Questions and Replies

Reply:

No, the National Treasury has not investigated such impact, as neither the National Treasury nor the South African Reserve Bank have any evidence that any bank has taken part in currency manipulation, as indicated in our previous replies to oral question 57 and 245 submitted on 29 March 2019, and will repeat the essence of those replies below.

We are not aware that the Competition Commission has made any finding on the manipulation of the rand, but is investigating a case of price fixing and market allocation in the trading of foreign currency pairs involving the Rand, which it has referred to the Competition Tribunal for prosecution. The currency market is a deep and liquid market, and it is difficult to determine any material or long-lasting impact of any one transaction on the level or value of the currency.

It is important for members to differentiate between the impact of any transaction on consumers and the impact on the value of the rand – the investigation before the Competition Commission appears to be related more to the conduct of bank traders towards clients, rather than providing evidence of their affecting the actual value of the rand.

We should all await the outcome of the Competition Commission’s investigation before acting on them. I am also happy to invite the Honourable Member to provide any other evidence he may have on any currency manipulation to the Commission and/or National Treasury.

Reply:

In terms of its mandate and legal provision, SARS established an interim capability to conduct investigations into the illicit economy. The capability executes integrated enforcement investigations and comprises of data analysis, risk identification, criminal and compliance investigation and audits and debt recovery.

(a) Its current staff complement is 60.

(b) The capability is funded through SARS financial allocation.

The mandate and scope of this capability is currently under review in order to better define and sharpen its focus.

As part of the review by the new Commissioner the following is being assessed:

• SARS’ capability and capacity to monitor and assess the activities within the elicit economy as well as assess the true revenue impact/ risk that the illicit economy presents to the state.
• SARS’ capability and capacity to conduct the investigative and audit work
• The most effective organizational arrangement
• Collaboration with the agencies of State.

Reply:

(a) (i) (ii) (iii) (aa) Own	Nil
(a) (i) (bb) Rent	Three (3) buildings: - 1108 John Vorster Drive (1 x floor only) - 240 Madiba Street; and - 40 Church Square.
(a) (ii) (iii) (bb)	Nil
(b) (i) Value and purpose owned property	Not applicable
(b) (ii) Value and purpose of rented property	1108 John Vorster Drive (1 x floor only)	R65 033 050.00	Office accommodation and State Transversal Information and Communication Technology site
	240 Madiba Street	R603 337 824.00	Office accommodation
	40 Church Square	R19 030 631.00	Office accommodation
(c) (i) Duration of rental:	1108 John Vorster Drive (1 x floor only)	20 years
	240 Madiba Street	16 years
	40 Church Square	16 years
(c)(ii) From whom is each property rented:	1108 John Vorster Drive (1 x floor only)	Rented on behalf of National Treasury by the Department of Public Works, owned by SITA.
	240 Madiba Street	Rented on behalf of National Treasury by the Department of Public Works, owned by Bothongo Group Management.
	40 Church Square	State owned - Department of Public Works.
(c)(iii) Monthly rental fee for each property:	1108 John Vorster Drive (1 x floor only)	R1 127 659.02
	240 Madiba Street	R4 221 538.45
	40 Church Square	R673 134.08

 

Reply:

National Treasury did not support any investments in energy resources outside the borders of the Republic.

Reply:

1. R199 million has been allocated to the SABC for the 2019/2020 financial year. This is to specifically cater for public broadcasting obligations, community radio stations, Channel Africa and programme production. More detail can be found within the Estimates of National Expenditure.

2. In the 2019 Budget Speech, the Minister of Finance indicated the following:

“On other state-owned enterprises, we are reviewing our framework for state-owned enterprise support. Government has revised the contingency reserve upwards to R13 billion for 2019/20 to respond to possible requests for financial support”

SABC is one of the entities that has applied for funding from the contingency reserve. The amount that the entity has applied for and the outcome of the funding request will only be determined after the normal budgetary and legislative processes have been finalised which is expected around August/September 2019.

3. In line with the 2019 Budget Speech, National Treasury has indicated to the SABC that government remains committed to supporting the entity and its funding requirements through the contingency reserve process which is currently underway.

4. None.

Reply:

1. SAA was recapitalized with R5 billion during February 2019 to assist the airline to repay maturing government guaranteed debt. This was in accordance with the SAA Special Appropriation Bill which was tabled at the time of the Medium Term Budget Policy Statement (MTBPS) in October 2018. The R5 billion formed part of the R21.7 billion funding request by SAA.

2. In the 2019 Budget Speech, the Minister of Finance indicated the following:

“On other state-owned enterprises, we are reviewing our framework for state-owned enterprise support. Government has revised the contingency reserve upwards to R13 billion for 2019/20 to respond to possible requests for financial support”.

SAA is one of the entities that has applied for funding from the Contingency Reserve. The amount the airline applied for and the outcome of the funding request will only be determined after the normal budgetary and legislative processes have been finalised which is expected around August/September 2019.

3. In line with the 2019 Budget Speech, National Treasury has indicated that government remains committed to supporting the airline and its funding requirements through the

contingency reserve process which is currently underway.

4. None

Reply:

1. By 30 April 2019, National Treasury transferred a total of R13.5 billion to Eskom of the R17.652 billion that was approved by the Minister of Finance through invoking Section 16 of the Public Finance Management Act (PFMA).

2. Government acknowledges that the R23 billion for 2019/2020 will not be sufficient and is thus tabling a Special Appropriation Bill to Parliament for urgent consideration and approval.

3. Given the strategic role that Eskom plays in pursuit of governments objectives, the Minister of Finance announced that government has committed to set aside R23 billion per year over the next 3 years to financially support Eskom. Moreover, beyond MTEF the current fiscal planning includes R23 billion per year to support Eskom over the next 10 years, with the total accumulated support amounting to R230 billion or R150 billion in net present value terms.

4. None.

Reply:

1. (a) The Nugent Commission was funded by the fiscus, which is the same as other Commissions.

   (b) A total amount of R7 985 726 was spent on the Commission.

2. (a) Judge Nugent was paid in accordance with the President’s determination on remuneration of the Chairperson of the Commission. He received a total amount R816 459 for the period 1 June to 31 December 2018.

  (b) The last day of the Commission was 31 December 2018.

3. The work of the Commission has been finalised and the report was submitted to the Office of the President.

Reply:

What (a) amount has been designated for the purposes of (i) creating jobs and (ii) addressing unemployment in the Government’s national budget for the 2019-20 financial year

Public employment programmes are key components of the government’s drive to alleviate poverty, inequality and unemployment in South Africa. These programmes have a large multiplier effect on vulnerable communities by combining the social, environmental and economic objectives of employment generation, income support, and asset creation. Government has allocated a total of R15.4 billion in the national budget for the 2019/20 financial year towards addressing unemployment. This is mainly comprised of two public employment programmes, namely, the Expanded Public Works Programme (EPWP) (R14.6 billion) and the Jobs Fund now called the Employment Creation Facility Fund (R800 million).

The table below displays the breakdown of funds designated for the purposes of creating jobs in the 2019/20 financial year.

National departments (R'000)	13 807 428
Cooperative Governance and Traditional Affairs	4 038 608
Environmental Affairs	4 084 367
Labour	2 289 950
National Treasury	800 073
Public Works	1 812 036
Rural Development and Land Reform	411 153
Tourism	371 241
Provincial Departments (R'000)	1 586 094
Infrastructure Development	314 634
Public Works and Transport	1 271 460
GRAND TOTAL	15 393 522

Additionally, government launched the Youth Employment Service (YES) initiative in March 2018. This is a business-led initiative supported by government. It offers a quality one-year work experience to participating youth, coupled with training (both technical and behavioural) as well as boosting the access to networks relevant for finding the next job. It is complementary with government incentives such as the Employment Tax Incentive as well as custom Broad-based Black Economic Empowerment recognition work to further bolster the programme’s impact. The YES directly contributes to employment creation but does not have a direct allocation from the government.

 

(b) What are the details of each programme and/or department or entity that will benefit from these designations?

Within the EPWP, there are two main modalities through which public employment is funded. The first is through direct budgetary allocations, where public employment is an explicit part of the purpose. The second modality is where focus on employment is not the primary or stated aim of a given programme, but where there is scope for labour-intensive work as part of the programme design. Part of the rationale for the incentive grants is to encourage public bodies to look at their programmes through this prism.

The incentive grants of the EPWP were initiated to expand job creation in specific focus areas, where labour-incentive delivery methods can be maximised. The grants are made up of the following components:

In provinces:

• Infrastructure sector
• Environment and culture sector

In municipalities:

• Social sector
• Environment and culture
• Infrastructure

At national level:

• Environment and culture

While each of the grants vary slightly in terms of design, they share the following purposes:

• To strengthen job creation outcomes in specific focus areas
• To maximise the use of labour intensive methods
• To incentivise increased job creation efforts within public bodies by linking budget allocations from the grant to performance.
• To use the grant to incentivise increased use if core budgets and other conditional grants for the purposes of job creation.

The EPWP is carried out by the following government departments: Labour, Public Works, National Treasury, Agriculture, Forestry and Fisheries, Tourism, Environmental Affairs, Cooperative Governance and Rural Development and Land Reform. The Department of Public Works leads and coordinates the expanded public works programme, as articulated in government’s medium term strategic framework and the national development plan whilst the Jobs Fund is run directly by the National Treasury.

Complementing government’s broader job creation programmes, the Jobs Fund is a specific grant financing instrument that uses public funds to catalyse innovation and investment in activities that contribute to job creation initiatives and longer term employment growth. In March 2018 the Jobs Fund issued its eighth call for proposals which it hopes to complete by the first quarter of the 2019/20 financial year.

 

Reply:

Progress has been made on key interventions to restore policy certainty as outlined in the 2019 Budget Review. These include:

1. Visa amendments and immigration reform: Gazetted amendments to the Immigration Act (2002) will waive the requirement of an unabridged birth certificate for children traveling from certain countries. Revised requirements for business visas clarify the documentation and accreditations required. An e-visa system will be launched with New Zealand as the pilot case. It will then be rolled out to other countries. The scarce skills list will be updated by March 2019.

2. Mining policy: Government issued a new Mining Charter. The Minister of Mineral Resources has signaled that controversial amendments to the Mineral and Petroleum Resources Development Act (2002) are no longer in keeping with the policy intent. Separate legislation for the regulation of oil and gas is being developed and consultations with various stakeholders are under way.

3. Administered price review: The Department of Energy has invited the public to comment on the basic fuel price review until 31 March 2019. Stakeholder consultations are under way to identify ways to improve the efficiency and reduce the costs of ports and rail, making the country’s exports more competitive.

4. Procurement: The Public Procurement Bill is being finalised. It will consolidate various procurement laws into one national legislative framework. Provisions in the bill will encourage participation from black-, youth- and women-owned businesses in state procurement.

5. Telecommunications spectrum: The impasse on licensing has been resolved and licensing for high-demand spectrum will commence this year, with the process expected to be completed in 2020/21.

Prior to this, the 2018 Medium Term Budget Policy Statement reported progress on longstanding policy issues including:

1. Renewable energy: Eskom’s conclusion of 27 outstanding power-purchase agreements with independent power producers.

2. Energy planning: The reestablishment of a sustainable approach to energy planning by updating the Integrated Resource Plan for consideration by Parliament.

3. Land reform: Creating a panel to advise government on measures to effect fair and equitable land reform that will increase agricultural output and build self-sufficiency in food production.

Government is also acting decisively to mitigate the risks that Eskom poses to the economy and the public finances. The restructuring of the electricity sector and state support for Eskom’s balance sheet are central to a transparent and credible reform of the utility’s business model. This forms part of government’s broader agenda to restore good governance and financial stability at public institutions and state-owned companies.

Collectively, these efforts illustrate the progress made in providing policy certainty.

Reply:

In terms of section 160(1) of the Constitution, a municipal council, makes decisions concerning the exercise of all the powers and the performance of all the functions of the municipality. The Municipal Finance Management Act 56 0f 2003 (MFMA) was issued to provide municipal councils with the financial management legal framework to enable decision making, which includes amongst others, the management of the municipality’s bank account. The MFMA is applicable to both municipalities and municipal entities. The MFMA enables municipalities to open more than one bank account provided that initial allocations to the municipalities flows through the municipality’s primary bank account. The legislation is however silent on the issue of “ring fencing”, however, nothing stops the municipal council from adopting a written policy which enables the ring fencing of funds for purpose of defraying liabilities due towards Eskom.

An Inter-Ministerial Task Team, made up of officials from the National Treasury and the Department of Cooperative Governance, has been established to look at strategies to address the failure by municipalities to pay, amongst others, Eskom and Water Boards.

Over and above the Inter-Ministerial Task Team, both the national and provincial treasuries are assisting financially struggling municipalities to prepare financial recovery plans for implementation. This will assist towards ensuring that the municipalities are financial sustainable. It is also important that issue of regulations are also looked at in the context of the Constitution referred to above, namely, that the executive authority at local government is vested within the municipal councils. The National Treasury can therefore regulate to provide a framework for decision making, but the ultimate and final decision vest with the municipal council.

Reply:

a) The Commission has operated at all times in terms of a Presidential Proclamation (no 17 of 2018, published in Government Gazette 41652 of 24 May 2018) which set out the terms of reference for the Commission supplemented by regulations set out in Proclamation no 18 of 2018 (published in Government Gazette 41713 on 15 June 2019), as amended. There is no end-date for the Commission, but the terms of reference required a final report by 14 December 2018. Having met this deadline and issued its final report, the Commission is no longer active at this stage in terms of further hearings or reports, but Judge Nugent is concluding logistical arrangements like the cataloging and archiving of the Commission’s work or attending (where required, with other members of the Panel or evidence team) to requests like that of appearing before the Standing Committee on Finance on 13 February 2019. This logistical process commenced after delivery of the final report, and takes place at the premises that SARS made available to the Commission for its work.

b) There is no last day of the Commission, even though it is not actively functioning in terms of hearings or fact-finding. The President is expected to respond shortly to the recommendations of the Commission, and to provide clarity on a formal end-date for the Commission.

Reply:

Question 1

1. There are no economic indicators that measure the direct impact of the “land expropriation without compensation” debate on South Africa’s economic performance or its specific impact on the agricultural sector. However, there are indicators that collectively provide insight into the overall performance of the agricultural sector. These include: (i) gross capital formation in agriculture; (ii) profitability (net farm income); (iii) real value added in agriculture, forestry and fishing; (iv) farm mortgages; and the (v) agribusiness confidence index. None of these indicators are able to isolate the direct impact of the “land expropriation without compensation” debate.

1. Real gross fixed capital formation – a proxy for investment – peaked in 2013 and has been on a downward trend since.

2. Net farm income – a measure of farm profitability – has been growing since 2010. The data for 2017 and 2018 are not yet available.

3. Real value added in agriculture, forestry and fishing declined by 4.8 per cent in the first half of 2018 compared with the same period in 2017. Maize production eased following record output in 2017 and the drought continued to weigh down production in the Western Cape. The short-term outlook for the sector has improved due to higher rainfall in the Western Cape. The combined export value of crops such as citrus, grapes and macadamia nuts increased by an annual average of 7.5 per cent over the period 2015 to 2017.

4. New mortgage loans and re-advances granted on farms peaked in 2006 and has remained relatively flat since 2011. At the end of 2017 new mortgages on farms were at similar levels to those observed in 2013.

5. The Agbiz / IDC Agribusiness Confidence index fell to 42 index points in the fourth quarter of 2018 – its lowest level in 9 years. This was largely due to significant declines in the net operating income, general agricultural conditions and turnover sub-indices – suggesting that business conditions are driving changes in sentiment. The capital investment confidence sub-index increased, supported by increases in capital sales (specifically tractor sales which were 9 per cent higher in the first 10 months of 2018 in relation to the same period last year).

It is difficult to isolate the impact of the “land expropriation without compensation” debate on the agricultural sector or the broader economy on the basis of these indicators. Furthermore, the information revealed by these indicators about the agriculture sector is mixed and there are a number of other factors that influence sentiment in agriculture, including the cost of doing business, weather expectations and market conditions.

The government has allocated resources to conduct a general agricultural census (currently underway), to collect information that will provide further data on the dynamics in the sector to better inform policy making and support a viable, inclusive and productive agricultural sector.

2. As indicated, it is not possible to empirically isolate the impact of the debate on “land expropriation without compensation” and therefore not possible, at this stage, to presume any negative impacts on the economy.

3. In light of the above, at this stage it is not possible to assess the potential impact on tax revenues.

Reply:

We have no evidence of the manipulation of the Rand, and invite the Honourable Member to provide any evidence he may have of such manipulation. The currency market is a deep and liquid market, and it is difficult to determine any material or long-lasting impact of any one transaction on the level or value of the currency. I am therefore not able to respond to the question on the impact on revenue collection.

It is important to differentiate between the impact of any transaction on consumers and the impact on the value of the rand – current cases before the Competition Commission appear to be related more to the conduct of bank traders towards clients, rather than providing evidence of affecting the actual value of the rand, but let us await the outcome of that investigation before making any conclusions.

 

Reply:

1. No I have not, since the National Treasury does not have any evidence on whether there is any form of currency manipulation and hence not able to assess the impact of any alleged manipulation on illicit financial flows. The National Treasury has also checked that the South African Reserve Bank likewise does not have such evidence, and would like to invite the Honourable Member to provide any such evidence if she has any.

2. As stated above, neither the National Treasury nor the South African Reserve Bank have any evidence that any bank has taken part in currency manipulation. We are aware that the Competition Commission is investigating a case of price fixing and market allocation in the trading of foreign currency pairs involving the Rand, which it has referred to the Competition Tribunal for prosecution. The currency market is a deep and liquid market, and it is difficult to determine any material or long-lasting impact of any one transaction on the level or value of the currency.

It is also important to differentiate between the impact of any transaction on consumers and the impact on the value of the rand – current cases before the Competition Commission appear to be related more to the conduct of bank traders towards clients, rather than providing evidence of affecting the actual value of the rand, but let us await the outcome of that investigation before making any conclusions.

Reply:

1. The Government of South Africa has not entered into an agreement to provide the government of the Kingdom of eSwatini with financial support.

2. Moreover, should such a formal request be received, it would need to be considered within the context of the challenging macroeconomic climate as outlined in the 2019/20 Budget Review, which highlights the following challenges:

2.1 Subdued economic growth, forecast at 1.9 percent real GDP growth for 2019/20,

2.2 An increasing budget deficit (forecast to increase from 4,2 percent in 2018/19 to 4.5 percent in 2019/20); and

2.3 the resultant fiscal consolidation measures currently being undertaken by government (reduction of baselines by R50.3 billion) to ensure that public finances are returned to a sustainable path.

Reply:

Yes, the implementation of the Public Service Co-ordinating Bargaining Council Resolution included employees in Programme 1.

(a) (i) 18 employees in Programme 1 qualified; and

(ii) 48 employees did not qualify.

(b) The DPSA Circular 4 of 2014, a Directive on the amendment to the implementation of the PSCBC Resolution 3 of 2009 and the grading of jobs/posts on salary levels 9/10 and 11/12, directed that the automatic upgrades should be implemented for employees who were appointed between 1 July 2010 and 31 July 2012, the 48 employees who did not qualify were appointed after the said date.

The National Treasury consulted with the Minister for the Public Service and Administration (MPSA) on the grading of the positions of 48 employees who were appointed on or after 1 August 2012, as per the DPSA Circular 4 of 2014. The affected positions were subsequently verified by the DPSA and retained on salary levels 9 and 11 respectively.

Reply:

SARS has conducted a research study (tax gap) to estimate the loss of revenue on illicit trade of cigarette using the top-down approach for the period 2014/2015 and 2015/2016 respectively. The estimated loss of tax revenue (tax gap) was estimated at R4.1 billion and R6 billion respectively. However, SARS has not commissioned a research study to quantify the size of the illicit cigarette for the period in question, 2008/2009 – 2017/2018 financial years and as such, SARS is unable to provide an official position to that effect.

SARS is currently undertaking a scientific and evidenced-based research study to identify the businesses operating in the illicit economy with a view to quantify the size of the illicit economy. The research methodologies include both qualitative and quantitative analysis through collaboration with business, field research including a survey for data collection for all tax types. The research study further serve to solicit input from the multidisciplinary stakeholder involved in the illicit economy enforcement to ensure a collective approach is attained. The study is expected to be completed during 2021.

SARS has put measure in place to combat the illicit trade and selling of illicit cigarettes through its Customs enforcement wing and in collaboration with other law enforcement wings from the public (JCPS cluster) and the private including TISA and FITA. SARS is aware of the various studies amongst others IPSOS and Euronomics which has estimated the size of the illicit cigarettes to average R8 billion per annum however, due to the absence of our own research, SARS is unable to quantify or confirm any narrative currently in the public domain.

SARS Enforcement performance, 10 years, 2008/2009 – 2017/2018 financial year

SARS enforcement was involved in 13, 428 seizures in the past 10 years, resulting in 1.7 billion sticks of cigarettes with a Rand value of R1 041 billion calculated at an average street value of R0.60 per cigarette sticks and R1.7 billion when using the industry acceptable average value of R1.00.

Reply:

NATIONAL TREASURY

1. (a) No

(i) Number of contracts signed	(ii) Date on which each contract was signed	(iii) Duration of each contract	(iv) What services did the company render?	(v) Monetary value of each contract in each case
Nil One purchase order issued	Order issued on 1 June 2015	3 days	Security Services at the Cape Town International Airport for the World Economic Forum	R30 369.60

 

2. No

ASB

The Accounting Standards Board did not contract the services of BOSASA now known as GLOBAL OPERATIONS in any of the past 10 financial years to date.

CBDA

The Co-operative Banks Development Agency has never contracted the services of Bosasa now known as Global Operations.

DBSA

1. None
2. None

FAIS OMBUD

Inspection of the FAIS Ombud database has revealed that NO contracts were entered into with the above mentioned supplier for the financial periods ending 1 March 2007 to date.

FIC

(1) The Financial Intelligence Centre did not contract BOSASA or Global Operations for any services in any of the past 10 financial years.

(i)(ii)(iii)(iv)(v) Not applicable.

(2) Not applicable.

FSCA

The Financial Sector Conduct Authority (and the former Financial Services Board) has not contracted with the mentioned companies during the past 10 years.

GEPF

The GEPF has not contracted the services of BOSASA now known as Global Operations in the past 10 financial years.

GPAA

The GPAA has not done any business with BOSASA (GLOBAL OPERATIONS) for the said period.

IRBA

The IRBA hereby declares that no contracts were awarded to the abovementioned company in the past 10 Financial years.

LAND BANK

Land Bank has never contracted the services of Bosasa or Global Operations.

PFA

(1)(b) The Office of the Pension Funds Adjudicator has not contracted the services of Bosasa (now known as Global Operations) in the past 10 years.

(2) Not applicable.

PIC

The PIC during the last ten financial years did not contract the services of the company mentioned.

SARS

Question 1

SARS has never contracted with, BOSASA now known as GLOBAL OPERATIONS, for any security related services.

Question 2

N/A

SASRIA

For purposes of the question(s) raised above, Sasria SOC Ltd (“Sasria”) has not contracted the services of Bosasa now known as Global Operations (“Bosasa”), in each of the past ten financial years.

Whilst we have taken care, and exercised the necessary diligence in preparing the requested information, it is necessary that we highlight that, there is no information that seeks to indicate or suggest whether Bosasa was at any point directly or indirectly contracted to Sasria.

It is also common cause, that Sasria provides specialist short-term insurance products to its clients, which include but are not limited to insurance coverage from damage caused by non-political riots, public disorder, including labour disturbances, civil unrest, strikes, lockouts and terrorism, as well as loss in respect of mortgage loans. It would therefore follow, that Sasria would be in a position to have done business with Bosasa in this respect.

In the spirit of this, Sasria has therefore settled various insurance claims to Bosasa, and these are in the ordinary course of our business, and the said payments are neither services sought, nor contracts entered into, as the questions above specifically enquire on services entered into with Bosasa.

We hereby therefore, for purposes of transparency, disclose all the claims Bosasa has had with Sasria, and stress the fact that these are not services nor contracts entered into, but claims payments in the ordinary course of our business, as mandated.

Date (Payment)	Client	Service provided	Rand Value (Excl. VAT)	Duration	Irregular Expenditure
20 March 2012	Bosasa Operations (Pty) Ltd	Insurance Claim	R 131 578.95	N/A	N/A
14 November 2012	Bosasa Operations (Pty) Ltd	Insurance Claim	R 68 774.30	N/A	N/A
18 December 2013	Bosasa Operations (Pty) Ltd	Insurance Claim	R 318 533.67	N/A	N/A
12 August 2015	Bosasa Operations (Pty) Ltd	Insurance Claim	R 2 010 495.23	N/A	N/A

TAX OMBUD

1. The Office of the Tax Ombud did not contract any services of BOSASA now known as GLOBAL OPERATIONS in the past 10 financial years.
2. No irregular expenditure was recorded or condoned that relates to BOSASA now known as GLOBAL OPERATIONS.

Reply:

1. No signs of hacking were found. The possibility that Minister’s twitter account may have been hacked was raised in an interview, during which the journalist asked if Minister’s twitter account had been hacked. The response was that we did not know at the time how Minister had ended up liking the tweet in question, and that we were looking into the matter.
2. See response to question 1

Reply:

a) The Large Business Centre was decentralized as part of the new operating model that was adopted by SARS in 2016. SARS was of the view that decentralization will allow large businesses to have easy access to SARS offices throughout the country and by this enhance the service offering to the sector.

b) SARS took an executive decision to re-establish the Large Business segment after conducting diagnostic studies that showed the synergies and gains achieved when the Large Business Centre was centralised. The LBC will formally commence operations on 1 April 2019.

 

Reply:

Real gross domestic product (GDP) growth is expected to increase from an estimated 0.7 per cent in 2018/19 to 1.5 per cent in 2019/20. Growth is expected to be supported by stronger household spending and private sector investment.

Household spending is projected to strengthen due to gradual improvements in disposable income and credit extended to households. Employment growth is expected to remain weak in the early half of the fiscal year, although real wage growth in the private sector is expected to recover.

Investment growth is expected to remain subdued compared with historical levels, but improving over the medium term. In 2019/20, investment growth is expected to be supported by a rising need to replace worn capital, an expected improvement in certain export commodity prices, and a gradual recovery in business confidence.

The main risks to the economic outlook for 2019/20 concerns Eskom and the potential impact that ineffective implementation of its reconfiguration could have on capital flows; the level of the exchange rate; and investor confidence. Other near-term domestic risks include the potential for disruptive load-shedding, prolonged industrial action and whether a hesitance to investment continues well beyond political events scheduled this year. Government has made progress on restoring policy certainty with many measures being implemented or prepared for implementation. Improved traction on the reform agenda could increase growth, if reforms are well-received by investors and businesses.

Global risks include an escalation of global trade frictions that lead to financial market volatility and undermine international trade and investment. If trade disputes are resolved, the resulting improvement in business and investor sentiment can support global growth. Slower growth in key export markets can further pressure demand for South Africa’s exports while global financial markets remain vulnerable to uncertainties surrounding Brexit and potential banking sector risks in Europe.

Reply:

1. (a) Mr (details provided) provided his services for free to the Nugent Commission of Inquiry and was therefore not paid for the work that he performed for the duration of the Commission.

(b) worked up to 30 November 2018 without remuneration.

2. (a) Advocate was paid a total amount of R1 869 300.00 at a rate of R18 000.00 per day for the work of the Commission and for 104 days.

(b) Advocate last day of remunerated work paid was 30 October 2018, and must still submit an invoice for work performed in November 2018.

3. (a) has not been remunerated to date, however he has submitted invoices in January 2019 for the amount of R842 292.00

(ii) has performed remunerated worked until 11 December 2018.

Reply:

No.

Reply:

1. No
2. Not applicable.

Reply:

NATIONAL TREASURY

(a) No

(i)(ii) N/A

ASB

The Accounting Standards Board has not contracted the services of any of the companies.

CBDA

The Co-operative Banks Development Agency has not contracted the services of any of the companies.

DBSA

(b) No.

(i) NIL

(ii) N/A

FIC

(b) The Financial Intelligence Centre has not contracted any services of companies as listed.

(i) Not applicable.

(ii) Not applicable.

FAIS OMBUD

Based on our records and scrutiny of the system, the FAIS Ombud can confirm that no contracts or services were utilized from the service providers listed.

FSCA

The Financial Sector Conduct Authority (including the former Financial Services Board) has never engaged the entities named as their service providers or suppliers.

GEPF

The GEPF has not contracted any of the entities.

GPAA

According to our records, the Government Pensions Administration Agency and GEPF have no records of the above companies in our system.

IRBA

The IRBA hereby declares that we have not contracted any of the services from the companies listed.

PFA

Based on the information available at my disposal, the Office of the Pension Funds Adjudicator has never contracted the services of the companies listed.

LAND BANK

Land Bank does not have any contracts in place with any of the companies listed above.

We have, however, utilized Eavesdropping Detection Services which is a division of Corporate Business and Insight Awareness on a once-off basis for confidential work for Technical Surveillance Counter Measures. This order was placed in December 2018. Payment of R53 241.32 was made to Corporate Business and Insight Awareness on 21 January 2019.

Corporate Business Insight and Awareness is a new supplier on our database and all the necessary screening including AML was conducted prior to them being loaded.

PIC

The Public Investment Corporation (PIC) contracted the services of Corporate Business Insight and Awareness (CBIA) in the 2014/15 financial year.

(i) The total monetary value was R20 621.00.

(ii) This was a once-off assignment.

SARS

According to the SARS financial systems:

1. There is no indication that SARS contracted with Eavesdropping Detection Solutions (EDS.

2. There is no indication that SARS contracted with Cell Detect; or Business Espionage Countermeasures South Africa (BECSA).

3. SARS did make purchases from the vendor named Corporate Business Insight and Awareness (CBIA). The total payments made to CBIA are indicated below and these date back to the Financial Year 2006/2007 until Financial Year 2014/2015.

2006/2007	2009/2010	2010/2011	2011/2012	2012/2013	2013/2014	2014/2015	Grand Total
70 965.00	737 891.00	54 720.00	68 628.00	640 779.80	501 962.52	264 528.42	2 339 474.74

SASRIA

Sasria SOC Ltd is currently (and had previously) not contracted the services of the following companies:

TAX OMBUD

The Office of the Tax Ombud did not conduct any business or award any tender to any of the aforementioned companies.

Reply:

(1) The PIC’s Social and Ethics Committee (SEC) has never considered the home loan that VBS Mutual Bank (VBS) granted to former President Zuma. According to media reports, VBS advanced a loan to Mr Zuma in September 2016. The PIC had no knowledge of, nor was it party to, that transaction. In August 2017, the transaction referred to in the reply to Parliamentary Question 2762, was referred to the SEC due to the negative media coverage that followed after VBS granted the home loan to Mr Zuma. The SEC had to assess the reputational risk for the PIC when investing in VBS.

(2) The PIC did not grant any loan to VBS to be used to lend money to former President Zuma.

The rest of the questions fall away.

Reply:

This pensioners (Name furnished) monthly pension was paid from January 1993 to March 2018 to the following bank account number:

ABSA (Volkskas)

Branch: Adelaide

Account no: XXXXXXXXX

She was a member of the TEPF when she retired and a widow when she died, the monthly pension stopped with her death.

There is no further pension payable to anyone.

Reply:

Water supply infrastructure is funded through various grants, including the Regional Bulk Infrastructure Grant, the Water Services Infrastructure Grant and the Municipal Infrastructure Grant. In metropolitan municipalities like the City of Tshwane, where these wards are located, the Urban Settlements Development Grant is a supplementary grant for municipal infrastructure services. The grant allocations are based on household backlogs and poverty weighted data.

The choice of which projects are funded from the Urban Settlements Development Grant is determined by metropolitan municipalities. Projects must be identified in the municipality’s Integrated Development Plan and then included in their Service Delivery and Budget Implementation Plan.

Reply:

Although the Treasury would like to increase the child support grant (CSG) closer to or ideally to or above the food poverty line, progress on this is being constrained by the macro-economic environment and other factors driving grant expenditure.

Increasing the value of the CSG to the food poverty line would significantly assist poor households and by definition reduce the proportion of the population defined as poor. The 2018 budget included above inflation increases to the Child Support Grant (CSG), to compensate for the VAT increase. The CSG increased from R380 in 2017/18 to an average of R405 (R400 from April to September 2018 and R410 from October 2018 to March 2019) in 2018/19. This was an annual increase of 6.6% against estimated CPI of 4.9%.

However, in the 2019 budget, because of fiscal pressures and increasing beneficiary numbers, social grant values will increase in line with long term inflation. The CSG increases from an average of R405 in 2018/19 to R425 in 2019/20 (4.9%). Despite this, the budget for social grants increases by 7.5 per cent to R175.2 billion (of which R65 billion is for CSG) in 2019/20 and exceeds R200 billion (of which R76 billion is for CSG) by 2021/22. Factored into the budget is also an increase in beneficiary coverage. In particular:

• The demographic aging of the SA population by >3% per annum or 120,000 elderly persons per annum costs an additional R2.5 billion rising to R2.8 billion per annum over the MTEF.
• The number of CSG beneficiaries continues to rise by around 190,000 per annum costing an additional R1 billion per annum.
• The budget for social grants over the 2019 MTEF period also includes an allocation for a new policy proposal for a top-up CSG for double orphans, at a rate of 150% of the CSG (i.e. R615). Implementation is anticipated in 2020/21 with an initial budget of R344 million and growing to R1 billion in 2021/22.

Nevertheless, government would like in the long term to bring the CSG much closer to the food poverty line of R547 (StatsSA, 2018). Given the current 12.5 million beneficiaries, estimated to grow by about 190k per annum, raising CSG to the food poverty line will require additional allocations of R21 billion rising to R25 billion per annum. This is unfortunately not affordable at present.

Reply:

According to the SARS records the person has a grade 12 qualification. At the time of his appointment to SARS it was not the practice to verify the qualifications. His qualifications have therefore not been verified by SARS.

Reply:

(1) All transactions entered into by the Public Investment Corporation (PIC) has to adhere to the mandate requirements of its clients. The money market mandate of the Government Employees Pension Fund (GEPF) allows for investments up to a 12 month tenure, whereas the capital market mandate allows for investments for a longer tenure. Both of the mandates for these asset classes explicitly state the credit rating of the issuer and/or the instrument being the main criteria for such investment. The Eskom loan in question was done on the explicit condition that the loan should be government guaranteed , which implies that it has the highest credit quality in the domestic ZAR denominated market.

(2) The GEPF’s mandate requirements for money market and capital market transactions are in line with acceptable industry norms and standards. The GEPF’s mandate was approved by the GEPF’s Board of Trustees. The mandates of all the clients of the PIC are also approved by the Financial Sector Conduct Authority (FSCA).

(3) The PIC’s Research and Project Development Team has conducted detailed research (“deep dive”) into Eskom.

(4) Due to the confidentiality of the information pertaining to the Eskom loan of R5 billion, the supporting documents cannot be made available. It should, however, be stated that this loan was granted on 1 February 2018 and repaid in full, with interest, on 1 March 2018.

Reply:

(1) The GEPF has already provided a detailed response to a similar question in broad terms which applies to detailed investment monitoring, refer to the response provided to Question Number: 1220 [NW1316E] dated 2 May 2018.

The GEPF and PIC have entered into a formal arrangement stipulating the terms under which the PIC is authorised to manage the assets of the GEPF. The Trustees have implemented variouis the monitoring and compliance measures to enable them to effectively discharge their fiduciary duty of investment monitoring. The Board has constituted permanent committees and sub-committeees to give effect to its strategic functions, including investment monitoring. All the committees have formal terms of reference that clearly set out the mandate and duties of the each committee. These are briefly described below.

Board Committees:

1. The Investment Committee is a committee of the Board whose duty includes monitoring the Investment Managers’ investments, including the PIC. Part of the investment committee’s duty is to consider various factors including any changes in the Fund’s liabilities as reported by the Fund’s Valuator, and any changes in the expected return on the Fund’s assets, the likely volatility of the value of the Fund’s assets and any implications those changes may have on the funding level of the Fund, contribution requirements, or benefits of the Fund, including but not limited to:

• • Monitoring and reviewing the performance of Investment Manager(s) primarily the PIC, to assure compliance with policy, procedures, risk and return objectives as set out in their mandate(s);
• Monitoring investment performance. The investment committee ensures that an independent review and evaluation of the performance of the investment portfolio is conducted at least quarterly.

• Reviewing quarterly investment reports and reporting where appropriate to the Board on issues that are considered important or relevant for Board deliberation.

2. Valuations Sub-Committee: The Valuations sub-committee is a sub-committee of the Finance and Audit Committee and reports into the Finance and Audit Committee of the Board and the Investment Committee. The Valuations sub-committee has been established to advise the Fund on the relatively complex matter of the valuation of the unlisted investments of the Fund managed by the PIC.

Management Committees:

1. The GEPF/ PIC Investment Liaison Committee: The purpose of the Investment Liaison Committee is to bridge the gap between the PIC and GEPF’s Investment Committees with the implementation of the GEPF’s reporting requirements, resolution of queries and implementation of the investment strategy as set out in the investment mandate of the GEPF. The Investment Liaison Committee also facilitates smooth investment processes and ease the flow of information and communication between the GEPF, PIC, Government Pensions Administration Agency and any third party service providers of the GEPF on investment matters.There are monthly meetings that are augmented by more regular interaction as necessary.

2. The GEPF/ PIC Exco to Exco committee: The GEPF/PIC Exco-to-Exco was established to, subject to the direction of the Board of Directors, of both GEPF and PIC, exercise the powers and perform the duties conferred or imposed upon it by the Government Employees Pension Law. Part of the duties include oversight responsibilities in relation to the implementation of the GEPF Investment Management Agreement. There are monthly meetings that are augmented by more regular interaction as necessary.

3. ESG Working Committtee; The purpose of the ESG working committee is to address the environmental, social and governance matters within the PIC and GEPF Investment Committees in order to implement the Responsible Investment strategy as set out in the investment mandate and investment beliefs of the GEPF quartely.

(1) (a) The GEPF has not written-off its investment in Steinhoff and this is reflected at its current market value

(1) (b) The GEPF’s investment in Ayo Technologies is reflected at its current market value and has not been written-off.

(1) (c) The GEPF has not invested in Sagamartha.  

(1) (d) The Fund’s investment in Independent Media and VBS have been impaired and this is fully disclosed in the  GEPF’s 2017/18 Annual Report with their respective impairment amounts of R1058320000 and R374700000.

(2) Refer to the reply above.

(3) The PIC does not have to inform the GEPF of the investment that it makes provided that it’s within the mandate. Monitoring and reporting takes place as detailed above (answer to question 1).

Reply:

NATIONAL TREASURY

(a) 10 Non-compulsory briefing sessions were held in 2018.

(b) Nil

ASB

The Accounting Standards Board held no tender briefings in 2018, as none of the goods and services procured meet the requirements for issuing tenders.

CBDA

In the 2018/19 financial year the Co-operative Banks Development Agency (CBDA) did not have any tender briefings.

The only tender briefing held by the CBDA was in the 2017/18 financial year, with tender number: NT 013-1-2017 and it was a non-compulsory briefing session.

FAIS OMBUD

The Office of the Ombud for Financial Services Providers (FAIS Ombud) would like to confirm that o tender briefings were held for the period 1 January 2018 to 31 December 2018.

FIC

(a) The FIC held 3 tender briefing sessions.

(b) All three (3) briefing sessions were compulsory

FSCA

(a) Eleven (11) briefing sessions were held.

(b) Seven (7) thereof were compulsory.

GEPF

(a) The GEPF held the following compulsory tender briefing meeting from 1 January 2018 – 31 December 2018:

• Strategic Investment Advisory Service
• Legal Services
• External Auditors

(b) The tender briefings were compulsory

GPAA

The Government Pensions Administration Agency had eleven compulsory briefing sessions in 2018.

IRBA

1. One tender briefing session was held in 2018;
2. The session was compulsory.

LAND BANK

Land Bank had 17 compulsory briefing sessions in 2018

PFA

The Office of the Pension Funds Adjudicator had 3 tender briefings for 2018 and were all not compulsory for prospective bidders to attend. The tenders relate to the procurement of Information Technology Infrastructure and Public Relations consultancy services.

PIC

(a) The PIC had 15 tender briefing sessions in 2018:

• Open Tenders – 14 briefing sessions; and
• Closed Bids – 1 briefing session.

(b) All of the briefing sessions stated above were compulsory.

SARS

(a)(i) NT to respond

(ii) SARS issued 31 tenders for the period 1 January 2018 to 31 December 2018.

(b) Out of the 31 tenders, 22 had tender briefings with 9 being compulsory and 13 being non-

compulsory.

SASRIA

Sasria SOC Ltd has not had any tender briefings during the period 01 April 2017 up to 31 March 2018.

TAX OMBUD

a) Only one (1) tender briefing was held in the year 2017/18 financial year and none in 2018/2019 financial year.

b) Yes, the tender briefing in 2017/2018 was compulsory.

Reply:

1. The National Treasury confirms that a full investigation was conducted in keeping with the Public Protector remedial action and a comprehensive report finalised on the privatisation of the Venda Pension Funds. The comprehensive report provides detail on the historical background, the process followed during the investigation in line with the Implementation Plan and findings thereof. The Implementation Plan was agreed by National Treasury and the Public Protector; and submitted to the Speaker of the National Assembly for monitoring.

2. The Minister of Finance submitted the final comprehensive report on behalf of the State to Parliament and Public Protector on the 4th December 2018. The National Treasury awaits further communication and guidance from the Speaker of the National Assembly and Public Protector on this matter.

Reply:

a) While SARS has taken some strides towards implementing the recommendations of the Commission of Inquiry and is in engagement concerning others, there are certain recommendations that require Presidential approval and collaboration with National Treasury. However, from the time that the erstwhile Commissioner was suspended and the Acting Commissioner was appointed, SARS sought to repair and improve the administration of tax. The proceedings of the Nugent Commission of Inquiry ran concurrently with these endeavours taken by the Acting Commissioner and some of the recommendations made by the Commission of Inquiry echo some of the initiatives started by the Acting Commissioner.  This includes re-establishing a healthy reporting relationship between the Minister of Finance and SARS and the formation of the Illicit Economy Unit, the Unit focusing on Large Business, and more recently, a Unit to assess and analyze taxpayer compliance levels.

b) The function to plan, facilitate and monitor implementation of the Commission’s recommendations will be assigned to a small unit that continues with this work, and which will report their progress to the permanent Commissioner.

Reply:

(1)(a)(i)   The estimated loss of tax revenue due to the illicit trade in tobacco products for the 2015/16 financial year was R6 billion compared to the estimated loss of R 4.1 billion for the 2014/15 financial year.

(ii)(iii) The estimated loss of tax revenue due to the illicit trade in tobacco products for the 2016/17 and 2017/18 financial year has not been concluded as yet.

(b) Steps taken by SARS to ensure that all taxes on the trade in tobacco products in South Africa are paid are:

• SARS conducted Integrated Audits on the Tobacco industry for years up until 2015.

• Amending section 113 of the Customs and Excise Act, 1964, (the Act) with effect from 19 January 2017 to prohibit the importation of cigarettes with a mass of more than 1.2 kilogram per 1 000 cigarettes, and the manufacture of cigarettes of which the mass of the tobacco content exceeds 0.9 kilogram per 1 000 cigarettes.

• SARS is finalising a draft rule amendment to the Act that will be published for public comment shortly to require functional tamper-proof product counters on all the tobacco manufacturing equipment used by the industry at any licensed tobacco excise manufacturing warehouse in the country.

• SARS is in the process of modernising its current fiscal marker and implement technology that will provide information to SARS to enable SARS to track and trace cigarettes that are manufactured throughout the value chain.

• SARS has an integrated Audit team that was established to audit traders across multiple taxes.

There is an increased focus on illicit tobacco and cigarette trade using a multi-pronged approach that includes:

• Establishment of the Illicit Economy Unit with a multi-disciplinary team investigating allegations of non-compliance in the tobacco industry.
• Integrated audits are performed by the Excise team.
• Reviews of the existing licences are conducted in line with the new measure that is under consideration for implementation.
• Targeted port risk alerts driven interventions on raw tobacco in order to follow the trail from foreign exporter to the consignee who is either the manufacturer of the importer who supplies the manufacturer, to ensure that we can align any thread of imported raw tobacco to the volumes of production per manufacturer.
• Audit and inspections are being conducted on cigarette manufacturing machines to ensure that SARS has sight of manufacturing equipment and its production capacity.
• Policy review is being envisaged to enforce the cigarette manufacturing machines counters usage, with possible withdrawal of licences should the counter be found not to be operational.
• Increased inspections at targeted areas identified as being high risk regarding suspected illicit cigarettes sold.
• Deployment of Customs inspectors at the manufacturing sites to inspect, monitor, record and develop an understanding of the entire manufacturing value chain from raw materials that form the inputs into production and the final products in relation to the excise account declared.

(2)(a)(b)  SARS does research on a regular basis aligned to its strategic approach and focus.

In line with this approach SARS is in the process of conducting research into the tobacco industry.

Reply:

a) No

b) SA Revenue Service contracted the services of the Public Affairs Research Institute in 2011. This followed a request for quotation, RFQ 39/2010 for purposes of conducting a SARS Corruption Study on a national basis. This was awarded on the 02 February 2011 to the value of R799,755.00.

Reply:

As advised by the Prudential Authority at the SA Reserve Bank, there were no payments made by the Prudential Authority (which managed the VBS curatorship) to certain person (name furnished), but were made to the curator SizweNtsalubaGobodo Advisory Services (Pty) Limited (SNG). A certain person (name furnished) acts as the representative for the curator. The total cost of curatorship for the period 12 March 2018 to 12 November 2018 amounted to R21,6 million, excluding VAT. VBS was placed in liquidation on 13 November 2018, so the curatorship ended on 12 November 2018.

The Prudential Authority of the South African Reserve Bank (which took over the role of regulator from the Registrar on 1 April 2018) implemented various governance arrangements pertaining to the cost of curatorship at the commencement of the curatorship assignment. The governance arrangements include, inter alia, an agreement on charge-out rates, instituting a limit pertaining to the total curatorship fees for the initial 12-month period of the curatorship, as well as the management of potential conflict of interest that may arise from using other service providers.

Reply:

The Prudential Authority of the South African Reserve Bank has indicated to the National Treasury that the South African Reserve Bank did not serve VBS Mutual Bank with any (a) notice, (b) directive and/or (c) other correspondence in terms of section 5 of the Mutual Banks Act, Act 124 of 1993, in the period 1 January 2016 to 31 March 2018.

Section 5 of the Mutual Banks Act, 1993 (Act No. 124 of 1993) deals with the furnishing of information by mutual banks to the South African Reserve Bank (to the Prudential Authority or before 1 April 2018, the Registrar of Banks). It empowers the Prudential Authority (or previously, the Registrar) to direct a mutual bank or the holder of any interest in a mutual bank to provide it with information specified in a notice given to the mutual bank or the holder of the interest in the mutual bank, that the Prudential Authority (or previously, the Registrar) may reasonably require for the performance of the Prudential Authority’s (or previously, the Registrar’s) functions under the Mutual Banks Act.

The Prudential Authority (or previously the Registrar) may also direct a mutual bank or the holder of any interest in a mutual bank to provide it with a report by a public accountant as defined in section 1 of the Public Accountants’ and Auditors’ Act, 1991 (Act No. 80 of 1991), or by any other person with appropriate professional skill, on any relevant matter, to provide it with such information.

Reply:

The South African Reserve Bank publishes information on our gold reserves every month, which can be accessed from its website. In particular, for this question, I refer you to the following link on its website:

https://www.resbank.co.za/Lists/News%20and%20Publications/Attachments/8974/GoldFXReserves_November2018.pdf.

I also refer the Honourable Member to the previous response to his question PQ2333 (as published on 19 June 2015).

1. (a) The value of the official gold reserves as at 31 October 2018 was US$4,9 billion (ZAR72,4 billion) (as outlined in the above monthly release), which is approximately 4 million fine ounces.

(b) The SARB holds a large percentage of South Africa’s gold reserves in vaults of official sector institutions at offshore bullion centres, while a smaller amount is held locally. It is operationally efficient to store gold at offshore bullion centres should the need arise to conduct gold transactions. The exact percentage allocation per location is not made public.

(c) There is no material transportation cost incurred currently, as the bulk of the gold reserves were transferred to the respective places of storage in the 1990s.

(d) No particular procurement processes have been conducted in recent years as no service provider has been required for many years. In the past, the South Reserve Bank utilised government and state institutions to provide the necessary services.

2. The SARB performs monthly reconciliations on its gold reserves held at various centres, while senior SARB officials conduct due diligence visits as well as formal audits (which include sample verifications) at offshore centres, every three years and at local centres, on an annual basis. An audit of locally held gold is also conducted annually.

3. (a) 31 March 2004 (b) The South African Reserve Bank (c) USD423.00 (d)161.51 fine ounces (to put it into perspective, a standard gold bar weighs approximately 400 fine ounces) (e) A Bullion Bank (Nova Scotia) (f) Settlement of a gold swap transaction

Reply:

(1)(a) The artwork under the curatorship of National Treasury is recorded in its asset register and audited on an annual basis by the Auditor General of South Africa. There is no artwork owned by the rest of Government under the curatorship of National Treasury;

(1)(b) The National Treasury does not have any artwork under its control that meets the definition of Heritage Assets in accordance with Generally Recognised Accounting Practice 103.

(2)(a) During the past five financial years the National Treasury has not written off any artworks after completion of its physical verification process, due to loss or other reason. During the current financial year starting 1 April 2018 to date, no artwork has been found missing;

(2)(b) There is no applicable detail, as there is no missing artwork at the National Treasury.

Reply:

Under this new bursary scheme where funded students are not required to pay back money, the scheme is reliant on an allocation from the fiscus to meet its obligation to students in line with government’s commitment in this regard. Thus, any shortfalls, should they arise, will be met by the fiscus in line with resources available in the fiscal framework.

Reply:

(a)(i)(iii) and (b) No contract was awarded during the period 1 January 2015 to 31 December 2017.

Reply:

a) According to information at our disposal there are only two other mutual banks operating in South Africa which are:

1. GBS Mutual Bank; and
2. Finbond Mutual Bank.

There are no records of any municipal investments for 01 January 2009 to 30 June 2014. Based on municipal reports submitted to the National Treasury from 01 July 2014 to December 2018, there were no municipal investments in either GBS Mutual Bank or Finbond Mutual Bank.

b) In terms of section 7(2) of the PFMA the above-mentioned banks are not approved in writing by the National Treasury.

• Therefore, approval was not granted to national or provincial departments or national or provincial public entities to invest funds with these institutions.

In terms of section 7(3) of the PFMA Schedule 2 entities (SOE’s) may open bank accounts without the approval of the National treasury.

In terms of Treasury Regulation 31.2.1 The South African Library for the Blind reported that they held an account with GBS Mutual Bank. 

Reply:

a) According to information at our disposal there are only two other mutual banks operating in South Africa which are:

(i) GBS Mutual Bank; and

(ii) Finbond Mutual Bank.

There are no records of any municipal investments for 01 January 2009 to 30 June 2014. Based on municipal reports submitted to the National Treasury from 01 July 2014 to December 2018, there were no municipal investments in either GBS Mutual Bank or Finbond Mutual Bank.

(b) In terms of section 7(2) of the PFMA the above-mentioned banks are not approved in writing by the National Treasury.

• Therefore, approval was not granted to national or provincial departments or national or provincial public entities to invest funds with these institutions.

In terms of section 7(3) of the PFMA Schedule 2 entities (SOE’s) may open bank accounts without the approval of the National treasury.

In terms of Treasury Regulation 31.2.1 The South African Library for the Blind reported that they held an account with GBS Mutual Bank. 

Reply:

The Co-operative Banks Development Agency had three (3) meetings in the 2016-17 financial year and five (5) board meetings in the 2017-18 financial year.

 

Reply:

1 a) Yes, SARS replaced Oracle with BBD through a deviation process;

This was due to the fact that Oracle UK initially offered to review the offering against SARS’ requirements. Alternative proposals were put forward, but it quickly became apparent that SARS’ functional needs as agreed with Siebel, far exceeded what Oracle intended to deliver regarding scope, cost and implementation timelines.

b) The replacement was justified as follows:

Extensive discussions were conducted with Oracle in an attempt to rescue the transaction and bring it back in line with SARS’ original understanding, namely that it:

• be a turnkey solution including all required infrastructure, hardware/networks and integrated costs. The contractor would manage, for a fixed price and delivery timeline, the solution “end to end” and guarantee its performance when in production;

• be capped within the cost limit;

• Includes all the functionalities which formed part of Exco’s original understanding.

• Notwithstanding the fact that it was telephonically confirmed to SARS’ representatives by Oracle, Oracle was not willing to provide SARS with an undertaking in line with the above.

c) Accenture – came into SARS through a tender process in 2005 to appoint a strategic partner to assist SARS with the Modernisation Programme

The 2006 SARS records that have been reviewed by the current procurement leadership team reflects that the selection of the three entities (i.e. IBM, Accenture and BB&D) was based on the industry knowledge of the then Strategy, Modernisation and Technology senior staff. In circumstances relating to the replacement of the Oracle transaction BB&D was then chosen from the listed primarily because of price consideration.

2 a) The reason for not inviting competitive bids and instead extending the service providers’ contracts (i.e. Accenture, BB&D and others) was considered to be due to exceptional reasons which mainly centred on the need for natural continuation of the projects where previous work was carried out by the same service providers, thus presenting a clear advantage over competition. SARS wanted to also ensure consistent engagement with the same service providers in order to avoid a risk of information being disclosed to the public as the project was linked to taxpayer and SARS employee’ information.

b) The extensions of both Accenture and BBD were legal and compliant with the relevant legislation and regulations.

c) Accenture was selected through a tender process. BB&D was appointed through a deviation.

Reply:

The Acting Commissioner of SARS has informed me that SARS has no evidence of any such incident(s).

Reply:

a)  National Treasury submitted the draft reports to PRASA on 25 April 2017. The PRASA Board requested time to consider the reports until 31 October 2017. The National Treasury was informed that PRASA had discovered additional documentation that must also be subjected to investigation. However, feedback is still awaited from PRASA on the draft reports that were submitted during April 2017.

b)  The total amount spent on the 13 companies was R24 174 529.