Money Bills Act; Public Investment Corporation Amendment Bill: briefing; Strategy and Programme on Steinhoff Issues

Meeting report

Draft Framework for a Strategy and Programme on Steinhoff Issues
The Chairperson took the Committee through a draft framework for a strategy and programme on Steinhoff issues. The aim was to facilitate a discussion on an overall approach on Steinhoff issues. On the legal parameters of Parliament’s oversight role, Parliament needed to be far more effective in its oversight role, including over the private sector. However, except in very specific circumstances, Members needed to avoid converting committees into courts of law or commissions of inquiry or full-scale investigative bodies where there were already structures legally mandated to carry out these functions. The Committee’s primary responsibility was to hold the relevant bodies to vigorous and regular account on Steinhoff matters- of which it would most certainly do so. The Committee could not take over the role of these bodies and carry out the investigations they are legally mandated to. However, Members had to ask themselves if they had the forensic, technical and other capacity and the time to do this. For example, it would mean analysing possibly hundreds of documents across South Africa, Germany, the Netherlands and possibly up to 27 other countries in which Steinhoff operates, if the Committee was to fully investigate the matter and ‘cross-examine’ witnesses. If the Committee was to pursue this route, it could approach the Speaker’s Office to have a commission of inquiry into the Steinhoff debacle. This will mean allocating necessary time and effecting a fundamental change to the Committee programme; securing the necessary legal support, including an evidence leader; allowing each Member to cross examine witnesses; and the like. As per the Parliamentary Legal Unit’s advice, there will also need to be legal clarity about the relationship between the evidence given at such a commission of inquiry and that given to regulators and other investigative bodies and the use of such evidence in a court of law.

On aspects of the Committee programme, by the nature of these corporate scandals, the investigations take very long. These irregularities were usually elusive, highly complex and global in nature, requiring considerable work before investigations can be finalised. However, the Committee needed to act in terms of the law and of its oversight role to help expedite matters as far as possible. The Committee should have a follow-up joint briefing on Steinhoff matters by the end of March. To ensure a focused, productive briefing there should be a clear agenda with specific focus areas and not cover ground covered already. It had to build on what emerged at the 31 January briefing. The Committee had been engaging with Steinhoff through its legal representatives about deadlines for their PwC investigations. There was also need to check on progress by Hawks on the case opened against the former CEO Mr Jooste. The Committee might also consider applying for a subpoena to force Mr Jooste to appear before the Committee. The excuse given by Mr Jooste – conveyed in a letter by his attorney – for his failure to appear at the hearing organised by four committees in January was ‘lame’. The letter said that having resigned as CEO Jooste was no longer involved in Steinhoff and therefore he would not appear before the Committee. The Chairperson added that care would have to be taken that the questioning of Mr Jooste did not stray into matters that could be relevant to court proceedings later.

He asked Members if they would want to take the commission of inquiry route in dealing with the Steinhoff matter.    

Discussion 
Mr A Lees (DA) could not determine which route the Committee should take at this stage. He however believed the Steinhoff matter was very complex and noted that there were a number of investigations currently underway.

Ms P Mabe (ANC) said the Committee had to determine whether it had enough capacity to institute a commission of inquiry. If not, then the Committee had no choice but to leave the matter to be handled by experts.

The Chairperson said in the meanwhile, he would take it that the majority view was that the Committee would not want to take the commission of inquiry route.
 
Public Investment Corporation Amendment Bill

The Chairperson said the draft Public Investment Corporation (PIC) Amendment Bill being worked on by the Parliamentary Legal Unit stemmed from the Committee resolutions on the PIC reached in October 2017.

Presentation by the Parliamentary Legal Unit
Ms Noluthando Mpikashe, Parliamentary Legal Unit, highlighted the amendments to the PIC Bill as proposed by the Committee.

Clause 2
Clause 2 of the Act amends section 4 of the Act by expanding the objects of the corporation to ensure that the corporation promotes, facilitate, support and assist depositors in buying property and that is also helps with economic growth, job creation, infrastructure development and the reduction of social inequalities.

Clause 3
Clause 3 amends section 5 of the Act by extending the powers of the corporation. The clause enables the corporation to conduct the business of the bank as defined in the Banks Act.

Clause 5
Clause 5 amends section 10 of the Act and requires an annual report reflecting all investments and deposits to be submitted to the Minister.

Clause 6
Clause 6 inserts section 11A which requires the corporation to annually report on the total number of requests made and details thereof to the Minister.

Discussion
The Chairperson suggested that a proposal be made that Parliament should set out the process of nominating and appointing the PIC board chairperson. Parliament could as well nominate the Deputy Minister as is currently the norm. There should be more vigorous oversight by the Committee and this needed to find expression in the Bill. Appropriate trade union representation within the PIC board which was also agreed upon by Member should be provided for.

Ms S Shope-Sithole (ANC) cautioned against having Parliament directing Treasury not to appoint the Deputy Minister as the PIC board chairperson. This could be seen as interference and encroachment into the mandate of the executive.

The Chairperson noted that there were many other statutory bodies in which Parliament was involved in the nomination of board membership as well as appointment of chairpersons. The question would be whether it was inappropriate to have the Deputy Minister in the PIC board. There was need for further discussions and positions on this.

Ms Pamela Phala, Senior Manager: Corporate Legal, PIC, indicated the PIC had reviewed the draft Bill and flagged a number of provisions which it believed should be reviewed. She noted the constant reference to a specific number of directors within the PIC board. These provisions had to be reviewed as they contradicted the PIC memorandum of incorporation (MOI). Also, PIC believed there was need for further changes to the provisions dealing with the Banks Act.

The Chairperson asked the PIC to furnish the Committee with a written response and comments on the Bill in its current form. The Committee would then decide on the course of action. Members and stakeholders were being given ample time to mull over it.

Mr Abel Sithole, Principal Executive Officer, Government Employees Pension Fund (GEPF), highlighted GEPFs concerns about the Bill, as the owner of assets held by the PIC. He appreciated the nature of the PIC in its current form and noted that transforming it into a bank as suggested by some stakeholders would fundamentally change the nature of the PIC. Therefore, the contention about the provisions which referred to the Banks Act was pertinent. The GEPF, as the asset owner, determines PIC mandate and therefore altering it would be problematic. The appropriate operational structures should be maintained. The PIC should not be constrained in terms of its governance structure. He identified the need for a relook into the provisions which spoke to more union representation within the PIC board. Currently, unions and workers were represented through the GEPF through a very detailed process mandating the relationship between labour representatives with a particular number of employees constituting the bargaining council. Circumventing the current relationship between PIC and GEPF might bring fundamental structural challenges. The nature of the relationship had been carefully crafted. The majoritarian principle currently in effect was workable.

Mr Lees said good points were raised by the GEPF on the relationship between unions and the PIC. He urged stakeholders to engage further on the proposals.

The Chairperson indicated this was a preliminary discussion. Some of the issues would be dissected during the public hearings on the Bill. He urged the PIC, GEPF and the National Treasury to meet within 14 days and come to some agreement. The Parliamentary Legal Unit would also be drawn into the process as the Committee’s representatives. A concrete proposal should be drawn up within 21 days.

Money Bills Amendment Procedure and Related Matters Act
The Chairperson said this was the first of a two tranche process in dealing with amendments to the Bill. He indicated he had been approached by various NGOs proposing significant changes. Their views also had to be considered. The Parliamentary Legal Unit had worked on the Bill as per the last engagements on same.

Adv Frank Jenkins, Senior Parliamentary Legal Advisor, said the Unit had made no substantial amendments; save for wording changes as proposed by National Treasury to bring the Bill in line with other government statutes. Also, the onerous deadlines on the tabling of the revised fiscal framework which the Committee expressed concern about had been changed from nine to “as soon as reasonably possible.”

The Chairperson said the Committee was aware of and sympathised with concerns about the time available for organisations and the public to prepare submissions for the fiscal framework hearings to be held on the next day. However, in terms of the Money Bills Amendment Procedure and Related Matters Amendment Act, both Houses of Parliament had to finalise the fiscal framework within 16 days of the Budget being introduced to Parliament. A key reason for this was that the tax year begins on 1 March and the financial year on 1 April each year. Only after the fiscal framework was adopted can other aspects of the Budget, such as the Division of Revenue and Appropriations Bill, be processed and they must be finalised within 35 days of the adoption of the fiscal framework. The Committee was, in fact, in the final stages of amending the Money Bills Act to give both the public and Parliament more time to process the Budget. Understandably, there was significant opposition to the 1% increase in VAT. In terms of the Value Added Tax Act, a VAT increase comes into effect on the date the Minister announces this in the Budget. In this case, 1 April this year. Parliament had 12 months within which to accept, reject or amend the increase in some other way within 12 months. Should Parliament reject the VAT increase through the fiscal framework, alternative sources would have to be found for the estimated R22.9 billion that would be raised through the VAT increase. This would also involve consultation with the Standing and Select Committees on Appropriations. The public will have more time to make considered submissions on the VAT increase during the hearings on the Rates and Monetary Bill. The parties would decide.

The meeting was adjourned.