Independent Communications Authority Bill: hearings; AG's Report on SATRA

Meeting report

COMMUNICATIONS PORTFOLIO COMMITTEE
13 March 2000
SOUTH AFRICAN COMMUNICATIONS REGULATORY AUTHORITY BILL;
AUDITOR-GENERAL'S INVESTIGATION OF SATRA
 
Documents Handed Out:
Special Report of the Auditor-General on an Investigation at the South African Telecommunications Regulatory Authority
South African Communications Regulatory Authority Bill [B14-2000]

SUMMARY
The committee discussed Clauses 1 through 18 of the South African Communications Regulatory Authority (SACRA) Bill.  Discussion centered around two issues.  One, increasing the size of the Council to nine members as outlined in the Darling Report, and two, adding the option of a jail term to the R100,000 fine for any councilor convicted of an offence under Clause 12: Conflicting interests.

The committee also heard from the Office of the Auditor-General regarding the report on the investigation at South African Telecommunications Regulatory Authority (SATRA).  The report concluded that due to time constraints and financial restrictions, the investigation was too limited to draw any conclusions of alleged involvement of SATRA councilors in any of the entities that held direct interests in applicants for the third cellular license.

Committee members were persistent in probing for more information surrounding the  allegations, and heavily criticized the representatives for not being forthcoming with any answers.    

Based on that information, the committee adopted a report which stated that on the basis of the report of the Auditor-General, the committee could not take the matter any further and regarded the matter as closed.

MINUTES
The South African Communications Regulatory Authority Bill
The Department of Communications led the committee through the Bill.  Discussions focused on certain clauses that some members found to be problematic.

Clause 2: Objects of the Act
The Chair raised two issues.  One, that by separating broadcasting and telecommunications into different subsections, it would indicate that broadcasting, which was mentioned first, would be deemed primary to telecommunications.  Secondly, that telecommunications, like broadcasting, should be followed by “in the public interest.”

The Department replied that it was implicit that telecommunications would also be regulated in the public interest.

Clause 5: Constitution of and appointment of councilors to Council
Ms Smuts (DP) expressed concern that a Council of five to seven members as prescribed in the Bill was too small in relation to the amount of work that the Council was expected to perform.  Reference was made to the Darling Report which suggested that 9 members should be appointed.  She also felt that five members could not be “representative of a broad-cross selection of the population”, as was indicated in 5(3b)(i).

The Department responded that the Independent Broadcasting Authority (IBA) was responsible for issuing a work plan every three years, and if it was determined that more members were needed to assist in the workload, then the question of increasing the size of the Council would then be addressed.

Mr Maserumule (ANC)asked for clarification on why the IBA Act and the SATRA Act would still exist after the new Authority had been established?

Mr Mjwara said the Department had discussed the issue of eliminating the existing Acts when the new Authority took over, however it was decided to maintain the existing legislation until the new Authority was properly established.  At which time, the existing Acts would be dissolved.

Clause 6: Disqualification
Ms Smuts (DP) asked that 6(f) and (g) be changed so that a person would be disqualified from being a councilor if a family member or business partner had a financial or controlling interest in the telecommunications or broadcasting industry, twelve months prior to their appointment.

Mr Mjwara stated that it was not necessary to specify a length of time, since any information pertaining to subsections (f) and (g) would be determined during the interviews and public hearings of that individual. 

The Chair noted that the IBA Act made a provision that the appointing body must be satisfied that appointees did not have conflicting financial interests.  It was decided that further discussion was needed to look into the implications of these subsections in relation to clause 12:  Conflicting interests.

Ms Smuts (DP) also felt that the staggered approach of rotating Council members was problematic, and asked why the process was being used.

Mr Tshongweni replied that it ensured the continuity of the work of the Council.  It was thought that replacing the entire Council every four years would mean that the each new Council would have to start the same process over again.

Ms Vos (IFP) asked for clarification on the Department’s definition in 6(f) of “substantial financial interest in the telecommunications or broadcasting industry”?  Ms Vos felt that this terminology did not include agencies like Eskom which had significant telecommunications potential, or individuals that hold directorships in telecommunication or broadcasting related companies.

Mr Mjwara stated that if Eskom applies for a license, and starts rendering communication services to the public, then councilors must be held accountable under section 7(5) of the Act.  The Chair added that this clause may need to be amended in the future, to ensure that councilors can be retained with both broad knowledge and experience.

Clause 7: Terms of Office
Mr Pieterse (ANC) felt that the required period of one month’s notice for a councilor to tender their resignation was too short.  It was suggested that three months would be a more appropriate length of time, considering the time needed to replace that individual.  The Department took the point under consideration.

Clause 8: Removal from Office
Ms Smuts (DP) suggested that the Communications Portfolio Committee should be responsible for recommending the dismissal of a councilor, rather than it being a direct action from the President.

The Chair asked the Department to look into existing laws to determine how an appointing body removes an individual from office.

Mr Tshongweni said that 8(2) states a councilor may not be removed from office except “after due enquiry”.  This was the measure that other Acts had used to make sure good cause was shown before dismissing a person from an appointed position.

Clause 10: Remuneration
The committee agreed that if the councilors were not allowed to hold other positions, then their salaries must recognize that they are paid equal to the salaries they would attain in the private sector.

Clause 11: Meetings of Council
Several members of the committee raised concern over whether the Bill was stating that the Chairperson sits above the Council with original powers, or whether the Chairperson sits as part of the Council.  Some questions were also raised about the ability of councilors to call special meetings, and the implications of that action.  The Chair stated these issues would be discussed at a later date.

Clause 12: Conflicting interests
The Chair noted that it would be necessary to determine how clause 6 and this clause related in terms of financial interests and disclosure of financial interests, as well as whether R100,000 was enough of a deterrent in an industry where people make millions every year.  It was suggested that the fine be coupled with a jail term of approximately five years.

Clause 13: Validity of proceedings
Ms Vos (IFP) asked if it was normal procedure that decisions remained valid if it was later determined that a councilor was influenced by outside interests?

The Chair said that while the IBA Act states the relevant proceedings of the Council would be null and void, the Telecommunications Act states that the licensee cannot be punished, and, thus, the proceedings could not be voided.  It was decided that further discussion was needed.  

Clause 14: Staff
Mr Pieterse (ANC) said that salaries for the support staff must be substantive and be consistent with the private sector considering the importance and complexity of the work that they would be responsible for. 

The Chair stated that the committee must remember that these salaries are coming from the public purse, and competing with the private sector may not be realistic.

Special Report of the Auditor-General
The committee also heard from the Office of the Auditor-General regarding the report on the investigation at South African Telecommunications Regulatory Authority (SATRA).  The report concluded that due to time constraints and financial restrictions, the investigation was too limited to draw any conclusions of alleged involvement of SATRA councilors in any of the entities that held direct interests in applicants for the third cellular license.

(Q) Ms Vos (IFP) asked whether it was considered normal that terms such as “file not available” and “not registered” appeared in the schedules of the report?

(A) Mr Benjamin, Deputy Auditor-General, responded that those terms appeared as a result of the limited amount of time and finances that were made available to the investigation, and that these terms were a reflection of those limited resources.

(Q) Ms Smuts (ANC) asked if they had found any contradictions in the affidavits of the councilors regarding the third cellular licensing process?

(A) Mr Benjamin stated that no contradictions had been found.

(Q) Ms Vos (IFP) asked if those concerned in the investigation had all the necessary information in front of them, including reports that had been forwarded to the committee?

(A) Mr Benjamin replied that the investigators did have all the necessary information at their disposal, and that all allegations in the reports deemed relevant had been tested.

(Q) Ms Smuts (DP) asked whether the Chairperson of SATRA was asked to recuse himself, or did he recuse himself of his own accord, and was the Auditor-General aware that the Minister had brought in the National Intelligence Agency (NIA).

(A) Mr Goss, of Price-Waterhouse-Coopers, responded that the Chairperson had been asked to recuse himself.  Regarding the NIA, the mandate of the Office of the Auditor-General was specific to government agencies.  The Auditor-General did not have powers of search and seizure for private companies, and as a result,  the matter was handed over to the NIA, which had such powers.

(Q) Ms Vos (IFP) asked whether this was an indication that there were matters that warranted further investigation?

(A) Mr Goss replied that some matters did warrant further investigation.

(Q) Ms Vos (IFP) asked if that included matters pertaining to the awarding of the third cellular license?

(A)  Mr Goss stated that company checks had been performed on all the councilors, and it was concluded that no councilor had a direct interest in the issuing of the third cellular licence.

Questions were also raised about Eskom being interested in buying shares of the new cell licencee, and the allegations of a connection between the Director of Eskom and the Zada Corporation.

Mr Benjamin and Mr Goss replied that they did not have any information on these matters. 

The Chair commented that members must restrict their questions to information contained in the report.

(Q) The Chair asked if the Auditor-General had any information that would necessitate the delay of the third cellular licence.
 
Mr Benjamin would not comment.

Several members criticized the Office of the Auditor-General for giving inconclusive answers. 

The Chair responded that the information received from the Auditor-General clearly indicated that they could not conclude on allegations of councilors having direct interests in the awarding of the third cellular license. 

Based on that information, the committee adopted a report which stated the following:
1.  The committee has noted that other matters may be subjected to further investigation by the Auditor-General during the normal course of this Regulatory audit, and
2.  On the basis of the report of the Auditor-General the committee cannot take the matter any further, and consequently, the committee regards the matter as closed.

The meeting was adjourned.