 Blankets	OAG Team	2015/2016
NT			GTAC Job Fund Fraud	OAG Team	2015/2016
NT			Transversal Contract RT22- Education Leaner Material	OAG Team	2016/2017
Government Pension Administraiton Agency			Fraud and Bribery by officials	OAG Team	2015/2016

ACCOUNTING STANDARDS BOARD (ASB)

There have been no internal or external forensic reports issued for the Accounting Standards Board since its establishment in October 2002.

CO-OPERATIVE BANKS DEVELOPMENT AGENCY (CBDA)

No forensic audits have been done on the Co-operative Banks Development Agency (CBDA) from 2009 to date. The CBDA is audited annually by the AG and the National Treasury conducts internal audits.

DEVELOPMENT BANK OF SOUTHERN AFRICA (DBSA)

(a) None, there are no internal investigations pertaining to the DBSA, only employee related internal investigations conducted during the normal course of business.

(b) (ii) Based on the understanding of DBSA, there is only one external investigation pertaining to the DBSA.

(aa) (bb)The matter involves the investigation of the DBSA around alleged irregularities inter alia pertaining to appointment of service providers. The investigation is still ongoing and is being undertaken by the Anti-Corruption Task Team within the SAPS Directorate for Priority Crime under case number Midrand CAS 57/05/2013.

(cc) Investigation has not yet been concluded.

OFFICE OF THE OMBUD FOR FINANCIAL SERVICES PROVIDERS (FAIS OMBUD)

(a)(i) Not applicable

(ii) None, no matters to be investigated.

(b)(i) Not applicable

(ii) None, no matters to be investigated.

FINANCIAL INTELLIGENCE CENTRE (FIC)

(a) Yes, the Financial Intelligence Centre (FIC) initiated an internal investigation into an employee on 3 March 2009;

(ii) aa) Mr Sandile Vernon Ndimande.

bb) the employee was investigated for alleged embezzlement of funds, and

cc) the investigation was completed on 18 March 2009.

FINANCIAL SERVICES BOARD (FSB)

(a) No.

(b) Yes.

(c) (b)(i) not applicable

(d) (b)(ii) in respect of the Financial Services Board (FSB)

(aa) provisional Forensic accounting investigation into the merits of a grievance lodged by a senior employee against her supervisor.

(bb) as specified in (aa).

(cc) 11 June 2014.

GOVERNMENT EMPLOYEES PENSION FUND (GEPF)

An external forensic report was completed in 2012 regarding the alleged breaches to the GEPF’s Supply Chain Management Policy regarding the appointment of a service provider.

The conclusion of the Report was that the Supply Chain Management Policy was breached and the Board agreed to take disciplinary action against the then Principal Executive Officer. The Board ended the contract with the Principal Executive Officer after the disciplinary hearing indicated that he had breached the Policy.

GOVERNMENT PENSION ADMINISTRATION AGENCY (GPAA)

Forensic Investigations

(a) Internal Investigations:

aa) Forensic Investigations and Fraud Prevention Unit.           bb) Alleged corruption in the process of reactivating life certificates.           cc) 26 February 2016.

2. aa) Forensic Investigations and Fraud Prevention Unit.     bb) Alleged tender irregularities reported to the National Anti-Corruption Hotline.     cc) 5 August 2016.

(b) External Investigations:

aa) Price Waterhouse Coopers. bb) Alleged irregularities in respect of pension benefits payments. cc) 23 April 2013.

1. aa) Gobodo Forensic & Investigative Accounting.     bb) Irregular Expenditure.    cc) 3 December 2014.    cc) 22 March 2016.

aa) SEMA Integrated Risk Services. bb) Irregular Expenditure. cc) 22 March 2016.

aa) George Fivaz (Pty) Ltd. bb) Asset verification of IT equipment and office furniture. cc) 13 April 2016.

aa) Audit and Risk Management Services. bb) Allegations of nepotism in the appointment of Senior Management. cc) 06 July 2016.

INDEPENDENT REGULATORY BOARD OF AUDITORS (IRBA)

The IRBA confirms that no forensic reports were completed, in respect of the IRBA.

LAND BANK AND AGRICULTURE BANK OF SOUTHERN AFICA (LAND BANK)

Internal and External Forensic Reports or Cases that the Land Bank has dealt with from January 2009 to August 2016.

The Land Bank has dealt with a total of 47 forensic reports (see below) during the period 1 January 2009 to 30 October 2016. Most of these cases were reported directly to our Head Office and some were reported through our anonymous fraud hotline:

1. 46 Internal forensic reports; and
2. 1 External forensic reports.

	(aa) Name	(bb) Subject matter	(cc) Date of conclusion
	Matumba and Fuls Case	Complaint received about a farm been auctioned without consent.	21/04/2009
	Cape Town Lease agreement	Deliberate intent to defraud the Bank of lease income.	03/06/2009
	Johan Scholtz case	Internal Audit received a query from the Ethics line that a Land Bank client was unable to service the loans.	28/07/2010
	Boschkop Training Centre	Boschkop Communal Property Association alleges that an individual and Land Bank has defrauded their community.	29/10/2009
	Mahlobo case	An ex-employee of Land Bank filed a complaint pertaining to his pension pay out from Land Bank still outstanding.	18/03/2010
	Unjust enrichment by member of staff	It was reported that a Land Bank employee allegedly exploited her professional position for her own personal benefit by supplying products to a supplier that received a tender for catering for Land Bank canteen.	21/02/2011
	Stolen laptops from IT	It was reported that 42 new HP laptops which were to be used for training purposes, went missing from the IT department at Land Bank.	09/06/2011
	Fraudulent activity by client	It was established that a supplier did not deliver the supplies that the Land Bank has paid as per the invoice to the client.	19/08/2010
	I-Sure investigation	A company was sourced to microchip and monitor the livestock for Land Bank, and give monthly feedback to the Bank on the status of the marked animals. Service provider was paid although no report was received.	04/05/2010
	Travel Expo competition irregularities	It was reported that there was probable irregularities that took place on the draw of the Travel Expo competition winners.	19/08/2010
	SS Chauke	It was reported that two bank’s mortgage bonds were cancelled in the Deeds office on the 07/02/2008 without the debt being repaid.	02/02/2011
	Land Bank Fraud Case	On 24 December 2010, several transfer transactions of cash from the Land Bank Absa account were effected through the Cashfocus system. An amount of R7m was transferred through the Cashfocus system to be credited to several fraudulent service providers reported to have been engaged by Land Bank.	01/05/2011
	Single-sourcing Irregularity	A Senior Manager within HR had single-handedly contracted the Bank with a vendor to provide “Crafting of Employer Value Proposition (EVP) services without following proper Procurement process.	30/07/2012
	Eavesdropping	It was reported through the hotline that Land Bank employees where being unknowingly recorded at meetings.	11/04/2011
	Derogatory language	A staff member in LBIC used derogatory language to address her colleagues.	12/7/2011
	Discrimination in Land Bank Hiring Process	A preliminary investigation was conducted with regards to an allegation of hiring without following recruitment and selection process.	15/05/2012
	Irregular secondment of an Area Manager.	The caller stated an employee was the branch manager of the Tzaneen offices until he was transferred to manage the Pretoria branch in an acting capacity. According to the caller the transfer and subsequent appointment was highly irregular.	25/09/2012
	Occupational Detriment & Victimization.	The caller reported occupational detriment and victimization committed by management of the Information Technology department of the Land Bank. The caller stated that sometime after lodging the report with the Fraud Hotline, they began being victimized by management and on 27 February 2012, they were suspended from work. The caller strongly believes that they were suspended from work as a result of reporting the irregularities to the Fraud Hotline.	08/11/2012
	Breach of company policies & conflict of interest	It has been reported that a sales consultant at a branch has been operating a private business while in the employ of the Land bank and during office hours.	18/10/2012
	Suspicious Invoices submitted by the Service Provider.	In September 2012 it was reported by a branch alleging that a company has submitted suspicious invoices.	23/10/2012
	Alleged Irregularities- Procurement Manager	On the 02nd March 2013 the Internal Audit-Forensic business unit received information from a whistle-blower alleging that the Procurement Manager.	15/03/2013
	Nerpo Enquiry	Land Bank Internal Audit received a report through the Ethics line. The caller reported the executive owners of Nerpo Financial Services for fraud. The caller stated that Nerpo Financial Services receives money from the Land Bank to distribute to beneficiary farmers. According to the caller, the two executives tunnel the money received from the Land Bank into private investments and private enrichment.	04/04/2013
	Mpilende Foods (Pty) Ltd	On the 10th July 2013, Legal, Insolvency, RCB and Internal Audit business units met to discuss the discrepancies on the account of Mpilende Foods (Pty) Ltd. Legal, Insolvency prepared a report on discrepancies identified on review of the documentations received for the liquidation process. On the basis of the identified discrepancies, Internal Audit was engaged to conduct further investigations to establish this irregularities.	07/11/2013
	Board Secretariat	Internal Audit business units received an e-mail to report an alleged misconduct by one staff member in the Board secretariat and another in the Facilities Business units. It is alleged that there is an arrangement between the two to dispose of paper to a third party in return for payment of a sum of money. The money is then allegedly shared in agreed proportions between the two. It is alleged the arrangement has been going on for a number of years.	12/09/2013
	Alleged Irregular appointment of a Service Provider	Internal Audit-Forensic business unit received a hotline report, where it is alleged that during the course of August 2013, a vendor was appointed to review the banks credit process without following the procurement policy and process.	04/10/2013
	Alleged unfair practice in the HR	Alleging that there is unfair practice in the Human Resource Department of the Land Bank with regards to the appointment of HR business partner.	02/10/2013
	Complaint against AFC Manager-	It is alleged that staff members at both Vryheid and Pietermaritzburg AFCs complain about the AFC manager’s management style.	21/01/2014
	Suspicious Transactions on the Staff Deposit Account	Internal Audit-Forensic business unit had a meeting with Compliance, Risk business unit to investigate the high amount that is electronically transferred into Land bank staff deposit accounts. It was established that an amount of R964 000 was deposited into the Land Bank which was later distributed to different Staff Deposit accounts which raised suspicion	20/03/2014
	Allegation of stolen laptops in Rustenburg AFC	It was reported that two laptops had gone missing from the server room where they had been stored.	08/04/2014
	Legal- Disbursement of Land Bank Loan to a wrong account	On the 22nd of April 2014, the Internal Audit received a referral from the Legal business unit requesting an investigation of disbursement of Land Bank loan to a wrong account.	09/07/2014
	Duplicate salary payments-May 2014	On the 23rd of May 2014, duplicate salary payments were made to all staff members including members of the board. Duplicate payments were also made to garnishees.	14/07/2014
	Investigation into qualifications of staff member	On the 22nd August 2014 the Internal Audit received a fraud hotline report requesting an investigation into the education qualifications a staff member in the Marketing Business Unit.	27/08/2014
	Undue influence by the AFC Manager	On the 10th September 2014 the Internal Audit unit received a fraud hotline report requesting an investigation into the allegations of undue influence by an AFC Manager.	11/09/2014
	Suspicious transactions on the staff deposit account.	On the 11th November 2014 the Internal Audit business unit was informed per e-mail by Compliance, Risk business unit, that there is another employee from Bloemfontein AFC who received R950 000 and deposited into the staff member’s staff deposit account on the 23 June 2014.	04/12/2014
	Unjust Enrichment-Hiring of entertainment area: Rustenburg AFC	It was alleged that the then AFC Manager Rustenburg, benefitted unjustly from hiring out the entertainment area at the Rustenburg AFC.	19/05/2015
	Single sourcing irregularities	It is alleged that procurement procedures were not followed in the appointment of a Chauffer to drive the CEO during his Road-show.	22/05/2015
	Alleged irregular loan disbursement	It was reported that there are suspicious activities relating to accounts that are in a process of being written off in Mpumalanga. It was mentioned that the Finance officer at the AFC Nelspruit Branch was the person responsible for the irregularities.	17/07/2015
	Alleged Irregularities in Marketing	Internal audit conducted an audit of the Marketing and Corporate Affairs department and several issues were identified and escalated as irregularities. Upon communication of the final report to Management and Executive, audit was requested to conduct a fraud investigation into the Marketing department activities regarding processes and expenditure for corporate merchandise and sponsorship and events.	02/09/2015
	Alleged irregularities by staff members in the loan agreement with a client	Internal Audit received information from Legal business unit pertaining to possible involvement of the AFC officials in the fraudulent behaviour of the client. A client was granted an ISF loan to an amount of R135 610 to purchase studs cows.	02/10/2015
	Identity theft or fraud	One Joe Gabriel received an email from a perpetrator disguised as CEO of the Land Bank, with an attachment of an Identity Card. The perpetrator sent an email to Joe informing him of $1,000,000.00 compensation that has been approved by the UN and that the funds will be paid through Bank of New York.	22/09/2015
	Media Monitoring Enquiry	Internal Audit business unit received a request from the Executive Manager Strategy, Marketing, Communication & Policy to investigate the procurement process into the appointment of the media monitoring service provider.	09/10/2015
	Identity theft or fraud	Internal Audit received an email from Human Resources to investigate a case of identity theft. It appeared that someone was using HR business partner’s details as a procurement official to commit fraud. The HR business partner is a permanent employee of the Land Bank in the capacity of Employment Equity Consultant in the HR business unit.	24/11/2015
	Travel Irregularities by the AFC Manager	Internal Audit was requested per e-mail by Commercial Development Banking to investigate the trips conducted by an AFC Manager.	27/01/2016
	Attempted payment fraud	Internal Audit received an email from the Assistant Specialist: Monitoring and Arrear Management, based at the Gauteng Provincial Office, pertaining to attempted fraud committed by external perpetrators into a Land Bank client’s account.	13/01/2016
	Irregularities in Marketing	It came to Internal Audit’s attention that there was an invoice to an amount of R257 709 that was dispatched to Land Bank for the merchandise that was delivered on the 04th November 2015. The merchandise was thus received by an employee who has since left the employ of Land Bank.	02/02/2016
	Alleged irregular appointments in Finance department	Internal Audit business unit received a hotline report with regards to alleged irregularities in the recruitment, selection and appointments of the Procurement Manager and the Finance Systems Administrator.	16/08/2016
	Alleged Loan Application Fraud	A loan application was received on the 15 January 2016 for a special Mortgage loan. Concerns were raised with regard to the information supplied in the loan application form and submitted to the Land Bank for consideration.	29/10/2016

PENSION FUND ADJUDICATOR (PFA)

1. No
2. No
3. N/A
4. No circumstances arose to call for such action.

PUBLIC INVESTMENT CORPORATION (PIC)

Date Concluded	Subject Matter	Outcome
March 2011	Investigation into allegations of procurement fraud and collusion with suppliers against an employee	Investigation did not find any evidence of procurement fraud. No further action was taken against the employee.
July 2012	Investigation into the actual cause of data backup interruption which occurred in February 2012	The investigation found that the interruption was caused by human error rather than a systems failure, the employee was subject to the disciplinary hearing. A written warning was issued to the employee.
May 2013	Forensic Accounting Investigation into the role played by PIC employees, if any, in alleged irregularities pertaining to the leasing of business premises.	The investigation found no irregularities against the two PIC employees but that they were negligent in the carrying out of their duties. The employees were subject to disciplinary hearing. The investigation found that an outside person was illegally leasing out the business premises and receiving the income. A case of fraud against this person was reported at SAPS.
December 2013	Investigation into allegations of procurement fraud against an employee and irregular disposal of equipment	The investigation didn’t find any evidence that there was procurement fraud but only found that the employee contravened PIC policies with regard to use of PIC property for personal gain. The employee resigned during the disciplinary hearing process.
December 2013	Investigation into undisclosed business interests that may be in competition with the PIC business by an employee and failure to follow PIC approval processes with regards to application for additions funding on a property development project.	Employee was cleared on not following approval process and not declaring a business interest. Employee was, however, found to be conducting private business that may conflict with PIC business without appropriate approval. Employee resigned during the disciplinary hearing process.
May 2013	Investigation into allegations of procurement fraud and collusion with suppliers against an employee.	Investigation found evidence to support the allegations. A case of fraud was laid with SAPS against the employee.
November 2013	Investigation into allegations of procurement fraud in appointment of suppliers and embezzlement of Mall toilet takings against an employee.	The investigation found evidence to support the allegations. The employee resigned during disciplinary hearing process. A case of fraud was opened with SAPS against the employee.
November 2013	Investigation into breach of internal policies by the Executive.	The investigation found that policies of PIC were breached. There was mutual separation before the disciplinary process could commence.
January 2014	Investigation into allegations of collusion between five building managers and contractors.	The investigation found that there were no evidence to support allegations of collusion. However, two employees were found to have been negligent in performing their duties and resigned during the disciplinary process.
February 2014	Investigation into suspected fraud involving sending emails regarding "change of PIC bank accounts" to PIC tenants by an employee from a “gmail” account but utilising the email format of PIC Properties Division	Investigation found no wrongdoing on the part of the employee. The employee details appeared to have been used by the fraudsters involved in the scam. No action was taken against the employee.
November 2015	Investigation into breach of internal investment processes and policies by the general manager (GM) and senior manager reporting to them.	The investigation found that there were breaches by the GM and partly the senior manager for carrying out the instruction of the GM. There was mutual separation with the GM before the disciplinary process could commence and the senior manager was given a warning in line the PIC disciplinary policy.
September 2015	Investigation into process failures that caused delays and cost escalations relating to a property development.	Investigation found that there were inadequacies in project and contract management processes relating to this development. The employees implicated had already resigned from the PIC.
September 2015	Investigation into process failures that resulted in damage and vandalism to a building and caused PIC to incur cost of repairing the building	Investigation found that there were process inadequacies with regard to evicting the tenant and payment inefficiencies that caused the building to be left unsecured resulting in the damage. The employees implicated had already resigned from PIC
February 2016	Investigation into suspected procurement irregularities involving collusion with suppliers and receiving of bribes by an employee. The employee was also suspected of misconduct involving favouritism of certain employees and not adhering to code of conduct. Two employees were implicated as the favourites of the senior employee.	The investigation found no irregularities, collusion and fraud. The senior employee was found to have breached PIC policies and resigned before the disciplinary process. One of the employees was charged with misconduct for breaching PIC policies and the employee resigned during the disciplinary hearing. The third employee was cleared.

SOUTH AFRICAN AIRWAYS (SAA)

1. Internal Forensic reports

Name of Entity	Subject matter	Date of conclusion
South African Airways (SOC) Limited	Investigations into allegations of irregular appointment of Daylite Capital	20 July 2012
Air Chefs (SOC) Limited	Whistle-blower – husband reported wife for alleged irregularities in wine procurement.	27 February 2015

1. External Forensic Reports

Name of Entity	Subject matter	Date of conclusion
South African Airways (SOC) Limited	Investigation into why SAA incurs losses, and dependent on the Shareholder for Bailouts	In progress
South African Airways (SOC) Limited	Investigations in various allegations which had been made against primarily the company's former Chief Executive Officer, Mr. Khaya Ngqula.	July 2010
South African Airways (SOC) Limited	Investigation into not renewing the loan facility advanced to SAA timeously.	25 September 2014
South African Airways (SOC) Limited	Forensic investigation into various allegations at South African Airways – Bagport.	23 January 2015
South African Airways (SOC) Limited	Investigation into Baggage Claims Payments - Sao Paolo, Brazil.	07 April 2015
South African Airways (SOC) Limited	Investigation into the award of sale and leaseback of ten Airbus A320-200 aircraft to SAA.	26 May 2015
South African Airways (SOC) Limited	Investigation into allegations relating to RFP GSM 0085/14 and GSM026/15.	12 June 2015
South African Airways (SOC) Limited	Forensic investigation into various allegations at South African Airways- Fallout investigations post the Kalawe disciplinary matter.	05 October 2015
South African Airways (SOC) Limited	Investigation into commercial and operational associations between SAA and Mango.	04 March 2016
South African Airways (SOC) Limited	Investigation in respect of Commercial aircraft leases between SAA and Mango.	12 August 2016
South African Airways (SOC) Limited	Investigation into allegations relating to the award of the Dry Snack tender GSM025/2013 Supplies.	13 October 2016
South African Airways Technical (SOC) Limited	Investigation into the sale of surplus material (rotables and consumables).	17 March 2016
Air Chefs (SOC) Limited	Investigation into various allegations including: Excessive orders from Deli One Victimisation by management of some staff members Excessive wastage of meals Loss of potential bids	30 June 2013
Air Chefs (SOC) Limited	Investigation into alleged irregular awarding of tender for dry snacks by Air Chefs	08 August 2014

SOUTH AFRICAN REVENUE SERVICE (SARS)

1. Regarding the PWC report related to Ecko Research in 2009:

Name: Forensic investigation on behalf of the South African Revenue Services "SARS" into alleged procurement irregularities

Subject: An internal audit was conducted which pointed to certain possible procurement irregularities in the appointment of Ecko Research to render services to the Segmentation and Research unit of SARS. The SARS GE: Internal Audit engaged PWC in July 2009 to investigate the following:

• The procurement process followed in the appointment of Ecko Research.
• The deliverables received from Ecko Research; and
• The payments made.

Date of conclusion: The final PWC report was submitted to SARS on 01 October 2009.

High-level results: PWC recommended that SARS:

• register a criminal case with the SAPS.
• consider instituting disciplinary action against the G.E: Research and Segmentation, Mandisa Mokwena (cost centre owner) for various contraventions of the procurement policy.
• investigate whether payments were made to the other entities/individuals identified by PWC.

SARS results subsequent to the PWC report:

• An internal investigation was launched and the SARS manager resigned on the day her arbitration would have started (09 December 2009).
• A criminal case was opened with the SAPS.
• The others started in the North Gauteng High Court on 8 October 2015. They face the following charges:
  • 43 counts of Fraud.
  • contravening section 2 read with section 3 of the Prevention of Organised Crime Act 121 of 1998 [Offences relating to Racketeering Activities].
  • contravening section 4, 5 and 6 of the Prevention of Organised Crime Act 121 of 1998 [Offences relating to Proceeds of Unlawful Activities – Money Laundering].
  • contravention of  section 4 of the Prevention and Combating of Corrupt Activities Act 12 of 2004 [Corruption];
  • contravening Section 86 of the PFMA No 1 of 1999 [Financial maladministration].
• The charges relate to 43 fraudulent procurement transactions during the period 1 January 2007 to 31 May 2009. The total pecuniary loss suffered by SARS due to the aforesaid fraud amounts to R11 501 052.08.
• The State closed its case on 23 May 2016.
• The trial will continue against the SARS manger & 6 others from 01 December – 14 December 2016 when the defence will call their witnesses.

2. KPMG Forensic Investigation

Name: “South African Revenue Service: Report on Allegations of Irregularities and Misconduct”.

Subject: A forensic audit was conducted to verify the allegations

Date of conclusion: The final KPMG report was submitted to SARS on 3 September 2015.

High-level results: The Report has not been made public, and remains confidential, because it raises matters that are either sub judice or that are still subject to further investigation by law enforcement agencies.

SARS results subsequent to the report: Matter was referred to relevant law enforcement agencies.

SASRIA

Sasria received a tip-off on its fraud hotline during March 2010 regarding allegations of impropriety over the unauthorised payment of bonuses to the Managing Director and other staff. A forensic investigation was conducted and the matter concluded during August 2010.

TAX OMBUD

The Office of the Tax Ombud was established in October 2013 in terms of the Tax Administration Act, 28 of 2011. Since its establishment, it has not requested any internal and/or external forensic report on any aspect.

Reply:

According to the Deputy Minister of Finance:

  (a) Yes, the Deputy Minister met with the Hawks investigators.

  (b) Yes, a sworn statement was submitted to the Hawks Investigators by the Deputy Minister.

Reply:

Yes.

(a) The Deputy Minister submitted an affidavit to the Public Protector.

(b) The Deputy Minister submitted a statement to the Hawks for their investigation.

Reply:

1.  

(a) National Treasury has undertaken preliminary assessment of various aspects of the feasibility of the nuclear new build programme, based on the Draft Feasibility Study (2013) submitted by the Department of Energy. The Department of Energy has not yet completed a full feasibility study with a cost-benefit analysis which includes a socio-economic assessment. As a result, a detailed assessment of the feasibility and the affordability of the nuclear new build programme cannot be undertaken at this stage.

(b) During 2015, National Treasury engaged extensively with officials from the Department of Energy on the potential financial, fiscal and economic implications of the nuclear new build programme (which are all involved aspects of affordability). A presentation was produced to guide discussions and shared with officials of the DoE. National Treasury has not yet presented these preliminary findings to Cabinet and therefore cannot currently share the details.

(c) The Office of the Chief Procurement Officer (OCPO) held a series of engagements with the DoE during 2015 on the nuclear new build programme’s procurement strategy, after which the OCPO wrote to the department expressing National Treasury’s opinion on that strategy. On 13 September 2016, the National Treasury received a set of documents, which included the reviews undertaken by the DoE Transaction Advisors. A preliminary assessment of the documents was undertaken and a letter sent to the DoE on 23 September 2016, outlining Treasury’s assessment on the state of readiness of the procurement strategy. The Treasury intends to engage further with the DoE once documents have reached a more substantive stage of development.

2. (a) (b) The reports that Treasury has produced in this regard are the following:

     (1) An internal report containing an assessment of the DoE’s draft feasibility study of November 2013 was prepared and finalised in 2014. The report was titled ‘Assessment of the Nuclear Feasibility Study’.

      (2) Internal research conducted by the Treasury on the high level costs and risks associated with a nuclear build programme was first conducted in 2013 and has been updated since, in line with updated global trends.

      (3) In September 2015, at Cabinet’s request, the National Treasury prepared a preliminary report on high-level fiscal and financial implications of a new nuclear build programme.

      (4) The Chief Procurement Officer sent an assessment of the draft procurement documents to the Department of Energy in February 2016.

(c) Main findings and recommendations:

These reports only contain preliminary observations, which were reached from limited information. Extensive work is still required before substantive conclusions are reached. A full cost-benefit analysis must be conducted which must include a comprehensive social and economic impact assessment before the feasibility, affordability and procurement strategy can be properly assessed by the Treasury.

The Department of Energy is the lead department in government on this matter. They are best place to respond. Recent documents released by the Department of Energy should be of assistance in this regard.

 

Reply:

1. SAA currently has in place a R14.4 billion government guarantee facility against which the company can raise funding. Although the facility has currently been almost fully utilised to raise debt, as the debt matures or is repaid, SAA can utilise the guarantees that are freed up as a result, to raise further funding.

2. There is no requirement for SAA to obtain permission from National Treasury to issue a request for proposal (RFP) to raise financing.

Nevertheless, there are existing conditions that have been placed by National Treasury that relate to the process and terms of obtaining funding with which the airline is required to adhere. These are as follows:

(a) The Chief Procurement Officer has required that all tenders above R10 million must be reviewed by the National Treasury before appointment letters are issued.

(b) Among the conditions that have been attached to the government guarantee facility that has been provided to SAA, there is a requirement that National Treasury approve the terms of financing raised against the guarantee before any agreements are concluded.

Once SAA has identified sources of financing and the legal agreements have been negotiated, including the guarantee agreement, the airline will be required to submit all the relevant documents to the Minister of Finance for his consideration, including those relating to the above mentioned conditions.

3. There is no requirement for SAA to obtain permission from National Treasury to issue a request for proposal (RFP) to raise financing. Hence:

     (a) National Treasury will not be taking steps to “stop the funding process from proceeding”.

      (b) SAA is not required to provide any reasons.

4. (a) and (b) The funds are primarily required to refinance existing debt facilities. Should there be delays in concluding financing, all options will be considered. These are likely to include, SAA seeking to extend or roll-over existing facilities.

Reply:

(1) (a) 2013-14 financial year; refer to the previous response of the Minister of Finance for Question number: 1389 NW1602E], dated 17 April 2015.

(b) 2014-15 financial year; refer to the previous response of the Minister of Finance for Question number: 1389 NW1602E], dated 17 April 2015.

(c) 2015-16 financial year Refer to attached Annexure B for (i); (ii) & (iii)

 

(2) (a) Refer to Annexure A in respect of 2013-14 and 2014-15 financial years, and Annexure B in respect of 2015-16 financial year.

(b) All the cases were conducted on behalf of client departments, municipalities or entities. National Treasury is an agent and not the owner of the reports. Therefore, the respective client departments, as reflected on Annexure A and B should be responsible for responding to the question, as the reports contained detailed findings and recommendations.

 

Reply:

This information was provided by the South African Revenue Service (SARS) on the 08th November 2016. The Ministry of Finance cannot verify its accuracy because of lack of accountability and cooperation from the SARS top management.

1. There are no specialised units like the SARS High Risk Investigation Unit:

           (a) The HRIU was formally dissolved in 2014.

           (b) SARS has since implemented a New Operating Model and the current position in dealing with non-compliance in high risk areas (including areas such as the illicit economy) is guided by the focus areas in the publicised 2012/13 – 2016/17 SARS Compliance Programme.

(i – iv) As stated there are no specialised units, thus the questions are not applicable.

Why not – why does SARS have no units similar to HRIU.

SARS has a multifaceted approach to tackle the illicit economy, tax related organised crime and tax evasion. This approach intergrates its resources to deal with such matters.

SARS also builds and maintains strong working relationships with South African law enforcement agencies. The SARS enforcement unit primarily deals with tax, customs and excise related investigations and is supported by other units within SARS such as case selection which identifies the cases; internal investigations which investigates cases perpetrated by / with the assistance of SARS employees and Customs and Excise Investigations, etc.

SARS is also representaed in various clusters such as the Justice, Crime Prevention and Security Cluster, Governance and Administration Cluster, International Cooperation, Trade and Security Cluster, etc. Through these and various other fora, SARS works with government departments to execute its mandate.

Reply:

This information is provided by the South African Revenue Service (SARS). The Ministry of Finance cannot verify this information.

The Commissioner of the South African Revenue Service, Mr Tom Moyane does have Protective Service Officers allocated to him.

(a) What is the purpose of the bodyguards?

A bodyguard is a protective agent who is paid to protect an organization's assets (property, people, money, etc.) from a variety of hazards (such as damaged property, unsafe worker behaviour, criminal activity, etc.) by utilizing preventative measures.

(b) Why are the bodyguards necessary?

SARS is a critical institution which is tasked with revenue collection, including from high profile individuals and businesses. Due to the nature of its mandate it is vital that the Commissioner and SARS employees who are threatened or deemed to have been threatened by individuals or syndicates under investigation are provided with personal protectors. The

current Commissioner including previous SARS Commissioners have all been allocated protective service for this reason.

(c) How many bodyguards are utilised in the security detail of the specified person?

The number of Protective Service Officers (PSO) is determined by the threat and risk assessment (TRA) which is compiled in advance by South African Police. By divulging the number protectors assigned to the Commissioner will be a breach of security measures currently in place.

(d) what was the

    (i) total expenditure

        Total expenditure is dependent on the employee grade see breakdown below

   (ii) breakdown of such expenditure

        (aa) in the

        (aaa) 2014-15

Period	Minimum of grade 4B pa	Midpoint of grade 4B pa	Maximum of grade 4B pa
1 April 2014 – 31 March 2015	215 508	295 212	374 916
Cell phone	R650
Uniform Allowance	6831.58

(bbb) 2015-16 financial years and

Period	Minimum of grade 4B pa	Midpoint of grade 4B pa	Maximum of grade 4B pa
1 April 2015 – 31 March 2016	228 504	313 008	397 524
Cell Phone	R500
Uniform Allowance	7226.47

(bb) 1 April 2016

Period	Minimum of grade 4B pa	Midpoint of grade 4B pa	Maximum of grade 4B pa
1 April 2016 – 31 March 2017	R237 984	R317 316	R396 648
Cell phone	R400
Uniform Allowance	7226.47

Reply:

The amount originally planned for spending by SASSA and for payment contractors is shown in Table 1.

Table 1. Original planned spending by SASSA in total and for payment contractors.

R' 000	2015/16	2016/17	2017/18	2018/19
	Audited Outcome	Budget	Estimates	Estimates
Total expenditure/ budgets	6,686,478	7,351,089	7,697,571	7,911,091
Of which: payment Contractors	2,025,559	2,179,364	2,202,043	2,329,761

Source: Data as at ENE 2016

SASSA will spend approximately R2.179 billion on payment contractors in 2016/17. In 2017/18 the Department of Social Development will transfer R7.697 billion to SASSA.

The Ministry of Social Development and SASSA need to respond on the specific spending amounts from SASSA’s budget and accumulated surpluses being used to build up systems in preparation to become the paymaster, and on related issues such as SASSA’s readiness to assume the paymaster role, what functions they intend to take over and which ones they will continue to contract out. The above figures, published in ENE 2016 are indicative since while Departmental Budgets are approved by Parliament, entity budgets are approved by Executive Authorities, in this case the line function Minister, Minister Dlamini.

Reply:

NATIONAL TREASURY

The total amounts spent by the National Treasury (RSA Retail Savings Bonds Directorate) for the period in question is presented in table 1 and 2 below

Table 1: Amount Spent On Advertising in 2015-16

2015 - 16 FINANCIAL YEAR
1	AFRICA NEWS NETWORK 7 CHANNEL			R -
2	TV SPEND (VAT Inclusive)			R 5,841,989.30
	SABC STATIONS			R 3,594,936.00
	E-TV			R 1,370,245.81
	DSTV CHANNELS			R 876,807.49
	TOTAL			R 5,841,989.30
3	RADIO SPEND (VAT Inclusive)			R 9,800,022.96
	SABC NATIONAL RADIO STATIONS			R 3,201,503.40
	REGIONAL RADIO STATIONS			R 3,160,363.19
	COMMUNITY RADIO STATIONS			R 3,438,156.37
	TOTAL			R 9,800,022.96
	GRAND TOTAL SPEND			R 15,642,012.26

Table 2: Amount Spent On Advertising from 1 April 2016

1ST APRIL 2016
1	AFRICA NEWS NETWORK 7 CHANNEL			R -
2	TV SPEND (VAT Inclusive)			R 609,500.00
	SABC STATIONS			R 459,500.00
	ETV			R -
	DSTV			R 150,000.00
	TOTAL			R 609,500.00
3	RADIO SPEND (VAT Inclusive)			R -
	SABC NATIONAL RADIO			R -
	REGIONAL RADIO STATIONS			R -
	COMMUNITY RADIO STATIONS			R -
	TOTAL			R -
	GRAND TOTAL SPEND			R 609,500.00

ASB

The Accounting Standards Board has not spent any money on advertising in the 2016-16 financial year and since 1 April 2016.

CBDA

The CBDA have not advertised in terms of point (i), (ii), (iii) and (iv) in the 2015-16 financial year and since 1 April 2016.

DBSA

The Communications and Marketing unit of the Development Bank of Southern Africa wishes to report as follows regarding the spending on advertising on the below listed platforms during the 2015/16 financial year:

1. Africa News Network 7 channel, Zero (R0.00)
2. SA Broadcasting Corporation Zero (R0.00)

(aa) television channels, Zero (R0.00)

(bb) radio stations, Zero (R0.00)

1. national commercial radio stations, Zero (R0.00)
2. community, Zero (R0.00)

(aa) television Zero, (R0.00)

(bb) radio stations

(aaa), Zero, (R0.00)

And since April 2016, the communications and marketing unit of the development Bank of Southern Africa wishes to report as follows regarding the spending on advertising since April 2016:

(aa) television channels (CNBC – R331 752 for World Economic Forum Africa

in May 2016.

FAIS OMBUD

The FAIS OMBUD has not spent any money on advertising in the 2016-16 financial year and since 1 April 2016

FIC

The FIC has not spent any money on advertising in the 2016-16 financial year and since 1 April 2016

FSB

Financial Service Board (FSB)

	2015/16 (aaa)	April – August 2016 (bbb)
(i)	Nil	Nil
(ii) (aa)	Nil	Nil
(bb)	Nil	Nil
(iii) Power FM	R 45 486	Nil
(iv) Community (aa) television (bb) radio stations	Nil Nil	Nil Nil

GEPF

The GEPF has not spent any money on advertising in the 2016-16 financial year and since 1 April 2016

GPAA

Africa News Network 7 channel,

None

(ii) SA Broadcasting Corporation

(aa) television channels

None

(bb) radio stations,

2015/16 Financial year R1 235 223

2016/17 Financial year R569 231

(iii) National commercial radio stations and

None

(iv) Community

(aa) television

None

(bb) radio stations

2015/16 financial year R188 096

2016/17 financial year R286 654

(aaa) in the 2015-16 financial year and

R1 423 319

(bbb) since 1 April 2016?

R855 885

IRBA

The IRBA has not spent any money on advertising in the 2016-16 financial year and since 1 April 2016

LAND BANK

1. Amounts spent on various media houses, radio and television stations by the Land Bank during the Financial Year 2015/2016 and 2016/2017 respectively.

1. During the financial year 2015/2016 the Land Bank spent R711 559.57 specifically on the following items:

• General Advertising;
• Print Advertising; and
• Event sponsorships and promotion related advertising.

1. There was no amount paid to ANN7 during the 2015/16 financial year; and
2. No amount paid to the SABC either.

(aa) No amount paid to any television channel; and

(bb) No amount paid to any radio station, be it commercial, national or community radio during the 2015/16 Financial Year.

(bbb) The Land Bank spent a total amount of R147 684.80 during the current financial year (2016/17) from April 2016 to date. The breakdown is as follows:

• R14 780.00 for an advert in the Farmer’s Weekly; and
• R132 904.80 for an advert in the Business Day.

All the interviews that the Executive Managers of the Land Bank had with either the SABC, CNBC Africa, Business Day TV or ANN7 were free of charge. Our Executives were invited into the studios at no cost due to the topical nature of what was being discussed. Most of those interviews were carried out during the current financial year (2016/2017).

PFA

Question	(aaa)	(bbb)
(b) (i)	R Nil	R Nil
(b) (ii) (aa)	R Nil	R Nil
(b) (ii) (bb)	R23 777.55	R Nil
(b) (iii)	R Nil	R Nil
(b) (iv) (aa)	R Nil	R Nil
(b) (iv) (bb)	R 11 037.36	R Nil

PIC

The PIC has not spent money for advertising on any television channel or radio station, in the 2015-16 financial year as well as from 1 April 2016 to date.

SAA

For: South African Airways

2015 – 2016 Financial year:

1. Africa News Network 7 Channels R0.00

1. SA Broadcasting Corporation (2015/16)

(aa) Television R712 000.00

(bb) Radio R6 306 966.08

1. National commercial radio station ( non SABC) R13 695 561.09

1. Community

(aa) Television R0.00

(bb) Radio R0.00

(aaa) Financial year 2015 – 16 R0.00

(bbb) Since 1 April 2016 R0.00

2016 till date:

1. Africa News Network 7 Channels R0.00

1. SA Broadcasting Corporation (2015/16)

(aa) Television R1 932 000.00

(bb) Radio R4 822 518.60

1. National commercial radio station ( non SABC) R8 396 152.42
2. Community

(aa) Television R0.00

(bb) Radio R0.00

(aaa) Financial year 2015 – 16 R0.00

(bbb) Since 1 April 2016 R0.00

SARS

Response from the South African Revenue Service (SARS)

(aaa) – 2015-16 financial year	(bbb) – 1 April 2016 – 27 Sep
(b)(i) No advertising placed, no funds spent	(b)(i) No advertising placed, no funds spent
(b)(ii) (aa) R 6 413 674.51	(b)(ii) (aa) R 1 961 340.08
(b)(ii) (bb) R 7 076 710.31	(b)(ii) (bb) R 4 131 478.43
(b)(iii) R 13 308 260.39	(b)(iii) R 8 716 784.06
(b)(iv)(aa) No advertising placed, no funds spent	(b)(iv)(aa) No advertising placed, no funds spent
(b)(iv)(bb) R 80 468.36	(b)(iv)(bb) R 33 667.09

SASRIA

2015/2016 Financial Year

Channel	Amount spent
SABC TV	R218 500
SABC Radio	R308 896
African Business Channel (Business Day TV)	R400 000
African Business News (CNBC)	R550 000
Total	R 1 477 396

April 2016 to date

Channel	Amount spent
African Business Channel (Business Day TV)	R450 000
SABC Radio	R273 824
Primedia (702)	R146 314
Radmark Media House (Kaya FM)	R141 360
Total	R 737 674

TAX OMBUD

The Office of the Tax Ombud has spent as follows;

Media Channels	2015/16	Since 1 April 2016
African News Network 7 channel	R0	R0
SA Broadcasting Corporation
(aa) Television channels	R0	R0
(bb) Radio Stations	R1 457 483.78	R0
National commercial radio stations	R1 359 744.43	R0
Community
(aa) Television	R0	R0
(bb) Radio stations	R130 040.84	R0

Reply:

1. South Africa has complied with every obligation contained in the agreement. The first capital installment (US$150 million) was due and payable on 3 January 2016; it was paid on 30 December 2015. The second capital installment (US$250 million) is due and payable on 3 January 2017; it was paid on 26 August 2016. Five capital installments remain, each payable 12 months after the last; the next three payments are US$300 million and the last two are US$350 million.
2. The New Development Bank related obligations have been factored into the Medium Term Expenditure Framework; and will be funded as budgeted.

Reply:

Formal qualifications as requested below:

(a) (i) Chief Financial Officer	Qualification
Ms SP Khubeka	National Diploma Accounting Bachelor of Commerce Honours (Accounting) Certificate of Membership - Chartered Accountant of South Africa CA (SA)

(b) (i) Director – General	Qualification
Mr L Fuzile	Bachelor of Commerce Higher Diploma in Education Bachelor of Commerce Honours (Economics) Master of Commerce (Economics)

Reply:

The Public Investment Corporation (PIC) have submitted the following information:

(a) VBS Mutual Bank was established in 1982 and traded as the Venda Building Society. The Government Pension Fund of Venda was a shareholder in the Venda Building Society. The Public Investment Corporation (PIC) became a shareholder in VBS Mutual Bank (VBS) with the enactment of the Government Employees Pension Law, 1996 (Act 21 of 1996) (GEPF Law) on the 1st of May 1996. Section 14 of the GEPF Law provided for the discontinuance of inter alia the Government Pension Fund of Venda as well as the Government Superannuation Fund of Venda and for these funds to be amalgamated into the Government Employees Pension Fund.

(b) As at 31 March 2016, the PIC had a 8.5% equity stake in VBS which was valued by external valuators at R4.123 million. The shareholding of 8.5% was due to a rights issue by VBS in which the PIC has not participated as at financial year end. The PIC has since resolved to participate in the rights issue, which will result in the PIC restoring its equity stake to 25.26%. The value of this equity stake will be approximately R12.369 million.